HOST MARRIOTT CORPORATION
Consolidated Balance Sheets (a)
(unaudited, in millions, except share amounts)
June 17, December 31,
2005
2004
ASSETS
Property and equipment, net
$7,229
$7,274
Assets held for sale
-
113
Due from managers
110
75
Investments in affiliates
42
69
Deferred financing costs, net
72
70
Furniture, fixtures and equipment
replacement fund
151
151
Other
130
168
Restricted cash
167
154
Cash and cash equivalents
404
347
Total assets
$8,305
$8,421
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt
Senior notes, including
$492 million
and $491 million,
net of discount,
of Exchangeable
Senior Debentures,
respectively
$3,059
$2,890
Mortgage debt
1,871
2,043
Convertible Subordinated
Debentures
492
492
Other
97
98
Total debt
5,519
5,523
Accounts payable and accrued expenses
145
113
Liabilities associated with assets
held for sale
-
26
Other
173
156
Total liabilities
5,837
5,818
Interest of minority partners of Host
Marriott L.P.
118
122
Interest of minority partners of
other consolidated partnerships
29
86
Stockholders' equity
Cumulative redeemable
preferred stock
(liquidation preference
$250
million), 50 million
shares
authorized; 10.0
million shares and
14.0 million shares
issued and
outstanding, respectively
241
337
Common stock, par value
$.01, 750
million shares authorized;
353.0
million shares and
350.3 million
shares issued and
outstanding,
respectively
3
3
Additional paid-in capital
2,961
2,953
Accumulated other comprehensive
income
13
13
Deficit
(897)
(911)
Total stockholders'
equity
2,321
2,395
Total liabilities
and stockholders'
equity
$8,305
$8,421
(a) Our consolidated balance sheet
as of June 17, 2005 has been prepared
without audit.
Certain information and footnote disclosures normally
included in
financial statements presented in accordance with GAAP
have been
omitted. The consolidated balance sheets should be read in
conjunction
with the consolidated financial statements and notes
thereto included
in our most recent Annual Report on Form 10-K.
HOST MARRIOTT CORPORATION
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Revenues
Rooms
$597 $526 $1,083
$978
Food and beverage
306 290 557
536
Other
65 58
117 108
Total hotel
sales
968 874 1,757
1,622
Rental income (b)
25 24
54 53
Total revenues
993 898 1,811
1,675
Expenses
Rooms
139 127 258
240
Food and beverage
218 208 404
390
Hotel departmental expenses
251 232 468
439
Management fees
44 38
78 69
Other property-level expenses
(b) 71
70 136 137
Depreciation and amortization
86 80
170 160
Corporate and other expenses
15 12
29 25
Total operating
costs and expenses 824 767
1,543 1,460
Operating profit
169 131 268
215
Interest income
5 2
12 5
Interest expense
(114) (130) (223)
(248)
Net gains on property transactions
74 4
77 5
Gain (loss) on foreign currency and
derivative contracts
- -
2 -
Minority interest income (expense)
(8) 1
(12) (2)
Equity in earnings (losses) of
affiliates
3 (3)
(1) (8)
Income (loss) before income taxes
129 5
123 (33)
Provision for income taxes
(38) (11) (38)
(8)
Income (loss) from continuing
operations
91 (6)
85 (41)
Income from discontinued operations
(c) - 23
12 27
Net income
(loss)
91 17
97 (14)
Less: Dividends on preferred stock
(7) (10) (15)
(19)
Issuance costs of redeemed
Class B preferred stock (d) (4)
- (4)
-
Net income (loss) available to common
stockholders
$80 $7
$78 $(33)
Basic earnings (loss) per common
share:
Continuing operations
$0.23 $(0.05) $0.19 $(0.18)
Discontinued operations
- 0.07 0.03
0.08
Basic earnings (loss) per common
share
$0.23 $0.02 $0.22 $(0.10)
Diluted earnings (loss) per common
share:
Continuing operations
$0.22 $(0.05) $0.19 $(0.18)
Discontinued operations
- 0.07 0.03
0.08
Diluted earnings (loss) per common
share
$0.22 $0.02 $0.22 $(0.10)
(a) Our consolidated statements of
operations presented above have been
prepared without
audit. Certain information and footnote disclosures
normally included
in financial statements presented in accordance with
GAAP have
been omitted. The consolidated statements of operations
should be
read in conjunction with the consolidated financial
statements
and notes thereto included in our most recent Annual Report
on Form 10-K.
(b) Rental income and expense are
as follows:
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Rental income
Full-service
$7 $6
$18 $18
Limited service and office
buildings
18 18
36 35
$25 $24 $54
$53
Rental and other expenses (included
in other property-level expenses)
Full-service
$1 $1
$3 $3
Limited service and office
buildings
18 18
36 36
$19 $19 $39
$39
(c) Reflects the results of operations
and gain (loss) on sale, net of the
related income
tax, for four properties sold in the first quarter of
2005 and nine
properties sold in 2004.
(d) Emerging Issues Task Force Topic
D-42, "The Effect on the Calculation
of Earnings
per Share for the Redemption or Induced Conversion of
Preferred
Stock," requires that the excess of the fair value of the
consideration
transferred to the holders of preferred stock redeemed
over the carrying
amount of the preferred stock should be subtracted
from net earnings
to determine net earnings available to common
stockholders
in the calculation of earnings per share.
On May 20,
2005, the fair value paid to holders of our Class B preferred stock, or
$100 million (which was equal to the redemption price and par value) exceeded
the carrying value of the preferred stock ($96 million, which was net of
$4 million of original issuance costs). Accordingly, the $4 million
of original issuance costs has been included in the determination of net
income available to common stockholders for the purpose of calculating
our second quarter and full-year 2005 basic and diluted earnings per share.
