EXHIBIT 99.1
[FELCOR LODGING TRUST LOGO] FelCor Lodging Trust Incorporated
545 E. John Carpenter Freeway, Suite 1300
Irving, Texas 75062-3933
P 972.444.4900 F 972.444.4949
www.felcor.com NYSE: FCH
FOR IMMEDIATE RELEASE:
FELCOR'S REVPAR CONTINUES TO IMPROVE
- ANNOUNCES THIRD QUARTER RESULTS
IRVING, TEXAS...OCTOBER 27, 2004 -- FelCor Lodging Trust Incorporated
(NYSE: FCH), the nation's second largest hotel real estate investment trust
("REIT"), today reported operating results for the third quarter and nine months
ended September 30, 2004.
THIRD QUARTER RESULTS:
FelCor's third quarter hotel portfolio revenue per available room
("RevPAR") improved 4.6 percent (July 4.4 percent, August 1.8 percent and
September 8.0 percent), compared to third quarter 2003. For the quarter, average
daily rate ("ADR") increased 2.7 percent to $98.00, and occupancy increased 1.9
percent to 67.7 percent, compared to third quarter 2003. During the first 21
days of October, total portfolio RevPAR increased 7.6 percent, with occupancy
increasing 4.2 percent and ADR increasing 3.2 percent, compared to the same
period in 2003.
Hotel operating profit for FelCor's hotels included in continuing
operations increased nine percent to $60 million, compared to the same period
last year. This represents a hotel operating profit flow through of nearly two
times RevPAR growth. The hotel operating profit margin was 19.7 percent, which
represents a 60 basis point increase, compared to the same period of 2003. The
improvements in hotel operating margins are largely from decreases in property
taxes and insurance that were somewhat offset by higher labor-related costs.
FelCor's net loss applicable to common shareholders for the third quarter
was $46 million, or a loss of $0.78 per share, compared to a third quarter 2003
net loss of $133 million, or a loss of $2.26 per share. Third quarter 2004
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
totaled $31 million, compared to a $50 million loss in the third quarter of
2003. EBITDA adjusted for impairment charges; costs associated with the early
retirement of debt and interest rate swaps; and gains and losses on sale of
assets ("Adjusted EBITDA") was $74 million, or an 18.8 percent improvement
compared to third quarter 2003.
Third quarter 2004 Funds From Operations ("FFO") was a loss of $19
million, or $0.30 per share. FFO for the same period last year was a loss of
$101 million, or $1.64 per share. In accordance with the Securities and Exchange
Commission's ("SEC") guidance on non-GAAP financial measures, FFO has not been
adjusted to add back the following items included in net loss for the third
quarter:
- $33 million ($0.53 per share) of impairment charges and
- $13 million ($0.21 per share) of costs associated with the
early retirement of $179 million of senior notes.
EBITDA, Adjusted EBITDA and FFO are non-GAAP financial measures. See the
discussion included in this press release for more information regarding these
non-GAAP financial measures including a reconciliation of these measures to
FelCor's net loss.
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 2
Included in the operating results for the current quarter are $2.1
million, or $0.03 per share, of expenses associated with hurricane damage in
Florida.
The third quarter 2004 impairment charges of $33 million relate to 13
hotels. Of the impaired assets, five were either held for sale at September 30,
2004, or met the criteria of being held for sale following the end of the
quarter. With respect to one hotel, FelCor entered into an option in the third
quarter to sell the hotel for less than its book value. The remaining seven
hotels experienced disappointing operating results, compared to prior year and
budget, and recently forecasted 2005 hotel operating margins continue to be
depressed for these hotels. These hotels are currently being reviewed for
possible disposition. During the third quarter of 2003, FelCor recorded an
impairment charge of $113 million, or $1.82 per share, relating to 21 hotels.
The completion and sale of the 251-unit Margate condominium tower at the
Kingston Plantation in Myrtle Beach, South Carolina, during the quarter
concluded FelCor's third successful condominium development project. This
project resulted in an $11 million profit during the quarter, $3 million over
the original estimate. A fourth condominium project in Myrtle Beach is in the
planning stages, with a completion date currently expected in the fall of 2006.
