/FIRST ADD -- DCTH002 -- Host Marriott Corporation results/ HOST
MARRIOTT CORPORATION Comparable Hotel Operating Data Schedule of
Comparable Hotel Results (a) (unaudited, in millions, except hotel
statistics) Quarter ended Year ended December 31, December 31, 2004
2003 2004 2003 Number of hotels 103 103 103 103 Number of rooms
52,063 52,183 52,063 52,183 Percent change in Comparable Hotel
RevPAR 8.6% 7.3% Operating profit margin under GAAP (b) 12.5% 9.7%
11.2% 9.1% Comparable hotel adjusted operating profit margin (c)
23.7% 21.7% 22.4% 21.4% Comparable hotel sales Room $643 $593
$2,045 $1,907 Food and beverage 375 355 1,102 1,043 Other 72 67 226
220 Comparable hotel sales (d) 1,090 1,015 3,373 3,170 Comparable
hotel expenses Room 159 152 515 483 Food and beverage 271 263 823
784 Other 45 42 141 134 Management fees, ground rent and other
costs 357 338 1,140 1,091 Comparable hotel expenses (e) 832 795
2,619 2,492 Comparable Hotel Adjusted Operating Profit 258 220 754
678 Non-comparable hotel results, net (f) 25 14 83 26 Comparable
hotels classified as held for sale (g) (4) (4) (12) (11) Office
building and limited service properties, net (h) 3 - 2 1 Other
income 1 - 1 12 Depreciation and amortization (111) (108) (354)
(347) Corporate and other expenses (24) (21) (67) (60) Operating
Profit $148 $101 $407 $299 (a) See the introductory notes to the
financial information for discussion of non-GAAP measures,
reporting periods and comparable hotel results. (b) Operating
profit margin under GAAP is calculated as the operating profit
divided by the total revenues per the consolidated statements of
operations. (c) Comparable hotel adjusted operating profit margin
is calculated as the comparable hotel adjusted operating profit
divided by the comparable hotel sales per the table above. (d) The
reconciliation of total revenues per the consolidated statements of
operations to the comparable hotel sales is as follows (in
millions): Quarter ended Year ended December 31, December 31, 2004
2003 2004 2003 Revenues per the consolidated statements of
operations $1,181 $1,042 $3,640 $3,288 Revenues of hotels held for
sale 21 21 70 66 Non-comparable hotel sales (100) (50) (292) (137)
Hotel sales for the property for which we record rental income, net
16 15 47 46 Rental income for office buildings and limited service
hotels (27) (24) (80) (75) Other income (1) - (1) (12) Adjustment
for hotel sales for comparable hotels to reflect Marriott's fiscal
year for Marriott- managed hotels - 11 (11) (6) Comparable hotel
sales $1,090 $1,015 $3,373 $3,170 (e) The reconciliation of
operating costs per the consolidated statements of operations to
the comparable hotel expenses is as follows (in millions): Quarter
ended Year Ended December 31, December 31, 2004 2003 2004 2003
Operating costs and expenses per the consolidated statements of
operations $1,033 $941 $3,233 $2,989 Operating costs of hotels held
for sale 18 17 58 55 Non-comparable hotel expenses (75) (34) (210)
(112) Hotel expenses for the property for which we record rental
income 15 14 47 46 Rent expense for office buildings and limited
service hotels (24) (24) (78) (74) Adjustment for hotel expenses
for comparable hotels to reflect Marriott's fiscal year for
Marriott- managed hotels - 10 (10) (5) Depreciation and
amortization (111) (108) (354) (347) Corporate and other expenses
(24) (21) (67) (60) Comparable hotel expenses $832 $795 $2,619
$2,492 (f) Non-comparable hotel results, net, includes the
following items: (i) the results of operations of our
non-comparable hotels whose operations are included in our
consolidated statement of operations as continuing operations and
(ii) the difference between the number of days of operations
reflected in the comparable hotel results and the number of days of
operations reflected in the consolidated statements of operations.
