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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 June 30, 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 August 11, 2003, was 168,210,570.



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##### Table of Contents

WY
NDHAM INTERNATIONAL, INC.



INDEX



PART IFINANCIAL INFORMATION



|                             |  |                                                                                                                       |  | Page
|---------------------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                                                      
|Item 1.                      |  | Financial Statements                                                                                                  |  | 3   
|                             | 
|Wyndham International, Inc.: |  |                                                                                                                      
|                             |  |                                                                                                                      
|                             |  | Condensed Consolidated Balance Sheets as of June 30, 2003 (unaudited) and December 31, 2002                           |  | 3   
|                             |  |                                                                                                                      
|                             |  | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2003 and 2002 (unaudited) |  | 4   
|                             |  |                                                                                                                      
|                             |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002 (unaudited)           |  | 5   
|                             |  |                                                                                                                      
|                             |  | Notes to Condensed Consolidated Financial Statements as of June 30, 2003 (unaudited)                                  |  | 6   
|                             |  |                                                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                 |  | 23  
|                             |  |                                                                                                                      
|Item 3.                      |  | Quantitative and Qualitative Disclosures about Market Risks                                                           |  | 39  
|                             |  |                                                                                                                      
|Item 4.                      |  | Controls and Procedures                                                                                               |  | 39  
|                             | 
|PART IIOTHER INFORMATION    |  |                                                                                                                      
|                             |  |                                                                                                                      
|Item 1.                      |  | Legal Proceedings                                                                                                     |  | 41  
|                             |  |                                                                                                                      
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                                                             |  | 42  
|                             |  |                                                                                                                      
|Item 3.                      |  | Defaults Upon Senior Securities                                                                                       |  | 42  
|                             |  |                                                                                                                      
|Item 4.                      |  | Submission of Matters to Vote of Security Holders                                                                     |  | 42  
|                             |  |                                                                                                                      
|Item 5.                      |  | Other Information                                                                                                     |  | 43  
|                             |  |                                                                                                                      
|Item 6.                      |  | Exhibits and Reports on Form 8-K:                                                                                     |  |     
|                             |  |                                                                                                                      
|                             |  | Exhibits                                                                                                              |  | 44  
|                             |  |                                                                                                                      
|                             |  | Reports on Form 8-K                                                                                                   |  | 44  
|                             | 
|Signature                    |  | 45                                                                                                                   



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##### Table of Contents

PART I:    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

WYNDHAM INTERNATIONAL, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)



|                                                                                                                             |  | June 30, 2003 |            |   | December 31,2002 |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | -
|ASSETS                                                                                                                       |  |               |            |   |                  |  
|Current assets:                                                                                                              |  |               |            |   |                  |  
|Cash and cash equivalents                                                                                                    |  | $             | 52,502     |   |                  | $
|Restricted cash                                                                                                              |  |               | 154,134    |   |                  |  
|Accounts receivable                                                                                                          |  |               | 86,700     |   |                  |  
|Inventories                                                                                                                  |  |               | 13,935     |   |                  |  
|Prepaid expenses and other assets                                                                                            |  |               | 9,158      |   |                  |  
|Assets held for sale, net of accumulated depreciation of $99,518 in 2003 and $28,526 in 2002                                 |  |               | 212,890    |   |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Total current assets                                                                                                         |  |               | 529,319    |   |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Investment in real estate and related improvements, net of accumulated depreciation of $970,466 in 2003 and $978,953 in
2002 |  |               | 3,179,920  |   |                  |  
|Investment in unconsolidated subsidiaries                                                                                    |  |               | 46,554     |   |                  |  
|Notes and other receivables                                                                                                  |  |               | 40,965     |   |                  |  
|Management contract costs, net of accumulated amortization of $20,772 in 2003 and $20,082 in 2002                            |  |               | 81,199     |   |                  |  
|Leasehold costs, net of accumulated amortization of $11,432 in 2003 and $38,764 in 2002                                      |  |               | 22,784     |   |                  |  
|Trade names and franchise costs, net of accumulated amortization of $33,652 in 2003 and $30,396 in 2002                      |  |               | 90,213     |   |                  |  
|Deferred acquisition costs                                                                                                   |  |               | 3,107      |   |                  |  
|Deferred expenses, net of accumulated amortization of $64,763 in 2003 and $64,441 in 2002                                    |  |               | 56,410     |   |                  |  
|Other assets                                                                                                                 |  |               | 6,367      |   |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Total assets                                                                                                                 |  | $             | 4,056,838  |   |                  | $
|                                                                                                                             |  |               |            |   |                  |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                         |  |               |            |   |                  |  
|Current liabilities:                                                                                                         |  |               |            |   |                  |  
|Accounts payable and accrued expenses                                                                                        |  | $             | 237,136    |   |                  | $
|Deposits                                                                                                                     |  |               | 27,082     |   |                  |  
|Borrowings associated with assets held for sale                                                                              |  |               | 107,180    |   |                  |  
|Current portion of borrowings under credit facility, term loans, mortgage notes and capital lease obligations                |  |               | 648,994    |   |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Total current liabilities                                                                                                    |  |               | 1,020,392  |   |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Borrowings under credit facility, term loans, mortgage notes and capital lease obligations                                   |  |               | 2,007,333  |   |                  |  
|Derivative financial instruments                                                                                             |  |               | 82,782     |   |                  |  
|Deferred income taxes                                                                                                        |  |               | 22,787     |   |                  |  
|Deferred income                                                                                                              |  |               | 10,008     |   |                  |  
|Minority interest in the Operating Partnerships                                                                              |  |               | 21,368     |   |                  |  
|Minority interest in other consolidated subsidiaries                                                                         |  |               | 38,380     |   |                  |  
|Commitments and contingencies                                                                                                |  |               |            |   |                  |  
|Shareholders equity:                                                                                                        |  |               |            |   |                  |  
|Preferred stock, $0.01 par value; authorized: 150,000,000 shares; shares issued and outstanding:                             |  |               |            |   |                  |  
|13,776,480 in 2003 and 13,170,620 in 2002                                                                                    |  |               | 138        |   |                  |  
|Common stock, $0.01 par value; authorized: 750,000,000 shares; shares issued and outstanding:                                |  |               |            |   |                  |  
|168,211,152 in 2003 and 167,999,126 in 2002                                                                                  |  |               | 1,682      |   |                  |  
|Additional paid in capital                                                                                                   |  |               | 4,101,554  |   |                  |  
|Receivables from shareholders and affiliates                                                                                 |  |               | (18,121    | ) |                  |  
|Accumulated other comprehensive income                                                                                       |  |               | (10,486    | ) |                  |  
|Accumulated deficit                                                                                                          |  |               | (3,220,979 | ) |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Total shareholders equity                                                                                                   |  |               | 853,788    |   |                  |  
|                                                                                                                             |  |               |            |   |                  |  
|Total liabilities and shareholders equity                                                                                   |  | $             | 4,056,838  |   |                  | $
|                                                                                                                             |  |               |            |   |                  |  



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 June 30, |          |   | Six Months Ended June 30, |  
|------------------------------------------------------------------------------ |  | --------------------------- | -------- | - | ------------------------- | -
|                                                                               |  | 2003                        |          |   | 2002                      |  
|Revenue:                                                                       |  |                             |          |   |                           |  
|Hotel revenue                                                                  |  | $                           | 341,099  |   |                           | $
|Management fee and service fee income                                          |  |                             | 4,430    |   |                           |  
|Interest and other income                                                      |  |                             | 928      |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Total revenue                                                                  |  |                             | 346,457  |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Expenses:                                                                      |  |                             |          |   |                           |  
|Hotel expenses                                                                 |  |                             | 262,625  |   |                           |  
|General and administrative                                                     |  |                             | 16,143   |   |                           |  
|Bond offering cancellation costs                                               |  |                             |         |   |                           |  
|Interest expense                                                               |  |                             | 49,801   |   |                           |  
|Depreciation and amortization                                                  |  |                             | 53,158   |   |                           |  
|(Gain) loss on sale of assets                                                  |  |                             |         |   |                           |  
|Impairment loss                                                                |  |                             | 2,040    |   |                           |  
|Loss on derivative instruments                                                 |  |                             | 7,425    |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Total expenses                                                                 |  |                             | 391,192  |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Operating loss from continued operations                                       |  |                             | (44,735  | ) |                           |  
|Equity in earnings of unconsolidated subsidiaries                              |  |                             | 1,275    |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Loss from continued operations before income taxes and minority interest       |  |                             | (43,460  | ) |                           |  
|Income tax benefit                                                             |  |                             | 16,273   |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Loss from continued operations before minority interest                        |  |                             | (27,187  | ) |                           |  
|Minority interest in consolidated subsidiaries                                 |  |                             | (225     | ) |                           |  
|                                                                               |  |                             |          |   |                           |  
|Loss from continued operations                                                 |  |                             | (27,412  | ) |                           |  
|                                                                               |  |                             |          |  
|Discontinued operations:                                                       |  |                             |          |   |                           |  
|(Loss) income from discontinued operations, net of taxes and minority interest |  |                             | (29,625  | ) |                           |  
|Impairment loss, net of taxes and minority interest                            |  |                             | (37,303  | ) |                           |  
|Gain (loss) on sale of assets, net of taxes and minority interest              |  |                             | 2,827    |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Loss from discontinued operations, net of taxes and minority interest          |  |                             | (64,101  | ) |                           |  
|                                                                               |  |                             |          |   |                           |  
|Loss before accounting change                                                  |  |                             | (91,513  | ) |                           |  
|Cumulative effect of change in accounting principle, net of taxes              |  |                             |         |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Net loss                                                                       |  | $                           | (91,513  | ) |                           | $
|Preferred stock dividends                                                      |  |                             | (38,509  | ) |                           |  
|                                                                               |  |                             |          |   |                           |  
|Net loss attributable to common shareholders                                   |  | $                           | (130,022 | ) |                           | $
|                                                                               |  |                             |          |   |                           |  
|                                                                               |  |                             |          |  
|Basic and diluted loss per common share:                                       |  |                             |          |   |                           |  
|Loss from continued operations                                                 |  | $                           | (0.39    | ) |                           | $
|Loss from discontinued operations, net of taxes and minority interest          |  |                             | (0.38    | ) |                           |  
|Cumulative effect of change in accounting principle, net of taxes              |  |                             |         |   |                           |  
|                                                                               |  |                             |          |   |                           |  
|Net loss per common share                                                      |  | $                           | (0.77    | ) |                           | $
|                                                                               |  |                             |          |   |                           |  



