<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 29, 1995
-------------------------
HOST MARRIOTT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-5664 53-0085950
(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION
NUMBER)
10400 FERNWOOD ROAD, BETHESDA, MARYLAND 20817
(ADDRESS OF PRINCIPLE EXECUTIVE OFFICES) (ZIP CODE)
----------------------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (301) 380-9000
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
================================================================================
<PAGE>
FORM 8-K/A
ITEM 5. OTHER EVENTS
The Registrant hereby amends its Current Report on Form 8-K dated June
19, 1995 by filing financial statements of an acquired business, the San Antonio
Marriott Riverwalk, and pro forma financial information for the Registrant
pursuant to Items 2 and 7 of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(a) Financial statements of acquired business (San Antonio Marriott Riverwalk)
. As of and for the Year Ended December 30, 1994. 3 - 11
. As of and for the Twenty-four Weeks Ended June 16, 1995. 12 - 15
(b) Pro forma financial information for Host Marriott Corporation. 16 - 21
</TABLE>
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.
HOST MARRIOTT CORPORATION
By: /s/ JEFFREY P. MAYER
---------------------------------------------
Jeffrey P. Mayer
Senior Vice President,
Finance and Corporate Controller
(Chief Accounting Officer)
Date: August 29, 1995
2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________________________
TO THE OWNERS OF THE SAN ANTONIO MARRIOTT RIVERWALK:
We have audited the accompanying statement of assets, liabilities and net
advances from parent of the San Antonio Marriott Riverwalk, as defined in Note
1, as of December 30, 1994, and the related statements of operations and cash
flows for the year ended December 30, 1994. These financial statements are the
responsibility of the management of the Parent, as defined in Note 1. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the San Antonio Marriott
Riverwalk (as defined in Note 1) as of December 30, 1994, and its operations and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Washington, D.C.
August 18, 1995
3
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
STATEMENT OF ASSETS, LIABILITIES AND NET
ADVANCES FROM PARENT
AS OF DECEMBER 30, 1994 (IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Property and equipment, net...................................... $26,310
Property improvement fund........................................ 2,159
Accounts receivable.............................................. 875
Other assets..................................................... 557
-------
$29,901
=======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ADVANCES FROM PARENT
<S> <C>
Mortgage debt.................................................... $19,400
Accounts payable and accrued expenses............................ 828
-------
Total liabilities................................................ 20,228
Net advances from Parent......................................... 9,673
-------
$29,901
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 30, 1994 (IN THOUSANDS)
_________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
REVENUE...................................................... $ 10,196
--------
OPERATING COSTS AND EXPENSES
Depreciation and amortization............................. 2,160
Base and incentive management fees........................ 2,030
Property taxes............................................ 1,201
Rent, insurance and other................................. 588
--------
Total operating costs and expenses..................... 5,979
--------
OPERATING PROFIT BEFORE INTEREST............................. 4,217
Interest expense............................................. 2,152
--------
NET INCOME................................................... $ 2,065
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 30, 1994 (IN THOUSANDS)
_______________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net Income................................................ $ 2,065
Depreciation and amortization............................. 2,160
Working capital changes:
Accounts receivable..................................... 67
Other assets............................................ (56)
Accounts payable and accrued expenses................... (436)
--------
Cash provided by operations............................... 3,800
--------
INVESTING ACTIVITIES
Additions to property and equipment....................... (3,482)
Change in property improvement fund....................... (1,204)
--------
Cash used in investing activities......................... (4,686)
--------
FINANCING ACTIVITIES
Change in net advances from Parent........................ 2,068
Proceeds from mortgage debt............................... 19,400
Repayments of mortgage debt............................... (20,388)
Financing costs........................................... (194)
--------
Cash provided by financing activities..................... 886
--------
CHANGE IN CASH AND CASH EQUIVALENTS......................... --
CASH AND CASH EQUIVALENTS at beginning of year.............. --
--------
CASH AND CASH EQUIVALENTS at end of year.................... $ --
========
SUPPLEMENTAL INFORMATION
Cash paid for interest.................................... $ 2,207
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
NOTES TO FINANCIAL STATEMENTS
________________________________________________________________________________
NOTE 1.