For detail, see "Introductory Notes to Financial Information." (g)
Included in our comparable hotel results are four hotels that are
classified as held for sale as of December 31, 2004. Because the
hotels are classified as held for sale, their operating results are
not included in the revenues or operating costs and expenses from
continuing operations, but are instead included in discontinued
operations. We continue to include them as comparable hotels,
however, because the operating results for these properties were
reported by us throughout the entire reporting periods being
compared. (h) Represents rental income less rental expense for
limited service properties and office buildings. For detail, see
footnote (b) to the statements of operations. HOST MARRIOTT
CORPORATION Other Financial and Operating Data (unaudited, in
millions, except per share amounts) December 31, 2004 2003 Equity
Common shares outstanding 350.3 320.3 Common shares and minority
held common OP Units outstanding 371.3 343.8 Preferred OP Units
outstanding .02 .02 Class A Preferred shares outstanding (a) - 4.1
Class B Preferred shares outstanding 4.0 4.0 Class C Preferred
shares outstanding 6.0 6.0 Class D Preferred shares outstanding .03
.03 Class E Preferred shares outstanding 4.0 - Security pricing
(per share price) Common (b) $17.30 $12.32 Class A Preferred (a) $
- $26.74 Class B Preferred (b) $25.80 $27.00 Class C Preferred (b)
$26.37 $27.26 Class E Preferred (b) $27.45 $ - Convertible
Preferred Securities (c) $57.25 $51.00 Exchangeable Senior
Debentures (d) $1,156.00 $ - Dividends per share for calendar year
Common $ .05 $ - Class A Preferred (a) $1.38 $2.50 Class B
Preferred $2.50 $2.50 Class C Preferred $2.50 $2.50 Class D
Preferred $2.50 $1.88 Class E Preferred $1.37 $ - Other Financial
Data Construction in progress $85 $56 Quarter ended Year Ended
December 31, December 31, 2004 2003 2004 2003 Hotel Operating
Statistics for All Full-Service Properties (e) Average daily rate
$160.20 $145.84 $152.03 $141.93 Average occupancy 69.2% 67.1% 72.0%
69.1% RevPAR $110.84 $97.88 $109.51 $98.01 Debt December 31, 2004
2003 Series B senior notes, with a rate of 7 7/8% due August 2008
$304 $1,196 Series C senior notes, with a rate of 8.45% due
December 2008 - 218 Series E senior notes, with a rate of 8 3/8%
due February 2006 300 300 Series G senior notes, with a rate of 9
1/4% due October 2007 (f) 243 244 Series I senior notes, with a
rate of 9 1/2% due January 2007 (g) 468 484 Series J senior notes
with a rate of 7 1/8% due November 2013 - 725 Series K senior
notes, with a rate of 7 1/8% due November 2013 725 - Series L
senior notes, with a rate of 7% due August 2012 346 - Exchangeable
Senior Debentures, with a rate of 3.25% due April 2024 491 - Senior
notes, with an average rate of 9.7%, maturing through 2012 13 13
Total senior notes 2,890 3,180 Mortgage debt (non-recourse) secured
by $2.9 billion of real estate assets, with an average interest
rate of 7.7% and 7.8% at December 31, 2004 and 2003, respectively
(h) 2,043 2,205 Credit facility (i) - - Convertible Subordinated
Debentures, with a rate of 6 3/4% due December 20, 2026 (j) 492 -
Other 98 101 Total debt $5,523 $5,486 Percentage of fixed rate debt
86% 85% Weighted average interest rate (j) 7.1% 7.7% Weighted
average debt maturity (j) 6.6 years 5.5 years (a) On August 3,
2004, we redeemed all 4.16 million shares of the outstanding Class
A preferred stock at a price of $25.00 per share plus dividends
accrued to that date. (b) Share prices are the closing price as
reported by the New York Stock Exchange. (c) Reflects the closing
market price as quoted by Bloomberg L.P. Amount reflects the price
of a single $50 debenture, which is convertible into common stock
upon the occurrence of certain events. (d) Reflects the closing
market price as quoted by Bloomberg L.P. Amount reflects the price
of a single $1,000 debenture, which is exchangeable for common
stock upon the occurrence of certain events. (e) The operating
statistics reflect all consolidated properties as of December 31,
2004 and 2003, respectively. The operating statistics include the
results of operations for nine hotels sold in 2004 and eight hotels
sold in 2003 prior to their disposition. (f) Includes fair value
adjustments for interest rate swap agreements of $1 million and $2
million as of December 31, 2004 and 2003, respectively. (g)
