<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 22, 1996 COMMISSION FILE NO. 1-5664
HOST MARRIOTT CORPORATION
10400 FERNWOOD ROAD
BETHESDA, MARYLAND 20817
(301) 380-9000
Delaware 53-0085950
-------------------------- -------------------------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
SHARES OUTSTANDING
CLASS AT APRIL 19, 1996
- --------------------- ------------------
Common Stock, $1.00
par value per share 194,457,000
-----------
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<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
INDEX
-----
PAGE NO.
--------
PART I. FINANCIAL INFORMATION (Unaudited):
Condensed Consolidated Balance Sheets - 3
March 22, 1996 and December 29, 1995
Condensed Consolidated Statements of Operations - 4
Twelve Weeks Ended March 22, 1996 and March 24, 1995
Condensed Consolidated Statements of Cash Flows - 5
Twelve Weeks Ended March 22, 1996 and March 24, 1995
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Results of 9
Operations and Financial Condition
PART II. OTHER INFORMATION AND SIGNATURE 13
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
March 22, December29,
1996 1995
--------- ----------
(unaudited)
ASSETS
------
<S> <C> <C>
Property and Equipment........................................ $3,160 $2,882
Notes and Other Receivables (including amounts due from
affiliates of $164 million and $170 million, respectively).. 218 210
Due from Hotel Managers....................................... 80 72
Investments in Affiliates..................................... 14 26
Other Assets.................................................. 230 166
Cash and Cash Equivalents..................................... 168 201
------ ------
$3,870 $3,557
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Debt
Debt carrying a parent company guarantee of repayment....... $ 253 $ 262
Debt not carrying a parent company guarantee of repayment... 2,171 1,916
------ ------
2,424 2,178
Accounts Payable and Accrued Expenses........................ 75 52
Deferred Income Taxes........................................ 501 504
Other Liabilities............................................ 203 148
------ ------
Total Liabilities......................................... 3,203 2,882
------ ------
Shareholders' Equity
Common Stock, 300 million shares authorized; 162.7 million
shares and 159.7 million shares issued, respectively....... 163 160
Additional Paid-in Capital.................................. 500 499
Retained Earnings........................................... 4 16
------ ------
Total Shareholders' Equity................................ 667 675
------ ------
$3,870 $3,557
====== ======
</TABLE>
- See Notes to Condensed Consolidated Financial Statements -
-3-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TWELVE WEEKS ENDED MARCH 22, 1996 AND MARCH 24, 1995
(UNAUDITED, IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
REVENUES
Hotels........................................................ $ 126 $ 96
Net gains on property transactions............................ 1 1
Equity in earnings (losses) of affiliates..................... 1 (1)
Other......................................................... 2 4
----- -----
Total revenues............................................... 130 100
----- -----
OPERATING COSTS AND EXPENSES
Hotels (including Marriott International management fees of
$17 million and $14 million in 1996 and 1995, respectively).. 83 57
Other......................................................... 9 8
----- -----
Total operating costs and expenses........................... 92 65
----- -----
OPERATING PROFIT BEFORE MINORITY INTEREST,
CORPORATE EXPENSES AND INTEREST.............................. 38 35
Minority interest.............................................. (1) --
Corporate expenses............................................. (9) (9)
Interest expense............................................... (48) (40)
Interest income................................................ 6 5
----- -----
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES............................................ (14) (9)
Benefit for income taxes....................................... 2 1
----- -----
LOSS FROM CONTINUING OPERATIONS................................ (12) (8)
DISCONTINUED OPERATIONS
Loss from discontinued operations
(net of income taxes of $5 million in 1995).............. -- (6)
----- -----
NET LOSS....................................................... $ (12) $ (14)
===== =====
LOSS PER COMMON SHARE:
Continuing operations.......................................... $(.07) $(.05)
Discontinued operations........................................ -- (.04)
----- -----
NET LOSS....................................................... $(.07) $(.09)
===== =====
</TABLE>
- See Notes to Condensed Consolidated Financial Statements -
-4-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE WEEKS ENDED MARCH 22, 1996 AND MARCH 24, 1995
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Loss from continuing operations.......................................... $ (12) $ (8)
Adjustments to reconcile to cash from operations:
Depreciation and amortization........................................ 34 30
Income taxes......................................................... (2) (1)
Equity in earnings of affiliates..................................... (1) 1
Changes in operating accounts........................................ 14 --
Other................................................................ 10 8
----- -----
Cash from continuing operations...................................... 43 30
Cash used in discontinued operations................................. (3) (6)
