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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



(Mark One)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE ACT OF 1934
|- |  | -----------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2003



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
|- |  | -----------------------------------------------------------------------------------------------------------



For the transition period from
 to



Commission File Number 1-9320



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WYNDHAM INTERNATIONAL, INC.

(Exact name of
registrant as specified in its charter)



|Delaware                                                       |  | 94-2878485                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



1950
Stemmons Freeway, Suite 6001

Dallas, Texas 75207

(Address of principal executive offices) (Zip Code)



(214) 863-1000

(Registrants telephone number, including area code)



N/A

(Former name, former address and former fiscal year, if changed
since last report)



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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 is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Yes  x    No ̈



The number of shares outstanding of the registrants
class A common stock, par value $.01 per share, as of the close of business on May 12, 2003, was 168,082,892.



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##### Table of Contents



WYNDHAM
INTERNATIONAL, INC.



INDEX



PART
IFINANCIAL INFORMATION



|                             |  |                                                                                                                |  | Page
|---------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|                            
|Item 1.                      |  | Financial Statements                                                                                           |  | 3   
|                            
|Wyndham International, Inc.: |  |                                                                                                               
|                            
|                             |  | Condensed Consolidated Balance Sheets as of March 31, 2003 (unaudited) andDecember 31, 2002                    |  | 3   
|                            
|                             |  | Condensed Consolidated Statements of Operations for the three months endedMarch 31, 2003 and 2002 (unaudited)  |  | 4   
|                            
|                             |  | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 (unaudited) |  | 5   
|                            
|                             |  | Notes to Condensed Consolidated Financial Statements as of March 31, 2003(unaudited)                           |  | 6   
|                            
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                          |  | 20  
|                            
|Item 3.                      |  | Qualitative and Quantitative Disclosures about Market Risks                                                    |  | 30  
|                            
|Item 4.                      |  | Controls and Procedures                                                                                        |  | 30  
|                            
|PART IIOTHER INFORMATION    |  |                                                                                                               
|                            
|Item 1.                      |  | Legal Proceedings                                                                                              |  | 31  
|                            
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                                                      |  | 32  
|                            
|Item 3.                      |  | Defaults Upon Senior Securities                                                                                |  | 32  
|                            
|Item 4.                      |  | Submission of Matters to Vote of Security Holders                                                              |  | 33  
|                            
|Item 5.                      |  | Other Information                                                                                              |  | 33  
|                            
|Item 6.                      |  | Exhibits and Reports on Form 8-K:                                                                              |  | 33  
|                            
|                             |  | Exhibits                                                                                                       |  | 33  
|                            
|                             |  | Reports on Form 8-K                                                                                            |  | 33  
|                            
|Signature                    |  | 34                                                                                                            
|                            
|Certifications               |  | 35                                                                                                            



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PART
I:    FINANCIAL INFORMATION



ITEM
1.    
FINANCIAL STATEMENTS



WYNDHAM INTERNATIONAL, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)



|                                                                                                                               |  | March 31, 2003 |            |   | December 31, 2002 |  
|------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ---------- | - | ----------------- | -
|ASSETS                                                                                                                         |  |                |            |   |                   |  
|Current assets:                                                                                                                |  |                |            |   |                   |  
|Cash and cash equivalents                                                                                                      |  | $              | 76,872     |   |                   | $
|Restricted cash                                                                                                                |  |                | 146,229    |   |                   |  
|Accounts receivable                                                                                                            |  |                | 99,062     |   |                   |  
|Inventories                                                                                                                    |  |                | 14,795     |   |                   |  
|Prepaid expenses and other assets                                                                                              |  |                | 11,551     |   |                   |  
|Assets held for sale, net of accumulated depreciation of $47,651 in 2003 and $28,526 in
2002                                   |  |                | 113,674    |   |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Total current assets                                                                                                           |  |                | 462,183    |   |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Investment in real estate and related improvements, net of accumulated depreciation of
$1,019,265 in 2003 and $978,953 in 2002 |  |                | 3,454,910  |   |                   |  
|Investment in unconsolidated subsidiaries                                                                                      |  |                | 44,808     |   |                   |  
|Notes and other receivables                                                                                                    |  |                | 39,754     |   |                   |  
|Management contract costs, net of accumulated amortization $19,446 in 2003 and $20,082
in 2002                                 |  |                | 82,594     |   |                   |  
|Leasehold costs, net of accumulated amortization of $10,858 in 2003 and $38,764 in
2002                                        |  |                | 23,358     |   |                   |  
|Trade names and franchise costs, net of accumulated amortization of $32,023 in 2003 and
$30,396 in 2002                        |  |                | 91,842     |   |                   |  
|Deferred acquisition costs                                                                                                     |  |                | 3,580      |   |                   |  
|Goodwill, net of accumulated amortization of $54 in 2003 and $54 in 2002                                                       |  |                | 391        |   |                   |  
|Deferred expenses, net of accumulated amortization of $71,039 in 2003 and $64,441 in
2002                                      |  |                | 49,136     |   |                   |  
|Other assets                                                                                                                   |  |                | 39,152     |   |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Total assets                                                                                                                   |  | $              | 4,291,708  |   |                   | $
|                                                                                                                               |  |                |            |   |                   |  
|LIABILITIES AND SHAREHOLDERS
EQUITY                                                                                           |  |                |            |   |                   |  
|Current liabilities:                                                                                                           |  |                |            |   |                   |  
|Accounts payable and accrued expenses                                                                                          |  | $              | 240,584    |   |                   | $
|Deposits                                                                                                                       |  |                | 33,033     |   |                   |  
|Borrowings associated with assets held for sale                                                                                |  |                | 60,812     |   |                   |  
|Current portion of borrowings under credit facility, term loans, mortgage notes and
capital lease obligations                  |  |                | 394,662    |   |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Total current liabilities                                                                                                      |  |                | 729,091    |   |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Borrowings under credit facility, term loans, mortgage notes and capital lease
obligations                                     |  |                | 2,373,057  |   |                   |  
|Derivative financial instruments                                                                                               |  |                | 89,379     |   |                   |  
|Deferred income taxes                                                                                                          |  |                | 80,429     |   |                   |  
|Deferred income                                                                                                                |  |                | 9,766      |   |                   |  
|Minority interest in the Operating Partnerships                                                                                |  |                | 21,368     |   |                   |  
|Minority interest in other consolidated subsidiaries                                                                           |  |                | 38,571     |   |                   |  
|Commitments and contingencies                                                                                                  |  |                |            |   |                   |  
|Shareholders equity:                                                                                                          |  |                |            |   |                   |  
|Preferred stock, $0.01 par value; authorized: 150,000,000 shares; shares issued and
outstanding:                               |  |                |            |   |                   |  
|13,475,489 in 2003 and 13,170,620 in 2002                                                                                      |  |                | 135        |   |                   |  
|Common stock, $0.01 par value; authorized: 750,000,000 shares; shares issued and
outstanding:                                  |  |                |            |   |                   |  
|168,034,901 in 2003 and 167,999,126 in 2002                                                                                    |  |                | 1,680      |   |                   |  
|Additional paid in capital                                                                                                     |  |                | 4,070,223  |   |                   |  
|Receivables from shareholders and affiliates                                                                                   |  |                | (18,121    | ) |                   |  
|Accumulated other comprehensive income                                                                                         |  |                | (12,912    | ) |                   |  
|Accumulated deficit                                                                                                            |  |                | (3,090,958 | ) |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Total shareholders equity                                                                                                     |  |                | 950,047    |   |                   |  
|                                                                                                                               |  |                |            |   |                   |  
|Total liabilities and shareholders equity                                                                                     |  | $              | 4,291,708  |   |                   | $
|                                                                                                                               |  |                |            |   |                   |  



The
accompanying notes are an integral part of these consolidated financial statements.



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WYNDHAM INTERNATIONAL, INC.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)



|                                                                         |  | Three Months Ended March 31, |         
|------------------------------------------------------------------------ |  | ---------------------------- | --------
|                                                                         |  | 2003                         |         
|Revenue:                                                                 |  |                              |         
|Hotel revenue                                                            |  | $                            | 413,763 
|Management fee and service fee income                                    |  |                              | 4,420   
|Interest and other income                                                |  |                              | 1,256   
|                                                                         |  |                              |         
|Total revenue                                                            |  |                              | 419,439 
|                                                                         |  |                              |         
|Expenses:                                                                |  |                              |         
|Hotel expenses                                                           |  |                              | 321,391 
|General and administrative                                               |  |                              | 15,004  
|Interest expense                                                         |  |                              | 44,989  
|Depreciation and amortization                                            |  |                              | 61,557  
|Loss on sale of assets                                                   |  |                              | 4,937   
|Impairment loss                                                          |  |                              | 108,385 
|Loss (gain) on derivative instruments                                    |  |                              | 11,668  
|                                                                         |  |                              |         
|Total expenses                                                           |  |                              | 567,931 
|                                                                         |  |                              |         
|Operating loss from continued operations                                 |  |                              | (148,492
|Equity in (loss) earnings of unconsolidated subsidiaries                 |  |                              | (574    
|                                                                         |  |                              |         
|Loss from continued operations before income taxes and minority interest |  |                              | (149,066
|Income tax benefit                                                       |  |                              | 61,340  
|                                                                         |  |                              |         
|                                                                        
|Loss from continued operations before minority interest                  |  |                              | (87,726 
|Minority interest in consolidated subsidiaries                           |  |                              | (289    
|                                                                         |  |                              |         
|Loss from continued operations                                           |  |                              | (88,015 
|                                                                        
|Discontinued operations:                                                 |  |                              |         
|Loss from discontinued operations                                        |  |                              | (2,432  
|Impairment loss                                                          |  |                              | (16,966 
|                                                                         |  |                              |         
|Loss from discontinued operations, net of taxes and minority interest    |  |                              | (19,398 
|                                                                         |  |                              |         
|Loss before accounting change                                            |  |                              | (107,413
|Cumulative effect of change in accounting principle, net of taxes        |  |                              |        
|                                                                         |  |                              |         
|Net loss                                                                 |  | $                            | (107,413
|Preferred stock dividends                                                |  |                              | (37,799 
|                                                                         |  |                              |         
|Net loss attributable to common shareholders                             |  | $                            | (145,212
|                                                                         |  |                              |         
|                                                                        
|Basic and diluted loss per common share:                                 |  |                              |         
|Loss from continued operations                                           |  | $                            | (0.75   
|Loss from discontinued operations, net of taxes                          |  |                              | (0.12   
|Cumulative effect of change in accounting principle, net of taxes        |  |                              |        
|                                                                         |  |                              |         
|Net loss per common share                                                |  | $                            | (0.87   
|                                                                         |  |                              |         



The
accompanying notes are an integral part of these consolidated financial statements.



