Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Revenues:
Hotel operating
revenue:
Room
$237,041 $208,121 $975,128
$886,478
Food
and beverage 48,200
45,919 174,537 168,391
Other
operating
departments
14,479 13,796
60,465 58,284
Retail space rental
and other
revenue
141 129
2,049 2,721
Total revenues 299,861
267,965 1,212,179 1,115,874
Expenses:
Hotel departmental
expenses:
Room
63,183 58,235 253,563
238,807
Food
and beverage 36,546
34,967 135,558 132,561
Other
operating
departments
7,492 7,220
30,356 29,028
Other property related
costs
89,556 81,342 353,070
323,587
Management and franchise
fees
14,854 13,161
61,348 57,305
Taxes, insurance
and
lease expense
29,181 23,513 122,186
109,310
Abandoned projects
265 ---
265 ---
Corporate expenses
4,917 5,506
19,025 17,035
Depreciation
30,528 28,668 119,323
111,836
Total operating
expenses
276,522 252,612 1,094,694
1,019,469
Operating income
23,339 15,353 117,485
96,405
Interest expense,
net (31,948) (32,552)
(130,954) (145,666)
Impairment loss
(263,091) (3,494) (263,091)
(3,494)
Hurricane loss
(4,172) ---
(6,481) (2,125)
Loss on early extinguishment
of debt
(11,921) (4,983) (11,921)
(44,216)
Charge-off of deferred
financing
costs
(2,659) (866)
(2,659) (6,960)
Gain on swap termination
--- ---
--- 1,005
Loss before equity in income
from unconsolidated entities,
minority interests and gain
on sale of assets
(290,452) (26,542) (297,621)
(105,051)
Equity in income
from
unconsolidated
entities 1,941
1,428 10,169
17,121
Minority interests
21,891 1,923
23,813 5,229
Gain on sale of
assets ---
73 733
1,167
Loss from continuing
operations
(266,620) (23,118) (262,906)
(81,534)
Discontinued operations
1,410 12,348
11,291 (18,593)
Net loss
(265,210) (10,770) (251,615)
(100,127)
Preferred dividends
(9,679) (10,091) (39,408)
(35,130)
Issuance costs of
redeemed
preferred
stock
--- ---
(6,522) ---
Net loss applicable to
common stockholders
$(274,889) $(20,861) $(297,545) $(135,257)
Basic and diluted per
common share data:
Net loss from continuing
operations
$(4.65) $(0.56) $(5.20)
$(1.98)
Net loss
$(4.62) $(0.35) $(5.01)
$(2.29)
Weighted average
common
shares outstanding
59,453 59,192
59,436 59,045
Discontinued Operations
(in thousands)
Included in discontinued operations
are the results of operations of the
18 hotels disposed of in 2004, and 19 hotels disposed
of in 2005. Condensed
financial information for the hotels included in discontinued
operations is as
follows:
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Operating revenue
$3,813 $22,333 $45,970
$145,007
Operating expenses
(3,781) (24,087) (43,299)
(141,530)
Operating income (loss) 32
(1,754) 2,671
3,477
Direct interest
costs, net ---
(861) (918)
(3,943)
Impairment loss
(1,800) (1,768) (3,660)
(34,795)
Asset disposition
costs ---
--- (1,300)
(4,900)
Gain on early extinguishment
of debt
742 ---
3,280 ---
Gain on sale of
depreciable
assets
2,501 17,306
11,736 19,422
Minority interests
(65) (575)
(518) 2,146
Income (loss) from
discontinued operations
1,410 12,348
11,291 (18,593)
Depreciation
212 1,742
3,212 9,680
Minority interest
in
FelCor LP
65 575
518 (865)
Interest expense
--- 864
922 2,465
EBITDA from discontinued
operations
1,687 15,529
15,943 (7,313)
Gain on sale of
assets (2,501) (17,306)
(11,736) (19,422)
Impairment loss
1,800 1,768
3,660 34,795
Gain on early
extinguishment
of debt (742)
--- (3,280)
---
Asset disposition
costs ---
--- 1,300
4,900
Adjusted EBITDA from
discontinued operations
$244 $(9)
$5,887 $12,960
Selected Balance Sheet Data
(in thousands)
December 31, December 31,
2005 2004
Investment in hotels
$3,606,502 $3,904,397
Accumulated depreciation
(1,019,123) (948,631)
Investments in hotels, net of
accumulated depreciation
$2,587,379 $2,955,766
Total cash and cash equivalents
$ 94,564 $ 119,310
Total assets
$2,919,094 $3,317,658
Total debt
$1,675,280 $1,767,122
Total stockholders' equity
$1,031,793 $1,330,323
At December 31, 2005, we had an aggregate
of 60,209,499 shares of FelCor
common stock and 2,762,540 units of FelCor LP limited
partnership interest
outstanding.
