HOST MARRIOTT CORPORATION
Consolidated Balance Sheets (a)
(unaudited, in millions, except share amounts)
September 12, December 31,
2003
2002
ASSETS
$6,954
$7,031
Property and equipment, net
54
53
Notes and other receivables
68
82
Due from managers
84
133
Investments in affiliates
491
523
Other assets
134
133
Restricted cash
547
361
Cash and cash equivalents
$8,332
$8,316
LIABILITIES
AND SHAREHOLDERS' EQUITY
Debt
Senior notes
$3,162
$3,247
Mortgage debt
2,317
2,289
Other
102
102
5,581
5,638
Accounts payable and accrued expenses
148
118
Minority interest liability(b)
112
--
Other liabilities
184
252
Total liabilities
6,025
6,008
Minority interests of Host Marriott,
L.P. 111
131
Interest of minority partners of
other consolidated partnerships(b)
2
92
Company-obligated mandatorily
redeemable convertible preferred
securities of a subsidiary whose
sole assets are convertible
subordinated debentures due
2026
("Convertible Preferred Securities")
475
475
Shareholders' equity
Cumulative redeemable preferred stock
(liquidation preference $354
million), 50 million shares
authorized; 14.1 million shares
issued and outstanding
339
339
Common stock, par value $.01, 750
million shares authorized; 295.7
million shares and 263.7 million
shares issued and outstanding,
respectively
3
3
Additional paid-in capital
2,363
2,100
Accumulated other comprehensive income
(loss) 7
(2)
Deficit
(993)
(830)
Total shareholders'
equity
1,719
1,610
$8,332
$8,316
(a) Our consolidated balance sheet
as of September 12, 2003 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 the annual report on Form 10-K for the year ended
December 31,
2002.
(b) See footnote (d) to the Statements
of Operations for detail.
HOST MARRIOTT CORPORATION
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date
Sept. 12, Sept. 6, Sept. 12, Sept. 6,
Revenues
2003 2002 2003
2002
Rooms
$463 $473 $1,436 $1,467
Food and beverage
218 220 746
744
Other
49 64
157 182
Total hotel
sales
730 757 2,339
2,393
Rental income(b)
20 20
71 70
Other income
10 --
12 --
Total revenues
760 777 2,422
2,463
Operating Costs and Expenses
Rooms
124 123 360
359
Food and beverage
180 179 565
553
Hotel departmental expenses
224 221 664
635
Management fees
28 29
98 109
Other property-level expenses(b)
71 69
220 201
Depreciation and amortization
86 85
258 251
Corporate and other expenses
15 11
42 40
Total operating
costs and expenses 728
717 2,207 2,148
Operating profit
32 60
215 315
Minority interest income
(expense) 9
3 11
(8)
Interest income
2 7
7 14
Interest expense
(109) (107) (327)
(318)
Net gains on property
transactions 1
1 4
3
Equity in losses of affiliates
(4) (3) (13)
(6)
Dividends on Convertible
Preferred
Securities
(7) (7) (22)
(22)
Loss before income taxes
(76) (46) (125)
(22)
Benefit (provision) for income taxes
11 7
10 (8)
Loss from continuing operations
(65) (39) (115)
(30)
Income from discontinued
operations(c)
1 1
3 17
Loss before cumulative effect of a
change in accounting principle
(64) (38) (112)
(13)
Cumulative effect of adoption of
SFAS 150(d)
(24) -- (24)
--
Net loss
(88) (38) (136)
(13)
Less: dividends on preferred
stock (9)
(9) (27) (27)
Net loss available to common
shareholders
$(97) $(47) $(163) $(40)
Basic and diluted loss per common
share
$(0.35) $(0.18) $(0.61) $(0.15)
(a) Our consolidated statements of
operations have been prepared without
audit.
Certain information and footnote disclosures normally included
in financial
statements presented in accordance with GAAP have been
omitted.
The unaudited 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 for the year
ended December
31, 2002.
(b) Rental income and expense are as
follows:
Quarter ended Year-to-date
Sept. Sept. Sept.
Sept.