Basis of Presentation
On June 16, 1995 ("Sale Date"), HMH Properties, Inc., a wholly-owned indirect
subsidiary of Host Marriott Corporation, acquired the San Antonio Marriott
Riverwalk (the "Hotel"), located in San Antonio, Texas, from MRI Business
Property Fund Ltd., II (the "Parent"), a California limited partnership, for
approximately $50 million. The Hotel was part of a portfolio of properties owned
by the Parent. The Hotel, with approximately 500 rooms, is operated by Marriott
International, Inc. as a part of the Marriott Hotels, Resorts and Suites full-
service hotel system.
The Hotel's purchase price at the Sale Date was in excess of its carrying value.
No adjustments related to the resultant sale are reflected in the accompanying
statements.
These financial statements present the assets, liabilities and net advances to
Parent, results of operations and cash flows related to the business of the San
Antonio Marriott Riverwalk which is a lesser component of the Parent for all
periods presented. The Parent's historical basis in assets and liabilities of
the Hotel have been carried over. Changes in Net Advances from Parent represent
the operating results of the Hotel adjusted for net cash transferred between the
Parent and the Hotel.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Hotel's records are maintained on the accrual basis of accounting and its
fiscal year ends on the Friday nearest to December 31.
Revenues
Revenue represents house profit, which is the Hotel's operating results less
property-level expenses, excluding depreciation, management fees, real and
personal property taxes, ground and equipment rent, insurance, and certain other
costs which are classified as operating costs and expenses (see Note 3).
Property and Equipment
Property and equipment is recorded at cost. Replacements and improvements are
capitalized as incurred. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets, generally 30 years for
buildings and 5 to 6 years for furniture and equipment.
7
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
________________________________________________________________________________
Cash and Cash Equivalents
The Hotel considers all highly liquid investments with a maturity of three
months or less at date of purchase to be cash equivalents. At December 30,
1994, the Hotel's outstanding checks were in excess of then available cash
balances by $126,000 and have been classified as accounts payable and accrued
expenses in the accompanying statement of assets, liabilities and net advances
from parent.
Deferred Financing Costs
Deferred financing costs, which are included in other assets, amounted to
$194,000 at December 30, 1994. These costs are being amortized over the life of
the Refinanced Loan, as defined below.
Income Taxes
Provision for Federal or state income taxes has not been made in the
accompanying financial statements since the Parent is a partnership and does not
pay income taxes but rather allocates its profits and losses to the Parent's
individual partners.
NOTE 3. REVENUES
House profit for the year ended December 30, 1994 consists of (in thousands):
<TABLE>
<CAPTION>
<S> <C>
SALES
Rooms..................................................... $ 17,037
Food and beverage......................................... 4,649
Other..................................................... 1,404
--------
Total Hotel Sales...................................... 23,090
--------
DEPARTMENTAL COSTS
Rooms..................................................... 3,116
Food and beverage......................................... 3,826
Other..................................................... 758
--------
Total Department Costs................................. 7,700
--------
DEPARTMENT PROFIT........................................... 15,390
Other deductions............................................ 5,194
--------
HOUSE PROFIT................................................ $ 10,196
========
</TABLE>
8
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________________________________________________________________________
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 30, 1994 (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Buildings and leasehold improvements............................. $ 33,346
Furniture and equipment.......................................... 12,758
--------
46,104
Less accumulated depreciation and amortization................... (19,794)
--------
Property and equipment, net...................................... $ 26,310
========
</TABLE>
NOTE 5. DEBT
The mortgage debt of the Hotel was refinanced (the "Refinancing") on December
23, 1994, at which time the existing debt was repaid and a note of $19,400,000
was issued (the "Refinanced Debt"). Prior to the Refinancing, debt consisted of
three separate notes as described below:
The Hotel's first mortgage consisted of a $19,500,000 note payable to
Connecticut General Life Insurance Company maturing on January 1, 2010. This
note bore interest at a rate of 10.25% per annum and was payable in monthly
installments of $174,850, consisting of both principal and interest. The
remaining principal balance of $16,605,000 was repaid at the time of the
Refinancing. There were no prepayment or other penalties incurred for the early
extinguishment of this debt.
