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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 23, 2001 Commission File No. 001-14625
HOST MARRIOTT CORPORATION
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-9000
Maryland 53-0085950
------------------------ -------------------------
(State of Incorporation) (I.R.S. Employer
Identification Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ___
Shares outstanding
Class at May 1, 2001
- ----------- --------------
Common Stock, $0.01 par value 233,701,538
Purchase share rights for Series A Junior Participating Preferred Stock, $0.01 par value --
Class A Cumulative Redeemable Preferred Stock, $0.01 par value 4,160,000
Class B Cumulative Redeemable Preferred Stock, $0.01 par value 4,000,000
Class C Cumulative Redeemable Preferred Stock, $0.01 par value 5,200,000
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INDEX
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Page No.
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Part I. FINANCIAL INFORMATION (Unaudited):
Condensed Consolidated Balance Sheets-
March 23, 2001 and December 31, 2000...................... 3
Condensed Consolidated Statements of Operations-
Twelve Weeks Ended March 23, 2001 and March 24, 2000...... 4
Condensed Consolidated Statements of Cash Flows-
Twelve Weeks Ended March 23, 2001 and March 24, 2000...... 5
Notes to Condensed Consolidated Financial Statements........ 6
Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ 11
Quantitative and Qualitative Disclosures about Market Risk.. 20
PART II. OTHER INFORMATION AND SIGNATURE............................. 21
-2-
HOST MARRIOTT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 23, December 31,
2001 2000
-------- ------------
(unaudited)
ASSETS
------
Property and equipment, net.................................................. $7,097 $7,110
Notes and other receivables (including amounts due from affiliates of 146 211
$98 million and $164 million, respectively)...............................
Due from Manager............................................................. 174 --
Rent receivable.............................................................. 11 65
Investments in affiliates.................................................... 131 128
Other assets................................................................. 452 444
Restricted cash.............................................................. 128 125
Cash and cash equivalents.................................................... 112 313
------ ------
$8,251 $8,396
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------
Debt
Senior notes.............................................................. $2,790 $2,790
Mortgage debt............................................................. 2,269 2,275
Other..................................................................... 372 257
------ ------
5,431 5,322
Accounts payable and accrued expenses........................................ 174 381
Other liabilities............................................................ 308 312
------ ------
Total liabilities..................................................... 5,913 6,015
------ ------
Minority interest............................................................ 410 485
Company-obligated mandatorily redeemable convertible preferred 475 475
securities of a subsidiary whose sole assets are the convertible
subordinated debentures due 2026 ("Convertible Preferred Securities").....
Shareholders' equity
Cumulative redeemable preferred stock ("Preferred Stock"), 50 million shares 196 196
authorized; 8.2 million shares issued and outstanding.....................
Common stock, 750 million shares authorized; 234.1 million shares and 2 2
221.3 million shares issued and outstanding, respectively.................
Additional paid-in capital................................................... 1,902 1,824
Accumulated other comprehensive loss......................................... (4) (1)
Retained deficit............................................................. (643) (600)
------ ------
Total shareholders' equity............................................ 1,453 1,421
------ ------
$8,251 $8,396
====== ======
See notes to Condensed Consolidated Financial Statements
-3-
HOST MARRIOTT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve Weeks Ended March 23, 2001 and March 24, 2000
(unaudited, in millions, except per share amounts)
2001 2000
----- -----
REVENUES
Hotel sales
Rooms...................................................................... $ 521 $ --
Food and beverage.......................................................... 253 --
Other...................................................................... 64 --
----- -----
Total hotel sales....................................................... 838 --
Rental income............................................................... 29 173
Net gains on property transactions.......................................... 1 1
Equity in earnings of affiliates............................................ 2 --
Other....................................................................... 2 2
----- -----
Total revenues.......................................................... 872 176
----- -----
OPERATING COSTS AND EXPENSES
Hotel operating expenses
Rooms...................................................................... 121 --
Food and beverage.......................................................... 191 --
Hotel departmental costs and deductions.................................... 208 --
Management fees and other.................................................. 52 --
Other property-level expenses.............................................. 61 59
Depreciation and amortization.............................................. 77 74
----- -----
Total operating costs and expenses...................................... 710 133
OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE
EXPENSES, INTEREST, AND OTHER................................................ 162 43
Minority interest (expense) benefit......................................... (15) 11
Interest income............................................................. 8 9
Interest expense............................................................ (103) (96)
Dividends on Convertible Preferred Securities............................... (7) (7)
Corporate expenses.......................................................... (8) (10)
Other expenses.............................................................. (2) (6)
----- -----
INCOME (LOSS) BEFORE INCOME TAXES............................................ 35 (56)
Provision for income taxes................................................... (3) (1)
----- -----
NET INCOME (LOSS)............................................................ $ 32 $ (57)
===== =====
Less: Dividends on Preferred Stock.......................................... (5) (5)
Add: Gain on repurchase of Convertible Preferred Securities, net of income
tax expense of $1 million............................................... -- 4
----- -----
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS........................... $ 27 $ (58)
===== =====
BASIC INCOME (LOSS) PER COMMON SHARE......................................... $.12 $(.26)
===== =====
DILUTED INCOME (LOSS) PER COMMON SHARE....................................... $.12 $(.26)
===== =====
See Notes to Condensed Consolidated Financial Statements
-4-
HOST MARRIOTT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Weeks Ended March 23, 2001 and March 24, 2000
(unaudited, in millions)
2001 2000
----- -----
OPERATING ACTIVITIES
Net income (loss)............................................................ $ 32 $ (57)
Adjustments to reconcile to cash from operations:
Depreciation and amortization............................................... 77 74
Income taxes................................................................ (19) (21)
Deferred contingent rental income........................................... 7 123
Net gains on property transactions.......................................... (1) (1)
Equity in earnings of affiliates............................................ (2) --
Purchase of Crestline leases................................................ (204) --
Changes in other operating accounts......................................... (47) (27)
Other....................................................................... (8) (23)
----- -----
Cash (used in) from operations.......................................... (165) 68
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INVESTING ACTIVITIES
Capital expenditures:
Capital expenditures for renewals and replacements.......................... (56) (54)
New investment capital expenditures......................................... (20) (34)
Other investments........................................................... (5) (11)
Note receivable collections, net............................................. 3 --
----- -----
Cash used in investing activities....................................... (78) (99)
----- -----
FINANCING ACTIVITIES
Issuances of debt, net....................................................... 118 83
Scheduled principal repayments............................................... (9) (9)
Debt prepayments............................................................. -- (80)
Issuances of common stock.................................................... 1 1
Repurchases of common stock.................................................. -- (44)
Dividends.................................................................... (62) (51)
Repurchases of Convertible Preferred Securities.............................. -- (15)
Repurchases and redemptions of OP Units...................................... -- (3)
Other........................................................................ (6) (2)
----- -----
Cash from (used in) financing activities................................ 42 (120)
----- -----
DECREASE IN CASH AND CASH EQUIVALENTS........................................ $(201) $(151)
===== =====
Supplemental schedule of noncash investing and financing activities:
During the first quarter of 2001 and 2000, respectively, approximately
12,954,000 shares and 66,000 shares of common stock were issued upon the
conversion of outside OP Units valued at $173,105,000 and $612,000.