YEAR TO DATE RESULTS:
For the nine months ended September 30, 2004, FelCor's RevPAR increased
5.0 percent, compared to the same period in 2003. The increase in RevPAR
resulted from a 1.4 percent increase in ADR and a 3.5 percent increase in
occupancy during the period.
Hotel operating profit for FelCor's hotels included in continuing
operations increased 5.5 percent to $182 million, compared to the third quarter
2003. The hotel operating margins were 20.1 percent, which represents a 40 basis
point decrease, compared to the same period in 2003. The decrease in margins is
largely attributed to increased labor-related costs somewhat offset by
improvements in property taxes and insurance costs.
FelCor's net loss applicable to common shareholders for the nine months
ended September 30, 2004, was $114 million, or a net loss per share of $1.94.
This is compared to the prior year net loss of $187 million, or $3.20 per share.
EBITDA for the nine months ended September 30, 2004, totaled $126 million,
compared to $72 million in the same period of 2003. Adjusted EBITDA was $206
million, or a six percent improvement to prior year.
FFO for the nine months ended September 30, 2004, was a loss of $25
million, or $0.40 per share. FFO for the same period last year was a loss of $80
million, or $1.29 per share. In accordance with the SEC's guidance on non-GAAP
financial measures, FFO has not been adjusted to add back the costs associated
with:
- $33 million ($0.53 per share) of impairment charges;
- $44 million ($0.72 per share) of costs associated with the
early retirement of $679 million of senior notes and gain on
swap termination; and
- $5 million ($0.08 per share) of lease termination costs.
"Overall hotel operations have been strong with improving rates and
increasing revenue this year, both for the industry and FelCor," said Thomas J.
Corcoran, Jr., FelCor's President and CEO. "In addition, our hotels experienced
improved operating profit margins for the first time since we acquired our
leases in 2001."
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 3
CAPITAL STRUCTURE:
Consistent with the Company's objectives to reduce its outstanding debt,
reduce its interest expense and extend the maturities of its debt, FelCor
completed the following capital transactions during the third quarter:
- Issued 2.3 million shares of its $1.95 Series A Cumulative
Convertible Preferred Stock at a yield of 8.5%, realizing net
proceeds of $52 million;
- Purchased or redeemed $179 million in aggregate principal
amount of its 9.5% Senior Notes due 2008 that, at retirement,
bore interest at the rate of 10% per year.
At September 30, 2004, FelCor had $1.8 billion of debt outstanding, with a
weighted average life of five years and approximately $154 million in cash and
cash equivalents. FelCor has no significant remaining debt maturities (other
than those that may be extended at FelCor's option) until 2007, when $125
million of its senior notes mature.
"We're pleased to have successfully retired $179 million of FelCor's 9.5%
Senior Notes due 2008 during the quarter," said Andrew J. Welch, FelCor's Senior
Vice President and Treasurer. "Since the end of the third quarter, we have
received approximately $57 million from the sale of four additional hotels and
issued notices that we will be redeeming an additional $50 million of the 2008
Senior Notes during November 2004, leaving a principal balance of approximately
$46 million. This, and other initiatives taken this year, will continue to
strengthen FelCor's financial position by decreasing our level of debt, reducing
our interest costs and extending the length of our maturities."
OTHER HIGHLIGHTS:
FelCor has declared the third quarter dividend on each of its $1.95 Series
A Cumulative Convertible Preferred Stock and its 9% Series B Cumulative
Redeemable Preferred Stock.
FelCor currently has 19 remaining non-strategic hotels identified for sale
(including three hotels held for sale at September 30, 2004), with currently
expected proceeds of approximately $134 million, substantially all of which are
expected to be sold over the next 15 months. Through October 27, 2004, FelCor
has sold 15 hotels for $127 million with the proceeds used to retire senior
notes. For the remainder of 2004, proceeds from the sale of five non-strategic
hotels are currently estimated to be approximately $34 million, which FelCor
expects to use to retire additional senior notes. During the fourth quarter of
2004, FelCor expects to recognize gains of approximately $18 million upon sales
of hotels.
