<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1998 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------- ---------
Commission file number 1-12017
CAPSTAR HOTEL COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 52-1979383
(State of Incorporation) (I.R.S. Employer
Identification No.)
1010 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20007
(Address of Principal Executive Offices)(Zip Code)
(202) 965-4455
(Registrant's Telephone Number, Including Area Code)
NONE
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period for which the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of common stock, par value $0.01 per share ("Common
Stock"), outstanding at May 7, 1998 was 24,900,505.
<PAGE>
CAPSTAR HOTEL COMPANY
INDEX
Page
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997......................... 3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1998 and 1997.................... 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997.................... 5
Notes to Condensed Consolidated Financial Statements.......... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................ 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK... 11
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION............................................ 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAPSTAR HOTEL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................................... $ 77,573 $ 83,429
Accounts receivable, net........................................... 35,200 26,009
Deposits........................................................... 8,544 16,173
Pepaid expenses, inventory and other............................... 9,608 7,218
----------- -----------
Total current assets............................................... 130,925 132,829
Property and equipment
Land............................................................... 143,109 125,140
Building and improvements.......................................... 907,863 737,095
Furniture, fixtures, and equipment................................. 93,138 75,226
Construction in progress........................................... 20,057 12,591
----------- -----------
1,164,167 950,052
Accumulated depreciation........................................... (35,963) (27,275)
----------- -----------
Total property and equipment, net.................................. 1,128,204 922,777
Investments in and advances to affiliates........................... 11,908 11,970
Restricted cash 3,116 3,111
Intangible assets, net of accumulated amortization of $2,745
and $2,032......................................................... 54,304 53,955
----------- ----------
$1,328,457 $1,124,642
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 19,345 $ 16,726
Accrued expenses and other liabilities............................ 52,954 40,246
Income taxes payable.............................................. 608 565
Long-term debt, current portion................................... 54,338 1,056
----------- ----------
Total current liabilities........................................... 127,245 58,593
Deferred income taxes............................................... 6,098 6,098
Long-term debt...................................................... 621,109 491,715
----------- ----------
Total liabilities................................................... 754,452 556,406
Minority interests.................................................. 49,194 48,824
Stockholders' Equity:
Common stock, par value $0.01 per share
Authorized- 49,000 shares
Issued and outstanding- 24,890 and 24,867 shares.................. 249 249
Additional paid-in-capital.......................................... 500,017 499,576
Retained earnings................................................... 26,565 22,114
Accumulated other comprehensive income.............................. (2,020) (2,527)
----------- ----------
Total stockholders' equity.......................................... 524,811 519,412
----------- ----------
$ 1,328,457 $1,124,642
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CAPSTAR HOTEL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1998 1997
---- ----
<S> <C> <C>
Revenue:
Hotel operations:
Rooms................................................ $ 100,876 $ 31,260
Food and beverage.................................... 33,192 13,828
Other operating departments.......................... 7,529 2,149
Office rental, parking and other revenue............... 1,018 --
Hotel management and other fees........................ 987 871
--------- ---------
Total revenue.......................................... 143,602 48,108
--------- ---------
Hotel operating expenses by department:
Rooms................................................ 24,193 7,764
Food and beverage.................................... 26,547 11,231
Other operating departments.......................... 4,100 1,167
Office rental, parking and other operating expenses.... 440 --
Undistributed operating expenses:
Administrative and general........................... 25,245 8,846
Property operating costs............................. 19,068 5,874
Property taxes, insurance and other.................. 6,135 2,193
Lease expense........................................ 10,654 --
Depreciation and amortization........................ 9,508 3,499
--------- ---------
Total operating expenses............................... 125,890 40,574
Net operating income................................... 17,712 7,534
Interest expense, net.................................. 9,972 4,252
--------- ---------
Income before minority interests and income taxes...... 7,740 3,282
Minority interests..................................... (561) (48)
--------- ---------
Income before income taxes............................. 7,179 3,234
Income taxes........................................... 2,728 1,294
--------- ---------
Net income............................................. $ 4,451 $ 1,940
--------- ---------
--------- ---------