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WYNDHAM INTERNATIONAL, INC.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

|                                                                                |  | Three Months Ended March 31, |         
|------------------------------------------------------------------------------- |  | ---------------------------- | --------
|                                                                                |  | 2003                         |         
|Cash flows from operating activities:                                           |  |                              |         
|Net loss                                                                        |  | $                            | (107,413
|Adjustments to reconcile net loss to net cash provided by operating
activities: |  |                              |         
|Depreciation and amortization                                                   |  |                              | 63,028  
|Amortization of unearned stock compensation                                     |  |                              | 551     
|Amortization of deferred loan costs                                             |  |                              | 6,516   
|Net loss on sale of assets                                                      |  |                              | 4,937   
|Loss (gain) on derivative financial instruments                                 |  |                              | 257     
|Impairment loss on assets                                                       |  |                              | 136,662 
|Write-off of intangible assets                                                  |  |                              |        
|Write-off of deferred acquisition costs                                         |  |                              | 2       
|Provision for bad debt expense                                                  |  |                              | 4,512   
|Equity in loss (earnings) of unconsolidated subsidiaries                        |  |                              | 574     
|Minority interest in consolidated subsidiaries                                  |  |                              | 274     
|Deferred income taxes                                                           |  |                              | (77,144 
|Cumulative effect of change in accounting principle                             |  |                              |        
|Changes in assets and liabilities:                                              |  |                              |         
|Accounts receivable and other assets                                            |  |                              | (4,398  
|Inventory                                                                       |  |                              | 693     
|Deferred income                                                                 |  |                              | 516     
|Accounts payable and other accrued expenses                                     |  |                              | (2,108  
|                                                                                |  |                              |         
|Net cash provided by operating activities                                       |  |                              | 27,459  
|                                                                                |  |                              |         
|Cash flows from investing activities:                                           |  |                              |         
|Improvements and additions to hotel properties                                  |  |                              | (7,527  
|Proceeds from sale of assets                                                    |  |                              | 22,366  
|Changes in restricted cash accounts                                             |  |                              | (2,389  
|Collection on notes receivable                                                  |  |                              | 132     
|Advances on other notes receivable                                              |  |                              | (9      
|Deferred acquisition costs                                                      |  |                              | (488    
|Investment in unconsolidated subsidiaries                                       |  |                              |        
|Distributions from unconsolidated subsidiaries                                  |  |                              | 400     
|Other                                                                           |  |                              | 6       
|                                                                                |  |                              |         
|Net cash provided by investing activities                                       |  |                              | 12,491  
|                                                                                |  |                              |         
|Cash flows from financing activities:                                           |  |                              |         
|Borrowings under line of credit facility and mortgage notes                     |  |                              | 35,000  
|Repayments of borrowings under credit facility and other debt                   |  |                              | (33,011 
|Payment of deferred loan costs                                                  |  |                              | (2,297  
|Contribution received from minority interest in consolidated
subsidiaries       |  |                              |        
|Distribution made to minority interest in other partnerships                    |  |                              | (221    
|Other                                                                           |  |                              |        
|                                                                                |  |                              |         
|Net cash used in financing activities                                           |  |                              | (529    
|                                                                                |  |                              |         
|Foreign currency translation adjustment                                         |  |                              | 212     
|Net increase (decrease) in cash and cash equivalents                            |  |                              | 39,633  
|Cash and cash equivalents at beginning of period                                |  |                              | 37,239  
|                                                                                |  |                              |         
|Cash and cash equivalents at end of period                                      |  | $                            | 76,872  
|                                                                                |  |                              |         



The
accompanying notes are an integral part of these consolidated financial statements.



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share amounts)

(unaudited)



1.    Organization:



Wyndham International, Inc. (together with its consolidated subsidiaries, Wyndham or the Company) is a fully
integrated and multi-branded hotel enterprise that operates primarily in the upper upscale and luxury segments. Through a series of acquisitions, Wyndham has since 1995 grown from 20 hotels to become one of the largest U.S. based hotel
owner/operators. As of March 31, 2003, Wyndham owned interests in 110 hotels with over 31,500 guestrooms and leased 37 hotels from third parties with over 5,700 guestrooms. In addition, Wyndham managed 26 hotels for third party owners with over
8,000 guestrooms and franchised 31 hotels with over 6,900 guestrooms.



Principles of ConsolidationThe consolidated financial statements include the accounts of Wyndham, its wholly-owned subsidiaries, and the partnerships, corporations, and limited liability companies in which
Wyndham owns a controlling interest, after the elimination of all significant intercompany accounts and transactions.



PartnershipsThe condition for control is the ownership of a majority voting interest and the ownership of the general
partnership interest. Also, Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) which requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both.



Corporations and Limited Liability CompaniesThe
condition for control is the ownership of a majority voting interest. Also, FASB issued FIN 46 which requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable
interest entitys activities or entitled to receive a majority of the entitys residual returns or both.



Critical Accounting Policies and Estimates The preparation of consolidated financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related
to: impairment of assets; assets held for sale; bad debts; income taxes; insurance reserves; derivatives; and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.



The
Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. The Company periodically reviews the carrying value of its assets,
including intangible assets, to determine if events and circumstances exist indicating that assets might be impaired. If facts and circumstances support this possibility of impairment, management will prepare undiscounted and discounted cash flow
projections which require judgments that are both subjective and complex.



The Companys management uses judgment in projecting which assets will be sold by the Company within the next twelve months. These judgments are based on managements knowledge of the current market and the status
of current negotiations with third parties. If assets are expected to be sold within 12 months, they are reclassified as assets held for sale on the balance sheet.



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





The
Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Companys customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be required.



The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing
prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount,
an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an
adjustment to the deferred tax asset would be charged to income in the period such determination was made.



The Company maintains a paid loss deductible insurance plan for commercial general liability, automobile liability, and workers
compensation loss exposures related to the hotel operations. The primary loss deductible retention limit is currently $500 per occurrence for general liability and $250 per occurrence for automobile liability and workers compensation loss, in
most jurisdictions. The estimates of the ultimate liability for losses and associated expenses are based upon a third party actuarial analysis and projection of actual historical development trends of loss frequency, severity and incurred but not
reported claims as well as traditional issues that affect loss cost such as medical and statutory benefit inflation. In addition, the actuarial analysis compares our trends against general insurance industry development trends to develop an estimate
of ultimate costs within the deductible retention. Large claims or incidents that could potentially involve material amounts are also monitored closely on a case-by-case basis. As of March 31, 2003, the Companys balance sheet included an
estimated liability with respect to this self-insurance program of $24,113.



The Companys objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. During the first quarter ended March 31, 2003, such
derivatives were used to hedge the variable cash flows associated with a portion of the Companys variable-rate debt. As of March 31, 2003, the Company did not have any derivatives designated as fair value hedges. Additionally, the Company does
not use derivatives for trading or speculative purposes. The Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date to determine the fair value of the derivative
instruments. For the majority of financial instruments including most derivatives, standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and termination cost are used to determine
fair value. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. Future cash inflows or outflows from the derivative instruments depend upon future borrowing rates. If
assumptions about future borrowing rates prove to be materially incorrect, the recorded value of these agreements could also prove to be materially incorrect. Because the Company uses the derivative instruments to reduce its exposure to increases in
variable interest rates, thus effectively fixing a portion of its variable interest rates, the impact of changes in future borrowing rates could result in interest expense being either higher or lower than might otherwise have been incurred on the
variable-rate borrowings had the rates not been fixed. A reduction in interest rates could result in a competitive advantage for companies in a position to take advantage of a lower cost of capital.



The Company is a defendant in lawsuits that arise out of, and
are incidental to, the conduct of its business. Management uses its judgment, with the aid of legal counsel, to determine if accruals are necessary as a result of any pending actions against the Company (see Note 7).



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





Stock
Compensation



The Company accounts for its
stock compensation arrangements under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and intends to continue to do so. At March 31, 2003, no stock-based
employee compensation cost is charged to earnings for options, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. If the compensation cost for the
Companys stock option-based compensation plans had been determined based on the fair value at the grant dates for awards under the plans consistent with the method pursuant to Statement of Financial Accounting Standard No. 123 Accounting
for Stock-Based Compensation (SFAS 123), the Companys net loss and loss per common share would have increased to the pro forma amounts indicated below:



|                                                                                                                                            |  | Three Months Ended March 31, 2003 |          |   | Three Months Ended March 31, 2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | -------- | - | --------------------------------- | -
|Net loss attributable to common shareholders, as reported                                                                                   |  | $                                 | (145,212 | ) |                                   | $
|Deduct: Total stock-based employee compensation expense determined under fair value
based method for all awards, net of related tax effects |  |                                   | (263     | ) |                                   |  
|                                                                                                                                            |  |                                   |          |   |                                   |  
|Pro forma net loss attributable to common shareholders                                                                                      |  |                                   | (145,475 | ) |                                   |  
|                                                                                                                                            |  |                                   |          |   |                                   |  
|Earnings per share:                                                                                                                         |  |                                   |          |   |                                   |  
|Basic and diluted loss per common shareas reported                                                                                         |  | $                                 | (0.87    | ) |                                   | $
|Basic and dilutedpro forma loss per common share                                                                                           |  | $                                 | (0.87    | ) |                                   | $



Goodwill



Goodwill was
recognized in connection with the acquisition of certain businesses and was amortized utilizing the straight-line method over a period of 10 to 40 years. However, on January 1, 2002, the Company completed the two step process prescribed by SFAS 142
for (1) testing for impairment and (2) determining the amount of impairment loss related to goodwill associated with the reporting unit. Accordingly, in January 2002, the Company recorded an impairment charge of $324,102 as a cumulative effect of a
change in accounting principle. In connection with the adoption of SFAS 142, the Company did not record $12,136 of amortization in 2002, and will not be recording $12,136 of amortization annually. Upon implementation of SFAS 142, the Company
identified finite lived intangible assets related to our tradenames and determined that there was no indication of impairment on these finite lived intangible assets.



These financial statements have been prepared in accordance with generally accepted accounting principles
(GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the year ended December 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Companys Annual Report on Form 10-K for the year
ended December 31, 2002.



Recent
PronouncementsIn December 2002, the FASB issued SFAS 148, Accounting for Stock-Based CompensationTransition and Disclosure, which amends SFAS 123, Accounting for Stock-Based Compensation. In response to a growing
number of companies announcing plans to record expenses for the fair value of stock options, SFAS 148 provides alternative methods of transition for a voluntary change to the fair



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123
to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. SFAS 148 also amends the disclosure provisions of SFAS 123 to require more prominent disclosure about the effects of an
entitys accounting policy decisions with respect to stock-based employee compensation on reported net income. Finally, SFAS 148 amends APB 28, Interim Financial Reporting,to require disclosure about those effects in interim financial
information. The amendments to SFAS 123 are effective for financial statements for fiscal years ending after December 15, 2002. The Company made the disclosure required by the provisions of SFAS 148 on page 8 under Stock Compensation.



In January 2003, the FASB issued Interpretation
46, Consolidation of Variable Interest Entities. In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with
voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. Interpretation 46 requires a variable interest entity to be consolidated by a company if that company is subject
to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. The consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial
statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company is currently evaluating the provisions of the Interpretation, but believes its adoption will not have a material impact on its
financial position or results of operations.



In
April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities under SFAS 133. The new guidance amends SFAS 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS 133, (b) in connection with
other Board projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an underlying and the
characteristics of a derivative that contains financing components. The amendments set forth in SFAS 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS 149 is generally
effective for contracts entered into or modified after June 30, 2003 (with a few exceptions) and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The Company is currently evaluating the
provisions of SFAS 149, but believes its adoption will not have a material impact on its financial position or results of operations.



ReclassificationCertain prior year balances have been reclassified to conform to the current year presentation with no effect
on previously reported amounts of income or accumulated deficits.



2.    Disposition of Assets



During the four months ended April 30, 2003, the Company sold its investments in ten hotels, certain undeveloped land and a golf venture. The Company received net cash proceeds of approximately $34,598, after the repayment
of mortgage debt of $64,416. The Company recorded a net loss of $1,213 as a result of these asset sales, net of impairment. Also, $8,006 of the net cash proceeds was used by the Company to pay down a portion of the senior credit facility and
increasing rate loan facility, and the Company retained the rest of the net cash proceeds in accordance with the terms of the senior credit facilities.