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)



|                                                                                |  | Six Months Ended June 30, |         
|------------------------------------------------------------------------------- |  | ------------------------- | --------
|                                                                                |  | 2003                      |         
|Cash flows from operating activities:                                           |  |                           |         
|Net loss                                                                        |  | $                         | (198,925
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                           |         
|Depreciation and amortization                                                   |  |                           | 121,424 
|Amortization of unearned stock compensation                                     |  |                           | 965     
|Amortization of deferred loan costs                                             |  |                           | 16,284  
|Net loss on sale of assets                                                      |  |                           | 225     
|(Gain) loss on derivative financial instruments                                 |  |                           | (4,486  
|Impairment loss on assets                                                       |  |                           | 96,582  
|Write-off of intangible assets                                                  |  |                           | 151,916 
|Write-off of deferred acquisition costs                                         |  |                           | 191     
|Provision for bad debt expense                                                  |  |                           | 4,585   
|Equity in earnings of unconsolidated subsidiaries                               |  |                           | (701    
|Minority interest in consolidated subsidiaries                                  |  |                           | 693     
|Deferred income taxes                                                           |  |                           | (136,411
|Cumulative effect of change in accounting principle                             |  |                           |        
|Changes in assets and liabilities:                                              |  |                           |         
|Accounts receivable and other assets                                            |  |                           | 10,595  
|Inventory                                                                       |  |                           | 1,553   
|Deferred income                                                                 |  |                           | 419     
|Accounts payable and other accrued expenses                                     |  |                           | (28,239 
|                                                                                |  |                           |         
|Net cash provided by operating activities                                       |  |                           | 36,670  
|                                                                                |  |                           |         
|Cash flows from investing activities:                                           |  |                           |         
|Improvements and additions to hotel properties                                  |  |                           | (16,753 
|Proceeds from sale of assets                                                    |  |                           | 97,724  
|Changes in restricted cash accounts                                             |  |                           | (17,436 
|Collection on notes receivable                                                  |  |                           | 194     
|Advances on other notes receivable                                              |  |                           | (1,089  
|Deferred acquisition costs                                                      |  |                           | (640    
|Management contract costs                                                       |  |                           | (19     
|Investment in unconsolidated subsidiaries                                       |  |                           |        
|Distributions from unconsolidated subsidiaries                                  |  |                           | 400     
|                                                                                |  |                           |         
|Net cash provided by (used in) investing activities                             |  |                           | 62,381  
|                                                                                |  |                           |         
|Cash flows from financing activities:                                           |  |                           |         
|Borrowings under line of credit facility and mortgage notes                     |  |                           | 460,000 
|Repayments of borrowings under credit facility and other debt                   |  |                           | (523,035
|Payment of deferred loan costs                                                  |  |                           | (19,910 
|Contribution received from minority interest in consolidated subsidiaries       |  |                           |        
|Distribution made to minority interest in other partnerships                    |  |                           | (831    
|Other                                                                           |  |                           |        
|                                                                                |  |                           |         
|Net cash used in financing activities                                           |  |                           | (83,776 
|                                                                                |  |                           |         
|Foreign currency translation adjustment                                         |  |                           | (12     
|Net increase (decrease) in cash and cash equivalents                            |  |                           | 15,263  
|Cash and cash equivalents at beginning of period                                |  |                           | 37,239  
|                                                                                |  |                           |         
|Cash and cash equivalents at end of period                                      |  | $                         | 52,502  
|                                                                                |  |                           |         



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 June
30, 2003, Wyndham owned interests in 100 hotels with over 29,300 guestrooms and leased 10 hotels from third parties with over 1,500 guestrooms. In addition, Wyndham managed 26 hotels for third party owners with over 8,000 guestrooms and franchised
67 hotels with over 13,013 guestrooms.



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 and six months ended June 30, 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.



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, in January 2003, the 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



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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.



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 June 30, 2003, the Companys balance sheet included an estimated liability with respect to this self-insurance program of
$26,727.



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 three and six months ended June 30, 2003, such derivatives were used to hedge the variable cash flows associated with a portion of the
Companys variable-rate debt. As of June 30, 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



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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).



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 June 30, 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 (SFAS) No. 123 Accounting for Stock-Based Compensation, the Companys net loss and loss per common share would have increased to the
pro forma amounts indicated below:



|                                                                                                                                            |  | Three MonthsEndedJune 30, 2003 |          |   | Three MonthsEndedJune 30, 2002 |   |         | Six MonthsEndedJune 30, 2003 |  |   | Six MonthsEndedJune 30, 2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ------------------------------ | - | ------- | ---------------------------- |  | - | ---------------------------- | -
|Net loss attributable to common shareholders, as reported                                                                                   |  | $                              | (130,022 | ) |                                | $ | (76,865 | )                            |  | $ | (275,233                     | )
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related
tax effects |  |                                | (10      | ) |                                |   | (15     | )                            |  |   | (272                         | )
|                                                                                                                                            |  |                                |          |   |                                |   |         |                              |  |   |                              |  
|Pro forma net loss attributable to common shareholders                                                                                      |  | $                              | (130,032 | ) |                                | $ | (76,880 | )                            |  | $ | (275,505                     | )
|                                                                                                                                            |  |                                |          |   |                                |   |         |                              |  |   |                              |  
|Earnings per share:                                                                                                                         |  |                                |          |   |                                |   |         |                              |  |   |                              |  
|Basic and diluted loss per common shareas reported                                                                                         |  | $                              | (0.77    | ) |                                | $ | (0.46   | )                            |  | $ | (1.64                        | )
|Basic and dilutedpro forma loss per common share                                                                                           |  | $                              | (0.77    | ) |                                | $ | (0.46   | )                            |  | $ | (1.64                        | )



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 Goodwill and Other
Intangible Assets 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



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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.



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 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 7 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 derivative 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.



In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
150 specifies that instruments within its scope embody



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



obligations of the issuer and that, therefore, the issuer must classify them as liabilities. SFAS 150 is effective immediately for all financial instruments
entered into or modified after May 31, 2003. For all other instruments, SFAS 150 goes into effect at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of a non-public
entity. For contracts that were created or modified before May 31, 2003 and still exist at the beginning of the first interim period beginning after June 15, 2003, entities should record the transition to SFAS 150 by reporting the cumulative effect
of a change in an accounting principle. SFAS 150 prohibits entities from restating financial statements for earlier years presented. The Company is currently evaluating the provisions of SFAS 150, 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 six months ended June 30, 2003, the Company sold its investments
in eleven hotels, certain undeveloped land and a golf venture. The Company received net cash proceeds of approximately $24,640, after the repayment of mortgage debt of approximately $67,657. The Company recorded a net loss of $1,234 as a result of
these asset sales, net of impairment of $36,162. Also, $21,816 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.



Also during the six months ended June 30, 2003, leases on 27 hotel properties (15 Summerfield Suites® by Wyndham and 12 Wyndham Hotels and Garden Hotels) operated by two subsidiaries of the Company were terminated by Hospitality Properties Trust (HPT). The subsidiaries of the Company are
in negotiations with HPT on the final franchise agreements for these properties. On an annualized basis, based upon projections for the calendar year 2003, the estimated positive impact on cash flow of the lease terminations to the subsidiaries of
the Company is $14,300. For the six months ended June 30, 2003, the terminations resulted in a non-cash write-off of approximately $150,000 for the leases remaining book value.



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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 June 30, 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                            |  | June 30,2003 |           |   | December 31,2002 |   |           | Amortization |  |         | Interest Rate |  | Maturity        
|-------------------------------------- |  | ------------ | --------- | - | ---------------- | - | --------- | ------------ |  | ------- | ------------- |  | ----------------
|Revolving Credit Facility              |  | $            | 168,732   |   |                  | $ | 156,406   |              |  | None    |               |  | Libor + 3.75%(2)
|Term Loans                             |  |              | 1,093,106 |   |                  |   | 1,183,177 |              |  | (3      | )             |  | Libor + 4.75%(4)
|Increasing Rate Loans                  |  |              | 389,499   |   |                  |   | 447,699   |              |  | None    |               |  | Libor + 4.75%(4)
|Bear, Stearns Funding, Inc.(5)         |  |              |          |   |                  |   | 154,198   |              |  | None    |               |  | Libor + 2.90%   
|Lehman Brothers Holdings Inc.(5)       |  |              |          |   |                  |   | 174,520   |              |  | None    |               |  | Libor + 3.5%    
|Lehman Brothers Holdings Inc.(6)       |  |              | 176,305   |   |                  |   | 177,388   |              |  | (6      | )             |  | Libor + 1.8%    
|Lehman Brothers Holdings Inc.(7)       |  |              | 39,613    |   |                  |   | 39,873    |              |  | (7      | )             |  | 8.0%(7)         
|Lehman Brothers Holdings Inc. IV(8)    |  |              | 425,000   |   |                  |   |          |              |  | (8      | )             |  | 7.48%(8)        
|Metropolitan Life Insurance(9)         |  |              | 94,220    |   |                  |   | 94,937    |              |  | (10     | )             |  | 8.08%           
|Other Mortgage Notes Payable(11)       |  |              | 338,088   |   |                  |   | 356,882   |              |  | Various |               |  | (12)            
|Unsecured financing                    |  |              | 1,509     |   |                  |   | 1,509     |              |  | None    |               |  | 10.5%           
|Capital lease obligations              |  |              | 37,435    |   |                  |   | 39,954    |              |  |         |               |  |                 
|                                       |  |              |           |   |                  |   |           |              |  |         |               |  |                 
|                                       |  | $            | 2,763,507 |   |                  | $ | 2,826,543 |              |  |         |               |  |                 
|Less current portion:                  |  |              |           |   |                  |   |           |              |  |         |               |  |                 
|Mortgage debt-assets held for sale(13) |  |              | (107,180  | ) |                  |   | (45,835   | )            |  |         |               |  |                 
|Current portion of borrowings          |  |              | (648,994  | ) |                  |   | (385,786  | )            |  |         |               |  |                 
|                                       |  |              |           |   |                  |   |           |              |  |         |               |  |                 
|Long term debt                         |  | $            | 2,007,333 |   |                  | $ | 2,394,922 |              |  |         |               |  |                 
|                                       |  |              |           |   |                  |   |           |              |  |         |               |  |                 