The Hotel's second mortgage consisted of a $2,500,000 note payable to
Connecticut General Life Insurance Company maturing on January 1, 2010. This
note bore interest at a rate of 8.25% per annum and was payable in monthly
installments of $23,375, consisting of both principal and interest. The
remaining principal balance of $2,422,000 was repaid at the time of the
Refinancing of the Hotel. There were no prepayment or other penalties incurred
for the early extinguishment of this debt.
Marriott International, Inc. funded a renovation that took place at the Hotel in
1989 with a $2,900,000 note payable due on December 31, 1994. This note bore
interest at a rate of 9% per annum. Both principal and interest were payable
out of the balance in the property improvement fund in excess of $100,000, first
to accrued interest, then to principal reduction. The remaining principal
balance of $1,487,000 was repaid partially with available cash and partially
with proceeds from the Refinancing. There were no prepayment or other penalties
for the early extinguishment of this debt.
The Refinanced Debt consists of a note payable to Connecticut General Life
Insurance Company of $19,400,000 maturing on January 1, 2002. This note bears
interest at a rate of 9.85% per annum payable in monthly installments of
$185,290, consisting of both principal and interest beginning in January 1995.
9
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________________________________________________________________________
Principal amortization of the Refinanced Debt is required as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
1995............................................. $ 327
1996............................................. 361
1997............................................. 398
1998............................................. 439
1999 and thereafter.............................. 17,875
--------
Total............................................ $ 19,400
========
</TABLE>
NOTE 6. MANAGEMENT AGREEMENT
Marriott International, Inc. (the "Manager") operates the Hotel pursuant to a
long-term management agreement (the "Management Agreement") with an initial term
expiring in 2008. The management agreement provides for a base fee equal to 3%
of Hotel sales and an incentive management fee of up to 20% of gross operating
profit, as defined. Pursuant to the terms of the Management Agreement, the
Manager is required to furnish the Hotel with certain services such as central
training, advertising and promotion, a national reservation system, computerized
payroll and accounting services, and such additional services as needed which
may be more efficiently performed on a centralized basis ("Chain Services") and,
are generally provided on a central or regional basis to all hotels in the
Manager's full-service hotel system. Costs and expenses incurred in providing
such services are allocated among all domestic full-service hotels managed,
owned and leased by the Manager and its subsidiaries and, in accordance with
these arrangements, the Hotel paid Chain Services of $734,000 in 1994. In
addition, the Hotel also participates in the Manager's Honored Guest Awards
Program. The cost of this program is charged to all hotels in the Manager's
full-service hotel system.
The Management Agreement also provides for the establishment of a property
improvement fund for the Hotel to cover (a) the cost of certain non-routine
repairs and maintenance to the Hotel which are normally capitalized; and (b) the
cost of replacements and renewals to the Hotel's property and improvements.
Contributions to the property improvement fund are 5 1/2% of Hotel sales and
totaled $1,270,000 for 1994.
NOTE 7. LEASES
The land under the Hotel is leased from a third party under a long-term lease
expiring December 31, 2033 (the "Land Lease"). Minimum annual rent is $50,000
per year. In addition to minimum annual rent, percentage rent equal to .5% of
gross revenues, as defined, is required to be paid. Rent expense related to the
Land Lease was $129,000 for 1994.