9



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





3.    Line of Credit Facility, Term Loans, Mortgage and Other Notes and Capital Lease Obligations:



Outstanding borrowings as of March 31, 2003 and December 31, 2002 under the line of credit, term loans, various mortgage and other notes
and capital lease obligations consisted of the following:



|Description                             |  | March 31, 2003 |           |   | December 31, 2002 |   |           | Amortization |  |         | Interest Rate |  | Maturity         | 
|--------------------------------------- |  | -------------- | --------- | - | ----------------- | - | --------- | ------------ |  | ------- | ------------- |  | ---------------- | 
|Revolving Credit Facility               |  | $              | 171,406   |   |                   | $ | 156,406   |              |  | None    |               |  | Libor + 3.75%(1) | 
|Term Loans                              |  |                | 1,175,469 |   |                   |   | 1,183,177 |              |  | (2      | )             |  | Libor + 4.75%(3) | 
|Increasing Rate Loans                   |  |                | 447,699   |   |                   |   | 447,699   |              |  | None    |               |  | Libor + 4.75%(3) | 
|Bear, Stearns Funding, Inc.(4)          |  |                | 154,198   |   |                   |   | 154,198   |              |  | None    |               |  | Libor + 2.54%    | 
|Lehman Brothers Holdings Inc.(5)        |  |                | 173,977   |   |                   |   | 174,520   |              |  | None    |               |  | Libor + 3.5%     | 
|Lehman Brothers Holdings Inc.(6)        |  |                | 176,860   |   |                   |   | 177,388   |              |  | (6      | )             |  | Libor + 1.8%     | 
|Lehman Brothers Holdings Inc.(7)        |  |                | 39,743    |   |                   |   | 39,873    |              |  | (7      | )             |  | 8.0%             | 
|Metropolitan Life Insurance(8)          |  |                | 94,563    |   |                   |   | 94,937    |              |  | (9      | )             |  | 8.08%            | 
|Other Mortgage Notes Payable(10)        |  |                | 354,392   |   |                   |   | 356,882   |              |  | Various |               |  | (10)             | 
|Unsecured financing                     |  |                | 1,509     |   |                   |   | 1,509     |              |  | None    |               |  | 10.5%            | 
|Capital lease obligations               |  |                | 38,715    |   |                   |   | 39,954    |              |  |         |               |  |                  | 
|                                        |  |                |           |   |                   |   |           |              |  |         |               |  |                  | 
|                                        |  | $              | 2,828,531 |   |                   | $ | 2,826,543 |              |  |         |               |  |                  | 
|Less current portion:                   |  |                |           |   |                   |   |           |              |  |         |               |  |                  | 
|Mortgage debt-assets held for sale (12) |  |                | (60,812   | ) |                   |   | (45,835   | )            |  |         |               |  |                  | 
|Current portion of borrowings           |  |                | (394,662  | ) |                   |   | (385,786  | )            |  |         |               |  |                  | 
|                                        |  |                |           |   |                   |   |           |              |  |         |               |  |                  | 
|Long term debt                          |  | $              | 2,373,057 |   |                   | $ | 2,394,922 |              |  |         |               |  |                  | 
|                                        |  |                |           |   |                   |   |           |              |  |         |               |  |                  | 

---

|(1) |  | The one-month LIBOR rate at March 31, 2003 was 1.30%. The rate increased from LIBOR plus 3.00% to LIBOR plus 3.75% on January 24, 2002.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | In January 2003, the Company repaid $7,708 under the term loans and $2,246 is to be repaid by December 31, 2003 and $5,000 is to be repaid each six months until
the final payment of principal which is due on June 30, 2006.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | The rate increased from LIBOR plus 3.75% to LIBOR plus 4.75% on January 24, 2002.
|--- |  | ---------------------------------------------------------------------------------

|(4) |  | During 2002, four properties were sold, and debt was repaid in the amount of $153,627. The net book value of the remaining 17 properties is $391,457, net of
impairment, as of March 31, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | The net book value of the eight properties is $240,396, net of impairment, as of March 31, 2003. The Company elected to extend the term of the loan for an additional
twelve month period ending July 1, 2003. The Company paid an extension fee of $2,021. The loan agreement specifies an interest rate floor of 8%.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | The loan is collateralized by four hotel properties with a net book value of $220,780 as of March 31, 2003. The Company must make scheduled amortization payments as
set forth in the loan agreement. The loan agreement provides that the Company can elect to extend the term of the loan for three additional twelve month periods.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | The loan is collateralized by three hotel properties with a net book value of $108,536 as of March 31, 2003. The Company must make scheduled amortization payments as
set forth in the loan agreement. The loan agreement provides that the Company can elect to extend the term of the loan for two additional twelve month periods. Currently, LIBOR is below the minimum interest rate pursuant to the agreement, therefore,
the rate is fixed at 8% until such time as the LIBOR rate rises above the minimum.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | The loan is collateralized by six Doubletree hotels with a net book value of $171,133 as of March 31, 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------

|(9) |  | The loan requires monthly payments of principal and interest in the amount of $755 until the October 1, 2007 maturity date.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



|(10) |  | The loans are collateralized by eleven hotel properties and a parcel of land with a net book value of $717,932 as of March 31, 2003.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------

|(11) |  | Interest rates range from fixed rates of 6.5% to 9.11% and variable rates of LIBOR plus 1.5% to Prime plus 2.5%. The mortgages have a weighted average interest rate
as of March 31, 2003 of 4.92%. Maturity dates range from 2003 through 2023.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) |  | Subsequent to March 31, 2003, mortgage debt was paid down by a total of $57,016 due to the sale of assets.
|---- |  | ----------------------------------------------------------------------------------------------------------



On March 4, 2003, the Company entered into a fourth amendment
and restatement of its senior credit facilities. The fourth amendment and restatement includes the following:



| |  |  | an increase in the letter of credit availability under the revolving facility from $75 million to $90 million;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | waivers and consents by the lenders to any resolution of issues surrounding certain under-performing properties;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | extension of the outside date by which the Company must grant mortgage liens to the lenders on certain excluded properties under the credit facilities; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | authorization to effect certain administrative organizational changes to the Companys corporate structure.
| | - |  | -----------------------------------------------------------------------------------------------------------



On March 1, 2003, a mortgage note with a balance of $3,999
with TIB/Bank of the Keys was amended extending the maturity from March 31, 2003 to June 1, 2003 with a fixed interest rate of 6.75%.



11



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





4.    Derivatives:



The Company manages its debt portfolio by using interest rate caps and swaps to achieve an overall desired position of fixed and floating rates. The fair value of interest rate hedge contracts is estimated based on quotes from the
market makers of these instruments and represents the estimated amounts the Company would expect to receive or pay to terminate the contracts. Credit and market risk exposures are limited to the net interest differentials. At March 31, 2003, the
estimated fair value of the interest rate hedges represented a liability of $89,379. The Company has no embedded derivatives under SFAS 133, as amended, at March 31, 2003.



The following table represents the derivatives in place as of March 31, 2003:



|                                   |  | Notional Amount |         | Maturity Date |            | Swap Rate |      |         | Cap Rate |      |      | Floor Rate |      |      | Trigger Level |      |         | Fair Market Value |  
|---------------------------------- |  | --------------- | ------- | ------------- | ---------- | --------- | ---- | ------- | -------- | ---- | ---- | ---------- | ---- | ---- | ------------- | ---- | ------- | ----------------- | -
|Type of Hedge:                     |  |                 |         |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   |  
|Interest Rate Cap                  |  | $               | 176,846 |               | 08/10/2003 |           | n/a  |         |          | 7.25 | %    |            | n/a  |      |               | n/a  |         |                   | $
|Interest Rate Cap                  |  |                 | 18,990  |               | 07/03/2004 |           | n/a  |         |          | 6.50 | %    |            | n/a  |      |               | n/a  |         |                   |  
|Interest Rate Cap                  |  |                 | 27,680  |               | 07/03/2004 |           | n/a  |         |          | 7.10 | %    |            | n/a  |      |               | n/a  |         |                   |  
|Interest Rate Cap                  |  |                 | 42,760  |               | 07/03/2004 |           | n/a  |         |          | 8.10 | %    |            | n/a  |      |               | n/a  |         |                   |  
|Interest Rate Cap                  |  |                 | 42,760  |               | 07/03/2004 |           | n/a  |         |          | 9.70 | %    |            | n/a  |      |               | n/a  |         |                   |  
|Interest Rate Cap                  |  |                 | 26,150  |               | 08/02/2004 |           | n/a  |         |          | 8.50 | %    |            | n/a  |      |               | n/a  |         |                   |  
|Structured Collar                  |  |                 | 180,000 |               | 11/04/2004 |           | n/a  |         |          | 6.60 | %(1) |            | 5.65 | %(2) |               | n/a  |         |                   |  
|Interest Rate Cap                  |  |                 | 3,943   |               | 07/01/2005 |           | n/a  |         |          | 9.75 | %    |            | n/a  |      |               | n/a  |         |                   |  
|Interest Rate Cap                  |  |                 | 106,000 |               | 07/01/2005 |           | n/a  |         |          | 9.75 | %    |            | n/a  |      |               | n/a  |         |                   |  
|                                   |  |                 |         |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   |  
|                                   |  | $               | 625,129 |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   | $
|                                   |  |                 |         |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   |  
|                                  
|Interest Rate Swap                 |  | $               | 23,230  |               | 09/30/2005 |           | 4.62 | %       |          | n/a  |      |            | n/a  |      |               | n/a  |         |                   | $
|Interest Rate Swap                 |  |                 | 23,624  |               | 12/31/2005 |           | 7.00 | %       |          | n/a  |      |            | n/a  |      |               | 5.61 | %       |                   |  
|Interest Rate Swap                 |  |                 | 14,391  |               | 04/01/2005 |           | 3.92 | %-4.73% |          | 6.50 | %    |            | n/a  |      |               | 5.50 | %       |                   |  
|Interest Rate Swap                 |  |                 | 44,062  |               | 08/01/2005 |           | 4.36 | %-5.25% |          | 7.85 | %    |            | n/a  |      |               | 5.75 | %       |                   |  
|Interest Rate Swap5 year Knockout |  |                 | 150,000 |               | 03/06/2005 |           | 6.10 | %-6.75% |          | n/a  |      |            | n/a  |      |               | 7.00 | %-8.50% |                   |  
|Interest Rate Swap5 year Knockout |  |                 | 550,000 |               | 03/07/2005 |           | 6.10 | %-6.75% |          | n/a  |      |            | n/a  |      |               | 7.00 | %-8.50% |                   |  
|                                   |  |                 |         |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   |  
|                                   |  | $               | 805,307 |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   | $
|                                   |  |                 |         |               |            |           |      |         |          |      |      |            |      |      |               |      |         |                   |  

---

|(1) |  | If on a reset date LIBOR is greater than or equal to 8% but less than 9.5%, the cap rate shall not be effective. If on a reset date, LIBOR is equal to or greater
than 9.5%, then the cap rate shall be 9.5%
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | If on a reset date, LIBOR is equal to or less than 5.1%, then the floor rate is 5.65%
|--- |  | -------------------------------------------------------------------------------------



In the first quarter of 2003, the Company recorded a gain of $1,652 for the change in the fair market value
of the interest rate hedge contracts through earnings, and a reduction of $1,374 (net of taxes of $915) through other comprehensive income. Also, in the first quarter of 2003, the Company recorded amortization of $1,145 (net of taxes of $764) to
earnings as a reduction of the transitional adjustment that was recorded in other comprehensive income in 2001. Additionally, the Company paid $11,411 in settlement payments for the ineffective hedges during the first quarter of 2003.



Accounting for Derivatives and Hedging Activities



On the date the Company enters into a
derivative contract, it designates the derivative as a hedge of (a) a forecasted transaction or (b) the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (a cash flow hedge).
Currently, the Company has only entered into derivative



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



contracts designated as cash flow hedges. Changes in the fair value of a derivative that is highly effective and that is designated and
qualifies as a cash flow hedge, to the extent that the hedge is effective, are recorded in other comprehensive income until earnings are affected by the variability of cash flows of the hedged transaction (e.g., until periodic settlements of a
variable-rate asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the fair value of the derivative exceed the variability in the cash flows of the forecasted transaction) is
recorded in current-period earnings. Changes in the fair value non-hedging instruments are reported in current-period earnings.



The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective
and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to (1) specific assets and liabilities on the balance sheet or (2) specific firm commitments or forecasted
transactions. The Company also formally assesses (both at the hedges inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged
items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, the Company discontinues hedge accounting
prospectively.



