HOST MARRIOTT CORPORATION
Consolidated Balance Sheets (a)
(unaudited, in millions, except share amounts)
December 31,
2005
2004
ASSETS
Property and equipment, net
$7,434
$7,298
Assets held for sale
73
113
Due from managers
41
51
Investments in affiliates
41
69
Deferred financing costs, net
63
70
Furniture, fixtures and equipment
replacement fund 143
151
Other
157
168
Restricted cash
109
154
Cash and cash equivalents
184
347
Total assets
$8,245
$8,421
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt
Senior notes, including $493
million
and $491 million, net
of discount,
of Exchangeable Senior
Debentures,
respectively
$3,050
$2,890
Mortgage debt
1,823
2,043
Convertible Subordinated Debentures
387
492
Other
110
98
Total debt
5,370
5,523
Accounts payable and accrued expenses
165
113
Liabilities associated with assets
held for sale -
26
Other
148
156
Total liabilities
5,683
5,818
Interest of minority partners of
Host Marriott, L.P.
119
122
Interest of minority partners of other
consolidated partnerships
26
86
Stockholders' equity
Cumulative redeemable preferred
stock
(liquidation preference
$250 million
and $350 million, respectively),
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;
361.0
million shares and 351.4
million
shares issued and outstanding,
respectively
4
3
Additional paid-in capital
3,080
2,953
Accumulated other comprehensive
income
15
13
Deficit
(923)
(911)
Total stockholders'
equity
2,417
2,395
Total liabilities
and stockholders' equity $8,245
$8,421
(a) Our consolidated balance sheet
as of December 31, 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 ended
Dec. 31, Dec.
31,
2005 2004 2005
2004
Revenues
Rooms
$753 $675 $2,341
$2,114
Food and beverage
407 380 1,180
1,121
Other
77 71
249 232
Total hotel sales
1,237 1,126 3,770
3,467
Rental income (b)
35 32
111 106
Other income
- 1
- 1
Total revenues
1,272 1,159 3,881
3,574
Expenses
Rooms
180 164
566 526
Food and beverage
293 278
877 842
Hotel departmental expenses
332 309 1,032
965
Management fees
60 46
170 141
Other property-level expenses
(b) 88
86 291
290
Depreciation and amortization
117 110
368 349
Corporate and other expenses
22 24
67 67
Gain on insurance settlement
(9) (3)
(9) (3)
Total operating costs
and expenses 1,083 1,014
3,362 3,177
Operating profit
189 145
519 397
Interest income
4 3
21 11
Interest expense
(126) (127) (443)
(483)
Net gains on property transactions
3 7
80 17
Gain (loss) on foreign currency and
derivative contracts
1 (4)
2 (6)
Minority interest expense
(4) (6) (16)
(4)
Equity in losses of affiliates
- (4)
(1) (16)
Income (loss) before income taxes
67 14
162 (84)
Benefit (provision) for income taxes
(1) 8
(24) 10
Income (loss) from continuing
operations
66 22
138 (74)
Income from discontinued operations
(c) 8 39
28 74
Net income (loss)
74 61
166 -
Less: Dividends on preferred stock
(6) (9) (27)
(37)
Issuance costs of redeemed
preferred
stock (d)
- -
(4) (4)
Net income (loss) available to
common stockholders
$68 $52 $135
$(41)
Basic and diluted earnings (loss)
per common share:
Continuing operations
$.17 $.04 $.30
$(.34)
Discontinued operations
.02 .11
.08 .22
Basic and diluted earnings (loss)
per common share
$.19 $.15 $.38
$(.12)
(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 ended
Dec. 31, Dec.
31,
2005 2004 2005
2004
Rental income
Full-service
$5 $5
$27 $26
Limited service and office buildings
30 27
84 80
$35 $32 $111
$106
Rental and other expenses
(included in other property
level expenses)
Full-service
$2 $2
$7 $7
Limited service and office buildings
25 24
79 78
$27 $26
$86 $85
(c) Reflects the results of operations
and gain (loss) on sale, net of the
related income
tax, for five properties sold in 2005, two properties
classified
as held for sale as of December 31, 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 August 3,
2004, the fair value paid to holders of our Class A
preferred
stock, or $104 million (which was equal to the redemption
price and
par value) exceeded the carrying value of the preferred
stock ($100
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 (loss) available to
common stockholders
for the purpose of calculating our full year 2004
basic and
diluted earnings (loss) 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 (loss) available to
common stockholders
for the purpose of calculating our full year 2005
basic and
diluted earnings (loss) per share.