HOST MARRIOTT CORPORATION
Earnings (Loss) per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended June 17, 2005 Quarter ended
June 18, 2004
Income
Per Income
Per
(loss) Shares
Share (loss) Shares
Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income $91
352.7 $0.26
$17 323.1 $0.05
Dividends on
preferred
stock
(7) -
(0.02) (10)
- (0.03)
Issuance
costs of
redeemed
Class B
preferred
stock (a)
(4) -
(0.01) -
- -
Basic income
available
to common
stockholders
(b)
80 352.7
0.23 7
323.1 0.02
Assuming
distribution
of common
shares
granted under
the
comprehensive
stock plan
less shares
assumed
purchased at
average
market price -
2.2 -
- -
-
Assuming
conversion
of minority
OP units
issuable -
1.8 -
- -
-
Assuming
conversion
of
Exchangeable
Senior
Debentures 4
27.5 (0.01)
- -
-
Diluted
earnings
available to
common
stockholders
(b)(c)
$84 384.2
$0.22 $7
323.1 $0.02
Year-to-date ended June 17, 2005 Year-to-date ended June
18, 2004
Income
Per Income
Per
(loss) Shares
Share (loss) Shares
Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income
(loss)
$97 352.3
$0.28 $(14)
322.0 $(0.04)
Dividends
on preferred
stock
(15) -
(0.05) (19)
- (0.06)
Issuance
costs of
redeemed
Class B
preferred
stock (a)
(4) -
(0.01) -
- -
Basic income
(loss)
available
to common
stockholders
(b)
78 352.3
0.22 (33)
322.0 (0.10)
Assuming
distribution
of common
shares granted
under the
comprehensive
stock plan
less shares
assumed
purchased
at average
market price -
2.2 -
- -
-
Diluted
earnings
(loss)
available
to common
stockholders
(b)(c)
$78 354.5
$0.22 $(33)
322.0 $(0.10)
(a) For discussion on accounting treatment,
see footnote (d) to the
consolidated
statements of operations.
(b) Basic earnings (loss) per common
share is computed by dividing net
income (loss)
available to common stockholders by the weighted average
number of
shares of common stock outstanding. Diluted earnings (loss)
per common
share is computed by dividing net income (loss) available
to common
stockholders as adjusted for potentially dilutive
securities,
by the weighted average number of shares of common stock
outstanding
plus other potentially dilutive securities. Dilutive
securities
may include shares granted under comprehensive stock plans,
those preferred
OP Units held by minority partners, other minority
interests
that have the option to convert their limited partnership
interests
to common OP Units, the Exchangeable Senior Debentures and
the Convertible
Subordinated Debentures. No effect is shown for any
securities
that are anti-dilutive.
(c) Our results for the periods presented
were significantly affected by
certain transactions,
which are detailed in the table entitled,
"Schedule
of Significant Transactions Affecting Earnings per Share and
Funds From
Operations per Diluted Share."
HOST MARRIOTT CORPORATION
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Region (a)
As of June 17, 2005
No. of No. of
Properties Rooms
Pacific
20 11,035
Florida
11 7,027
Mid-Atlantic
10 6,720
Atlanta
13 5,940
North Central
13 4,923
South Central
7 4,816
DC Metro
11 4,661
New England
6 3,032
Mountain
5 1,940
International
5 1,953
All Regions
101 52,047
Quarter ended June 17, 2005
Average Average
Daily Occupancy
Rate Percentages RevPAR
Pacific
$177.08 77.7%
$137.65
Florida
189.76 74.7
141.69
Mid-Atlantic
205.06 83.9
171.98
Atlanta
149.35 68.4
102.13
North Central
133.72 69.2
92.51
South Central
147.60 78.6
115.99
DC Metro
184.57 85.3
157.53
New England
161.94 72.3
117.09
Mountain
119.72 61.7
73.82
International
133.48 73.1
97.63
All Regions
169.86 75.9
128.86
Quarter ended June 18, 2004
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR
RevPAR
Pacific
$163.29 75.6%
$123.39 11.6%
Florida
176.88 74.7
132.17 7.2
Mid-Atlantic
184.93 80.6
149.06 15.4
Atlanta
142.84 69.3
98.99 3.2
North Central
122.09 70.3
85.87 7.7
South Central
136.88 79.4
108.64 6.8
DC Metro
166.61 81.0
135.01 16.7
New England
150.52 78.7
118.45 (1.1)
Mountain
110.52 58.0
64.08 15.2
International
122.49 74.4
91.18 7.1
All Regions
156.13 75.2
117.35 9.8
As of June 17, 2005
No. of No. of
Properties Rooms
Pacific
20 11,035
Florida
11 7,027
Mid-Atlantic
10 6,720
Atlanta
13 5,940
North Central
13 4,923
South Central
7 4,816
DC Metro
11 4,661
New England
6 3,032
Mountain
5 1,940
International
5 1,953
All Regions
101 52,047
Year-to-date ended June 17, 2005
Average Average
Daily Occupancy
Rate Percentages RevPAR
Pacific
$173.60 76.0%
$131.98
Florida
195.76 77.9
152.56
Mid-Atlantic
195.64 79.0
154.47
Atlanta
147.46 68.6
101.18
North Central
127.54 63.3
80.80
South Central
146.03 77.5
113.13
DC Metro
182.89 78.9
144.27
New England
151.22 66.0
99.87
Mountain
124.94 60.4
75.50
International
129.74 71.1
92.25
All Regions
167.32 73.7
123.30
Year-to-date ended June 18, 2004
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR
RevPAR
Pacific
$163.34 74.1%
$121.12 9.0%
Florida
181.74 76.7
139.41 9.4
Mid-Atlantic
179.66 75.8
136.09 13.5
Atlanta
142.56 69.5
99.06 2.1
North Central
117.53 65.8
77.33 4.5
South Central
137.83 78.8
108.67 4.1
DC Metro
164.62 75.8
124.76 15.6
New England
141.78 69.7
98.76 1.1
Mountain
112.28 59.1