----- -----
Cash from operations................................................. 40 24
----- -----
INVESTING ACTIVITIES
Proceeds from sales of assets............................................ 90 191
Less noncash proceeds................................................ (9) (18)
----- -----
Cash received from sales of assets....................................... 81 173
Acquisitions............................................................. (165) (15)
Capital expenditures:
Capital expenditures for renewals and replacements................... (18) (11)
Lodging construction funded by project financing..................... (1) (18)
Other capital expenditures........................................... (12) (14)
Note receivable collections.............................................. 3 37
Affiliate collections (advances), net.................................... 5 (19)
Other.................................................................... (25) --
----- -----
Cash from (used in) investing activities from continuing operations.. (132) 133
Cash used in investing activities from discontinued operations....... -- (7)
----- -----
Cash from (used in) investing activities............................. (132) 126
----- -----
FINANCING ACTIVITIES
Issuances of debt........................................................ 50 25
Issuances of common stock................................................ 4 5
Scheduled principal repayments........................................... (12) (1)
Debt prepayments......................................................... -- (25)
Other.................................................................... 17 --
----- -----
Cash from financing activities....................................... 59 4
----- -----
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......................... $ (33) $ 154
===== =====
</TABLE>
- See Notes to Condensed Consolidated Financial Statements -
-5-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying condensed consolidated financial statements of Host Marriott
Corporation and subsidiaries (the "Company") have been prepared by the
Company without audit. Certain information and footnote disclosures normally
included in financial statements presented in accordance with generally
accepted accounting principles have been condensed or omitted. The Company
believes the disclosures made are adequate to make the information presented
not misleading. However, the condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 29, 1995.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position of Host Marriott Corporation and subsidiaries as of March 22, 1996
and December 29, 1995, and the results of operations and cash flows for the
twelve weeks ended March 22, 1996 and March 24, 1995. Interim results are
not necessarily indicative of fiscal year performance because of the impact
of seasonal and short-term variations.
2. On December 29, 1995, the Company distributed to its shareholders through a
special tax-free dividend (the "Special Dividend") all of the outstanding
shares of common stock of Host Marriott Services Corporation ("HM Services"),
formerly a wholly-owned subsidiary of the Company, which, as of the date of
the Special Dividend, owned and operated food, beverage and merchandise
concessions businesses at airports, on tollroads and at stadiums, arenas and
other attractions (the "Operating Group"). The condensed consolidated
financial statements for 1995 have been restated to reflect the Operating
Group results as discontinued operations. Revenues for the Company's
discontinued operations totaled $231 million for the twelve weeks ended March
24, 1995. Cash used in discontinued operations for the first quarter of 1996
represents the 1996 payment of expenses related to the Special Dividend
accrued during 1995.
3. Revenues primarily represent house profit from the Company's hotel
properties, gains/losses on property transactions, and equity in earnings of
affiliates. House profit reflects the net revenues flowing to the Company
as property owner and represents hotel operating results less property-level
expenses excluding depreciation, real and personal property taxes, ground
rent, insurance and management fees which are classified as operating costs
and expenses.
House profit generated by the Company's hotels for the first quarter of 1996
and 1995 consists of:
<TABLE>
<CAPTION>
Twelve Weeks Ended
------------------
March 22, March 24,
1996 1995
Sales (in millions)
<S> <C> <C>
Rooms...................... 247 $ 194
Food & Beverage............ 98 77
Other...................... 25 17
----- -----
Total Hotel Sales....... 370 288
----- -----
Department Costs
Rooms...................... 62 49
Food & Beverage............ 79 61
Other...................... 13 10
----- -----
Total Department Costs.. 154 120
----- -----
Department Profit............. 216 168
Other Deductions.............. 90 72
----- -----
House Profit............ 126 $ 96
===== =====
</TABLE>
-6-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. Loss per common share is computed on a fully diluted basis by dividing net
loss by the weighted average number of outstanding common and common
equivalent shares, plus other potentially dilutive securities. Common
equivalent shares and other potentially dilutive securities have been
excluded from the weighted average number of outstanding shares for the
twelve weeks ended March 22, 1996 and March 24, 1995, as they are
antidilutive. The weighted average shares were 161.4 million and 156.2
million for the twelve weeks ended March 22, 1996 and March 24, 1995,
respectively.