---

|(1) |  | The Company entered into amendments and restatements of its senior credit facilities. Upon the satisfaction of certain conditions, the consenting lenders maturity dates for
the revolving credit facility and the increasing rate loans will be extended to April 1, 2006.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The one-month LIBOR rate at June 30, 2003 was 1.12%. The rate increased from LIBOR plus 3.00% to LIBOR plus 3.75% on January 24, 2002.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | In January 2003, the Company repaid $7,708 under the term loans and $2,292 was repaid in April 2003 and $5,000 is to be repaid each six months until the final payment of principal
which is due on June 30, 2006.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | The rate increased from LIBOR plus 3.75% to LIBOR plus 4.75% on January 24, 2002.
|--- |  | ---------------------------------------------------------------------------------

|(5) |  | The debt balance was refinanced on June 11, 2003.
|--- |  | -------------------------------------------------

|(6) |  | The loan is collateralized by four hotel properties with a net book value of $217,293 as of June 30, 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.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | The loan is collateralized by three hotel properties with a net book value of $107,355 as of June 30, 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 nineteen hotel properties with a net book value of $592,548 as of June 30, 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. The interest rate is the sum of (x) the greater of (i) LIBOR and (ii) 2.5% plus (y)
the then effective spread as set forth in the loan agreement. The current spread is 4.98% and LIBOR is less
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



| | than 2.5%, which results in a current interest rate of 7.48%. The interest rate is adjustable as LIBOR and the spread changes over the life of the loan. Over
the life of the loan, the average spread is 5%.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | The loan is collateralized by six Doubletree hotels with a net book value of $137,959 as of June 30, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------

|(10) |  | The loan requires monthly payments of principal and interest in the amount of $755 until the October 1, 2007 maturity date.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------

|(11) |  | The loans are collateralized by ten hotel properties and a parcel of land with a net book value of $692,886 as of June 30, 2003.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------

|(12) |  | Interest rates range from fixed rates of 6.5% to 9.11% and variable rates of LIBOR plus 1.5% to LIBOR plus 5.57%. The mortgages have a weighted average interest rate as of June 30,
2003 of 4.73%. Maturity dates range from 2003 through 2023.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) |  | Subsequent to June 30, 2003, a portion of the senior credit facility and a portion of the increasing rate loan facility were paid down by a total of $24,400 due to the sale of two
assets.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On March 4, 2003, the Company entered
into a fourth amendment and restatement of its term loan and revolving credit facility and a third amendment of its increasing rates loan facility. The amendments include the following:



| |  |  | an increase in the letter of credit availability under the revolving facility from $75,000 to $90,000;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | 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 May 29, 2003, the Company entered into a fifth amendment and restatement
of its term loan and revolving credit facility and a fourth amendment of its increasing rate loans facility. The amendments provide for the extension of the maturity dates on the Companys revolving and increasing rate loan facilities
(currently scheduled to occur on June 30, 2004) to April 1, 2006 upon the satisfaction of certain conditions, including the principal repayment of approximately $194,000 of the term and increasing rate facilities before February 29, 2004. The
primary source of funds for the $194,000 repayment will be proceeds of asset sales and refinancings. As of August 12, 2003, the Company had repaid $154,000 using the proceeds of the Lehman IV refinancing discussed below and two asset sales. The
Company may also use corporate cash and up to $10,000 from the revolving credit facility to meet the target paydown amount. In connection with the maturity extensions, the available commitments under the Companys revolving credit facility will
also be reduced by $85,000. Over 95% of the revolving and increasing rate lenders voted in favor of the amendments. Loans held by non-consenting lenders currently totaling $19,400 will retain the original maturity date. Also, consenting lenders will
receive an increase in interest rate and certain fees as set forth in the amended credit facilities.



In order to obtain the maturity extensions, the Company was required to, among other things, refinance or extend the maturity date of its 1999 commercial
mortgage-backed securities pool with Lehman Brothers Holdings, Inc. beyond June 30, 2006. This requirement was satisfied on June 11, 2003 by the completion of a $425,000 mortgage refinancing secured by 19 hotel properties. The loan was made by
affiliates of Lehman Brothers Holdings, Inc. and bears interest at the rate set forth in Note 3, footnote 8 and has an initial maturity date of June 9, 2005. The Company, in its sole discretion, may extend the maturity date of the loan to as late as
July 9, 2008. The loan refinanced the 1999 mortgage pool described above and a second mortgage pool that were scheduled to mature on July 1, 2003 and July 1, 2004, respectively.



12



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



Upon the effectiveness of the maturity extensions, the Company may retain some or all of the net cash
proceeds from asset sales and refinancings of existing mortgage indebtedness (other than the credit facilities) up to $22,500 to be used to repay the non-consenting lenders at the June 2004 original maturity date as long as the Company maintains a
pro forma minimum revolving facility commitment availability after giving effect to such retention. Following the retention described above, the Company will apply net cash proceeds in the following manner: first, the initial $20,000 of asset sale
proceeds each year may be retained by the Company, provided that the second $10,000 of the $20,000 may be retained only if the Companys liquidity falls below a certain level set forth in the credit facilities; second, subject to certain
limitations set forth in the credit facilities including maximum Company liquidity levels, the Company may elect to retain up to 25% of such net cash proceeds with the balance applied to repay indebtedness under the credit facilities, up to a
maximum of $35,000 a year; third, to repay scheduled term loan prepayments; fourth, after the Company has retained $35,000 in such year, or if the Company is not permitted to retain a percentage of the asset sale or refinancing proceeds as a result
of the limitations set forth in the credit facilities, 100% of such proceeds must be applied to repay indebtedness under the credit facilities on a pro-rata basis. The Company also agreed to use 100% of the net cash proceeds from new debt issuances
(other than refinancings of existing mortgage indebtedness which will be applied in accordance with the previous sentence) to reduce outstanding indebtedness under the credit facilities on a pro rata basis.



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 June 30, 2003, the estimated fair value of the interest rate hedges represented a liability of $82,782. The
Company has no embedded derivatives under SFAS 133, as amended, at June 30, 2003.



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



The following table represents the derivatives in place as of June 30, 2003:



|                   |  | NotionalAmount |           | MaturityDate |            | Swap Rate |      |         | Cap Rate |      |            | Floor Rate |      |      | TriggerLevel |      |         | Fair MarketValue |  
|------------------ |  | -------------- | --------- | ------------ | ---------- | --------- | ---- | ------- | -------- | ---- | ---------- | ---------- | ---- | ---- | ------------ | ---- | ------- | ---------------- | -
|Type of Hedge:     |  |                |           |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  |  
|Interest Rate Cap  |  | $              | 176,121   |              | 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  |  |                | 25,975    |              | 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  |  |                | 3,120     |              | 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  |         |                  |  
|Interest Rate Cap  |  |                | 275,000   |              | 07/09/2005 |           | n/a  |         |          | 3.50 | %-4.25%(3) |            | n/a  |      |              | n/a  |         |                  |  
|Interest Rate Cap  |  |                | 150,000   |              | 07/09/2005 |           | n/a  |         |          | 3.50 | %-4.25%(3) |            | n/a  |      |              | n/a  |         |                  |  
|Interest Rate Cap  |  |                | 20,000    |              | 09/10/2004 |           | n/a  |         |          | 7.00 | %          |            | n/a  |      |              | n/a  |         |                  |  
|Interest Rate Cap  |  |                | 13,000    |              | 09/10/2004 |           | n/a  |         |          | 7.00 | %          |            | n/a  |      |              | n/a  |         |                  |  
|Interest Rate Cap  |  |                | 7,000     |              | 09/10/2004 |           | n/a  |         |          | 7.00 | %          |            | n/a  |      |              | n/a  |         |                  |  
|                   |  |                |           |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  |  
|                   |  | $              | 1,088,406 |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  | $
|                   |  |                |           |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  |  
|Interest Rate Swap |  | $              | 24,819    |              | 09/30/2005 |           | 4.62 | %       |          | n/a  |            |            | n/a  |      |              | n/a  |         |                  | $
|Interest Rate Swap |  |                | 24,405    |              | 12/31/2005 |           | 7.00 | %       |          | n/a  |            |            | n/a  |      |              | 5.61 | %       |                  |  
|Interest Rate Swap |  |                | 14,316    |              | 04/01/2005 |           | 3.92 | %-4.73% |          | 6.50 | %          |            | n/a  |      |              | 5.50 | %       |                  |  
|Interest Rate Swap |  |                | 43,875    |              | 08/01/2005 |           | 4.36 | %-5.25% |          | 7.85 | %          |            | n/a  |      |              | 5.75 | %       |                  |  
|Interest Rate Swap |  |                | 150,000   |              | 03/06/2005 |           | 6.10 | %-6.75% |          | n/a  |            |            | n/a  |      |              | 7.00 | %-8.50% |                  |  
|Interest Rate Swap |  |                | 550,000   |              | 03/07/2005 |           | 6.10 | %-6.75% |          | n/a  |            |            | n/a  |      |              | 7.00 | %-8.50% |                  |  
|                   |  |                |           |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  |  
|                   |  | $              | 807,415   |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  | $
|                   |  |                |           |              |            |           |      |         |          |      |            |            |      |      |              |      |         |                  |  

---

|(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%.
|--- |  | --------------------------------------------------------------------------------------

|(3) |  | 3.5% is the first year cap rate and 4.25% is the second year cap rate.
|--- |  | ----------------------------------------------------------------------



In the second quarter of 2003, the Company recorded a gain of $6,227 for the change in the fair market value of the interest rate hedge contracts through
earnings, and a reduction of $225 (net of taxes of $150) through other comprehensive income. Also, in the second quarter of 2003, the Company recorded amortization of $890 (net of taxes of $594) to earnings as a reduction of the transitional
adjustment that was recorded in other comprehensive income in 2001. Additionally, the Company paid $12,168 in settlement payments for the ineffective hedges during the second quarter of 2003.



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.



14



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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 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.



15



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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 EndedJune 30, |         |   | Six Months Ended June 30, |  
|-------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------- | -
|                                                   |  | 2003                       |         |   | 2002                      |  
|Net loss                                           |  | $                          | (91,513 | ) |                           | $
|Unrealized (loss) gain on securities held for sale |  |                            | 1,323   |   |                           |  
|Unrealized foreign exchange loss                   |  |                            | (12     | ) |                           |  
|Unrealized gain on derivative instruments          |  |                            | 1,115   |   |                           |  
|                                                   |  |                            |         |   |                           |  
|Total comprehensive income                         |  | $                          | (89,087 | ) |                           | $
|                                                   |  |                            |         |   |                           |  



6.    Computation of Earnings Per Share:



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



|                                                                      |  | Three MonthsEndedJune 30, 2003 |          |   | Three MonthsEndedJune 30, 2002 |  
|--------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ------------------------------ | -
|                                                                      |  | Basic andDiluted (1)(2)        |          |   | Basic andDiluted (1)(2)        |  
|Loss from continued operations                                        |  | $                              | (27,412  | ) |                                | $
|Loss from discontinued operations                                     |  |                                | (64,101  | ) |                                |  
|Preferred stock dividends                                             |  |                                | (38,509  | ) |                                |  
|                                                                      |  |                                |          |   |                                |  
|Net loss attributable to common shareholders                          |  | $                              | (130,022 | ) |                                | $
|                                                                      |  |                                |          |   |                                |  
|Weighted average number of shares outstanding                         |  |                                | 168,079  |   |                                |  
|                                                                      |  |                                |          |   |                                |  
|Loss per share:                                                       |  |                                |          |   |                                |  
|Loss from continued operations                                        |  | $                              | (0.39    | ) |                                | $
|Loss from discontinued operations, net of taxes and minority interest |  |                                | (0.38    | ) |                                |  
|                                                                      |  |                                |          |   |                                |  
|Net loss per common share                                             |  | $                              | (0.77    | ) |                                | $
|                                                                      |  |                                |          |   |                                |  

