<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) July 10, 1998
-------------
American General Hospitality Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Maryland 1-11903 75-2648842
- --------------------------------------------------------------------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
5605 MacArthur Boulevard, Suite 1200, Irving, Texas 75038
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code (972) 550-6800
--------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, If Changed Since Last Report.)
<PAGE>
ITEM 5. OTHER EVENTS.
As previously disclosed in American General Hospitality Corporation's
(the "Registrant" or "AGH") Current Report on Form 8-K, dated March 15, 1998 and
filed on March 17, 1998, the Registrant and CapStar Hotel Company ("CapStar"),
have entered into a definitive agreement (the "Merger Agreement"), as amended,
to merge as equals (the "Merger"). Pursuant to the terms of the Merger Agreement
(i) CapStar will merge with and into the Registrant which will be renamed
MeriStar Hospitality Corporation ("MeriStar") if the Merger is consummated, (ii)
CapStar will spin-off (the "Spin-Off"), in a taxable transaction, its hotel
operations and management business to its current stockholders as a new C-
corporation to be called MeriStar Hotels & Resorts, Inc. ("OpCo"). Pursuant to a
separate transaction, OpCo will acquire AGH Leasing, L.P. ("AGH Leasing") and
American General Hospitality, Inc. ("AGHI"), the respective lessee and manager
of substantially all of the Registrant's hotels, which acquisition is a
condition to the closing of the Merger. If the proposed Merger is consummated,
OpCo will become the lessee and manager of the hotels currently leased by AGH
Leasing and will have a right of first refusal to become the lessee of hotels
acquired by the Registrant in the future except for certain hotels currently
under contract to be acquired by the Registrant. Pursuant to the terms of the
Merger Agreement, the Registrant's stockholders will receive 0.8475 shares of
MeriStar for each share of the Registrant's common stock owned and, CapStar's
stockholders will receive one share of MeriStar for each CapStar share owned.
The Merger, which is expected to be completed by the end of July 1998, is
subject to customary closing conditions and covenants, including the approval of
the stockholders of both companies, accordingly, no assurance can be given that
the Merger will be consummated. The Registrant has filed a registration
statement on Form S-4, which includes the Joint Proxy Statement/Prospectus, with
the Securities and Exchange Commission (Registration No. 333-49611) (the "Form
S-4 Registration Statement").
Attached and incorporated by reference herein as Exhibit 99.1 through
Exhibit 99.12 are certain financial information for CapStar, OpCo and AGHI and
Exhibits 99.13 and 99.14 are certain unaudited pro forma combined financial
information for MeriStar giving effect to the Merger.
Attached and incorporated by reference herein as Exhibits 23.1, 23.2,
23.3, 23.4, 23.5, 23.6, 23.7 and 23.8, respectively, are copies of a consent of
KPMG Peat Marwick LLP, a consent of Pannell Kerr Forster PC, a consent of
Pinsker, Goldberg, Ivanicki & Appuzzo, a consent of Wertheim & Company, a
consent of King Griffin & Adamson P.C., a consent of Mann Frankfort Stein &
Lipp, P.C., a consent of PricewaterhouseCoopers LLP (Dallas, TX) and a consent
of PricewaterhouseCoopers LLP (Philadelphia, PA).
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS.
Exhibit Description
- ------- -----------
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Pannell Kerr Forster PC
23.3 Consent of Pinsker, Goldberg, Ivanicki & Appuzzo
23.4 Consent of Wertheim & Company
23.5 Consent of King Griffin & Adamson P.C.
23.6 Consent of Mann Frankfort Stein & Lipp, P.C.
23.7 Consent of PricewaterhouseCoopers LLP (Dallas, TX)
23.8 Consent of PricewaterhouseCoopers LLP (Philadelphia, PA)
99.1 The audited Consolidated Balance Sheets of CapStar as of December 31,
1997 and 1996, and the Consolidated Statements of Operations for the
years ended December 31, 1997, 1996 and 1995, the Consolidated
Statements of Stockholder's Equity and Partners' Capital for the years
ended December 31, 1997, 1996 and 1995 and Consolidated Statements of
Cash Flows for the years ended December 31, 1997, 1996 and 1995
(incorporated by reference from pages 21 to 42 of CapStar's 1997
Annual Report on Form 10-K for the year ended December 31, 1997 (File
No. 1-12017)).
99.2 The Condensed Consolidated Balance Sheet of CapStar as of March 31,
1998 (unaudited), and December 31, 1997, the unaudited Condensed
Consolidated Statements of Operations of CapStar for the three months
ended March 31, 1998 and 1997, and the unaudited Condensed
Consolidated Statements of Cash Flows for the three months ended March
31, 1998 and 1997 (incorporated by reference from pages 3 to 8 of
CapStar's Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998 (File No. 1-12017)).
99.3 The unaudited Pro Forma Balance Sheet of OpCo as of March 31, 1998,
the unaudited Pro Forma Statement of Operations of OpCo for the three
months ended March 31, 1998, and the unaudited Pro Forma Statement of
Operations of OpCo for the year ended December 31, 1997.
3
<PAGE>
99.4 The Balance Sheets of MCV Venture, LLC, formerly MCV Venture, as of
June 30, 1997 (unaudited) and December 31, 1996 and 1995, the
Statement of Operations of MCV Venture, LLC for the six months ended
June 30, 1997 (unaudited) and for the years ended December 31, 1996
and 1995, the Statements of Members' Equity (Deficit) of MCV Venture,
LLC for the six months ended June 30, 1997 (unaudited) and for the
years ended December 31, 1996 and 1995, and the Statements of Cash
Flows for MCV Venture, LLC for the six months ended June 30, 1997
(unaudited) and for the years ended December 31, 1996 and 1995
(incorporated by reference from pages 3 to 12 of CapStar's Current
Report on 8-K dated August 18, 1997 (File No. 1-12017)).
99.5 Comparative Balance Sheets as of December 31, 1996 and 1995,
comparative Statements of Income (Loss), Cash Flows and Partners'
Capital for the years ended December 31, 1996 and 1995 for Packwood
Jekyll Limited Partnership with accompanying notes and Independent
Auditors' Report (incorporated by reference from CapStar's Current
Report on Form 8-K dated September 5, 1997 (File No. 1-12017)).
99.6 Balance Sheet as of June 30, 1997 and Statements of Income (Loss),
Cash Flows and Partners' Capital for the period ended June 30, 1997
for Packwood Jekyll Limited Partnership with accompanying notes and
Accountants' Compilation Report (incorporated by reference from
CapStar's Current Report on Form 8-K dated September 5, 1997 (File No.
1-12017)).
99.7 Combined Balance Sheets as of June 30, 1997 (unaudited) and December
31, 1996, Combined Statements of Income, Partners' Capital and Cash
Flows for the six months ended June 30, 1997 (unaudited) and the year
ended December 31, 1996 for Chi-Town Partners, L.P. and St. Elmo's
Partners, L.P. with accompanying notes and Report of Independent
Accountants (incorporated by reference from CapStar's Current Report
on Form 8-K dated September 5, 1997 (File No. 1-12017)).
99.8 Combined Balance Sheet as of December 27, 1996, Combined Statements of
Income, Owners' Deficit and Cash Flows for the year ended December 27,
1996 for Westchase Holdings Ltd. with accompanying notes and
Independent Auditors' Report (incorporated by reference from
CapStar's Current Report on Form 8-K dated September 5, 1997 (File No.
1-12017)).
99.9 The Balance Sheet of Governor Morris Hotel Partners, L.P. as of June
30, 1997 (unaudited), the Statement of Operations of Governor Morris
Hotel Partners, L.P. for the six months ended June 30, 1997 (unaudited
), the Statement of
4
<PAGE>
Changes in Partners' Deficit of Governor Morris Hotel Partners, L.P.
for the six months ended June 30, 1997 (unaudited), and the Statement
of Cash Flows for Governor Morris Hotel Partners, L.P. for the six
months ended June 30, 1997 (unaudited), the Balance Sheets of Governor
Morris Hotel Partners, L.P. as of December 31, 1996 and 1995, and the
Statements of Operations, Changes in Partners' Deficit and Cash Flows
of Governor Morris Hotel Partners, L.P. for the years ended December
31, 1996 and 1995 (incorporated by reference from pages 3 to 21 of
CapStar's Current Report on Form 8-K dated September 18, 1997 (File
No. 1-12017)).
99.10 The Consolidated Balance Sheet of Atgen Holdings, Inc. and
Subsidiaries as of July 31, 1997 (unaudited), January 31, 1997 and
1996, the Consolidated Statements of Operations of Atgen Holdings,
Inc. and Subsidiaries for the six months ended July 31, 1997
(unaudited) and for the year ended January 31, 1997 and 1996, the
Consolidated Statement of Cash Flows of Atgen Holdings, Inc. and
Subsidiaries for the six months ended July 31, 1997 (unaudited) and
for the year ended January 31, 1997 and 1996 (incorporated by
reference from pages 3 to 10 of CapStar's Current Report on Form 8-K
dated September 22, 1997 (File No. 1-12017)).