Includes fair value adjustments for interest rate swap agreements
of $18 million and $34 million as of December 31, 2004 and 2003,
respectively. (h) Excludes approximately $20 million of mortgage
debt related to a hotel that was reclassified as liabilities
associated with held for sale at December 31, 2004. The hotel was
sold in January of 2005. (i) Our credit facility was amended on
September 10, 2004, which increased the available capacity to $575
million. Currently, there are no amounts outstanding. (j) Beginning
in January 2004, we recorded the Convertible Subordinated
Debentures as debt in accordance with a revision to FIN 46. The
Convertible Subordinated Debentures were previously classified in
the mezzanine section of our consolidated balance sheet. For
additional information, see footnote (b) to the consolidated
balance sheets. The weighted average maturity excluding the effect
of the Convertible Subordinated Debentures is 5.1 years and 5.5
years in 2004 and 2003, respectively. HOST MARRIOTT CORPORATION
Reconciliation of Net Income (Loss) Available to Common
Stockholders to Funds From Operations per Diluted Share (unaudited,
in millions, except per share amounts) Quarter ended December
Quarter ended December 31, 2004 31, 2003 Per Per Income Share
Income Share (Loss) Shares Amount (Loss) Shares Amount Net income
available to common stockholders $52 350.2 $.15 $142 310.7 $.46
Adjustments: Cumulative effect of change in accounting principle -
- - (24) - (.08) Gain on the disposition of the New York Marriott
World Trade Center hotel - - - (56) - (.18) Gains on dispositions,
net (35) - (.10) (9) - (.03) Amortization of deferred gains (1) - -
(1) - - Depreciation and amortization 114 - .32 115 - .37
Partnership adjustments 8 - .02 21 - .07 FFO of minority partners
of Host LP (a) (8) - (.02) (14) - (.05) Adjustments for dilutive
securities: Assuming distribution of common shares granted under
the comprehensive stock plan less shares assumed purchased at
average market price - 2.9 - - 3.9 (.01) Assuming conversion of
Convertible Subordinated Debentures 10 30.9 (.01) 10 30.9 (.02)
Assuming conversion of Exchangeable Senior Debentures (b) 6 27.4
(.01) - - - Assuming conversion of minority OP Units issuable - - -
- 2.0 - FFO per diluted share (c)(d) $146 411.4 $.35 $184 347.5
$.53 Year ended December Year ended December 31, 2004 31, 2003 Per
Per Income Share Income Share (Loss) Shares Amount (Loss) Shares
Amount Net loss available to common stockholders $(41) 337.2 (.12)
$(21) 281.0 (.07) Adjustments: Gain on the disposition of the New
York Marriott World Trade Center hotel - - - (56) - (.20) Gain on
dispositions, net (59) - (.18) (9) - (.04) Amortization of deferred
gains (4) - (.01) (4) - (.01) Depreciation and amortization 364 -
1.08 375 - 1.33 Partnership adjustments 21 - .06 24 - .08 FFO of
minority partners of Host LP (a) (18) - (.05) (26) - (.09)
Adjustments for dilutive securities: Assuming distribution of
common shares granted under the comprehensive stock plan less
shares assumed purchased at average market price - 3.0 (.01) - 3.5
(.01) Assuming conversion of Convertible Subordinated Debentures -
- - - - - Assuming conversion of Exchangeable Senior Debentures (b)
15 21.7 - - - - FFO per diluted share (c)(d) $278 361.9 $.77 $283
$284.5 $.99 (a) Represents FFO attributable to the minority
interests in Host LP. (b) EITF 04-08, "The Effect of Contingently
Convertible Debt on Diluted Earnings per Share," became effective
in the fourth quarter of 2004 and, as a result, the Exchangeable
Senior Debentures are now included as a potentially dilutive
security. (c) FFO per diluted share in accordance with NAREIT is
adjusted for the effects of dilutive securities. Dilutive
securities may include shares granted under comprehensive stock
plans, those preferred OP units held by minority partners, other
minority interests that have the option to convert their limited
partnership interest to common OP units, the Convertible
Subordinated Debentures and the Exchangeable Senior Debentures. No
effect is shown for securities if they are anti- dilutive. (d) FFO
per diluted share for 2004 and 2003 was affected by several
transactions, which are detailed in the table entitled, "Schedule
of Significant Transactions Affecting Earnings per Share, Funds
from Operations per Diluted Share and Adjusted EBITDA." HOST