12, 6,
12, 6,
2003 2002 2003
2002
Rental Income
$3 $2
$20 $19
Full-service
17 18
51 51
Limited service and office
buildings $20 $20
$71 $70
Rental and other expenses (included
in "Other property-level expenses")
$2 $2
$5 $5
Full-service
17 17
50 50
Limited service and office
buildings $19 $19
$55 $55
(c) Reflects the results of operations
and gain (loss) on sale, net of
related income
tax, for four properties disposed of during 2003 and
one in 2002.
(d) The FASB recently issued SFAS No.
150. This statement requires
issuers to
classify as liabilities (or assets in some circumstances)
three classes
of freestanding financial instruments that embody
obligations
for the issuer. Previously, many such instruments had
been classified
as equity. A freestanding financial instrument is an
instrument
that is entered into separately and apart from any of the
entity's other
financial instruments or equity transactions, or that
is entered
into in conjunction with some other transaction and is
legally detachable
and separately exercisable, such as certain put and
call options.
These provisions are effective for financial
instruments
entered into or modified after May 31, 2003, and otherwise
is effective
at the beginning of the first interim period beginning
after June
15, 2003. As a result of further discussion by the FASB on
October 8,
2003, it was determined that any minority partners'
interest in
consolidated partnerships with finite lives specified in
the related
partnership agreements should be reclassified as a
liability
and presented at the fair value as of the date of the
balance sheet
unless the interests are convertible into equity of the
parent.
The effect of this change is shown on our statements of
operations
as a cumulative effect of a change in accounting principle.
The minority
interest liability will be fair valued and the gains and
losses from
changes in fair value of the liability are recorded in
interest expense
in the current period (i.e., a change in the fair
value of our
minority partners' equity in the partnership).
We did not
enter into any financial instruments within the
scope of SFAS
No. 150 during June 2003. However, as a result of
adopting SFAS
No. 150 on July 1, 2003 for existing financial
instruments
entered into on or before May 31, 2003, a cumulative
effect of
change in accounting principle of $24 million was recorded
in the quarter.
As of September 12, 2003, total liabilities include
$112 million
of minority interest liabilities at their fair value.
HOST MARRIOTT CORPORATION
Loss per Common Share (a)
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
September 12, 2003 September 6, 2002
Per
Per
Income Share Income
Share
(Loss) Shares Amount (Loss) Shares Amount
Net loss
$(88) 275.6 $(0.32) $(38) 263.3 $(0.15)
Dividends on preferred
stock (9) -- (0.03)
(9) -- (0.03)
Basic and diluted loss
available to common
shareholders and basic and
diluted loss per common share
$(97) 275.6 $(0.35) $(47) 263.3 $(0.18)
Year-to-date ended Year-to-date ended
September 12, 2003 September 6, 2002
Per
Per
Income Share Income
Share
(Loss) Shares Amount (Loss) Shares Amount
Net loss
$(136) 268.1 $(0.51) $(13) 262.7 $(0.05)
Dividends on preferred
stock (27) -- (0.10)
(27) -- (0.10)
Basic and diluted loss
available to common
shareholders and basic and
diluted loss per common share
$(163) 268.1 $(0.61) $(40) 262.7 $(0.15)
(a) Basic loss per common share is
computed by dividing net loss available
to common
shareholders by the weighted average number of shares of
common stock
outstanding. Diluted loss per common share is computed
by dividing
net loss available to common shareholders as adjusted for
dilutive securities,
by the weighted average number of shares of
common stock
outstanding plus other dilutive shares. 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 Preferred Securities.