Debt Summary
(dollars in thousands)
Interest
Rate at
Encumbered December 31, Maturity Consolidated
Hotels 2005
Date Debt
Promissory note
none 6.31
June 2016 $650
Senior unsecured term notes
none 7.63
October 2007 123,358
Senior unsecured term notes
none 9.00
June 2011 298,660
Term loan (A)
none 5.81
October 2006 225,000
Senior unsecured term notes
none 8.48 (B) June 2011
290,000
Total unsecured
debt
7.89
937,668
Mortgage debt
9 hotels 6.52
July 2014 104,282
Mortgage debt
8 hotels 6.63
May 2006 © 117,913
Mortgage debt
7 hotels 7.32
April 2009 127,455
Mortgage debt
4 hotels 7.55
June 2009 41,912
Mortgage debt
8 hotels 8.70
May 2010 172,604
Mortgage debt
7 hotels 8.73
May 2010 133,374
Mortgage debt
1 hotel 6.77
August 2008 15,500
Mortgage debt
1 hotel 7.91
December 2007 10,457
Other
1 hotel 9.17
August 2011 5,204
Construction loan (D)
--- 6.47
October 2007 8,911
Total secured debt
46 hotels 7.69
737,612
Total
7.80%
$1,675,280
(A) This note was paid
off in January 2006.
(B) The stated interest
rate on this debt is six month LIBOR (4.58% at
December 31, 2005) plus 4.25%. We have swapped $100 million of this
floating rate debt for a fixed rate of 7.80%. The resulting
weighted average rate on these notes was 8.48% at December 31, 2005.
© This debt has two,
one-year extension options, subject to certain
contingencies.
(D) The Company has a
$69.8 million recourse construction loan facility
for the development of a 184-unit condominium project in Myrtle
Beach, South Carolina. The interest on this facility is currently
based on LIBOR plus 225 basis points and is being capitalized as
part of the cost of the project. The interest rate may be reduced
to LIBOR plus 200 basis points when the project is 55% complete and
upon satisfaction of certain other requirements.
Fixed interest rate debt to total
debt
67.2%
Weighted average maturity of
debt
5 years
Secured debt to total assets
25.3%
Preferred Stock
(dollars in thousands)
Liquidation Value at
December 31, 2005
Series A Cumulative Convertible
Preferred Stock
$322,012
Series C Cumulative Redeemable
Preferred Stock
$169,950
Non-GAAP Financial Measures
We refer in this supplement to certain "non-GAAP financial
measures." These measures, including FFO, Adjusted FFO, EBITDA, Adjusted
EBITDA, Same- Store EBITDA, Hotel EBITDA and Hotel EBITDA margin, are measures
of our financial performance that are not calculated and presented in accordance
with generally accepted accounting principles ("GAAP"). The following tables
reconcile each of these non-GAAP measures to the most comparable GAAP financial
measure. Immediately following the reconciliations, we include a discussion
of why we believe these measures are useful supplemental measures of our
performance and of the limitations upon such measures.