2004 GUIDANCE:
Current estimates for the fourth quarter and full year 2004 operating
results, exclusive of future capital transactions other than the completion of
the $50 million of pending senior note redemptions, are as follows:
FOURTH FULL YEAR
QUARTER 2004
------- ----
RevPAR 4% to 6% 4.75% to 5.25%
Net loss per share $0.49 to $0.45 $2.42 to $2.38
EBITDA $49 to $51 million $175 to $177 million
Adjusted EBITDA $52 to $54 million $258 to $260 million
FFO per share $0.04 to $0.07 $(0.35) to $(0.32)
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 4
Included in Net Loss and FFO guidance are the following (in millions):
FOURTH QUARTER 2004 FULL YEAR 2004
------------------- --------------
PER SHARE PER SHARE
DOLLARS AMOUNT DOLLARS AMOUNT
------- ------ ------- ------
Loss on extinguishment of debt........ $2 $42
Charge off of debt costs.............. 1 6
Gain on swap termination.............. - (1)
Impairment losses..................... - 33
Lease termination..................... - 5
--- ---
Total.............................. $3 $0.04 $85 $1.36
== ======== === =====
FelCor currently anticipates its 2004 total capital expenditures to be in
the range of $75 to $100 million, with $64 million having been spent through
September 30, 2004.
FelCor has published its Third Quarter 2004 Supplemental Information,
which provides additional corporate data, financial highlights and portfolio
statistical data for the quarter and nine months ended September 30, 2004.
Investors are encouraged to access the Supplemental Information on the Company's
Web site at www.felcor.com, on its Investor Relations page in the "Financial
Reports" section. The Supplemental Information also will be furnished upon
request. Requests may be made by e-mail to information@felcor.com or by writing
to the Vice President of Investor Relations, FelCor Lodging Trust Incorporated,
545 E. John Carpenter Freeway, Suite 1300, Irving, Texas, 75062.
FelCor is the nation's second largest hotel REIT and the nation's largest
owner of full service, all-suite hotels. FelCor's consolidated portfolio is
comprised of 146 hotels, located in 32 states and Canada. FelCor owns 69 full
service, all-suite hotels, and is the largest owner of Embassy Suites Hotels(R)
and Doubletree Guest Suites(R) hotels. FelCor's portfolio also includes 68
hotels in the upscale and full service segments. FelCor has a current market
capitalization of approximately $3.0 billion. Additional information can be
found on FelCor's Web site at www.felcor.com.
FelCor invites you to listen to its third quarter 2004 conference call on
Thursday, October 28, 2004, at 9:00 a.m. (Central Standard Time). The conference
call will be webcast simultaneously via FelCor's Web site at www.felcor.com.
Interested investors and other parties who wish to access the call should go to
FelCor's Web site and click on the conference call microphone icon on either the
"Investor Relations" or "FelCor News" pages. A phone replay will be available
from Thursday, October 28, 2004, at 12:00 p.m. (Central Standard Time), through
Friday, November 26, 2004, at 7:00 p.m. (Central Standard Time), by dialing
416-695-6033 (access code is 5254). A recording of the call also will be
archived and available at www.felcor.com.
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 5
With the exception of historical information, the matters discussed in
this news release include "forward looking statements" within the meaning of the
federal securities laws. Forward looking statements are not guarantees of future
performance. Numerous risks and uncertainties, and the occurrence of future
events, may cause actual results to differ materially from those currently
anticipated. General economic conditions, including the anticipated continuation
of the current economic recovery, the impact of U.S. military involvement in the
Middle East and elsewhere, future acts of terrorism, the impact on the travel
industry of increased security precautions, the availability of capital, the
ability to effect sales of non-strategic hotels at anticipated prices, and
numerous other factors may affect future results, performance and achievements.
