HOST HOTELS & RESORTS, INC.
Consolidated Balance Sheets (a)
(in millions, except shares and per share amounts)
September 5, December 31,
2008
2007
(unaudited)
ASSETS
Property and equipment, net
$10,731 $10,588
Due from managers
99
106
Investments in affiliates
210
194
Deferred financing costs, net
51
51
Furniture, fixtures and equipment
replacement fund
121
122
Other
228
198
Restricted cash
55
65
Cash and cash equivalents
494
488
Total assets
$11,989 $11,812
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt
Senior notes, including $1,091 million
and $1,088 million, respectively,
net of
discount, of Exchangeable Senior
Debentures $4,117
$4,114
Mortgage debt
1,492
1,423
Credit facility, including the $210
million
term loan
210
-
Other
87
88
Total debt
5,906
5,625
Accounts payable and accrued expenses (b)
132
315
Other
206
215
Total liabilities
6,244
6,155
Interest of minority partners of Host
Hotels & Resorts, L.P.
223
188
Interest of minority partners of other
consolidated partnerships
26
28
Stockholders' equity
Cumulative redeemable preferred stock
(liquidation preference $100
million)
50 million shares authorized;
4.0
million shares issued and outstanding
97
97
Common stock, par value $.01, 750
million
shares authorized; 518.9 million
shares
and 522.6 million shares issued
and
outstanding, respectively
5
5
Additional paid-in capital
5,638
5,673
Accumulated other comprehensive income
44
45
Deficit
(288)
(379)
Total stockholders' equity
5,496
5,441
Total liabilities and
stockholders'
equity
$11,989 $11,812
(a) Our consolidated balance sheet
as of September 5, 2008 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.
(b) Amount includes $209 million at
year end 2007 for the accrual of
the year end
2007 dividend of $.40 per common share. The third
quarter 2008
dividend of $.20 per common share was declared
subsequent
to the end of the third quarter on September 18, 2008.
HOST HOTELS & RESORTS, INC.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Revenues
Rooms
$757 $769 $2,236 $2,216
Food and beverage
311 323 1,085
1,071
Other
78 83 241
242
Total hotel sales
1,146 1,175 3,562 3,529
Rental income
22 22
79 78
Total revenues
1,168 1,197 3,641 3,607
Expenses
Rooms
191 190 547
533
Food and beverage
254 260 798
791
Hotel departmental expenses
313 307 897
870
Management fees
49 55 173
171
Other property-level expenses
91 93 268
268
Depreciation and amortization
133 119 388
352
Corporate and other expenses
14 14
45 51
Gain on insurance settlement (b)
- (5) (7)
(5)
Total operating costs
and
expenses
1,045 1,033 3,109 3,031
Operating profit
123 164 532
576
Interest income
4 9
13 27
Interest expense
(83) (82) (240) (312)
Net gains on property transactions
and other
- 3
2 5
Minority interest expense
- (5) (19)
(21)
Equity in earnings of affiliates
1 -
3 5
Income before income taxes
45 89 291
280
Benefit (provision) for income taxes
(4) 4 (11)
(1)
Income from continuing operations
41 93 280
279
Income from discontinued operations ( c ) 13
4 25
154
Net income
54 97 305
433
Less: Dividends on preferred stock
(2) (2) (6)
(6)
Net income available to common
stockholders
$52 $95 $299
$427
Basic earnings per common share:
Continuing operations
$.07 $.17 $.52
$.52
Discontinued operations
.03 .01 .05
.30
Basic earnings per common
share $.10 $.18
$.57 $.82
Diluted earnings per common share
Continuing operations
$.07 $.17 $.52
$.51
Discontinued operations
.03 .01 .04
.28
Diluted earnings per common
share $.10 $.18 $.56
$.79
(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.
(b) The gain on insurance settlement
reflects business interruption
insurance
proceeds from damages incurred from Hurricane Katrina in
2005 and excludes
the $2 million of management fees due to the
manager of
the hotel for the first quarter of 2008 related to the
proceeds.
( c ) Reflects the results of operations and gains
on sale, net of the
related income
tax, for two properties sold in 2008, and nine
properties
sold in 2007.
HOST HOTELS & RESORTS, INC.