---

|(1) |  | For the three months ended June 30, 2003, the dilutive effect of unvested stock grants of 13,264 and 160,378 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 June 30, 2002, the dilutive effect of unvested stock grants of 13,581 and 146,455 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 June 30, 2003, options to purchase 14,282 shares of common stock at prices ranging from $0.20 to $30.40 were outstanding but not included in the
computation because the effect would be anti-dilutive. For the three months ended June 30, 2002, options to purchase 13,235 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.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



|                                                                                       |  | Six MonthsEndedJune 30, 2003 |          |   | Six MonthsEndedJune 30, 2002 |  
|-------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---------------------------- | -
|                                                                                       |  | Basic andDiluted (1)(2)      |          |   | Basic andDiluted (1)(2)      |  
|Loss from continued operations                                                         |  | $                            | (46,749  | ) |                              | $
|Loss from discontinued operations                                                      |  |                              | (152,176 | ) |                              |  
|Preferred stock dividends                                                              |  |                              | (76,308  | ) |                              |  
|                                                                                       |  |                              |          |   |                              |  
|Loss attributable to common shareholders before cumulative effect of accounting change |  |                              | (275,233 | ) |                              |  
|Cumulative effect of accounting change                                                 |  |                              |         |   |                              |  
|                                                                                       |  |                              |          |   |                              |  
|Net loss attributable to common shareholders                                           |  | $                            | (275,233 | ) |                              | $
|                                                                                       |  |                              |          |   |                              |  
|Weighted average number of shares outstanding                                          |  |                              | 168,042  |   |                              |  
|                                                                                       |  |                              |          |   |                              |  
|Loss per share:                                                                        |  |                              |          |   |                              |  
|Loss from continued operations                                                         |  | $                            | (0.73    | ) |                              | $
|Loss from discontinued operations, net of taxes and minority interest                  |  |                              | (0.91    | ) |                              |  
|Cumulative effect of a change in accounting principle, net of taxes                    |  |                              |         |   |                              |  
|                                                                                       |  |                              |          |   |                              |  
|Net loss per common share                                                              |  | $                            | (1.64    | ) |                              | $
|                                                                                       |  |                              |          |   |                              |  

---

|(1) |  | For the six months ended June 30, 2003, the dilutive effect of unvested stock grants of 13,345 and 160,378 shares of preferred stock were not included in the computation of diluted
earnings per share because they are anti-dilutive. For the six months ended June 30, 2002, the dilutive effect of unvested stock grants of 13,544 and 146,455 shares of preferred stock were not included in the computation of diluted earnings per
share because they are anti-dilutive.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | For the six months ended June 30, 2003, options to purchase 14,282 shares of common stock at prices ranging from $0.20 to $30.40 were outstanding but not included in the computation
because the effect would be anti-dilutive. For the six months ended June 30, 2002, options to purchase 13,235 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., 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



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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. No discovery has been taken yet and the Court has not yet certified a class. 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. No discovery has been taken yet and the Court has
not yet certified a class. 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 parties reached a settlement on July 23, 2003 and exchanged mutual releases. The parties also submitted a stipulation of dismissal of the case to the Supreme Court of
New York on July 23, 2003.



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 and the individual defendants were dismissed. The Attorney General has appealed the dismissal of the individual defendants. The Company intends to vigorously defend this lawsuit and oppose the appeal.



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



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. An answer to the complaint has been filed and discovery has commenced. 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 June 30, 2003, the Company
issued stock dividends of approximately 244,640 shares of series A and series B preferred stock with a value of $24,464. 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 67,377 shares of series A and series B preferred stock with a value of $6,738 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 June 30, 2003.



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. 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.



19



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



As of June 30, 2003, the deferred payments of the cash portion of the preferred stock dividend
totaled approximately $58,500 and are included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.



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 Wyndham offers 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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##### Table of Contents

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. The total revenue and operating income (loss) for each segment for the three and six months
ended June 30, 2003 and 2002 are as follows:



|Three months ended June 30, 2003 |  | Wyndhambranded |         | Nonproprietarybranded |   | Other   |  |   | Total    |  
|-------------------------------- |  | -------------- | ------- | --------------------- | - | ------- |  | - | -------- | -
|Total revenue                    |  | $              | 297,927 |                       | $ | 43,172  |  | $ | 5,358    |  
|Operating income (loss)          |  |                | 65,438  |                       |   | 8,126   |  |   | (118,299 | )
|                                 |  |                |         |                      
|Three months ended June 30, 2002 |  | Wyndhambranded |         | Nonproprietarybranded |   | Other   |  |   | Total    |  
|Total revenue                    |  | $              | 310,722 |                       | $ | 58,840  |  | $ | 6,444    |  
|Operating income (loss)          |  |                | 81,869  |                       |   | 12,059  |  |   | (158,982 | )
|                                 |  |                |         |                      
|Six months ended June 30, 2003   |  | Wyndhambranded |         | Nonproprietarybranded |   | Other   |  |   | Total    |  
|Total revenue                    |  | $              | 612,689 |                       | $ | 88,825  |  | $ | 11,034   |  
|Operating income (loss)          |  |                | 148,677 |                       |   | 14,512  |  |   | (242,196 | )
|                                 |  |                |         |                      
|Six months ended June 30, 2002   |  | Wyndhambranded |         | Nonproprietarybranded |   | Other   |  |   | Total    |  
|Total revenue                    |  | $              | 627,243 |                       | $ | 117,678 |  | $ | 13,018   |  
|Operating income (loss)          |  |                | 175,089 |                       |   | 23,317  |  |   | (287,937 | )

---



The following table represents revenue information by geographic area for the three and six months ended June 30, 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 June 30, 2003
|-------- |  | --------------------------------
|         |  | United States                   
|Revenues |  | $                               
|         | 
|         |  | Three Months ended June 30, 2002
|         |  | United States                   
|Revenues |  | $                               
|         | 
|         |  | Six Months ended June 30, 2003  
|         |  | United States                   
|Revenues |  | $                               
|         | 
|         |  | Six Months ended June 30, 2002  
|         |  | United States                   
|Revenues |  | $                               



21



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##### Table of Contents

WYNDHAM INTERNATIONAL, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands, except share amounts)

(unaudited)



10.    Supplemental Cash Flow Disclosure:



During the three months ended June 30, 2003, the Company issued a stock
dividend of 244,640 shares of series A and series B preferred stock with a value of $24,464. The Company deferred payment of the cash portion of the dividend of approximately $7,305. 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 67,378 shares of series A and series B preferred stock with a value of $6,738 in payment of additional dividends at a rate of
2.0% per annum as cash dividends on the series A and B preferred stock were in arrears for at least 60 days as of June 30, 2003.



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 series A and B preferred stock were in
arrears for at least 60 days as of March 31, 2003.



During the
three months ended June 30, 2003, the Company recorded an accrual of $6,601 as a result of the change in the fair market value of the derivatives with the offset recognized as a net gain of $6,227 and an increase to other comprehensive income of
$225 (net of taxes of $150). Also, in the second quarter of 2003, the Company recorded amortization of $890 (net of taxes of $594) to earnings as a reduction of the transitional adjustment that was recorded in other comprehensive income in 2001.



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.



11.    Subsequent Event:



On July 24 and August 8, 2003, the Company sold two hotels for $32,400 in
separate transactions. The hotels had no mortgage debt. As part of the sale agreements, one hotel will retain the Wyndham flag under a ten-year management agreement and one hotel will retain the Wyndham flag under a twenty-year franchise agreement.
These properties have been classified as assets held for sale in the balance sheet as of June 30, 2003 and the results of operations have been reported separately as discontinued operations. As a result of these asset sales, the Company paid down a
portion of the senior credit facility and a portion of the increasing rate loan facility by approximately $24,400.



22



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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 in our 2002 Annual Report on Form 10-K, 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 June 30, 2003, we had 110 owned and leased hotels with approximately
30,900 guestrooms as compared to 164 owned and leased hotels with approximately 42,600 guestrooms at June 30, 2002. This decrease was a result of hotels sold and leases terminated during that twelve month period. As of June 30, 2003, we managed 26
hotels and franchised 67 hotels as compared to 30 managed hotels and 24 franchised hotels at June 30, 2002.



We continue to sell our non-strategic assets to reduce debt. At June 30, 2003, we had approximately $213 million of assets classified as held for sale,
net of impairment of $89.1 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 term loan and revolving
credit facility and a third amendment of our increasing rates loan facility. The amendments and restatements include 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.
| | - |  | -------------------------------------------------------------------------------------------------



On May 29, 2003, we entered into a fifth amendment and restatement of our term loan and revolving credit facility and a
fourth amendment of our increasing rate loans facility. The amendments provide for the extension of the maturity dates on our revolving and increasing rate loan facilities (currently scheduled to occur on June 30, 2004) to April 1, 2006 upon
the satisfaction of certain conditions, including the principal repayment of approximately $194 million of the term and increasing rate facilities before February 29, 2004. The primary source of funds for the $194 million repayment will be proceeds
of asset sales and refinancings. As of August 12, 2003, we had repaid $154 million using the proceeds of the Lehman IV refinancing discussed below and two asset sales. We may also use corporate cash and up to $10 million from the revolving
credit facility to meet the target paydown amount. In connection with the maturity extensions, the available commitments under our revolving credit facility will also be reduced by $85 million. Over 95% of the revolving and increasing rate lenders
voted in favor of the amendments. Loans held by non-consenting lenders currently totaling $19.4 million will retain the original maturity date. Also, consenting lenders will receive an increase in interest rate and certain fees as set forth in the
amended credit facilities.



In order to obtain the maturity
extensions, we were required to, among other things, refinance or extend the maturity date of our 1999 commercial mortgage-backed securities pool with Lehman Brothers Holdings, Inc. beyond June 30, 2006. A portion of this requirement was satisfied
on June 11, 2003 by the completion of a $425 million mortgage refinancing secured by 19 hotel properties. The remainder of the conditions must be satisfied by February 29, 2004. The loan was made by affiliates of Lehman Brothers Holdings, Inc.
and bears interest at the rate set forth in Note 3, footnote 8 and has an initial maturity date of June 9, 2005. We, in our sole discretion, may extend the maturity date of the loan to as late as July 9, 2008. The loan refinanced the 1999 mortgage
pool described above and a second mortgage pool that were scheduled to mature on July 1, 2003 and July 1, 2004, respectively.



Upon the effectiveness of the maturity extensions, we may retain some or all of the net cash proceeds from asset sales and refinancings of existing
mortgage indebtedness (other than the credit facilities) up to $22.5 million to be used to repay the non-consenting lenders at the June 2004 original maturity date as long as we maintain a pro forma minimum revolving facility commitment
availability after giving effect to such retention. Following the retention described above, we will apply net cash proceeds in the following manner: first, the initial $20 million of asset sale proceeds each year may be retained by us, provided
that the second $10 million of the $20 million may be retained only if our liquidity falls below a certain level set forth in the credit facilities; second, subject to certain limitations set forth in the credit facilities including our maximum
liquidity levels, we may elect to retain up to 25% of such net cash proceeds with the balance applied to repay indebtedness under the credit facilities, up to a maximum of $35 million a year; third, to repay scheduled term loan prepayments; fourth,
after we have retained $35 million in such year, or if we are not permitted to retain a percentage of the asset sale or refinancing proceeds as a result of the limitations set forth in the credit facilities, 100% of such proceeds must be applied to
repay indebtedness under the credit facilities on a pro rata basis. We also agreed to use 100% of the net cash proceeds from new debt issuances (other than refinancings of existing mortgage indebtedness which will be applied in accordance with the
previous sentence) to reduce outstanding indebtedness under the credit facilities on a pro rata basis.