Certain of these risks and uncertainties are described in greater detail in our
filings with the Securities and Exchange Commission. Although FelCor believes
its current expectations to be based upon reasonable assumptions, the Company
can give no assurance that its expectations will be attained or that actual
results will not differ materially.
Contact:
Thomas J. Corcoran, Jr., President and CEO (972) 444-4901 tcorcoran@felcor.com
Andrew J. Welch, Senior Vice President and Treasurer (972) 444-4982 awelch@felcor.com
Monica L. Hildebrand, Vice President of Communications (972) 444-4917 mhildebrand@felcor.com
Stephen A. Schafer, Vice President of Investor Relations (972) 444-4912 sschafer@felcor.com
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 6
RESULTS OF OPERATIONS - THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2004 AND 2003
(in thousands, except per share data)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
REVENUES:
Hotel operating revenue:
Room ......................................... $ 244,281 $ 231,579 $ 724,974 $ 674,542
Food and beverage ............................ 42,418 38,843 131,510 121,348
Other operating departments .................. 16,110 14,974 47,889 45,063
Retail space rental and other revenue .......... 2,166 221 2,590 838
--------- --------- --------- ---------
Total revenues ......................... 304,975 285,617 906,963 841,791
--------- --------- --------- ---------
EXPENSES:
Hotel departmental expenses:
Room ......................................... 66,787 62,142 194,478 174,788
Food and beverage ............................ 34,551 32,258 105,455 96,737
Other operating departments .................. 7,993 6,893 24,045 20,415
Other property related costs ................... 88,247 83,245 261,636 241,738
Management and franchise fees .................. 16,270 15,375 47,490 44,488
Taxes, insurance and lease expense ............. 29,216 30,905 89,750 90,792
Corporate expenses ............................. 3,791 3,299 11,569 10,459
Depreciation ................................... 30,074 31,476 88,445 95,009
--------- --------- --------- ---------
Total operating expenses ................ 276,929 265,593 822,868 774,426
--------- --------- --------- ---------
OPERATING INCOME .................................. 28,046 20,024 84,095 67,365
Interest expense, net .......................... (35,348) (42,303) (116,210) (123,150)
Impairment loss ................................ (28,498) (53,204) (28,498) (53,204)
Hurricane loss ................................. (2,125) -- (2,125) --
Charge off of debt related costs ............... (1,920) -- (6,094) (2,834)
Loss on early extinguishment of debt ........... (10,987) -- (39,233) --
Gain on swap termination ....................... -- -- 1,005 --
--------- --------- --------- ---------
LOSS BEFORE EQUITY IN INCOME FROM
UNCONSOLIDATED ENTITIES, MINORITY INTERESTS
AND GAIN (LOSS) ON SALE OF ASSETS ........... (50,832) (75,483) (107,060) (111,823)
Equity in income from unconsolidated entities .. 12,019 1,674 15,692 2,252
Gain (loss) on sale of assets .................. 1,094 (47) 1,094 106
Minority interests ............................. 2,230 4,587 5,800 7,068
--------- --------- --------- ---------
LOSS FROM CONTINUING OPERATIONS ................... (35,489) (69,269) (84,474) (102,397)
Discontinued operations ........................ (1,496) (56,648) (4,883) (64,814)
--------- --------- --------- ---------
NET LOSS .......................................... (36,985) (125,917) (89,357) (167,211)
Preferred dividends ............................ (9,343) (6,727) (25,039) (20,181)
--------- --------- --------- ---------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS ........ $ (46,328) $(132,644) $(114,396) $(187,392)
========= ========= ========= =========
Basic and diluted per common share data:
Net loss from continuing operations ............ $ (0.76) $ (1.29) $ (1.86) $ (2.09)
========= ========= ========= =========
Net loss ....................................... $ (0.78) $ (2.26) $ (1.94) $ (3.20)
========= ========= ========= =========
Weighted average common shares outstanding ..... 59,075 58,690 58,993 58,609
========= ========= ========= =========
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 7
DISCONTINUED OPERATIONS
(IN THOUSANDS)
Included in discontinued operations are the results of operations of the
13 hotels disposed of in the first nine months of 2004, six hotels designated as
held for sale at September 30, 2004, and 16 hotels sold in 2003. Condensed
