Press Release: Host Marriott Corporation
March 7, 2001
HOST MARRIOTT CORPORATION
Consolidated Balance Sheets (a)
(unaudited, in millions)
December 31, December 31,
2000 1999
ASSETS
Property and equipment, net $7,110 $7,108
Notes and other receivables
(including amounts due from
affiliates of $164 million
and $127 million, respectively) 211 175
Rent receivable 65 72
Investments in affiliates 128 49
Other assets 444 351
Restricted cash 125 170
Cash and cash equivalents 313 277
$8,396 $8,202
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt
Senior notes $2,790 $2,539
Mortgage debt 2,275 2,309
Other 246 221
5,311 5,069
Accounts payable and accrued expenses 381 148
Other liabilities 323 475
Total liabilities 6,015 5,692
Minority interest 485 508
Company-obligated mandatorily
redeemable convertible preferred
securities of a subsidiary whose
sole assets are the convertible
subordinated debentures due 2026
("Convertible Preferred Securities") 475 497
Shareholders' equity
Cumulative redeemable preferred stock
(liquidation preference $25.00 per
share), 50 million shares authorized;
8.2 million shares issued and outstanding 196 196
Common stock, 750 million shares authorized;
221.3 million shares and 223.5 million
shares issued and outstanding, respectively 2 2
Additional paid-in capital 1,828 1,844
Accumulated other comprehensive (loss) income (1) 2
Retained deficit (604) (539)
Total shareholders' equity 1,421 1,505
$ 8,396 $ 8,202
(a) Our unaudited consolidated balance sheets have been prepared
without audit. Certain information and footnote disclosures
normally included in financial statements presented in accordance
with accounting principles generally accepted in the United States
have been omitted. The unaudited consolidated balance sheets
should be read in conjunction with the consolidated financial
statements and notes thereto included in the annual report on form
10-K for the year ended December 31, 2000.
HOST MARRIOTT CORPORATION
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Sixteen weeks ended Year ended
December December December December
31, 31, 31, 31,
2000 1999 2000 1999
Revenues
Rental income (b) $810 $749 $1,390 $1,295
Interest income 14 13 40 39
Other 26 16 43 42
Total revenues 850 778 1,473 1,376
Expenses
Depreciation and
amortization 107 90 331 293
Property-level owner
expenses 81 80 272 264
Minority interest (b) 98 103 72 82
Interest expense 140 132 433 430
Dividends on
convertible preferred
securities of
subsidiary trust 10 11 32 37
Corporate expenses 15 14 42 34
Loss on litigation
settlement -- 40 -- 40
Lease repurchase
expense (c) 207 -- 207 --
Other expense 14 11 23 16
Total expenses 672 481 1,412 1,196
Income before
income taxes 178 297 61 180
Provision for
income taxes (c) 105 19 98 16
Income before
extraordinary items 283 316 159 196
Extraordinary gain
(loss) -- (2) (3) 15
Net income 283 314 156 211
Less: preferred
dividends (5) (5) (20) (6)
Add: gain on
repurchase
of Convertible
Preferred
Securities 1 11 5 11
Net income available
to common
shareholders $279 $320 $141 $216
Basic earnings
per common share $1.26 $1.42 $.64 $.95
Diluted earnings
per common share $1.14 $1.24 $.63 $.92
(a) Our unaudited consolidated statements of operations have been
prepared without audit. Certain information and footnote
disclosures normally included in financial statements presented in
accordance with accounting principles generally accepted in the
United States have been omitted. The unaudited consolidated
statements of operations should be read in conjunction with the
consolidated financial statements and notes thereto included in
our annual report on Form 10-K for the year ended December 31,
2000.
(b) The staff of the Securities & Exchange Commission issued Staff
Accounting Bulletin 101 "Revenue Recognition" (SAB 101) in
December 1999, which we retroactively adopted effective January 1,
1999. SAB 101 discusses factors to consider in determining when
contingent revenue should be recognized during interim periods.
As of December 31, 2000 and 1999, our hotel sales reached the
annual levels under the leases for payment of percentage rent and
therefore, all previously deferred rent was recognized.
Accordingly, included in rental income for the sixteen weeks ended
December 31, 2000 and 1999 is $366 million and $339 million,
respectively, of previously deferred rent. SAB 101 has no effect
on the full year results for the years ended December 31, 2000 and
1999.
(c) Effective January 1, 2001, we and Crestline Capital Corporation
("Crestline") announced we had completed the purchase and sale of
certain subsidiaries of Crestline holding the lease rights to 116
hotels which coincides with the effective date of the REIT
Modernization Act (RMA). The RMA allows lodging REITs to lease their
hotels to subsidiaries which elect to be treated as Taxable REIT
Subsidiaries. As a result of the acquisition, a non-recurring loss
of $207 million, including transaction fees and certain transfer
taxes, and an $82 million benefit for income taxes were recorded
during the fourth quarter of 2000.