Earnings per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
September 5, 2008 September 7, 2007
Per
Per
Share
Share
Income Shares Amount Income Shares Amount
Net income
$54 519.3 $.10 $97 522.3
$.19
Dividends on preferred stock
(2) - -
(2) - (.01)
Basic earnings available to common
stockholders (a)(b)
52 519.3 .10 95 522.3
.18
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at
average market price
- .3 -
- .8 -
Assuming conversion of minority OP
units issuable
- - -
- 1.2 -
Assuming conversion of 2004
Exchangeable Senior Debentures
- - -
4 29.5 -
Diluted earnings available to
common stockholders (a)(b)
$52 519.6 $.10 $99 553.8
$.18
Year-to-date ended Year-to-date ended
September 5, 2008 September 7, 2007
Per
Per
Share
Share
Income Shares Amount Income Shares Amount
Net income
$305 520.8 $.58 $433 522.0 $.83
Dividends on preferred stock
(6) - (.01) (6)
- (.01)
Basic earnings available to common
stockholders (a)(b)
299 520.8 .57 427 522.0
.82
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at
average market price
- .4 -
- .9 -
Assuming conversion of minority OP
units issuable
- - -
- 1.2 -
Assuming conversion of 2004
Exchangeable Senior Debentures
13 31.2 (.01) 13
29.5 (.03)
Diluted earnings available to
common stockholders (a)(b)
$312 552.4 $.56 $440 553.6 $.79
(a) Basic earnings per common share is computed
by dividing net income
available to common
stockholders by the weighted average number of
shares of common
stock outstanding. Diluted earnings per common share
is computed by dividing
net income available to common stockholders,
as adjusted for
potentially dilutive securities by the weighted
average number of
shares of common stock outstanding plus potentially
dilutive securities.
Dilutive securities may include shares granted
under comprehensive
stock plans, preferred OP Units held by minority
partners, exchangeable
debt securities and other minority interests
that have the option
to convert their limited partnership interests
to common OP Units.
No effect is shown for any securities that are
anti-dilutive.
(b) Our results for both periods presented
were significantly affected by
certain transactions.
For further detail see "Schedule of Significant
Transactions Affecting
Earnings per Share and Funds From Operations
per Diluted Share."
HOST
HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Region (a)
Quarter ended
As of September 5, 2008 September 5, 2008
Average Average
No. of No. of Daily Occupancy
Properties Rooms Rate Percentages
RevPAR
Pacific
27 15,936 $193.33 80.9%
$156.43
Mid-Atlantic
11 8,684 258.56 81.6
210.89
North Central
14 6,175 153.73 72.8
111.91
Florida
9 5,676 165.06 67.8
111.95
DC Metro
13 5,666 175.31 80.0
140.29
New England
11 5,663 175.51 77.4
135.76
South Central
8 4,358 149.97 62.7
94.09
Mountain
8 3,372 136.63 65.6
89.70
Atlanta
7 2,589 179.13 62.1
111.24
International
7 2,471 171.67 64.7
111.05
All Regions
115 60,590 187.00 74.9
140.13
Quarter ended September 7, 2007
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR RevPAR
Pacific
$198.97 82.6% $164.36
(4.8)%
Mid-Atlantic
240.98 85.8 206.70
2.0
North Central
157.40 75.6 119.06
(6.0)
Florida
161.15 68.5 110.46
1.3
DC Metro
175.09 77.5 135.63
3.4
New England
171.34 84.7 145.14
(6.5)
South Central
146.60 65.8 96.53
(2.5)
Mountain
130.13 71.0 92.45
(3.0)
Atlanta
184.37 66.1 121.91
(8.8)
International
155.41 66.6 103.50
7.3
All Regions
184.54 77.5 143.15
(2.1)
Year-to-date ended
As of September 5, 2008 September 5, 2008
Average Average
No. of No. of Daily Occupancy
Properties Rooms Rate Percentages
RevPAR
Pacific
27 15,936 $201.37 76.9%
$154.86
Mid-Atlantic
11 8,684 255.14 79.3
202.32
North Central
14 6,175 150.95 66.6
100.48
Florida
9 5,676 218.67 75.6
165.31
DC Metro
13 5,666 196.54 76.4
150.13
New England
11 5,663 174.84 72.7
127.13
South Central
8 4,358 163.73 68.7
112.56
Mountain