financial information for the hotels included in discontinued operations is as
follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2004 2003 2004 2003
--------- --------- --------- ---------
Hotel operating revenue .......................... $ 14,558 $ 39,972 $ 63,621 $ 119,700
Hotel operating expenses ......................... 14,660 40,082 61,431 120,703
--------- --------- --------- ---------
Operating income ................................. (102) (110) 2,190 (1,003)
Direct interest costs ............................ 7 20 12 (637)
Gain on the early extinguishment of debt ......... -- 351 -- 1,611
Impairment ....................................... (4,529) (59,498) (4,529) (67,322)
Lease termination expense from asset disposition . -- -- (4,900) --
Gain (loss) on sale of assets .................... 3,058 (399) 2,116 (882)
Minority interest ................................ 70 2,988 228 3,419
--------- --------- --------- ---------
Loss from discontinued operations ................ $ (1,496) $ (56,648) $ (4,883) $ (64,814)
========= ========= ========= =========
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 8
NON-GAAP FINANCIAL MEASURES
Historical cost accounting for real estate assets implicitly assumes that
the value of real estate assets diminish predictably over time. Since real
estate values instead have historically risen or fallen with market conditions,
most industry investors consider supplemental measures of performance to be
helpful in evaluating a real estate company's operations. Funds From Operations
("FFO"), Earnings Before Interest, Taxes, Depreciation, and Amortization
("EBITDA") and Adjusted EBITDA are not measures of operating performance under
generally accepted accounting principles ("GAAP"). However, FelCor considers
FFO, EBITDA and Adjusted EBITDA to be supplemental measures of a REIT's
performance and should be considered along with, but not as an alternative to,
net income as a measure of FelCor's operating performance. FFO, EBITDA and
Adjusted EBITDA reflect additional ways of viewing FelCor's operations that the
Company believes when viewed with its GAAP results and the reconciliations to
the corresponding GAAP financial measures, provide a more complete understanding
of factors and trends affecting its business than could be obtained absent this
disclosure. Management strongly encourages investors to review the Company's
financial information in its entirety and not to rely on a single financial
measure.
The White Paper on Funds From Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts, or
NAREIT, defines FFO as net income or loss (computed in accordance with GAAP),
excluding gains or losses from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect FFO on the same basis. FelCor computes FFO in accordance
with standards established by NAREIT. This may not be comparable to FFO reported
by other REITs that do not define the term in accordance with the current NAREIT
definition, or that interpret the current NAREIT definition differently than
FelCor does.
EBITDA is a commonly used measure of performance in many industries.
FelCor defines EBITDA as net income or loss (computed in accordance with GAAP)
plus interest, income taxes, depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnership and joint ventures are calculated to reflect EBITDA
on the same basis.
FelCor's management and Board of Directors use Adjusted EBITDA to evaluate
the performance of its hotels and to facilitate comparisons between the Company
and other lodging REITs, hotel owners who are not REITs and other capital
intensive companies. FelCor adjusts EBITDA when evaluating its performance
because management believes that the exclusion of certain additional recurring
and non-recurring items described below provides useful supplemental information
to investors regarding its ongoing operating performance and that the
presentation of Adjusted EBITDA when combined with GAAP net income, EBITDA and
FFO is beneficial to an investor's better understanding of the Company's
operating performance. FelCor adjusts EBITDA for the following items to derive
Adjusted EBITDA:
- Gains and losses related to early extinguishment of debt and
interest rate swaps - FelCor excludes gains and losses related
to early extinguishment of debt and interest rate swaps
because the Company believes that it represents an
acceleration of interest expense or a reduction of interest
expense and interest expense is excluded from EBITDA.