HOST MARRIOTT CORPORATION
Earnings (Loss) per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended
Quarter ended
December 31, 2005 December 31,
2004
Income Per
Income Per
(loss) Shares Share (loss) Shares
Share
(Numer- (Denomin- Amount (Numer- (Denomin- Amount
ator) ator)
ator) ator)
Net income
$74 353.8 $.21
$61 350.2 $.17
Dividends on preferred
stock
(6) - (.02)
(9) - (.02)
Basic earnings available to
common stockholders (a)(b) 68
353.8 .19 52
350.2 .15
Assuming distribution of
common shares granted
under the comprehensive
stock plan less shares
assumed purchased at
average market price
- 2.4
- - 2.9
-
Assuming conversion of
minority OP units issuable
- 2.1
- -
- -
Diluted earnings available
to common stockholders
(a)(b)
$68 358.3 $.19
$52 353.1 $.15
Year ended
Year ended
December 31, 2005 December 31, 2004
Income Per
Income Per
(loss) Shares Share (loss) Shares
Share
(Numer- (Denomin- Amount (Numer- (Denomin- Amount
ator) ator)
ator) ator)
Net income (loss)
$166 353.0 $.47
$- 337.3 $-
Dividends on preferred
stock
(27) - (.08)
(37) - (.11)
Issuance costs of
redeemed preferred stock
(4) - (.01)
(4) - (.01)
Basic earnings (loss)
available to common
stockholders (a)(b)
135 353.0 .38
(41) 337.3 (.12)
Assuming distribution of
common shares granted
under the comprehensive
stock plan less shares
assumed purchased at
average market price
- 2.5
- -
- -
Diluted earnings (loss)
available to common
stockholders (a)(b)
$135 355.5 $.38 $(41)
337.3 $(.12)
(a) 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.
(b) Our results for certain 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
Quarter ended
December 31, 2005 December
31, 2005
Average Average
No. of No. of Daily
Occupancy
Properties Rooms Rate Percentages
RevPAR
Pacific
20 11,035 $173.16
71.6% $123.91
Florida
11 7,027 165.32
64.5 106.65
Mid-Atlantic
10 6,720 241.88
79.4 192.13
North Central
13 4,923 139.49
69.3 96.61
DC Metro
11 4,661 190.48
74.6 142.16
Atlanta
11 3,968 168.59
71.2 119.98
South Central
6 3,526 137.75
75.3 103.71
New England
6 3,032 164.58
75.9 124.98
Mountain
5 1,940 116.89
58.9 68.80
International
5 1,953 140.10
72.0 100.87
All Regions
98 48,785 174.20
71.7 124.89
Quarter ended December 31, 2004
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR
RevPAR
Pacific
$160.50 69.5% $111.48
11.2%
Florida
160.30 66.9
107.22 (.5)
Mid-Atlantic
212.85 79.9
170.16 12.9
North Central
134.43 66.2
88.99 8.6
DC Metro
169.47 73.4
124.35 14.3
Atlanta
157.64 67.1
105.84 13.4
South Central
126.73 71.5
90.60 14.5
New England
161.27 72.1
116.28 7.5
Mountain
113.08 51.4
58.13 18.4
International
127.57 71.4
91.10 10.7
All Regions
161.68 70.0
113.24 10.3
As of
Year ended
December 31, 2005 December
31, 2005
Average Average
No. of No. of Daily
Occupancy
Properties Rooms Rate
Percentages RevPAR
Pacific
20 11,035 $171.51
75.9% $130.22
Florida
11 7,027 173.99
71.6 124.51
Mid-Atlantic
10 6,720 209.71
79.2 166.06
North Central
13 4,923 132.47
67.8 89.78
DC Metro
11 4,661 181.76
77.2 140.27
Atlanta
11 3,968 159.13
69.0 109.83
South Central
6 3,526 134.96
76.3 102.94
New England
6 3,032 155.57
72.9 113.35
Mountain
5 1,940 112.93
62.6 70.72
International
5 1,953 134.18
72.2 96.83
All Regions
98 48,785 166.80
73.6 122.82
Year ended December 31, 2004
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR RevPAR
Pacific
$160.37 73.7% $118.19
10.2%
Florida
164.70 71.4
117.60 5.9
Mid-Atlantic
189.17 78.3
148.19 12.1
North Central
123.93 67.8
84.06 6.8
DC Metro
163.01 74.8
121.96 15.0
Atlanta
151.79 68.4
103.82 5.8
South Central
125.73 74.9
94.19 9.3
New England
150.48 72.9
109.64 3.4
Mountain
106.70 57.7
61.54 14.9
International
122.86 72.3
88.87 9.0
All Regions
154.96 72.4
112.21 9.5
Comparable Hotels by Property Type (a)
As of
Quarter Ended
December 31, 2005 December 31,
2005
Average Average
No. of No. of Daily
Occupancy