See Notes to Condensed Consolidated Financial Statements
-5-
HOST MARRIOTT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization
Host Marriott Corporation ("Host REIT" or the "Company"), a Maryland
corporation operating through an umbrella partnership structure, is primarily
the owner of hotel properties. Host REIT operates as a self-managed and self-
administered real estate investment trust ("REIT") with its operations
conducted through an operating partnership, Host Marriott, L.P. (the
"Operating Partnership" or "Host LP"), and its subsidiaries. Host REIT has
elected, effective January 1, 1999, to be treated as a REIT for federal
income tax purposes, and is the sole general partner of the Operating
Partnership. As of March 23, 2001, Host REIT owned approximately 82% of the
Operating Partnership.
The Work Incentives Improvement Act of 1999 ("REIT Modernization Act")
amended the tax laws to permit REITs, effective January 1, 2001, to lease
hotels to a subsidiary that qualifies as a taxable REIT subsidiary ("TRS").
Accordingly, a wholly-owned subsidiary of Host LP, which has elected to be
treated as a TRS for federal income tax purposes, acquired certain
subsidiaries (the "Crestline Lessee Entities") of Crestline Capital
Corporation ("Crestline") owning the leasehold interests with respect to 116
of the Company's full-service hotels effective January 1, 2001 for $207
million in cash, including $6 million of transaction costs, including legal
and professional fees and transfer taxes. In connection therewith, during the
fourth quarter of 2000 the Company recorded a non-recurring, pre-tax loss of
$207 million net of a tax benefit of $82 million which the Company recognized
as a deferred tax asset because, for income tax purposes, the acquisition is
recognized as an asset that will be amortized over the next six years. As a
result of the acquisition, the TRS replaced Crestline as the lessee under the
applicable leases, and the Company's operating results reflect property-level
revenues and expenses rather than rental income from lessees with respect to
those 116 full-service properties.
2. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of the
Company and its subsidiaries 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 condensed or omitted. The Company
believes the disclosures made are adequate to make the information presented
not misleading. However, the unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report on Form
10-K for the fiscal year ended December 31, 2000.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary to
present fairly the financial position of the Company as of March 23, 2001,
and the results of its operations and cash flows for the twelve weeks ended
March 23, 2001 and March 24, 2000. Interim results are not necessarily
indicative of fiscal year performance because of the impact of seasonal and
short-term variations.
Certain reclassifications were made to the prior year financial statements to
conform to the current presentation.
-6-
HOST MARRIOTT CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF
(Unaudited)
As previously discussed, the Company, through its wholly-owned TRS, acquired
the Crestline Lessee Entities with respect to 116 of the Company's full-
service properties effective January 1, 2001. The Company's consolidated
results of operations with respect to those 116 properties reflect, from the
effective date of the transaction, property-level revenues and expenses
rather than rental income from lessees and, therefore, are not comparable to
2000 results.
The rent due under each lease is the greater of base rent or percentage rent,
as defined. Percentage rent applicable to room, food and beverage and other
types of hotel revenue varies by lease and is calculated by multiplying fixed
percentages by the total amounts of such revenues over specified threshold
amounts. The Company recognizes percentage rent when all contingencies have
been met, that is, when annual thresholds for percentage rent have been met
or exceeded. Percentage rent received pursuant to the leases but not
recognized is included on the balance sheet as deferred rent. Contingent
rental revenue of $7 million and $123 million, respectively, for the twelve
weeks ended March 23, 2001 and March 24, 2000 have been deferred.
3. Earnings Per Share
Basic earnings per common share is computed by dividing net income available
to common shareholders by the weighted average number of shares of common
stock outstanding. Diluted earnings per share is computed by dividing net
income 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 may also include those
common and preferred OP Units issuable or outstanding that are held by
minority partners which are assumed to be converted. No effect is shown for
securities if they are anti-dilutive.