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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 the remainder of 2003, we have scheduled principal payments and debt maturities of approximately $13.8 million. During 2004, we have scheduled
principal payments and debt maturities of approximately $863 million. Of that amount, we can elect to extend $215.9 million for two additional twelve month periods. Also, with the fifth amendment and restatement of our term loan and revolving
credit facility and the fourth amendment of our increasing rate loans facility, the maturity date of our revolving and increasing rate loan facilities totaling $558 million currently due on June 30, 2004, will be extended to April 1, 2006 upon the
satisfaction of certain conditions. We are seeking to refinance the remaining 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.



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 June 30, 2003 compared with the three months ended June 30, 2002



Our hotel revenues were $341,099,000 and $369,562,000 for the three months ended June 30, 2003 and 2002, respectively. Approximately $13,386,000 of the
decrease in our hotel revenues is attributable to those hotels that were sold since June 30, 2002. The remaining decrease is attributable to the declining revenues throughout our owned and leased hotel portfolio. While occupancy remained flat,
revenue per available room, or RevPAR, and average daily rate, or ADR, decreased 5.40% and 5.80%, respectively, for the three months ended June 30, 2003 as compared to the same period in 2002.



Our hotel expenses were $262,625,000 and $272,914,000 for the three months
ended June 30, 2003 and 2002, respectively. The decrease of $10,289,000 in our hotel expenses was in part due to hotels that were sold since June 30, 2002 and staffing reductions at the hotels and other cost saving initiatives we implemented as our
hotel revenues declined.



Our management fee and service fee
income was $4,430,000 and $4,574,000 for the three months ended June 30, 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 nine contracts since June
30, 2002. The decrease was offset by 36 new management and franchise contracts acquired subsequent to June 30, 2002.



Our interest and other income was $928,000 and $1,870,000 for the three months ended June 30, 2003 and 2002, respectively. Approximately $863,000 of the
decrease in interest and other income can be attributed to dividend and interest income from investments that were sold subsequent to June 30, 2002 and certain one-time transaction fees incurred in June 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 $16,143,000 and $18,951,000 for the three months ended June 30, 2003 and 2002, respectively. The decrease in our general and administrative expenses for the three months
ended June 30, 2003 is primarily a result of the following: reductions in bonus accruals of $1,770,000,



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reductions in deferred compensation expenses of $501,000, reductions in receivable write-offs of $727,000 and reductions in conversion costs of $275,000.
These reductions in general and administrative costs were offset by increases in directors and officers insurance costs of $418,000, increases in legal costs of $250,000 and increases in leasehold termination costs of $522,000.



During the three months ended June 30, 2002, our bond offering
cancellation costs were $4,504,000. We withdrew the offering of the proposed debt securities due to unfavorable market conditions.



Our interest expense was $49,801,000 and $54,401,000 for the three months ended June 30, 2003 and 2002, respectively. This decrease is a result of a
reduction in the amount of our total debt and lower interest rates. At June 30, 2003 and 2002, we had approximately $2.76 billion and $3.32 billion of debt, respectively. Also, the one-month LIBOR rate was 1.12% and 1.84% as of June 30, 2003
and 2002, respectively, and our weighted average interest rate as of June 30, 2003 was 5.88% as compared to 6.00% as of June 30, 2002.



Our depreciation and amortization expense was $53,158,000 and $57,071,000 for the three months ended June 30, 2003 and 2002, respectively. The
decrease in depreciation expense is due to assets becoming fully depreciated subsequent to the three months ended June 30, 2002.



The benefit for income taxes was $16,273,000 and $23,952,000 for the three months ended June 30, 2003 and 2002, respectively. The decrease in the tax
benefit is due to lower operating losses during the quarter ended June 30, 2003 as compared to same period in 2002.



Minority interests share of income in consolidated subsidiaries was $225,000 and $23,000 for the three months ended June 30, 2003 and 2002,
respectively. The increase is attributable to better operating results due to lower hotel expenses in the joint venture partnerships.



For the three months ended June 30, 2003, we recorded a gain of $6,227,000 as compared to a loss of $18,533,000 for the three months ended June 30, 2002
for the change in the fair market value of interest rate hedge contracts. In addition, a reduction of $225,000 (net of taxes of $150,000) and a charge of $103,000 (net of taxes of $69,000) were recorded against other comprehensive income for the
three months ended June 30, 2003 and 2002, respectively, for such change. Also, during the three months ended June 30, 2003 and 2002, we paid $12,168,000 and $10,704,846 respectively, in settlement payments for ineffective hedges. In addition, we
recorded amortization of $890,000 (net of taxes of $594,000) and $3,084,000 (net of taxes of $2,056,000) for the three months ended June 30, 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 $64,101,000 and $294,000 for the three months ended June 30, 2003 and 2002, respectively. The increase in loss is attributable to the loss from operations of $2,424,000; impairment charges of $37,303,000, net of taxes; and the
write-off of the remaining book value of the terminated HPT leases of $28,261,000, net of taxes. The loss from discontinued operations was offset by an increase in gain on sale of assets of $4,181,000.



Impairment loss was $2,040,000 for the three months ended June 30, 2003. The
impairment loss is a pre-tax charge related to the decline in value of certain equity securities held by us. The decline in value of the securities was deemed to be other-than-temporary in the quarter ended June 30, 2003, thus requiring an earnings
charge, primarily based on the length of time the securities have traded below cost.



Our resulting net loss for the three months ended June 30, 2003 was $91,513,000 as compared to a net loss of $41,365,000 for the three months ended June 30, 2002.



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Results of Operations: Six months ended June 30, 2003 compared with the six months ended June 30, 2002



Our hotel revenues were $701,514,000 and $744,921,000 for
the six months ended June 30, 2003 and 2002, respectively. Approximately $22,234,000 of the decrease in our hotel revenues is attributable to those hotels that were sold since June 30, 2002. The remaining decrease is attributable to the declining
revenues throughout our owned and leased hotel portfolio. While occupancy increased 2.0%, RevPAR and ADR decreased 3.80% and 5.90%, respectively, for the six months ended June 30, 2003 as compared to the same period in 2002.



Our hotel expenses were $526,985,000 and $541,253,000 for the six months
ended June 30, 2003 and 2002, respectively. The decrease of $14,268,000 in our hotel expenses was in part due to hotels that were sold since June 30, 2002 and staffing reductions at the hotels and other cost saving initiatives we implemented as our
hotel revenues declined. These decreases were offset in part by an increase of approximately $4,083,000 in our property, general liability, worker compensation and health insurance premiums during the six months ended June 30, 2003 compared to June
30, 2002.



Our management fee and service fee income was
$8,850,000 and $9,043,000 for the six months ended June 30, 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 nine contracts since June 30, 2002.
The decrease was offset by 46 new management and franchise contracts acquired subsequent to June 30, 2002.



Our interest and other income was $2,184,000 and $3,975,000 for the six months ended June 30, 2003 and 2002, respectively. Approximately $1,721,000 of the
decrease in interest and other income can be attributed to dividend and interest income from investments that were sold subsequent to June 30, 2002 and certain one-time transaction fees incurred 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 $34,361,000 and $39,125,000 for the six months ended June 30, 2003 and 2002, respectively. The decrease in our general and administrative expenses for the six months
ended June 30, 2003 is primarily a result of the following: reductions in bonus accruals of $3,836,000, reductions in deferred compensation expenses of $837,000, reductions in legal fees of $2,352,000, reductions in development and acquisition costs
of $1,086,000 and reductions in conversion costs of $939,000. These reductions in general and administrative costs were offset by increases in receivable write-offs of $3,251,000, increases in directors and officers insurance of
$837,000, increases in leasehold termination costs of $522,000, reductions in management contract costs of $476,000 and a litigation settlement accrual of $1,021,000.



During the six months ended June 30, 2002, our bond offering cancellation costs were $4,504,000. We withdrew the offering of
the proposed debt securities due to unfavorable market conditions.



Our interest expense was $92,898,000 and $112,687,000 for the six months ended June 30, 2003 and 2002, respectively. This decrease is a result of a reduction in the amount of our total debt and lower interest rates. At June 30, 2003 and
2002, we had approximately $2.76 billion and $3.32 billion of debt, respectively. Also, the one-month LIBOR rate was 1.12% and 1.84% as of June 30, 2003 and 2002, respectively, and our weighted average interest rate as of June 30, 2003 was 5.88% as
compared to 6.00% as of June 30, 2002.



Our depreciation and
amortization expense was $107,148,000 and $113,084,000 for the six months ended June 30, 2003 and 2002, respectively. The decrease in depreciation expense is due to assets becoming fully depreciated subsequent to the six months ended June 30,
2002.



The benefit for income taxes was $31,827,000 and
$32,657,000 for the six months ended June 30, 2003 and 2002, respectively. The decrease in the tax benefit is due to lower operating losses during the six months ended June 30, 2003 as compared to same period in 2002.



Minority interests share of income in consolidated subsidiaries was
$270,000 and $322,000 for the six months ended June 30, 2003 and 2002, respectively. The decrease is due to lower operating results in the joint



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venture partnerships. The operating results were impacted by increases our property, general liability, worker compensation and health insurance premiums
during the six months ended June 30, 2003 compared to June 30, 2002.



For the six months ended June 30, 2003, we recorded a gain of $7,879,000 as compared to a loss of $2,451,000 for the six months ended June 30, 2002 for the change in the fair market value of interest rate hedge contracts. In addition, a
reduction of $1,516,000 (net of taxes of $1,011,000) and a charge of $1,405,000 (net of taxes of $936,000) were recorded against other comprehensive income for the six months ended June 30, 2003 and 2002, respectively, for such change. Also, during
the six months ended June 30, 2003 and 2002, we paid $23,578,000 and $20,315,000, respectively, in settlement payments for ineffective hedges. In addition, we recorded amortization of $2,036,000 (net of taxes of $1,357,000) and $6,167,000 (net of
taxes of $4,111,000) for the six months ended June 30, 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 $152,176,000 and $4,145,000 for the six
months ended June 30, 2003 and 2002, respectively. The increase in loss is attributable to the loss from operations of $7,107,000; impairment charges of $54,269,000, net of taxes; and the write-off of the remaining book value of the terminated HPT
leases of $90,836,000, net of taxes. The loss from discontinued operations was offset by an increase in gain on sale of assets of $4,181,000.



