HOST MARRIOTT CORPORATION
Consolidated Balance Sheets(a)
(unaudited, in millions, except share amounts)
June 18, December 31,
2004
2003
ASSETS
Property and equipment, net
$7,031
$7,085
Assets held for sale
-
73
Notes and other receivables
54
54
Due from managers
92
62
Investments in affiliates(b)
83
74
Deferred financing costs, net
75
82
Furniture, fixture and
equipment replacement fund
156
144
Other
152
138
Restricted cash
124
116
Cash and cash equivalents(c)
771
764
Total assets
$8,538
$8,592
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt
Senior notes, including
$490 million, net
of discount, of
Exchangeable
Senior Debentures
at June 18, 2004
$2,884
$3,180
Mortgage debt
2,094
2,205
Convertible Subordinated
Debentures(b)
492
-
Other
99
101
Total debt
5,569
5,486
Accounts payable and accrued expenses
93
108
Liabilities associated with assets
held for sale
-
2
Other
161
166
Total liabilities
5,823
5,762
Interest of minority partners of
Host Marriott L.P.
133
130
Interest of minority partners of
other consolidated partnerships
88
89
Company-obligated mandatorily redeemable
convertible preferred securities
of a
subsidiary whose sole assets
are convertible
subordinated debentures due
2026
("Convertible Preferred Securities")(b)
-
475
Shareholders' equity
Cumulative redeemable
preferred stock
(liquidation preference
$453.5
million), 50 million
shares
authorized; 18.1
million shares
issued and outstanding(c)
436
339
Common stock, par value
$.01, 750
million shares authorized;
347.0
million shares and
320.3 million
shares issued and
outstanding,
respectively
4
3
Additional paid-in capital
2,914
2,617
Accumulated other comprehensive
income
24
28
Deficit
(884)
(851)
Total shareholders'
equity
2,494
2,136
Total liabilities
and
shareholders'
equity
$8,538
$8,592
(a) Our consolidated balance sheet
as of June 18, 2004 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 Annual Report on Form 10-K and as amended
from time to time in other filings with the SEC.
(b) We adopted Financial Interpretation
No. 46 "Consolidation of Variable Interest Entities" (FIN 46) in 2003.
Under FIN 46, our limited purpose trust subsidiary that was formed to issue
trust-preferred securities (the Convertible Preferred Securities Trust)
was accounted for on a consolidated basis as of December 31, 2003 since
we were the primary beneficiary under FIN 46.
In December
2003, the FASB issued a revision to FIN 46, which we refer to as FIN 46R.
Under FIN 46R, we are not the primary beneficiary and we are required to
deconsolidate the accounts of the Convertible Preferred Securities Trust.
We adopted the provisions of FIN 46R on January 1, 2004. As a result, we
recorded the $492 million in debentures (the Convertible Subordinated Debentures)
issued by the Convertible Preferred Securities Trust and eliminated the
$475 million of Convertible Preferred Securities that were previously classified
in the mezzanine section of our consolidated balance sheet prior to January
1, 2004. The difference of $17 million is our investment in the Convertible
Preferred Securities Trust, which is included in "Investments in affiliates"
on our consolidated balance sheet. Additionally, we classified the
related dividend payment of approximately $15 million as interest expense.
The adoption of FIN 46R had no effect on our net loss, loss per diluted
share or financial covenants under our senior notes indentures.
(c) On July 1, 2004, we called for
the redemption of all of the outstanding 10% Class A Cumulative Redeemable
Preferred Stock. The Class A preferred stock will be redeemed on August
3, 2004 at a redemption price of $25.00 per share plus accrued dividends
to the redemption date.