8 3,372 173.01 66.8
115.57
Atlanta
7 2,589 190.25 67.1
127.74
International
7 2,471 172.50 69.3
119.60
All Regions
115 60,590 198.30 73.8
146.27
Year-to-date ended September 7, 2007
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR RevPAR
Pacific
$201.57 77.6% $156.33
(0.9)%
Mid-Atlantic
241.03 82.4 198.69
1.8
North Central
150.04 70.3 105.53
(4.8)
Florida
214.38 73.7 158.03
4.6
DC Metro
193.00 77.6 149.72
0.3
New England
168.33 74.4 125.30
1.5
South Central
158.83 72.0 114.30
(1.5)
Mountain
166.73 69.9 116.49
(0.8)
Atlanta
193.47 69.1 133.70
(4.5)
International
151.35 67.5 102.11
17.1
All Regions
193.26 75.3 145.46
0.6
HOST HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Property Type (a)
Quarter ended
As of September 5, 2008 September 5, 2008
Average Average
No. of No. of Daily Occupancy
Properties Rooms Rate Percentages
RevPAR
Urban
55 32,989 $204.22 78.2%
$159.70
Suburban
32 12,311 154.84 70.3
108.84
Resort/Conference
13 8,082 209.98 67.3
141.32
Airport
15 7,208 132.26 76.4
101.10
All Types
115 60,590 187.00 74.9
140.13
Quarter ended September 7, 2007
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR RevPAR
Urban
$197.08 81.0% $159.73
-%
Suburban
153.75 71.2 109.48
(0.6)
Resort/Conference
221.06 72.9 161.26
(12.4)
Airport
132.42 77.6 102.70
(1.6)
All Types
184.54 77.5 143.15
(2.1)
Year-to-date ended
As of September 5, 2008 September 5, 2008
Average Average
No. of No. of Daily Occupancy
Properties Rooms Rate Percentages
RevPAR
Urban
55 32,989 $210.29 75.8%
$159.44
Suburban
32 12,311 159.58 67.3
107.43
Resort/Conference
13 8,082 256.76 73.8
189.58
Airport
15 7,208 138.69 75.3
104.42
All Types
115 60,590 198.30 73.8
146.27
Year-to-date ended September 7, 2007
Average Average
Percent
Daily Occupancy
Change in
Rate Percentages RevPAR RevPAR
Urban
$202.31 78.0% $157.73
1.1%
Suburban
156.11 68.6 107.04
0.4
Resort/Conference
258.75 74.1 191.67
(1.1)
Airport
137.20 75.7 103.91
0.5
All Types
193.26 75.3 145.46
0.6
(a) See the notes to financial information
for a discussion of reporting
periods and comparable
hotel results.
HOST HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
Schedule of Comparable Hotel Results (a)
(unaudited, in millions, except hotel statistics)
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Number of hotels
115 115 115
115
Number of rooms
60,590 60,590 60,590 60,590
Percent change in comparable hotel
RevPAR
(2.1%) -
.6% -
Operating profit margin under GAAP (b)
10.5% 13.7% 14.6%
16.0%
Comparable hotel adjusted operating
profit margin (b)
23.45% 24.85% 26.6% 27.2%
Food and beverage profit margin under
GAAP (b)
18.3% 19.5% 26.5%
26.1%
Comparable food and beverage adjusted
profit margin (b)
18.5% 20.1% 26.7%
26.5%
Comparable hotel sales
Room
$741 $757 $2,204 $2,188
Food and beverage ( c )
308 323 1,079
1,071
Other
79 84
245 247
Comparable hotel sales
(d) 1,128
1,164 3,528 3,506
Comparable hotel expenses
Room
187 186 538
524
Food and beverage (e)
251 258 791
787
Other
45 49
132 135
Management fees, ground rent and other
costs
380 382 1,130
1,108
Comparable hotel expenses
(f) 863
875 2,591 2,554
Comparable hotel adjusted operating
profit
265 289 937
952
Non-comparable hotel results, net (g)
5 3
22 23
Office buildings and select service
properties, net (h)
- -
(1) (1)
Depreciation and amortization
(133) (119) (388)
(352)
Corporate and other expenses
(14) (14) (45)
(51)
Gain on insurance settlement
- 5
7 5
Operating profit
$123 $164 $532
$576
(a) See the notes to the financial
information for discussion of non-
GAAP measures,
reporting periods and comparable hotel results.
(b) Operating profit margins are calculated
by dividing the applicable
operating
profit by the related revenue amount. GAAP margins are
calculated
using amounts presented in the consolidated statement of
operations.
Comparable margins are calculated using amounts
presented
in the above table.