Reconciliation of Net Loss to FFO and Adjusted FFO
(in thousands, except per share and unit data)
Three Months Ended December 31,
2005
2004
Per Share
Per Share
Dollars Shares Amount Dollars
Shares Amount
Net loss
$(265,210)
$(10,770)
Preferred dividends
(9,679)
(10,091)
Net loss applicable
to common
stockholders (274,889) 59,453 $(4.62) (20,861) 59,192
$(0.35)
Depreciation from
continuing
operations
30,528
0.51 28,668
0.48
Depreciation from
unconsolidated
entities and
discontinued
operations
2,784
0.05 4,401
0.07
Gain on sale of
depreciable
assets (2,501)
0.04 (17,306)
(0.29)
Minority interest
in
FelCor LP
(12,623) 2,763 (0.11) (974)
2,789 (0.01)
FFO
(256,701) 62,216 (4.13) (6,072) 61,981
(0.10)
Charge-off of
deferred financing
costs
2,659
0.04 866
0.01
Loss on early
extinguishment
of
debt
11,180
0.18 4,983
0.08
Abandoned projects
265
--- ---
---
Impairment loss
263,091
4.23 3,494
0.05
Impairment loss
on
discontinued
operations
1,800
0.03 1,768
0.03
Minority interest
share of impairment
loss
(8,976) (0.14)
---
---
Unvested restricted
stock
--- 787 ---
--- 438 0.01
Adjusted FFO
$13,318 63,003 $0.21 $5,039
62,419 $0.08
Reconciliation of Net Loss to FFO and Adjusted FFO
(in thousands, except per share and unit data)
Year Ended December 31,
2005
2004
Per Share
Per Share
Dollars Shares Amount Dollars
Shares Amount
Net loss
$(251,615)
$(100,127)
Preferred dividends (39,408)
(35,130)
Issuance costs of
redeemed preferred
stock
(6,522)
---
Net loss applicable
to common
stockholders
(297,545) 59,436 $(5.01) (135,257) 59,045 $(2.29)
Depreciation from
continuing
operations
119,323
2.01 111,836
1.89
Depreciation from
unconsolidated
entities and
discontinued
operations
12,884
0.22 18,916
0.32
Gain on sale of
depreciable assets
(12,124) (0.20)
(19,422) (0.33)
Minority interest
in FelCor LP (13,677) 2,778 (0.09) (6,681) 2,939 (0.08)
FFO
(191,139) 62,214 $(3.07) (30,608) 61,984
(0.49)
Charge-off of
deferred financing
costs
2,659
0.04 6,960
0.11
Loss on early
extinguishment of
debt
8,641
0.14 44,216
0.71
Abandoned projects
265
--- ---
---
Impairment loss
263,091
4.23 3,494
0.06
Impairment loss on
discontinued
operations
3,660
0.06 34,795
0.56
Minority interest
share of impairment
(8,976) (0.14)
---
---
Asset disposition
costs
1,300
0.02 4,900
0.08
Issuance costs of
redeemed preferred
stock
6,522
0.10 ---
---
Gain on swap
termination
---
--- (1,005)
(0.02)
Unvested restricted
stock
--- 647 (0.01)
--- 359 ---
Adjusted FFO
$86,023 62,861 $1.37 $62,752
62,343 $1.01
Reconciliation of
Net Loss to EBITDA, Adjusted EBITDA and Same-Store
EBITDA
(in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Net loss
$(265,210) $(10,770) $(251,615)
$(100,127)
Depreciation from
continuing operations
30,528 28,668
119,323 111,836
Depreciation from
unconsolidated entities
and discontinued
operations
2,783 4,401
12,884 18,916
Minority interest in
FelCor Lodging LP
(12,623) (974)
(13,677) (6,681)
Interest expense
33,414 33,459
135,054 148,430
Interest expense from
unconsolidated
entities and
discontinued
operations
1,580 2,636
7,602 9,631
Amortization expense
733 1,330
2,904 2,945
EBITDA
$(208,795) $58,750
$12,475 $184,950
Charge-off of deferred
financing costs
2,659 866
2,659 6,960
Loss on early
extinguishment of
debt
11,180 4,983
8,641 44,216
Abandoned projects
265 ---
265 ---
Impairment loss
263,091 3,494
263,091 3,494
Impairment loss on
discontinued
operations
1,800 1,768
3,660 34,795
Minority interest
share of impairment
(8,976) ---
(8,976) ---
Asset disposition costs
--- ---
1,300 4,900
Gain on swap termination
--- ---
--- (1,005)
Gain on sale of
depreciable assets
(2,501) (17,306)
(12,124) (19,422)
Adjusted EBITDA $58,723 $52,555 $270,991 $258,888
Adjusted EBITDA from
discontinued operations
(244) 9
(5,887) (12,960)
Gain on development and
sale of Margate
condos ---
(808) ---
(11,664)
Gain on sale of land
--- ---
(344) (1,167)
Same-Store EBITDA
$58,479 $51,756
$264,760 $233,097
Reconciliation of Adjusted EBITDA to Hotel EBITDA
(in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Adjusted EBITDA
$58,723 $52,555
$270,991 $258,888
Retail space rental
and other revenue
(141) (129)
(2,049) (2,721)
Adjusted EBITDA from