HOST MARRIOTT CORPORATION
Consolidated Statements of Operations(a)
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date ended
June 18, June 20, June 18, June 20,
2004 2003 2004
2003
Revenues
Rooms
$ 544 $ 482 $1,013 $
930
Food and beverage
300 267 554
507
Other
59 55
110 107
Total hotel
sales
903 804 1,677
1,544
Rental income(b)
24 24
53 51
Other income
- -
- 2
Total revenues
927 828 1,730
1,597
Expenses
Rooms
132 116 249
226
Food and beverage
215 192 404
371
Hotel departmental expenses
241 217 456
421
Management fees
39 35
71 67
Other property-level expenses(b)
71 76
140 145
Depreciation and amortization
83 81
165 165
Corporate expenses
12 12
25 25
Total expenses
793 729 1,510
1,420
Operating profit
134 99
220 177
Interest income
2 2
5 5
Interest expense, including interest
expense for the Convertible
Subordinated Debentures in 2004(c)
(130) (107) (248)
(216)
Net gains on property transactions
4 2
5 3
Loss on foreign currency and
derivative contracts
- (1)
- (2)
Minority interest income (expense)
1 1
(2) 2
Equity in losses of affiliates
(3) (3) (8)
(9)
Dividends on Convertible Preferred
Securities(c)
- (8)
- (15)
Income (loss) before income taxes
8 (15) (28)
(55)
Provision for income taxes
(11) (6) (8)
(2)
Loss from continuing operations
(3) (21) (36)
(57)
Income from discontinued operations(d)
20 7
22 9
Net income (loss)
17 (14) (14)
(48)
Less: dividends on preferred stock
(10) (9) (19)
(18)
Net income (loss) available to common
shareholders
$ 7 $ (23) $ (33)
$ (66)
Basic and diluted earnings (loss)
per common share
$ 0.02 $(0.09) $(0.10) $(0.25)
(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 Annual Report on Form 10-K
and as amended from time to time in other filings with the SEC.
(b) Rental income and expense are
as follows:
Quarter ended Year-to-date ended
June 18, June 20, June 18,
June 20,
2004 2003
2004 2003
Rental income
$ 7 $
7 $ 18
$ 17
Full-service
17 17
35 34
Limited service and
office buildings
$ 24 $ 24
$ 53 $ 51
Rental and other expenses
(included in other
property-level expenses)
$ 2 $
2 $ 3
$ 3
Full-service
18 17
36 33
Limited service and
office buildings
$ 20 $ 19
$ 39 $ 36
(c) See discussion of FIN 46R in footnote
(b) to the consolidated balance sheet. Interest expense also includes approximately
$30 million and $42 million for the payment of call premiums and the acceleration
of deferred financing costs on debt redemptions and repayments for the
second quarter and year-to-date 2004, respectively.
(d) Reflects the results of operations
and gain (loss) on sale, net of the related income tax, for seven properties
sold in 2004 and eight properties sold in 2003.
HOST MARRIOTT CORPORATION
Earnings (Loss) per Common Share (unaudited, in millions, except per share
amounts)
Quarter ended
Quarter ended
June 18, 2004
June 20, 2003
Income
Income
Per (loss)
Per
(loss) Shares Share
(Numer-) Shares Share
(Numerator) (Denominator) Amount (ator) (Denominator) Amount
Net income
(loss)
$ 17 323.1 $ 0.05
$ (14) 264.7 $ (0.05)
Dividends on
preferred
stock
(10) -
(0.03) (9)
- (0.04)
Basic and diluted
earnings (loss)
available to
common
shareholders
per share (a)
$ 7 323.1 $
0.02 $ (23) 264.7 $ (0.09)
Year-to-date ended Year-to-date
ended
June 18, 2004
June 20, 2003
Income
Income
Per (loss)
Per
(loss) Shares Share
(Numer-) Shares Share
(Numerator) (Denominator) Amount (ator) (Denominator) Amount
Net loss
$ (14) 322.0 $ (0.04) $ (48)
264.5 $ (0.18)
Dividends on
preferred
stock
(19) -
(0.06) (18) -
(0.07)
Basic and diluted
loss available
to common
shareholders
per share (a)
$ (33) 322.0 $ (0.10) $ (66)
264.5 $ (0.25)
(a) Basic earnings (loss) per common
share is computed by dividing net income (loss) available to common shareholders
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 shareholders 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 and the
Convertible Subordinated Debentures. No effect is shown for any securities
that are anti-dilutive.