The Company discontinues hedge
accounting prospectively when (1) it determines that the derivative is no longer effective in offsetting changes in the cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) the derivative
expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; or (5) management determines that designating
the derivative as a hedging instrument is no longer appropriate.



When the Company discontinues hedge accounting because it is no longer probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in accumulated other
comprehensive income and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an
additional two-month period of time thereafter, the gains and losses that were accumulated in other comprehensive income will be recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative
remains outstanding, the Company will carry the derivative at its fair value on the balance sheet, recognizing changes in the fair value in current-period earnings.



5.    Comprehensive Income:



SFAS No. 130, Reporting Comprehensive Income establishes standards for reporting and displaying
comprehensive income and its components. Total comprehensive income for the relevant periods is calculated as follows:



|                                                   |  | Three Months Ended March 31, |         
|-------------------------------------------------- |  | ---------------------------- | --------
|                                                   |  | 2003                         |         
|Net loss                                           |  | $                            | (107,413
|Unrealized (loss) gain on securities held for sale |  |                              | (183    
|Unrealized foreign translation loss                |  |                              | (27     
|Unrealized gain on derivative instruments          |  |                              | 2,519   
|                                                   |  |                              |         
|Total comprehensive income                         |  | $                            | (105,104
|                                                   |  |                              |         



13



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





6.    Computation of Earnings Per Share:



Basic and diluted loss per share have been computed as follows:



|                                                                                       |  | Three Months Ended March 31, 2003 |          |   | Three Months Ended March 31, 2002 |  
|-------------------------------------------------------------------------------------- |  | --------------------------------- | -------- | - | --------------------------------- | -
|                                                                                       |  | Basic and Diluted (1), (2)        |          |   | Basic and Diluted (1), (2)        |  
|Loss from continued operations                                                         |  | $                                 | (88,015  | ) |                                   | $
|Loss from discontinued operations                                                      |  |                                   | (19,398  | ) |                                   |  
|Preferred stock dividends                                                              |  |                                   | (37,799  | ) |                                   |  
|                                                                                       |  |                                   |          |   |                                   |  
|Loss attributable to common shareholders before cumulative effect of accounting
change |  |                                   | (145,212 | ) |                                   |  
|Cumulative effect of accounting change                                                 |  |                                   |         |   |                                   |  
|                                                                                       |  |                                   |          |   |                                   |  
|Net loss attributable to common shareholders                                           |  | $                                 | (145,212 | ) |                                   | $
|                                                                                       |  |                                   |          |   |                                   |  
|Weighted average number of shares outstanding                                          |  |                                   | 168,004  |   |                                   |  
|                                                                                       |  |                                   |          |   |                                   |  
|Loss per share:                                                                        |  |                                   |          |   |                                   |  
|Loss from continued operations                                                         |  | $                                 | (0.75    | ) |                                   | $
|Loss from discontinued operations                                                      |  |                                   | (0.12    | ) |                                   |  
|Accounting changes                                                                     |  |                                   |         |   |                                   |  
|                                                                                       |  |                                   |          |   |                                   |  
|Net loss per common share                                                              |  | $                                 | (0.87    | ) |                                   | $
|                                                                                       |  |                                   |          |   |                                   |  

---

|(1) |  | For the three months ended March 31, 2003, the dilutive effect of unvested stock grants of 13,427 and 156,874 shares of preferred stock were not included in the
computation of diluted earnings per share because they are anti-dilutive. For the three months ended March 30, 2002, the dilutive effect of unvested stock grants of 13,506 and 141,119 shares of preferred stock were not included in the computation of
diluted earnings per share because they are anti-dilutive.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | For the three months ended March 31, 2003, options to purchase 14,268 shares of common stock at prices ranging from $0.24 to $30.40 were outstanding but not included
in the computation because the effect would be anti-dilutive. For the three months ended March 31, 2002, options to purchase 13,268 shares of common stock at prices ranging from $0.61 to $30.40 were outstanding but not included in the computation
because the effect would be anti-dilutive.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7.    Commitments and Contingencies:



On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the Northern District of California against Patriot, Wyndham, their respective operating partnerships and Paine Webber Group, Inc.
This action, Johnson v. Patriot American Hospitality, Inc., et al., No. C-99-2153, was commenced on behalf of all former holders of Bay Meadows stock during a class period from June 2, 1997 to the date of filing. The action asserts securities fraud
claims and alleges that the purported class members were wrongfully induced to tender their shares as part of the Patriot/Bay Meadows merger based on a fraudulent prospectus. The action further alleges that defendants continued to defraud
shareholders about their intentions to acquire numerous hotels and saddle the Company with massive debt during the class period. Three other actions against the same defendants subsequently were filed in the Northern District of California: (i)
Ansell v. Patriot American Hospitality, Inc.,



14



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



et al., No. C-99-2239 (filed May 14, 1999), (ii) Sola v. Paine Webber Group, Inc., et al., No. C-99-2770 (filed June 11, 1999), and
(iii) Gunderson v. Patriot American Hospitality, Inc., et al., No. C 99-3040 (filed June 23, 1999). Another action with substantially identical allegations, Susnow v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1354-T (filed June 15,
1999) also subsequently was filed in the Northern District of Texas. By order of the Judicial Panel on Multidistrict Litigation, these actions along with certain actions identified below have been consolidated in the Northern District of California
for consolidated pretrial purposes. On or about October 13, 2000, the defendants moved to dismiss the actions. On or about August 15, 2001, the court granted Defendants motions to dismiss the action, dismissing some of the claims with
prejudice and granting leave to replead certain other claims in the Complaint. On or about October 15, 2001, plaintiff filed an amended complaint seeking substantially the same relief as in the original complaint. On or about December 20, 2001, the
defendants moved to dismiss the amended complaint. On or about September 3, 2002, the court granted in part and denied in part Defendants motion to dismiss. The Court did not dismiss certain of Plaintiffs claims under Section 11 of the
Securities Act of 1933 and Section 12(b) of the Securities Exchange Act of 1934. An answer to the complaint has been filed. The Company intends to defend the suits vigorously.



On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American Hospitality, Inc., et al.,
No. 3-99-CV1416-D, was filed in the Northern District of Texas against Patriot, Wyndham, James D. Carreker and Paul A. Nussbaum. This action asserts securities fraud claims and alleges that, during the period from January 5, 1998 to December
17, 1998, the defendants defrauded shareholders by issuing false statements about the Company. The complaint was filed on behalf of all shareholders who purchased Patriot American and Wyndham stock during that period. Three other actions, Gallagher
v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June 23, 1999, David Lee Meisenburg, et al. v. Patriot American Hospitality, Inc., Wyndham International, Inc., James D. Carreker, and Paul A. Nussbaum Case No.
3-99-CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1866-D, filed on or about August 27, 1999, allege substantially the same allegations. By orders of the Judicial Panel on
Multidistrict Litigation, these actions have been consolidated with certain other shareholder actions and transferred to the Northern District of California for consolidated pre-trial purposes. On or about October 20, 2000, the defendants moved to
dismiss the actions. On or about August 15, 2001, the court granted Defendants motions to dismiss the action, dismissing some of the claims with prejudice and granting leave to replead certain other claims in the Complaint. On or about October
15, 2001, plaintiff filed an amended complaint seeking substantially the same relief as in the original complaint. On or about December 20, 2001, the defendants moved to dismiss the amended complaint. On or about September 3, 2002, the court
dismissed in its entirety the complaint and granted plaintiffs leave to amend. On or about December 2, 2002, Plaintiffs filed an amended complaint. The Company intends to defend the suits vigorously.



On or about October 26, 2000, a demand for arbitration was
filed on behalf of John W. Cullen, IV, William F. Burruss, Heritage Hotel Management & Investment Ltd. And GH-Resco, L.L.C. naming Wyndham International, Inc. f/k/a Patriot American Hospitality, Inc. as respondent. The Demand for
Arbitration claims that the claimants and Wyndham are parties to a Contribution Agreement dated February 28, 1997 and that Wyndham is in breach of that agreement. Claimants assert that Wyndham breached its agreement to pay respondents additional
consideration under the Contribution Agreement by, among other things, allegedly denying claimants compensation due to them in connection with various transactions initiated by claimants and provided to Wyndham, which allegedly provided Wyndham with
growth and added revenue. In addition, claimants assert that Wyndham failed to provide claimants with various other amounts due under the Contribution Agreement, failed to indemnify claimants for certain expenses and intentionally and negligently
mismanaged Wyndhams business. Claimants do not specify the amount of damages sought. The matter currently is pending before an arbitrator. The parties are discussing a settlement of the matter; however, settlement documents have not been



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



finalized. In the event that the parties do not reach a mutually agreed settlement, the Company intends to defend the claims vigorously.



On May 29, 2002, the State of Florida Office of
the Attorney General Department of Legal Affairs filed a lawsuit in Leon County, Florida (Case No. 02-CA-1296) naming the Company, Patriot and four current or former Wyndham employees as defendants. In this case, the Attorney General alleged that
the imposition of energy surcharges, resort fees and automatic service fees violates the States Deceptive and Unfair Trade Practices Act and False Claims Act. The Company filed a motion to dismiss this suit which was granted in part. The
Attorney General has filed a notice of appeal, appealing the dismissal of the individual defendants. The Company intends to vigorously defend this lawsuit and appeal.



On June 20, 2002, plaintiffs in the case entitled Roller-Edelstein, et al. v. Wyndham International, Inc., et
al., filed an amended complaint in Dallas County District Court (case no. 02-04946-A) alleging that supplemental fees charged to hotel guests constituted common law fraud, breach of contract and violated Texas Deceptive Trade Practices Act.
The plaintiffs claim to represent a nationwide class and have estimated damages in excess of ten million dollars. The Company has answered this complaint and anticipates vigorously defending it.



On February 18, 2003, a lawsuit was filed by Joseph Lopez and
Alberto Jose Martinez, on behalf of themselves and all others similarly situated, against Wyndham International, Inc., et al alleging that the Company violated certain provisions of the California Labor Code and the California Business and
Professions Code concerning wage and hour requirements. The plaintiffs claim to represent a class. The plaintiffs also allege the Company breached a fiduciary duty to them and the other class members by seeking to take advantage of them by failing
to pay them appropriate wages. The plaintiffs seek compensatory and punitive damages on behalf of themselves and the class in an unspecified amount for all causes of action. The Company intends to vigorously defend the lawsuit.



The Company is a party to a number of other claims and
lawsuits arising out of the normal course of business. However, the Company does not consider the ultimate liability with respect to these other claims and lawsuits to be material in relation to the consolidated financial condition or results of
operations of the Company.



8.    Dividends



The Company does not anticipate paying a dividend to the common shareholders and is prohibited under the terms of the senior credit facility and increasing rate loans facility from paying dividends on the class A common stock. Also,
the Company is prohibited under the terms of the January 24, 2002 amendments to the senior credit facility and increasing rate loans facility from paying the cash portion of any dividends on the preferred stock. However, the holders of the preferred
stock are entitled to receive on a quarterly basis a dividend equal to 9.75% per annum on a cumulative basis payable in cash and additional shares of preferred stock. In addition, according to the terms of the series A and B preferred stock, if the
cash dividends on the preferred stock are in arrears and unpaid for a period of 60 days or more, then an additional amount of dividends shall accrue at a rate per annum equal to 2.0% of the stated amount of each share of preferred stock then
outstanding from the last payment date on which cash dividends were to be paid in full until such time as all cash dividends in arrears have been paid in full. Such additional dividends shall be cumulative and payable in additional shares of
preferred stock.



During the three months ended
March 31, 2003, the Company issued stock dividends of approximately 239,016 shares of series A and series B preferred stock with a value of $23,902. The Company deferred payment of the cash portion of the dividends of approximately $7,312. The
amount has been included in accounts payable



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



and accrued expenses in the accompanying consolidated balance sheet. In addition, the Company issued an additional stock dividend of 65,853
shares of series A and series B preferred stock with a value of $6,585 in payment of additional dividends at a rate of 2.0% per annum as cash dividends on the preferred stock were in arrears for at least 60 days as of March 31, 2003.