discontinued operations
(244) 9
(5,887) (12,960)
Equity in income from
unconsolidated entities
(excluding interest
and depreciation
expense)
(6,635) (6,476)
(28,859) (35,764)
Minority interest in
other partnerships
(excluding interest
and depreciation
expense)
315 243
1,694 2,828
Consolidated hotel
lease expense
14,243 12,256
57,004 51,261
Unconsolidated taxes,
insurance and
lease expense
(964) (1,577)
(5,673) (5,737)
Interest income
(1,466) (907)
(4,100) (2,764)
Hurricane loss
4,172 ---
6,481 2,125
Corporate expenses
(excluding amortization
expense)
4,184 4,176
16,121 14,090
Gain on sale of land
--- (73)
(344) (1,167)
Hotel EBITDA
$72,187 $60,077
$305,379 $268,079
Reconciliation of Net Loss to Hotel EBITDA
(in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Net loss
$(265,210) $(10,770) $(251,615) $(100,127)
Discontinued
operations
(1,410) (12,348)
(11,291) 18,593
Equity in income
from unconsolidated
entities
(1,941) (1,428)
(10,169) (17,121)
Minority interest
(21,891) (1,923)
(23,813) (5,229)
Consolidated hotel
lease expense
14,243 12,256
57,004 51,261
Unconsolidated taxes,
insurance and lease
expense
(964) (1,577)
(5,673) (5,737)
Interest expense, net
31,948 32,552
130,954 145,666
Impairment loss
263,091 3,494
263,091 3,494
Hurricane loss
4,172 ---
6,481 2,125
Loss on early
extinguishment of
debt 11,921
4,983 11,921
44,216
Charge-off of deferred
financing costs
2,659 866
2,659 6,960
Gain on swap termination
--- ---
--- (1,005)
Corporate expenses
4,917 5,506
19,025 17,035
Depreciation
30,528 28,668
119,323 111,836
Retail space rental
and other revenue
(141) (129)
(2,049) (2,721)
Abandoned projects
265 ---
265 ---
Gain on sale of assets
--- (73)
(733) (1,167)
Hotel EBITDA
$72,187 $60,077
$305,380 $268,079
Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Total revenue
$299,861 $267,965 $1,212,179
$1,115,874
Retail space rental
and other revenue
(141) (129)
(2,049) (2,721)
Hotel operating revenue 299,720 267,836 1,210,130 1,113,153
Hotel operating expenses 227,533 207,759 904,750 845,074
Hotel EBITDA
$72,187 60,077
$305,380 268,079
Hotel EBITDA margin
24.1% 22.4%
25.2% 24.1%
Reconciliation of Ratio of Operating Income to Total Revenue
to Hotel EBITDA
Margin
Three Months Ended
Year Ended
December 31,
December 31,
2005 2004
2005 2004
Ratio of operating income
to total revenue
7.8% 5.7%
9.7% 8.6%
Retail space
rental
and
other revenue 0.0
0.0 (0.2)
(0.2)
Unconsolidated
taxes,
insurance
and lease
expense
(0.3) (0.7)
(0.4) (0.5)
Consolidated
hotel
lease
expense
4.7 4.6
4.7 4.6
Corporate
expenses 1.6
2.1 1.6
1.5
Depreciation
10.2 10.7
9.8 10.1
Abandoned
projects 0.1
--- 0.0
---
Hotel EBITDA margin
24.1% 22.4%
25.2% 24.1%
Hotel Operating Expense Composition
(dollars in thousands)
Three Months Ended Year
Ended
December 31,
December 31,
2005 2004
2005 2004
Reconciliation of total
operating expense
to hotel operating expense:
Total operating expenses
$276,522 $252,612 $1,094,694 $1,019,469
Unconsolidated taxes,
insurance and lease
expense 964 1,577
5,673 5,737
Consolidated hotel
lease expense
(14,243) (12,256) (57,004)
(51,261)
Corporate expenses
(4,917) (5,506) (19,025)
(17,035)
Depreciation
(30,528) (28,668) (119,323) (111,836)
Abandoned projects
(265) ---
(265) ---
Hotel operating expenses
$227,533 $207,759 $ 904,750 $ 845,074
Supplemental information:
Compensation and benefits
expense
(included in hotel
operating expenses)
$ 96,188 $ 89,122 $ 383,632 $ 364,299
Reconciliation of Estimated
Net Income to Estimated FFO and EBITDA
(in millions, except per share and unit data)
First Quarter 2006 Guidance Full Year 2006 Guidance
Low Guidance High Guidance Low Guidance
High Guidance
Per Share Per Share
Per Share Per Share
Amount Amount
Amount Amount
Dollars (A) Dollars (A) Dollars
(A) Dollars (A)
Net income (B) $ 6
$ 8
$ 23 $ 30
Preferred
dividends
(10) (10)
(39) (39)
Net loss
applicable to
common
stockholders (B) (4) $(0.07)
(2) $(0.04) (16) $(0.27) (9) $(0.15)
Depreciation
31
31 130
130
Minority
interest in
FelCor LP
--- ---
(1) (1)
FFO
$ 27 $ 0.42 $ 29 $ 0.45 $113
$ 1.79 $120 $ 1.90
Net income (B) $ 6
$ 8 $
23 $ 30
Depreciation
31
31 130
130
Minority
interest
in FelCor LP