66.35 13.8
International
119.50 72.4
86.52 6.6
All Regions
155.12 73.1
113.33 8.8
HOST MARRIOTT CORPORATION
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Property Type (a)
As of June 17, 2005
No. of
No. of
Properties
Rooms
Urban
41
25,839
Suburban
34
12,492
Airport 16
16
7,328
Resort/Convention
10
6,388
All Types
101
52,047
Quarter ended June 17, 2005
Average Average
Daily Occupancy
Rate Percentages RevPAR
Urban
$182.09 79.0%
$143.87
Suburban
134.23 69.7
93.62
Airport 16
122.47 76.4
93.58
Resort/Convention
236.25 74.5
176.04
All Types
169.86 75.9
128.86
Quarter ended June 18, 2004
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR RevPAR
Urban
$167.08 77.7% $129.84
10.8%
Suburban
123.13 68.7
84.55 10.7
Airport 16
111.92 77.3
86.46 8.2
Resort/Convention
219.77 75.2
165.38 6.4
All Types
156.13 75.2
117.35 9.8
As of June 17, 2005
No. of
No. of
Properties
Rooms
Urban
41
25,839
Suburban
34
12,492
Airport
16
7,328
Resort/Convention
10
6,388
All Types
101
52,047
Year-to-date ended June 17, 2005
Average Average
Daily Occupancy
Rate Percentages RevPAR
Urban
$177.24 76.2%
$135.10
Suburban
132.61 67.2
89.09
Airport
123.25 74.7
92.12
Resort/Convention
238.71 75.0
179.00
All Types
167.32 73.7
123.3
Year-to-date ended June 18, 2004
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR RevPAR
Urban
$164.40 75.2% $123.63
9.3%
Suburban
122.85 66.6
81.83 8.9
Airport
114.47 75.2
86.04 7.1
Resort/Convention
222.02 74.8
166.05 7.8
All Types
155.12 73.1
113.33 8.8
(a) See the introductory notes to financial
information for a discussion
of reporting
periods and comparable hotel results.
HOST MARRIOTT CORPORATION
Comparable Hotel Operating Data
Schedule of Comparable Hotel Results (a)
(unaudited, in millions, except hotel statistics)
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Number of hotels
101 101
101 101
Number of rooms
52,047 52,161 52,047 52,161
Percent change in Comparable Hotel
RevPAR
9.8% -
8.8% -
Operating profit margin under GAAP
(b)
17.0% 14.6% 14.8%
12.8%
Comparable hotel adjusted operating
profit margin (c)
27.3% 25.3% 25.8%
24.2%
Comparable hotel sales
Room
$ 575 $ 524 $ 1,054 $
973
Food and beverage
304 290
556 534
Other
64 60
116 110
Comparable
hotel sales (d)
943 874 1,726
1,617
Comparable hotel expenses
Room
134 126
250 237
Food and beverage
216 208
401 387
Other
38 36
70 67
Management fees, ground
rent and
other costs
298 283
560 534
Comparable
hotel expenses (e) 686
653 1,281 1,225
Comparable hotel adjusted operating
profit
257 221
445 392
Non-comparable hotel results, net
(f) 13
2 22
9
Office buildings and limited service
properties, net (g)
- -
- (1)
Depreciation and amortization
(86) (80) (170)
(160)
Corporate and other expenses
(15) (12) (29)
(25)
Operating profit
$ 169 $ 131 $ 268
$ 215
(a) See the introductory notes to the
financial information for discussion
of non-GAAP
measures, reporting periods and comparable hotel results.
(b) Operating profit margin under
GAAP is calculated as the operating
profit divided
by the total revenues per the consolidated statements
of operations.
(c) Comparable hotel adjusted operating
profit margin is calculated as the
comparable
hotel adjusted operating profit divided by the comparable
hotel sales
per the table above.
(d) The reconciliation of total revenues
per the consolidated statements
of operations
to the comparable hotel sales is as follows:
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Revenues per the consolidated
statements of operations
$ 993 $ 898 $1,811 $1,675
Non-comparable hotel sales
(45) (18) (74)
(35)
Hotel sales for the property for
which we record rental
income, net 13
12 25
23
Rental income for office buildings
and limited service hotels
(18) (18) (36)
(35)
Adjustment for hotel sales for
comparable hotels to reflect
Marriott's fiscal year for Marriott-
managed hotels
- -
- (11)
Comparable
hotel sales
$ 943 $ 874 $1,726 $1,617
(e) The reconciliation of operating
costs per the consolidated statements
of operations
to the comparable hotel expenses is as follows (in
millions):
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Operating costs and expenses per the
consolidated statements of
operations
$ 824 $ 767 $1,543 $1,460
Non-comparable hotel expenses
(30) (14) (52)
(28)
Hotel expenses for the property for
which we record rental income
11 10
25 24
Rent expense for office buildings
and
limited service hotels
(18) (18) (36)
(36)
Adjustment for hotel expenses for
comparable hotels to reflect
Marriott's fiscal year for Marriott-
managed hotels
- -
- (10)
Depreciation and amortization
(86) (80) (170)
(160)
Corporate and other expenses
(15) (12) (29)
(25)
Comparable hotel expenses
$ 686 $ 653 $1,281 $1,225
(f) Non-comparable hotel results, net,
includes the following items: (i)
the results
of operations of our non-comparable hotels whose
operations
are included in our consolidated statement of operations as
continuing
operations and (ii) the difference between the number of
days of operations
reflected in the comparable hotel results and the
number of
days of operations reflected in the consolidated statements
of operations.