5. The Company has minority interests in 29 affiliates that own an aggregate of
261 properties, 41 of which are full-service properties, managed by Marriott
International. The Company's equity in net income of affiliates was $1
million for the twelve weeks ended March 22, 1996 and the equity in losses of
affiliates was $1 million for the twelve weeks ended March 24, 1995.
Combined summarized operating results reported by affiliates follows:
<TABLE>
<CAPTION>
Twelve Weeks Ended
--------------------
March 22, March 24,
1996 1995
--------- ---------
(in millions)
<S> <C> <C>
Revenues................................. $ 176 $ 185
Operating expenses
Cash charges (including interest)....... 110 120
Depreciation and other noncash charges.. 59 64
----- -----
Net income............................. $ 7 $ 1
===== =====
</TABLE>
During the second quarter of 1996, the Company commenced an offer to purchase
100% of the limited partnership units of the Marriott Hotel Properties II
Limited Partnership (MHP II), an affiliated partnership of the Company in
which the Company currently owns a 1.67% general partner interest, for
$125,000 per unit, or approximately $92 million for all 740 limited
partnership units. MHP II owns the 1,290-room New Orleans Marriott hotel,
the 999-room San Antonio Marriott Rivercenter hotel, the 368-room San Ramon
Marriott hotel and a 50% limited partner interest in the 754-room Santa Clara
Marriott hotel. The tender offer is subject to a number of conditions,
including the tender of a minimum of 50.1% of the total units outstanding.
6. On March 27, 1996, the Company completed the issuance of 31.6 million shares
of common stock for net proceeds of nearly $400 million.
7. In February 1996, the Company entered into an agreement with a real estate
investment trust (the "REIT") to sell and lease back 16 of its Courtyard
properties and 18 of its Residence Inn properties for $349 million (10% of
which would be deferred). On March 22, 1996, the sale and leaseback of three
Courtyard and five Residence Inn properties was completed for approximately
$91 million (10% of which was deferred). A gain on the transaction of
approximately $9 million will be deferred and amortized over the initial term
of the leases. In the second quarter of 1996, the Company completed the sale
and leaseback of the remaining 26 properties (two of these 26 properties
remain in escrow pending resolution of certain title issues which must be
accomplished by December 31, 1996) for $258 million.
8. During the first quarter of 1996, the Company acquired a controlling interest
in the San Diego Marriott Hotel and Marina (1,355 rooms), in which it had
previously held a five percent interest, for $216 million consisting of a
cash contribution of $10 million and $206 million in assumed debt. Also
during the first quarter of 1996, the Company acquired a controlling interest
in a venture which owns two hotels in Mexico City, Mexico (914 rooms). In
addition, the Company acquired the Toronto Delta Meadowvale Hotel and
Conference Center (374 rooms) in the first quarter of 1996 for $25 million
and an 83% interest in the mortgage loans secured by the Newport Beach
Marriott Suites for $18 million.
-7-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
During the second quarter of 1996, the Company acquired the 254-room Dulles
Airport Marriott Suites for $29 million and acquired, for $18 million, a 95%
interest in a venture that acquired the 400-room Pittsburgh Hyatt Regency
Hotel. The Pittsburgh Hyatt is being converted to the Marriott brand and is
scheduled to re-open in July 1996.
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ---------------------
REVENUES. Revenues primarily represent house profit from the Company's hotel
- --------
properties, net gains (losses) on property transactions and equity in earnings
(losses) of affiliates. Revenues increased $30 million, or 30%, to $130 million
for the first quarter of 1996 from $100 million for the first quarter of 1995.
The Company's revenue and operating profit were impacted by:
. improved lodging results for comparable properties;
. the addition of nine full-service hotel properties during 1995 and three
during the first quarter of 1996 (a fourth 1996 addition is under
construction and did not impact revenue or operating profit);
. the 1995 sale and leaseback of 37 of the Company's Courtyard properties; and
. the 1995 sale of four Fairfield Inns.
Hotel revenues increased $30 million, or 31%, to $126 million in the first
quarter of 1996, as all three of the Company's lodging concepts reported growth
in room revenues generated per available room ("REVPAR"). Improved results for
the Company's full-service hotels were driven by strong increases in REVPAR of
almost 9% for comparable units. On a comparable basis for the Company's full-
service properties, average room rates increased over 5%, while average
occupancy increased two percentage points.