Twelve Weeks Ended
--------------------------------------------------------------------------
March 23, 2001 March 24, 2000
------------------------------------ ------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------------------------------ ------------------------------------
Net income (loss).............................. $32 229.1 $ .14 $(57) 221.4 $(.26)
Dividends on preferred stock.................. (5) -- (.02) (5) -- (.02)
Gain on repurchase of Convertible
Preferred Securities........................ -- -- -- 4 -- .02
--- ----- ----- ---- ----- -----
Basic income (loss) available to common
shareholders per share....................... 27 229.1 .12 (58) 221.4 (.26)
Assuming distribution of common shares
granted under the comprehensive stock
plan, less shares assumed purchased at
average market price........................ -- 4.3 -- -- -- --
Assuming conversion of minority OP Units
outstanding................................. 7 55.7 -- (17) 63.8 --
Assuming conversion of preferred
OP Units.................................... -- -- -- -- .6 --
--- ----- ----- ---- ----- -----
Diluted income (loss) per share............... $34 289.1 $ .12 $(75) 285.8 $(.26)
=== ===== ===== ==== ===== =====
-7-
HOST MARRIOTT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. OP Unit Conversions
On February 7, 2001, Blackstone Real Estate Partners ("Blackstone")
converted 12.5 million OP Units to common shares and immediately sold them
to an underwriter for sale on the open market. These units were obtained in
connection with the purchase of the Blackstone luxury hotel portfolio in
1998. As a result of this transaction, Blackstone now owns approximately 11%
of the outstanding OP Units of the Operating Partnership, and the Company
increased its ownership in the Operating Partnership to 82% of the
outstanding OP Units. The Company received no proceeds as a result of the
transaction.
On May 7, 2001, Blackstone converted an additional 10 million OP Units to
common shares and immediately sold them to an underwriter for sale on the
open market. As a result, Blackstone's ownership was reduced to
approximately 7% of the outstanding OP Units, and the Company increased its
ownership in the Operating Partnership to approximately 86%. The Company
received no proceeds as a result of this transaction.
5. Debt Issuances and Refinancing
During the first quarter of 2001, the Company borrowed $115 million under
the revolver portion of the Bank Credit Facility to partially fund the
acquisition of the Crestline Lessee Entities and for general corporate
purposes.
Subsequent to the first quarter of 2001, the Company repaid the $115 million
outstanding balance under the revolver portion of the Bank Credit Facility.
As of May 1, 2001, $150 million is outstanding under the term loan portion
of the Bank Credit Facility, and the available capacity under the revolver
is $625 million.
6. Dividends and Distributions Payable
On March 19, 2001, the Board of Directors declared a quarterly cash dividend
of $0.26 per share of common stock. The first quarter dividend was paid on
April 13, 2001 to shareholders of record on March 30, 2001.
On March 19, 2001, the Board of Directors declared quarterly dividends of
$0.625 per share of Preferred Stock, which were paid on April 13, 2001 to
shareholders of record on March 30, 2001.
7. Stock Repurchases
In September 1999, the Board of Directors approved the repurchase, at
management's discretion, of up to 22 million of the outstanding shares of
the Company's common stock, OP Units, or a corresponding amount (based on
the appropriate conversion ratio) of the Company's Convertible Preferred
Securities. No repurchases have been made since the first quarter of 2000,
when the Company repurchased approximately 4.9 million common shares,
325,000 OP Units, and 435,000 shares of the Convertible Preferred Securities
for a total investment of $62 million. Since inception of the repurchase
program in September 1999, the Company has spent, in the aggregate,
approximately $150 million to retire 16.2 million equivalent shares on a
fully diluted basis.
8. Geographic Information
As of March 23, 2001, the Company's foreign operations consisted of four
hotel properties located in Canada. There were no intercompany sales between
the properties and the Company. The following table presents revenues for
each of the geographical areas in which the Company owns hotels (in
millions). As a result of the acquisition of the Crestline Lessee Entities,
effective January 1, 2001 the
-8-
HOST MARRIOTT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Company's consolidated results of operations for the twelve weeks ended
March 23, 2001, primarily represent property-level revenues and expenses,
whereas the results for the twelve weeks ended March 24, 2000 primarily
represent rental income.
Twelve Weeks Ended
-----------------------------------
March 23, 2001 March 24, 2000
-------------- --------------
United States.................... $ 857 $ 173
International.................... 15 3
-------------- --------------
Total...................... $ 872 $ 176
============== ==============
9. Comprehensive Income
The Company's other comprehensive income consists of unrealized gains and
losses on foreign currency translation adjustments and the right to receive
cash from Host Marriott Services Corporation subsequent to the exercise of
the options held by certain former and current employees of Marriott
International, pursuant to the distribution agreement between the Company
and Host Marriott Services Corporation. For the twelve weeks ended March 23,
2001 and March 24, 2000, the comprehensive income (loss) totaled $29 million
and ($58) million, respectively. As of March 23, 2001 and December 31, 2000,
the Company's accumulated other comprehensive loss was $4 million and $1
million, respectively.
10. Summarized Lease Pool Financial Statements
During 2000, almost all the properties of the Company and its subsidiaries
were leased to subsidiaries of Crestline. In conjunction with these leases,
Crestline and certain of its subsidiaries entered into limited guarantees of
the lease obligations of each lessee. The full-service hotel leases were
grouped into four lease pools, with Crestline's guarantee limited to the
greater of 10% of the aggregate rent payable for the preceding year or 10%
of the aggregate rent payable under all leases in the respective pool.
Additionally, the lessee's obligation under each lease agreement was
guaranteed by all other lessees in the respective lease pool. As a result,
the Company believed that the operating results of each full-service lease
pool may have been material to the Company's financial statements for the
year ended December 31, 2000.
Effective January 1, 2001, a wholly-owned TRS of Host LP replaced Crestline
as the lessee with respect to 116 of the Company's full-service hotels, and
the third party credit concentration ceased to exist.
