FelCor LP's Consolidating Financial Information | FelCor LP’s Consolidating Financial Information Certain of FelCor LP’s 100% owned subsidiaries (FCH/PSH, L.P.; FelCor/CMB Buckhead Hotel, L.L.C.; FelCor/CMB Marlborough Hotel, L.L.C.; FelCor/CMB Orsouth Holdings, L.P.; FelCor/CMB SSF Holdings, L.P.; FelCor/CSS Holdings, L.P.; FelCor Dallas Love Field Owner, L.L.C.; FelCor Milpitas Owner, L.L.C.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Holdings, L.L.C.; FelCor Canada Co.; FelCor Hotel Asset Company, L.L.C.; FelCor Copley Plaza, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; FelCor S-4 Hotels (SPE), L.L.C.; Madison 237 Hotel, L.L.C.; Myrtle Beach Owner, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guaranty, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, our senior debt. The guaranties by the Subsidiary Guarantors may be automatically and unconditionally released upon (i) the sale or other disposition of all of the capital stock of the Subsidiary Guarantor or the sale or disposition of all or substantially all of the assets of the Subsidiary Guarantor, if, in each case, as a result of such sale or disposition, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (ii) the consolidation or merger of any such Subsidiary Guarantor with any person other than FelCor LP, or a subsidiary of FelCor LP, if, as a result of such consolidation or merger, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (iii) a legal defeasance or covenant defeasance of the indenture, (iv) the unconditional and complete release of such Subsidiary Guarantor in accordance with the modification and waiver provisions of the indenture, or (v) the designation of a restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary under and in compliance with the indenture. 14. FelCor LP’s Consolidating Financial Information — (continued) The following tables present consolidating information for the Subsidiary Guarantors. FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING BALANCE SHEET June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net investment in hotels $ — $ 649,072 $ 1,075,471 $ — $ 1,724,543 Hotel development — — 51,191 — 51,191 Equity investment in consolidated entities 1,254,819 — — (1,254,819 ) — Investment in unconsolidated entities 4,854 5,202 1,287 — 11,343 Hotels held for sale — — 36,173 — 36,173 Cash and cash equivalents 70,742 33,916 1,449 — 106,107 Restricted cash — 13,548 10,012 — 23,560 Accounts receivable, net 469 35,805 17,153 — 53,427 Deferred expenses, net 16,529 — 9,779 — 26,308 Other assets 6,737 9,741 2,830 — 19,308 Total assets $ 1,354,150 $ 747,284 $ 1,205,345 $ (1,254,819 ) $ 2,051,960 Debt $ 1,000,000 $ — $ 574,692 $ (39,436 ) $ 1,535,256 Distributions payable 12,288 — 118 — 12,406 Accrued expenses and other liabilities 25,661 90,986 19,265 — 135,912 Total liabilities 1,037,949 90,986 594,075 (39,436 ) 1,683,574 Redeemable units, at redemption value 6,041 — — — 6,041 Preferred units 309,337 — — — 309,337 Common units 823 656,563 558,820 (1,215,383 ) 823 Total FelCor LP partners’ capital 310,160 656,563 558,820 (1,215,383 ) 310,160 Noncontrolling interests — (265 ) 9,262 — 8,997 Preferred capital in consolidated joint venture — — 43,188 — 43,188 Total partners’ capital 310,160 656,298 611,270 (1,215,383 ) 362,345 Total liabilities and partners’ capital $ 1,354,150 $ 747,284 $ 1,205,345 $ (1,254,819 ) $ 2,051,960 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2014 