( c ) The reconciliation of total food and beverage
sales per the
consolidated
statements of operations to the comparable food and
beverage sales
is as follows:
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Food and beverage
sales per the
consolidated
statements of
operations
$311 $323 $1,085
$1,071
Non-comparable food
and beverage
sales
(8) (4) (34)
(24)
Food and beverage
sales for the
property for
which we record
rental income
5 4
21 20
Adjustment for food
and beverage
sales for
comparable hotels to
reflect Marriott's
fiscal year
for Marriott-managed
hotels -
- 7
4
Comparable food and beverage
sales
$308 $323 $1,079
$1,071
(d) The reconciliation of total revenues
per the consolidated statements
of operations to
the comparable hotel sales is as follows:
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Revenues per the
consolidated
statements
of operations $1,168
$1,197 $3,641 $3,607
Non-comparable hotel
sales
(31) (24) (114)
(96)
Hotel sales for
the property for
which we record
rental income,
net
11 10
38 37
Rental income for
office
buildings
and select service
hotels
(20) (19) (58)
(56)
Adjustment for hotel
sales for
comparable
hotels to reflect
Marriott's
fiscal year for
Marriott-managed
hotels
- -
21 14
Comparable hotel sales
$1,128 $1,164 $3,528 $3,506
(e) The reconciliation of total food and
beverage expenses per the
consolidated statements
of operations to the comparable food and
beverage expenses
is as follows:
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Food and beverage
expenses per
the consolidated
statements of
operations
$254 $260 $798
$791
Non-comparable food
and beverage
expense
(6) (5) (25)
(19)
Food and beverage
expenses for
the property
for which we
record rental
income
3 3
13 12
Adjustment for food
and beverage
expenses for
comparable hotels
to reflect
Marriott's fiscal
year for Marriott-managed
hotels
- -
5 3
Comparable food and beverage
expenses
$251 $258 $791
$787
(f) The reconciliation of operating costs
per the consolidated
statements of operations
to the comparable hotel expenses is as
follows:
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Operating costs
and expenses per
the consolidated
statements of
operations
$1,045 $1,033 $3,109 $3,031
Non-comparable hotel
expenses (26)
(20) (87) (70)
Hotel expenses for
the property
for which
we record rental
income
11 9
39 38
Rent expense for
office buildings
and select
service hotels
(20) (19) (59)
(57)
Adjustment for hotel
expenses for
comparable
hotels to reflect
Marriott's
fiscal year for
Marriott-managed
hotels
- -
15 10
Depreciation and
amortization (133)
(119) (388) (352)
Corporate and other
expenses (14)
(14) (45) (51)
Gain on insurance
settlement
- 5
7 5
Comparable hotel expenses $863
$875 $2,591 $2,554
(g) 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.
(h) Represents rental income less rental
expense for select service
properties and office
buildings.
HOST HOTELS & RESORTS, INC.
Other Financial and Operating Data
(unaudited, in millions, except per share amounts)
September 5, December 31,
2008
2007
Equity
Common shares outstanding
518.9
522.6
Common shares and minority held
common OP Units outstanding
540.2
540.9
Preferred OP Units outstanding
.02
.02
Class E Preferred shares outstanding
4.0
4.0
Security pricing
Common (a)
$14.32
$17.04
Class E Preferred (a)
$24.03
$25.05
3 1/4% Exchangeable Senior Debentures
(b) $1,032.50
$1,153.19
2 5/8% Exchangeable Senior Debentures
(b) $810.00
$855.44
Dividends declared per share for calendar year
Common ( c )
$.60
$1.00
Class E Preferred ( c )
$1.67
$2.22
Debt
Series K senior notes, with a rate of 7 1/8%
due November 2013
$725
$725
Series M senior notes, with a rate of 7%
due August 2012
348
347
Series O senior notes, with a rate of 6 3/8%
due March 2015
650
650
Series Q senior notes, with a rate
of 6 3/4% due June 2016
800
800
Series S senior notes, with a rate
of 6 7/8% due November 2014
497
497
$500 million Exchangeable Senior
Debentures, with a rate of 3 1/4% due
April 2024
497
496
$600 million Exchangeable Senior
Debentures, with a rate of 2 5/8%
due April 2027
593
592
Senior notes, with a rate of 10.0%
due May 2012
7
7
Total senior notes
4,117
4,114
Mortgage debt (non-recourse) secured by
$2.2 billion of real estate assets, with
an average interest rate of 6.4% and 6.6%
at
September 5, 2008 and December 31, 2007,
respectively, maturing through December
2023 1,492
1,423
Credit facility, including the $210 million
term loan (d)
210
-
Other
87
88
Total debt (e)(f)
$5,906
$5,625
Percentage of fixed rate debt
91.4%
100%
Weighted average interest rate
5.9%
6.0%
Weighted average debt maturity
5.0 years 5.7 years
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Hotel Operating Statistics for All
Properties (g)
Average daily rate
$184.53 $181.71 $195.80 $190.20
Average occupancy
74.7% 76.5% 73.6%
74.6%
RevPAR
$137.75 $138.97 $144.07 $141.81
(a) Share prices are the closing price
as reported by the New York Stock
Exchange.