HOST MARRIOTT CORPORATION
Comparable Hotel Operating Data Comparable Hotels by Region(a)
(unaudited)
As of June 18, 2004 Quarter ended June
18, 2004
Average
No. of No. of Average
Occupancy
Properties Rooms Daily Rate Percentages
RevPAR
Pacific
21 11,302 $ 150.12
74.5% $ 111.88
Florida
12 7,337
174.51 74.8
130.61
Mid-Atlantic
10 6,720
184.93 80.6
149.06
Atlanta
13 5,940
142.84 69.3
98.99
North Central
13 4,923
122.09 70.3
85.87
South Central
7 4,816
136.88 79.4
108.64
DC Metro
11 4,297
154.85 79.9
123.72
New England
7 3,413
146.54 78.5
115.02
Mountain
8 3,313
106.68 63.6
67.89
International
5 1,951
122.49 74.4
91.18
All Regions
107 54,012
150.60 74.8
112.64
Quarter ended June 20, 2003
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR
RevPAR
Pacific
$ 150.39 66.5%
$ 99.98 11.9%
Florida
175.33 71.7
125.69 3.9
Mid-Atlantic
180.86 75.2
136.02 9.6
Atlanta
137.98 63.6
87.71 12.9
North Central
124.89 67.9
84.75 1.3
South Central
136.52 76.9
104.93 3.5
DC Metro
146.74 75.9
111.38 11.1
New England
149.55 69.4
103.82 10.8
Mountain
103.78 64.3
66.78 1.7
International
114.35 57.6
65.86 38.4
All Regions
149.00 69.5
103.50 8.8
As of June 18, 2004 Year-to-date ended June 18, 2004
Average
No. of No. of Average
Occupancy
Properties Rooms Daily Rate Percentages
RevPAR
Pacific
21 11,302 $ 151.34
73.5% $ 111.18
Florida
12 7,337
179.40 76.9
137.99
Mid-Atlantic
10 6,720
179.66 75.8
136.09
Atlanta
13 5,940
142.56 69.5
99.06
North Central
13 4,923
117.53 65.8
77.33
South Central
7 4,816
137.83 78.8
108.67
DC Metro
11 4,297
153.72 73.9
113.57
New England
7 3,413
138.18 70.1
96.79
Mountain
8 3,313
112.04 64.6
72.33
International
5 1,951
119.50 72.4
86.52
All Regions
107 54,012
150.15 72.8
109.32
Year-to-date ended June 20, 2003
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR
RevPAR
Pacific
$ 154.30 66.4%
$ 102.44 8.5%
Florida
178.72 74.1
132.49 4.1
Mid-Atlantic
175.64 72.5
127.38 6.8
Atlanta
140.79 66.1
93.01 6.5
North Central
119.76 63.9
76.50 1.1
South Central
139.27 78.1
108.73 (0.1)
DC Metro
145.01 71.3
103.42 9.8
New England
140.98 65.3
92.04 5.2
Mountain
109.42 64.7
70.82 2.1
International
109.87 62.1
68.27 26.7
All Regions
149.24 69.1
103.09 6.0
(a) See the introductory notes to financial
information for a discussion of reporting periods and comparable hotel
results.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Schedule of Comparable Hotel Results(a)
(unaudited, in millions, except hotel statistics)
Quarter ended Year-to-date ended
June 18, June 20, June 18, June 20,
2004 2003 2004
2003
Number of hotels
107 107 107
107
Number of rooms
54,012 54,102 54,012 54,012
Percent change in comparable hotel
RevPAR
8.8% -
6.0% -
Operating profit margin under GAAP(b)
14.5% 12.0% 12.7%
11.1%
Comparable hotel adjusted
operating profit margin(c)
24.6% 24.0% 23.6%
23.5%
Comparable hotel sales
Room
$ 520 $ 478 $ 974
$ 918
Food and beverage
289 267 536
502
Other
58 57
108 109
Comparable hotel sales(d) 867
802 1,618 1,529
Comparable hotel expenses
Room
127 115 241
222
Food and beverage
207 192 388
365
Other
36 34
66 64
Management fees, ground rent
and other costs
284 269 541
518
Comparable hotel expenses(e) 654
610 1,236 1,169
Comparable Hotel Adjusted
Operating Profit
213 192 382
360
Non-comparable hotel
results, net(f)
16 -
29 4
Office building and
limited service properties,
net(g)
- -
(1) 1
Other income
- -
- 2
Depreciation and amortization (83)
(81) (165) (165)
Corporate expenses
(12) (12) (25)
(25)
Operating Profit
$ 134 $ 99 $ 220
$ 177
(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 schedule above.