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net investment in hotels $ — $ 883,189 $ 716,602 $ — $ 1,599,791 Hotel development — — 297,466 — 297,466 Equity investment in consolidated entities 1,364,470 — — (1,364,470 ) — Investment in unconsolidated entities 7,270 6,514 1,311 — 15,095 Hotels held for sale — — 47,145 — 47,145 Cash and cash equivalents 5,717 32,923 8,507 — 47,147 Restricted cash — 12,199 8,297 — 20,496 Accounts receivable, net 963 26,343 499 — 27,805 Deferred expenses, net 17,203 — 8,624 — 25,827 Other assets 4,866 11,531 7,489 — 23,886 Total assets $ 1,400,489 $ 972,699 $ 1,095,940 $ (1,364,470 ) $ 2,104,658 Debt $ 1,050,000 $ — $ 576,654 $ (40,787 ) $ 1,585,867 Distributions payable 13,709 — 118 — 13,827 Accrued expenses and other liabilities 27,174 94,154 14,153 — 135,481 Total liabilities 1,090,883 94,154 590,925 (40,787 ) 1,735,175 Redeemable units, at redemption value 6,616 — — — 6,616 Preferred units 478,749 — — — 478,749 Common units (175,759 ) 878,698 444,985 (1,323,683 ) (175,759 ) Total FelCor LP partners’ capital 302,990 878,698 444,985 (1,323,683 ) 302,990 Noncontrolling interests — (153 ) 18,588 — 18,435 Preferred capital in consolidated joint venture — — 41,442 — 41,442 Total partners’ capital 302,990 878,545 505,015 (1,323,683 ) 362,867 Total liabilities and partners’ capital $ 1,400,489 $ 972,699 $ 1,095,940 $ (1,364,470 ) $ 2,104,658 . FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Three Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 236,049 $ — $ — $ 236,049 Percentage lease revenue — — 42,755 (42,755 ) — Other revenue 107 4,800 147 — 5,054 Total revenues 107 240,849 42,902 (42,755 ) 241,103 Expenses: Hotel operating expenses — 147,025 — — 147,025 Taxes, insurance and lease expense 105 53,559 5,670 (42,755 ) 16,579 Corporate expenses (138 ) 3,909 2,759 — 6,530 Depreciation and amortization 47 14,175 14,528 — 28,750 Other expenses 3 1,463 (55 ) — 1,411 Total operating expenses 17 220,131 22,902 (42,755 ) 200,295 Operating income 90 20,718 20,000 — 40,808 Interest expense, net (14,572 ) 3 (5,709 ) — (20,278 ) Debt extinguishment (28,446 ) — (2,377 ) — (30,823 ) Other gains, net — — 166 — 166 Loss before equity in income from unconsolidated entities (42,928 ) 20,721 12,080 — (10,127 ) Equity in income from consolidated entities 32,380 — — (32,380 ) — Equity in income from unconsolidated entities 7,297 227 (11 ) — 7,513 Loss from continuing operations (3,251 ) 20,948 12,069 (32,380 ) (2,614 ) Loss from discontinued operations — — (83 ) — (83 ) Loss before loss on sale of hotels (3,251 ) 20,948 11,986 (32,380 ) (2,697 ) Loss on sale of hotels, net (108 ) (3 ) (439 ) — (550 ) Net loss (3,359 ) 20,945 11,547 (32,380 ) (3,247 ) Loss attributable to noncontrolling interests — 251 (4 ) — 247 Preferred distributions - consolidated joint venture — — (359 ) — (359 ) Net loss attributable to FelCor LP (3,359 ) 21,196 11,184 (32,380 ) (3,359 ) Preferred distributions (7,903 ) — — — (7,903 ) Redemption of preferred units (6,096 ) — — — (6,096 ) Net loss attributable to FelCor LP common unitholders $ (17,358 ) $ 21,196 $ 11,184 $ (32,380 ) $ (17,358 ) 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Three Months Ended June 30, 2014 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 258,279 $ — $ — $ 258,279 Percentage lease revenue 1,910 — 28,628 (30,538 ) — Other revenue 1 1,082 153 — 1,236 Total revenues 1,911 259,361 28,781 (30,538 ) 259,515 Expenses: Hotel