For further detail, see "Introductory Notes to
Financial
Information."
(g) Represents rental income less
rental expense for limited service
properties
and office buildings. For further detail, see footnote (b)
to the consolidated
statements of operations.
HOST MARRIOTT CORPORATION
Other Financial and Operating Data
(unaudited, in millions, except per share amounts)
June 17, December 31,
2005
2004
Equity
Common shares outstanding
353.0
350.3
Common shares and minority
held
common OP Units
outstanding
373.2
371.3
Preferred OP Units outstanding
0.02
0.02
Class B Preferred shares
outstanding (a)
-
4.0
Class C Preferred shares
outstanding
6.0
6.0
Class D Preferred shares
outstanding (a)
-
0.03
Class E Preferred shares
outstanding
4.0
4.0
Security pricing (per share price)
Common (b)
$17.57
$17.30
Class B Preferred (a)
(b)
$- $25.80
Class C Preferred (b)
$26.80
$26.37
Class E Preferred (b)
$27.32
$27.45
Convertible Preferred
Securities (c) $57.50
$57.25
Exchangeable Senior Debentures
(d) $1,108.70
$1,156.00
Dividends per share for calendar year
Common
$0.18
$0.05
Class A Preferred (e)
$-
$1.38
Class B Preferred
$0.87
$2.50
Class C Preferred
$1.25
$2.50
Class D Preferred
$0.87
$2.50
Class E Preferred
$1.11
$1.37
June 17, December 31,
2005
2004
Debt
Series B senior notes, with a rate
of
7 7/8% due August 2008
$135
$304
Series E senior notes, with a rate
of
8 3/8% due February 2006
-
300
Series G senior notes, with a rate
of
9 1/4% due October 2007 (f)
238
243
Series I senior notes, with a rate
of
9 1/2% due January 2007 (g)
460
468
Series K senior notes, with a rate
of
7 1/8% due November 2013
725
725
Series M senior notes, with a rate
of
7% due August 2012 (h)
346
346
Series N senior notes, with a rate
of
6 3/8% due March 2015 (i)
650
-
Exchangeable Senior Debentures, with
a rate of 3.25% due April 2024
492
491
Senior notes, with an average rate
of
9.7%, maturing through 2012
13
13
Total senior notes
3,059
2,890
Mortgage debt (non-recourse) secured
by $3.0 billion of real estate
assets, with an average interest
rate of 7.7% at June 17, 2005
and
December 31, 2004, respectively
1,871
2,043
Credit facility (j)
-
-
Convertible Subordinated Debentures,
with a rate of 6 3/4% due December
20, 2026
492
492
Other
97
98
Total debt
$5,519
$5,523
Percentage of fixed rate debt
85%
85%
Weighted average interest rate
7.0%
7.1%
Weighted average debt maturity
7.1 years 6.6 years
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Hotel Operating Statistics for All
Full-Service Properties (k)
Average daily rate
$172.03 $153.04 $169.17 $151.81
Average occupancy
75.5% 75.0% 73.3%
73.0%
RevPAR
$129.95 $114.85 $123.96 $110.76
(a) On May 20, 2005, we redeemed, at
par, all four million shares of our
10% Class
B Cumulative Redeemable Preferred stock for approximately
$101 million,
including accrued dividends and all 33,182 shares of our
10% Class
D Cumulative Redeemable Preferred stock.
(b) Share prices are the closing price
as reported by the New York Stock
Exchange.
(c) Market price as quoted by Bloomberg
L.P. Amount reflects the price of
a single $50
security, which is convertible into Host Marriott common
stock upon
the occurrence of certain events. For further detail, see
our most recent
Annual Report on Form 10-K.
(d) Market price as quoted by Bloomberg
L.P. Amount reflects the price of
a single $1,000
debenture, which is exchangeable for common stock upon
the occurrence
of certain events.
(e) On August 3, 2004, we redeemed
all 4.16 million shares of the
outstanding
Class A preferred stock at a price of $25.00 per share
plus dividends
accrued to that date.
(f) Includes the fair value of interest
rate swap agreements of $(4)
million and
$1 million as of June 17, 2005 and December 31, 2004,
respectively.
(g) Includes the fair value of interest
rate swap agreements of $10
million and
$18 million as of June 17, 2005 and December 31, 2004,
respectively.
(h) On March 3, 2005, we exchanged
all of our 7% Series L senior notes due
2012 for our
7% Series M senior notes due 2012. The terms of the
Series L senior
notes and the Series M senior notes are substantially
identical
in all material respects, except that the Series M senior
notes are
registered under the Securities Act of 1933 and are,
therefore,
freely transferable by the holders.
(i) On July 19, 2005, we exchanged
all of our 6 3/8% Series N senior notes
for our 6
3/8% Series O senior notes. The terms of the Series O
senior notes
and the Series N senior notes are substantially identical
in all material
respects, except that the Series O senior notes are
registered
under the Securities Act of 1933 and are, therefore, freely
transferable
by the holders.
(j) Our credit facility has an available
capacity of $575 million.
Currently,
there are no amounts outstanding.
(k) The operating statistics reflect
all consolidated properties as of
June 17, 2005
and June 18, 2004, respectively. The operating
statistics
include the results of operations for four hotels sold in
the first
quarter of 2005 and nine hotels sold in 2004 prior to their
disposition.