(d) The reconciliation of total revenues
per the consolidated statements of operations to the comparable hotel sales
is as follows (in millions):
Quarter ended Year-to-date ended
June 18, June 20, June 18, June 20,
2004 2003
2004 2003
Revenues per the consolidated
statements of operations
$ 927 $ 828 $ 1,730
$ 1,597
Non-comparable hotel sales
(54) (19)
(89) (37)
Hotel sales for the property for
which we record rental
income, net
12 10
23 22
Rental income for office buildings
and limited service hotels
(18) (17)
(35) (34)
Other income
- -
- (2)
Adjustment for hotel sales for
comparable hotels to reflect
Marriott's fiscal year
for
Marriott-managed
hotels
- -
(11) (17)
Comparable
hotel sales $ 867
$ 802 $ 1,618 $ 1,529
(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 18, June 20, June 18, June 20,
2004 2003
2004 2003
Operating costs and expenses per
the consolidated statements
of
operations
$ 793 $ 729 $ 1,510
$ 1,420
Non-comparable hotel expenses
(36) (20)
(62) (39)
Hotel expenses for the property for
which we record rental income 10
11 24
26 Rent expense for office buildings and limited service hotels
(18) (17)
(36) (33)
Adjustment for hotel expenses for
comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels
- -
(10) (15)
Depreciation and amortization
(83) (81)
(165) (165)
Corporate expenses
(12) (12)
(25) (25)
Comparable
hotel expenses $ 654
$ 610 $ 1,236 $ 1,169
(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 statements of operations as continuing operations and
(ii) the difference between comparable hotel adjusted operating profit,
which reflects 168 days of operations, and the operating results included
in the consolidated statements of operations, which reflects 170 days and
171 days for year-to-date 2004 and 2003, respectively.