Financial information of Crestline may be found in its quarterly and annual
filings with the Securities and Exchange Commission. Further information
regarding these leases and Crestline's limited guarantees may be found in
the Company's annual report on Form 10-K for the fiscal year ended December
31, 2000. The results of operations and summarized balance sheet data of the
lease pools in which the Company's hotels were organized during 2000 are as
follows (in millions):
-9-
HOST MARRIOTT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Twelve Weeks Ended March 24, 2000
---------------------------------
Pool 1 Pool 2 Pool 3 Pool 4 Combined
------ ------ ------ ------ --------
Hotel Sales
Rooms...................................... $129 $143 $125 $133 $530
Food and beverage.......................... 59 66 60 75 260
Other...................................... 14 13 19 19 65
---- ---- ---- ---- ----
Total hotel sales..................... 202 222 204 227 855
Operating Costs and Expenses
Rooms...................................... 31 37 28 29 125
Food and beverage.......................... 44 50 44 51 189
Other...................................... 52 51 50 52 205
Management fees............................ 9 15 10 18 52
Lease expense.............................. 62 66 69 75 272
---- ---- ---- ---- ----
Total operating expenses.............. 198 219 201 225 843
---- ---- ---- ---- ----
Operating Profit................................ 4 3 3 2 12
Corporate and Interest Expenses................. (1) (1) -- -- (2)
---- ---- ---- ---- ----
Income before taxes....................... 3 2 3 2 10
Income taxes.............................. (1) (1) (1) (1) (4)
---- ---- ---- ---- ----
Net Income............................ $ 2 $ 1 $ 2 $ 1 $ 6
==== ==== ==== ==== ====
As of December 31, 2000
-----------------------
Pool 1 Pool 2 Pool 3 Pool 4 Combined
------ ------ ------ ------ --------
Assets.......................................... $37 $37 $40 $44 $158
Liabilities..................................... 37 37 40 42 156
Equity.......................................... -- -- -- 2 2
11. Subsequent Events
On March 27, 2001, the Company sold approximately 6.0 million shares of 10%
Class C preferred stock ("Class C Preferred Stock") for net proceeds of
$144.6 million. Holders of the Class C Preferred Stock are entitled to
receive cumulative cash dividends at a rate of 10% per annum of the $25 per
share liquidation preference. Dividends are payable quarterly in arrears
commencing April 15, 2001, on which date a pro rata dividend of $0.03 per
share was distributed. Beginning March 27, 2006, the Company has the option
to redeem the Class C Preferred Stock for $25.00 per share, plus accrued and
unpaid dividends to the date of redemption. The Class C Preferred Stock
ranks senior to the common stock and the authorized Series A Junior
Participating preferred stock, and on a parity with the Class A and Class B
Preferred Stock. The preferred stockholders generally have no voting rights.
On April 1, 2001, a 50,000 square foot spa at The Ritz-Carlton, Naples was
placed in service at an approximate development cost of $23 million.
Effective January 1, 2001, each of Rockledge Hotel Properties, Inc. and
Fernwood Hotel Assets, Inc. (the "Non-Controlled Subsidiaries") elected to
be a TRS and in April 2001, the Operating Partnership acquired the voting
interests in the Non-Controlled Subsidiaries held by the Host Marriott
Statutory Employee/Charitable Trust for approximately $2 million, which is
also permitted as a result of the REIT Modernization Act. Subsequent to the
acquisition, on a consolidated basis the Company's results of operations
will reflect the revenues and expenses generated by the two taxable
corporations, and its consolidated balance sheets will include the various
assets, consisting of three additional full-service properties, one located
in Missouri, and two located in Mexico City, Mexico, as well as certain
joint venture interests, and related liabilities held by the two taxable
corporations, which were approximately $356 million and $262 million,
including $54 million of third party debt ($26 million of which matures in
2001), respectively, as of March 23, 2001.
-10-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Forward-looking Statements
Certain matters discussed herein are forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events. We identify forward-looking statements in this quarterly
report on Form 10-Q by using words or phrases such as "believe," "expect," "may
be," "intend," "predict," "project," "plan," "objective," "will be," "should,"
"estimate," or "anticipate," or the negative thereof or other variations thereof
or comparable terminology. All forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
transactions, results, performance or achievements to be materially different
from any future transactions, results, performance or achievements expressed or
implied by such forward-looking statements. Although we believe the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, we can give no assurance that we will attain these
expectations or that any deviations will not be material. Except as other
required by the federal securities laws, we disclaim any obligations or
undertaking to publicly release any updates or revisions to any forward-looking
statement contained in this quarterly report on Form 10-Q to reflect any change
in our expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
Results of Operations
During 2000, our revenues primarily represented rental income from Crestline and
other third-party lessees. As a result of the previously discussed acquisition
of the Crestline lessees by our TRS, beginning in 2001, our consolidated results
of operations primarily reflect hotel-level revenues and operating costs and
expenses. In order to provide a clearer understanding and comparability of our
results of operations, in addition to our discussion of the historical results
we have also presented unaudited pro forma condensed consolidated statements of
operations for the twelve weeks ended March 24, 2000, adjusted to reflect the
acquisition of the Crestline lessee entities as if it occurred on January 1,
2000, and a discussion of the results thereof compared to our historical results
for the twelve weeks ended March 23, 2001, beginning on page 13.
2001 Compared to 2000 (Historical)
Revenues. Revenues increased $696 million for the twelve weeks ended March 23,
2001. As discussed above, our revenues and operating profit are not comparable
to 2000, due to the acquisition of the Crestline Lessee Entities by our TRS.
The table below presents gross hotel sales for the twelve weeks ended March 23,
2001 and March 24, 2000. For 2000, gross hotel sales were used as the basis for
calculating rental income. The data is presented in order to facilitate an
investor's understanding and comparative analysis of the operations of our
properties.