- Gains or losses on disposition of assets - FelCor excludes the
gains or losses on disposition of assets because the Company
believes that including them in EBIDTA is not consistent with
reflecting ongoing performance of its remaining assets.
Additionally, the gain or loss on sale of depreciable assets
represents either accelerated depreciation or too much
depreciation deducted in previous periods and depreciation is
excluded from EBITDA.
- Impairment losses - FelCor excludes the effect of impairment
losses because the Company believes that including these in
EBITDA is not consistent with reflecting the ongoing
performance of its remaining assets. Additionally, the Company
believes that impairment losses are similar to gains and
losses on disposition of assets.
- Cumulative effect of a change in accounting principle -
Infrequently, the Financial Accounting Standards Board
promulgates new accounting standards that requires the
consolidated statements of operations to reflect the
cumulative effect of a change in accounting principle. FelCor
excludes these one-time adjustments because they do not
reflect actual performance of the Company for that period.
FFO, EBITDA and Adjusted EBITDA should not be considered as alternatives
to operating profit, cash flow from operations, or any other operating
performance measure prescribed by GAAP. Neither should FFO, FFO per share,
EBITDA or Adjusted EBITDA be considered as measures of FelCor's liquidity or
indicative of funds available for our cash needs, including the Company's
ability to make cash distributions. FFO per share does not measure, and should
not be used as a measure of, amounts that accrue directly to the benefit of
stockholders.
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 9
RECONCILIATION OF NET LOSS TO EBITDA
(in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2004 2003 2004 2003
---- ---- ---- ----
NET LOSS $ (36,985) $(125,917) $ (89,357) $(167,211)
Depreciation from continuing operations 30,074 31,476 88,445 95,009
Depreciation from unconsolidated entities and
discontinued operations 2,924 6,477 9,238 21,836
Minority interest in FelCor Lodging LP. (2,222) (7,015) (5,707) (10,065)
Interest expense 35,893 42,793 118,073 124,560
Interest expense from unconsolidated entities and
discontinued operations 1,170 1,362 3,895 6,419
Amortization expense 593 565 1,615 1,645
--------- --------- --------- ---------
EBITDA 31,447 (50,259) 126,202 72,193
Charge off of deferred debt costs 1,920 -- 6,094 2,834
Loss (gain) on early extinguishment of debt 10,987 (351) 39,233 (1,611)
Gain on swap termination -- -- (1,005) --
Lease termination expense from asset disposition -- -- 4,900 --
Loss (gain) on sale of assets (3,058) 446 (2,116) 776
Impairment 33,027 112,702 33,027 120,526
--------- --------- --------- ---------
ADJUSTED EBITDA $ 74,323 $ 62,538 $ 206,335 $ 194,718
========= ========= ========= =========
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 10
RECONCILIATION OF NET LOSS TO FFO
(in thousands, except per share and unit data)
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2004 2003
---- ----
PER SHARE PER SHARE
DOLLARS SHARES AMOUNT DOLLARS SHARES AMOUNT
------- ------ ------ ------- ------ ------
NET LOSS ................................... $ (36,985) $(125,917)
Preferred dividends ..................... (9,343) (6,727)
--------- ---------
NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS .......................... $ (46,328) 59,075 $ (0.78) $(132,644) 58,690 $ (2.26)
Depreciation from continuing operations . 30,074 -- 0.51 31,476 -- 0.54
Depreciation from unconsolidated
entities and discontinued operations . 2,924 -- 0.05 6,477 -- 0.11
Loss (gain) on sale of assets ........... (3,058) -- (0.05) 446 -- 0.01
Minority interest in FelCor LP. ......... (2,222) 2,903 (0.03) (7,015) 3,161 (0.04)
--------- ------ -------- --------- ------ --------
FFO ........................................ $ (18,610) 61,978 $ (0.30) $(101,260) 61,851 $ (1.64)
========= ====== ======== ========= ====== ========
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2004 2003
---- ----
PER SHARE PER SHARE
DOLLARS SHARES AMOUNT DOLLARS SHARES AMOUNT
------- ------ ------ ------- ------ ------
NET LOSS ................................... $ (89,357) $(167,211)
Preferred dividends ..................... (25,039) (20,181)
--------- ---------
NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS .......................... $(114,396) 58,993 $ (1.94) $(187,392) 58,609 $ (3.20)
Depreciation from continuing operations . 88,445 -- 1.50 95,009 -- 1.62
Depreciation from unconsolidated
entities and discontinued operations . 9,238 -- 0.16 21,836 -- 0.37
Loss (gain) on sale of assets ........... (2,116) -- (0.04) 776 -- 0.01
