Press Release: Crestline Capital Corporation
May 3, 2002
MCLEAN, VA -- Crestline Capital Corporation (NYSE: CLJ) reported first quarter 2002 Earnings before Interest Expense,
Taxes, Depreciation and Amortization and other non-cash items (EBITDA) of $4.0 million, an 83 percent decrease
from first quarter 2001 EBITDA of $23.7 million.
Diluted earnings per common share were $1.61 for the first quarter of 2002, compared to $7.67 per diluted share
for the first quarter of 2001. Diluted earnings per share for the first quarter of 2002 included the one-time gain
from the sale of the senior living business and 2002 senior living earnings through the sale date totaling $1.55
per share. Diluted earnings per share for the first quarter of 2001 included the one time gain from the sale of
the full-service leases and first quarter 2001 senior living earnings totaling $7.53 per share.
Pro forma first quarter 2002 EBITDA was a loss of $0.5 million, compared to pro forma first quarter 2001 EBITDA
of $0.4 million. Pro forma EBITDA excludes:
* senior living community EBITDA for 2002 and 2001 (the communities were
sold on January 11, 2002)
* full-service hotel lease EBITDA for 2001*
* EBITDA for 2001 for the 10 Residence Inns sold in the fourth quarter of
2001
* EBITDA for 2001 for the Baltimore Inner Harbor Courtyard sold in
December 2001
* interest income earned in 2002 and 2001 on the asset sale proceeds
Bruce D. Wardinski, Chairman of the Board, President and Chief Executive Officer, stated, "The first quarter
of 2002 was another exciting quarter for the company with the consummation of the sale of our senior living business
and the announcement of our merger with Barcelo. At this time, we anticipate having the shareholder vote for the
merger in mid-June, with the merger closing shortly thereafter."
Mr. Wardinski added, "Overall, our first quarter performance was consistent with our expectations." We
believe that the second quarter of 2002 will continue to be a difficult time in the lodging business, but continue
to expect modest improvements in the second half of the year."
About the companies
Crestline Capital Corporation is the parent company of Crestline Hotels & Resorts, among the nation's leading
independent hotel management companies. The Company also leases and has investments in hotel properties. Additional
information about Crestline Capital Corporation is available at the company's web site: http://www.crestlinecapital.com
.
Crestline Hotels & Resorts manages and leases 38 hotels, resorts and conference and convention centers with
over 7,000 rooms in twelve states and the District of Columbia. Crestline Hotels & Resorts manages properties
independently and under such well regarded brands as Marriott, Hilton, Sheraton, Renaissance and Crowne Plaza.
Additional information about the hotel management company is available at the company's web site: http://www.crestlinehotels.com
.
Barcelo is one of the world's largest hospitality companies and is based in Palma de Mallorca, Spain. The company
is 100% owned by the Barcelo family and has been run by three generations of family members. Barcelo and affiliates
own, manage and lease 108 hotels in 16 countries across four continents, including 18 hotels in the United States.
In addition, the company owns an equity interest in one of Europe's leading travel groups, First Choice Holidays
PLC. Additional information about Barcelo is available at the company's website: http://www.barcelo.com
.
Note: Certain matters discussed herein are forward-looking statements within the meaning of the Private Litigation
Reform Act of 1995. Certain, but not necessarily all, of such statements can be identified by the use of forward-looking
terminology, such as "believes," "expects," "may," "will," "should,"
"estimates" or "anticipates" or the negative thereof or comparable terminology. All forward-looking
statements involve known and unknown risks, uncertainties and other factors, which may cause the actual transactions,
results, performance or achievements of the Company to be materially different from any future transactions, results,
performance or achievements expressed or implied by such forward-looking statements. These may include: (i) national
and local economic and business conditions or governmental regulations that will affect demand, prices, wages or
other costs for hotels; (ii) the level of rates and occupancy that can be achieved by such properties; (iii) the
Company's ability to compete effectively in areas such as access, location, quality of properties and rate structures;
(iv) the ability to maintain the properties in a first-class manner (including meeting capital expenditure requirements);
(v) the availability and terms of financing; (vi) governmental actions and initiatives; (vii) the ability to consummate
the merger; and (viii) the ability to find available acquisitions and investment opportunities. Although the Company
believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions and
business opportunities, it can give no assurance that its expectations will be attained or that any deviations
will not be material. The Company undertakes no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or circumstances.
All but one full-service hotel lease was sold effective January 1, 2001. The remaining full-service hotel lease
was sold in the second quarter of 2001.