9.    Segment Reporting:



The Company classifies its business into proprietary owned
brands and non-proprietary brand hotel divisions, under which it manages the business.



Wyndham is the brand umbrella under which all of its proprietary products are marketed. It includes three four-star, upscale hotel brands that offer full-service accommodations to business and leisure
travelers, as well as the five-star luxury resort brand.



Description of reportable segments



The Company has three reportable segments: Wyndham branded properties, non-proprietary branded hotel properties and other. Prior years reportable segments have been restated to conform to current year presentation.



| |  |  | The Wyndham branded properties are: Wyndham Hotels & Resorts®, Wyndham Luxury Resorts®, Wyndham
Garden Hotels®, and Summerfield Suites®by Wyndham. Wyndham Hotels & Resorts®are upper upscale, full-service hotel properties that contain
an average of 300 hotel rooms, generally between 15,000 and 315,000 square feet of meeting space and a full range of guest services and amenities for business and leisure travelers, as well as conferences and conventions. The hotels are located
primarily in the central business districts and dominant suburbs of major metropolitan markets and are targeted to business groups, meetings, and individual business and leisure travelers. These hotels offer elegantly appointed facilities and high
levels of guest service. Wyndham Luxury Resorts®are five-star hotel properties that are distinguished by their focus on incorporating the local environment into every aspect of the property, from
decor to cuisine to recreation. The luxury collection includes the Golden Door Spa, one of the worlds preeminent spas. Wyndham Garden Hotels®are full-service properties, which serve individual business
travelers and are located principally near major airports and suburban business districts. Amenities and services generally include a three-meal restaurant, signature Wyndham Garden Hotels®libraries and laundry
and room service. Summerfield Suites®by Wyndhamoffers guests the highest quality lodging in the upper upscale all-suites segment. Each suite has a fully equipped kitchen, a spacious living room and a private
bedroom. Many suites feature two bedroom, two bath units. The hotels also have a swimming pool, exercise room and other amenities to serve business and leisure travelers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Non-proprietary branded properties include all properties which are not Wyndham branded hotel properties. The properties consist of non-Wyndham branded assets, such
as Doubletree®, Hilton®, Holiday Inn®, Marriott®, Ramada®, Radisson®and Hyatt®
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other includes management fee and service fee income, interest and other income, general and administrative costs, interest expense, depreciation and amortization
and other charges. General and administrative costs, interest expense and depreciation and amortization are not allocated to each reportable segment; therefore, they are reported in the aggregate within this segment.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





Measurement of segment profit or loss



The Company evaluates performance based on the operating income or loss from each business segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.



|Three months ended March 31, 2003 |  | Wyndham branded |         | Non proprietary branded |   | Other  |  |   | Total    |  
|--------------------------------- |  | --------------- | ------- | ----------------------- | - | ------ |  | - | -------- | -
|Total revenue                     |  | $               | 336,679 |                         | $ | 77,084 |  | $ | 5,676    |  
|Operating income (loss)           |  |                 | 68,648  |                         |   | 14,106 |  |   | (231,246 | )
|                                 
|Three months ended March 31, 2002 |  | Wyndham branded |         | Non proprietary branded |   | Other  |  |   | Total    |  
|Total revenue                     |  | $               | 338,729 |                         | $ | 96,734 |  | $ | 6,575    |  
|Operating income (loss)           |  |                 | 78,603  |                         |   | 21,616 |  |   | (128,709 | )

---



The following table represents revenue information by geographic area for the three months ended March 31, 2003 and 2002,
respectively. Revenues are attributed to the United States and its territories or International based on the location of hotel properties.



|         |  | Three Months ended March 31, 2003
|-------- |  | ---------------------------------
|         |  | United States                    
|Revenues |  | $                                
|        
|         |  | Three Months ended March 31, 2002
|         |  | United States                    
|Revenues |  | $                                



10.    Supplemental Cash Flow Disclosure:



During the three months ended March 31, 2003, the Company issued a stock dividend of 239,016 shares of series A and series B preferred stock with a value of $23,902. The Company deferred payment of the
cash portion of the dividend of approximately $7,312. The amount has been included in accounts payable and accrued expenses in the accompanying consolidated balance sheet. In addition, the Company issued an additional stock dividend of 65,853 shares
of series A and series B preferred stock with a value of $6,585 in payment of additional dividends at a rate of 2.0% per annum as cash dividends on the preferred stock were in arrears for at least 60 days as of March 31, 2003.



During the three months ended March 31, 2003, the Company
recorded an accrual of $3,435 as a result of the change in the fair market value of the derivatives with the offset recognized as a net gain of $1,652 and an increase to other comprehensive income of $1,374 (net of taxes of $915). Also, in the first
quarter of 2003, the Company recorded amortization of $1,146 (net of taxes of $764) to earnings as a reduction of the transitional adjustment that was recorded in other comprehensive income in 2001.



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)





11.    Subsequent Event:



On April 4, 2003, the Company sold eight Wyndham Garden hotels for $46,100. As part of the sale agreement, the eight Garden hotels will retain the Wyndham flag for a term of up to five years under a franchise agreement,
which term may be terminated by the Company on 90 days prior written notice or by the franchisee on 30 days prior written notice. These properties have been classified as assets held for sale in the balance sheet as of March 31, 2003 and the results
of operations have been reported separately as discontinued operations. As a result of these asset sales, the Company paid down mortgage debt by $57,016 (see note 2).



On April 29, 2003, the Company sold the Marriott Hutchinson Island Beach Resort & Marina in Stuart,
Florida (see note 2).



A subsidiary of the
Company announced on May 12, 2003, the lease termination of 12 Wyndham Hotels and Garden Hotels by Hospitality Properties Trust (HPT). Also, on April 28, 2003, a subsidiary of the Company announced the lease termination of 15 Summerfield
Suites®by Wyndham properties by HPT. The subsidiaries of the Company are still in negotiations with HPT on the final franchise agreements of the 12 Wyndham Hotels and Garden Hotels and the 15 Summerfield
properties. The terminations will result in a non-cash write-off of approximately $150 million for the leases remaining book value, of which $104.3 million was written-off in the first quarter of 2003 and the remainder will be written-off in
the second quarter of 2003.



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##### Table of Contents



ITEM
2.    
Managements Discussion and Analysis of Financial Condition and Results of Operations



The following discussion and analysis should be read in conjunction with the Managements Discussion and Analysis of Financial
Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2002.



Certain statements in this Form 10-Q constitute forward-looking statements as that term is defined under §21E of the
Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. Statements that are predictive in
nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates, thinks,
and similar expressions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or
performance expressed or implied by these forward-looking statements. These factors include, among other things, those matters discussed under the caption Risk Factors, as well as the following:



| |  |  | the impact of general economic conditions in the United States;
| | - |  | ---------------------------------------------------------------



| |  |  | industry conditions, including competition;
| | - |  | -------------------------------------------



| |  |  | business strategies and intended results;
| | - |  | -----------------------------------------



| |  |  | our ability to effect sales of our assets on terms and conditions favorable to us;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | our ability to integrate acquisitions into our operations and management;
| | - |  | -------------------------------------------------------------------------



| |  |  | risks associated with the hotel industry and real estate markets in general;
| | - |  | ----------------------------------------------------------------------------



| |  |  | the impact of terrorist activity or war, threats of terrorist activity or war and responses to terrorist activity on the economy in general and the travel and hotel
industries in particular;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | travelers fears of exposure to contagious diseases;
| | - |  | ----------------------------------------------------



| |  |  | capital expenditure requirements;
| | - |  | ---------------------------------



| |  |  | legislative or regulatory requirements; and
| | - |  | -------------------------------------------



| |  |  | access to capital markets.
| | - |  | --------------------------



Although we believe that these statements are based upon reasonable assumptions, we can give no assurance that our goals will be achieved.
Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this Form 10-Q. We assume no obligation to update or revise
them or provide reasons why actual results may differ.



Results of operations:



General



As of March 31,
2003, we had 147 owned and leased hotels with approximately 37,200 guestrooms as compared to 166 owned and leased hotels with approximately 43,118 guestrooms at March 31, 2002. This decrease was a result of hotels sold during that twelve month
period. As of March 31, 2003, we managed 26 hotels and franchised 31 hotels as compared to 30 managed hotels and 24 franchised hotels at March 31, 2002.



We continue to sell our non-strategic assets to reduce debt. At March 31, 2003, we had approximately $113.7 million of assets classified
as held for sale, net of impairment of $40.6 million. We classified certain assets as held for sale based on our management having the authority and intent of entering into commitments for sale transactions expected to close in the next twelve
months.



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On March 4,
2003, we entered into a fourth amendment and restatement of our senior credit facilities. The fourth amendment and restatement includes the following:



| |  |  | an increase in the letter of credit availability under our revolving facility from $75 million to $90 million;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | waivers and consents by the lenders to any resolution of issues surrounding certain under-performing properties;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | extension of the outside date by which we must grant mortgage liens to the lenders on certain excluded properties under the credit facilities; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | authorization to effect certain administrative organizational changes to our corporate structure.
| | - |  | -------------------------------------------------------------------------------------------------



Despite our successful efforts to amend our credit facilities,
there can be no assurance that we will be able to meet our debt service obligations and, to the extent that we cannot, we may lose some or all of our assets, including hotel properties. Continuing adverse economic conditions could cause the terms on
which we borrow to worsen. Those circumstances, if we are in need of funds to repay indebtedness, could force us to liquidate one or more investments in properties at times that may not permit realization of the maximum return on those investments.
The foregoing risks associated with our debt obligations may inhibit our ability to raise capital in both the public and private markets and may have a negative impact on our credit rating.



During 2003, we have scheduled principal payments and debt
maturities of approximately $380.6 million. Of that amount, we can elect to extend $176.9 million for three additional twelve month periods. We are seeking to refinance the remaining mortgages prior to their maturities in 2003; however, there can be
no assurance that we will be able to do so.



A
sluggish economy, a lack of consumer confidence in the stock market and other national and world events have created a significant amount of uncertainty about future prospects of national and world economies. The overall long-term effect on us and
the lodging industry is also uncertain. In the face of such uncertainty, we have developed and implemented a contingency plan focused particularly on cost management. At the present time, however, it is not possible to predict either the severity or
duration of such declines, but weaker hotel performance will, in turn, have an adverse impact on our business, financial condition, and results of operations.



Results of Operations: Three months ended March 31, 2003 compared with the three months ended March 31, 2002



Our hotel revenues were $413,763,000 and $435,463,000 for the
three months ended March 31, 2003 and 2002, respectively. Approximately $9,190,000 of the decrease in our hotel revenues is attributable to those hotels that were sold in 2002. The remaining decrease is attributable to the declining revenues
throughout our owned and leased hotel portfolio. While occupancy increased 4.60%, revenue per available room, or RevPAR and average daily rate, or ADR decreased 2.50% and 6.80%, respectively, for the three months ended March 31, 2003 as compared to
the same period in 2002.



Our hotel expenses were
$321,391,000 and $324,905,000 for the three months ended March 31, 2003 and 2002, respectively. The decrease of $3,514,000 in our hotel expenses was in part due to hotels that were sold in 2002 and staffing reductions at the hotels and other cost
saving initiatives we implemented as our hotel revenues declined. This decrease was offset in part by an increase of approximately $2,122,000 in our property and health insurance premiums during the three months ended March 31, 2003.



Our management fee and service fee income was $4,420,000 and
$4,470,000 for the three months ended March 31, 2003 and 2002, respectively. The decrease is primarily a result of reductions in hotel revenue upon which the fees are based and the termination of certain contracts during 2002. The decrease was
offset by 10 new management and franchise contracts acquired subsequent to March 31, 2002.