Impairment loss was $6,133,000 and $162,000 for the six months ended June 30, 2003 and 2002, respectively. The impairment loss is the write-down of assets
held for sale during the six months ended June 30, 2003 and a pre-tax charge related to the decline in value of certain equity securities held by us. The decline in value of the securities was deemed to be other-than-temporary during the six months
ended June 30, 2003, thus requiring an earnings charge, primarily based on the length of time the securities have traded below cost.



Our adoption of SFAS No. 142 during the six months ended June 30, 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.



Our resulting net loss for the six months ended June 30, 2003 was $198,925,000 as compared to a net loss of $384,545,000 for the six months ended June 30,
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 June 30, 2002 to conform to the three months ended June 30, 2003 presentation.



For the three months ended June 30, 2003 compared with the three months
ended June 30, 2002



Wyndham branded properties include
Wyndham Hotels & Resorts®, Wyndham Luxury
Resorts®, Wyndham Gardens hotels® and Summerfield Suites® by Wyndham. This segment represented approximately 86% and 82.6% of our total
revenue for the three months ended June 30, 2003 and 2002, respectively. Total revenue for this segment was $297,927,000 compared to $310,722,000 for the three months ended June 30, 2003 and 2002, respectively. Operating income for this segment was
$67,893,000 compared to $83,229,000 for the three months ended June 30, 2003 and 2002, respectively. Decreases in revenue and operating income for this segment can be primarily attributed to a decline in ADR of 6.8% in the three months ended June
30, 2003. The decrease in ADR was partially offset by an increase in occupancy of 2.2%.



Non-proprietary branded properties, including Doubletree®, Hilton®,
Holiday Inn®, Marriott®, Ramada®, Radisson®, and Hyatt®, represented approximately 12.5% and 15.6% of our total revenue for the three months ended June 30, 2003 and 2002, respectively. Total revenue for this segment was $43,172,000 compared
to



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$58,840,000 for the three months ended June 30, 2003 and 2002, respectively. Operating income for this segment was $8,126,000 and $12,059,000 for the three
months ended June 30, 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 June 30, 2002. Also, operating results were impacted by declines in ADR and
occupancy of 4.4% and 5.3%, respectively.



During 2002, we
identified 50 non-proprietary branded hotels as non-strategic assets that we intend to sell. We have sold 17 of these assets and 33 assets remain to be sold. However, these remaining 33 non-strategic assets will be held until such time as the sales
price meets or exceeds managements assessment of each assets fair value. The 33 assets represented approximately 18% and 16% of our revenue for the three months ended June 30, 2003 and 2002, respectively. In response to third party
offers, we have also identified a limited number of Wyndham-branded assets that we would consider selling under limited circumstances and upon specific conditions. The Wyndham-branded assets include properties where we would retain a franchise or
management agreement, properties that reside in markets where we have multiple Wyndham-branded assets and would maintain favorable market penetration after the sale, and properties that are inconsistent with the maintenance and development of the
Wyndham brand.



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 $5,358,000 and $6,444,000
for the three months ended June 30, 2003 and 2002, respectively. The overall $1,086,000 decrease in this segments revenue was primarily the result of dividend and interest income from investments that were sold subsequent to June 30, 2002 and
certain one-time transaction fees incurred in June 2002. Operating losses for this segment were $118,299,000 and $158,982,000 for the three months ended June 30, 2003 and 2002, respectively. The decrease in operating loss of $40,683,000 was
primarily due to the following: reductions in bonus accruals of $1,770,000, reductions in deferred compensation expenses of $501,000, reductions in receivable write-offs of $727,000, reductions in conversion costs of $275,000, reductions in loss on
derivative instruments of $26,575,000, reductions in bond cancellation costs of $4,504,000, reductions in interest expenses of $4,600,000, reductions in depreciation and amortization of $3,913,000 and lower gains on the sale of assets of $1,159,000.
The reductions were offset by increases in directors and officers insurance costs of $418,000, increases in legal costs of $250,000, increases in leasehold termination costs of $522,000 and increases in impairment charge of $2,040,000.



For the six months ended June 30, 2003 compared with the
six months ended June 30, 2002



Wyndham branded properties
include Wyndham Hotels & Resorts®, Wyndham
Luxury Resorts®, Wyndham Gardens hotels® and Summerfield Suites® by Wyndham. This segment represented approximately 86% and 82.8% of our total
revenue for the six months ended June 30, 2003 and 2002, respectively. Total revenue for this segment was $612,689,000 compared to $627,243,000 for the six months ended June 30, 2003 and 2002, respectively. Operating income for this segment was
$154,347,000 compared to $177,720,000 for the six months ended June 30, 2003 and 2002, respectively. Decreases in revenue and operating income for this segment can be primarily attributed to a decline in ADR of 6.5% in the six months ended June 30,
2003. The decrease in ADR was partially offset by an increase in occupancy of 3.3%. Also, operating results were impacted by increases in our fixed expenses, such as property, general liability, worker compensation and health insurance.



Non-proprietary branded properties, including Doubletree®, Hilton®, Holiday Inn®, Marriott®, Ramada®, Radisson®, and Hyatt®,
represented approximately 12.5% and 15.5% of our total revenue for each of the six months ended June 30, 2003 and 2002, respectively. Total revenue for this segment was $88,825,000 compared to $117,678,000 for the six months ended June 30, 2003 and
2002, respectively. Operating income for this segment was $14,512,000 and $23,317,000 for the six months ended June 30, 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 June 30, 2002. Also, operating results were impacted by declines in ADR and occupancy of 5.8% and 2%, respectively, and by increases in our fixed expenses, such as property, general liability, worker compensation and health
insurance.



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During 2002, we identified 50 non-proprietary branded hotels as non-strategic assets that we intend to
sell. We have sold 17 of these assets and 33 assets remain to be sold. However, these remaining 33 non-strategic assets will be held until such time as the sales price meets or exceeds managements assessment of each assets fair value.
The 33 assets represented approximately 17% and 16% of our revenue for the six months ended June 30, 2003 and 2002, respectively. In response to third party offers, we have also identified a limited number of Wyndham-branded assets that we
would consider selling under limited circumstances and upon specific conditions. The Wyndham-branded assets include properties where we would retain a franchise or management agreement, properties that reside in markets where we have multiple
Wyndham-branded assets and would maintain favorable market penetration after the sale, and properties that are inconsistent with the maintenance and development of the Wyndham brand.



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 $11,034,000 and $13,018,000 for the six months ended June 30, 2003 and 2002, respectively. The
overall $1,984,000 decrease in this segments revenue was primarily the result of dividend and interest income from investments that were sold subsequent to June 30, 2002 and certain one-time transaction fees incurred in 2002. Operating losses
for this segment were $242,196,000 and $287,937,000 for the six months ended June 30, 2003 and 2002, respectively. The decrease in operating loss of $45,741,000 was primarily due to the following: reductions in bonus accruals of $3,836,000,
reductions in deferred compensation expenses of $837,000, reductions in legal fees of $2,352,000, reductions in development and acquisition costs of $1,086,000, reductions in derivative instruments of $13,951,000, reductions in bond cancellation
costs of $4,504,000, reductions in interest expenses of $19,789,000, reductions in depreciation and amortization of $5,936,000 and reductions in conversion costs of $939,000. The reductions were offset by increases in receivable write-offs of
$3,251,000, increases in directors and officers insurance of $837,000, increases in leasehold termination costs of $522,000, reductions in management contract costs of $476,000, increases in impairment of $5,971,000, increases in losses
on the sale of assets of 1,326,000 and a litigation settlement accrual of $1,021,000.



Recent Events



During the three months ended
June 30, 2003, and the subsequent months as of August 8, 2003, we sold our investments in thirteen hotels. We received net cash proceeds of approximately $36.3 million, after the repayment of mortgage debt of $67.6 million. We recorded a net gain of
$3.9 million as a result of these asset sales, net of impairment of $68.2 million. Also, $38.6 million of the net cash proceeds were used by us to pay down a portion of the senior credit facility and increasing rate loans facility, and we retained
the rest of the net cash proceeds in accordance with the terms of the senior credit facilities. As part of the sale agreements, one hotel will retain the Wyndham flag under a ten-year management agreement and one hotel will retain the Wyndham flag
under a twenty-year franchise agreement.



Also during the three
months ended June 30, 2003, leases on 27 hotel properties (15 Summerfield Suites® by Wyndham and 12 Wyndham Hotels and Garden Hotels) held and operated by two of our subsidiaries were terminated by Hospitality Properties Trust (HPT). These subsidiaries are in negotiations with HPT on the final
franchise agreements for these properties. On an annualized basis, based upon projections for the calendar year 2003, the estimated positive impact on cash flow of the lease terminations to our subsidiaries is $14.3 million. For six months
ended June 30, 2003, the terminations resulted in a non-cash write-off of approximately $150 million for the leases remaining book value.



On May 29, 2003, we entered into a fifth amendment and restatement of our term loan and revolving credit facility and a fourth amendment of our increasing
rate loans facility. The amendments provide for the extension of the maturity dates on our revolving and increasing rate loan facilities (currently scheduled to occur on June 30, 2004) to April 1, 2006 upon the satisfaction of certain
conditions, including the principal repayment of approximately $194 million of the term and increasing rate facilities before February 29, 2004. The primary source of funds for the $194 million repayment will be proceeds of asset sales and
refinancings. As of August 12,



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2003, we had repaid $154 million using the proceeds of the Lehman IV refinancing discussed below and two asset sales. We may also use corporate cash and up
to $10 million from the revolving credit facility to meet the target paydown amount. In connection with the maturity extensions, the available commitments under our revolving credit facility will also be reduced by $85 million. Over 95% of the
revolving and increasing rate lenders voted in favor of the amendments. Loans held by non-consenting lenders currently totaling $19.4 million will retain the original maturity date. Also, consenting lenders will receive an increase in interest
rate and certain fees as set forth in the amended credit facilities.



In order to obtain the maturity extensions, we were required to, among other things, refinance or extend the maturity date of our 1999 commercial mortgage-backed securities pool with Lehman Brothers Holdings, Inc. beyond June 30, 2006. A
portion of this requirement was satisfied on June 11, 2003 by the completion of a $425 million mortgage refinancing secured by 19 hotel properties. The remainder of the conditions must be satisfied by February 29, 2004. The loan was made by
affiliates of Lehman Brothers Holdings, Inc. and bears interest at the rates set forth in Note 3, footnote 8 and has an initial maturity date of June 9, 2005. We, in our sole discretion, may extend the maturity date of the loan to as late as July 9,
2008. The loan refinanced the 1999 mortgage pool described above and a second mortgage pool that were scheduled to mature on July 1, 2003 and July 1, 2004, respectively.