Earnings per share:
Basic.................................................. $ 0.18 $ 0.14
--------- ---------
--------- ---------
Diluted................................................ $ 0.18 $ 0.14
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CAPSTAR HOTEL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income.............................................................. $ 4,451 $ 1,940
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization......................................... 9,508 3,499
Minority interests.................................................... 561 48
Changes in assets and liabilities:
Accounts receivable, net.............................................. (9,191) (4,727)
Deposits, prepaid expenses, inventory and other assets................ 5,239 (27,215)
Accounts payable...................................................... 2,619 5,485
Accrued expenses and other liabilities................................ 12,708 4,094
Income taxes payable.................................................. 43 (172)
--------- ---------
Net cash provided by (used in) operating activities..................... 25,938 (17,048)
--------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment..................................... (213,593) (69,855)
Investments in and advances to affiliates............................... 62 (1,991)
Purchases of minority interests......................................... (28) (42)
Change in restricted cash............................................... (5) (362)
--------- ---------
Net cash used in investing activities................................... (213,564) (72,250)
--------- ---------
FINANCING ACTIVITIES:
Deferred costs.......................................................... (1,062) (732)
Proceeds from long-term debt............................................ 183,000 --
Principal payments of long-term debt and capital leases................. (324) (225)
Repayments of line of credit, net....................................... -- (49,000)
Proceeds from issuances of common stock, net............................ 441 134,051
Distributions to minority investors..................................... (163) --
--------- ---------
Net cash provided by financing activities............................... 181,892 84,094
--------- ---------
Effect of exchange rate changes on cash and cash equivalents............ (122) --
Net decrease in cash and cash equivalents............................... (5,856) (5,204)
Cash and cash equivalents, beginning of period.......................... 83,429 21,784
--------- ---------
Cash and cash equivalents, end of period................................ $ 77,573 $ 16,580
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CAPSTAR HOTEL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
UNAUDITED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. ORGANIZATION
The principal activity of the Company is to own, acquire, renovate, reposition
and manage upscale, full-service hotels. The Company also leases and manages
certain other hotels. As of March 31, 1998, the Company owned, leased or managed
140 hotels with 27,723 rooms. The Company owned 55 of these hotels with 14,414
rooms, leased 45 of these hotels with 6,410 rooms, and managed an additional 40
hotels owned by third parties with 6,899 rooms.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated interim financial statements have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles ("GAAP") have been omitted
pursuant to such rules and regulations. The unaudited condensed consolidated
interim financial statements should be read in conjunction with the financial
statements, notes thereto and other information included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
The accompanying unaudited condensed consolidated interim financial statements
reflect, in the opinion of management, all adjustments, which are of a normal
and recurring nature, necessary for a fair presentation of the financial
condition and results of operations and cash flows for the periods presented.
The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions. Such estimates and assumptions
affect the reported amounts of assets and liabilities, as well as the disclosure
of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The results of operations for the
interim periods are not necessarily indicative of the results for the entire
year.
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," requires an enterprise to display comprehensive income and its
components in a financial statement to be included in an enterprise's full
set of annual financial statements or in the notes to interim financial
statements. Comprehensive income represents a measure of all changes in
equity of an enterprise that result from recognized transactions and other
economic events for the period other than transactions with owners in their
capacity as owners. Comprehensive income of the Company includes net income
and other comprehensive income from foreign currency items. For the three
months ended March 31, 1998, net income was $4,451, other comprehensive
income, net of tax, was $507, and comprehensive income was $4,958. For the
three months ended March 31, 1997, net income and comprehensive income were
both $1,940.
6
<PAGE>
3. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
Credit facility............................ $ 283,000 $ 100,000
Convertible notes.......................... 172,500 172,500
Subordinated notes......................... 149,810 149,805
Non-recourse facility...................... 52,750 52,750
Mortgage debt.............................. 14,981 15,084
Other...................................... 2,406 2,632
--------- ---------
675,447 492,771
Less current portion....................... (54,338) (1,056)
--------- ---------
$ 621,109 $ 491,715
========= =========
</TABLE>
During the three months ended March 31, 1998, the Company borrowed $183,000 on
the credit facility to fund certain acquisitions of hotels.