--- ---
(1) (1)
Interest expense 32
32 126
126
Amortization
expense
1
1
4
4
EBITDA
$ 70 $ 72
$282 $289
(A) Weighted average shares
are 59.7 million. Adding minority interest
and unvested restricted stock of 3.4 million shares to weighted
average shares, provides the weighted average shares and units of
63.1 million used to compute FFO per share.
(B) Excludes gains or
losses from asset sales and debt extinguishment.
Substantially all of our non-current assets consist of
real estate. Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably over
time. Since real estate values instead have historically risen or fallen
with market conditions, most industry investors consider supplemental measures
of performance, which are not measures of operating performance under GAAP,
to be helpful in evaluating a real estate company's operations. These supplemental
measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store
EBITDA, Hotel EBITDA and Hotel EBITDA margin, are not measures of operating
performance under GAAP. However, we consider these non-GAAP measures to
be supplemental measures of a hotel REIT's performance and should be considered
along with, but not as an alternative to, net income as a measure of our
operating performance.
FFO and EBITDA
The White Paper on Funds From Operations approved by the
Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT"), defines FFO as net income or loss (computed in accordance
with GAAP), excluding gains or losses from sales of property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships
and joint ventures. Adjustments for unconsolidated partnerships and joint
ventures are calculated to reflect FFO on the same basis. We compute FFO
in accordance with standards established by NAREIT. This may not be comparable
to FFO reported by other REITs that do not define the term in accordance
with the current NAREIT definition, or that interpret the current NAREIT
definition differently than we do.
EBITDA is a commonly used measure of performance in many
industries. We define EBITDA as net income or loss (computed in accordance
with GAAP) plus interest expenses, income taxes, depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are calculated
to reflect EBITDA on the same basis.
Adjustments to FFO and EBITDA
We adjust FFO and EBITDA when evaluating our performance
because management believes that the exclusion of certain additional recurring
and non-recurring items described below provides useful supplemental information
to investors regarding our ongoing operating performance and that the presentation
of Adjusted FFO, Adjusted EBITDA and Same-Store EBITDA, when combined with
GAAP net income, EBITDA and FFO, is beneficial to an investor's better
understanding of our operating performance.
* Gains and losses related
to early extinguishment of debt and interest
rate swaps
-- We exclude gains and losses related to early
extinguishment
of debt and interest rate swaps from FFO and EBITDA
because we
believe that it is not indicative of ongoing operating
performance
of our hotel assets. This also represents an acceleration
of interest
expense or a reduction of interest expense, and interest
expense is
excluded from EBITDA.
* Impairment losses --
We exclude the effect of impairment losses and
gains or losses
on disposition of assets in computing Adjusted FFO and
Adjusted EBITDA
because we believe that including these is not
consistent
with reflecting the ongoing performance of our remaining
assets.
Additionally, we believe that impairment charges and gains or
losses on
disposition of assets represent accelerated depreciation, or
excess depreciation,
and depreciation is excluded from FFO by the
NAREIT definition
and from EBITDA.
* Cumulative effect of
a change in accounting principle -- Infrequently,
the Financial
Accounting Standards Board promulgates new accounting
standards
that require the consolidated statements of operations to
reflect the
cumulative effect of a change in accounting principle. We
exclude these
one-time adjustments in computing Adjusted FFO and
Adjusted EBITDA
because they do not reflect our actual performance for
that period.