(g) Represents rental income less rental
expense for limited service properties and office buildings. For
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 18, December 31,
2004
2003
Equity
Common shares outstanding
347.0
320.3
Common shares and minority
held
common OP Units
outstanding
369.8
343.8
Preferred OP Units outstanding
.02
.02
Class A Preferred shares
outstanding(a) 4.1
4.1
Class B Preferred shares
outstanding
4.0
4.0
Class C Preferred shares
outstanding
6.0
6.0
Class D Preferred shares
outstanding
.03
.03
Class E Preferred shares
outstanding
4.0
-
Security pricing
Common (b)
$ 12.26 $
12.32
Class A Preferred(a)(b)
$ 25.80 $
26.74
Class B Preferred(b)
$ 26.39 $
27.00
Class C Preferred(b)
$ 26.80 $
27.26
Class E Preferred(b)
$ 25.30
-
Convertible Preferred
Securities(c) $ 49.81
$ 51.00
Exchangeable Senior Debentures(d)
$ 947.50 $
-
Dividends per share
Common
-
-
Class A Preferred
$ 1.25
$ 2.50
Class B Preferred
$ 1.25
$ 2.50
Class C Preferred
$ 1.25
$ 2.50
Class D Preferred
$ 1.25
$ 1.88
Class E Preferred
$ 0.27
$ -
Debt
Percentage of fixed rate
debt
85%
85%
Weighted average interest
rate(e)
7.0%
7.7%
Weighted average debt
maturity (e) 6.9 years
5.5 years
Credit facility, outstanding
balance
(capacity of $250
million)
$ -
$ -
Other Financial Data
Construction in progress
$ 44
$ 56
Quarter ended Year-to-date ended
June 18, June 20, June 18, June 20,
2004 2003
2004 2003
Hotel Operating Statistics for
All Full-Service Properties(f)
Average Daily Rate
$ 153.04 $ 145.14 $ 151.81 $ 145.50
Average Occupancy
75.0% 69.7%
73.0% 69.2%
RevPAR
$ 114.85 $ 101.22 $ 110.76 $ 100.73
(a) On July 1, 2004, we called for
the redemption of all of the outstanding 10% Class A Cumulative Redeemable
Preferred Stock. The Class A preferred stock will be redeemed on August
3, 2004 at a redemption price of $25.00 per share plus accrued dividends
to the redemption date.
(b) Share prices are the closing price
on the consolidated balance sheet date, as reported by the New York Stock
Exchange, for the common and preferred stock, except our Class E preferred
stock which is as of the date of issue, June 21, 2004.
(c) Market price as of June 18, 2004
as quoted by Bloomberg L.P. We have reclassified these securities as debt
on our consolidated balance sheet. See footnote (b) to the consolidated
balance sheet.
(d) Market price as of June 18, 2004
as quoted by Bloomberg L.P. Quoted price reflects the price of a
single $1,000 debenture, which is exchangeable for common stock upon the
incurrence of certain events.
(e) Amounts include the Convertible
Subordinated Debentures in 2004. See footnote (b) to the consolidated
balance sheet. Excluding the Convertible Subordinated Debentures, our weighted
average interest rate was 7.1% and our weighted average debt maturity was
5.4 years.
(f) The operating statistics reflect
all consolidated properties as of June 18, 2004 and June 20, 2003, respectively.
However, the operating statistics include the results of operations for
seven hotels sold in 2004 and eight hotels sold in 2003 prior to their
disposition.
HOST MARRIOTT CORPORATION
Reconciliation of Net Income
(Loss) Available to Common Shareholders
to Funds From Operations per Diluted Share (unaudited, in millions, except
per share amounts)
Quarter ended Quarter ended
June 18, 2004 June 20,
2003
Per
Per
Income Share Income
Share
(loss) Shares Amount (loss) Shares Amount Net income (loss)
available to common shareholders
$7 323.1 $ .02 $(23) 264.7 $(0.09)
Adjustments:
Gains on dispositions,
net (22) -
(0.07) 2 -
-
Depreciation and amortization
83 - 0.26
86 - 0.32
Partnership adjustments
6 - 0.02
4 - 0.02
FFO of minority partners
of
Host LP (a)
(5) - (0.02) (6)
- (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
- 3.2 -
- 2.8 (0.01)
FFO per diluted share(b)(c)
$69 326.3 $0.21 $59 267.5
$0.22
Year-to-date ended Year-to-date ended
June 18, 2004 June 20,
2003
Per
Per
Income Share Income
Share
(loss) Shares Amount (loss) Shares Amount Net loss available
to common shareholders
$(33) 322.0 $(.10) $(66) 264.5 $(0.25)
Adjustments:
Gains on dispositions,
net (24) -
(0.08) (3) - (0.01)
Depreciation and amortization
166 - 0.52
174 - 0.66
Partnership adjustments
11 - 0.03
6 - 0.02
FFO of minority partners
of
Host LP (a)
(8) - (0.02) (11)
- (0.04)
Adjustments for dilutive
securities:
Assuming distribution
of common
shares granted under
the
comprehensive stock
plan less
shares assumed purchased
at
average market price
- 3.3 -
- 2.7 (0.01)
FFO per diluted share(b)(c)
$112 325.3 $0.34 $100 267.2
$0.37
(a) Represents FFO attributable to
the minority interest in Host LP.