Aggregate future maturities of the above obligations are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998............................................... $ 732
1999............................................... 54,466
2000............................................... 1,826
2001............................................... 13,118
2002............................................... ------
Thereafter........................................ 605,305
--------
$675,447
========
</TABLE>
4. EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per
share ("EPS"):
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
BASIC EARNINGS PER SHARE COMPUTATION:
Net income.............................................................. $4,451 $1,940
Weighted average number of shares of common stock outstanding.......... 24,889 13,540
------ ------
Basic earnings per share................................................ $0.18 $0.14
====== ======
DILUTED EARNINGS PER SHARE COMPUTATION:
Net income.............................................................. $4,451 $1,940
Weighted average number of shares of common stock outstanding........... 24,889 13,540
Common stock equivalents-stock options.................................. 240 192
--- ---
Total weighted average number of diluted shares of common
stock outstanding....................................................... 25,129 13,732
------ ------
Diluted earnings per share.............................................. $0.18 $0.14
====== ======
</TABLE>
The effects of certain operating partnership units and convertible debt were not
included in the computation of diluted EPS for the three months ended March 31,
1998 as their effects were anti-dilutive.
7
<PAGE>
5. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
<S> <C> <C>
Cash paid for interest and income taxes:
Interest, net of capitalized interest of $821 and $99, respectively... $ 8,301 $ 3,887
Income taxes.......................................................... 2,685 1,464
Non-cash investing and financing activities:
Long-term debt assumed in purchase of property and equipment.......... --- 15,628
</TABLE>
6. MERGER
On March 15, 1998, the Company and American General Hospitality Corporation (the
"REIT") entered into a definitive agreement (the "Merger Agreement") pursuant to
which the parties agreed, subject to stockholder approval and other conditions
and covenants, to merge as equals. Pursuant to the Merger Agreement, the Company
will 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. The Company will subsequently merge with and
into the REIT and the surviving corporation will be called MeriStar Hospitality
Corporation. The merger is expected to close in June, subject to customary
conditions, regulatory approvals and approval of the merger by shareholders of
both companies.
7. SUBSEQUENT EVENTS
Subsequent to March 31, 1998, the following were announced:
- The Company acquired the 524-room Sheraton Fisherman's Wharf hotel in San
Francisco, California for a purchase price of $84 million. The acquisition
was funded through existing cash and borrowings on the Company's credit
facility.
- The Company entered into three separate agreements to acquire nine hotels
and lease an additional two hotels with 2,373 rooms.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The principal activity of the Company is to own, acquire, renovate, reposition
and manage upscale, full-service hotels. The Company also leases and manages
certain other hotels. As of March 31, 1998, the Company owned, leased or managed
140 hotels with 27,723 rooms. The Company owned 55 of these hotels with 14,414
rooms, leased 45 of these hotels with 6,410 rooms, and managed an additional 40
hotels owned by third parties with 6,899 rooms. The financial statements for the
periods ended March 31, 1998 and March 31, 1997 reflect differing numbers of
owned, leased, and managed hotels throughout the periods. For the leased hotels,
the full operating results are included in the Company's financial statements.
The following table outlines the Company's portfolio of owned, leased and
managed hotels:
<TABLE>
<CAPTION>
OWNED LEASED MANAGED TOTAL
----------------- ------------------ ------------------ -----------------
HOTELS ROOMS HOTELS ROOMS HOTELS ROOMS HOTELS ROOMS
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1998......... 55 14,414 45 6,410 40 6,899 140 27,723
December 31, 1997...... 47 12,019 40 5,687 27 4,631 114 22,337
March 31, 1997......... 24 6,348 -- -- 28 4,482 52 10,830
December 31, 1996...... 19 5,166 -- -- 28 4,619 47 9,785
</TABLE>
On March 15, 1998, the Company and American General Hospitality Corporation (the
"REIT") entered into a definitive agreement (the "Merger Agreement") pursuant to
which the parties agreed, subject to stockholder approval and other conditions
and covenants, to merge as equals. Pursuant to the Merger Agreement, the Company
will 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. The Company will subsequently merge with and
into the REIT and the surviving corporation will be called MeriStar Hospitality
Corporation. The merger is expected to close in June, subject to customary
conditions, regulatory approvals and approval of the merger by shareholders of
both companies.
FINANCIAL CONDITION
MARCH 31, 1998 COMPARED WITH DECEMBER 31, 1997
Total assets increased by $203.9 million to $ 1,328.5 million at March 31, 1998
from $1,124.6 million at December 31, 1997. This growth was due to the
acquisition of eight hotels during the first quarter of 1998.