No effect
is shown for securities if they are anti-dilutive.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Hotels by Region (a)
(unaudited)
As of September 12, 2003 Quarter ended September 12, 2003
Average
No. of No. of Average
Occupancy
Properties Rooms Daily Rate Percentages
RevPAR
Atlanta
15 6,563 $125.74
67.7% $85.14
DC Metro
12 4,593
141.73 73.7
104.41
Florida
12 7,303
123.35 65.7
81.04
International
6 2,552
114.22 67.5
77.11
Mid-Atlantic
9 6,222
163.66 75.4
123.43
Mountain
8 3,313
90.18 64.1
57.79
New England
6 2,277
120.28 66.4
79.89
North Central
15 5,395
122.02 73.6
89.83
Pacific
22 11,526 137.01
73.8 101.18
South Central
11 6,317
111.52 73.8
82.27
All Regions
116 56,061
129.03 71.0
91.62
Quarter ended September 6, 2002
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR
RevPAR
Atlanta
$128.93 66.0%
$85.15 0.0%
DC Metro
137.54 73.3
100.80 3.6
Florida
119.94 64.8
77.70 4.3
International
111.15 76.5
85.02 (9.3)
Mid-Atlantic
175.98 75.4
132.66 (7.0)
Mountain
89.45 64.7
57.87 (0.1)
New England
132.24 76.3
100.92 (20.8)
North Central
120.53 73.8
88.91 1.0
Pacific
141.79 74.1
105.09 (3.7)
South Central
110.67 74.8
82.77 (0.6)
All Regions
130.99 71.7
93.92 (2.5)
As of September 12, 2003 Year-to-date September
12, 2003
Average
No. of No. of Average
Occupancy
Properties Rooms Daily Rate Percentages
RevPAR
Atlanta
15 6,563 $132.62
66.6% $88.29
DC Metro
12 4,593
142.31 71.8
102.21
Florida
12 7,303
157.2 71.5
112.39
International
6 2,552
110.19 65.3
71.96
Mid-Atlantic
9 6,222
170.33 73.6
125.32
Mountain
8 3,313
102.98 64.5
66.43
New England
6 2,277
120.79 61.9
74.77
North Central
15 5,395
119.82 67.2
80.55
Pacific
22 11,526 147.21
69.0 101.57
South Central
11 6,317
125.28 76.2
95.41
All Regions
116 56,061
139.02 69.7
96.90
Year-to-date September 6, 2002
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR
RevPAR
Atlanta
$139.90 68.0%
$95.14 (7.2)%
DC Metro
141.33 71.0
100.39 1.8
Florida
154.74 72.5
112.19 0.2
International
110.20 71.8
79.10 (9.0)
Mid-Atlantic
181.52 76.9
139.51 (10.2)
Mountain
108.65 67.5
73.34 (9.4)
New England
129.19 68.4
88.31 (15.3)
North Central
118.88 68.5
81.41 (1.1)
Pacific
152.21 71.5
108.87 (6.7)
South Central
129.43 78.3
101.33 (5.8)
All Regions
142.71 71.9
102.63 (5.6)
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Ritz-Carlton Hotels (b)
(unaudited)
As of September 12, 2003 Quarter ended September
12, 2003
Average
No. of No. of Average
Occupancy
Properties Rooms Daily Rate Percentages
RevPAR
Ritz-Carlton
9 3,536
$ 201.96 66.6%
$ 134.52
Quarter ended September 6, 2002
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages
RevPAR RevPAR
Ritz-Carlton $
201.94 63.0%
$ 127.20 5.8%
As of September 12, 2003 Year-to-date September 12, 2003
Average
No. of No. of Average
Occupancy
Properties Rooms Daily Rate Percentages
RevPAR
Ritz-Carlton
9 3,536
$ 229.38 65.9%
$ 151.24
Year -to-date September 6, 2002
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages
RevPAR RevPAR
Ritz-Carlton $
231.93 66.2%
$ 153.63 (1.6)%
(a) See discussion of Comparable Hotel
Results.
(b) Includes nine Ritz-Carlton properties
owned by us for all periods
presented,
excluding The Ritz-Carlton, Naples Golf Resort, which was
placed in
service in January 2002.