(b) Amount reflects market price of
a single $1,000 debenture as quoted
by Bloomberg
L.P.
( c ) On September 18, 2008, the Company declared
a third quarter common
dividend of
$0.20 per share and a third quarter preferred dividend
of $.5546875
per share for its Class E cumulative redeemable
preferred
stock.
(d) Subsequent to the end of the third
quarter, the Company drew $200
million under
the revolver portion of its credit facility. The
Company currently
has $400 million of remaining available capacity
under the
revolver portion of the Credit Facility.
(e) In accordance with GAAP, total
debt includes the debt of entities
that we consolidate,
but do not own 100% of the interests, and
excludes the
debt of entities that we do not consolidate, but have a
minority ownership
interest and record our investment therein under
the equity
method of accounting. As of September 5, 2008, our
minority partners'
share of consolidated debt is $68 million and our
share of debt
in unconsolidated investments is $365 million.
(f) Total debt as of September 5, 2008
and December 31, 2007 includes
net discounts
of $11 million and $13 million, respectively.
(g) The operating statistics reflect
all consolidated properties as of
September
5, 2008 and September 7, 2007, respectively. The operating
statistics
include the results of operations for eleven properties
sold as of
September 5, 2008 prior to their disposition.
HOST HOTELS & RESORTS, INC.
Reconciliation of Net
Income Available to Common Stockholders
to Funds From Operations per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
September 5, 2008 September 7, 2007
Per
Per
Share
Share
Income Shares Amount Income Shares Amount
Net income available to common
stockholders
$52 519.3 $.10 $95 522.3
$.18
Adjustments:
Gains on dispositions, net of
taxes
(13) - (.03)
- - -
Gains on insurance settlement (a)
- - -
(6) - (.01)
Amortization of deferred gains
and other property transactions,
net of taxes
(1) - -
(3) - (.01)
Depreciation and amortization
133 - .25
120 - .23
Partnership adjustments
5 - .01
7 - .01
FFO of minority partners of
Host LP (b)
(7) - (.01) (7)
- (.01)
Adjustments for dilutive securities:
Assuming distribution of common
shares granted under the
comprehensive stock plan
less
shares assumed purchased at
average market price
- .3 -
- 0.8 -
Assuming conversion of 2004
Exchangeable Senior Debentures
4 31.2 (.01) 4
29.5 (.01)
FFO per diluted share ( c )(d)
$173 550.8 $.31 $210 552.6 $.38
Year-to-date ended Year-to-date ended
September 5, 2008 September 7, 2007
Per
Per
Share
Share
Income Shares Amount Income Shares Amount
Net income available to common
stockholders
$299 520.8 $.57 $427 522.0 $.82
Adjustments:
Gains on dispositions, net of
taxes
(23) - (.04) (139)
- (.27)
Gains on insurance settlement (a)
- - -
(6) - (.01)
Amortization of deferred gains
and other property transactions,
net of taxes
(3) - (.01) (5)
- (.01)
Depreciation and amortization
387 - .74
354 - .68
Partnership adjustments
22 - .04
20 - .04
FFO of minority partners of
Host LP (b)
(28) - (.05) (22)
- (.04)
Adjustments for dilutive
securities:
Assuming distribution of common
shares granted under the
comprehensive stock plan
less
shares assumed purchased at
average market price
- .4 -
- 0.9 -
Assuming conversion of 2004
Exchangeable Senior Debentures
13 31.2 (.04) 13
29.5 (.05)
FFO per diluted share ( c )(d)
$667 552.4 $1.21 $642 552.4 $1.16
(a) Represents the gain during the
period for the settlement of property
insurance
claims, including the gains that are included in
discontinued
operations related to hotels that we have sold.
(b) Represents FFO attributalbe to
the minority interests in Host LP.
( c ) FFO per diluted share in accordance with
NAREIT is adjusted for the
effects of
dilutive securities. Dilutive securities may include
shares granted
under comprehensive stock plans, preferred OP Units
held by minority
partners, exchangeable debt securities and other
minority interests
that have the option to convert their limited
partnership
interest to common OP Units. No effect is shown for
securities
if they are anti-dilutive.
(d) FFO per diluted share was significantly
affected by certain
transactions.