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Our interest
and other income was $1,256,000 and $2,105,000 for the three months ended March 31, 2003 and 2002, respectively. Approximately $517,000 of the decrease in interest and other income can be attributed to

dividend and interest income from investments that were sold in 2002. The remaining decrease is attributable to the reductions of our note receivables in
2003 as compared to the same period in 2002.



Our
general and administrative expenses were $15,004,000 and $18,903,000 for the three months ended March 31, 2003 and 2002, respectively. The decrease in our general and administrative expenses for the three months ended March 31, 2003 were due to the
following: reductions in bonus accruals of $1,971,000, reductions in deferred compensation expenses of $336,000, reductions in legal fees of $2,004,000, reductions in development and acquisition costs of $992,000, reductions in conversion costs of
$752,000 and reductions in management contract costs of $1,710,000. These reductions in general and administrative costs were offset by increases in receivable write-offs of $3,965,000 and a litigation settlement accrual of $1,472,000.



Our interest expense was $44,989,000 and $60,205,000 for the
three months ended March 31, 2003 and 2002, respectively. This decrease is primarily a result of a reduction in the amount of our total debt. At March 31, 2003 and 2002, we had approximately $2.8 billion and $3.4 billion of debt, respectively. Also,
the one-month LIBOR rate was 1.30% and 1.88% as of March 31, 2003 and 2002, respectively, and the weighted average interest rate as of March 31, 2003 was 5.80% as compared to 6.17% as of March 31, 2002.



Our depreciation and amortization expense was $61,557,000 and
$62,917,000 for the three months ended March 31, 2003 and 2002, respectively. The decrease in depreciation expense is due to non-depreciation of certain fully depreciated assets subsequent to the three months ended March 31, 2002.



The benefit for income taxes was $61,340,000 and $10,442,000
for the three months ended March 31, 2003 and 2002, respectively. The increase in the tax benefit is due to impairment losses resulting in temporary differences between generally accepted accounting principles, or GAAP, and tax.



Minority interests share of loss in consolidated
subsidiaries was $289,000 and $627,000 for the three months ended March 31, 2003 and 2002, respectively. The decrease is attributable to the decrease in the allocation of losses used in the computation of minority interest.



For the three months ended March 31, 2003, we recorded a gain
of $1,652,000 as compared to a gain of $16,084,000 for the three months ended March 31, 2002 for the change in the fair market value of interest rate hedge contracts. In addition, a reduction of $1,374,000 (net of taxes of $915,000) and a charge of
$1,508,000 (net of taxes of $1,005,000) were recorded against other comprehensive income for the three months ended March 31, 2003 and 2002, respectively, for such change. Also, during the three months ended March 31, 2003 and 2002, we paid
$11,411,000 and $9,610,000 respectively, in settlement payments for ineffective hedges. In addition, we recorded amortization of $1,145,000 (net of taxes of $764,000) and $3,084,000 (net of taxes of $2,056,000) for the three months ended March 31,
2003 and 2002, respectively, to earnings as a reduction of the transitional adjustment that was recorded in other comprehensive income in 2001.



Loss from discontinued operations was $19,398,000 and $1,244,000 for the three months ended March 31, 2003 and 2002, respectively. The
increase in loss is attributable to the impairment charges of $16,966,000 (net of taxes of $11,311,000) for the assets held for sale recorded during the three months ended March 31, 2003.



Impairment loss was $108,385,000 and $162,000 for the three months ended March 31, 2003 and 2002,
respectively. The impairment loss includes $104,292,000 for the three months ended March 31, 2003, which is the write-off of the remaining book value of the terminated HPT leases. An additional write-off of approximately $46,000,000 will be recorded
in the second quarter of 2003.



Our adoption of
SFAS No. 142 during the three months ended March 31, 2002, resulted in the cumulative effect of an accounting change of $324,102,000 to reflect an adjustment to goodwill being recognized in our consolidated statement of operations.



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Our resulting
net loss for the three months ended March 31, 2003 was $107,413,000 compared to a net loss of $343,177,000 for the three months ended March 31, 2002.



Results of reporting segments:



Our results of operations are classified into three reportable segments: (1) Wyndham branded hotel properties (2) non-proprietary branded
hotel properties and (3) other. We have restated reportable segments for the three months ended March 31, 2002 to conform to the three months ended March 31, 2003 presentation.



For the three months ended March 31, 2003 compared with the three months ended March 31, 2002



Wyndham branded properties include Wyndham
Hotels & Resorts®, Wyndham Luxury Resorts®, Wyndham Gardens hotels®and Summerfield Suites®by Wyndham. This segment represented approximately 80.30% and 76.60% of our total revenue for the three months ended March 31, 2003 and
2002, respectively. Total revenue for this segment was $336,679,000 compared to $338,729,000 for the three months ended March 31, 2003 and 2002, respectively. Operating income for this segment was $68,648,000 compared to $78,603,000 for the
three months ended March 31, 2003 and 2002, respectively. Decreases in revenue and operating income for this segment can be primarily attributed to a decline in ADR of 7.2% in the three months ended March 31, 2003. The decrease in ADR was partially
offset by an increase in occupancy of 6.7%. Also, operating results were impacted by increases in our fixed expenses, such as property and health insurance, without an offsetting proportional increase in our revenues during the three months ended
March 31, 2003.



Non-proprietary branded
properties, including Doubletree®, Hilton®, Holiday Inn®, Marriott®, Ramada®, Radisson®, and Hyatt®, represented approximately 18.4% and 21.9% of our total revenue for each of the three months ended March 31, 2003 and 2002, respectively. Total
revenue for this segment was $77,084,000 compared to $96,734,000 for the three months ended March 31, 2003 and 2002, respectively. Operating income for this segment was $14,106,000 and $21,616,000 for the three months ended March 31, 2003 and 2002,
respectively. The decrease in both revenue and operating income is due in part to the sale of non-proprietary branded assets since 2002. Also, operating results were impacted by declines in ADR and occupancy of 6.8% and 1%, respectively, and by
increases in our fixed expenses, such as property and health insurance.



We originally identified 50 non-proprietary branded hotels as non-strategic assets that we intend to sell. We have sold 16 assets and 34 assets remain to be sold. However, these remaining 34 non-strategic assets will be held
until such time as the sales price meets or exceeds managements assessment of fair value. The 34 assets represented approximately 17% and 16% of our revenue for the three months ended March 31, 2003 and 2002, respectively.



Other represents revenue from various operating businesses,
including management and other service companies. Expenses in this segment are primarily interest, depreciation, amortization and corporate general and administrative expenses. Total revenue for the segment was $5,676,000 and $6,575,000 for the
three months ended March 31, 2003 and 2002, respectively. The overall $899,000 decrease in this segments revenue was primarily the result of lost management fees from contracts lost and the decline in hotel revenue. Operating losses for this
segment were $231,246,000 and $128,709,000 for the three months ended March 31, 2003 and 2002, respectively. The increase in operating loss of $102,537,000 was attributable to the increase in litigation settlement accrual of $1,472,000, receivable
write-off of $3,965,000, increase in loss on derivative instruments of $13,002,000 and $108,385,000 increase in impairment charges. The increases were offset by reductions in bonus accruals of $1,971,000, reduction in deferred compensation expenses
of $336,000, reductions in legal fees of $2,004,000, reductions in development and acquisition costs of $992,000, reductions in conversion costs of $752,000 and reductions in management contract costs of $1,710,000.



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Recent Events



During the four months ended April 30,
2003, we sold our investments in ten hotels, certain undeveloped land and a golf venture. We received net cash proceeds of approximately $34.6 million, after the repayment of mortgage debt of $64.4 million. We recorded a net loss of $1.2 million as
a result of these asset sales, net of impairment. Also, $8 million of the net cash proceeds was used by us to pay down a portion of the senior credit facility and increasing rate loan facility, and we retained the rest of the net cash proceeds in
accordance with the terms of the senior credit facilities.



One of our subsidiaries announced on May 12, 2003, the lease termination of 12 Wyndham Hotels and Garden Hotels by Hospitality Properties Trust (HPT). Also, on April 28, 2003, another of our subsidiaries announced the lease
termination of 15 Summerfield Suites®by Wyndham properties by HPT. These subsidiaries are still in negotiations with HPT on the final franchise agreements of the 12 Wyndham Hotels and
Garden Hotels and the 15 Summerfield properties. The terminations will result in a non-cash write-off of approximately $150 million for the leases remaining book value, of which $104.3 million was written-off in the first quarter of 2003 and
the remainder will be written-off in the second quarter of 2003.



Statistical Information



During 2003, our portfolio of 146 owned and leased hotels experienced a decline in ADR and REVPAR for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002 although occupancy increased or stayed
constant over such period. The following table sets forth certain statistical information for the 138 owned and leased hotels for 2003 and 2002 as if the hotels were owned or leased for the entire periods presented.



|                               |  | Three months ended March 31,
|------------------------------ |  | ----------------------------
|                               |  | Occupancy                   
|                               |  | 2003                        
|Wyndham Hotels & Resorts       |  | 71.2                        
|Wyndham Luxury Resorts         |  | 73.9                        
|Wyndham Garden Hotels          |  | 68.2                        
|Summerfield Suites by Wyndham  |  | 78.9                        
|Non-Proprietary Branded Hotels |  | 57.4                        
|                               |  |                             
|Weighted average               |  | 67.7                        
|                               |  |                             



Liquidity And Capital
Resources



Our cash and cash equivalents as
of March 31, 2003 were $76.8 million and our restricted cash was $146.2 million. Our cash and cash equivalents as of March 31, 2002 were $102.1 million and our restricted cash was $68.3 million. Included in restricted cash at March 31, 2003 is
$36.1 million which is a portion of the net proceeds received from the sale of a portfolio of thirteen hotels. The $36.1 million will be used to cure defaults, make payments on such debt, refinance all or any portion of the debt and/or extend
maturities and amortization payments in accordance with the credit facilities.



Cash Flow Provided by Operating Activities



Our principal source of cash flow is from the operations of the hotels that we own, lease and manage. Cash flows from operating activities
were $27.4 million and $21.9 million for the three months ended March 31, 2003 and 2002, respectively. Operational cash flows were positively impacted by lower interest expense payments of approximately $10 million as compared to the same period in
2002 due to the reduction in the amount of our total debt and the lower interest rates in 2003. This was offset in part by lower cash generated from hotel operations as a result of hotels sold and lower RevPar.



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Cash Flows
from Investing and Financing Activities



Cash flows provided by our investing activities were $12.4 million for the three months ended March 31, 2003, resulting primarily from proceeds received from the sale of assets during the period. This was offset by renovation
expenditures at certain hotels and changes in our restricted cash reserves during the period. Cash flows used in financing activities of $529,000 for the three months ended March 31, 2003 were primarily related to principal repayments made on our
debt and distributions made to limited partners.



Cash flows provided by our investing activities were $17.9 million for the three months ended March 31, 2002, resulting primarily from the changes in our restricted cash reserves and proceeds from the sale of assets during the
period. Cash flows used in financing activities of $104.7 million for the three months ended March 31, 2002 were primarily related to principal payments made on our debt and distributions made to limited partners.



Credit Facilities



As of March 31, 2003, we had approximately $171.4 million
outstanding under our revolving credit facility, $1.2 billion outstanding on term loans, and $447.7 million outstanding under our increasing rate loans facility. Additionally, we had outstanding letters of credit totaling $66.9 million. Also as of
March 31, 2003, we had $993.7 million of mortgage debt outstanding that encumbered 49 hotels and capital leases and other debt of $38.7 million, resulting in total indebtedness of approximately $2.8 billion. Included in the total indebtedness
is approximately $60.8 million of debt associated with assets held for sale. As of March 31, 2003, we had $235.8 million of additional availability under the revolving credit facility.