99.11 The Balance Sheets of OpCo as of March 31, 1998 (unaudited), December
31, 1997 and 1996, Statements of Operations, Owners' Equity and Cash
Flows of OpCo for the three months ended March 31, 1998 and 1997
(unaudited) and for each of the years in the three-year period ended
December 31, 1997 (incorporated by reference from Item 7 of CapStar's
Current Report on Form 8-K dated and filed on April 7, 1998 (and the
related Current Reports on Form 8-K/A, filed on May 22, 1998 and June
5, 1998) (File No. 1-12017)).
99.12 Balance Sheets of AGHI as of March 31, 1998 (unaudited), December 31,
1997 and 1996, Statements of Operations, Stockholders' Equity and Cash
Flows of AGHI for the three months ended March 31, 1998 and 1997
(unaudited) and for each of the years in the three-year period ended
December 31, 1997 (incorporated by reference from Item 7 of CapStar's
Current Report on Form 8-K dated and filed on April 7, 1998 (and the
related Current Reports on Form 8-K/A, filed on May 22, 1998 and June
5, 1998) (File No. 1-12017)).
99.13 The unaudited Pro Forma Balance Sheet of MeriStar as of March 31,
1998, the unaudited Pro Forma Statement of Operations of MeriStar for
the three months ended March 31, 1998 and the unaudited Pro Form
Statements of Operations of MeriStar for the year ended December 31,
1997.
99.14 The Comparative Per Share Information for the year ended December 31,
1998 and for the three months ended March 31, 1998 (unaudited).
5
<PAGE>
SIGNATURES
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 hereunto duly authorized.
AMERICAN GENERAL HOSPITALITY CORPORATION
(Registrant)
Date: July 10, 1998
By: /s/ Kenneth E. Barr
---------------------------------------------
Name: Kenneth E. Barr
Title: Executive Vice President, Chief
Financial Officer (Principal Financial
Officer), Secretary and Treasurer
6
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Pannell Kerr Forster PC
23.3 Consent of Pinsker, Goldberg, Ivanicki & Appuzzo
23.4 Consent of Wertheim & Company
23.5 Consent of King Griffin & Adamson P.C.
23.6 Consent of Mann Frankfort Stein & Lipp, P.C.
23.7 Consent of PricewaterhouseCoopers LLP (Dallas, TX)
23.8 Consent of PricewaterhouseCoopers LLP (Philadelphia, PA)
99.1 The audited Consolidated Balance Sheets of CapStar as of December 31,
1997 and 1996, and the Consolidated Statements of Operations for the
years ended December 31, 1997, 1996 and 1995, the Consolidated
Statements of Stockholder's Equity and Partners' Capital for the years
ended December 31, 1997, 1996 and 1995 and Consolidated Statements of
Cash Flows for the years ended December 31, 1997, 1996 and 1995
(incorporated by reference from pages 21 to 42 of CapStar's 1997
Annual Report on Form 10-K for the year ended December 31, 1997 (File
No. 1-12017)).
99.2 The Condensed Consolidated Balance Sheet of CapStar as of March 31,
1998 (unaudited) and December 31, 1997, the unaudited Condensed
Consolidated Statements of Operations of CapStar for the three months
ended March 31, 1998 and 1997, and the unaudited Condensed
Consolidated Statements of Cash Flows for the three months ended March
31, 1998 and 1997 (incorporated by reference from pages 3 to 8 of
CapStar's Quarterly Report on Form 10-Q for the quarterly period ended
march 31, 1998 (File No. 1-12017)).
99.3 The unaudited Pro Forma Balance Sheet of OpCo as of March 31, 1998,
and the unaudited Pro Forma Statement of Operations of OpCo for the
three months ended March 31, 1998, and the unaudited Pro Forma
Statement of Operations of OpCo for the year ended December 31, 1997.
7
<PAGE>
99.4 The Balance Sheets of MCV Venture, LLC, formerly MCV Venture, as of
June 30, 1997 (unaudited) and December 31, 1996 and 1995, the
Statement of Operations of MCV Venture, LLC for the six months ended
June 30, 1997 (unaudited) and for the years ended December 31, 1996
and 1995, the Statements of Members' Equity (Deficit) of MCV Venture,
LLC for the six months ended June 30, 1997 (unaudited) and for the
years ended December 31, 1996 and 1995, and the Statements of Cash
Flows for MCV Venture, LLC for the six months ended June 30, 1997
(unaudited) and for the years ended December 31, 1996 and 1995
(incorporated by reference from pages 3 to 12 of CapStar's Current
Report on 8-K dated August 18, 1997 (File No. 1-12017)).
99.5 Comparative Balance Sheets as of December 31, 1996 and 1995,
comparative Statements of Income (Loss), Cash Flows and Partners'
Capital for the years ended December 31, 1996 and 1995 for Packwood
Jekyll Limited Partnership with accompanying notes and Independent
Auditors' Report (incorporated by reference from CapStar's Current
Report on Form 8-K dated September 5, 1997 (File No. 1-12017)).
99.6 Balance Sheet as of June 30, 1997 and Statements of Income (Loss),
Cash Flows and Partners' Capital for the period ended June 30, 1997
for Packwood Jekyll Limited Partnership with accompanying notes and
Accountants' Compilation Report (incorporated by reference from
CapStar's Current Report on Form 8-K dated September 5, 1997 (File No.
1-12017)).
99.7 Combined Balance Sheets as of June 30, 1997 (unaudited) and December
31, 1996, Combined Statements of Income, Partners' Capital and Cash
Flows for the six months ended June 30, 1997 (unaudited) and the year
ended December 31, 1996 for Chi-Town Partners, L.P. and St. Elmo's
Partners, L.P. with accompanying notes and Report of Independent
Accountants (incorporated by reference from CapStar's Current Report
on Form 8-K dated September 5, 1997 (File No. 1-12017)).
99.8 Combined Balance Sheet as of December 27, 1996, Combined Statements of
Income, Owners' Deficit and Cash Flows for the year ended December 27,
1996 for Westchase Holdings Ltd. with accompanying notes and
Independent Auditors' Report (incorporated by reference from
CapStar's Current Report on Form 8-K dated September 5, 1997 (File No.
1-12017)).
99.9 The Balance Sheet of Governor Morris Hotel Partners, L.P. as of June
30, 1997 (unaudited), the Statement of Operations of Governor Morris
Hotel Partners, L.P. for the six months ended June 30, 1997
(unaudited), the Statement of Changes in Partners' Deficit of Governor
Morris Hotel Partners, L.P. for the six months ended June 30, 1997
(unaudited), and the Statement of Cash Flows
8
<PAGE>
for Governor Morris Hotel Partners, L.P. for the six months ended June
30, 1997 (unaudited), the Balance Sheets of Governor Morris Hotel
Partners, L.P. as of December 31, 1996 and 1995, and the Statements of
Operations, Changes in Partners' Deficit and Cash Flows of Governor
Morris Hotel Partners, L.P. for the years ended December 31, 1996 and
1995 (incorporated by reference from pages 3 to 21 of CapStar's
Current Report on Form 8-K dated September 18, 1997 (File No. 1-
12017)).
99.10 The Consolidated Balance Sheet of Atgen Holdings, Inc. and
Subsidiaries as of July 31, 1997 (unaudited), January 31, 1997 and
1996, the Consolidated Statements of Operations of Atgen Holdings,
Inc. and Subsidiaries for the six months ended July 31, 1997
(unaudited) and for the year ended January 31, 1997 and 1996, the
Consolidated Statement of Cash Flows of Atgen Holdings, Inc. and
Subsidiaries for the six months ended July 31, 1997 (unaudited) and
for the year ended January 31, 1997 and 1996 (incorporated by
reference from pages 3 to 10 of CapStar's Current Report on Form 8-K
dated September 22, 1997 (File No. 1-12017)).
99.11 The Balance Sheets of OpCo as of March 31, 1998 (unaudited), December
31, 1997 and 1996, Statements of Operations, Owners' Equity and Cash
Flows of OpCo for the three months ended March 31, 1998 and 1997
(unaudited) and for each of the years in the three-year period ended
December 31, 1997 (incorporated by reference from Item 7 of CapStar's
Current Report on Form 8-K dated and filed on April 7, 1998 (and the
related Current Reports on Form 8-K/A, filed on May 22, 1998 and June
5, 1998) (File No. 1-12017)).
99.12 Balance Sheets of AGHI as of March 31, 1998 (unaudited), December 31,
1997 and 1996, Statements of Operations, Stockholders' Equity and Cash
Flows of AGHI for the three months ended March 31, 1998 and 1997
(unaudited) and for each of the years in the three-year period ended
December 31, 1997 (incorporated by reference from Item 7 of CapStar's
Current Report on Form 8-K dated and filed on April 7, 1998 (and the
related Current Reports on Form 8-K/A, filed on May 22, 1998 and June
5, 1998) (File No. 1-12017)).
99.13 The unaudited Pro Forma Balance Sheet of MeriStar as of March 31,
1998, the unaudited Pro Forma Statement of Operations of MeriStar for
the three months ended March 31, 1998 and the unaudited Pro Form
Statements of Operations of MeriStar for the year ended December 31,
1997.