For further detail see "Schedule of Significant
Transactions
Affecting Earnings per Diluted Share and Funds From
Operations
per Diluted Share."
HOST HOTELS & RESORTS, INC.
Schedule of Significant Transactions
Affecting Earnings per Share
and Funds From Operations per Diluted Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
September 5, 2008 September 7,2007
Net Income
Net Income
(Loss) FFO
(Loss) FFO
Gain on hotel dispositions, net of
taxes
$13 $-
$- $-
Minority interest expense (a)
(1) -
- -
Total (b)
$12 $-
$- $-
Diluted shares
519.6 -
- -
Per diluted share
$.02 $-
$- $-
Year-to-date ended Year-to-date ended
September 5, 2008 September 7, 2007
Net Income Net Income
(Loss) FFO (Loss)
FFO
Senior notes redemptions and
debt prepayments ( c )
$- $-
$(46) $(46)
Gain on hotel dispositions, net
of taxes
23 -
139 -
Minority interest income
(expense) (a)
(1) -
(3) 2
Total (b)
$22 $-
$90 $(44)
Diluted shares
552.4 -
553.6 552.4
Per diluted share
$.04 $-
$.16 $(.08)
(a) Represents the portion of the significant
transactions attributable
to minority
partners in Host LP.
(b) Net income of Host LP was also
affected by the transactions
discussed
above, with the exception of the minority interest income
(expense)
item discussed in footnote (a). Accordingly, the total
adjustments
to the net income of Host LP were approximately $13
million and
$23 million for the third quarter and year-to-date 2008
and $93 million
for the year-to-date 2007.
( c ) Represents call premiums and the acceleration
of original issue
discounts
and deferred financing costs, as well as incremental
interest during
the call or prepayment notice period, included in
interest expense
in the consolidated statements of operations. We
recognized
these costs in conjunction with the prepayment or
refinancing
of senior notes and mortgages during the periods
presented.
HOST HOTELS & RESORTS, L.P.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per unit amounts)
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Revenues
Rooms
$757 $769 $2,236 $2,216
Food and beverage
311 323 1,085
1,071
Other
78 83 241
242
Total hotel sales
1,146 1,175 3,562 3,529
Rental income
22 22
79 78
Total revenues
1,168 1,197 3,641 3,607
Expenses
Rooms
191 190 547
533
Food and beverage
254 260 798
791
Hotel departmental expenses
313 307 897
870
Management fees
49 55 173
171
Other property-level expenses
91 93 268
268
Depreciation and amortization
133 119 388
352
Corporate and other expenses
14 14
45 51
Gain on insurance settlement
- (5) (7)
(5)
Total operating costs
and expenses 1,045 1,033 3,109
3,031
Operating profit
123 164 532
576
Interest income
4 9
13 27
Interest expense
(83) (82) (240) (312)
Net gains on property transactions
and other
- 3
2 5
Minority interest income/(expense)
3 (1) (5)
(5)
Equity in earnings of affiliates
1 -
3 5
Income before income taxes
48 93 305
296
Provision for income taxes
(4) 4 (11)
(1)
Income from continuing operations
44 97 294
295
Income from discontinued operations (b)
13 4
25 154
Net income
57 101 319
449
Less: Distributions on preferred units
(2) (2) (6)
(6)
Net income available to common
unitholders
$55 $99 $313
$443
Basic earnings per common unit:
Continuing operations
$.08 $.17 $.53
$.54
Discontinued operations
.02 .01 .05
.28
Basic earnings per common unit
$.10 $.18 $.58
$.82
Diluted earnings per common unit:
Continuing operations
$.08 $.17 $.52
$.53
Discontinued operations
.02 .01 .05
.27
Diluted earnings per common unit
$.10 $.18 $.57
$.80
(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. When distinguishing between
Host and Host LP,
the primary difference is the partnership
interests in Host
LP held by outside partners, which is reflected
as minority interest
in Host's consolidated balance sheets and
minority interest
expense in Host's consolidated statements of
operations. The
consolidated statements of operations should be
read in conjunction
with the consolidated financial statements and
notes thereto included
in our most recent Annual Report on Form
10-K.
(b) Reflects the results of operations and
gain on sale, net of the
related income tax,
for two properties sold in 2008 and nine
properties sold
in 2007.
HOST HOTELS & RESORTS, L.P.