-11-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Twelve Weeks Ended Twelve Weeks Ended
March 23, 2001 March 24, 2000
----------------------- -----------------------
(in millions) (in millions)
Hotel sales
Rooms...................................................... $624 $613
Food and beverage.......................................... 276 274
Other...................................................... 73 71
---- ----
Total hotel sales........................................ $973 $958
==== ====
The $15 million increase in hotel sales for the first quarter of 2001 reflects
the slight increase in REVPAR for our comparable properties of 0.2% to $119.64,
as well as incremental revenues provided by the Tampa Waterside Marriott, which
opened in February 2000, and the 500-room expansion at the Orlando Marriott,
which was placed in service in June 2000. The recent slowdown in the economy has
negatively impacted the operating results for our hotels as well as the hotels
in our competitive set, which posted a 2.2% increase in REVPAR for the first
quarter of 2001, based on historical data provided by Smith Travel Research. Our
competitive set refers to hotels in the upscale and luxury full service segment
of the lodging industry and consists of Crowne Plaza; Doubletree; Hyatt; Hilton;
Radisson; Renaissance; Sheraton; Westin; and Wyndham. The REVPAR results for our
competitive set were slightly higher than ours because our portfolio has a
significant presence in certain markets including the New York, Atlanta, and San
Francisco markets, where transient group and supply issues had a more pronounced
negative impact on operations.
Rental income decreased $144 million, or 83%, to $29 million for the first
quarter of 2001 versus the first quarter of 2000, reflecting the purchase of 116
of the Crestline leases by our wholly-owned TRS effective January 1, 2001. As
discussed in Note 2 to the condensed consolidated financial statements,
percentage rental revenues from third-party lessees of $7 million and $123
million for the twelve weeks ended March 23, 2001 and March 24, 2000,
respectively, were deferred on the balance sheet as deferred rent. Percentage
rent will be recognized as income only as specified hotel sales thresholds are
achieved.
Depreciation and Amortization. Depreciation and amortization increased $3
million or 4% for the first quarter of 2001 versus the first quarter of 2000,
reflecting an increase in depreciable assets, which is primarily the result of
$379 million in capital expenditures during 2000.
Operating Costs and Expenses. As discussed above, 2001 hotel revenues and
operating costs are not comparable with 2000. During 2000, Crestline, as the
lessee, paid specified direct property-level costs including management fees,
which reduced the net rent payment to us under the terms of the leases. During
2001, these costs are borne by us and are included in our condensed consolidated
results of operations.
Minority Interest Expense (Benefit). For the twelve weeks ended March 23, 2001
and March 24, 2000, respectively, we recognized minority interest expense
(benefit) of $15 million and $(11) million. The variance is due in part to the
decrease in the minority ownership of the Operating Partnership from 23% in the
first quarter of 2000 to 18% in the first quarter of 2001, and reflects the OP
Unitholders' share in our results of operations, which increased $89 million
from a net loss of $57 million for the first quarter of 2000 to net income of
$32 million for the first quarter of 2001, which is discussed below.
Interest Expense. Interest expense increased 7% to $103 million in the first
quarter of 2001, primarily due to the issuance in October 2000 of $250 million
of 91/4% Series F Senior notes, as well as additional borrowings of $115 million
under the revolver portion of the Bank Credit Facility during the first quarter
of 2001. The proceeds of these borrowings were principally used to fund the
purchase of the Crestline Lessee Entities and for general corporate purposes.
-12-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Corporate Expenses. Corporate expenses decreased $2 million to $8 million for
the first quarter of 2001, resulting primarily from lower salaries and benefits
expense.
Net Income (Loss). Our net income was $32 million for the first quarter of
2001 compared to a net loss of $57 million for the first quarter of 2000,
primarily reflecting the acquisition of the Crestline lessees effective January
1, 2001, thereby eliminating amounts paid to Crestline as lessee for 116 of our
properties and the effect of the deferral of third party contingent rent, which
was approximately $115 million in 2000 with respect to the 116 hotels.
Net Income (Loss) Available to Common Shareholders. The net income available to
common shareholders was $27 million for the first quarter of 2001, an increase
of $85 million over the first quarter of 2000, reflecting primarily the
previously discussed $89 million increase in our net income, partially offset by
the $4 million gain on the repurchase of the Convertible Preferred Securities
recorded during the first quarter of 2000.
2001 (Historical) Compared to 2000 (Pro Forma)
Because of the significant changes to our corporate structure as a result of our
acquisition of the Crestline lessee entities effective January 1, 2001,
management believes that a discussion of our 2001 historical results of
operations compared to our 2000 pro forma results of operations is meaningful
and relevant to an investor's understanding of our present and future
operations. The unaudited pro forma results of operations for the twelve weeks
ended March 24, 2000 set forth below are based on the unaudited condensed
consolidated statements of operations for the twelve weeks ended March 24, 2000
and are only adjusted to reflect the acquisition of the Crestline lessee
entities as if the transaction occurred at the beginning of 2000. The following
pro forma results do not include adjustments for any transactions other than the
Crestline lease repurchase and are not presented in accordance with Article 11
of SEC Regulation S-X.
As a result of the Crestline acquisition, effective January 1, 2001, we lease
116 of our full-service hotels to our TRS. Our 2001 consolidated operations
primarily represent property-level revenues and expenses rather than rental
income from Crestline. In addition, the net income applicable to the TRS is
subject to federal and state income taxes. The pro forma adjustments to
reflect the acquisition of the Crestline lessee entities are as follows:
. record hotel-level revenues and expenses and reduce historical rental
income with respect to the 116 properties;
. reduce historical interest income for amounts related to the working
capital note with Crestline;
. reduce historical equity in earnings of affiliates for interest earned
at our non-controlled subsidiary on the related FF&E loans with
Crestline;
. record interest expense related to the additional borrowings from the
91/4% Series F senior notes to fund the $207 million cash payment;
. record the minority interest effect related to the outside ownership in
the operating partnership; and
. record the tax provision attributable to the income of the TRS at an
effective tax rate of 39.5%.