MARRIOTT CORPORATION Schedule of Significant Transactions Affecting
Earnings per Share, Funds From Operations per Diluted Share and
Adjusted EBITDA (unaudited, in millions, except per share amounts)
Quarter ended Quarter ended December 31, 2004 December 31, 2003 Net
Net Income Adjusted Income Adjusted (Loss) FFO EBITDA (Loss) FFO
EBITDA Senior notes redemptions and debt prepayments (1) $- $- $-
$(33) $(33) $- World Trade Center insurance gain (2) - - - 212 156
- Loss on foreign currency forward contracts (3) - - - (17) (17)
(17) Minority interest expense (4) - - - (14) (8) - Total $- $- $-
$148 $98 $(17) Per diluted share $- $- $0.48 $0.29 Year ended Year
ended December 31, 2004 December 31, 2003 Net Net Income Adjusted
Income Adjusted (Loss) FFO EBITDA (Loss) FFO EBITDA Senior notes
redemptions and debt prepayments (1) $(59) $(59) $- $(36) $(36) -
World Trade Center insurance gain (2) - - - 212 156 - Loss on
foreign currency forward contracts (3) - - - (18) (18) (18) Class A
preferred stock redemption (5) (6) (6) - - - - Directors' and
officers' insurance settlement (6) - - - 7 7 10 Minority interest
benefit (expense) (4) 4 4 - (14) (10) - Total $(61) $(61) $- $151
$99 $(8) Per diluted share $(0.18)$(0.17) $0.54 $0.34 (1)
Represents call premiums and the acceleration of original issue
discounts and deferred financing costs, as well as incremental
interest during the call period for refinancings, included in
interest expense in the consolidated statements of operations. We
recognized these costs in conjunction with the prepayment or
refinancing of senior notes and mortgages during 2003 and 2004. (2)
As a result of the New York Marriott World Trade Center hotel
insurance settlement in the fourth quarter of 2003, we recorded a
gain of approximately $212 million, which was comprised of $156
million in post-2003 business interruption proceeds and $56 million
from the disposition of the hotel. See the previous discussion of
non-GAAP financial measures, which describes why we exclude gain
and loss on dispositions from FFO per diluted share and Adjusted
EBITDA. For these reasons, we have also excluded the $156 million
gain on settlement for business interruption insurance proceeds for
the periods subsequent to December 31, 2003 from Adjusted EBITDA.
These business interruptions proceeds, because they relate to
future periods for a hotel that, even if rebuilt would be in a
different location and would be significantly different from the
prior hotel, are not consistent with reflecting the ongoing
performance of our remaining assets. (3) In the fourth quarter of
2003, we made a partial repayment of the Canadian mortgage debt
which resulted in the related forward currency contracts hedge
being deemed ineffective for accounting purposes. Accordingly, we
recorded an approximate $17 million decrease in net income, FFO and
Adjusted EBITDA in the fourth quarter in addition to the
approximate $1 million recorded in the first three quarters of
2003. (4) Represents the portion of the significant transactions
attributable to minority partners in Host LP. (5) Represents the
original issuance costs for the Class A preferred stock, which was
required to be included in the calculation of earnings (loss) per
share in conjunction with the redemption of the Class A preferred
stock in the third quarter of 2004, as well as the incremental
dividends from the date of issuance of the Class E preferred stock
to the date of redemption of the Class A preferred stock. For
additional information, see footnote (f) to the consolidated
statements of operations. (6) During the third quarter of 2003, we
recognized approximately $10 million of other income from the
settlement of a claim that we brought against our directors' and
officers' insurance carriers for reimbursement of defense costs and
settlement payments incurred in resolving a series of related
actions brought against us and Marriott International that arose
from the sale of certain limited partnership units to investors
prior to 1993. The effect on net income (loss) and FFO is
approximately $7 million due to income taxes on the proceeds. HOST
MARRIOTT CORPORATION Reconciliation of Net Income to EBITDA and
Adjusted EBITDA (unaudited, in millions) Quarter ended Year ended
December 31, December 31, 2004 2003 2004 2003 Net income (loss) $61
$150 $ - $14 Interest expense (a) 127 166 483 488 Dividends on