99.14 The Comparative Per Share Information for the year ended December 31,
1998 and for the three months ended March 31, 1998 (unaudited).
9
<PAGE>
Exhibit 23.1
ACCOUNTANTS' CONSENT
The Board of Directors of
American General Hospitality Corporation:
We consent to the incorporation by reference in the Registration
Statement on Form S-3 (File No. 333-36127) of American General Hospitality
Corporation of our reports incorporated herein by reference and the reference to
our firm under the heading "Experts" in the Registration Statement.
Washington, D.C. /s/ KPMG Peat Marwick LLP
July 10, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of our report dated April
30, 1997 on the consolidated financial statements of Atgen-Holdings, Inc. and
Subsidiaries into the Registration Statement on Form S-3 (File No. 333-36127) of
American General Hospitality Corporation and to the reference to our firm under
the heading "Experts" in the Registration Statement.
New York, New York /s/ Pannell Kerr Forster PC
July 10, 1998
<PAGE>
Exhibit 23.3
ACCOUNTANTS' CONSENT
We consent to the use of our report incorporation by reference herein
by reference into the Registration Statement on Form S-3 (File No. 333-36127) of
American General Hospitality Corporation and to the reference to our firm under
the heading "Experts" in the Registration Statement.
Little Silver, New Jersey /s/ Pinsker, Goldberg, Ivanicki & Appuzzo
July 10, 1998
<PAGE>
Exhibit 23.4
ACCOUNTANTS' CONSENT
We consent to the use of our report incorporated herein by reference
into the Registration Statement on Form S-3 (File No. 333-36127) of American
General Hospitality Corporation and to the reference to our firm under the
heading "Experts" in the Registration Statement.
New York, New York /s/ Wertheim & Company
July 10, 1998
<PAGE>
Exhibit 23.5
ACCOUNTANTS' CONSENT
The Board of Directors of American General Hospitality Corporation:
We consent to the use of our report dated February 7, 1997 related to
the balance sheets of MCV Venture, LLC as of December 31, 1996 and 1995 and the
related statements of operations, members' equity (deficit), and cash flows for
the years then ended incorporated herein by reference into the Registration
Statement on Form S-3 (File No. 333-36127) of American General Hospitality
Corporation and to the reference to our firm under the heading "Experts" in the
Registration Statement.
Dallas, Texas /s/ King Griffin & Adamson P.C.
July 10, 1998
<PAGE>
Exhibit 23.6
ACCOUNTANTS' CONSENT
The Board of Directors of American General Hospitality Corporation:
We consent to the use of our report incorporated herein by reference
into the Registration Statement on Form S-3 (File No. 333-36127) of American
General Hospitality Corporation and to the reference to our firm under the
heading "Experts" in the Registration Statement.
Houston, Texas /s/ Mann Frankfort Stein & Lipp, P.C.
July 10, 1998
<PAGE>
Exhibit 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS'
We consent to the incorporation by reference in the Registration
Statement on Form S-3 (File No. 333-36127) of our report, dated April 1, 1998,
on our audit of the Financial Statements of American General Hospitality, Inc.
as of December 31, 1997 and 1996, and for each of the years in the three year
period ended December 31, 1997. We also consent to the reference to our firm
under the heading "Experts" in the Registration Statement.
Dallas, Texas /s/ PricewaterhouseCoopers LLP (Dallas, TX)
July 10, 1998
<PAGE>
Exhibit 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of American General Hospitality Corporation on Form S-3 (File No. 333-
36127) of our report, dated January 31, 1997, except as to Note 8 for which the
date is July 16, 1997, on our audit of the combined financial statements of Chi-
Town Partners, L.P. and St. Elmo's Partners, L.P. for the year ended December
31, 1996. We also consent to the reference to our firm under the caption
"Experts."
Philadelphia, Pennsylvania /s/ PricewaterhouseCoopers LLP (Philadelphia,PA)
July 10, 1998
<PAGE>
EXHIBIT 99.3
OPCO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The Unaudited Pro Forma Balance Sheet of OpCo as of March 31, 1998 is
presented assuming the following transactions had occurred on March 31, 1998:
(i) the Spin-Off, (ii) the execution of the Participating Leases and the
transfer of net hotel operating assets from CapStar, and (iii) the acquisition
of AGH Leasing and AGHI.
The Unaudited Pro Forma Statement of Operations of OpCo for the three months
ended March 31, 1998 and the year ended December 31, 1997 are presented assuming
the following transactions occurred at the beginning of 1997: (i) the Spin-Off,
(ii) the execution of the Participating Leases and the related transfer of hotel
operations, and (iii) the acquisition of AGH Leasing and AGHI.
In management's opinion, all material adjustments necessary to reflect the
transactions are presented in the pro forma adjustments columns, which are
further described in the notes to the OpCo Unaudited Pro Forma Financial
Statements. The OpCo Unaudited Pro Forma Financial Statements are not
necessarily indicative of what OpCo's financial position or results of
operations would have been if all the hotels were owned on such dates and if the
Spin-Off and other related transactions occurred on such dates. Additionally,
the pro forma information does not purport to project OpCo's financial position
or results of operations at any future date or for any future period. The OpCo
Unaudited Pro Forma Financial Statements should be read in conjunction with the
historical financial statements and related notes thereto of OpCo, AGH Leasing
and AGHI, which are incorporated by reference herein. Unless otherwise defined
herein, defined terms used herein shall have such meanings ascribed such terms
in the S-4 Registration Statement.
<PAGE>
OPCO
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUIRE
AGH
SPIN- PARTICIPATING LEASING AND
HISTORICAL (A) OFF (B) LEASES (C) SUBTOTAL AGHI (D) PRO FORMA
-------------- --------- -------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents ................ $28,602 $ 30,000 $ -- $ 58,602 $(48,799) $ 9,803
Prepaid expenses, deposits and other ..... 17,498 -- 37,959 55,457 -- 55,457
Intangible and fixed assets, net ......... 38,619 -- -- 38,619 95,000 133,619
------- -------- ------- -------- -------- --------
Total assets ........................... $84,719 $ 30,000 $37,959 $152,678 $ 46,201 $198,879
======= ======== ======= ======== ======== ========
LIABILITIES, MINORITY INTEREST AND
OWNERS'/STOCKHOLDERS' EQUITY
Due to affiliate ......................... $18,372 $(18,372) $ 871 $ 871 $ -- $ 871
Other liabilities ........................ 20,069 -- 37,088 57,157 -- 57,157
Credit facilities ........................ -- 30,000 -- 30,000 35,000 65,000
Capital leases and other debt ............ 776 -- -- 776 -- 776
------- -------- ------- -------- -------- --------
Total liabilities ...................... 39,217 11,628 37,959 88,804 35,000 123,804
Minority interest ........................ 3,835 768 -- 4,603 11,201 15,804
Common stock ............................. -- 249 -- 249 -- 249
Additional paid-in capital ............... -- 59,022 -- 59,022 -- 59,022
Retained earnings ........................ -- -- -- -- -- --
Owners' equity ........................... 41,667 (41,667) -- -- -- --
------- -------- ------- -------- -------- --------
Owners'/Stockholders' equity ............. 41,667 17,604 -- 59,271 -- 59,271
Total liabilities, minority interest and
owners'/stockholders' equity ......... $84,719 $ 30,000 $37,959 $152,678 $ 46,201 $198,879
======= ======== ======= ======== ======== ========
</TABLE>
___________
(A) Reflects the unaudited historical condensed combined balance sheet of OpCo
as of March 31, 1998.
(B) Reflects adjustments to capitalize OpCo upon the Spin-Off for (i) $30,000 of
cash drawn from OpCo's credit facilities and (ii) contributions of $18,372
to OpCo shareholders ($17,604) and OP Unit holders ($768) by CapStar upon
forgiveness of $18,372 due to CapStar.
(C) Reflects the transfer of net hotel operating assets from CapStar ($37,959 of
operating assets and $37,088 of operating liabilities) in conjunction with
the execution of the Participating Leases and the resulting due to affiliate
of $871 for the amount by which operating assets transferred to OpCo exceed
operating liabilities assumed by OpCo.
(D) Reflects the acquisitions of AGH Leasing and AGHI for $95,000. Based on
preliminary estimates, the purchase price will be allocated $26,500 to
intangible hotel leases acquired, to be amortized over 26 years
(representing the average remaining initial lease terms plus the assumed
exercise of three 5-year renewal options) and $68,500 to goodwill, to be
amortized over 35 years. The transaction is to be financed with $48,799 in
cash, an additional $35,000 drawn from OpCo's credit facilities and $11,201
in OpCo OP Units.