-13-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The unaudited pro forma financial information does not purport to represent what
our results of operations or financial condition would actually have been if the
transaction had in fact occurred at the beginning of 2000, or to project our
results of operations or financial condition for any future period. The
unaudited pro forma financial information is based upon available information
and upon assumptions and estimates that we believe are reasonable under the
circumstances. The following unaudited pro forma financial information should be
read in conjunction with our audited financial statements contained in our
annual report on Form 10-K for the year ended December 31, 2000.
-14-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
UNAUDITED STATEMENT OF OPERATIONS
For the Twelve Weeks Ended March 23, 2001 (Historical) and March 24, 2000 (Pro
Forma)
(in millions, except per share amounts)
Historical Pro Forma
----------------- -----------------
March 23, 2001 March 24, 2000
----------------- -----------------
(unaudited)
REVENUES
Hotel sales
Rooms........................................................................... $ 521 $ 512
Food and beverage............................................................... 253 250
Other........................................................................... 64 64
----- -----
Total hotel sales........................................................ 838 826
Rental income................................................................... 29 31
Net gains on property transactions.............................................. 1 1
Equity in earnings of affiliates................................................ 2 --
Other........................................................................... 2 2
----- -----
Total revenues........................................................... 872 860
----- -----
OPERATING COSTS AND EXPENSES
Hotel operating expenses
Rooms........................................................................... 121 121
Food and beverage............................................................... 191 183
Hotel departmental costs and deductions......................................... 208 200
Management fees and other....................................................... 52 51
Other property-level expenses................................................ 61 59
Depreciation and amortization................................................ 77 74
----- -----
Total operating costs and expenses....................................... 710 688
----- -----
OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND 162 172
OTHER..........................................................................
Minority interest expense....................................................... (15) (16)
Interest income................................................................. 8 8
Interest expense................................................................ (103) (101)
Dividends on Convertible Preferred Securities................................... (7) (7)
Corporate expenses.............................................................. (8) (10)
Other........................................................................... (2) (6)
----- -----
INCOME BEFORE INCOME TAXES...................................................... 35 40
Provision for income taxes...................................................... (3) (5)
----- -----
NET INCOME...................................................................... 32 35
----- -----
Less:
Dividends on preferred stock.................................................... (5) (5)
Gain on repurchase of Convertible Preferred Securities.......................... -- 4
----- -----
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS..................................... $ 27 $ 34
===== =====
Basic income per common share................................................... $.12 $.16
===== =====
-15-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Revenues. Revenues increased $12 million, or 1%, to $872 million for the first
quarter of 2001 from $860 million for the first quarter of 2000. Hotel sales,
which include room sales, food and beverage sales, and other ancillary sales
such as telephone sales, increased $12 million, or 1%, to $838 million for the
first quarter of 2001, reflecting primarily the slight increase in REVPAR for
our comparable properties of 0.2% to $119.64, as well as incremental revenues
provided by the Tampa Waterside Marriott, which opened in February 2000, and the
500-room expansion at the Orlando Marriott, which was placed in service in June
2000.
Operating Costs and Expenses. Operating costs and expenses principally consist
of property-level operating costs, management fees, real and personal property
taxes, ground, building and equipment rent, insurance, depreciation, and certain
other costs. Operating costs and expenses increased $22 million to $710 million
in the first quarter of 2001, primarily due to increases in property-level
operating costs. Rooms, food and beverage, and hotel departmental costs and
deductions were 62% and 61% of hotel sales for the first quarters of 2001 and
2000, respectively, reflecting increases in benefits and labor costs,
particularly in the food and beverage area, and rising energy costs, partially
offset by a slight improvement in rooms' margin.
Operating Profit. As a result of the changes in revenues and operating costs
and expenses discussed above, our operating profit decreased $10 million, or 6%,
to $162 million in the first quarter of 2001. Operating profit was approximately
19% and 20% of total revenues for the first quarter of 2001 and 2000,
respectively.
Minority Interest. Minority interest expense decreased $1 million to $15
million for the first quarter of 2001 due to the decrease in the minority
ownership of the Operating Partnership from 23% in the first quarter of 2000 to
18% in the first quarter of 2001, and the $7 million decrease in net income
available to common shareholders.
Income Tax Provision. In addition to state and foreign taxes applicable to the
Operating Partnership and us, the TRS is subject to federal and state income
taxes. The income tax provision decreased $2 million to $3 million for the
first quarter of 2001, due primarily to a decrease in the income tax provision
for the TRS, due to the previously discussed decline in hotel operations for the
116 hotels leased to the TRS.
Net Income Available to Common Shareholders. Net Income Available to Common
Shareholders for 2001 was $27 million compared to $34 million for 2000. Basic
income per common share was $.12 and $.15 for 2001 and 2000, respectively.
FFO and EBITDA
- --------------
We consider Comparative Funds From Operations ("Comparative FFO"), which
consists of Funds From Operations, as defined by the National Association of
Real Estate Investment Trusts, adjusted for significant non-recurring items
detailed in the chart below, and our consolidated earnings before interest
expense, income taxes, depreciation, amortization and other non-cash items
(including contingent rent) ("EBITDA") to be indicative measures of our
operating performance due to the significance of our long-lived assets.
Comparative FFO and EBITDA are also useful in measuring our ability to service
debt, fund capital expenditures and expand our business. Furthermore, management
believes that Comparative FFO and EBITDA are meaningful disclosures that will
help shareholders and the investment community to better understand our
financial performance, including comparing our performance to other real estate
investment trusts. However, Comparative FFO and EBITDA as presented may not be
comparable to amounts calculated by other companies. This information should not
be considered as an alternative to net income, operating profit, cash from
operations, or any other operating or liquidity performance measure prescribed
by
-16-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
accounting principles generally accepted in the United States. Cash expenditures
for various long-term assets, interest expense (for EBITDA purposes only) and
income taxes have been, and will be incurred which are not reflected in the
EBITDA and Comparative FFO presentations.