HOST MARRIOTT CORPORATION
Reconciliation of Net Income
(Loss) Available to Common Stockholders
to Funds From Operations per Diluted Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
June 17, 2005 June 18, 2004
Per
Per
Income Share Income
Share
(loss) Shares Amount (loss) Shares Amount
Net income available to common stockholders
$80 352.7 $0.23 $7 323.1 $0.02
Adjustments:
Gains on dispositions,
net of
taxes
(41) - (0.12) (19)
- (0.06)
Amortization of deferred
gains,
net of taxes
(2) - -
(3) - (0.01)
Depreciation and amortization
86 - 0.24 83
- 0.26
Partnership adjustments
3 - 0.01
6 - 0.02
FFO of minority partners
of Host
LP(a)
(7) - (0.02) (5)
- (0.02)
Adjustments for dilutive
securities:
Assuming distribution
of common
shares granted under
the
comprehensive stock
plan less
shares assumed purchased
at
average market price
- 2.2 -
- 3.2 -
Assuming conversion of
Exchangeable Senior
Debentures(b)
4 27.5 (0.02) 4 27.3
-
Assuming conversion of
Convertible Subordinated
Debentures
7 30.9 (0.01) -
- -
FFO per diluted share(c)(d)
$130 413.3 $0.31 $73 353.6 $0.21
Year-to-date ended Year-to-date ended
June 17, 2005 June 18, 2004
Per
Per
Income Share Income
Share
(loss) Shares Amount (loss) Shares Amount
Net income (loss) available to common
stockholders
$78 352.3 $0.22 $(33) 322.0 $(0.10)
Adjustments:
Gains on dispositions,
net of
taxes
(54) - (0.15) (20)
- (0.06)
Amortization of deferred
gains,
net of taxes
(4) - (0.01) (4)
- (0.02)
Depreciation and amortization
169 - 0.48 166
- 0.52
Partnership adjustments
8 - 0.02 11
- 0.03
FFO of minority partners
of
Host LP(a)
(11) - (0.03) (8)
- (0.02)
Adjustments for dilutive
securities:
Assuming distribution
of common
shares granted under
the
comprehensive stock
plan less
shares assumed purchased
at
average market price
- 2.2 -
- 3.3 (0.01)
Assuming conversion of
Exchangeable Senior
Debentures(b)
9 27.5 (0.02) 5 15.1
-
Assuming conversion of
Convertible Subordinated
Debentures
15 30.9 -
- - -
FFO per diluted share(c)(d)
$210 412.9 $0.51 $117 340.4 $0.34
(a) Represents FFO attributable to
the minority interests in Host LP.
(b) During November 2004, the FASB
ratified the Emerging Issues Task
Force, or
EITF, on EITF Issue No. 04-8, "The Effect of Contingently
Convertible
Debt on Diluted Earnings per Share." EITF 04-8 requires
contingently
convertible debt instruments to be included in diluted
earnings per
share, if dilutive, regardless of whether a market price
contingency
for the conversion of the debt into common shares or any
other contingent
factor has been met. Prior to this consensus, such
instruments
were excluded from the calculation until one or more of
the contingencies
were met. EITF 04-8 is effective for reporting
periods ending
after December 15, 2004 and requires restatement of
prior period
earnings per share amounts. As a result, prior year FFO
per diluted
share has been restated for second quarter and year-to-
date 2004
to include the dilutive effect of the conversion of the
Exchangeable
Senior Debentures.
(c) FFO per diluted share in accordance
with NAREIT is adjusted for the
effects of
dilutive securities. Dilutive securities may include shares
granted under
comprehensive stock plans, those preferred OP units held
by minority
partners, convertible debt securities and other minority
interests
that have the option to convert their limited partnership
interest to
common OP units. No effect is shown for securities if
they are anti-dilutive.
(d) FFO per diluted share for the
periods presented was affected by
certain transactions,
which are detailed in the table entitled,
"Schedule
of Significant Transactions Affecting Earnings per Share,
Funds from
Operations per Diluted Share and Adjusted EBITDA."
HOST MARRIOTT CORPORATION
Schedule of Significant Transactions Affecting
Earnings per Share
and Funds From Operations per Diluted Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
June 17, 2005 June 18, 2004
Net Income
Net Income
(Loss) FFO
(Loss) FFO
Senior notes redemptions
and debt prepayments (a)
$ (20) $ (20) $
(32) $ (32)
Class B preferred stock
redemption (b)
(4) (4)
- -
Gain on CBM Joint Venture
LLC sale (c)
42 -
- -
Gain on hotel dispositions,
net of taxes
- -
19 -
Minority interest income
(expense) (d)
(1) 1
1 2
Total
$ 17 $ (23)
$(12) $(30)
Per diluted share (e)
$0.04 $(0.06) $(0.04)
$(0.08)
Year-to-date ended Year-to-date ended
June 17, 2005 June 18, 2004
Net Income
Net Income
(Loss) FFO
(Loss) FFO
Senior notes redemptions and
debt prepayments (a)
$ (34) $ (34) $ (45)
$ (45)
Class B preferred stock
redemption (b)
(4) (4)
- -
Gain on CBM Joint Venture LLC
sale (c)
42 -
- -
Gain on hotel dispositions, net
of taxes
12 -
20 -
Minority interest income
(expense) (d)
(1) 2
1 3
Total
$ 15 $ (36)
$ (24) $ (42)
Per diluted share (e)
$0.04 $(0.09) $(0.08)
$(0.13)
(a) Represents call premiums and the
acceleration of original issue
discounts
and deferred financing costs, as well as incremental
interest during
the call or prepayment notice period, included in
interest expense
in the consolidated statements of operations. We
recognized
these costs in conjunction with the prepayment or
refinancing
of senior notes and mortgages during all periods
presented.
(b) Represents the original issuance
costs for the Class B preferred
stock, which
was required to be charged against net income (loss)
available
to common stockholders in the calculation of earnings (loss)
per share
in conjunction with the redemption of the Class B preferred
stock in the
second quarter of 2005. For further detail, see footnote
(d) to the
consolidated statements of operations.