HOST MARRIOTT CORPORATION
Hotel Operational Data
All Full Service Hotels by Region (a)
(unaudited)
As of September 12, 2003 Quarter ended September 12, 2003
Average
No. of No. of Average
Occupancy
Properties(b) Rooms(b) Daily Rate Percentages
RevPAR
Atlanta
15 6,563
$125.74 67.7%
$85.14
DC Metro
13 5,365
144.07 75.0
108.11
Florida
13 7,598
122.98 64.8
79.72
International
6 2,552
114.22 67.5
77.11
Mid-Atlantic
10 6,726
164.24 75.0
123.19
Mountain
8 3,313
90.18 64.1
57.79
New England
7 3,416
135.95 72.3
98.27
North Central
15 5,395
122.02 73.6
89.83
Pacific
22 11,526
137.01 73.8
101.18
South Central
11 6,317
111.16 73.8
82.08
All Regions
120 58,771
130.54 72.3
92.97
Quarter ended September 6, 2002
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR(a)
RevPAR
Atlanta
$128.93 66.0%
$85.15 0.0%
DC Metro
135.58 74.4
100.92 7.1
Florida
118.77 63.5
75.36 5.8
International
111.15 76.5
85.02 (9.3)
Mid-Atlantic
176.37 75.6
133.28 (7.6)
Mountain
89.45 64.7
57.87 (0.1)
New England
145.11 75.3
109.22 (10.0)
North Central
120.53 73.8
88.91 1.0
Pacific
140.58 74.0
104.08 (2.8)
South Central
109.99 74.8
82.26 (0.2)
All Regions
131.58 71.6
94.27 (1.4)
Year-to-date
As of September 12, 2003
September 12, 2003
Average
No. of No. of
Average Occupancy
Properties(b) Rooms(b) Daily Rate Percentages
RevPAR
Atlanta
15 6,563
$132.62 66.6%
$88.29
DC Metro
13 5,365
141.49 72.5
102.58
Florida
13 7,598
158.70 70.9
112.59
International
6 2,552
110.19 65.3
71.96
Mid-Atlantic
10 6,726
171.69 73.4
125.96
Mountain
8 3,313
102.98 64.5
66.43
New England
7 3,416
139.13 67.7
94.19
North Central 15
5,395 119.82
67.2 80.55
Pacific
22 11,526
147.06 69.0
101.50
South Central 11
6,317 124.52
76.1 94.78
All Regions
120 58,771
140.23 69.9
98.07
Year-to-date September 6, 2002
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR(a)
RevPAR
Atlanta
$139.90 68.0%
$95.14 (7.2)%
DC Metro
138.74 71.7
99.44 3.2
Florida
155.61 71.6
111.43 1.0
International
110.20 71.8
79.10 (9.0)
Mid-Atlantic
181.10 76.6
138.70 (9.2)
Mountain
108.62 67.5
73.32 (9.4)
New England
136.05 69.1
93.96 0.2
North Central
118.88 68.5
81.41 (1.1)
Pacific
150.89 71.6
108.03 (6.0)
South Central
128.21 77.7
99.68 (4.9)
All Regions
142.76 71.8
102.57 (4.4)
(a) See discussion of Reporting Periods
on page 7.
(b) The number of properties and the
room count reflect all consolidated
properties
as of September 12, 2003. However, the operating statistics
include the
results of operations for four hotels sold in 2003 and one
sold in 2002
prior to their disposition.
HOST MARRIOTT CORPORATION
Schedule of Comparable Hotel Results (a)
(unaudited, in millions)
Quarter ended Year-to-date
September September September September
12, 6,
12, 6,
2003 2002 2003
2002
Number of hotels
116 116 116
116
Number of rooms
56,061 56,061 56,061 56,061
Percent change in Comparable RevPAR
(2.5)%
(5.6)%
Operating profit margin under GAAP(b)
4.2% 7.7% 8.9%
12.8%
Comparable hotel operating profit
margin(c)
16.6% 19.1% 21.5%
24.9%
Comparable hotel sales
Room
$439 $450 $1,360 $1,440
Food and beverage
211 213 713
736
Other
49 53
157 174
Comparable
hotel sales(d)
699 716 2,230
2,350
Comparable hotel expenses
Room
119 117 341
350
Food and beverage
172 170 535
540
Other
32 32
95 99
Management fees, ground
rent
and other costs
260 260 780
777
Comparable
hotel expenses(e) 583
579 1,751 1,766
Comparable Hotel Operating Profit
116 137 479
584
Non-comparable hotel results,
net(f) 7
7 23
10
Office building and limited
service
properties, net
-- 1
1 1
Business interruption
insurance
proceeds
-- 11
-- 11
Other income
10 --
12 --
Depreciation and amortization
(86) (85) (258)
(251)
Corporate and other expenses
(15) (11) (42)
(40)
Operating Profit
$32 $60 $215
$315
(a) See discussion of Comparable Hotel
Results and Reporting Periods
beginning
on page 6.