Reconciliation
of Net Income to EBITDA and Adjusted EBITDA
(unaudited, in millions)
Quarter ended Year-to-date ended
September September September September
5, 2008 7, 2007 5, 2008 7, 2007
Net income
$57 $101 $319
$449
Interest expense
83 82
240 312
Depreciation and amortization
133 119 388
352
Income taxes
4 (4)
11 1
Discontinued operations (a)
1 1
1 4
EBITDA
278 299 959
1,118
Gains on dispositions
(13) -
(23) (139)
Amortization of deferred gains
(1) (3) (3)
(5)
Property insurance gains
- (6)
- (6)
Equity investment adjustments:
Equity in earnings of
affiliates (1)
- (3)
(5)
Pro rata EBITDA of equity
investments
12 9
29 24
Consolidated partnership
adjustments:
Minority interest
expense
(3) 1
5 5
Pro rata EBITDA
of minority
partners
(2) (3) (13)
(14)
Adjusted EBITDA of Host LP
$270 $297 $951
$978
(a) Reflects the interest expense, depreciation
and amortization and
income taxes included
in discontinued operations.
HOST HOTELS & RESORTS, INC.
Reconciliation of Net Income
Available to Common Stockholders to
Funds From Operations per Diluted Share for
Full Year 2008 Forecasts (a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Full Year 2008 Forecast
Per Share
Income Shares
Amount
Forecast net income available to
common stockholders
$428 521.2
$.82
Adjustments:
Depreciation and amortization
559 -
1.07
Gain on dispositions, net of taxes
(27) -
(.05)
Partnership adjustments
30 -
.05
FFO of minority partners of Host LP
(b) (38)
- (.07)
Adjustment for dilutive securities:
Assuming distribution of common shares
granted under the comprehensive
stock
plan less shares assumed purchased
at
average market price
- .3
-
Assuming conversion of 2004
Exchangeable Senior Debentures
19 32.3
(.07)
FFO per diluted share
$971 553.8
$1.75
High-end of Range
Full Year 2008 Forecast
Per Share
Income Shares
Amount
Forecast net income available to
common stockholders
$456 521.2
$.87
Adjustments:
Depreciation and amortization
559 -
1.07
Gain on dispositions, net of taxes
(27) -
(.05)
Partnership adjustments
30 -
.05
FFO of minority partners of Host LP
(b) (39)
- (.07)
Adjustment for dilutive securities:
Assuming distribution of common shares
granted under the comprehensive
stock
plan less shares assumed purchased
at
average market price
- .3
-
Assuming conversion of 2004
Exchangeable Senior Debentures
19 32.3
(.07)
FFO per diluted share
$998 553.8
$1.80
(a) The full year 2008 forecasts were
based on the following
assumptions:
-- Comparable
hotel RevPAR will range from flat to a decrease of 1%
for the full year for the low and high ends of the
forecasted range, respectively.
-- Comparable
hotel adjusted operating profit margins will range
from a decrease of 100 basis points to 125 basis points for
the full year for the low and high ends of the forecasted
range, respectively.
-- We do not
anticipate that any acquisitions will be made
during 2008.
-- We do not
anticipate that any hotel dispositions will be made
during the fourth quarter of 2008.
-- We expect
to spend approximately $650 million on capital
expenditures in 2008.
-- Fully diluted
weighted average shares for FFO per diluted
share and earnings per diluted share will be approximately
553.8 million for the full year.
The amounts
shown in these forecasts are based on these and other
assumptions,
as well as management's estimate of operations for
2008. These
forecasts are forward-looking and are not guarantees of
future performance
and involve known and unknown risks,
uncertainties
and other factors which may cause actual transactions,
results and
performance to differ materially from those expressed or
implied by
these forecasts. Although we believe the expectations
reflected
in the forecasts are based upon reasonable assumptions, we
can give no
assurance that the expectations will be attained or that
the results
will be materially different. Risks that may affect
these assumptions
and forecasts include the following:
-- the level
of RevPAR and margin growth or decline may change
significantly;
-- the amount
and timing of acquisitions and dispositions of
hotel properties is an estimate that can substantially affect
financial results, including such items as net income,
depreciation and gains on dispositions;
-- the level
of capital expenditures may change significantly,
which will directly affect the level of depreciation expense
and net income;
-- the amount
and timing of debt payments may change
significantly based on market conditions, which will directly
affect the level of interest expense and net income;
-- the number
of shares of the Company's common stock
repurchased may change based on market conditions; and
-- other risks
and uncertainties associated with our business
described herein and in the Company's filings with the SEC.
(b) Represents FFO attributable to
the minority interests in Host LP.
HOST HOTELS & RESORTS, INC.