Convertible Preferred Securities (a) - 10 - 32 Depreciation and
amortization 111 108 354 347 Income taxes (8) (4) (10) (13)
Discontinued operations (b) 3 13 13 40 EBITDA (c) 294 443 840 908
Gains and losses on dispositions (33) (10) (53) (8) Amortization of
deferred gains (7) (1) (17) (5) Gain on settlement of the New York
Marriott World Trade Center hotel for post-2003 business
interruption insurance (d) - (156) - (156) Gain on the disposition
of the New York Marriott World Trade Center hotel (d) - (56) - (56)
Impairment of assets held for sale 1 2 1 2 Consolidated partnership
adjustments: Minority interest expense 6 16 4 5 Distributions to
minority partners (1) (1) (6) (6) Equity investment adjustments:
Equity in losses of affiliates 4 9 16 22 Distributions received
from equity investments 4 - 6 3 Cumulative effect of a change in
accounting principle (e) - (24) - - Adjusted EBITDA of Host LP 268
222 791 709 Distributions to minority interest partners of Host LP
(1) - (1) - Adjusted EBITDA of Host Marriott (d) $267 $222 $790
$709 (a) Interest expense in the fourth quarter and year-to-date
2004 includes approximately $10 million and $32 million,
respectively, previously classified as dividends on Convertible
Preferred Securities. See footnote (b) to the consolidated balance
sheets. (b) Reflects the interest expense, depreciation and
amortization and income taxes included in discontinued operations.
(c) See the introductory notes to the financial information for
discussion of non-GAAP measures. (d) Our results for the periods
presented were significantly affected by several transactions,
which are detailed in the table entitled, "Schedule of Significant
Transactions Affecting Earnings per Share, Funds from Operations
per Diluted Share and Adjusted EBITDA." (e) For additional
information, see footnote (e) to the consolidated statements of
operations. HOST MARRIOTT CORPORATION Reconciliation of Net Income
(Loss) Available to Common Stockholders to Funds From Operations
per Diluted Share for First Quarter 2005 Forecasts (a) (unaudited,
in millions, except per share amounts) Low-end of Range First
Quarter Forecast Income Per Share (Loss) Shares Amount Forecast net
income available to common stockholders $37 352.2 $0.10
Adjustments: Depreciation and amortization 83 - 0.24 Gain on
dispositions, net (50) - (0.14) Partnership adjustments 8 - 0.02
FFO of minority partners of Host LP (b) (4) - (0.01) Adjustment for
dilutive securities: Assuming distribution of common share granted
under the comprehensive stock plan less shares assumed purchased at
average market price - 2.0 - Assuming conversion of Convertible
Subordinated Debentures - - - Assuming conversion of Exchangeable
Senior Debentures 4 27.5 (0.01) FFO per diluted share (c) $78 381.7
$0.20 High-end of Range First Quarter 2005 Forecast Income Per
Share (Loss) Shares Amount Forecast net income available to common
stockholders $43 352.2 $0.12 Adjustments: Depreciation and
amortization 83 - 0.24 Gain on dispositions, net (50) - (0.14)
Partnership adjustments 8 - 0.02 FFO of minority partners of Host
LP (b) (5) - (0.01) Adjustment for dilutive securities: Assuming
distribution of common share granted under the comprehensive stock
plan less shares assumed purchased at average market price - 2.0 -
Assuming conversion of Convertible Subordinated Debentures - - -
Assuming conversion of Exchangeable Senior Debentures 4 27.5 (0.01)
FFO per diluted share (c) $83 381.7 $0.22 HOST MARRIOTT CORPORATION
Reconciliation of Net Income Available to Common Stockholders to
Funds From Operations per Diluted Share for Full Year 2005
Forecasts (a) (unaudited, in millions, except per share amounts)
Low-end of Range Full Year 2005 Forecast Income Per Share (Loss)
Shares Amount Forecast net income available to common stockholders
$63 355.4 $0.18 Adjustments: Depreciation and amortization 360 -
1.01 Gain on dispositions, net (54) - (0.15) Partnership
adjustments 7 - 0.02 FFO of minority partners of Host LP (b) (20) -
(0.05) Adjustment for dilutive securities: Assuming distribution of
common share granted under the comprehensive stock plan less shares
assumed purchased at average market price - 2.0 - Assuming
conversion of Convertible Subordinated Debentures - - - Assuming
conversion of Exchangeable Senior Debentures 19 28.0 (0.03) FFO per
diluted share (c) $375 385.4 $0.98 High-end of Range Full Year 2005