10
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________________________________________________________________________
Future minimum annual rental commitments for all non-cancelable operating leases
entered into by the Manager on behalf of the Parent and subsequently assigned to
HMH Properties, Inc., including the Land Lease and leases for certain other
equipment, are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1995............................................. $ 151
1996............................................. 151
1997............................................. 151
1998............................................. 151
1999............................................. 76
Thereafter....................................... 1,650
-------
Total minimum lease payments.......................... $ 2,330
=======
</TABLE>
11
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
STATEMENT OF ASSETS, LIABILITIES AND NET
ADVANCES FROM PARENT
(SEE NOTE 1)
AS OF JUNE 16, 1995 (UNAUDITED, IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Property and equipment, net........................................ $27,179
Property improvement fund.......................................... 1,018
Accounts receivable................................................ 1,498
Other assets....................................................... 1,174
-------
$30,869
=======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ADVANCES FROM PARENT
<S> <C>
Mortgage debt...................................................... $19,268
Accounts payable and accrued expenses.............................. 1,949
-------
Total liabilities.................................................. 21,217
Net advances from Parent........................................... 9,652
-------
$30,869
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
STATEMENT OF OPERATIONS
FOR THE TWENTY-FOUR WEEKS ENDED JUNE 17, 1994 AND JUNE 16, 1995 (UNAUDITED,
IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
1994 1995
--------- --------
<S> <C> <C>
REVENUE...................................... $ 5,302 $ 5,119
------- -------
OPERATING COSTS AND EXPENSES
Depreciation and amortization............. 959 1,250
Base and incentive management fees........ 1,082 1,068
Property taxes............................ 557 616
Rent, insurance and other................. 233 209
------- -------
Total operating costs and expenses...... 2,831 3,143
------- -------
OPERATING PROFIT BEFORE INTEREST............. 2,471 1,976
Interest expense............................. 939 878
------- -------
NET INCOME................................... $ 1,532 $ 1,098
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
STATEMENT OF CASH FLOWS
FOR THE TWENTY-FOUR WEEKS ENDED JUNE 17, 1994 AND JUNE 16, 1995
(UNAUDITED, IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income........................................ $ 1,532 $ 1,098
Depreciation and amortization..................... 959 1,250
Working capital changes:
Accounts receivable........................... (153) (623)
Other assets.................................. (22) 3
Accounts payable and accrued expenses......... (410) 501
------- -------
Cash provided by operations....................... 1,906 2,229
------- -------
INVESTING ACTIVITIES
Additions to property and equipment............... (353) (2,138)
Change in property improvement fund............... (76) 1,141
------- -------
Cash used in investing activities................. (429) (997)
------- -------
FINANCING ACTIVITIES
Change in net advances from Parent................ (1,164) (1,100)
Repayments of mortgage debt....................... (208) (132)
------- -------
Cash used in financing activities................. (1,372) (1,232)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS................ 105 --
CASH AND CASH EQUIVALENTS at beginning of period..... -- --
------- -------
CASH AND CASH EQUIVALENTS at end of period........... $ 105 $ --
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
SAN ANTONIO MARRIOTT RIVERWALK
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
________________________________________________________________________________
1. The accompanying financial statements of the San Antonio Marriott Riverwalk
(the "Hotel") have been prepared without audit. Certain information and
footnote disclosures normally included in financial statements presented in
accordance with generally accepted accounting principles have been omitted.
The Hotel believes the disclosures made are adequate to make the information
presented not misleading. However, the financial statements should be read in
conjunction with the audited financial statements and notes thereto for the
fiscal year ended December 30, 1994 included elsewhere in this Form 8-K/A.
In the opinion of the Hotel, the accompanying unaudited financial statements
reflect all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position of the Hotel as of June
16, 1995 and the results of operations and cash flows for the twenty-four
weeks ended June 17, 1994 and June 16, 1995. Interim results are not
necessarily indicative of fiscal year performance because of the impact of
seasonal and short-term variations.
2. House profit represents hotel operating results less property-level expenses
excluding depreciation, management fees, real and personal property taxes,
ground and equipment rent, insurance and certain other costs which are
classified as operating costs and expenses.