(c) Represents the gain, net of tax,
on the sale of 85% of our interest in
CBM Joint
Venture LLC.
(d) Represents the portion of the
significant transactions attributable to
minority partners
in Host LP.
(e) Prior year per share amounts were
adjusted due to the dilutive effect
of the retroactive
application of EITF 04-8. See note (b) in the
"Reconciliation
of Net Income (Loss) Available to Common Stockholders
to Funds From
Operations per Diluted Share" for further discussion.
HOST MARRIOTT CORPORATION
Reconciliation of Net
Income (Loss) to EBITDA and Adjusted EBITDA
(unaudited, in millions)
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Net income (loss)
$91 $17
$97 $(14)
Interest expense
114 130
223 248
Depreciation and amortization
86 80
170 160
Income taxes (a)
38 11
38 8
Discontinued operations
(b)
- 3
- 6
EBITDA (c)
329 241
528 408
Gains on dispositions
(a)
(70) (19) (83)
(20)
Amortization of deferred
gains (3)
(4) (6)
(5)
Consolidated partnership
adjustments:
Minority interest
(income) expense 8
(1) 12
2
Distributions
to minority partners (3)
(3) (3)
(4)
Equity investment adjustments:
Equity in
(earnings) losses of
affiliates
(3) 3
1 8
Distributions
received from equity
investments
- 1
1 1
Adjusted EBITDA of Host LP (c)
258 218
450 390
Distributions to minority interest
partners of Host LP
(2) -
(2) -
Adjusted EBITDA of Host Marriott (c)
$256 $218 $448
$390
(a) Income taxes and gains on dispositions
include $28 million and $70
million for
both the second quarter and year-to-date 2005,
respectively,
due to the sale of 85% of our interest in CBM Joint
Venture LLC.
(b) Reflects the interest expense,
depreciation and amortization and
income taxes
included in discontinued operations.
(c) See the introductory notes to
the financial information for discussion
of non-GAAP
measures.
HOST MARRIOTT CORPORATION
Reconciliation of Net Income (Loss) Available
to Common Stockholders to
Funds From Operations per Diluted Share for Third Quarter
2005 Forecasts (a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Third Quarter 2005 Forecast
Income
Per Share
(Loss) Shares
Amount
Forecast net income (loss) available
to common stockholders
$(20) 353.3
$(0.05)
Adjustments:
Depreciation and amortization
83 -
0.23
Gain on dispositions,
net of taxes (1)
- -
Partnership adjustments
(2) -
(0.01)
FFO of minority partners
of Host LP (b) (3)
- (0.01)
Adjustment for dilutive securities:
Assuming distribution
of common share
granted under the
comprehensive
stock plan less
shares assumed
purchased at average
market price -
2.1 -
Assuming conversion of
Exchangeable
Senior Debentures
4 27.7
-
FFO per diluted share (c)
$61 383.1
$0.16
High-end of Range
Third Quarter 2005 Forecast
Income
Per Share
(Loss) Shares
Amount
Forecast net income (loss) available
to common stockholders
$(15) 353.3
$(0.04)
Adjustments:
Depreciation and amortization
83 -
0.23
Gain on dispositions,
net of taxes (1)
- -
Partnership adjustments
(2) -
(0.01)
FFO of minority partners
of Host LP (b) (3)
- (0.01)
Adjustment for dilutive securities:
Assuming distribution
of common share
granted under the
comprehensive
stock plan less
shares assumed
purchased at average
market price -
2.1 -
Assuming conversion of
Exchangeable
Senior Debentures
4 27.7
-
FFO per diluted share (c)
$66 383.1
$0.17
See the notes following the table reconciling net income
to EBITDA and Adjusted EBITDA for the full year 2005 forecasts.
HOST MARRIOTT CORPORATION
Reconciliation of
Net Income Available to Common Stockholders to
Funds From Operations per Diluted Share
for Full Year 2005 Forecasts (a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Full Year 2005 Forecast
Income
Per Share
(Loss) Shares Amount
Forecast net income available to
common stockholders
$96 353.2
$0.28
Adjustments:
Depreciation and amortization
363 -
1.02
Gain on dispositions,
net of taxes (61)
- (0.17)
Partnership adjustments
9 -
0.03
FFO of minority partners
of Host LP (b) (22)
- (0.07)
Adjustment for dilutive securities:
Assuming distribution
of common share
granted under the
comprehensive
stock plan less
shares assumed
purchased at average
market price -
2.1 (0.01)
Assuming conversion of
Exchangeable
Senior Debentures
19 27.9
(0.03)
Assuming conversion of
Convertible
Subordinated Debentures
32 30.9
-
FFO per diluted share (c)
$436 414.1
$1.05
High-end of Range
Full Year 2005 Forecast
Income
Per Share
(Loss) Shares Amount
Forecast net income available to
common stockholders
$113 353.2
$0.32
Adjustments:
Depreciation and amortization
363 -
1.02
Gain on dispositions,
net of taxes (61)
- (0.17)
Partnership adjustments
10 -
0.03
FFO of minority partners
of Host LP (b) (23)
- (0.07)
Adjustment for dilutive securities:
Assuming distribution
of common share
granted under the
comprehensive
stock plan less
shares assumed
purchased at average
market price -
2.1 (0.01)
Assuming conversion of
Exchangeable
Senior Debentures
19 27.9
(0.03)
Assuming conversion of
Convertible
Subordinated Debentures
32 30.9
-
FFO per diluted share (c)
$453 414.1
$1.09
See the notes following the table reconciling net income
to EBITDA and Adjusted EBITDA for the full year 2005 forecasts.