HOST MARRIOTT CORPORATION
Reconciliation of Earnings per Share (a)
(unaudited, in millions, except per share amounts)
Sixteen weeks ended December 31, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Net income $283 221.0 $1.28
Dividends on preferred stock (5) -- (.02)
Gain on repurchase of
Convertible Preferred Securities 1 -- --
Basic earnings available to
common shareholders per share 279 221.0 1.26
Assuming distribution of common
shares granted under the
comprehensive stock plan, less
shares assumed purchased at
average market price -- 4.0 (.02)
Assuming conversion of minority
OP Units outstanding (b) 80 63.1 --
Assuming conversion of preferred
OP Units (c) 1 .6 --
Assuming conversion of minority
OP Units issuable (c) 3 8.1 (.02)
Assuming conversion of Convertible
Preferred Securities (d) 10 31.0 (.08)
Diluted earnings per Share $373 327.8 $1.14
Sixteen weeks ended December 31, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Net income $314 225.6 $1.39
Dividends on preferred stock (5) -- (.02)
Gain on repurchase of
Convertible Preferred Securities 11 -- .05
Basic earnings available to
common shareholders per share 320 225.6 1.42
Assuming distribution of common
shares granted under the
comprehensive stock plan, less
shares assumed purchased at
average market price -- 4.8 (.02)
Assuming conversion of minority
OP Units outstanding (b) 89 64.2 --
Assuming conversion of preferred
OP Units (c) -- .5 --
Assuming conversion of minority
OP Units issuable (c) 1 10.9 (.05)
Assuming conversion of Convertible
Preferred Securities (d) 11 35.3 (.11)
Diluted earnings per Share $421 341.3 $1.24
Year ended December 31, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Net income $156 220.8 $.71
Dividends on preferred stock (20) -- (.09)
Gain on repurchase of
Convertible Preferred Securities 5 -- .02
Basic earnings available to
common shareholders per share 141 220.8 .64
Assuming distribution of common
shares granted under the
comprehensive stock plan, less
shares assumed purchased at
average market price -- 4.2 (.01)
Assuming conversion of minority
OP Units outstanding (b) 40 63.4 --
Assuming conversion of preferred
OP Units (c) -- .6 --
Assuming conversion of minority
OP Units issuable (c) -- -- --
Assuming conversion of Convertible
Preferred Securities (d) -- -- --
Diluted earnings per Share $181 289.0 $.63
Year December 31, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Net income $211 227.1 $.93
Dividends on preferred stock (6) -- (.03)
Gain on repurchase of
Convertible Preferred Securities 11 -- .05
Basic earnings available to
common shareholders per share 216 227.1 .95
Assuming distribution of common
shares granted under the
comprehensive stock plan, less
shares assumed purchased at
average market price -- 5.3 (.02)
Assuming conversion of minority
OP Units outstanding (b) 61 64.5 --
Assuming conversion of preferred
OP Units (c) -- .3 --
Assuming conversion of minority
OP Units issuable (c) 7 10.9 (.01)
Assuming conversion of Convertible
Preferred Securities (d) -- -- --
Diluted earnings per Share $284 308.1 $.92
(a) Basic earnings per common share is computed by dividing net income
adjusted for dividends on preferred stock and gains on repurchases
of Convertible Preferred Securities by the weighted average number
of shares of common stock outstanding. Diluted earnings per share
is computed by dividing net income adjusted for dividends on
preferred stock, gains on repurchases of Convertible Preferred
Securities, and 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 and the Convertible
Preferred Securities. Dilutive securities also include those
common and preferred OP Units issuable or outstanding that are held
by minority partners which are assumed to be converted.
(b) In connection with the conversion to a REIT, we formed Host LP,
whose OP Units are convertible to common stock, or cash at the
option of Host REIT, based on certain conditions, including the
passage of time.
(c) Includes those minority partners that have the option to convert
their limited partnership interest or preferred OP Units to common
OP Units. In December 2000, all of the 585,777 Class TS preferred
OP Units and 6,807 of the Class AM preferred OP Units were
converted to common OP Units. Therefore, at year-end, only 19,428
Class AM preferred OP Units are outstanding. However, for the
calculation of diluted earnings per share the weighted average is
used for these convertible securities.
(d) For the years ended December 31, 1999 and 2000, the Convertible
Preferred Securities were anti-dilutive, however for the fourth
quarters of 1999 and 2000 they were dilutive.