House profit generated by the Hotel for the twenty-four weeks ended June 17,
1994 and June 16, 1995 consists of (in thousands):
<TABLE>
<CAPTION>
Twenty-four Weeks Ended
-----------------------
June 17, June 16,
1994 1995
-------- --------
<S> <C> <C>
SALES
Rooms........................................ $ 8,307 $ 8,268
Food & Beverage.............................. 2,288 2,478
Other........................................ 683 676
------- -------
Total Hotel Sales.......................... 11,278 11,422
------- -------
DEPARTMENT COSTS
Rooms........................................ 1,391 1,420
Food & Beverage.............................. 1,766 1,919
Other........................................ 359 367
------- -------
Total Department Costs..................... 3,516 3,706
------- -------
DEPARTMENT PROFIT.............................. 7,762 7,716
Other Deductions............................... 2,460 2,597
------- -------
HOUSE PROFIT................................... $ 5,302 $ 5,119
======= =======
</TABLE>
15
<PAGE>
HOST MARRIOTT CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The unaudited Pro Forma Condensed Consolidated Financial Data of Host
Marriott Corporation (the "Company") reflect the following transactions in the
case of the Pro Forma Condensed Consolidated Statement of Operations for the
twenty-four weeks ended June 16, 1995 and for the fiscal year ended December 30,
1994, as if such transactions had been completed at the beginning of each
period:
. 1994 addition of 18 full-service properties
. 1994 sale of 14 senior living communities
. 1994 sale of 26 Fairfield Inns
. 1995 acquisition of five full-service properties
. March 1995 sale/leaseback of 21 Courtyard properties
. April 1995 sale of the Company's remaining four Fairfield Inns
. August 1995 sale/leaseback of an additional 16 Courtyard
properties
. Consummation of the May 1995 debt offering
During 1994, the Company added 16 full-service hotels to its lodging
portfolio plus two hotels for which a subsidiary of the Company provided 100%
non-recourse financing to an affiliate of the Company for the acquisition of the
hotels (which the Company treats as owned for accounting purposes). Through the
second quarter of 1995, the Company acquired two full-service hotels, including
the San Antonio Marriott Riverwalk Hotel (the "Riverwalk"). In the third quarter
of 1995, the Company acquired three additional full-service hotels.
During 1994, the Company sold all 14 of its senior living communities
and 26 of its 30 Fairfield Inns. During 1995, the Company sold to and leased
back from an unrelated real estate investment trust (the "REIT") 21 of its
Courtyard properties, sold to and leased back from the REIT an additional 16
Courtyard properties, and sold its four remaining Fairfield Inns.
In May 1995, two wholly-owned subsidiaries of Host Marriott
Hospitality, Inc. ("Hospitality"), a wholly-owned indirect subsidiary of the
Company, issued an aggregate $1 billion of debt in two concurrent offerings to
several initial purchasers (collectively, the "Offering"). The bonds were issued
at par and carry 9.5% coupon rates with final maturities of May 2005. The net
proceeds to the Company, after deducting commissions, totaled $974 million and
were used to defease, and subsequently redeem, all of Hospitality's remaining
bonds which carried a weighted average interest rate of 10.4%, and to pay down a
portion of the line of credit with Marriott International. Additionally, the
Company replaced its $630 million line of credit with Marriott International
with a new $225 million revolving line of credit with Marriott International.
All of the above transactions, including the acquisition of the
Riverwalk, are reflected in the Company's balance sheet as of June 16, 1995,
except for the August 1995 sale/leaseback of the 16 Courtyard properties and the
acquisition of three full-service hotels in the third quarter of 1995.
The adjustments required to reflect the above transactions are set
forth in the "Disposition Pro Forma Adjustments" column and the "Acquisition &
Other Pro Forma Adjustments" column, except for the acquisition of the Riverwalk
which are set forth in the "Riverwalk Pro Forma Adjustments" column.
The Pro Forma Condensed Consolidated Financial Data of the Company are
unaudited and presented for informational purposes only and may not reflect the
Company's future results of operations and financial position or what the
results of operations and financial position of the Company would have been had
such transactions occurred as of the dates indicated. The unaudited Pro Forma
Condensed Consolidated Financial Data and Notes thereto should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Results of Operations and
Financial Condition" included in the Company's Annual Report on Form 10-K for
the year ended December 30, 1994 and the Company's Quarterly Report on Form 10-Q
for the quarter ended June 16, 1995.