Schedule of
Comparable Hotel Adjusted Operating Profit Margin
for Full Year 2008 Forecasts (a)(b)
(unaudited, in millions, except hotel statistics)
Full Year 2008
Low-end High-end
of range of range
Operating profit margin under GAAP ( c )
14.4%
14.7%
Comparable hotel adjusted operating
profit margin (d)
26.2%
26.5%
Comparable hotel sales
Room
$3,203
$3,236
Other
1,939
1,950
Comparable hotel sales
(e)
5,142
5,186
Comparable hotel expenses
Rooms and other departmental costs
2,135
2,148
Management fees, ground rent and
other costs
1,659
1,666
Comparable hotel expenses
(f)
3,794
3,814
Comparable hotel adjusted operating profit
1,348
1,372
Non-comparable hotel results, net
39
39
Office buildings and select service
properties, net
8
8
Depreciation and amortization
(559)
(559)
Corporate and other expenses
(70)
(70)
Operating profit
$766
$790
(a) Forecasted comparable hotel results
include assumptions on the
number of
hotels that will be included in our comparable hotel set
in 2008. We
have assumed that 115 hotels will be classified as
comparable
as of December 31, 2008. No assurances can be made as to
the hotels
that will be in the comparable hotel set for 2008. Also,
see the notes
following the table reconciling net income available
to common
shareholders to Funds From Operations per Diluted Share
for assumptions
relating to the full year 2008 forecasts.
(b) Our comparable hotel results are
recorded based on the reporting
cycle used
by Marriott International, Inc., or Marriott, for our
Marriott-managed
hotels. Marriott uses a fiscal year ending on the
Friday closest
to December 31 and will generally report 52 weeks of
operations
in a given year. However, Marriott will report its
results of
operations based on a 53-week year for 2008 based on a
fourth quarter
of 17 weeks. For comparative purposes, we include the
standard 52
weeks and exclude the extra week of operations in our
forecast comparable
hotel operating data for the full year 2008. For
further information,
see "Reporting Periods for Statement of
Operations"
and "Reporting Periods for Hotel Operating Statistics
and Comparable
Hotel Results" in the Notes to Financial
Information.
( c ) Operating profit margin under GAAP is calculated
as the operating
profit divided
by the forecast total revenues per the consolidated
statements
of operations. See (d) below for forecasted revenues.
(d) Comparable hotel adjusted operating
profit margin is calculated as
the comparable
hotel adjusted operating profit divided by the
comparable
hotel sales per the table above. We forecasted a
decrease in
margins of 100 basis points to 125 basis points under
the 2007 comparable
hotel adjusted operating profit margin of 27.5%.
(e) The reconciliation of forecast
total revenues to the forecast
comparable
hotel sales is as follows (in millions):
Full Year 2008
Low-end High-end
of range of range
Revenues
$5,332
$5,377
Non-comparable
hotel sales
(152)
(153)
Hotel sales
for the property for which
we record
rental income, net
54
54
Rental income
for office buildings and
select
service hotels
(92)
(92)
Comparable hotel sales
$5,142
$5,186
(f) The reconciliation of forecast
operating costs and expenses to the
comparable
hotel expenses is as follows (in millions):
Full Year 2008
Low-end High-end
of range of range
Operating
costs and expenses
$4,566
$4,587
Non-comparable
hotel expenses
(113)
(114)
Hotel expenses
for the property
for
which we record rental income
54
54
Rent expense
for office buildings and
select
service hotels
(84)
(84)
Depreciation
and amortization
(559)
(559)
Corporate
and other expenses
(70)
(70)
Comparable hotel expenses
$3,794
$3,814
HOST HOTELS & RESORTS, L.P.
Reconciliation of Net Income to EBITDA and
Adjusted EBITDA for Full Year 2008 Forecasts (a)
(unaudited, in millions)
Full Year 2008
Low-end High-end
of range of range
Net income
$456
$485
Interest expense
359
359
Depreciation and amortization
559
559
Income taxes
1
(3)
EBITDA
1,375
1,400
Gains on dispositions
(27)
(27)
Equity investment adjustments:
(8)
(8)
Equity in earnings of
affiliates
Pro rata Adjusted EBITDA
of equity
investments
48
48
Consolidated partnership adjustments:
Minority interest expense
5
5
Pro rata Adjusted EBITDA
of minority
partners
(18)
(18)
Adjusted EBITDA of Host LP
$1,375
$1,400
(a) See the notes following the table
reconciling net income available
to common
shareholders to Funds From Operations per Diluted Share
for assumptions
relating to the full year 2008. |