On March 4, 2003, we entered into a fourth amendment and
restatement of our senior credit facilities. The fourth amendment and restatement includes the following:



| |  |  | an increase in the letter of credit availability under our revolving facility from $75 million to $90 million;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | waivers and consents by the lenders to any resolution of issues surrounding certain under-performing properties;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | extension of the outside date by which we must grant mortgage liens to the lenders on certain excluded properties under the credit facilities; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | authorization to effect certain administrative organizational changes to our corporate structure.
| | - |  | -------------------------------------------------------------------------------------------------



We have considered our short-term liquidity needs and the
adequacy of adjusted estimated cash flows and other expected liquidity sources to meet these needs. We believe that our principal short-term liquidity needs are to fund our normal recurring expenses and our debt service requirements. We anticipate
that these needs will be fully funded from our cash flows provided by operating activities and, when necessary, from our revolving credit facility. In the past, we have generally met our long-term liquidity requirements for the funding of
activities, such as development, scheduled debt maturities, major renovations, expansions and other non-recurring capital improvements, through long-term secured and unsecured indebtedness and the proceeds from the sale of our assets.



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Under the
terms of the applicable credit facility, loan agreement, and lease agreement, as of March 31, 2003, our principal amortization and balloon payment requirements and our future five year minimum lease payments are summarized as follows:



|                                             |  | Payments due by year
|-------------------------------------------- |  | --------------------
|                                             |  | Total               
|                                             |  | (in thousands)      
|Long term debt and capital lease obligations |  | $                   
|Office leases(A)                             |  |                     
|Hotel and ground leases(A)                   |  |                     
|                                             |  |                     
|Total                                        |  | $                   
|                                             |  |                     

---

|(A) |  | Office, hotel and ground leases are operating leases and are included in operating expenses.
|--- |  | --------------------------------------------------------------------------------------------



For the remainder of 2003, we have scheduled principal
payments and debt maturities of approximately $380.6 million of which, subsequent to March 31, 2003, $57 million was paid down due to the sale of assets. Also, we can elect to extend $176.9 million for three additional twelve month periods. During
2004, we have scheduled principal payments and debt maturities of approximately $910.3 million. Of that amount, we can elect to extend $39.8 million for two additional twelve month periods. We are seeking to refinance the scheduled principal
payments and debt prior to their maturities in 2003 and 2004; however, there can be no assurance that we will be able to do so. Although occupancies have improved from very depressed levels following the events of September 11, 2001, at present, it
is not possible to predict either the severity or the duration of declines in the medium or long term on operations, liquidity, and capital resources (see page 14 of our December 31, 2002 Form 10-K Risks Related to Our
Indebtedness).



Dividends



We do not anticipate paying a dividend to
our common shareholders and we are prohibited under the terms of our senior credit facility and increasing rate loans facility from paying dividends on our class A common stock. For the six year period beginning September 30, 1999, dividends on our
series A and series B preferred stock are payable partly in cash and partly in additional shares of our series A and series B preferred stock, with the cash portion aggregating $29.25 million per year, so long as there is no redemption or conversion
of our series A and series B preferred stock. For the following four years, dividends are payable in cash or additional shares of our series A or series B preferred stock, as the case may be, as determined by our board of directors. After year ten,
dividends are payable solely in cash.



We are
prohibited under the terms of the January 24, 2002 amendments to the senior credit facility and increasing rate loans facility from paying cash dividends on the series A and B preferred stock. As of March 31, 2003, we have deferred payments of the
cash portion of the preferred stock dividend totaling approximately $51.2 million. This amount has been included in accounts payable and accrued expenses as of March 31, 2003. In addition, according to the terms of our series A and B preferred
stock, if the cash dividends on the preferred stock are in arrears and unpaid for at least 60 days, then an additional amount of dividends will accrue at an annual rate of 2.0% of the stated amount of each share of preferred stock then outstanding
from the last payment date on which cash dividends were to be paid in full until the cash dividends in arrears have been paid in full. These additional dividends are cumulative and payable in additional shares of preferred stock. As of the three
months ended March 31, 2003, we issued an additional stock dividend of 430,912 shares of series A and series B preferred stock with a value of $43.1 million.



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Renovations and Capital
Improvements



During the first three months
of 2003, we invested approximately $7.5 million in capital improvements and renovations. These capital expenditures included (i) costs related to enhancing the revenue-producing capabilities of our hotels and (ii) costs related to recurring
maintenance. During 2003, we anticipate spending approximately $75 million in capital expenditures primarily for recurring maintenance capital expenditures and technological initiatives. We are limited to capital expenditures of $125 million per
year, plus $25 million per year for emergency capital expenditures under the terms of the January 24, 2002 amendments to the senior credit facility and increasing rate loans facility.



We attempt to schedule renovations and improvements during traditionally lower occupancy periods in an effort
to minimize disruption to the hotels operations. Therefore, we do not believe such renovations and capital improvements will have a material effect on the results of operations of the hotels. Capital expenditures will be financed through
capital expenditure reserves or with working capital.



Inflation



Operators of
hotels in general possess the ability to adjust room rates quickly. However, competitive pressures may limit our ability to raise room rates in the face of inflation.



Seasonality



The hotel industry is seasonal in nature; however, the periods during which our hotel properties experience higher revenues vary from
property to property and depend predominantly on the propertys location. Our revenues typically have been higher in the first and second quarters than in the third or fourth quarters.



Critical Accounting Policies and Estimates



The preparation of our consolidated financial statements
requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those
related to: impairment of assets; assets held for sale; bad debts; income taxes; insurance reserves; derivatives; and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.



We
believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. We periodically review the carrying value of our assets, including intangible
assets, to determine if events and circumstances exist indicating that assets might be impaired. If facts and circumstances support this possibility of impairment, our management will prepare probability weighted undiscounted and discounted cash
flow projections which require judgments that are both subjective and complex.



Our management uses judgment in projecting which assets will be sold by us within the next twelve months. These judgments are based on our managements knowledge of the current market and the
status of current negotiations with third parties. If assets are expected to be sold within 12 months, they are reclassified as assets held for sale on the balance sheet.



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our
customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.



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We record a
valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the
valuation allowance, should we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was
made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.



We maintain a paid loss deductible insurance
plan for commercial general liability, automobile liability, and workers compensation loss exposures related to our hotel operations. The primary loss deductible retention limit is currently $500,000 per occurrence for general liability and
$250,000 per occurrence for automobile liability and workers compensation loss, in most jurisdictions. The estimates of the ultimate liability for losses and associated expenses are based upon a third party actuarial analysis and projection of
actual historical development trends of loss frequency, severity and incurred but not reported claims as well as traditional issues that affect loss cost such as medical and statutory benefit inflation. In addition, the actuarial analysis compares
our trends against general insurance industry development trends to develop an estimate of ultimate costs within the deductible retention. Large claims or incidents that could potentially involve material amounts are also monitored closely on a
case-by-case basis. As of March 31, 2003, our balance sheet included an estimated liability with respect to this self-insurance program of $24,113,000.



Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements. During
three months ended March 31, 2003, such derivatives were used to hedge the variable cash flows associated with a portion of our variable-rate debt. As of March 31, 2003, we did not have any derivatives designated as fair value hedges. Additionally,
we do not use derivatives for trading or speculative purposes. We use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date to determine the fair value of our derivative instruments.
For the majority of financial instruments including most derivatives, standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and termination cost are used to determine fair value.
All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. Future cash inflows or outflows from our derivative instruments depend upon future borrowing rates. If assumptions about
future borrowing rates prove to be materially incorrect, the recorded value of these agreements could also prove to be materially incorrect. Because we use the derivative instruments to reduce our exposure to increases in variable interest rates,
thus effectively fixing a portion of our variable interest rates, the impact of changes in future borrowing rates could result in our interest expense being either higher or lower than might otherwise have been incurred on our variable-rate
borrowings had the rates not been fixed. A reduction in interest rates could result in a competitive advantage for companies in a position to take advantage of a lower cost of capital.



We are a defendant in lawsuits that arise out of, and are incidental to, the conduct of our business. Our
management uses its judgment, with the aid of legal counsel, to determine if accruals are necessary as a result of any pending actions against us.



Newly Issued Accounting Standards



In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based CompensationTransition and Disclosure, which
amends SFAS 123, Accounting for Stock-Based Compensation. In response to a growing number of companies announcing plans to record expenses for the fair value of stock options, SFAS 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent and more frequent disclosures in financial statements about the
effects of stock-based compensation. SFAS 148 also amends the disclosure provisions of SFAS 123 to require more prominent disclosure about the effects of an entitys accounting policy decisions with respect to stock-based employee



28



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##### Table of Contents

compensation on reported net income. Finally, SFAS 148 amends APB 28, Interim Financial Reporting,to require disclosure about those
effects in interim financial information. The amendments to SFAS 123 are effective for financial statements for fiscal years ending after December 15, 2002. We made the disclosure required by the provisions of SFAS 148 on page 8 under Stock
Compensation.



In January 2003, the FASB
issued Interpretation 46, Consolidation of Variable Interest Entities. In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have
equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. Interpretation 46 requires a variable interest entity to be consolidated by a company if
that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. The consolidation requirements of Interpretation 46 apply
immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply
in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. We are currently evaluating the provisions of the Interpretation 46, but believe its adoption will not have a material impact
on our financial position or results of operations.



In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS 133. The new guidance amends SFAS 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS 133,
(b) in connection with other Board projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an
underlying and the characteristics of a derivative that contains financing components. The amendments set forth in SFAS 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for
similarly. SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003 (with a few exceptions) and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. We are currently
evaluating the provisions of SFAS 149, but believes its adoption will not have a material impact on our financial position or results of operations.



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Item
3.    
Qualitative and Quantitative Disclosures About Market Risks



Our primary market risk exposure is to future changes in interest rates related to our derivative financial instruments and other financial instruments, including debt obligations, interest rate swaps,
interest rate caps, and future debt commitments.



We manage our debt portfolio by periodically entering into interest rate swaps and caps to achieve an overall desired position of fixed and floating rates or to limit our exposure to rising interest rates.



The following table provides information about our derivative
and other financial instruments that are sensitive to changes in interest rates.