In addition, to derive Adjusted EBITDA, we exclude gains
or losses on the sale of assets because we believe that including them
in EBITDA is not consistent with reflecting the ongoing performance of
our remaining assets. Additionally, the gain or loss on sale of depreciable
assets represents either accelerated depreciation or excess depreciation
in previous periods, and depreciation is excluded from EBITDA.
To derive Same-Store EBITDA, we make the same adjustments
to EBITDA as for Adjusted EBITDA and, additionally, exclude EBITDA from
discontinued operations and gains and losses from the disposition of non-hotel
related assets.
Hotel EBITDA and Hotel EBITDA Margin
Hotel EBITDA and Hotel EBITDA margin are commonly used
measures of performance in the industry and give investors a more complete
understanding of the operating results over which our individual hotels
and operating managers have direct control. We believe that Hotel EBITDA
and Hotel EBITDA margin is useful to investors by providing greater transparency
with respect to two significant measures used by us in our financial and
operational decision-making. Additionally, these measures facilitate comparisons
with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel
EBITDA margin by eliminating corporate-level expenses, depreciation and
expenses related to our capital structure. We eliminate corporate-level
costs and expenses because we believe property-level results provide investors
with supplemental information with respect to the ongoing operating performance
of our hotels and the effectiveness of management in running our business
on a property-level basis. We eliminate depreciation and amortization,
even though they are property-level expenses, because we do not believe
that these non- cash expenses, which are based on historical cost accounting
for real estate assets and implicitly assume that the value of real estate
assets diminish predictably over time, accurately reflect an adjustment
in the value of our assets. To enhance the comparability of our hotel-level
operating results with other hotel REITs and hotel owners, we are now disclosing
Hotel EBITDA and Hotel EBITDA margin rather than hotel operating profit
and hotel operating margin, previously disclosed. The purpose of the change
is to remove any distortion created by unconsolidated entities and to reflect
hotel-level operations as if they were fully consolidated. To reflect this,
we eliminate consolidated percentage rent paid to unconsolidated entities,
which is effectively eliminated by minority interest expense and equity
in income from unconsolidated subsidiaries, and include the cost of unconsolidated
taxes, insurance and lease expense, to reflect the entire operating costs
applicable to our hotels.
Use and Limitations of Non-GAAP Measures
Our management and Board of Directors use FFO, Adjusted
FFO, EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate
the performance of our hotels and to facilitate comparisons between us
and other lodging REITs, hotel owners who are not REITs and other capital
intensive companies. Same-Store EBITDA is used to provide investors with
supplemental information as to the ongoing operating performance of our
hotels without regard to those hotels sold or held for sale at the date
of presentation.
The use of these non-GAAP financial measures has certain
limitations. FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA,
Hotel EBITDA and Hotel EBITDA margin, as presented by us, may not be comparable
to FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel
EBITDA and Hotel EBITDA margin as calculated by other real estate companies.
These measures do not reflect certain expenses that we incurred and will
incur, such as depreciation and interest or capital expenditures. Management
compensates for these limitations by separately considering the impact
of these excluded items to the extent they are material to operating decisions
or assessments of our operating performance. Our reconciliations to the
GAAP financial measures, and our consolidated statements of operations
and cash flows, include interest expense, capital expenditures, and other
excluded items, all of which should be considered when evaluating our performance,
as well as the usefulness of our non-GAAP financial measures.
These non-GAAP financial measures are used in addition
to and in conjunction with results presented in accordance with GAAP. They
should not be considered as alternatives to operating profit, cash flow
from operations, or any other operating performance measure prescribed
by GAAP. Neither should FFO, FFO per share, Adjusted FFO, Adjusted FFO
per share, EBITDA, Adjusted EBITDA or Same-Store EBITDA be considered as
measures of our liquidity or indicative of funds available for our cash
needs, including our ability to make cash distributions. FFO per share
does not measure, and should not be used as a measure of, amounts that
accrue directly to the benefit of stockholders. FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin
reflect additional ways of viewing our operations that we believe when
viewed with our GAAP results and the reconciliations to the corresponding
GAAP financial measures provide a more complete understanding of factors
and trends affecting our business than could be obtained absent this disclosure.
Management strongly encourages investors to review our financial information
in its entirety and not to rely on any single financial measure. |