Properties Rooms Rate Percentages
RevPAR
Urban
39 22,874 $198.83
75.0% $149.20
Suburban
33 12,195 136.70
66.5 90.84
Airport
16 7,328 126.61
75.6 95.72
Resort/Convention
10 6,388 206.77
65.3 135.11
All Types
98 48,785 174.20
71.7 124.89
Quarter ended December 31, 2004
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR RevPAR
Urban
$182.92 73.9%
$135.22 10.3%
Suburban
127.58 63.9
81.53 11.4
Airport
115.21 72.3
83.31 14.9
Resort/Convention
196.23 65.3
128.06 5.5
All Types
161.68 70.0
113.24 10.3
As of
Year Ended
December 31, 2005 December 31,
2005
Average Average
No. of No. of Daily
Occupancy
Properties Rooms Rate Percentages
RevPAR
Urban
39 22,874 $183.26
76.7% $140.63
Suburban
33 12,195 133.96
67.9 90.93
Airport
16 7,328 122.41
75.9 92.89
Resort/Convention
10 6,388 216.80
70.9 153.82
All Types
98 48,785 166.80
73.6 122.82
Year ended December 31, 2004
Average
Percent
Average Occupancy
Change in
Daily Rate Percentages RevPAR RevPAR
Urban
$170.00 75.3% $127.95
9.9%
Suburban
124.44 66.5
82.71 9.9
Airport
113.12 74.6
84.37 10.1
Resort/Convention
202.44 71.1
143.97 6.8
All Types
154.96 72.4
112.21 9.5
(a) See the 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 ended
December 31, December 31,
2005 2004 2005
2004
Number of hotels
98 98
98 98
Number of rooms
48,785 48,785 48,785 48,785
Percent change in Comparable Hotel
RevPAR
10.3% -
0.0% -
Operating profit margin under GAAP
(b) 14.9% 12.5% 13.4%
11.1%
Comparable hotel adjusted operating
profit margin (c)
25.3% 23.8% 24.3%
22.6%
Comparable hotel sales
Room
$696 $631 $2,182 $1,998
Food and beverage
392 368 1,143
1,082
Other
72 73
239 230
Comparable hotel sales
(d)
1,160 1,072 3,564
3,310
Comparable hotel expenses
Room
168 156 531
500
Food and beverage
280 268 846
811
Other
46 46
149 145
Management fees, ground rent
and other
costs
372 347 1,171
1,105
Comparable hotel expenses (e)
866 817 2,697
2,561
Comparable hotel adjusted operating
profit 294 255
867 749
Non-comparable hotel results, net
(f) 23
21 85
71
Comparable hotels classified as held
for sale, net
(3) (4) (12)
(13)
Office buildings and limited service
properties, net (g)
5 3
5 2
Other income
- 1
- 1
Depreciation and amortization
(117) (110) (368)
(349)
Corporate and other expenses
(22) (24) (67)
(67)
Gain on insurance settlement
9 3
9 3
Operating profit
$189 $145 $519
$397
(a) See the 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 ended
December 31, December 31,
2005 2004 2005
2004
Revenues per the consolidated statements
of operations
$1,272 $1,159 $3,881 $3,574
Revenues of hotels held for sale
14 16
52 52
Non-comparable hotel sales
(103) (91) (327)
(271)
Hotel sales for the property for which
we
record rental income, net
14 16
49 47
Rental income for office buildings
and
limited service hotels
(30) (27) (84)
(80)
Other income
- (1)
- (1)
Adjustment for hotel sales for comparable
hotels to reflect Marriott's
fiscal
year for Marriott-managed hotels
(7) -
(7) (11)
Comparable hotel sales
$1,160 $1,072 $3,564 $3,310
(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 ended
December 31, December 31,
2005 2004 2005
2004
Operating costs and expenses per the
consolidated statements of operations
$1,083 $1,014 $3,362 $3,177
Operating cost of hotels held for
sale 11
12 40
39
Non-comparable hotel expenses
(82) (70) (244)
(201)
Hotel expenses for the property for
which
we record rental income
14 16
49 47
Rent expense for office buildings
and
limited service hotels
(25) (24) (79)
(78)
Adjustment for hotel expenses for
comparable
hotels to reflect Marriott's
fiscal year
for Marriott-managed hotels
(5) -
(5) (10)
Depreciation and amortization
(117) (110) (368)
(349)
Corporate and other expenses
(22) (24) (67)
(67)
Gain on insurance settlement
9 3
9 3
Comparable hotel expenses
$866 $817 $2,697 $2,561
(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.