| |  |  | For fixed rate debt obligations, the table presents principal cash flows and related weighted-average interest rates by expected maturity date and contracted
interest rates at March 31, 2003. For variable rate debt obligations, the table presents principal cash flows by expected maturity date and contracted interest rates at March 31, 2003.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For interest rate swaps and caps, the table presents notional amounts and weighted-average interest rates or strike rates by expected (contractual) maturity dates.
Notional amounts are used to calculate the contractual cash flows to be exchanged under the contract. Weighted average variable rates are based on implied forward rates in the yield curve at March 31, 2003.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                               |  | Remainder of 2003(1)   |         |   | 2004(2) |   |         | 2005 |  |   | 2006    |   |  | 2007 |           |   | Thereafter |   |        | Face Value |  | Fair Value |       
|-------------------------------------------------------------- |  | ---------------------- | ------- | - | ------- | - | ------- | ---- |  | - | ------- | - |  | ---- | --------- | - | ---------- | - | ------ | ---------- |  | ---------- | ------
|                                                               |  | (dollars in thousands) |        
|Debt                                                           |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Long-term debt obligations including current portion           |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Fixed Rate                                                     |  | $                      | 5,628   |   |         | $ | 15,825  |      |  | $ | 47,180  |   |  | $    | 7,012     |   |            | $ | 92,237 |            |  | $          | 64,071
|Average Interest Rate                                          |  |                        | 8.32    | % |         |   | 3.09    | %    |  |   | 7.51    | % |  |      | 9.22      | % |            |   | 8.12   | %          |  |            | 9.29  
|Variable Rate                                                  |  | $                      | 375,006 |   |         | $ | 894,500 |      |  | $ | 171,928 |   |  | $    | 1,145,469 |   |            | $ | 0      |            |  | $          | 9,675 
|Average Interest Rate                                          |  |                        | 4.51    | % |         |   | 7.13    | %    |  |   | 6.67    | % |  |      | 9.59      | % |            |   | 0      | %          |  |            | 1.80  
|Interest Rate Derivative Financial Instruments Related to Debt |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Interest Rate Swaps                                            |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Pay Fixed/Receive Variable                                     |  | $                      |        |   |         | $ |        |      |  | $ | 755,978 |   |  | $    |          |   |            | $ |       |            |  |            |      
|Average Pay Rate                                               |  |                        | 6.49    | % |         |   | 6.63    | %    |  |   | 6.63    | % |  |      |          | % |            |   |       |            |  |            |      
|Average Receive Rate                                           |  |                        | 1.22    | % |         |   | 1.69    | %    |  |   | 3.02    | % |  |      |          | % |            |   |       |            |  |            |      
|Interest Rate Swaps                                            |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Pay Fixed/Receive Variable                                     |  | $                      |        |   |         | $ |        |      |  | $ | 46,854  |   |  | $    |          |   |            | $ |       |            |  |            |      
|Average Pay Rate                                               |  |                        | 4.62    | % |         |   | 4.62    | %    |  |   | 4.62    | % |  |      |          | % |            |   |       |            |  |            |      
|Average Receive Rate                                           |  |                        | 3.60    | % |         |   | 3.71    | %    |  |   | 4.20    | % |  |      | 4.34      | % |            |   |       |            |  |            |      
|Interest Rate Caps                                             |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Notional Amount                                                |  | $                      | 426,121 |   |         | $ | 337,577 |      |  | $ | 104,070 |   |  | $    |          |   |            | $ |       |            |  |            |      
|Strike Rate                                                    |  |                        | 6.89    | % |         |   | 7.93    | %    |  |   | 9.75    | % |  |      |          | % |            |   |       |            |  |            |      
|Forward Rate                                                   |  |                        | 1.22    | % |         |   | 1.69    | %    |  |   | 3.02    | % |  |      |          | % |            |   |       |            |  |            |      

---

|(1) |  | We can elect to extend $176.9 million for three additional twelve month periods
|--- |  | -------------------------------------------------------------------------------

|(2) |  | We can elect to extend $39.8 million for two additional twelve month periods
|--- |  | ----------------------------------------------------------------------------



Item 4.    
Controls and Procedures



Within 90 days before the date of this report on Form 10-Q, under the supervision and with the participation of our management, including our Chairman of the Board and Chief Executive Officer (our principal executive officer) and our
Chief Financial Officer (our principal financial officer), we evaluated the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-14(c) of the Securities Exchange Act of 1934, as amended (the Exchange Act)).
Based on this evaluation, our Chairman of the Board and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in the reports
that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.



There were no significant changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of such evaluation.



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PART
II:    OTHER INFORMATION



Item
1.    
Legal Proceedings



On
May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the Northern District of California against Patriot, Wyndham, their respective operating partnerships and PaineWebber Group, Inc. This action, Johnson v. Patriot American
Hospitality, Inc., et al., No. C-99-2153, was commenced on behalf of all former holders of Bay Meadows stock during a class period from June 2, 1997 to the date of filing. The action asserts securities fraud claims and alleges that the purported
class members were wrongfully induced to tender their shares as part of the Patriot/Bay Meadows merger based on a fraudulent prospectus. The action further alleges that defendants continued to defraud shareholders about their intentions to acquire
numerous hotels and saddle the company with massive debt during the class period. Three other actions against the same defendants subsequently were filed in the Northern District of California: (i) Ansell v. Patriot American Hospitality, Inc., et
al., No. C-99-2239 (filed May 14, 1999), (ii) Sola v. PaineWebber Group, Inc., et al., No. C-99-2770 (filed June 11, 1999), and (iii) Gunderson v. Patriot American Hospitality, Inc., et al., No. C 99-3040 (filed June 23, 1999). Another action
with substantially identical allegations, Susnow v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1354-T (filed June 15, 1999) also subsequently was filed in the Northern District of Texas. By order of the Judicial Panel on
Multidistrict Litigation, these actions along with certain actions identified below have been consolidated in the Northern District of California for consolidated pretrial purposes. On or about October 13, 2000, the defendants moved to dismiss the
actions. On or about August 15, 2001, the court granted Defendants motions to dismiss the action, dismissing some of the claims with prejudice and granting leave to replead certain other claims in the Complaint. On or about October 15, 2001,
plaintiff filed an amended complaint seeking substantially the same relief as in the original complaint. On or about December 20, 2001, the defendants moved to dismiss the amended complaint. On or about September 3, 2002, the court granted in part
and denied in part Defendants motion to dismiss. The Court did not dismiss certain of Plaintiffs claims under Section 11 of the Securities Act of 1933 and Section 12(b) of the Securities Exchange Act of 1934. An answer to the complaint has
been filed. We intend to defend the suits vigorously.



On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1416-D, was filed in the Northern District of Texas against Patriot, Wyndham, James D. Carreker and Paul A.
Nussbaum. This action asserts securities fraud claims and alleges that, during the period from January 5, 1998 to December 17, 1998, the defendants defrauded shareholders by issuing false statements about the company. The complaint was filed on
behalf of all shareholders who purchased Patriot American and Wyndham stock during that period. Three other actions, Gallagher v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June 23, 1999, David Lee Meisenburg, et al. v.
Patriot American Hospitality, Inc., Wyndham International, Inc., James D. Carreker, and Paul A. Nussbaum Case No. 3-99-CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1866-D, filed on
or about August 27, 1999, allege substantially the same allegations. By orders of the Judicial Panel on Multidistrict Litigation, these actions have been consolidated with certain other shareholder actions and transferred to the Northern District of
California for consolidated pretrial purposes. On or about October 20, 2000, the defendants moved to dismiss the actions. On or about August 15, 2001, the court granted Defendants motions to dismiss the action, dismissing some of the claims
with prejudice and granting leave to replead certain other claims in the Complaint. On or about October 15, 2001, plaintiff filed an amended complaint seeking substantially the same relief as in the original complaint. On or about December 20, 2001,
the defendants moved to dismiss the amended complaint. On or about September 3, 2002, the court dismissed in its entirety the complaint and granted plaintiffs leave to amend. On or about December 2, 2002, Plaintiffs filed an amended complaint. We
intend to defend the suits vigorously.



On or
about October 26, 2000, a demand for arbitration was filed on behalf of John W. Cullen, IV, William F. Burruss, Heritage Hotel Management & Investment Ltd. And GH-Resco, L.L.C. naming Wyndham International, Inc. f/k/a Patriot American
Hospitality, Inc. as respondent. The Demand for Arbitration claims that the claimants and Wyndham are parties to a Contribution Agreement dated February 28, 1997 and that Wyndham is in breach of that agreement. Claimants assert that Wyndham breached
its agreement to pay respondents



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additional consideration under the Contribution Agreement by, among other things, allegedly denying claimants compensation due to them in
connection with various transactions initiated by claimants and provided to Wyndham, which allegedly provided Wyndham with growth and added revenue. In addition, claimants assert that Wyndham failed to provide claimants with various other amounts
due under the Contribution Agreement, failed to indemnify claimants for certain expenses and intentionally and negligently mismanaged Wyndhams business. Claimants do not specify the amount of damages sought. The matter is currently pending
before an arbitrator. The parties are discussing a settlement of the matter; however, settlement documents have not been finalized. In the event that the parties do not reach a mutually agreed settlement, we intend to defend the claims vigorously.



On May 29, 2002, the State of Florida Office of
the Attorney General Department of Legal Affairs filed a lawsuit in Leon County, Florida (Case No. 02-CA-1296) naming us, Patriot and four current or former Wyndham employees as defendants. In this case, the Attorney General alleged that the
imposition of energy surcharges, resort fees and automatic service fees violates the States Deceptive and Unfair Trade Practices Act and False Claims Act. We filed a motion to dismiss this suit which was granted in part. The Attorney General
has filed a notice of appeal, appealing the dismissal of the individual defendants. We intend to vigorously defend this lawsuit and appeal.



On June 20, 2002, plaintiffs in the case entitled Roller-Edelstein, et al. v. Wyndham International, Inc., et al., filed an amended
complaint in Dallas County District Court (case no. 02-04946-A) alleging that supplemental fees charged to hotel guests constituted common law fraud, breach of contract and violated Texas Deceptive Trade Practices Act. The plaintiffs claim to
represent a nationwide class and have estimated damages in excess of ten million dollars. We have answered this complaint and anticipate vigorously defending it.



On February 18, 2003, a lawsuit was filed by Joseph Lopez and Alberto Jose Martinez, on behalf of themselves
and all others similarly situated, against Wyndham International, Inc., et al alleging that we violated certain provisions of the California Labor Code and the California Business and Professions Code concerning wage and hour requirements. The
plaintiffs claim to represent a class. The plaintiffs also allege we breached a fiduciary duty to them and the other class members by seeking to take undue advantage of them by failing to pay them appropriate wages. The plaintiffs seek compensatory
and punitive damages on behalf of themselves and the class in an unspecified amount for all causes of action. We intend to vigorously defend the lawsuit



Item 2.    
Changes in Securities and Use of Proceeds



None.



Item
3.    
Defaults Upon Senior Securities



We are prohibited under the terms of the January 24, 2002 amendments to the senior credit facility and increasing rate loans facility from paying cash dividends on the series A and B preferred stock. As of March 31, 2003, we have
deferred payments of the cash portion of the preferred stock dividend totaling approximately $51.2 million. This amount has been included in accounts payable and accrued expenses as of March 31, 2003. In addition, according to the terms of our
series A and B preferred stock, if the cash dividends on the preferred stock are in arrears and unpaid for at least 60 days, then an additional amount of dividends will accrue at an annual rate of 2.0% of the stated amount of each share of preferred
stock then outstanding from the last payment date on which cash dividends were to be paid in full until the cash dividends in arrears have been paid in full. These additional dividends are cumulative and payable in additional shares of preferred
stock. As of the three months ended March 31, 2003, we issued an additional stock dividend of 430,912 shares of series A and series B preferred stock with a value of $43.1 million.



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Item
4.    
Submission of Matters to a Vote of Security Holders



No matters were submitted during the first quarter of the calendar year covered by this Form 10-Q to a vote of our shareholders, through the solicitation of proxies or otherwise.



Item 5.    
Other Information



None.



Item 6.    
Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------



|Item No. |  | Description                                                                                                                                            
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|        
|10.1*    |  | Fourth Amendment and Restatement to the Credit Agreement, dated as of March 4, 2003,
by Wyndham and the lenders named therein.                         
|        
|10.2*    |  | Third Amendment and Restatement to the Increasing Rate Note Purchase and Loan
Agreement, dated March 4, 2003, by Wyndham and the lenders named therein.
|        
|99.1*    |  | Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                    
|        
|99.2*    |  | Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                    

---

| | * |  | Filed herewith
| | - |  | --------------



| | (b) |  | Reports on Form 8-K for the quarter ended March 31, 2003:
| | --- |  | ---------------------------------------------------------



We filed a Current Report on Form 8-K on May 6, 2003, regarding our results of operations for the first quarter ended March 31, 2003.



33



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##### Table of Contents



SIGNATURE



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.



WYNDHAM INTERNATIONAL, INCBy

/s/    RICHARD A.
SMITHRichard A. Smith Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer)




DATED:    May 15, 2003



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##### Table of Contents



CERTIFICATION



I, Fred J. Kleisner,
Chief Executive Officer of Wyndham International, Inc., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Wyndham International, Inc.;
|-- |  | ----------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  
|------------------
|Date: May 14, 2003
|                  



35



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##### Table of Contents



CERTIFICATION



I, Richard A. Smith, Chief
Financial Officer of Wyndham International, Inc., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Wyndham International, Inc.;
|-- |  | ----------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  
|------------------
|Date: May 14, 2003
|                  



36