HOST MARRIOTT CORPORATION
COMPARATIVE FUNDS FROM OPERATIONS
(unaudited, in millions, except per share amounts)
Sixteen weeks ended Year ended
December December December December
31, 31, 31, 31,
2000 1999 2000 1999
Funds from Operations
Income before
extraordinary items $283 $316 $159 $196
Depreciation and
amortization 102 88 322 291
Other real estate
activities (1) (12) (3) (28)
Partnership adjustments 80 105 61 80
Funds from operations
of Host LP 464 497 539 539
Effect on funds
from operations of
SAB 101 (a) (359) (339) -- --
Loss on litigation
settlement (a) -- 40 -- 40
Loss on repurchase
of leases (a) 207 -- 207 --
Taxes on lease
repurchase (82) -- (82) --
Taxes unrelated to
continuing operations (30) (21) (30) (21)
Comparative funds from
operations of Host LP 200 177 634 558
Dividends on
preferred stock (5) (5) (20) (6)
Comparative funds from
operations of Host LP
available to common
unitholders 195 172 614 552
Comparative funds from
operations of minority
partners of Host LP (b) (42) (39) (137) (123)
Comparative funds from
operations available to
common shareholders of
Host REIT $153 $133 $477 $429
Comparative funds from
operations of Host REIT
per basic common
share (c) $.69 $.59 $2.16 $1.89
Comparative funds from
operations of Host
REIT per diluted common
share (d) $.64 $.54 $2.01 $1.75
(a) Results for the fourth quarter of 2000 are adjusted to reflect
revenue based on payment amounts calculated under our hotel leases
excluding the effect of prior revenue deferrals required by SAB 101.
(If the effect of SAB 101 were included, FFO per basic common share
for the fourth quarters of 2000 and 1999 would have been $1.95 and
$1.76, respectively.)
(b) The $42 million and $39 million, respectively, deducted for the
sixteen weeks ended and $137 million and $123 million, respectively,
deducted for the years ended December 31, 2000 and 1999,
respectively, represent the Comparative FFO attributable to the
interests in Host LP held by the 22% minority partners. For
additional detail regarding operating structure and OP Units
investors should read our annual report on Form 10-K for the year
ended December 31, 2000.
(c) Comparative FFO per basic share is computed by dividing comparative
funds from operations available to common shareholders by the
weighted average number of shares of common stock outstanding.
(d) Diluted shares include a provision for the assumed conversion of the
minority limited partners' interest and preferred OP Units in Host
LP to our common shares. Additionally, the calculation includes
shares from the assumed conversion of those minority partners of
subsidiary partnerships of Host LP that have the option to convert
their limited partnership interests to OP units and a corresponding
conversion of those OP Units to common stock. Whether any of these
actually occur depends on a number of conditions including, in some
cases, the passage of time. Should the conversions of these
minority interests occur, we would then receive the additional cash
flow and the equity value from the acquired limited partnership
interests.
HOST MARRIOTT CORPORATION
Reconciliation of Comparative Funds From
Operations on a Per Share Basis (a)
(unaudited, in millions, except per share basis)
Sixteen weeks ended December 31, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations available
to common shareholders $153 221.0 $.69
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.0 (.01)
Assuming conversion of minority
OP Units outstanding (b) 42 63.1 --
Assuming conversion of preferred
OP Units (c) -- .6 --
Assuming conversion of minority
OP Units issuable (c) 4 8.1 (.01)
Assuming conversion of Convertible
Preferred Securities 10 31.0 (.03)
Diluted Comparative Funds from
Operations $209 327.8 $.64
Sixteen weeks ended December 31, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations available
to common shareholders $133 225.6 $.59
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.8 (.01)
Assuming conversion of minority
OP Units outstanding (b) 39 64.2 --
Assuming conversion of preferred
OP Units (c) -- .5 --
Assuming conversion of minority
OP Units issuable (c) 3 10.9 (.01)
Assuming conversion of Convertible
Preferred Securities 11 35.3 (.03)
Diluted Comparative Funds from
Operations $186 341.3 $.54
Year ended December 31, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations available
to common shareholders $477 220.8 $2.16
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.2 (.04)
Assuming conversion of minority
OP Units outstanding (b) 137 63.4 --
Assuming conversion of preferred
OP Units (c) -- .6 --
Assuming conversion of minority
OP Units issuable (c) 15 8.1 (.01)
Assuming conversion of Convertible
Preferred Securities 32 31.0 (.10)
Diluted Comparative Funds from
Operations $661 328.1 $2.01
Year ended December 31, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations available
to common shareholders $429 227.1 $1.89
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 5.3 (.04)
Assuming conversion of minority
OP Units outstanding (b) 123 64.5 --
Assuming conversion of preferred
OP Units (c) -- .3 --
Assuming conversion of minority
OP Units issuable (c) 12 10.9 (.03)
Assuming conversion of Convertible
Preferred Securities 37 35.3 (.07)
Diluted Comparative Funds from
Operations $601 343.4 $1.75
(a) Comparative FFO per basic share is computed by dividing
Comparative FFO available to common shareholders by the
weighted average number of shares of common stock outstanding.
Comparative FFO per diluted share is computed by dividing
Comparative FFO available to common shareholders, 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 and the
Convertible Preferred Securities. Dilutive securities also
includes those common and preferred OP Units issuable or
outstanding that are held by minority partners which are
assumed to be converted.
(b) In connection with our conversion to a REIT, we formed Host
LP, whose OP Units are convertible to common stock, or cash,
at the option of Host REIT, based on certain conditions,
including the passage of time.
(c) Includes those minority partners that have the option to
convert their limited partnership interest or preferred OP
Units to common OP Units. Whether any of these actually occur
depends on a number of conditions, including, in some cases,
the passage of time.
SOURCE: Host Marriott Corporation