(b) 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 and the Convertible Subordinated Debentures. No effect is
shown for securities if they are anti-dilutive.
(c) Amount includes a reduction of
approximately $30 million, or $.09 of FFO per diluted share for the second
quarter of 2004, and $42 million, or $.13 of FFO per diluted share for
year-to-date 2004, related to the charges for call premiums and the acceleration
of deferred financing costs related to the repayment of debt.
HOST MARRIOTT CORPORATION
Reconciliation of Net
Income (Loss) to EBITDA and Adjusted EBITDA
(unaudited, in millions)
Quarter ended Year-to-date ended
June 18, June 20, June 18, June 20,
2004 2003 2004
2003
Net income (loss)
$ 17 $ (14) $ (14) $ (48)
Interest expense(a)
130 107 248
216
Dividends on Exchangeable
Preferred Securities(a)
- 8
- 15
Depreciation and amortization
83 81
165 165
Income taxes
11 6
8 2
Discontinued operations(b)
- 5
1 11
EBITDA(c)
241 193 408
361
Gains and losses on dispositions
and related debt extinguishments (23)
(1) (25) (2)
Consolidated partnership
adjustments:
Minority interest
(income) expense (1)
(1) 2
(2)
Distributions to
minority interest
partners of
Host LP and other minority partners
(3) (3) (4)
(4)
Equity investment adjustments:
Equity in losses
of affiliates
3 3
8 9
Distributions received
from
equity investments
1 2
1 3
Adjusted EBITDA(c)
$ 218 $ 193 $ 390
$ 365
(a) Interest expense in the second
quarter and year-to-date 2004 includes approximately $8 million and $15
million, respectively, previously classified as dividends on Convertible
Preferred Securities. See footnote (b) to the consolidated balance sheets
for further detail.
(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 Loss Available to Common
Shareholders to Funds From Operations per Diluted Share
for Third Quarter 2004 Forecasts(a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Third Quarter 2004 Forecast
Per
Income
Share
(Loss) Shares Amount
Forecast net loss available to common
shareholders
$ (46) 347.2 $ (.13)
Adjustments:
Depreciation and amortization
$ 83 --
$ .24
Gain on disposition, net
(6) --
(.02)
Partnership adjustments
3 --
.01
FFO of minority partners
of Host LP(b) (2)
-- (.01)
Adjustment for dilutive securities:
(c)
Assuming distribution
of common shares
granted under the
comprehensive stock
plan less shares
assumed purchased
at average market
price
-- 3.2
--
FFO per diluted share (d)
$ 32 350.4 $
.09
High-end of Range
Third Quarter 2004 Forecast
Per
Income
Share
(Loss) Shares Amount
Forecast net loss available to
$ (37) 347.2 $ (.11)
common shareholders Adjustments:
Depreciation and amortization
83 --
.24
Gain on disposition, net
(6) --
(.02)
Partnership adjustments
3 --
.01
FFO of minority partners
of Host LP(b) (3)
-- (.01)
Adjustment for dilutive securities:
(c)
Assuming distribution
of common shares
granted under the
comprehensive stock
plan less shares
assumed purchased
at average market
price
-- 3.2
--
FFO per diluted share (d)
$ 40 350.4
$ .11
See the notes following the table reconciling
net loss to EBITDA and Adjusted EBITDA for full year 2004 forecasts.