(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 operating profit
margin is calculated as the
comparable
hotel 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
Sept. 12, Sept. 6, Sept. 12, Sept. 6,
2003 2002 2003
2002
Revenues per the consolidated
statements of operations
$760 $777 $2,422
$2,463
Non-comparable hotel sales
(43) (41) (143)
(100)
Hotel sales for the property for
which we receive rental income,
net 9
9 31
30
Rental income for office buildings
and limited service hotels
(17) (18) (51)
(51)
Other income
(10) -- (12)
--
Business interruption insurance
proceeds
-- (11) --
(11)
Adjustment for hotel sales for
comparable hotels to reflect
thirty-
six weeks of operations for
Marriott-managed hotels
-- --
(17) 19
Comparable hotel sales
$699 $716 $2,230
$2,350
(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
Sept. 12, Sept. 6, Sept. 12, Sept. 6,
2003 2002 2003
2002
Operating costs and expenses per the
consolidated statements of
operations
$728 $717 $2,207
$2,148
Non-comparable hotel expenses
(37) (35) (127)
(91)
Hotel expenses for the property for
which we receive rental income
10 10
36 35
Rent expense for office buildings
and
limited service hotels
(17) (17) (50)
(50)
Adjustment for hotel expenses for
comparable hotels to reflect
thirty-
six weeks of operations for
Marriott-managed hotels
-- --
(15) 15
Depreciation and amortization
(86) (85) (258)
(251)
Corporate and other expenses
(15) (11) (42)
(40)
Comparable hotel sales
$583 $579 $1,751
$1,766
(f) Non-comparable hotel results, net
includes the following items: (i)
the results
of operations of our non-comparable hotels and (ii) the
difference
between the comparable hotel operating profit which
reflects 252
days of operations year-to-date and the operating results
included in
the consolidated statements of operations which reflects
255 and 249
days for year-to-date 2003 and 2002, respectively. For
further detail
see Comparable Hotel Results and Reporting Periods
beginning
on page 6.
HOST MARRIOTT CORPORATION
Other Financial Data
(unaudited, in millions, except per share and ratio data)
September 12, December 31,
2003
2002
Equity
Common shares outstanding
295.7
263.7
Common shares and minority-held
common OP Units outstanding
320.0
291.5
Preferred OP Units outstanding
0.02
0.02
Class A Preferred stock outstanding
4.1
4.1
Class B Preferred stock outstanding
4.0
4.0
Class C Preferred stock outstanding
6.0
6.0
Class D Preferred stock outstanding
(a) 0.03
--
Security pricing:
Share price-common (a)
$ 9.99
$ 8.85
Share price-Class A Preferred
(a) $
25.25 $ 26.15
Share price-Class B Preferred
(a) $
25.10 $ 25.65
Share price-Class C Preferred
(a) $
25.25 $ 25.70
Share price-Convertible
Preferred
Securities (a)
$ 44.19 $
36.94
Dividends per share (year-to-date
2003 and full year 2002)
Common (b)
$ --
$ --
Class A Preferred (c)
$ 1.88
$ 2.50
Class B Preferred (c)
$ 1.88
$ 2.50
Class C Preferred (c)
$ 1.88
$ 2.50
Class D Preferred (c)
$ 1.25
$ --
Debt
Percentage of fixed rate
debt
84%
90%
Weighted average interest
rate
7.8%
7.9%
Weighted average debt
maturity
4.8 years 5.5 years
Credit facility, outstanding
balance $
-- $
--
Other Financial Data
Construction in progress
$ 54
$ 39
(a) Share prices are the closing price
on the balance sheet date, as
reported by
the NYSE for the common and preferred stock. The shares of
Convertible
Preferred Securities are not traded on an exchange. Our
Convertible
Preferred Securities per share price is deemed to be the
higher of
the buy or sell price as provided by the trading desk for
Goldman Sachs
in New York, New York on the relevant date.