16
<PAGE>
HOST MARRIOTT CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 16, 1995
(UNAUDITED, IN MILLIONS)
ASSETS
<TABLE>
<CAPTION>
ACQUISITION
HOST MARRIOTT DISPOSITION & OTHER HOST MARRIOTT
CORPORATION PRO FORMA PRO FORMA CORPORATION
HISTORICAL ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Property and Equipment....................... $ 3,044 $ (133) (A) $ 101 (B) $ 3,012
Investments in Affiliates.................... 208 -- -- 208
Notes Receivable............................. 48 -- -- 48
Accounts Receivable.......................... 104 -- -- 104
Inventories.................................. 38 -- -- 38
Other Assets................................. 179 15 (A) -- 194
Cash and Cash Equivalents.................... 128 133 (A) (33) (B) 228
--------- ------- ------ --------
$ 3,749 $ 15 $ 68 $ 3,832
========= ======= ====== ========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C>
Debt
Debt carrying a company
guarantee of repayment................... $ 1,424 $ -- $ 44 (B) $ 1,468
Debt not carrying a company
guarantee of repayment................... 866 -- 24 (B) 890
--------- ------- ------ --------
2,290 -- 68 2,358
Accounts Payable and Accrued Expenses........ 164 -- -- 164
Deferred Income Taxes........................ 438 -- -- 438
Other Liabilities............................ 186 15 (A) -- 201
--------- ------- ------ --------
Total Liabilities.......................... 3,078 15 68 3,161
--------- ------- ------ --------
Shareholders' Equity
Convertible Preferred Stock................. 1 -- -- 1
Common Stock, 300 million shares
authorized; 153.6 million shares
issued and outstanding................... 158 -- -- 158
Additional Paid-in Capital.................. 492 -- -- 492
Retained Earnings........................... 20 -- -- 20
--------- ------- ------ --------
Total Shareholders' Equity................. 671 -- -- 671
--------- ------- ------ --------
$ 3,749 $ 15 $ 68 $ 3,832
========= ======= ====== ========
</TABLE>
17
<PAGE>
HOST MARRIOTT CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWENTY-FOUR WEEKS ENDED JUNE 16, 1995
------------------------------------------------------------------------
ACQUISITION
HOST MARRIOTT DISPOSITION & OTHER RIVERWALK HOST MARRIOTT
CORPORATION PRO FORMA PRO FORMA PRO FORMA CORPORATION
HISTORICAL ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Revenues
Real Estate Group...................... $ 205 $ (1)(C) $ 10 (G) $ 5 (I) $ 219
Operating Group........................ 495 -- -- - 495
------- ------ ------ ------- ----------
700 (1) 10 5 714
------- ------ ------ ------- ----------
Operating costs and expenses
Real Estate Group...................... 126 (1)(C) 5 (G) 4 (I) 142
5 (D)
3 (E)
Operating Group........................ 484 -- -- -- 484
------- ------ ------ ------- ----------
610 7 5 4 626
------- ------ ------ ------- ----------
Operating profit
Real Estate Group...................... 79 (8) 5 1 77
Operating Group........................ 11 -- -- -- 11
------- ------ ------ ------- ----------
Operating profit before corporate
expenses and interest............... 90 (8) 5 1 88
Corporate expenses...................... (21) -- -- -- (21)
Interest expense........................ (101) 4 (F) (1)(G) (1)(I) (98)
3 (H)
(2)(O)
Interest income......................... 13 -- -- -- 13
------- ------ ------ ------- ----------
Income (loss) before income taxes
and extraordinary item........... (19) (4) 5 -- (18)
(Provision) benefit for
income taxes..................... 2 2 (M) (2)(M) -- 2
------- ------ ------ ------- ----------
Net income (loss) before
extraordinary item............... $ (17) $ (2) $ 3 $ -- $ (16)
======= ====== ====== ======= ==========
Loss before extraordinary item
per common share................. $ (.11) $ (.11)
======= ==========
Weighted average number of common
shares outstanding............... 152.3 152.3
======= ==========
</TABLE>
18
<PAGE>
HOST MARRIOTT CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 30, 1994
---------------------------------------------------------------------------
ACQUISITION
HOST MARRIOTT DISPOSITION & OTHER RIVERWALK HOST MARRIOTT
CORPORATION PRO FORMA PRO FORMA PRO FORMA CORPORATION
HISTORICAL ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues
Real Estate Group....................... $ 360 $ (2) (C) $ 19 (G) $ 10 (I) $ 422
(10) (J) 59 (L)
(14) (K)
Operating Group......................... 1,141 -- -- -- 1,141
-------- ------- ------- -------- --------
1,501 (26) 78 10 1,563
-------- ------- ------- -------- --------
Operating costs and expenses
Real Estate Group....................... 213 (1) (C) 12 (G) 6 (I) 274
13 (D) 27 (L)
12 (E)
(3) (J)
(5) (K)