HOST MARRIOTT CORPORATION Reconciliation of Net Loss Available to Common
Shareholders to Funds From Operations per Diluted Share for Full Year 2004
Forecasts(a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Full Year 2004 Forecast
Per
Income
Share
(Loss) Shares Amount
Forecast net loss available to common
shareholders
$ (79) 335.6 $ (.24)
Adjustments:
Depreciation and amortization
360 --
1.07
Gain on dispositions,
net
(49) --
(.15)
Partnership adjustments
21 --
.06
FFO of minority partners
of Host LP(b) (16)
-- (.04)
Adjustment for dilutive securities:(c)
Assuming distribution
of common shares
granted under the
comprehensive stock
plan less shares
assumed purchased
at average market
price
-- 3.2
--
FFO per diluted share (d)
$ 237 338.8 $ .70
High-end of Range
Full Year 2004 Forecast
Per
Income
Share
(Loss) Shares Amount
Forecast net loss available to common
shareholders
$ (58) 335.6 $ (.17)
Adjustments:
Depreciation and amortization
360 --
1.07
Gain on dispositions, net
(49) --
(.15)
Partnership adjustments
22 --
.06
FFO of minority partners of
Host LP(b) (17)
-- (.05)
Adjustment for dilutive securities:(c)
Assuming distribution of common
shares
granted under the comprehensive
stock
plan less shares assumed
purchased
at average market price
-- 3.2
--
FFO per diluted share (d)
$ 258 338.8 $
.76
See the notes following the table reconciling
net loss to EBITDA and Adjusted EBITDA for full year 2004 forecasts.
HOST MARRIOTT CORPORATION
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
for Full Year 2004 Forecasts(a)
(unaudited, in millions)
Full Year 2004
Low-end High-end
of Range of Range
Net Loss
$ (38) $ (17)
Interest expense(e)
478 478
Depreciation and amortization
360 360
Income taxes
(7) (5)
EBITDA
793 816
Losses (gains) on dispositions
(49) (49)
Consolidated partnership
adjustments:
Minority interest
(income) expense
1 3 Distributions
to minority interest partners of Host LP and other minority partners
(6) (6)
Equity investment adjustments:
Equity in
losses of affiliates
19 19
Distributions
received from
equity
investments
2 2
Adjusted EBITDA
$ 760 $ 785
(a) The amounts shown in these reconciliations
are based on management's estimate of operations for 2004. 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.
For purposes
of preparing the full year and third quarter 2004 forecasts, we have made
the following assumptions:
* RevPAR
will increase between 5.5% and 7.0% for the full year and increase between
6.0% and 8.0% for the third quarter for the low and high ends of the forecasted
ranges, respectively.
* Comparable
hotel adjusted operating profit margins will increase 40 basis points and
80 basis points for the full year and will increase 80 basis points and
180 basis points for the third quarter for the low and high ends of the
forecasted ranges, respectively.
* Approximately
$300 million of hotels will be sold during 2004.
* Approximately
$600 million of acquisitions will be made during 2004.
* Approximately
$970 million of debt will be redeemed or repaid for the full year ($859
million of which was redeemed or repaid in the first and second quarter).
Charges totaling approximately $51 million, or $.15 of FFO per diluted
share, for the full year and approximately $5 million, or $.01 of FFO per
diluted share, for the quarter, in call premiums and the acceleration of
deferred financing costs associated with the debt repayments and the redemption
of the Class A preferred stock will be incurred.
* Fully
diluted shares will be 338.8 million and 350.4 million for the full year
and third quarter, respectively.
(b) Represents FFO attributable to
the minority interests in Host LP.
(c) These shares are dilutive for
purposes of the FFO per diluted share calculation, yet are anti-dilutive
for the purposes of the earnings per share calculation. This is due to
the net loss that is forecasted for 2004 compared to net earnings for FFO
for the year.
(d) 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 and the Exchangeable Preferred Securities. No effect is
shown for securities if they are anti-dilutive.
(e) Interest expense in 2004 includes
amounts previously classified as dividends on Exchangeable Preferred Securities.
See footnote (b) to the consolidated balance sheets for further detail. |