<PAGE>
OPCO
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ACQUIRE AGH LEASING
AND AGHI
-------------------------------------
AGH OTHER
SPIN-OFF PARTICIPATING ----------- --------------
HISTORICAL(A) PRO FORMA(B) LEASES(C) SUBTOTAL LEASING(D) AGHI(D) ADJUSTMENTS(E)
------------- ------------ ---------------- ---------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue from hotel
operations:
Rooms ..................... $23,404 $ -- $ 84,254 $107,658 $68,816 $ -- $ --
Food and beverage ......... 1,357 -- 33,632 34,989 16,641 -- --
Other hotel revenue ....... 1,219 -- 7,024 8,243 5,448 -- --
Hotel management, accounting
and other ................. 4,150 -- (3,121) 1,029 -- 2,815 (1,759)
------- ----- -------- -------- ------- ------ -------
Total revenue ............ 30,130 -- 121,789 151,919 90,905 2,815 (1,759)
Hotel operating expense by
department:
Rooms ..................... 5,124 -- 21,130 26,254 14,978 -- --
Food and beverage ......... 995 -- 27,154 28,149 12,235 -- --
Other operating
departments .............. 498 -- 3,819 4,317 2,054 -- --
Undistributed operating
expenses:
Administrative and
general .................. 6,963 -- 20,775 27,738 14,203 2,430 (577)
Property operating costs .. 4,142 -- 15,778 19,920 12,112 -- (2,070)
Lease expense ............. 10,655 -- 41,174 51,829 33,763 -- --
Depreciation and
amortization ............. 421 -- -- 421 26 27 750
------- ----- -------- -------- ------- ------ -------
28,798 -- 129,830 158,628 89,371 2,457 (1,897)
Interest expense and other,
net ....................... 539 694 -- 1,233 6 (42) 809
------- ----- -------- -------- ------- ------ -------
Total expenses ............. 29,337 694 129,830 159,861 89,377 2,415 (1,088)
------- ----- -------- -------- ------- ------ -------
Income (loss) before minority
interest and income taxes . 793 (694) (8,041) (7,942) 1,528 400 (671)
Minority interest .......... 35 (20) (336) (321) -- -- (753)
------- ----- -------- -------- ------- ------ -------
Income (loss) before income
taxes ..................... 758 (674) (7,705) (7,621) 1,528 400 82
Income tax provision
(benefit) ................. -- 34 (3,082) (3,048) -- -- 804
------- ----- -------- -------- ------- -------
Net income (loss) .......... $ 758 $(708) $ (4,623) $ (4,573) $ 1,528 $ 400 $ (722)
======= ===== ======== ======== ======= ====== =======
Basic net income per common
share ..................... NA
=======
Diluted net income per
common share ................... NA
=======
<CAPTION>
PRO FORMA
-----------
<S> <C>
Revenue from hotel
operations:
Rooms ..................................... $176,474
Food and beverage ......................... 51,630
Other hotel revenue ....................... 13,691
Hotel management, accounting
and other ................................. 2,085
--------
Total revenue ............................ 243,880
Hotel operating expense by
department:
Rooms ..................................... 41,232
Food and beverage ......................... 40,384
Other operating
departments .............................. 6,371
Undistributed operating
expenses:
Administrative and
general .................................. 43,794
Property operating costs .................. 29,962
Lease expense ............................. 85,592
Depreciation and
amortization ............................. 1,224
--------
248,559
Interest expense and other,
net ....................................... 2,006
--------
Total expenses ............................. 250,565
--------
Income (loss) before minority
interest and income taxes ................. (6,685)
Minority interest .......................... (1,074)
--------
Income (loss) before income
taxes ..................................... (5,611)
Income tax provision
(benefit) ................................. (2,244)
--------
Net income (loss) .......................... $ (3,367)
========
Basic net income per common
share ..................................... $(0.14)(F)
========
Diluted net income per
common share .............................. $(0.14)(F)
========
</TABLE>
______________
(A) Reflects the unaudited historical condensed combined statement of operations
of OpCo for the three months ended March 31, 1998.
(B) Reflects adjustments to (i) record interest expense (at an annual rate of
9.25%) of $694 relating to the $30,000 drawn from OpCo's credit facilities,
(ii) adjust minority interest for the effects of (i) and (iii) record income
taxes at 40% in conjunction with the change in tax status to a C-
corporation.
<PAGE>
A reconciliation of net income (loss) per the Historical and Spin-Off Pro
Forma columns in the OpCo Unaudited Pro Forma Statement of Operations for
the three months ended March 31, 1998 to net income per the Pro Forma Spin-
Off column in the MeriStar Unaudited Pro Forma Statement of Operations for
the same period (see page 28 of this Current Report on Forum 8-K) is as
follows:
<TABLE>
<CAPTION>
OPCO PRO FORMA:
---------------
<S> <C>
Net income (loss)--Historical column ................................................. $ 758
--Spin-Off Pro Forma column ............................................... (708)
-------
Historical and Spin-Off Pro Forma columns, net ....................................... $ 50
RECONCILING ITEMS:
------------------
Management fees earned by OpCo from CapStar-owned hotels--eliminated in CapStar's
consolidation ...................................................................... (3,121)
Interest expense incurred by CapStar on financing of note receivable from OpCo ....... 1,218
Minority interest effect of the above reconciling items .............................. (103)
Income tax effect of the above reconciling items ..................................... 764
-------
MERISTAR PRO FORMA:
-------------------
Net income--Pro Forma Spin-Off column (page 28 of this Current Report on Form 8-K) ... $(1,192)
=======
</TABLE>
___________
(C) Reflects the execution of the Participating Leases to (i) present a full
period of hotel operations for hotels leased from CapStar, (ii) adjust
minority interest for the effects of (i) and (iii) record income taxes at
40%. Lease expense was calculated based on contractual terms of existing
leases or expected terms of leases that will be entered into concurrently
with the Merger.
(D) Reflects adjustments for the acquisition of AGH Leasing and AGHI for (i) pro
forma AGH Leasing presented in AGH's Current Report on Form 8-K, dated April
6, 1998 and filed on April 7, 1998 (and the related Form 8-K/A, filed on May
22, 1998, June 5, 1998 and June 19, 1998) and incorporated herein by
reference and (ii) the historical operating activity of AGHI which is
derived from the historical financial statements of AGHI included in
CapStar's Current Report on Form 8-K, dated and filed on April 7, 1998 (and
the related Current Reports on Form 8-K/A, filed on May 22, 1998), and
incorporated herein by reference.
(E) Other adjustments for the acquisition reflect (i) elimination of historical
management fees earned by AGHI from the AGH Owned Hotels of $1,759, (ii)
elimination of pro forma management fees incurred by AGH Leasing for AGHI
services of $2,070, (iii) elimination of management advisory services fees
of $858 that will not be incurred in the future (as the management advisory
contract terminates upon the sale of AGHI and the Company will perform these
functions internally with existing management), net of $281 of additional
general and administrative costs expected to be incurred upon the Spin-Off
and acquisition, (iv) amortization of $750 on intangible assets acquired in
the purchase, (v) interest expense of $809 relating to the $35,000 draw from
OpCo's credit facility, (vi) minority interest of 16.2% adjusted for (i)
through (v), and (vii) income taxes at 40%.
(F) Pro forma basic and diluted net income per common share has been calculated
using 24,890,355 shares of OpCo Common Stock.