Upon the effectiveness of the maturity extensions, we may retain some or all of the net cash proceeds from asset sales and
refinancings of existing mortgage indebtedness (other than the credit facilities) up to $22.5 million to be used to repay the non-consenting lenders at the June 2004 original maturity date as long as we maintain a pro forma minimum revolving
facility commitment availability after giving effect to such retention. Following the retention described above, we will apply net cash proceeds in the following manner: first, the initial $20 million of asset sale proceeds each year may be retained
by us, provided that the second $10 million of the $20 million may be retained only if our liquidity falls below a certain level set forth in the credit facilities; second, subject to certain limitations set forth in the credit facilities including
our maximum liquidity levels, we may elect to retain up to 25% of such net cash proceeds with the balance applied to repay indebtedness under the credit facilities, up to a maximum of $35 million a year; third, to repay scheduled term loan
prepayments; fourth, after we have retained $35 million in such year, or if we are not permitted to retain a percentage of the asset sale or refinancing proceeds as a result of the limitations set forth in the credit facilities, 100% of such
proceeds must be applied to repay indebtedness under the credit facilities on a pro rata basis. We also agreed to use 100% of the net cash proceeds from new debt issuances (other than refinancings of existing mortgage indebtedness which will be
applied in accordance with the previous sentence) to reduce outstanding indebtedness under the credit facilities on a pro rata basis.



Statistical Information



Our portfolio of 110 owned and leased hotels experienced a decline in ADR and REVPAR for the three and six months ended June 30, 2003 as compared to the
three and six months ended June 30, 2002 although occupancy increased over such period. The following table sets forth certain statistical information for the 110 owned and leased hotels for 2003 and 2002 as if the hotels were owned or leased
for the entire periods presented.



|                               |  | Three months ended June 30, |   | Six months ended June 30,
|------------------------------ |  | --------------------------- | - | -------------------------
|                               |  | Occupancy                   |   |                          
|                               |  | 2003                        |   |                          
|Wyndham Hotels & Resorts       |  | 75.5                        | % |                          
|Wyndham Luxury Resorts         |  | 79.6                        |   |                          
|Wyndham Garden Hotels          |  | 79.5                        |   |                          
|Summerfield Suites by Wyndham  |  | 87.6                        |   |                          
|Non-Proprietary Branded Hotels |  | 59.1                        |   |                          
|                               |  |                             |   |                          
|Weighted average               |  | 70.6                        | % |                          
|                               |  |                             |   |                          



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Liquidity and Capital Resources



Our cash and cash equivalents as of June 30, 2003 were $52.5 million and our restricted cash was $154.1 million. Our
cash and cash equivalents as of June 30, 2002 were $77.9 million and our restricted cash was $104.8 million. Included in restricted cash at June 30, 2003 is $33.1 million which is a portion of the net proceeds received from the sale of a
portfolio of thirteen hotels. The $33.1 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 $36.7 million and $65.3 million for the six months ended June 30, 2003 and 2002, respectively. Operational cash flows were negatively impacted by lower cash generated from
hotel operations as a result of hotels sold and lower RevPar which was 3.8% lower compared to the same period in 2002. The decrease in RevPar was negatively impacted by the sluggish economy, travelers fears of exposure to contagious diseases
and the effects of Operation Iraqi Freedom. This was offset in part by lower interest expense payments of approximately $17.6 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.



Cash Flows from Investing and Financing
Activities



Cash flows provided by our investing
activities were $62.4 million for the six months ended June 30, 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 $83.8 million for the six months ended June 30, 2003 were primarily related to principal repayments made on our debt and distributions made to limited partners.



Cash flows used in investing activities were $27.4 million for the six
months ended June 30, 2002, resulting primarily from renovation expenditures at certain hotels and changes in our restricted cash reserves. This was offset by proceeds from the sale of assets during the period. Cash flows used in financing
activities of $126.3 million for the six months ended June 30, 2002 were primarily related to principal payments made on our debt and distributions made to limited partners.



Credit Facilities



As of June 30, 2003, we had approximately $168.7 million outstanding under our revolving credit facility, $1.1 billion outstanding on our term loans,
and $389.5 million outstanding under our increasing rate loans facility. Additionally, we had outstanding letters of credit totaling $66.8 million. Also as of June 30, 2003, we had $1.1 billion of mortgage debt outstanding that encumbered 42
hotels and capital leases and other debt of $38.9 million, resulting in total indebtedness of approximately $2.76 billion. Included in the total indebtedness is approximately $107.2 million of debt associated with assets held for sale. As of
June 30, 2003, we had approximately $200 million in liquidity.



On March 4, 2003, we entered into a fourth amendment and restatement of our term loan and revolving credit facility and a third amendment of our increasing rates loan facility. The amendments and restatements include 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------



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| |  |  | 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.
| | - |  | -------------------------------------------------------------------------------------------------



On May 29, 2003, we entered into a fifth amendment and restatement of our term loan and revolving credit facility and a
fourth amendment of our increasing rate loans facility. The amendments provide for the extension of the maturity dates on our revolving and increasing rate loan facilities (currently scheduled to occur on June 30, 2004) to April 1, 2006 upon
the satisfaction of certain conditions, including the principal repayment of approximately $194 million of the term and increasing rate facilities before February 29, 2004. The primary source of funds for the $194 million repayment will be proceeds
of asset sales and refinancings. As of August 12, 2003, we had repaid $154 million using the proceeds of the Lehman IV refinancing discussed below and two asset sales. We may also use corporate cash and up to $10 million from the revolving
credit facility to meet the target paydown amount. In connection with the maturity extensions, the available commitments under our revolving credit facility will also be reduced by $85 million. Over 95% of the revolving and increasing rate lenders
voted in favor of the amendments. Loans held by non-consenting lenders currently totaling $19.4 million will retain the original maturity date. Also, consenting lenders will receive an increase in interest rate and certain fees as set forth in
the amended credit facilities.



In order to obtain the maturity
extensions, we were required to, among other things, refinance or extend the maturity date of our 1999 commercial mortgage-backed securities pool with Lehman Brothers Holdings, Inc. beyond June 30, 2006. A portion of this requirement was satisfied
on June 11, 2003 by the completion of a $425 million mortgage refinancing secured by 19 hotel properties. The remainder of the conditions must be satisfied by February 29, 2004. The loan was made by affiliates of Lehman Brothers Holdings, Inc.
and bears interest at the rate set forth in Note 3, footnote 8 and has an initial maturity date of June 9, 2005. We, in our sole discretion, may extend the maturity date of the loan to as late as July 9, 2008. The loan refinanced the 1999 mortgage
pool described above and a second mortgage pool that were scheduled to mature on July 1, 2003 and July 1, 2004, respectively.



Upon the effectiveness of the maturity extensions, we may retain some or all of the net cash proceeds from asset sales and refinancings of existing
mortgage indebtedness (other than the credit facilities) up to $22.5 million to be used to repay the non-consenting lenders at the June 2004 original maturity date as long as we maintain a pro forma minimum revolving facility commitment
availability after giving effect to such retention. Following the retention described above, we will apply net cash proceeds in the following manner: first, the initial $20 million of asset sale proceeds each year may be retained by us, provided
that the second $10 million of the $20 million may be retained only if our liquidity falls below a certain level set forth in the credit facilities; second, subject to certain limitations set forth in the credit facilities including our maximum
liquidity levels, we may elect to retain up to 25% of such net cash proceeds with the balance applied to repay indebtedness under the credit facilities, up to a maximum of $35 million a year; third, to repay scheduled term loan prepayments; fourth,
after we have retained $35 million in such year, or if we are not permitted to retain a percentage of the asset sale or refinancing proceeds as a result of the limitations set forth in the credit facilities, 100% of such proceeds must be applied to
repay indebtedness under the credit facilities on a pro rata basis. We also agreed to use 100% of the net cash proceeds from new debt issuances (other than refinancings of existing mortgage indebtedness which will be applied in accordance with the
previous sentence) to reduce outstanding indebtedness under the credit facilities on a pro rata basis.



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, our debt service requirements, major renovations, expansions and other recurring capital improvements. We anticipate that these needs will be
fully funded from our cash flows provided by operating activities, proceeds from asset sales and, when necessary, from our revolving credit facility. In the



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past, we have generally met our long-term liquidity requirements for the funding of activities, such as development, and scheduled debt maturities, through
long-term secured and unsecured indebtedness and the proceeds from the sale of our assets.



Under the terms of the applicable credit facility, loan agreement, and lease agreement, as of June 30, 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(B)                             |  |                     
|Hotel and ground leases(B)                   |  |                     
|                                             |  |                     
|Total                                        |  | $                   
|                                             |  |                     

---

|(A) |  | We entered into amendments and restatements of our senior credit facilities. Upon the satisfaction of certain conditions, the consenting lenders maturity dates for the
revolving credit facility and the increasing rate loans will be extended to April 1, 2006.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



During the remainder of 2003, we have scheduled principal payments and debt maturities of approximately $13.8 million.
During 2004, we have scheduled principal payments and debt maturities of approximately $863 million. Of that amount, we can elect to extend $215.9 million for two additional twelve month periods. Also, on May 29, 2003, we entered into a fifth
amendment and restatement of our term loan and revolving credit facility and a fourth amendment of our increasing rate loans facility which will extend the maturity dates of our revolving and increasing rate loan facilities totaling $558 million
currently due on June 30, 2004 to April 1, 2006 upon the satisfaction of certain conditions. We are seeking to refinance the remaining 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 the common shareholders and are 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 June 30, 2003, we issued stock dividends of approximately 244,640 shares of series A and series B preferred stock with a value of $24,464. The amount has been included in accounts payable
and accrued expenses in the accompanying consolidated balance sheet. In addition, we issued an



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additional stock dividend of 67,377 shares of series A and series B preferred stock with a value of $6,738 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 June 30, 2003.



During the three months ended March 31, 2003, we issued stock dividends of approximately 239,016 shares of series A and series B preferred stock with a
value of $23,902. In addition, we 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.



As of June 30, 2003, the deferred payments of the cash portion of the preferred stock dividend totaled approximately $58.5 million and are included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.



Renovations and Capital Improvements



During the first six months of 2003, we invested approximately $16.8 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



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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.



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 June 30, 2003, our balance sheet included an estimated liability with respect to this self-insurance program of $26,727,000.



Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements. During six months ended
June 30, 2003, such derivatives were used to hedge the variable cash flows associated with a portion of our variable-rate debt. As of June 30, 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.



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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 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 derivative 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.



In May 2003, the FASB issued SFAS 150,
Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 specifies that instruments within its scope embody obligations of the issuer and that, therefore, the issuer must classify them as
liabilities. For calendar-year-end companies, SFAS 150 will become effective at the beginning of their third quarters. SFAS 150 is effective immediately for all financial instruments entered into or modified after May 31, 2003. For all other
instruments, SFAS 150 goes into effect at the beginning of the first interim period beginning after June 15, 2003, except for



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mandatorily redeemable financial instruments of a non-public entity. For contracts that were created or modified before May 31, 2003 and still exist at the
beginning of the first interim period beginning after June 15, 2003, entities should record the transition to SFAS 150 by reporting the cumulative effect of a change in an accounting principle. SFAS 150 prohibits entities from restating financial
statements for earlier years presented. We are currently evaluating the provisions of SFAS 150, but believes its adoption will not have a material impact on our financial position or results of operations.