operating expenses — 162,700 — — 162,700 Taxes, insurance and lease expense 450 53,325 3,755 (30,538 ) 26,992 Corporate expenses 149 4,934 2,564 — 7,647 Depreciation and amortization 992 16,880 11,210 — 29,082 Other expenses — 789 1,325 — 2,114 Total operating expenses 1,591 238,628 18,854 (30,538 ) 228,535 Operating income 320 20,733 9,927 — 30,980 Interest expense, net (20,300 ) (306 ) (3,889 ) — (24,495 ) Debt extinguishment — — (27 ) — (27 ) Other gains, net — 100 — — 100 Income before equity in income from unconsolidated entities (19,980 ) 20,527 6,011 — 6,558 Equity in income from consolidated entities 42,238 — — (42,238 ) — Equity in income from unconsolidated entities 2,315 462 (11 ) — 2,766 Income from continuing operations 24,573 20,989 6,000 (42,238 ) 9,324 Income from discontinued operations — 5 — — 5 Income before gain on sale of hotels 24,573 20,994 6,000 (42,238 ) 9,329 Gain on sale of hotels, net (221 ) (15 ) 15,862 — 15,626 Net income 24,352 20,979 21,862 (42,238 ) 24,955 Income attributable to noncontrolling interests — (113 ) (149 ) — (262 ) Preferred distributions - consolidated joint venture — — (341 ) — (341 ) Net income attributable to FelCor LP 24,352 20,866 21,372 (42,238 ) 24,352 Preferred distributions (9,678 ) — — — (9,678 ) Net income attributable to FelCor LP common unitholders $ 14,674 $ 20,866 $ 21,372 $ (42,238 ) $ 14,674 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Six Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 449,334 $ — $ — $ 449,334 Percentage lease revenue — — 80,520 (80,520 ) — Other revenue 108 5,147 209 — 5,464 Total revenues 108 454,481 80,729 (80,520 ) 454,798 Expenses: Hotel operating expenses — 290,661 — — 290,661 Taxes, insurance and lease expense (49 ) 101,963 10,161 (80,520 ) 31,555 Corporate expenses — 8,631 6,472 — 15,103 Depreciation and amortization 89 29,504 26,929 — 56,522 Other expenses 3 5,509 127 — 5,639 Total operating expenses 43 436,268 43,689 (80,520 ) 399,480 Operating income 65 18,213 37,040 — 55,318 Interest expense, net (28,312 ) 6 (11,453 ) — (39,759 ) Debt extinguishment (28,446 ) — (2,450 ) — (30,896 ) Other gains, net — — 166 — 166 Loss before equity in income from unconsolidated entities (56,693 ) 18,219 23,303 — (15,171 ) Equity in income from consolidated entities 52,738 — — (52,738 ) — Equity in income from unconsolidated entities 7,644 41 (23 ) — 7,662 Loss from continuing operations 3,689 18,260 23,280 (52,738 ) (7,509 ) Loss from discontinued operations — 4 (83 ) — (79 ) Loss before gain on sale of hotels 3,689 18,264 23,197 (52,738 ) (7,588 ) Gain on sale of hotels, net (279 ) (12 ) 16,628 — 16,337 Net income 3,410 18,252 39,825 (52,738 ) 8,749 Income attributable to noncontrolling interests — 510 (5,142 ) — (4,632 ) Preferred distributions - consolidated joint venture — — (707 ) — (707 ) Net income attributable to FelCor LP 3,410 18,762 33,976 (52,738 ) 3,410 Preferred distributions (17,581 ) — — — (17,581 ) Redemption of preferred units (6,096 ) — — — (6,096 ) Net loss attributable to FelCor LP common unitholders $ (20,267 ) $ 18,762 $ 33,976 $ (52,738 ) $ (20,267 ) 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Six Months Ended June 30, 2014 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 479,301 $ — $ — $ 479,301 Percentage lease revenue 3,309 — 58,496 (61,805 ) — Other revenue 2 1,348 213 — 1,563 Total revenues 3,311 480,649 58,709 (61,805 ) 480,864 Expenses: Hotel operating expenses — 316,814 — — 316,814 Taxes, insurance and lease expense 870 103,957 7,603 (61,805 ) 50,625 Corporate expenses 272 9,630 5,570 — 15,472 Depreciation and amortization 1,984 33,532 23,167 — 58,683 Other expenses 35 1,628 2,465 — 4,128 Total operating expenses 3,161 465,561 38,805 (61,805 ) 445,722 Operating income 150 15,088 19,904 — 35,142 Interest expense, net (40,784 ) (634 ) (8,304 ) — (49,722 ) Debt extinguishment — — (33 ) — (33 ) Other gains, net — 100 — — 100 Loss before equity in income from unconsolidated entities (40,634 ) 14,554 11,567 — (14,513 ) Equity in income from consolidated entities 47,381 — — (47,381 ) — Equity in income from unconsolidated entities 3,115 317 (23 ) — 3,409 Loss from continuing operations 9,862 14,871 11,544 (47,381 ) (11,104 ) Income from discontinued operations — 34 106 — 140 Loss before gain on sale of hotels 9,862 14,905 11,650 (47,381 ) (10,964 ) Gain on sale of hotels, net (449 ) (28 ) 21,560 — 21,083 Net income 9,413 14,877 33,210 (47,381 ) 10,119 Income attributable to noncontrolling interests — 21 (205 ) — (184 ) Preferred distributions - consolidated joint venture — — (522 ) — (522 ) Net income attributable to FelCor LP 9,413 14,898 32,483 (47,381 ) 9,413 Preferred distributions (19,356 ) — — — (19,356 ) Net loss attributable to FelCor LP common unitholders $ (9,943 ) $ 14,898 $ 32,483 $ (47,381 ) $ (9,943 ) 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME For the Three Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net loss $ (3,359 ) $ 20,945 $ 11,547 $ (32,380 ) $ (3,247 ) Foreign currency translation adjustment — — — — — Comprehensive loss (3,359 ) 20,945 11,547 (32,380 ) (3,247 ) Comprehensive loss attributable to noncontrolling interests — 251 (4 ) — 247 Preferred distributions - consolidated joint venture — — (359 ) — (359 ) Comprehensive loss attributable to FelCor LP $ (3,359 ) $ 21,196 $ 11,184 $ (32,380 ) $ (3,359 ) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME For the Three Months Ended June 30, 2014 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net income $ 24,352 $ 20,979 $ 21,862 $ (42,238 ) $ 24,955 Foreign currency translation adjustment 575 65 510 (575 ) 575 Comprehensive income 24,927 21,044 22,372 (42,813 ) 25,530 Comprehensive income attributable to noncontrolling interests — (113 ) (149 ) — (262 ) Preferred distributions - consolidated joint venture — — (341 ) — (341 ) Comprehensive income attributable to FelCor LP $ 24,927 $ 20,931 $ 21,882 $ (42,813 ) $ 24,927 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME For the Six Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net income $ 3,410 $ 18,252 $ 39,825 $ (52,738 ) $ 8,749 Foreign currency translation adjustment — — — — — Comprehensive income 3,410 18,252 39,825 (52,738 ) 8,749 Comprehensive income attributable to noncontrolling interests — 510 (5,142 ) — (4,632 ) Preferred distributions - consolidated joint venture — — (707 ) — (707 ) Comprehensive income attributable to FelCor LP $ 3,410 $ 18,762 $ 33,976 $ (52,738 ) $ 3,410 FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME For the Six Months Ended June 30, 2014 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net income $ 9,413 $ 14,877 $ 33,210 $ (47,381 ) $ 10,119 Foreign currency translation adjustment (45 ) (18 ) (27 ) 45 (45 ) Comprehensive income 9,368 14,859 33,183 (47,336 ) 10,074 Comprehensive income attributable to noncontrolling interests — 21 (205 ) — (184 ) Preferred distributions - consolidated joint venture — — (522 ) — (522 ) Comprehensive income attributable to FelCor LP $ 9,368 $ 14,880 $ 32,456 $ (47,336 ) $ 9,368 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (27,500 ) $ 39,296 $ 57,144 $ — $ 68,940 Investing activities: Improvements and additions to hotels (129 ) (15,847 ) (9,781 ) — (25,757 ) Hotel development — — (21,637 ) — (21,637 ) Net proceeds from asset sales (306 ) 10 134,174 — 133,878 Insurance proceeds 274 — — — 274 Change in restricted cash - investing — (1,350 ) (1,714 ) — (3,064 ) Distributions from unconsolidated entities 6,303 — — — 6,303 Intercompany financing 167,009 — — (167,009 ) — Cash flows from investing activities 173,151 (17,187 ) 101,042 (167,009 ) 89,997 Financing activities: Proceeds from borrowings 475,000 — 504,000 — 979,000 Repayment of borrowings (545,440 ) — (504,616 ) — (1,050,056 ) Payment of deferred financing fees (8,261 ) — (5,661 ) — (13,922 ) Distributions paid to noncontrolling interests — (85 ) (15,893 ) — (15,978 ) Contributions from noncontrolling interests — 483 1,425 — 1,908 Redemption of preferred units (169,986 ) — — — (169,986 ) Distributions paid to preferred unitholders (19,847 ) — — — (19,847 ) Distributions paid to common unitholders (10,765 ) — — — (10,765 ) Net proceeds from issuance of preferred capital - consolidated joint venture — — 1,746 — 1,746 Net proceeds from common stock issuance 198,720 — — — 198,720 Intercompany financing — (21,471 ) (145,538 ) 167,009 — Other (47 ) — (707 ) — (754 ) Cash flows from financing activities (80,626 ) (21,073 ) (165,244 ) 167,009 (99,934 ) Effect of exchange rate changes on cash — (43 ) — — (43 ) Change in cash and cash equivalents 65,025 993 (7,058 ) — 58,960 Cash and cash equivalents at beginning of period 5,717 32,923 8,507 — 47,147 Cash and cash equivalents at end of period $ 70,742 $ 33,916 $ 1,449 $ — $ 106,107 14. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2014 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (38,098 ) $ 55,424 $ 36,795 $ — $ 54,121 Investing activities: Improvements and additions to hotels (685 ) (29,305 ) (18,042 ) — (48,032 ) Hotel development — — (48,178 ) — (48,178 ) Net proceeds from asset sales (419 ) (56 ) 94,083 — 93,608 Insurance proceeds — 255 — — 255 Change in restricted cash - investing — (1,533 ) 12,714 — 11,181 Distributions from unconsolidated entities 3,406 500 — — 3,906 Intercompany financing 67,733 — — (67,733 ) — Cash flows from investing activities 70,035 (30,139 ) 40,577 (67,733 ) 12,740 Financing activities: Proceeds from borrowings — — 140,500 — 140,500 Repayment of borrowings — — (205,904 ) — (205,904 ) Distributions paid to preferred unitholders (19,356 ) — — — (19,356 ) Distributions paid to common unitholders (4,968 ) — — — (4,968 ) Distributions paid to noncontrolling interests — (626 ) (6,428 ) — (7,054 ) Contributions from noncontrolling interests — 605 4,464 — 5,069 Net proceeds from issuance of preferred capital- consolidated joint venture — — 40,994 — 40,994 Intercompany financing — (13,511 ) (54,222 ) 67,733 — Other (24 ) — (416 ) — (440 ) Cash flows from financing activities (24,348 ) (13,532 ) (81,012 ) 67,733 (51,159 ) Effect of exchange rate changes on cash — (3 ) — — (3 ) Change in cash and cash equivalents 7,589 11,750 (3,640 ) — 15,699 Cash and cash equivalents at beginning of period 5,227 33,283 7,135 — 45,645 Cash and cash equivalents at end of period $ 12,816 $ 45,033 $ 3,495 $ — $ 61,344 |