<PAGE>
OPCO
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SPIN-OFF PARTICIPATING
------------ ----------------
HISTORICAL(A) PRO FORMA(B) LEASES(C) SUBTOTAL
------------- ------------ ---------------- -----------
<S> <C> <C> <C> <C>
Revenue from hotel
operations:
Rooms......................... $ 9,880 $68,738 $343,066 $421,684
Food and beverage............. 1,397 3,316 137,358 142,071
Other......................... 474 3,237 26,265 29,976
Hotel management, accounting
and other .................... 12,088 -- (7,238) 4,850
------- ------- -------- --------
Total revenue ............... 23,839 75,291 499,451 598,581
Hotel operating expense by
department:
Rooms ........................ 2,533 14,300 89,297 106,130
Food and beverage ............ 909 2,215 109,096 112,220
Other operating
departments ................. 261 1,648 14,227 16,136
Undistributed operating
expenses:
Administrative and
general ..................... 10,473 11,169 77,254 98,896
Property operating costs ..... 1,917 12,265 60,265 74,447
Participating lease
expense ..................... 4,135 32,002 140,936 177,073
Depreciation and
amortization ................ 636 826 1,462
------- ------- -------- --------
20,864 74,425 491,075 586,364
Interest expense and other,
net 10 2,775 2,785
------- ------- -------- --------
Total expenses ................ 20,874 77,200 491,075 589,149
------- ------- -------- --------
Income (loss) before minority
interest and income taxes.... 2,965 (1,909) 8,376 9,432
Minority interest ............ 103 (14) 350 439
------- ------- -------- --------
Income (loss) before income
taxes ....................... 2,862 (1,895) 8,026 8,993
Income tax provision ......... -- 387 3,210 3,597
------- ------- -------- --------
Net income (loss) ............ $ 2,862 $(2,282) $ 4,816 $ 5,396
======= ======= ======== ========
Basic net income per common
share ....................... NA
==========
Diluted net income per
common share ................ NA
==========
<CAPTION>
ACQUIRE AGH LEASING
-------------------
AND AGHI
---------
AGH OTHER
------------ --------------
LEASING(D) AGHI(D) ADJUSTMENTS(E) PRO FORMA
------------ --------- -------------- ------------
<S> <C> <C> <C> <C>
Revenue from hotel
operations:
Rooms ....................... $252,513 $ -- $ -- $674,197
Food and beverage ........... 61,655 -- -- 203,726
Other ....................... 20,204 -- -- 50,180
Hotel management, accounting
and other ................... -- 7,351 (1,691) 10,510
-------- ------ ------- --------
Total revenue .............. 334,372 7,351 (1,691) 938,613
Hotel operating expense by
department:
Rooms ....................... 59,503 -- -- 165,633
Food and beverage ........... 48,406 -- -- 160,626
Other operating
departments ................ 8,259 -- -- 24,395
Undistributed operating
expenses:
Administrative and
general .................... 54,873 7,242 (1,102) 159,909
Property operating costs .... 47,607 -- (7,355) 114,699
Participating lease
expense .................... 120,128 -- -- 297,201
Depreciation and
amortization ............... 104 124 3,000 4,690
-------- ------ ------- --------
------
338,880 7,366 (5,457) 927,153
Interest expense and other,
net ......................... (373) (135) 2,974 5,251
-------- ------ ------- --------
------
Total expenses ............... 338,507 7,231 (2,483) 932,404
-------- ------ ------- --------
------
Income (loss) before minority
interest and income taxes ... (4,135) 120 792 6,209
Minority interest ............ (1,663) -- 2,271 1,047
-------- ------ ------- --------
Income (loss) before income
taxes ....................... (2,472) 120 (1,479) 5,162
Income tax provision ......... -- (1,532) 2,065
------ ------- --------
Net income (loss) ............ $ (2,472) $ 120 $ 53 $ 3,097
======== ====== ======= ========
Basic net income per common
share ....................... $ 0.12(F)
========
Diluted net income per
common share ................ $ 0.12(F)
========
</TABLE>
_______________
(A) Reflects the audited historical condensed combined statement of operations
<PAGE>
(B) Reflects the pre-acquisition operations of the management operations and
leases acquired during 1997 as if they were acquired at the beginning of the
year. The pre-acquisition operations were obtained from each entity's pre-
acquisition financial statements. Also reflects adjustments to (i) record
pro forma depreciation and amortization at OpCo's cost basis for its
acquisitions, (ii) record interest expense of $2,775 at 9.25% relating to
the $30,000 drawn from OpCo's credit facilities, (iii) adjust minority
interest for the effects of the acquisitions and (i) and (ii), and (iv)
record income taxes at 40% in conjunction with the change in tax status to a
C-corporation.
A reconciliation of net income (loss) per the Historical and Spin-Off Pro
Forma columns in the OpCo Unaudited Pro Forma Statement of Operations for
the year ended December 31, 1997 to net income per the Pro Forma Spin-Off
column in the MeriStar Unaudited Pro Forma Statement of Operations for the
same period (see page 30 of this Current Report on Form 8-K) is as follows:
<TABLE>
<CAPTION>
OPCO PRO FORMA:
- --------------
<S> <C>
Net income (loss)--Historical column ............................................... $ 2,862
--Spin-Off Pro Forma column ........................................ (2,282)
-------
Historical and Spin-Off Pro Forma columns, net ...................................... $ 580
RECONCILING ITEMS:
- ------------------
Management fees earned by OpCo from CapStar-owned hotels--eliminated in CapStar's
consolidation ..................................................................... (7,238)
Interest expense incurred by CapStar on financing of note receivable from OpCo ...... 2,147
Minority interest effect of the above reconciling items ............................. (125)
Income tax effect of the above reconciling items .................................... 2,001
-------
MERISTAR PRO FORMA:
- -------------------
Net income--Pro Forma Spin-Off column (page 30 of this Current Report on Form 8-K) .. $(2,635)
=======
</TABLE>
___________________
(C) Reflects the execution of the Participating Leases to (i) present a full
year of hotel operations for hotels leased from CapStar, (ii) eliminate
$7,238 of management fee revenue earned from CapStar-owned hotels, (iii)
adjust minority interest for the effects of (i) and (ii), and (iv) record
income taxes at 40%. Lease expense was calculated based on contractual terms
of existing leases or expected terms of leases that will be entered into
concurrently with the Merger.
(D) Reflects adjustments for the acquisition of AGH Leasing and AGHI for (i) pro
forma AGH Leasing presented in AGH's Current Report on Form 8-K, dated April
6, 1998, filed with the Commission on April 7, 1998 (and the related 8-K/A
filed on May 22, 1998, June 5, 1998 and June 19, 1998) and incorporated
herein by reference and (ii) the historical operating activity of AGHI that
is derived from the historical financial statements of AGHI included in
CapStar's Current Report on Form 8-K, dated and filed on April 7, 1998 (and
the related Current Report on Form 8-K/A filed on May 22, 1998) incorporated
herein by reference.
(E) Other adjustments for the acquisition reflect (i) elimination of historical
management fees earned by AGHI from the AGH Owned Hotels of $1,691, (ii)
elimination of pro forma management fees incurred by AGH Leasing for AGHI
services of $7,355, (iii) elimination of management advisory services fees
of $2,227 that will not be incurred in the future (as the management
advisory contract terminates upon the sale of AGHI and the Company will
perform these functions internally with existing management) net of $1,125
of additional general and administrative costs expected to be incurred upon
the Spin-Off and acquisition, (iv) amortization of $3,000 on intangible
assets acquired in the purchase, (v) interest expense of $3,238 relating to
the $35,000 draw from OpCo's credit facility net of historical AGH Leasing
and AGHI interest expense of $264 which will not be incurred upon
acquisition, (vi) minority interest adjusted for (i) through (v), and (vii)
income taxes at 40%.
(F) Pro forma basic and diluted net income per common share has been calculated
using 24,867,205 shares of OpCo Common Stock.
<PAGE>
EXHIBIT 99.13
MERISTAR UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The MeriStar Unaudited Pro Forma Balance Sheet as of March 31, 1998 is
presented assuming the following transactions had occurred on March 31, 1998:
(i) the Spin-Off, (ii) the execution of the separate participating lease
agreements, upon consummation of the Merger (the "Participating Leases") and the
related transfer of net hotel operating assets to OpCo, (iii) the execution of
the note receivable from OpCo to fund OpCo's acquisition of AGH Leasing and
AGHI, (iv) the Merger, and (v) the Transactions (as defined in the Form S-4
Registration Statement).
The MeriStar Unaudited Pro Forma Statement of Operations for three months
ended March 31, 1998 and the year ended December 31, 1997 are presented assuming
the following transactions occurred at the beginning of 1997: (i) CapStar's
purchase of 28 hotels, 40 leases and the management business of Winston
Hospitality Inc. ("Winston") during 1997 and the purchase of nine hotels
subsequent to year-end, (ii) the Spin-Off, (iii) the execution of the
Participating Leases and the related transfer of hotel operations, (iv) the
execution of the note receivable from OpCo in the amount of $35 million to fund
OpCo's acquisition of AGH Leasing and AGHI, (v) the Merger, and (vi) the
Transactions.
The Merger will be treated as a purchase for financial reporting purposes in
accordance with generally accepted accounting principles. In accordance with the
provisions of Accounting Principles Board Opinion No. 16, "Business
Combinations," CapStar will be considered the acquiring enterprise for financial
reporting purposes. MeriStar's unaudited pro forma financial statements give
effect to the acquisition of AGH by CapStar under the purchase method of
accounting and are based on the assumptions and adjustments described in the
accompanying notes to the unaudited pro forma financial statements presented on
the following pages. For purposes of preparing MeriStar's financial statements,
CapStar will establish a new accounting basis for AGH's assets and liabilities
based upon the fair values thereof as of the effective date of the Merger. The
preliminary estimates and assumptions as to the value of the assets and
liabilities of AGH to MeriStar are based upon information available at the date
these unaudited pro forma financial statements were prepared, and will be
adjusted upon the final determination of such fair values. For financial
reporting purposes, the results of operations of AGH will be included in the
MeriStar statement of operations following the effective date of the Merger.
In management's opinion, all material adjustments necessary to reflect the
transactions are presented in the pro forma adjustments columns, which are
further described in the notes to the MeriStar Unaudited Pro Forma Financial
Statements. The MeriStar Unaudited Pro Forma Financial Statements are not
necessarily indicative of what MeriStar's financial position or results of
operations would have been if all the hotels were owned on such dates and if the
Spin-Off, merger and other transactions occurred on such dates. Additionally,
the pro forma information does not purport to project MeriStar's financial
position or results of operations at any future date or for any future period.
The MeriStar Unaudited Pro Forma Financial Statements should be read in
conjunction with the historical financial statements and related notes thereto
of AGH and CapStar, which are incorporated by reference herein. Unless
otherwise defined herein, defined terms used herein shall have such meanings
ascribed such terms in the S-4 Registration Statement.