Comparative FFO available to common shareholders increased $9 million, or 10%,
to $101 million for the first quarter of 2001 over the first quarter of 2000.
The following is a reconciliation of the income (loss) from operations before
extraordinary items to Comparative FFO (in millions):
Twelve Weeks Ended
------------------------------------------
March 23, 2001 March 24, 2000
-------------------- --------------------
Funds from Operations
Income (loss) from operations before extraordinary items.................. $ 32 $(57)
Depreciation and amortization............................................. 76 72
Partnership adjustments................................................... 16 (14)
---- ----
Funds from operations of Host LP........................................... 124 1
Effect on funds from operations of SAB 101................................ 7 123
---- ----
Comparative funds from operations of Host LP............................... 131 124
Dividends on preferred stock.............................................. (5) (5)
---- ----
Comparative funds from operations of Host LP available to common 126 119
unitholders...............................................................
Comparative funds from operations of minority partners of Host LP......... (25) (27)
---- ----
Comparative funds from operations available to common shareholders $101 $ 92
of Host REIT.............................................................. ==== ====
We are the sole general partner in the Operating Partnership and as of March 23,
2001 and March 24, 2000, respectively, held approximately 82% and 77% of the
outstanding OP Units. The $25 million and $27 million deducted for the twelve
weeks ended March 23, 2001 and March 24, 2000, respectively, represent the
Comparative FFO attributable to the interests in the Operating Partnership held
by those minority partners. OP Units owned by holders other than us are
redeemable at the option of the holder, generally commencing one year after the
issuance of their OP Units. Upon redemption of an OP Unit, the holder would
receive from the Operating Partnership cash in an amount equal to the market
value of one share of our common stock, or at our option, a share of our common
stock.
EBITDA increased $7 million, or 3%, to $225 million in the first quarter of
2001, reflecting our modest increase in hotel results for the first quarter of
2001 compared to the same period in 2000, due to the recent economic slowdown,
as previously discussed. Hotel EBITDA was $235 million and $113 million in the
first quarter of 2001 and 2000, respectively, which does not include deferred
rental income of $7 million and $123 million, respectively. As previously
discussed, 2001 Hotel EBITDA primarily reflects the revenues and expenses
generated by the hotels whereas 2000 Hotel EBITDA primarily reflects rental
income from lessees.
The following schedule presents our EBITDA as well as a reconciliation of EBITDA
to the income (loss) from operations before extraordinary items (in millions):
-17-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Twelve Weeks Ended
------------------------------------------
March 23, 2001 March 24, 2000
-------------------- --------------------
EBITDA
Hotels.................................................................. $235 $113
Office buildings and other investments.................................. -- 1
Interest income......................................................... 8 9
Corporate and other expenses............................................ (12) (15)
Effect on revenue of SAB 101............................................ 7 123
---- ----
EBITDA of Host LP.......................................................... 238 231
Distributions to minority interest partners of Host LP.................. (13) (13)
---- ----
EBITDA of Host REIT........................................................ $225 $218
==== ====
Twelve Weeks Ended
------------------------------------------
March 23, 2001 March 24, 2000
-------------------- --------------------
EBITDA of Host REIT........................................................ $ 225 $ 218
Effect on revenue of SAB 101............................................... (7) (123)
Interest expense........................................................... (103) (96)
Income taxes............................................................... (3) (1)
Dividends on Convertible Preferred Securities.............................. (7) (7)
Depreciation and amortization.............................................. (77) (74)
Minority interest (expense) benefit........................................ (15) 11
Distributions to minority interest partners of Host LP..................... 13 13
Other non-cash charges, net................................................ 6 2
----- -----
Income (loss) from operations before extraordinary items................ $ 32 $ (57)
===== =====
Distributions to minority holders of OP Units for the twelve weeks ended March
23, 2001 and March 24, 2000 were $13 million. These OP Units are convertible
into cash or our common stock at our option. First quarter distributions of
$0.26 and $0.21 per common unit, respectively, were paid on April 13, 2001 and
April 14, 2000, respectively.
Our interest coverage, defined as EBITDA divided by cash interest expense, was
2.3 times for both the 2001 and 2000 first quarters. The ratio of earnings to
fixed charges was 1.4 to 1.0 in the first quarter of 2001 versus a deficiency of
earnings to fixed charges of $68 million for the first quarter of 2000, which
was primarily due to the deferral of contingent rental revenue of $123 million.
We reported a ratio of earnings to fixed charges of 1.2 to 1.0 for the full year
2000.
Cash Flows and Financial Condition
We reported a decrease in cash and cash equivalents of $201 million
during the twelve weeks ended March 23, 2001 compared to a decrease of $151
million during the twelve weeks ended March 24, 2000. Cash (used in) from
operations was ($165) million for the first quarter of 2001 and $68 million for
the first quarter of 2000. The $233 million decrease in cash from operations
primarily relates to the cash payment of $204 million during the first quarter
of 2001 to acquire the Crestline Lessee Entities, which was accrued at the end
of 2000.
Cash used in investing activities was $78 million and $99 million for the first
quarter of 2001 and 2000, respectively. Cash used in investing activities for
the first quarter includes capital expenditures and other investments of $81
million and $99 million for 2001 and 2000, respectively, mostly related to
renewals and replacements on existing properties and new development projects.
Property and equipment balances include
-18-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
$134 million and $135 million for construction in progress as of March 23, 2001
and December 31, 2000, respectively. The balance as of March 23, 2001 primarily
relates to the development of the 50,000 square-foot spa at the Ritz-Carlton
Naples and the 295-room Ritz-Carlton Golf Resort in Naples, and various other
expansion and development projects. On April 1, 2001, the 50,000 square foot
world-class spa at The Ritz-Carlton, Naples was placed in service at an
approximate development cost of $23 million.