Total liabilities increased by $198.1 million to $754.5 million at March 31,
1998 from $556.4 million at December 31, 1997 due mainly to the increase in
long-term debt. Long-term debt increased by $182.6 million to $675.4 million at
March 31, 1998 from $492.8 million at December 31, 1997 as a result of
borrowings to finance first quarter hotel acquisitions, net of principal
repayments.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,1997
Total revenue increased by $95.5 million or 199% from $48.1 million in the
three-month period ended March 31, 1997 to $143.6 million in the three-month
period ended March 31, 1998. This substantial increase was primarily
attributable to the acquisition of 31 owned and 45 leased hotels since the end
of the first quarter of 1997, and revenue growth from hotels in the Company's
portfolio that benefited from renovation and repositioning programs. On a pro
forma basis for the 47 hotels the Company owned as of December 31, 1997, revenue
per available room ("RevPAR") increased 9.1 percent to $63.53 for the three
months ended March 31, 1998, compared to $58.22 for the comparable period in
1997. Same-store average daily rate ("ADR") rose 7.5 percent from $86.56 to
$93.06 and occupancy increased to 68.3 percent, compared to 67.3 percent in the
same period in 1997.
9
<PAGE>
Hotel department and other operating expenses increased considerably due to the
increase in the number of owned and leased hotels in 1998 as compared to 1997.
The total of such expenses as a percentage of related revenues declined from
42.7% in 1997 to 38.8% in 1998. This decline results from a combination of
increased operational efficiencies implemented at owned and leased hotels, and
the ADR and RevPAR gains noted above.
Undistributed operating expenses increased in 1998 as a result of the additional
owned, leased and managed hotels added to the Company's portfolio since March
31, 1997. The lease agreements require the Company to pay participating rent
based on the leased hotel's revenue, subject to certain minimum amounts. The
Company did not lease any hotels until July 16, 1997, and has subsequently
acquired leases for a total of 45 hotels as of March 31, 1998. As a result, the
Company did not have any lease expense for the three months ended March 31,
1997.
Net interest expense increased to $10.0 million for the three months ended March
31, 1998, from $4.3 million for the same period in 1997. This increase was
attributable to the borrowings made to finance the acquisition of hotels during
1997 and 1998.
Earnings before interest expense, income taxes, depreciation and amortization
grew to $27.2 million for the three months ended March 31, 1998, from $11.0
million for the same period in 1997. This growth reflects both the increase in
the number of hotels owned and operated, and improved operating margins on the
Company's overall portfolio.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash on hand, cash generated from
operations, and funds from external borrowings and debt and equity offerings.
The Company's continuing operations are funded through cash generated from hotel
operations. Hotel acquisitions and joint venture investments are financed
through a combination of internally generated cash, external borrowings and the
issuance of operating partnership units and/or common stock.
Operating activities provided $25.9 million of net cash in the first quarter of
1998 mainly due to higher levels of net income, depreciation and amortization,
and accrued expenses and other liabilities due to the increase in hotels owned
and leased. The Company used $213.6 million of cash in investing activities for
the first quarter of 1998, primarily for the acquisition of hotels and capital
expenditures at the Company's owned hotels. Net cash provided by financing
activities of $181.9 million resulted from borrowings under the Company's credit
facility, net of principal repayments.
At March 31, 1998 the Company had available $167.0 million under the credit
facility's revolving facility and $32.3 million under the non-recourse facility.
In April 1998, the Company used $48.9 million of cash and $30.0 million of
additional borrowings under the credit facility to purchase a hotel. An
additional $5.0 million was borrowed from the credit facility's revolving
facility for general corporate expenditures. As of May 7, 1998, the Company has
available $132.0 million under the credit facility's revolving facility and
$32.3 million under the non-recourse facility.
Capital for renovation work has been and is expected to be provided by a
combination of internally generated cash and external borrowings. Once initial
renovation programs for a hotel are completed, the Company expects to spend
approximately 4% annually of hotel revenues for ongoing capital expenditure
programs, including room and facilities refurbishments, renovations, and
furniture and equipment replacements. The Company believes that these initial
and continuing capital investments will, in conjunction with operating
improvements the Company implements after purchasing a hotel, substantially
enhance the competitive position and operating results of its owned hotels.
During the three month period ended March 31, 1998, the Company spent $21.6
million on initial renovation and ongoing capital expenditure programs. The
Company expects to spend approximately $95.9 million during the remainder of
1998 to complete initial renovation programs and to fund ongoing capital
expenditures for the owned hotels.
The Company believes cash generated by operations, together with existing
borrowing capacity, will be sufficient to fund its existing working capital,
ongoing capital expenditures, and debt service requirements. In addition, the
Company expects to continue to make acquisitions of upscale, full-service hotels
and hotel management companies, and to secure additional management contracts.