<PAGE>
MERISTAR
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
CAPSTAR ACQUISITIONS SPIN-OFF PARTICIPATING OPCO
HISTORICAL(A) PRO FORMA(B) (C) LEASES(D) FINANCING(E) SUBTOTAL
------------- ------------ -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents...... $ 77,573 $ (48,971) $(28,602) $ -- $ -- $ --
Property and equipment, net.... 1,128,204 85,816 (2,881) -- -- 1,211,139
Deposits and other assets...... 122,680 (4,699) (53,236) (37,959) -- 26,786
Due from affiliate............. -- -- -- 871 -- 871
Note receivable from OpCo...... -- -- 30,000 -- 35,000 65,000
------------ ---------- -------- --------- ---------- -----------
Total assets.................. $ 1,328,457 $ 32,146 $(54,719) $ (37,088) $ 35,000 $ 1,303,796
============ ========== ======== ========= ========== ===========
LIABILITIES, MINORITY INTEREST
AND STOCKHOLDERS' EQUITY
Other liabilities.............. $ 79,005 $ 919 $(20,069) $ (37,088) $ -- $ 22,767
Long-term debt................. 675,447 31,227 29,224 -- 35,000 770,898
------------ ---------- -------- --------- ---------- -----------
Total liabilities.............. 754,452 32,146 9,155 (37,088) 35,000 793,665
Minority interest.............. 49,194 -- (4,603) -- -- 44,591
Common Stock................... 249 -- -- -- -- 249
Additional paid-in capital..... 500,016 -- (59,271) -- -- 440,745
Retained earnings.............. 26,566 -- -- -- -- 26,566
Accumulated other
comprehensive income.......... (2,020) -- -- -- -- (2,020)
------------ ---------- -------- --------- ---------- -----------
Stockholders' equity........... 524,811 -- (59,271) -- -- 465,540
------------ ---------- -------- --------- ---------- -----------
Total liabilities, minority
interest and stockholders'
equity....................... $ 1,328,457 $ 32,146 $(54,719) $ (37,088) $ 35,000 $ 1,303,796
============ ========== ======== ========= ========== ===========
<CAPTION>
MERGER
------------------------------
AGH PRO OTHER
FORMA(F) ADJUSTMENTS(G) PRO FORMA
---------- -------------- ---------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents...... $ 973 $ -- $ 973
Property and equipment, net.... 1,086,849 309,756 2,607,744
Deposits and other assets...... 75,997 (529) 102,254
Due from affiliate............. -- -- 871
Note receivable from OpCo...... -- -- 65,000
---------- ------------ -----------
Total assets.................. $1,163,819 $ 309,227 $ 2,776,842
========== ============ ===========
LIABILITIES, MINORITY INTEREST
AND STOCKHOLDERS' EQUITY
Other liabilities.............. $ 30,790 $ (6,098) $ 47,459
Long-term debt................. 517,311 241,485 1,529,694(H)
---------- ------------ -----------
Total liabilities.............. 548,101 235,387 1,577,153
Minority interest.............. 85,104 10,127 139,822
Common Stock................... 243 (37) 455
Additional paid-in capital..... 537,361 56,191 1,034,297
Retained earnings.............. (6,990) 7,559 27,135
Accumulated other
comprehensive income.......... -- -- (2,020)
---------- ------------
Stockholders' equity........... 530,614 63,713 1,059,867
---------- ------------ -----------
Total liabilities, minority
interest and stockholders'
equity....................... $1,163,819 $ 309,227 $ 2,776,842
========== ============ ===========
</TABLE>
_____________
(A) Reflects the unaudited historical condensed consolidated balance sheet of
CapStar as of March 31, 1998.
(B) Reflects CapStar's acquisition of the Sheraton Fisherman's Wharf in San
Francisco, CA and related financing as follows:
<TABLE>
<S> <C>
Purchase price of hotel....................... $85,000
Closing and other acquisition costs........... 816
Operating assets acquired in purchase:
Cash in house banks...................... 91
Deposits and other assets................ 301
Other liabilities assumed in purchase......... (919)
-------
Net cash disbursed for acquisition............ 85,289
Financing of acquisition:
Cash..................................... 49,062
Purchase deposit......................... 5,000
Credit facility.......................... 31,227
-------
Total financing of acquisition................ $85,289
</TABLE>
<PAGE>
The weighted average interest rate on the credit facility is the London
Interbank Offered Rate ("LIBOR") plus 1.58%, which was 7.29% at March 31,
1998.
(C) Reflects the Spin-Off of historical balances of OpCo in the form of a non-
cash distribution to CapStar shareholders and OP unitholders as follows:
<TABLE>
<S> <C>
Cash and cash equivalents...................... $(28,602)
Property and equipment......................... (2,881)
Deposits and other assets...................... (53,236)
Other liabilities.............................. 20,069
Long-term debt................................. 776
Non-cash distribution to CapStar shareholders
and OP unitholders........................ $(63,874)
</TABLE>
The non-cash distribution represents 24,890,355 shares OpCo Common Stock
and 1,083,759 OpCo OP Units distributed to holders of CapStar Common Stock
and CapStar OP Units.
The historical balances of OpCo as of March 31, 1998 are included in
CapStar's Current Report on Form 8-K dated and filed on April 7, 1998 (and
the related Current Reports on Form 8-K/A, filed on May 22, 1998 and June
5, 1998), and incorporated herein by reference. Also reflects the execution
of a note receivable from OpCo of $30,000 at an interest rate of 9.25%
which is to be financed with a draw of $30,000 from the credit facility.
(D) Reflects the transfer of net hotel operating assets to OpCo ($37,959 of
operating assets and $37,088 of operating liabilities) in conjunction with
the Participating Leases and the resulting due from affiliate of $871 for
the amount by which operating assets transferred to OpCo exceed operating
liabilities assumed by OpCo.
(E) Reflects the execution of an additional note receivable of $35,000 at an
interest rate of 9.25% from OpCo to finance OpCo's acquisition of AGH
Leasing and AGHI to be financed with a draw of $35,000 from the credit
facility.
(F) Reflects pro forma AGH as presented in AGH's Current Report on Form 8-K,
dated April 6, 1998 and filed on April 7, 1998 (and the related Current
Reports on Form 8-K/A, filed on May 22, 1998 and June 5, 1998), filed with
the Commission and incorporated herein by reference.
(G) Reflects the $73,271 adjustment (included in the $309,756 pro forma
adjustment to property and equipment) to record AGH's net assets acquired
at fair market value in connection with the Merger. The pro forma fair
value of AGH's net assets in the acquisition is calculated as follows:
<TABLE>
<S> <C>
CapStar's stock price at May 19, 1998......... $ 31.81
Less: Estimated value of OpCo upon Spin-
Off...................................... (3.00)
-----------
Estimated value of MeriStar stock............. 28.81
AGH Exchange Ratio............................ 0.8475
-----------
Estimated value of AGH stock.................. 24.42
Number of shares of AGH stock and OP
units outstanding at May 19, 1998 subject
to exchange offer........................ 28,215,765
-----------
Estimated fair value of AGH's net assets...... 688,989
AGH's net assets before fair value
adjustment............................... 615,718
-----------
Step-up of AGH's net assets to fair value
(allocated to property and equipment).... $ 73,271
===========
</TABLE>
<PAGE>
The entries to adjust the net assets of AGH to fair value for the
acquisition are as follows:
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
MINORITY COMMON PAID-IN EARNINGS
INTERESTS STOCK CAPITAL AND OTHER TOTAL
---------- ------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Eliminate pro forma AGH balances............... $(85,104) $ (243) $(537,361) $6,990 $(615,718)
Issuance of MeriStar common stock and OP
units to acquire AGH......................... 95,231 206 593,552 -- 688,989
-------- ------ --------- ------ ---------
Fair value adjustment of AGH's net assets for
acquisition.................................. $ 10,127 $ (37) $ 56,191 $6,990 $ 73,271
======== ====== ========= ====== =========
</TABLE>
Column also reflects (i) the Prime Group II Acquisition (as defined in the
AGH Form 10-K, as amended) for an acquisition cost of $230,485 and Merger
and other transaction costs of approximately $6,000 incurred by CapStar,
both amounts are included in the $309,756 pro forma adjustment to property
and equipment (ii) the write-off of CapStar's deferred financing fees of
$5,529 in conjunction with the termination of its credit facility, net of
estimated deferred financing costs of $5,000 associated with the Credit
Facility (as defined in the Form S-4 Registration Statement), (iii)
borrowings of $241,485 under the Credit Facility at an assumed interest
rate of 7.5%, to finance the Prime Group II Acquisition ($230,485), the
Merger and other transaction costs ($6,000) and the financing costs for the
Credit Facility ($5,000), and (iv) the adjustment to remove CapStar's
deferred taxes payable of $6,098 in conjunction with the change in its tax
status to a REIT.