Minority interest in FelCor LP. ......... (5,707) 2,989 (0.08) (10,065) 3,234 (0.09)
--------- ------ -------- --------- ------ --------
FFO ........................................ $ (24,536) 61,982 $ (0.40) $ (79,836) 61,843 $ (1.29)
========= ====== ======== ========= ====== ========
Consistent with SEC guidance, FFO has not been adjusted for the following
amounts included in net loss (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30
------------- ------------
2004 2003 2004 2003
---- ---- ---- ----
Charge off of deferred debt costs ............. $ 1,920 $ -- $ 6,094 $ 2,834
Loss (gain) on early extinguishment of debt ... 10,987 (351) 39,233 (1,611)
Gain on swap termination ...................... -- -- (1,005) --
Lease termination cost from asset disposition . -- -- 4,900 --
Impairment .................................... 33,027 112,702 33,027 120,526
--------- --------- --------- ---------
$ 45,934 $ 112,351 $ 82,249 $ 121,749
========= ========= ========= =========
Per share amounts ............................. $ 0.74 $ 1.82 $ 1.33 $ 1.97
========= ========= ========= =========
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FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 11
HOTEL OPERATING PROFIT AND OPERATING MARGIN
(DOLLARS IN THOUSANDS)
Hotel operating profit and operating margin are commonly used non-GAAP
measures of performance that we utilize to measure the relative performance of
our individual hotels and groups of hotels and give investors a more complete
understanding of the operating results directly related to our hotels. We
believe that hotel operating profit and operating margin are useful to investors
by providing greater transparency with respect to significant measures used by
management in its financial and operational decision-making. Hotel operating
profit and operating margin are calculated as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2004 2003 2004 2003
--------- --------- --------- ---------
Total revenue $ 304,975 $ 285,617 $ 906,963 $ 841,791
Retail space rental and other revenue (2,166) (221) (2,590) (838)
--------- --------- --------- ---------
Hotel revenue 302,809 285,396 904,373 840,953
Hotel operating expenses 243,064 230,818 722,854 668,958
--------- --------- --------- ---------
Hotel operating profit $ 59,745 $ 54,578 $ 181,519 $ 171,995
========= ========= ========= =========
Operating margin 19.7% 19.1% 20.1% 20.5%
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------- -----------------------
2004 2003 2004 2003
Reconciliation of total operating expenses to
hotel operating expenses:
Total operating expenses ............................ $ 276,929 $ 265,593 $ 822,868 $ 774,426
Corporate expenses ............................... (3,791) (3,299) (11,569) (10,459)
Depreciation ..................................... (30,074) (31,476) (88,445) (95,009)
--------- --------- --------- ---------
Hotel operating expenses ............................ $ 243,064 $ 230,818 $ 722,854 $ 668,958
========= ========= ========= =========
-more-
FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 12
RECONCILIATION OF ESTIMATED NET INCOME (LOSS) TO ESTIMATED FFO AND EBITDA
FOURTH QUARTER 2004 GUIDANCE (B)
--------------------------------
LOW GUIDANCE HIGH GUIDANCE
------------ -------------
PER SHARE PER SHARE
DOLLARS AMOUNT(A) DOLLARS AMOUNT(A)
------- ------ ------- ------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS........................... $ (29) $(0.49) $ (27) $(0.45)
Depreciation...................................................... 32 32
Minority interest in FelCor LP.................................... (1) (1)
------ ------
FFO.................................................................. $ 2 $ 0.04 $ 4 $ 0.07
====== ======
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS........................... $ (29) $ (27)
Depreciation...................................................... 32 32
Minority interest in FelCor LP.................................... (1) (1)
Interest expense.................................................. 36 36
Amortization expense.............................................. 1 1
Preferred dividends............................................... 10 10
------ ------
EBITDA............................................................... $ 49 $ 51
Loss on extinguishment of debt..................................... 2 2
Charge off of debt costs........................................... 1 1
------ ------
ADJUSTED EBITDA...................................................... $ 52 $ 54
====== ======
(a) Weighted average shares are 59.1 million. Adding minority
interest and unvested restricted stock of 3.2 million shares
to weighted average shares, provides the weighted average
shares and units of 62.3 million used to compute FFO per
share.