Forecast Income Per Share (Loss) Shares Amount Forecast net income
available to common stockholders $99 355.4 $0.28 Adjustments:
Depreciation and amortization 360 - 1.01 Gain on dispositions, net
(54) - (0.15) Partnership adjustments 10 - 0.03 FFO of minority
partners of Host LP(b) (22) - (0.06) Adjustment for dilutive
securities: Assuming distribution of common share granted under the
comprehensive stock plan less shares assumed purchased at average
market price - 2.0 - Assuming conversion of Convertible
Subordinated Debentures 32 30.9 (0.01) Assuming conversion of
Exchangeable Senior Debentures 19 28.0 (0.03) FFO per diluted
share(c) $444 416.3 $1.07 See the notes following the table
reconciling net income to EBITDA and Adjusted EBITDA for full year
2005 forecasts. HOST MARRIOTT CORPORATION Reconciliation of Net
Income to EBITDA and Adjusted EBITDA for Full Year 2005 Forecasts
(a) (unaudited, in millions) Full Year 2005 Low-end High-end of
Range of Range Net income $100 $136 Interest expense 447 447
Depreciation and amortization 361 361 Income taxes 28 30 EBITDA 936
974 Gains on dispositions (75) (75) Consolidated partnership
adjustments: Minority interest expense 10 12 Distributions to
minority partners (5) (5) Equity investment adjustments: Equity in
losses of affiliates 3 3 Distributions received from equity
investments 1 1 Adjusted EBITDA of Host LP 870 910 Distributions to
minority interest partners of Host LP (6) (6) Adjusted EBITDA of
Host Marriott $864 $904 (a) The amounts shown in these
reconciliations are based on management's estimate of operations
for 2005. These tables are forward-looking and as such contain
assumptions by management based on known and unknown risks,
uncertainties and other factors which may cause the actual
transactions, results, performance, or achievements to be
materially different from any future transactions, results,
performance or achievements expressed or implied by this table.
General economic conditions, competition and governmental actions
will affect future transactions, results, performance and
achievements. Although we believe the expectations reflected in
this reconciliation are based upon reasonable assumptions, we can
give no assurance that the expectations will be attained or that
any deviations will not be material. For purposes of preparing the
full year and first quarter 2005 forecasts, we have made the
following assumptions: * RevPAR will increase between 6.5% to 8.5%
for the full year and 6.0% to 8.0% for the first quarter for the
low and high ends of the forecasted range, respectively. *
Comparable hotel adjusted operating profit margins will increase
100 basis points and 150 basis points for the full year for the low
and high ends of the forecasted range, respectively. *
Approximately $325 million of hotels will be sold in 2005,
including $128 million of sales in January 2005 and 85% of the
Company's interest in the Courtyard joint venture will be sold for
approximately $92 million. * Approximately $400 million of
acquisitions will be made in 2005. * Approximately $500 million of
debt will be refinanced and approximately $140 million of debt will
be prepaid in 2005. Charges, net of the minority interest benefit,
totaling approximately $40 million, or $.10 of FFO per diluted
share, in call premiums and the acceleration of deferred financing
costs associated with the debt repayments will be incurred for the
full year. * Fully diluted shares will be 385.4 million for the
low-end of the range and 416.3 million for the high-end of the
range for the full year and 381.7 million for the first quarter.
(b) Represents FFO attributable to the minority interests in Host
LP. (c) FFO per diluted share in accordance with NAREIT is adjusted
for the effects of dilutive securities. Dilutive securities may
include shares granted under comprehensive stock plans, those
preferred OP Units held by minority partners, other minority
interests that have the option to convert their limited partnership
interest to common OP Units, the Convertible Subordinated
Debentures and the Exchangeable Senior Debentures. No effect is
shown for securities if they are anti- dilutive. PRNewswire -- Feb.
24 END FIRST AND FINAL ADD
http://www.newscom.com/cgi-bin/prnh/20040324/HOSTMARRIOTTLOGO
http://photoarchive.ap.org/ DATASOURCE: Host Marriott Corporation
Copyright