(g) Represents rental income less rental
expense for limited service
properties
and office buildings.
HOST MARRIOTT CORPORATION
Other Financial and Operating Data
(unaudited, in millions, except per share amounts)
December 31, December 31,
2005
2004
Equity
Common shares outstanding
361.0
351.4
Common shares and minority held
common OP Units
outstanding
380.8
372.4
Preferred OP Units outstanding
.02
.02
Class B Preferred shares outstanding
(a)
-
4.0
Class C Preferred shares outstanding
6.0
6.0
Class D Preferred shares outstanding
(a)
-
.03
Class E Preferred shares outstanding
4.0
4.0
Security pricing (per share price)
Common (b)
$18.95
$17.30
Class B Preferred (a) (b)
$-
$25.80
Class C Preferred (b)
$25.25
$26.37
Class E Preferred (b)
$26.75
$27.45
Convertible Preferred Securities
(c) $61.02
$57.25
Exchangeable Senior Debentures
(d) $1,163.70
$1,156.00
Dividends declared per share for calendar
year
Common (e)
$.41
$.05
Class A Preferred (f)
$-
$1.38
Class B Preferred (a)
$.87
$2.50
Class C Preferred (e)
$2.50
$2.50
Class D Preferred (a)
$.87
$2.50
Class E Preferred (e)
$2.22
$1.37
Debt
Series B senior notes, with a rate
of 77/8% due August 2008
$136
$304
Series E senior notes, with a rate
of 83/8% due February 2006
-
300
Series G senior notes, with a rate
of 91/4% due October 2007 (g)
236
243
Series I senior notes, with a rate
of 91/2% due January 2007 (h)
451
468
Series K senior notes, with a rate
of 71/8% due November 2013
725
725
Series M senior notes, with a rate
of 7% due August 2012 (i)
346
346
Series O senior notes, with a rate
of 63/8% due March 2015
650
-
Exchangeable Senior Debentures, with
a rate of 3.25% due April 2024
493
491
Senior notes, with an average rate
of 9.7%, maturing through May
2012
13
13
Total senior notes
3,050
2,890
Mortgage debt (non-recourse) secured
by $3.1 billion of real estate
assets, with an average interest
rate of 7.8% and 7.7% at December
31, 2005 and 2004, respectively,
maturing through February 2023
1,823
2,043
Credit facility (j)
20
-
Convertible Subordinated Debentures,
with a rate of 63/4% due December
2026 (k)
387
492
Other
90
98
Total debt
$5,370
$5,523
Percentage of fixed rate debt
85%
85%
Weighted average interest rate
7.2%
7.1%
Weighted average debt maturity
6.4 years 6.6 years
Quarter ended Year ended
December 31, December 31,
2005 2004 2005
2004
Hotel Operating Statistics for All
Full-Service Properties (l)
Average daily rate
$174.90 $160.20 $167.64 $152.03
Average occupancy
70.1% 69.2% 72.6%
72.0%
RevPAR
$122.61 $110.84 $121.66 $109.51
(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 common stock upon
the occurrence
of certain events.
(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 December 15, 2005, we declared
a fourth quarter common dividend of
$.12 per share
and preferred dividends per share for our Class C and
Class E preferred
stock of $.625 and $.5546875, respectively.
(f) 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 accrued
dividends.
(g) Includes the fair value of interest
rate swap agreements of $(6) and
$1 million
as of December 31, 2005 and 2004, respectively.
(h) Includes the fair value of an interest
rate swap agreement of $1
million and
$18 million as of December 31, 2005 and 2004,
respectively.
(i) 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.
(j) The outstanding balance on our
credit facility of $20 million as of
December 31,
2005 was repaid on January 13, 2006. Currently, we have
$575 million
of available capacity under our credit facility.
(k) Effective February 10, 2006, the
Company exercised its right to cause
the conversion
rights of its Convertible Subordinated Debentures to
expire. Prior
to this date, a substantial majority of holders of the
Convertible
Subordinated Debentures (and corresponding Convertible
Preferred
Securities) exercised their right to convert their
debentures
into the Company's common stock and as of February 10,
2006, $2 million
of Convertible Subordinated Debentures remained
outstanding.
Between December 2005 through February 10, 2006, the
Company issued
30.8 million shares of its common stock to converting
holders.
(l) The operating statistics reflect
all consolidated properties as of
December 31,
2005 and December 31, 2004, respectively. The operating
statistics
include the results of operations for five properties sold
in 2005 and
nine properties sold in 2004 prior to their disposition. |