(b) Included in Net Loss and FFO guidance are the following (in
millions):
FOURTH QUARTER 2004
-------------------
PER SHARE
DOLLARS AMOUNT
------- ------
Loss on extinguishment of debt...... $2
Charge off of debt costs............ 1
---
Total............................ $3 $0.04
== =====
-more-
FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 13
RECONCILIATION OF ESTIMATED NET INCOME (LOSS) TO ESTIMATED FFO AND EBITDA
(continued)
FULL YEAR 2004 GUIDANCE(B)
--------------------------
LOW GUIDANCE HIGH GUIDANCE
------------ -------------
PER SHARE PER SHARE
DOLLARS AMOUNT(A) DOLLARS AMOUNT (A)
------- ------ ------- ----------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS....... $(143) $(2.42) $ (141) $(2.38)
Depreciation.................................. 130 130
Gain from sales of assets..................... (2) (2)
Minority interest in FelCor LP................ (7) (7)
------ ------
FFO.............................................. $ (22) $(0.35) $ (20) $(0.32)
====== ======
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS....... $(143) $(141)
Depreciation.................................. 130 130
Minority interest in FelCor LP................ (7) (7)
Interest expense.............................. 158 158
Amortization expense.......................... 2 2
Preferred dividends........................... 35 35
------ ------
EBITDA........................................... $ 175 $ 177
Loss on extinguishment of debt................ 42 42
Charge off of debt costs...................... 6 6
Gain on swap termination...................... (1) (1)
Impairment losses............................. 33 33
Lease termination............................. 5 5
Gain on sale of assets (2) (2)
------ ------
ADJUSTED EBITDA $ 258 $ 260
====== ======
(a) Weighted average shares are 59.1 million. Adding minority
interest and unvested restricted stock of 3.2 million shares
to weighted average shares, provides the weighted average
shares and units of 62.3 million used to compute FFO per
share.
(b) Included in Net Loss and FFO guidance are the following (in
millions):
FULL YEAR 2004
--------------
PER SHARE
DOLLARS AMOUNT
------- ------
Loss on extinguishment of debt........................ $42
Charge off of debt costs.............................. 6
Gain on swap termination.............................. (1)
Impairment losses..................................... 33
Lease termination..................................... 5
---
Total.............................................. $85 $1.36
=== =====
-more-
FelCor Lodging Trust Third Quarter 2004 Operating Results
October 27, 2004
Page 14
SELECTED BALANCE SHEET DATA
(in thousands)
SEPTEMBER 30, 2004 DECEMBER 31, 2003
------------------ -----------------
Investment in hotels, included in continuing operations ... $ 3,875,531 $ 3,989,964
Accumulated depreciation .................................. (917,682) (886,168)
----------- -----------
$ 2,957,849 $ 3,103,796
=========== ===========
Cash and cash equivalents ................................. $ 154,109 $ 231,885
Total assets .............................................. $ 3,431,191 $ 3,590,893
Debt ...................................................... $ 1,828,261 $ 2,037,355
Total stockholders' equity ................................ $ 1,347,167 $ 1,296,272
###