Operating Group......................... 1,097 -- -- -- 1,097
-------- ------- ------- -------- --------
1,310 16 39 6 1,371
-------- ------- ------- -------- --------
Operating profit
Real Estate Group....................... 147 (42) 39 4 148
Operating Group......................... 44 -- -- -- 44
-------- ------- ------- -------- --------
Operating profit before corporate
expenses and interest................. 191 (42) 39 4 192
Corporate expenses....................... (37) -- -- -- (37)
Interest expense......................... (206) 34 (F) (2) (G) (2)(I) (184)
1 (K) 5 (H)
(14) (O)
Interest income.......................... 29 -- (5) (L) -- 24
-------- ------- ------- -------- --------
Income (loss) before income taxes and
extraordinary item.................... (23) (7) 23 2 (5)
(Provision) benefit for income taxes..... 4 2 (M) (8) (M) (1)(M) (3)
-------- ------- ------- -------- --------
Net income (loss) before
extraordinary item.................... $ (19) $ (5) $ 15 $ 1 $ (8)
======== ======= ======= ======== ========
Earnings (loss) before extraordinary item
per common share...................... $ (.13) $ (.05)
======== ========
Weighted average number of common
shares outstanding.................... 151.5 1.0 (N) 152.5
======== ======= ========
</TABLE>
19
<PAGE>
HOST MARRIOTT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL DATA
A. Represents the adjustment to record the August 1995 sale/leaseback of 16
Courtyard properties as follows:
- Reduce property and equipment by the net book value of assets sold of $133
million.
- Record the net cash proceeds of $133 million.
- Record the deferred proceeds of $15 million.
- Record the deferred gain of $15 million.
B. Represents the adjustment to record the third quarter 1995 acquisition of
three full-service hotels as follows:
- Record property and equipment of $101 million.
- Record the use of cash funds of $33 million.
- Record the assumption of a $24 million existing first mortgage.
- Record the draw of $44 million on the $230 million acquisition credit
facility.
C. Represents the adjustment to eliminate the revenues and the operating costs
for the 1995 sale of the four remaining Fairfield Inns.
D. Represents the adjustment to record the incremental operating costs and
expenses relating to the 1995 sale/leaseback of the 21 Courtyard properties.
E. Represents the adjustment to record the incremental operating costs and
expenses relating to the 1995 sale/leaseback of the 16 Courtyard properties.
F. Represents the adjustment to reduce interest expense for the paydown of
Hospitality bonds with the net sales proceeds from the 26 Fairfield Inns, 14
senior living communities and 21 Courtyard properties.
G. Represents the adjustment to reflect the increase in revenue, operating costs
and interest expense for the 1995 acquisition of four full-service
properties, other than the Riverwalk, as if they were acquired at the
beginning of the applicable period.
H. Represents the adjustment to reduce interest expense to reflect the decrease
in interest rates as a result of the Offering and the decrease in commitment
fees as a result of the new line of credit with Marriott International.
Extraordinary losses of approximately $27 million, after taxes, related to
the 1995 redemption of Hospitality's bonds are not reflected in the
accompanying Pro Forma Condensed Consolidated Financial Data.
I. Represents the adjustment to reflect the increase in revenues, operating
costs and secured debt interest expense for the 1995 acquisition of the
Riverwalk, as if it was acquired at the beginning of the applicable period.
J. Represents the adjustment to eliminate the revenues and the operating costs
for the 26 Fairfield Inns sold during 1994.
K. Represents the adjustments to eliminate the revenues, operating costs and the
secured debt interest expense for the 14 senior living communities sold
during 1994.
L. Represents the adjustment to reflect the increase in revenue and operating
costs for the 1994 addition of 18 full-service properties, mainly utilizing
proceeds from the common stock offering and the $230 million acquisition
credit facility, and the related decrease in interest income.
20
<PAGE>
HOST MARRIOTT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL DATA (CONTINUED)
M. Represents the income tax impact of pro forma adjustments at statutory rates.
N. Represents the adjustment to increase the weighted average number of common
shares outstanding for the common stock issuance as of January 1, 1994.
O. Represents the increase in interest expense on the draws under the
acquisition credit facility utilized for the acquisition of certain full-
service hotels.
21