(b) We did not declare a common stock
dividend in the first three quarters
of 2003 or
in full year 2002.
(c) Dividends reflect a quarterly
cash dividend of $.625 per share for the
Class A, Class
B, Class C and Class D preferred stock.
HOST MARRIOTT CORPORATION
Reconciliation
of Net Loss Available to Common Shareholders
to Funds From Operations per Diluted Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
September 12, 2003 September 6, 2002
Per
Per
Income Share Income
Share
(Loss) Shares Amount (Loss) Shares Amount
Net loss available to
common shareholders
$(97) 275.6 $(.35) $(47) 263.3 $(.18)
Adjustments:
Cumulative effect of change
in accounting principle
24 -- .09
-- -- --
Depreciation and
amortization
86 -- .31
87 -- .33
Partnership adjustments
(3) -- (.01)
2 -- .01
FFO of minority partners
of Host LP (a)
(1) -- --
(4) -- (.02)
Adjustments for dilutive
securities:
Assuming distribution
of
common shares granted
under
the comprehensive
stock plan
less shares assumed
purchased
at average market
price -- 2.9
-- -- 3.0
--
Assuming conversion of
Convertible Preferred
Securities
-- -- --
-- -- --
FFO per diluted share (b) (c)
$9 278.5 $.03 $38
266.3 $.14
Year-to-date
Year-to-date
September 12, 2003 September 6, 2002
Per
Per
Income Share
Income Share
(loss) Shares Amount (loss) Shares Amount
Net loss available to
common shareholders
$(163) 268.1 $(.61) $(40) 262.7 $(.15)
Adjustments:
Cumulative effect of change
in accounting principle
24 -- .09
-- -- --
Gain from discontinued
operations
-- -- --
(13) -- (.05)
Depreciation and
amortization
257 -- .96
254 -- .97
Partnership adjustments
3 -- .01
18 -- .07
FFO of minority partners
of Host LP (a)
(12) -- (.05) (19)
-- (.08)
Adjustments for dilutive
securities:
Assuming distribution
of
common shares granted
under
the comprehensive
stock
plan less shares
assumed
purchased at average
market price
-- 2.5 --
-- 3.2 --
Assuming conversion of
Convertible Preferred
Securities
-- -- --
22 30.9 (.01)
FFO per diluted share (b) (c)
$109 270.6 $.40 $222 296.8
$.75
(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
Preferred Securities. No effect is shown for securities
if they are
anti-dilutive.
(c) In the third quarter of 2003, the
FFO per diluted share includes the
following
items:
* the recognition
of approximately $9.6 million of other income from
the settlement of a claim that we brought against our directors' and
officers' insurance carriers for reimbursement of defense costs and
settlement payments incurred in resolving a series of related
actions brought against us and Marriott International that arose
from the sale of certain limited partnership units to investors
prior to 1993. The settlement amount, net of taxes of approximately
$2.4 million, resulted in FFO per diluted share of approximately
$.02 for the quarter.
* in conjunction
with the redemption of $71 million of our Series A
senior notes, we incurred approximately $2.3 million of expense
related to the 2.627% premium paid and the acceleration of related
deferred financing fees. This change decreased FFO per diluted
share by approximately $.01 for the quarter.