HOST MARRIOTT CORPORATION
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA for Full Year 2005 Forecasts (a)
(unaudited, in millions)
Full Year 2005
Low-end High-end
of Range of Range
Net income
$ 130
$ 147
Interest expense
445
445
Depreciation and amortization
364
364
Income taxes
35
37
EBITDA
974
993
Gains on dispositions
(90)
(90)
Consolidated partnership
adjustments:
Minority interest
expense
14
15
Distributions
to minority partners (5)
(5)
Equity investment adjustments:
Equity in
losses of affiliates
1
1
Distributions
received from equity
investments
1
1
Adjusted EBITDA of Host LP
895
915
Distributions to minority
interest
partners of Host
LP
(6)
(6)
Adjusted EBITDA of Host Marriott
$ 889
$ 909
(a) The amounts shown in these reconciliations
are based on management's
estimate of
operations for 2005. These tables are forward-looking and
as such contain
assumptions by management based on known and unknown
risks, uncertainties
and other factors which may cause the actual
transactions,
results, performance, or achievements to be materially
different
from any future transactions, results, performance or
achievements
expressed or implied by this table. General economic
conditions,
competition and governmental actions will affect future
transactions,
results, performance and achievements. Although we
believe the
expectations reflected in this reconciliation are based
upon reasonable
assumptions, we can give no assurance that the
expectations
will be attained or that any deviations will not be
material.
Our full year
and third quarter 2005 forecasts were based on the following assumptions:
* RevPAR will increase 8.0% to 9.0% for the full year and 6.5% to 8.0%
for the third quarter for the low and high ends of the forecasted range,
respectively.
* Comparable hotel adjusted operating profit margins will increase 120
basis points and 150 basis points for the full year for the low and high
ends of the forecasted range, respectively.
* Approximately $325 million of hotels will be sold during 2005.
* Approximately $400 million of acquisitions will be made during 2005.
* Approximately $630 million of debt has been, or will be, refinanced or
prepaid and approximately $100 million of Class B preferred stock has been
redeemed during 2005. Charges, net of the minority interest benefit, totaling
approximately $36 million, or
$.09 of FFO per diluted share, in call premiums and the
acceleration of deferred financing costs associated with the debt
repayments and the redemption of the Class B preferred stock will
be incurred for the full year.
* Fully diluted shares will be 414.1 million for the full year and 383.1
million for the third quarter.
(b) Represents FFO attributable to
the minority interests in Host LP.
(c) FFO per diluted share in accordance
with NAREIT is adjusted for the
effects of
dilutive securities. Dilutive securities may include shares
granted under
comprehensive stock plans, those preferred OP Units held
by minority
partners, other minority interests that have the option to
convert their
limited partnership interest to common OP Units, the
Convertible
Subordinated Debentures and the Exchangeable Senior
Debentures.
No effect is shown for securities if they are anti
dilutive.
HOST MARRIOTT CORPORATION
Forecast Schedule of Comparable Hotel Adjusted
Operating Profit Margin (a)
(unaudited, in millions, except hotel statistics)
Full Year 2005
Low-end High-end
of range of range
Percent change in Comparable Hotel
RevPAR
8.0%
9.0%
Operating profit margin under GAAP
(b) 13.2%
13.6%
Comparable hotel adjusted operating
profit margin (c)
23.9%
24.2%
Comparable hotel sales
Room
2,213
2,234
Other
1,397
1,410
Comparable
hotel sales (d)
3,610
3,644
Comparable hotel expenses
Rooms and other departmental
costs 1,547
1,557
Management fees, ground
rent and
other costs
1,199
1,204
Comparable
hotel expenses (e)
2,746
2,761
Comparable hotel adjusted operating
profit 864
883
Non-comparable hotel results, net
75
75
Office buildings and limited service
properties, net
4
4
Depreciation and amortization
(364)
(364)
Corporation and other expenses
(64)
(64)
Operating profit
$515
$534
(a) See the introductory notes to the
financial information for discussion
of non-GAAP
measure, reporting periods and comparable hotel results.
Forecasted
comparable hotel results include assumptions on the number
of hotels
that will be included in our comparable hotel set in 2005.
We have assumed
that 100 hotels will be classified as comparable as of
December 31,
2005, reflecting dispositions in January 2005 and certain
other forecasted
major renovations. No assurances can be made as to
the hotels
that will be in the comparable hotel set for 2005.
(b) Operating profit margin under
GAAP is calculated as the operating
profit divided
by the forecast total revenues per the consolidated
statements
of operations. See (d) below for forecasted revenues.
(c) Comparable hotel adjusted operating
profit margin is calculated as the
comparable
hotel adjusted operating profit divided by the comparable
hotel sales
per the table above. We forecasted an increase in margins
of 120 to
150 basis points. The comparable hotel adjusted operating
profit margin
for 2004 was 22.7%, which reflects the results of 100
hotels currently
forecasted to be classified as comparable for 2005 as
noted above.