(H) Notwithstanding the March 16, 1998 joint press release of AGH and CapStar,
this amount includes approximately $230 million of indebtedness to fund the
acquisition of the Prime Group II Acquisition that was proposed to be
financed by an equity offering. On a pro forma basis, the aggregate
maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1998....... $ 2,104
1999....... 56,462
2000....... 4,010
2001....... 477,095
2002....... 288,794
Thereafter. 701,229
-----------
Total. $ 1,529,694
===========
</TABLE>
<PAGE>
MERISTAR
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CAPSTAR ACQUISITIONS PRO FORMA PARTICIPATING OPCO
HISTORICAL(A) PRO FORMA(B) SPIN-OFF(C) LEASES(D) FINANCING(E)
------------------ ------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Hotel operating revenue ........ $ 141,597 $ 9,293 $ (25,980) $ (124,910) $ --
Office rental and other
revenue ....................... 1,018 -- -- -- --
Hotel management, accounting
and other ..................... 987 -- (987) -- --
Participating lease revenue .... -- -- -- 41,174 --
------------ ----------- ---------- ----------- -----------
Total revenue ................ 143,602 9,293 (26,967) (83,736) --
Hotel operating expenses ....... 54,840 3,880 (6,617) (52,103) --
Office rental and other
expenses ...................... 440 -- -- -- --
Undistributed operating
expenses:
Administrative and
general ..................... 25,245 1,267 (6,202) (19,560) --
Property operating
costs ....................... 29,722 853 (14,798) (15,777) --
Property taxes, insurance
and other ................... 6,135 466 (761) (1,214) --
Depreciation and
amortization ................ 9,508 1,207 (421) -- --
------------ ----------- ---------- ----------- -----------
125,890 7,673 (28,799) (88,654) --
Interest expense, net .......... 9,972 2,440 (2) -- (175)
------------ ----------- ---------- ----------- -----------
Total expenses ............... 135,862 10,113 (28,801) (88,654) (175)
------------ ----------- ---------- ----------- -----------
Income (loss) before minority
interest and income taxes ..... 7,740 (820) 1,834 4,918 175
Minority interest .............. 561 (100) (88) 206 7
------------ ----------- ---------- ----------- -----------
Income (loss) before income
taxes ......................... 7,179 (720) 1,922 4,712 168
Income tax provision ........... 2,728 (273) 730 1,791 64
------------ ----------- ---------- ----------- -----------
Net income ..................... $ 4,451 $ (447) $ 1,192 $ 2,921 $ 104
============ =========== ========== =========== ===========
Basic net income per common
share ......................... $ 0.18
============
Diluted net income per
common share .................. $ 0.18
============
<CAPTION>
MERGER
-----------------------------------------
AGII PRO OTHER
SUBTOTAL FORMA(F) ADJUSTMENTS(G) PRO FORMA
----------- ------------- ------------------ ---------
<S> <C> <C> <C> <C>
Hotel operating revenue ........ $ -- $ -- $ -- $ --
Office rental and other
revenue ....................... 1,018 818 -- 1,836
Hotel management, accounting
and other ..................... -- -- -- --
Participating lease revenue .... 41,174 36,490 7,342 85,006
--------- --------- -------------- --------
Total revenue ................ 42,192 37,308 7,342 86,842
Hotel operating expenses ....... -- -- -- --
Office rental and others
expenses ...................... 440 370 -- 810
Undistributed operating
expenses:ted operating
Administrative and
general ..................... 750 2,857 (2,100) 1,507
Property operating
costs ....................... -- -- -- --
Property taxes, insurance
and other ................... 4,626 5,245 1,751 11,622
Depreciation and
amortization ................ 10,294 10,391 4,063 24,748
--------- --------- -------------- --------
16,110 18,863 3,714 38,687
Interest expense, net .......... 12,235 8,312 4,322 24,869
--------- --------- -------------- --------
Total expenses ............... 28,345 27,175 8,036 63,556
--------- --------- -------------- --------
Income (loss) before minority
interest and income taxes ..... 13,847 10,133 (694) 23,286
Minority interest .............. 586 1,401 202 2,189
--------- --------- -------------- --------
Income (loss) before income
taxes ......................... 13,261 8,732 (896) 21,097
Income tax provision ........... 5,040 -- (5,040) --
--------- --------- -------------- --------
Net income ..................... $ 8,221 $ 8,732 $ 4,144 $ 21,097(I)
========= ========= ============== ========
Basic net income per common
share ......................... $ 0.46(H)
========
Diluted net income per
common share .................. $ 0.46(H)
========
</TABLE>
____________
(A) Reflects the unaudited historical condensed consolidated statement of
operations of CapStar for the three months ended March 31, 1998.
(B) Reflects the pre-acquisition operations of the nine hotels purchased
subsequent to year end. For each, the pre-acquisition operations were
obtained from the pre-acquisition financial statements. Also reflects
adjustments to (i) record depreciation and amortization expense as if the
hotels had been acquired as of the beginning of the period, (ii) record
interest expense as if the various financing activities that occurred during
1998 had occurred at the beginning of the period, (iii) adjust minority
interest of 4.2% for the effects of the acquisitions, and (iv) record the
income tax effect at 38%.
<PAGE>
(C) Reflects the pro forma Spin-Off. In addition, reflects adjustments to (i)
eliminate management fee revenue, (ii) record interest income on the $30,000
note receivable from OpCo, net of interest expense incurred on the $30,000
drawn on the credit facility to capitalize OpCo, (iii) adjust minority
interest of 4.2% for the effects of the Spin-Off, and (iv) record the income
tax effect at 38%.
(D) Reflects the execution of the Participating Leases to (i) transfer the hotel
operations to OpCo, and (ii) adjust minority interest of 4.2% for the
effects of (i), and (iii) record the income tax effect at 38%. Participating
Lease revenue was calculated based on contractual terms of existing leases
or expected terms of leases that will be entered into concurrently with the
Merger applied to the historical operations of the hotels. Management
believes that the changes in ownership and management structure are unlikely
to affect the conduct of the leased properties.
(E) Reflects adjustments to (i) record interest income at an annual interest
rate of 9.25% on the $35,000 note receivable from OpCo, net of interest
expense on the $35,000 draw on the credit facility to finance the note (ii)
adjust minority interest of 4.2%, and (iii) record the income tax effect at
38%.
(F) Reflects pro forma AGH as presented in AGH's Current Report on Form 8-K,
dated April 6, 1998, filed with the Commission on April 7, 1998 (and the
related Current Reports on Form 8-K/A filed on May 22, 1998 and June 5,
1998) and incorporated herein by reference.
(G) Reflects (i) the amortization related to the additional deferred financing
costs net of the amortization on the financing fees written off in
connection with the termination of CapStar's credit facility, (ii)
additional depreciation expense related to the adjustment to record AGH net
assets acquired at fair market value in connection with the Merger, (iii)
the adjustment to reflect interest expense of $4,322 on borrowings under the
Credit Facility at an assumed interest rate of 7.5% to finance the Prime
Group II Acquisition (as defined in the AGH Form 10-K, as amended), (iv) an
adjustment to eliminate $2,100 in non-recurring expenses incurred by AGH
related to the Merger, (v) adjusted minority interest of 8.8%, and (vi) the
adjustment to remove CapStar's income taxes in conjunction with the change
in its tax status to a REIT.
(H) Pro forma net income per common share has been calculated using 45,498,023
basic shares and 45,816,591 diluted shares of MeriStar Common Stock.
(I) As a result of the Spin-Off, the Merger and the Transactions, MeriStar
expects the following non-recurring items: (i) estimated tax expense of
$20,000 and transaction expenses of $2,000 related to the Spin-Off, (ii) the
write-off of deferred financing fees of $5,529 in connection with the
termination of CapStar's credit facility, and (iii) the write-off of
CapStar's deferred tax liability of $6,098 in conjunction with the change in
its tax status to a REIT. These items will be charged to operations as
incurred and have not been included in the Unaudited Pro Forma Statement of
Operations. In addition, AGH has incurred $2,100 in non-recurring expenses
related to the Merger, which have not been included in the Unaudited Pro
Forma Statement of Operations.