Also the Company invested in three joint ventures in 1997. The Company expects
to form additional joint ventures and strategic alliances with institutional and
private hotel owners to invest in future acquisitions, and to secure additional
fee management arrangements. The Company expects to finance
10
<PAGE>
these future acquisitions and investments through a combination of existing
borrowing capacity and the issuance of operating partnership units and/or
common stock.
In conjunction with the merger with the REIT, the Company, along with American
General Hospitality Corporation, is in the process of negotiating a new senior
secured credit facility (the "New Credit Facility") for MeriStar Hospitality
Corporation with an anticipated maximum principal amount of approximately $1.3
billion. The proceeds of the New Credit Facility are expected to be used to
refinance the existing credit facilities of both the Company and American
General Hospitality Corporation, and to fund new acquisitions and general
corporate expenditures. The combined outstanding borrowings on credit facilities
of the Company and American General Hospitality Corporation were $725.1 million
at March 31, 1998. The Company expects the New Credit Facility to comprise a
revolving credit facility, a term loan facility, and/or other borrowing
arrangements. Additionally, the Company anticipates that borrowings under the
New Credit Facility will bear interest at variable interest rates based on
MeriStar Hospitality Corporation's compliance with certain financial ratios.
SEASONALITY
Demand in the lodging industry is affected by recurring seasonal patterns.
Demand is typically lower in the winter months due to decreased travel and
higher in the spring and summer months during peak travel season. Accordingly,
the Company's operations are seasonal in nature, with lower revenue, operating
profit and cash flow in the first and fourth quarters and higher revenue,
operating profit and cash flow in the second and third quarters.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Forward-Looking Statements
Certain statements in this Form 10-Q and in the future filings by the Company
with the SEC, in the Company's press releases, and in oral statements made by or
with the approval of an authorized executive officer constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or
achievements of the company to be materially different from any future results,
performance or achievement expressed or implied by such forward-looking
statements. Such factors include: the ability of the Company to implement its
acquisition strategy and operating strategy; the Company's ability to manage
rapid expansion; changes in economic cycles; competition from other hospitality
companies; changes in the laws and governmental regulations applicable to the
Company; and special risks associated with the merger with the REIT (including
the possibility that expected cost savings may not be realized, the possibility
that costs or difficulties may arise relating to the integration of the business
of the Company and the REIT, and changes in the laws and governmental
regulations applicable to the structure of the merger and the related
transactions).
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit No.
27 -- Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K dated and filed on January 21, 1998,
regarding the consummation of the acquisition of the Medallion Hotels. (Item 2)
Current Report on Form 8-K/A dated and filed on March 6, 1998,
regarding the filing of financial statements and proforma condensed,
consolidated balance sheet and statement of operations reflecting acquisition of
six hotels from Medallion Hotels, Inc. (Item 2,7)
Current Report on Form 8-K dated and filed on March 17, 1998, regarding
the consummation of the acquisition of the Sheraton Grande Hotel. (Item 2)
Current Report on Form 8-K dated and filed on March 17, 1998, regarding
the agreement between CapStar Hotel Company and American General Hospitality
Corporation to merge. (Item 5,7)
12
<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 thereunto duly authorized.
CAPSTAR HOTEL COMPANY
Date: May 8, 1998 /s/ PAUL W. WHETSELL
---------------------
Paul W. Whetsell
President and Chief Executive Officer
Date: May 8, 1998 /s/ JOHN EMERY
----------------------
John Emery
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 77,573
<SECURITIES> 0
<RECEIVABLES> 36,370
<ALLOWANCES> 1,170
<INVENTORY> 5,927
<CURRENT-ASSETS> 130,925
<PP&E> 1,164,167
<DEPRECIATION> 35,963
<TOTAL-ASSETS> 1,328,457
<CURRENT-LIABILITIES> 127,245
<BONDS> 675,447
0
0
<COMMON> 249
<OTHER-SE> 524,562
<TOTAL-LIABILITY-AND-EQUITY> 1,328,457
<SALES> 0
<TOTAL-REVENUES> 143,602
<CGS> 0
<TOTAL-COSTS> 55,280
<OTHER-EXPENSES> 70,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,972
<INCOME-PRETAX> 7,179
<INCOME-TAX> 2,728
<INCOME-CONTINUING> 4,451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,451
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