(d) The reconciliation of forecast
total revenues per the consolidated
statements
of operations to the forecast comparable hotel sales is as
follows (in
millions):
Full Year 2005
Low-end High-end
of range of range
Revenues per the consolidated
statements of operations
$3,896
$3,932
Non-comparable hotel sales
(253)
(255)
Hotel sales for the property for
which we record rental income,
net
50
50
Rental income for office buildings
and limited service hotels
(83)
(83)
Comparable hotel sales
$3,610
$3,644
(e) The reconciliation of operating
costs per the consolidated statements
of operations
to the comparable hotel expenses is as follows (in
millions):
Full Year 2005
Low-end High-end
of range of range
Operating costs and expenses per the
consolidated statements of
operations $3,381
$3,398
Non-comparable hotel expenses
(178)
(180)
Hotel expenses for the property for
which
we record rental income
50
50
Rent expense for office buildings
and
limited service hotels
(79)
(79)
Depreciation and amortization
(364)
(364)
Corporate and other expenses
(64)
(64)
Comparable hotel expenses
$2,746
$2,761
HOST MARRIOTT, L.P.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per unit amounts)
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Revenues
Rooms
$597 $526 $1,083
$978
Food and beverage
306 290
557 536
Other
65 58
117 108
Total hotel
sales
968 874 1,757
1,622
Rental income
25 24
54 53
Total revenues
993 898 1,811
1,675
Expenses
Rooms
139 127
258 240
Food and beverage
218 208
404 390
Hotel departmental expenses
251 232
468 439
Management fees
44 38
78 69
Other property-level expenses
71 70
136 137
Depreciation and amortization
86 80
170 160
Corporate and other expenses
15 12
29 25
Total operating
costs and expenses 824 767
1,543 1,460
Operating profit
169 131
268 215
Interest income
5 2
12 5
Interest expense
(115) (131) (224)
(249)
Net gains on property transactions
74 4
77 5
Gain (loss) on foreign currency and
derivative contracts
- -
2 -
Minority interest income (expense)
(2) 3
(6) (3)
Equity in losses of affiliates
3 (3)
(1) (8)
Income (loss) before income taxes
134 6
128 (35)
Provision for income taxes
(38) (11) (38)
(8)
Income (loss) from continuing
operations
96 (5)
90 (43)
Income from discontinued operations
(b) - 23
12 27
Net income (loss)
96 18
102 (16)
Less: Distributions on preferred units
(7) (10) (15)
(19)
Issuance costs of redeemed Class
B preferred units
(4) -
(4) -
Net income (loss) available to common
unitholders
$85 $8
$83 $(35)
Basic earnings (loss) per common unit:
Continuing operations
$0.23 $(0.04) $0.19 $(0.18)
Discontinued operations
- 0.06 0.03
0.08
Basic earnings (loss) per common unit
$0.23 $0.02 $0.22
$(0.10)
Diluted earnings (loss) per common
unit:
Continuing operations
$0.22 $(0.04) $0.19 $(0.18)
Discontinued operations
- 0.06 0.03
0.08
Diluted earnings (loss) per common
unit
$0.22 $0.02 $0.22
$(0.10)
(a) Our consolidated statements of
operations presented above have been
prepared without
audit. Certain information and footnote disclosures
normally included
in financial statements presented in accordance with
GAAP have
been omitted. The consolidated statements of operations
should be
read in conjunction with the consolidated financial
statements
and notes thereto included in our most recent Annual Report
on Form 10-K
(b) Reflects the results of operations
and gain (loss) on sale, net of the
related income
tax, for four properties sold in the first quarter of
2005 and nine
properties sold in 2004 prior to their disposition.
HOST MARRIOTT, L.P.
Reconciliation of Net Income (Loss) to EBITDA and
Adjusted EBITDA for Host Marriott, L.P.
(unaudited, in millions)
Quarter ended Year-to-date ended
June 17, June 18, June 17, June 18,
2005 2004 2005
2004
Net income (loss)
$96 $18 $102
$(16)
Interest expense
115 131 224
249
Depreciation and amortization
86 80
170 160
Income taxes (a)
38 11
38 8
Discontinued operations
(b)
- 3
- 6
EBITDA (c)
335 243 534
407
Gains on dispositions
(a)
(70) (19) (83)
(20)
Amortization of deferred
gains (3)
(4) (6) (5)
Consolidated partnership
adjustments:
Minority interest
(income) expense 2
(3) 6
3
Distributions
to minority partners (3)
(3) (3) (4)
Equity investment adjustments:
Equity in
(earnings) losses of
affiliates
(3) 3
1 8
Distributions
received from equity
investments
- 1
1 1
Adjusted EBITDA of Host LP(c)
$258 $218 $450
$390
(a) Income taxes and gains on dispositions
include $28 million and $70
million, for
both the second quarter and year-to-date 2005,
respectively,
due to the sale of 85% of our interest in CBM Joint
Venture LLC.
(b) Reflects the interest expense,
depreciation and amortization and
income taxes
included in discontinued operations.
(c) See the introductory notes to
the financial information for discussion
of non-GAAP
measures.
HOST MARRIOTT, L.P.
Reconciliation
of Net Income to EBITDA and Adjusted EBITDA for
Full Year 2005 Forecasts for Host Marriott, L.P.(a)
(unaudited, in millions)
Full Year 2005
Low-end High-end
of range of range
Net income
$137
$155
Interest expense
446
446
Depreciation and amortization
364
364
Income taxes
35
37
EBITDA
982
1,002
Gains on dispositions
(90)
(90)
Consolidated partnership
adjustments:
Minority interest
expense
6
6
Distributions
to minority partners
(5)
(5)
Equity investment adjustments:
Equity in
losses of affiliates
1
1
Distributions
received from equity
investments
1
1
Adjusted EBITDA of Host LP
$895
$915
(a) The amounts shown in these
reconciliations are based on management's
estimate
of operations for 2005. These tables are forward-looking and
as such
contain assumptions by management based on known and unknown
risks,
uncertainties and other factors which may cause the actual
transactions,
results, performance, or achievements to be materially
different
from any future transactions, results, performance or
achievements
expressed or implied by this table. General economic
condition,
competition and governmental actions will affect future
transactions,
results performance and achievements. Although we
believe
the expectations in this reconciliation are based upon
reasonable
assumptions, we can give no assurance that the
expectations
will be attained or that any deviations will not be
material.
For purposes of the full year forecasts, we have utilized
the
same, previously detailed assumptions as those utilized for the
full
year forecasts for Host Marriott Corporation.
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