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Item 3.    Quantitative and Qualitative 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 June
30, 2003. For variable rate debt obligations, the table presents principal cash flows by expected maturity date and contracted interest rates at June 30, 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 June 30, 2003.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                               |  | Remainderof 2003       |         |   | 2004(1) |   |         | 2005 |  |   | 2006    |   |  | 2007 |           |   | Thereafter |   |        | Face Value |  | Fair Value |       
|-------------------------------------------------------------- |  | ---------------------- | ------- | - | ------- | - | ------- | ---- |  | - | ------- | - |  | ---- | --------- | - | ---------- | - | ------ | ---------- |  | ---------- | ------
|                                                               |  | (dollars in thousands) |        
|Debt                                                           |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Long-term debt obligations including current portion           |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Fixed Rate                                                     |  | $                      | 3,028   |   |         | $ | 5,270   |      |  | $ | 47,180  |   |  | $    | 7,012     |   |            | $ | 92,248 |            |  | $          | 64,221
|Average Interest Rate                                          |  |                        | 9.03    | % |         |   | 8.92    | %    |  |   | 7.51    | % |  |      | 9.22      | % |            |   | 8.13   | %          |  |            | 9.26  
|Variable Rate                                                  |  | $                      | 10,764  |   |         | $ | 857,736 |      |  | $ | 593,267 |   |  | $    | 1,073,106 |   |            | $ |       |            |  | $          | 9,675 
|Average Interest Rate                                          |  |                        | 6.59    | % |         |   | 7.12    | %    |  |   | 10.19   | % |  |      | 9.59      | % |            |   |       | %          |  |            | 1.80  
|Interest Rate Derivative Financial Instruments Related to Debt |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Interest Rate Swaps                                            |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Pay Fixed/Receive Variable                                     |  | $                      |        |   |         | $ |        |      |  | $ | 755,978 |   |  | $    |          |   |            | $ |       |            |  |            |      
|Average Pay Rate                                               |  |                        | 6.56    | % |         |   | 6.63    | %    |  |   | 6.63    | % |  |      |          | % |            |   |       |            |  |            |      
|Average Receive Rate                                           |  |                        | 1.2     | % |         |   | 1.60    | %    |  |   | 3.07    | % |  |      |          | % |            |   |       |            |  |            |      
|Interest Rate Swaps                                            |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Pay Fixed/Receive Variable                                     |  | $                      |        |   |         | $ |        |      |  | $ | 49,224  |   |  | $    |          |   |            | $ |       |            |  |            |      
|Average Pay Rate                                               |  |                        | 4.62    | % |         |   | 4.62    | %    |  |   | 4.62    | % |  |      |          | % |            |   |       |            |  |            |      
|Average Receive Rate                                           |  |                        | 3.46    | % |         |   | 3.86    | %    |  |   | 4.38    | % |  |      | 4.55      | % |            |   |       |            |  |            |      
|Interest Rate Caps                                             |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |           |   |            |   |        |            |  |            |       
|Notional Amount                                                |  | $                      | 176,121 |   |         | $ | 377,465 |      |  | $ | 517,238 |   |  | $    |          |   |            | $ |       |            |  |            |      
|Strike Rate                                                    |  |                        | 5.82    | % |         |   | 5.84    | %    |  |   | 4.76    | % |  |      |          | % |            |   |       |            |  |            |      
|Forward Rate                                                   |  |                        | 1.2     | % |         |   | 1.60    | %    |  |   | 3.07    | % |  |      |          | % |            |   |       |            |  |            |      

---

|(1) |  | We can elect to extend $215.9 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



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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. No discovery has been taken yet and the Court has not yet certified a class. 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. No discovery has been taken yet and the Court has not yet certified a class. 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 parties reached a settlement on July



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23, 2003 and exchanged mutual releases. The parties also submitted a stipulation of dismissal of the case to the Supreme Court of New York on July 23, 2003.



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 and the individual defendants were
dismissed. The Attorney General has appealed the dismissal of the individual defendants. We intend to vigorously defend this lawsuit and oppose the 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. An answer to the complaint has been filed and discovery has commenced. 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 June 30,
2003, we have deferred payments of the cash portion of the preferred stock dividend totaling approximately $58.5 million. This amount has been included in accounts payable and accrued expenses as of June 30, 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 June 30, 2003, we have issued an additional stock dividend of 498,289 shares of series A and series B preferred stock with a value of $49.8 million.



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



We held our annual meeting of stockholders on June 10, 2003. During this meeting, our stockholders were asked to consider and vote upon three proposals:
to elect eighteen directors to our board of directors, consisting of seven class A directors, eight class B directors and three class C directors, to serve until the 2004 annual meeting of our stockholders or until their respective successors are
duly elected and qualified, to ratify the appointment of our independent auditors for the 2003 calendar year, and to transact any other business as may properly come before the annual meeting or any adjournment thereof. On the date of the annual
meeting, a total



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of 168,082,892 shares of class A common stock (aggregated to 168,082,892 votes) and 13,402,541.77 shares of series B preferred stock (equivalent to
156,024,350 votes) were outstanding and entitled to vote. The holders of class A common stock and series B preferred stock were entitled to vote together on all matters presented at the meeting, except that only holders of class A common stock were
entitled to vote for the election of class A directors and only holders of series B preferred stock were entitled to vote for the election of class B directors. For each proposal, the results of the shareholder voting were as follows:



|                                                                                                                                                                                                                                                                                                  |  | Votes FOR   |  | VotesAGAINST |  | Abstaining |  | BrokerNon-Votes
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | ------------ |  | ---------- |  | ---------------
|1. To elect eighteen directors to our board of directors, consisting of seven class A directors, eight class B directors and three
class C directors, to serve until the 2004 annual meeting of our stockholders or until their respective successors are duly elected and qualified, as follows: |  |             |  |              |  |            |  |                
|Class A Directors                                                                                                                                                                                                                                                                                 |  |             |  |              |  |            |  |                
|Karim Alibhai                                                                                                                                                                                                                                                                                     |  | 148,343,629 |  | 1,781,794    |  |           |  |               
|Leonard Boxer                                                                                                                                                                                                                                                                                     |  | 148,342,558 |  | 1,782,865    |  |           |  |               
|Milton Fine                                                                                                                                                                                                                                                                                       |  | 148,337,949 |  | 1,787,474    |  |           |  |               
|Fred J. Kleisner                                                                                                                                                                                                                                                                                  |  | 148,311,693 |  | 1,813,730    |  |           |  |               
|Rolf E. Ruhfus                                                                                                                                                                                                                                                                                    |  | 147,746,189 |  | 2,379,234    |  |           |  |               
|Lynn Swann                                                                                                                                                                                                                                                                                        |  | 147,688,324 |  | 2,437,099    |  |           |  |               
|Sherwood Weiser                                                                                                                                                                                                                                                                                   |  | 147,689,644 |  | 2,435,779    |  |           |  |               
|Class B Directors                                                                                                                                                                                                                                                                                 |  |             |  |              |  |            |  |                
|Leon D. Black                                                                                                                                                                                                                                                                                     |  | 12,249,107  |  |             |  |           |  |               
|Thomas H. Lee                                                                                                                                                                                                                                                                                     |  | 12,249,107  |  |             |  |           |  |               
|Alan M. Leventhal                                                                                                                                                                                                                                                                                 |  | 12,249,107  |  |             |  |           |  |               
|William L. Mack                                                                                                                                                                                                                                                                                   |  | 12,249,107  |  |             |  |           |  |               
|Lee S. Neibart                                                                                                                                                                                                                                                                                    |  | 12,249,107  |  |             |  |           |  |               
|Marc J. Rowan                                                                                                                                                                                                                                                                                     |  | 12,249,107  |  |             |  |           |  |               
|Scott A. Schoen                                                                                                                                                                                                                                                                                   |  | 12,249,107  |  |             |  |           |  |               
|Scott M. Sperling                                                                                                                                                                                                                                                                                 |  | 12,249,107  |  |             |  |           |  |               
|Class C Director                                                                                                                                                                                                                                                                                  |  |             |  |              |  |            |  |                
|Norman Brownstein                                                                                                                                                                                                                                                                                 |  | 147,680,460 |  | 2,444,963    |  |           |  |               
|Stephen T. Clark                                                                                                                                                                                                                                                                                  |  | 148,386,510 |  | 1,738,913    |  |           |  |               
|Paul Fribourg                                                                                                                                                                                                                                                                                     |  | 148,368,141 |  | 1,757,282    |  |           |  |               
|                                                                                                                                                                                                                                                                                                  |  |             |  |             
|2. To ratify the appointment of PricewaterhouseCoopers LLP as our independent auditors for the 2003 calendar year                                                                                                                                                                                 |  | 161,155,499 |  | 1,058,703    |  | 160,328    |  |               



Item 5.    Other Information



None.



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Item 6.    Exhibits and Reports on Form 8-K



(a)    Exhibits:



|Item No. |   |  | Description                                                                                                                                                                                                                             
|-------- | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1     | * |  | Fifth Amendment and Restatement to the Credit Agreement, dated as of May 29, 2003, among the Company and the lenders named
therein.                                                                                                     
|         |  
|10.2     | * |  | Fourth Amendment and Restatement to the Increasing Rate Note Loan and Purchase Agreement, dated as of May 29, 2003, among the
Company and the lenders named therein.                                                                    
|         |  
|10.3     | * |  | Employment Agreement, dated May 21, 2003, between Wyndham and Andrew Jordan.                                                                                                                                                            
|         |  
|10.4     |   |  | Mortgage Loan Agreement, dated June 11, 2003, between Lehman ALI, Inc. and the Companys subsidiaries that are party
thereto, incorporated by reference to Exhibit 99.2 to Wyndhams Current Report on Form 8-K filed on July 18, 2003. 
|         |  
|10.5     |   |  | Mezzanine Loan Agreement, dated June 11, 2003, between Lehman ALI, Inc. and the Companys subsidiaries that are party
thereto, incorporated by reference to Exhibit 99.3 to Wyndhams Current Report on Form 8-K filed on July 18, 2003.
|         |  
|31.1     | * |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                     
|         |  
|31.2     | * |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                     
|         |  
|32.1     | * |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                     
|         |  
|32.2     | * |  | 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 June 30, 2003:



We filed a Current Report on Form 8-K on June 2, 2003, regarding our results of operations for the first quarter ended March 31, 2003.



We filed a Current Report on Form 8-K on May 29, 2003, stating that we had
entered into a fifth amendment and restatement of our senior credit facility and a fourth amendment and restatement of our increasing rate loans facility.



We filed a Current Report on Form 8-K on July 18, 2003, stating that certain of our subsidiaries had entered into a mortgage loan refinancing agreement
and a mezzanine loan agreement, dated June 11, 2003, with certain affiliates of Lehman Brothers, Inc.



We filed a Current Report on Form 8-K on August 5, 2003, regarding our results of operations for the second quarter ended June 30, 2003.



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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:    August 13, 2003



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