Cash from (used in) financing activities was $42 million for the first quarter
of 2001 and ($120) million for the first quarter of 2000. 2001 Cash from
financing activities includes $118 million of debt issuances offset by the
payment of dividends. During the first quarter of 2001, the Company borrowed
$115 million under the revolver portion of the Bank Credit Facility to partially
fund the acquisition of the Crestline Lessee Entities as well as for general
corporate purposes. Subsequent to the first quarter of 2001, we repaid the $115
million outstanding balance under the revolver portion of the Bank Credit
Facility. As of May 1, 2001, $150 million is outstanding under the term loan
portion of the Bank Credit Facility, and the available capacity under the
revolver is $625 million.
On March 19, 2001, the Board of Directors declared cash dividends of $0.26 per
common share and $0.625 per share of Preferred Stock, which were paid on April
13, 2001 to shareholders of record on March 30, 2001.
On March 27, 2001, we sold approximately 6.0 million shares of 10% Class C
preferred stock ("Class C Preferred Stock") for net proceeds of $144.6 million.
Holders of the Class C Preferred Stock are entitled to receive cumulative cash
dividends at a rate of 10% per annum of the $25 per share liquidation
preference. Dividends are payable quarterly in arrears commencing April 15,
2001, on which date a pro rata dividend of $0.03 per share was distributed.
Beginning March 27, 2006, we have the option to redeem the Class C Preferred
Stock for $25.00 per share, plus accrued and unpaid dividends to the date of
redemption.
Effective January 1, 2001, each of Rockledge Hotel Properties, Inc. and Fernwood
Hotel Assets, Inc. (the "Non-Controlled Subsidiaries") elected to be a TRS and
in April 2001, the Operating Partnership acquired the voting interests in the
Non-Controlled Subsidiaries held by the Host Marriott Statutory
Employee/Charitable Trust for approximately $2 million, which is also permitted
as a result of the REIT Modernization Act. Subsequent to the acquisition, on a
consolidated basis our results of operations will reflect the revenues and
expenses generated by the two taxable corporations, and our consolidated balance
sheets will include the various assets, consisting of three additional full-
service properties, one located in Missouri, and two located in Mexico City,
Mexico, as well as certain joint venture interests, and related liabilities held
by the two taxable corporations, which were approximately $356 million and $262
million, including $54 million of third party debt ($26 million of which matures
in 2001), respectively, as of March 23, 2001.
On February 7, 2001 and May 7, 2001, Blackstone Real Estate Partners
("Blackstone") converted 12.5 million and 10.0 million OP Units, respectively,
to common shares and immediately sold them to an underwriter for sale on the
open market. As a result of the transactions, Blackstone now owns approximately
7% of the outstanding OP Units of the Operating Partnership and we increased our
ownership in the Operating Partnership to 86%. We received no proceeds as a
result of the transactions.
In September 1999, the Board of Directors approved the repurchase, at
management's discretion, of up to 22 million of the outstanding shares of our
common stock, OP Units, or a corresponding amount (based on the appropriate
conversion ratio) of our Convertible Preferred Securities. The repurchases have
been financed in part through cash from operations and the net proceeds from
sales of assets, prior to their reinvestment in real estate assets. No
repurchases were made during the first quarter of 2001. Since inception of the
repurchase program in September 1999, repurchases under the program total 16.2
million common shares or equivalent for a total investment of $150 million.
-19-
HOST MARRIOTT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our borrowings under the term loan portion of the bank credit facility as well
as the mortgage on The Ritz-Carlton, Amelia Island are sensitive to changes in
interest rates. The interest rates on these debt obligations, which were $354
million and $239 million, respectively, at March 23, 2001 and December 31, 2000
are based on various LIBOR terms plus 200 to 225 basis points. The weighted
average interest rate for these financial instruments are 7.44% for the twelve
weeks ended March 23, 2001 and 8.88% for the year ended December 31, 2000.
-20-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in routine litigation and administrative proceedings
arising in the ordinary course of business, some of which are expected to be
covered by liability insurance and which collectively are not expected to have a
material adverse effect on the business, financial condition or results of
operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
On April 12, 2001, Host Marriott Corporation announced the annual meeting of
shareholders to be held on May 17, 2001 to elect members to the Board of
Directors, among other matters.
Item 6b. Reports on Form 8-K and Form 8-K/A
. February 7, 2001 - Report of the announcement that Host Marriott
Corporation agreed to issue to the Blackstone Entities 12,500,000 shares
of its common stock upon redemption of 12,500,000 units of limited
partnership interest in Host LP, which will in turn be sold to an
Underwriter for delivery on February 7, 2001 to be sold to the public.
. March 23, 2001 - Report on the issuance and sale of $130,000,000 of 10%
Class C Cumulative Redeemable Preferred Stock by Host Marriott
Corporation on March 27, 2001 at $25.00 per share, with underwriting
discounts and commissions of $.8125 of the principal amount at maturity,
generating expected net proceeds of approximately $125,000,000.
. April 13, 2001 - Report of the termination of the Crestline leases
through the purchase by Host Marriott Corporation through its operating
partnership, Host Marriott, L.P., of the lessee entities with respect to
116 of our full-service hotels for $207 million in cash effective
January 1, 2001. In order to provide a clearer understanding and
comparability of our results of operations we have presented unaudited
pro forma statements of operations by quarter and year-to-date for the
two fiscal years ended December 31, 2000, adjusted to reflect the
transaction as if it occurred on January 1, 1999.
. May 1, 2001--Report on Form 8-K/A to amend the unaudited pro forma
statements of operations filed as part of the Form 8-K dated April 13,
2001 to reflect adjustments to the recognition of minority interest
expense and the tax provision.
-21-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOST MARRIOTT CORPORATION
May 7, 2001 /s/ Donald D. Olinger
- ----------- -------------------------------------------
Date Donald D. Olinger
Senior Vice President and
Corporate Controller
(Chief Accounting Officer)
-22-