<PAGE>
MERISTAR
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CAPSTAR PRO FORMA FORMA PARTICIPATING
HISTORICAL(A) ACQUISITIONS(B) SPIN-OFF(C) LEASES(D)
------------------ -------------------------- ---------------- -----------------
1997 1998
----------- -------------
<S> <C> <C> <C> <C> <C>
Hotel operating revenue .... $309,083 $185,749 $98,899 $(87,042) $(506,689)
Office rental and other
revenue .................... 2,174 3,246 -- -- --
Hotel management,
accounting and
other ...................... 5,136 (98) -- (4,850) --
Participating lease.......... -- -- -- -- 140,936
revenue ................... -------- -------- ------- -------- ---------
Total revenue ............ 316,393 188,897 98,899 (91,892) (365,753)
Hotel operating expenses ... 127,603 65,440 41,443 (21,866) (212,620)
Office rental and other
expenses ................... 845 1,347 -- -- --
Undistributed operating
expenses:
Administrative and
general .................. 50,332 28,668 20,246 (21,240) (75,008)
Property operating costs... 42,553 58,464 9,567 (50,319) (60,265)
Property taxes,
insurance and
other .................... 12,558 6,326 3,367 (402) (2,246)
Depreciation and
amortization ............ 20,990 12,456 7,833 (1,462) --
-------- -------- ------- -------- ---------
254,881 172,701 82,456 (95,289) (350,139)
Interest expense, net ...... 21,024 13,028 15,603 (638) --
-------- -------- ------- -------- ---------
Total expenses ........... 275,905 185,729 98,059 (95,927) (350,139)
-------- -------- ------- -------- ---------
Income (loss) before
minority .................. 40,488 3,168 840 4,035 (15,614)
interest and income taxes
Minority interest .......... 1,425 968 104 (214) (653)
-------- -------- ------- -------- ---------
Income (loss) before
income taxes ............... 39,063 2,200 736 4,249 (14,961)
Income tax provision ....... 14,911 768 279 1,614 (5,685)
-------- -------- ------- -------- ---------
Net income ................. $ 24,152 $ 1,432 $ 457 $ 2,635 $ (9,276)
======== ======== ======= ======== =========
Basic net income per common
share ..................... $ 1.29
========
Diluted net income per
common share ............. $ 1.27
========
<CAPTION>
OPCO PRO
FINANCING(E) SUBTOTAL MERGER FORMA
-------------- ----------- ------------------------------ ------------
AGH OTHER
PRO ADJUST-
FORMA(F) MENTS(G)
-------------- --------------
<S> <C> <C> <C> <C> <C>
Hotel operating revenue .... $ -- $ -- $ -- $ -- $ --
Office rental and other
revenue .................... -- 5,420 2,340 -- 7,760
Hotel management,
accounting and
other ...................... -- 188 -- -- 188
Participating lease.......... -- 140,936 133,875 29,943 304,754
revenue ................... ----- -------- -------- -------- --------
Total revenue ............ -- 146,544 136,215 29,943 312,702
Hotel operating expenses ... -- -- -- -- --
Office rental and other
expenses ................... -- 2,192 1,256 -- 3,448
Undistributed operating
expenses:
Administrative and
general................... -- 2,998 3,066 -- 6,064
Property operating costs... -- -- -- -- --
Property taxes,
insurance and
other .................... -- 19,603 18,296 6,584 44,483
Depreciation and
amortization ............ -- 39,817 39,969 10,586 90,372
----- -------- -------- -------- --------
-- 64,610 62,587 17,170 144,367
Interest expense, net ...... (700) 48,317 32,127 17,286 97,730
----- -------- -------- -------- --------
Total expenses ........... (700) 112,927 94,714 34,456 242,097
----- -------- -------- -------- --------
Income (loss) before
minority .................. 700 33,617 41,501 (4,513) 70,605
interest and income taxes
Minority interest .......... 29 1,659 5,736 (628) 6,767
----- -------- -------- -------- --------
Income (loss) before
income taxes .............. 671 31,958 35,765 (3,885) 63,838
Income tax provision ....... 255 12,142 -- (12,142) --
----- -------- -------- -------- --------
Net income ................. $ 416 $ 19,816 $ 35,765 $ 8,257 63,838(I)
===== ======== ======== ======== ========
Basic net income per common
share ..................... $ 1.40(H)
===========
Diluted net income per
common share ............. $ 1.39(H)
===========
</TABLE>
___________
(A) Reflects the audited historical condensed consolidated statement of
operations of CapStar for the year ended December 31, 1997.
(B) Reflects the 1997 pre-acquisition operations of 28 CapStar Owned Hotels
acquired during 1997, the 1997 pre-acquisition operations for the 40 leases
and management business of Winston acquired during 1997, and the 1997
operations of the nine hotels purchased subsequent to year-end. For each,
the pre-acquisition operations were obtained from the pre-acquisition
financial statements. Also reflects adjustments to (i) record depreciation
and amortization expense as if the hotels and the leases and management
business of Winston had been acquired as of the beginning of the year, (ii)
record interest expense as if the various financing activities that occurred
during 1997 and 1998 had occurred at the beginning of the year, (iii) adjust
minority interest of 4.2% for the effects of the acquisitions, and (iv)
record the income tax effect at 38%.
(C) Reflects the pro forma Spin-Off. In addition, reflects adjustments to (i)
eliminate management fee revenue, (ii) record interest income on the $30,000
note receivable from OpCo, net of interest expense incurred on the $30,000
drawn on the credit facility to capitalize OpCo, (iii) adjust minority
interest of 4.2% for the effects of the Spin-Off, and (iv) record the income
tax effect at 38%.
<PAGE>
(D) Reflects the execution of the Participating Leases to (i) transfer the hotel
operations to OpCo, and (ii) adjust minority interest of 4.2% for the
effects of (i), and (iii) record the income tax effect at 38%. Participating
Lease revenue was calculated based on contractual terms of existing leases
or expected terms of leases that will be entered into concurrently with the
Merger applied to the historical operations of the hotels. Management
believes that the changes in ownership and management structure are unlikely
to affect the conduct of the leased properties.
(E) Reflects adjustments to (i) record interest income at an annual interest
rate of 9.25% on the $35,000 note receivable from OpCo, net of interest
expense on the $35,000 draw on the credit facility to finance the note (ii)
adjust minority interest of 4.2% and (iii) record the income tax effect at
38%.
(F) Reflects pro forma AGH as presented in AGH's Current Report on Form 8-K,
dated April 6, 1998 and filed on April 7, 1998 (and the related Current
Reports on Form 8-K/A, filed on May 22, 1998 and June 5, 1998) and
incorporated herein by reference.
(G) Reflects (i) the amortization related to the additional deferred financing
costs net of the amortization on the financing fees written off in
connection with the termination of CapStar's credit facility, (ii)
additional depreciation expense related to the adjustment to record AGH net
assets acquired at fair market value in connection with the Merger, (iii)
the adjustment to reflect interest expense of $17,286 on borrowings under
the Credit Facility at an assumed interest rate of 7.5% to finance the Prime
Group II Acquisition (as defined in the AGH Form 10-K, as amended), (iv)
adjusted minority interest of 8.8%, and (v) the adjustment to remove
CapStar's income taxes in conjunction with the change in its tax status to a
REIT.
(H) Pro forma net income per common share has been calculated using 45,474,873
basic shares and 45,767,508 diluted shares of MeriStar Common Stock.
(I) As a result of the Spin-Off, the Merger and the Transactions, MeriStar
expects the following non-recurring items: (i) estimated tax expense of
$20,000 and transaction expenses of $2,000 related to the Spin-Off, (ii) the
write off of deferred financing fees of $5,529 in connection with the
termination of CapStar's credit facility, and (iii) the write off of
CapStar's deferred tax liability of $6,098 in conjunction with the change in
its tax status to a REIT. These items will be charged to operations as
incurred and have not been included in the Unaudited Pro Forma Statement of
Operations. In addition, subsequent to December 31, 1997, AGH incurred
$2,100 in non-recurring expenses related to the Merger which have not been
included in the Unaudited Pro Forma Statements of Operations.
<PAGE>
EXHIBIT 99.14
COMPARATIVE PER SHARE INFORMATION
Set forth below are historical net income per common share, cash
distributions per common share and book value per common share data of AGH and
CapStar, pro forma combined per share data of MeriStar and equivalent pro forma
per share data of AGH. The Merger will be treated as a purchase for financial
reporting purposes in accordance with generally accepted accounting principles.
In accordance with the provisions of Accounting Principles Board Opinion No. 16,
"Business Combinations," CapStar will be considered the acquiring enterprise for
financial reporting purposes. MeriStar's unaudited pro forma financial
statements give effect to the acquisition of AGH by CapStar under the purchase
method of accounting and are based on the assumptions and adjustments described
in the notes to the MeriStar Unaudited Pro Forma Financial Statements, included
elsewhere therein (Exhibit 99.13). The data set forth below should be read in
conjunction with AGH and CapStar audited consolidated financial statements,
including the notes thereto, which are incorporated by reference herein. The
data should also be read in conjunction with the MeriStar Unaudited Pro Forma
Financial Statements, including the notes thereto, included elsewhere therein
(Exhibit 99.13). The pro forma data is not necessarily indicative of the actual
financial position that would have occurred, or future operating results that
will occur, upon consummation of the Merger.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 1998 DECEMBER 31, 1997
----------------------------------------------- ---------------------------------------------------
(UNAUDITED)
AGH AGH
--- ---
AGH CAPSTAR MERISTAR PRO FORMA AGH CAPSTAR MERISTAR PRO FORMA
--- ------- -------- --------- --- ------- -------- ---------
HISTORICAL HISTORICAL PRO FORMA(A) EQUIVALENT HISTORICAL HISTORICAL PRO FORMA(A) EQUIVALENT(B)
---------- ---------- ------------ ---------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Basic net income per common
share before extraordinary
items....................... $ 0.35 $ 0.18 $ 0.46 $ 0.39 $ 1.60 $ 1.29 $ 1.40 $ 1.19
Diluted net income per com-
mon share before extraor-
dinary items................ 0.35 0.18 0.46 0.39 1.58 1.27 1.39 1.18
Cash distributions/dividends
per common share............ 0.43 -- 0.50 0.43 1.67 -- 1.97 1.67
Book value per common
share....................... 21.82 21.09 23.29 19.74 20.93 20.89 -- --
</TABLE>
________
(A) The MeriStar pro forma per share information has been prepared as if the
Spin-Off, the Merger and the Transactions, as described in the MeriStar
Unaudited Pro Forma Financial Statements (included elsewhere herein), had
occurred at January 1, 1997.
(B) The equivalent pro forma per share data of AGH is calculated by multiplying
each MeriStar pro forma per share amount by the AGH Exchange Ratio of
0.8475.