CRESTLINE CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)
Twelve Weeks Ended
March 22, March 23,
2002 2001
Revenues
Leased full-service hotels (1) $ - $ 28,745
Subleased limited-service hotels 58,911 71,308
Leased limited-service hotels 21,863 21,161
Owned hotels (1) - 10,008
Managed hotels 2,786 9,791
Total revenues 83,560 141,013
Operating Costs and Expenses
Leased full-service hotels - 28,491
Subleased limited-service hotels 57,136 69,352
Leased limited-service hotels 22,123 20,767
Owned hotels - 7,535
Managed hotels 2,657 9,638
Total operating costs and
expenses 81,916 135,783
Operating Profit 1,644 5,230
Gain on sale of full-service hotel
leases (1) - 200,313
Equity in earnings (losses) of
unconsolidated affiliates (231) 192
Corporate expenses (2,968) (3,537)
Interest expense (142) (1,157)
Interest income 2,338 3,021
Income from continuing operations
before income taxes 641 204,062
Benefit (provision) for income taxes 336 (83,666)
Income From Continuing Operations 977 120,396
Income from discontinued operations,
net of income taxes (2) 932 3,334
Gain on disposal of discontinued
operations, net of income taxes (2) 24,443 -
Net Income $ 26,352 $ 123,730
Diluted Earnings From Continuing
Operations per Common Share (1) $ 0.06 $ 7.47
Diluted Earnings per Common Share $ 1.61 $ 7.67
Weighted Average Diluted Shares
Outstanding 16,318 16,123
Balance Sheet Data as of March 22,
2002
Cash and cash equivalents $ 524,557
Marketable securities $ 32,566
Total assets $ 626,167
Debt, excluding working capital
notes due to Host Marriott $ 2,850
Shareholders' equity $ 596,293
Common shares outstanding, net of
treasury stock 15,633
Common stock options outstanding
at an average
exercise price of $13.80 1,988
CRESTLINE CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(unaudited)
Twelve Weeks Ended
March 22, March 23,
2002 2001
(in thousands)
EBITDA
Full-service hotel leases (1) $ - $ 230
Limited-service hotel subleases 1,689 1,869
Limited-service hotel leases (254) 400
Hotel ownership, net of minority
distributions (1) - 3,551
Hotel management 562 682
Equity investments (231) 130
Interest income 2,338 3,021
Corporate and other (2,516) (3,218)
EBITDA from continuing
operations 1,588 6,665
EBITDA from discontinued
operations 2,364 17,012
Historical EBITDA $ 3,952 $ 23,677
Pro forma EBITDA (3) $ (538) $ 384
EBITDA from continuing operations $ 1,588 $ 6,665
Interest expense (142) (1,157)
Hotel working capital interest 87 110
Depreciation and amortization (437) (1,725)
Income taxes 336 (83,666)
Gain on sale of full-service
hotel leases - 200,313
Other non-cash charges, net (455) (144)
Income from continuing
operations $ 977 $ 120,396
LEASED HOTEL STATISTICS:
Subleased Courtyards (53 Properties)
Room rate $ 99.08 $ 104.34
Occupancy 65.9% 75.2%
REVPAR $ 65.26 $ 78.47
Subleased Residence Inns (18
Properties)
Room rate $ 96.60 $ 107.12
Occupancy 71.8% 78.2%
REVPAR $ 69.33 $ 83.73
Leased Limited-Service Hotels (28
Properties)
Room rate $ 93.75 $ 102.43
Occupancy 67.8% 71.4%
REVPAR $ 63.58 $ 73.13
MANAGED HOTEL STATISTICS:
Comparable Full-Service Hotels
Room rate $ 105.21 $ 116.24
Occupancy 62.1% 67.3%
REVPAR $ 65.35 $ 78.21
Comparable Limited-Service Hotels
Room rate $ 83.95 $ 80.48
Occupancy 59.6% 67.5%
REVPAR $ 50.03 $ 54.32
(1) During 2001, the Company disposed of its full-service hotel leasing
business. Also during 2001, the Company disposed of its portfolio of
Residence Inns and its Baltimore Inner Harbor Courtyard, which
comprised substantially all of the Company's hotel ownership
business. In accordance with generally accepted accounting principles
(GAAP) per APB No. 30, the Company is not permitted to treat these
disposed business segments as discontinued operations. Accordingly,
the operating results of these disposed business segments are
included in income from continuing operations and EBITDA from
continuing operations.
(2) In accordance with GAAP per APB No. 30, the Company's senior living
business has been treated as discontinued operations in the
accompanying condensed consolidated financial information.
Accordingly, the income statement revenues and expenses related to
senior living have been collapsed into one line item in the current
and prior year presentations.
(3) Pro forma EBITDA can be calculated as follows:
Twelve Weeks Ended
March 22, March 23,
2002 2001
(in thousands)
Historical EBITDA $ 3,952 $ 23,677
Discontinued operations (senior
living) (2,364) (17,012)
Sale of full-service hotel leases - (230)
Interest income earned on asset
sale proceeds (2,126) (2,500)
Sale of Residence Inns - (3,251)
Sale of Baltimore Inner Harbor
Courtyard - (300)
Pro forma EBITDA $ (538) $ 384
The pro forma information does not purport to represent what the Company's EBITDA would actually have been if these
transactions or events had in fact occurred at the beginning of such period or to project the Company's EBITDA
for any future date or period. The pro forma information should be read in conjunction with the historical results
contained herein.
SOURCE: Crestline Capital Corporation