HOST MARRIOTT CORPORATION
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
(unaudited, in millions)
Quarter ended Year-to-date
September September September September
12, 6,
12, 6,
2003 2002
2003 2002
Net loss
$(88) $(38)
$(136) $(13)
Interest expense
108 107
326 318
Dividends on Convertible
Preferred Securities
7 7
22 22
Depreciation and amortization
86 85
258 251
Income taxes
(11) (7)
(10) 8
Discontinued operations
(a) 1
1 4
3
EBITDA (b)
104 155
465 589
Gains and losses on
dispositions and
related
debt extinguishments
-- (1)
(2) (16)
Consolidated partnership
adjustments:
Minority interest
(income) expense
(9) (3)
(11) 8
Distributions to minority
interest partners
of Host LP
and other minority
partners (1)
(2) (5)
(9)
Equity investment adjustments:
Equity in losses of affiliates
4 3
13 6
Distributions received
from
equity investments
-- 1
3 3
Cumulative effect of change
in accounting principle
24 --
24 --
Adjusted EBITDA (b)
$122 $153
$487 $581
(a) Reflects the interest expense,
depreciation and amortization and
income taxes
included in discontinued operations.
(b) See discussion of EBITDA and Adjusted
EBITDA.
HOST MARRIOTT CORPORATION
Reconciliation of Net Loss Available to Common
Shareholders to Funds From
Operations
per Diluted Share for Full Year 2003 Forecasts (a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Full Year 2003 Forecast
Income
Per Share
(Loss) Shares
Amount
Forecast net loss available to
common shareholders
$(209) 276.5
$(.75)
Adjustments:
Cumulative effect of change
in
accounting principle
24 --
.09
Depreciation and amortization
374 --
1.34
Partnership adjustments
(2) --
--
FFO of minority partners
of Host LP (b) (15)
-- (.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
-- 2.9
(.01)
FFO per diluted share (d)
$172 279.4
$0.62
High-end of Range
Full Year 2003 Forecast
Income
Per Share
(Loss) Shares Amount
Forecast net loss available to
common shareholders
$(195) 276.5
$(.71)
Adjustments:
Cumulative effect of change
in
accounting principle
24 --
.09
Depreciation and amortization
374 --
1.34
Partnership adjustments
(2) --
--
FFO of minority partners
of Host LP (b) (16)
-- (.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
-- 2.9
(.01)
FFO per diluted share (d)
$185 279.4
$.66
HOST MARRIOTT CORPORATION
Notes to Reconciliation of Net
Loss Available to Common Shareholders
to Funds From Operations per Diluted Share
(a) The amounts shown in these reconciliations
are based on management's
estimate of
operations for full year 2003. 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 2003 forecasts, we have made
the following
assumptions:
* RevPAR will
be flat to down 2.5% for the fourth quarter and decrease
between 4% and 5% for the full-year 2003 for the high and low ends
of the forecasted ranges, respectively.
* Comparable
hotel operating profit margins will decrease between
2.5 percentage points and 3.0 percentage points for the full-year
2003 for the high and low end of the forecasted ranges,
respectively.
* $150 million
of hotels will be sold during 2003 and the proceeds
will be utilized to retire debt, including proceeds from the $97
million in dispositions completed to date.
* $210 million
in renewal and replacement capital expenditures will be
incurred during 2003.
* Fully diluted
shares will be 279.4 million full-year 2003.
(b) Represents FFO attributable to
the minority interests in Host LP
during 2003.
(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 2003 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
Convertible
Preferred Securities. No effect is shown for securities
if they are
anti-dilutive.
HOST MARRIOTT CORPORATION
Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA for Full Year 2003 Forecasts
(unaudited, in millions)
Full Year 2003
Low-end High-end
of Range of Range
Net Loss
$(174)
$(160)
Interest expense
463
463
Dividends on Convertible
Preferred Securities
32
32
Depreciation and amortization
374
374
Income taxes
(10)
(10)
Discontinued operations
(a)
4
4
EBITDA
689
703
Gains and losses on dispositions
and
related debt extinguishments
(4)
(4)
Consolidated partnership
adjustments:
Minority interest
(income) expense
(12)
(11)
Distributions
to minority interest
partners
of Host LP and other
minority
partners
(6)
(6)
Equity investment adjustments:
Equity in
(earnings) losses of
affiliates
20
20
Distributions
received from
equity
investments
4
4
Cumulative
effect of change in
accounting
principle
24
24
Adjusted EBITDA
$ 715
$730
(a) Reflects the interest expense,
depreciation and amortization and
income taxes
included in discontinued operations. |