The Company's moderate-price Courtyard properties reported an increase of 7% in
REVPAR for the 1996 first quarter due to a 6% increase in average room rates and
a slight increase in average occupancy.
The Company's extended-stay Residence Inns reported a 5% increase in REVPAR for
the 1996 first quarter due primarily to an increase in average room rates of 5%,
while average occupancy decreased almost one percentage point. Due to the high
occupancy of these properties, the Company expects future increases in REVPAR to
be driven by room rate increases, rather than occupancy increases. However,
there can be no assurance that REVPAR will continue to increase in the future.
OPERATING COSTS AND EXPENSES. Operating costs and expenses principally consist
- ----------------------------
of depreciation, management fees, real and personal property taxes, ground and
equipment rent, insurance and certain other costs. The Company's operating
costs and expenses increased $27 million to $92 million in the first quarter of
1996 from $65 million in the first quarter of 1995, primarily representing
increased hotel operating costs. Hotel operating costs increased $26 million to
$83 million for the first quarter of 1996 primarily due to the addition of 12
full-service properties during 1995 and 1996 and increased management fees and
rentals tied to improved property results. As a percentage of hotel revenues,
hotel operating costs and expenses increased to 66% of revenues in the first
quarter of 1996 from 59% of revenues in the first quarter of 1995, reflecting
the impact of the lease payments on the Courtyard properties which have been
sold and leased back, as well as the shifting emphasis to full-service
properties. Full-service hotel rooms accounted for 89% of the Company's total
hotel rooms at the end of the 1996 first quarter versus 65% at the end of the
1995 first quarter.
OPERATING PROFIT. As a result of the changes in revenues and operating costs
- ----------------
and expenses discussed above, the Company's operating profit increased $3
million, or 9%, to $38 million for the first quarter of 1996. Hotel operating
profit increased $4 million, or 10%, to $43 million, or 34% of hotel revenues,
for the first quarter of 1996 from $39 million, or 41%, of hotel revenues for
the first quarter of 1995.
-8-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Several hotels, including the New York Marriott East Side, the New York Marriott
Marquis, the Philadelphia Marriott and the Vail Marriott Mountain Resort posted
significant improvements in operating profit. The San Francisco Marriott
reported a significant decrease in operating profit due to a rooms renovation
and lower than anticipated transient business.
CORPORATE EXPENSES. Corporate expenses remained at $9 million for the first
- ------------------
quarter of 1996. As a percentage of revenues, corporate expenses decreased to
7% of revenues in the first quarter of 1996 from 9% in the first quarter of
1995.
INTEREST EXPENSE. Interest expense increased by 20% to $48 million in the first
- ----------------
quarter of 1996 primarily due to the additional debt of approximately $500
million incurred in connection with the 1995 and 1996 full-service hotel
additions, increased interest rates on the Company's variable rate debt, and the
decreased benefit from the Company's interest rate swap agreements, which was
partially offset by the net impact of the 1995 redemptions of Hospitality Notes
and the line of credit with Marriott International.
LOSS FROM CONTINUING OPERATIONS. The loss from continuing operations for the
- -------------------------------
first quarter of 1996 increased $4 million to $12 million principally due to the
increase in interest expense, partially offset by the changes in operating
profit discussed above.
NET LOSS. The Company's net loss for the first quarter of 1996 decreased $2
- --------
million to $12 million, including the impact of the $6 million loss from
discontinued operations in 1995. The net loss for the first quarter of 1996 was
$.07 per share, compared to $.09 per share for the first quarter of 1995.
EBITDA
- ------
The Company's consolidated Earnings Before Interest Expense, Taxes,
Depreciation, Amortization and other non-cash items ("EBITDA") increased $8
million, or 12%, to $75 million in the first quarter of 1996 from $67 million in
the first quarter of 1995. The Company considers EBITDA to be an indicative
measure of the Company's operating performance due to the significance of the
Company's long-lived assets and because such data can be used to measure the
Company's ability to service debt, fund capital expenditures and expand its
business, however, such information should not be considered as an alternative
to net income, operating profit, cash from operations, or any other operating or
liquidity performance measure prescribed by generally accepted accounting
principles. Cash expenditures for various long-term assets, interest expense,
and income taxes have been, and will be, incurred which are not reflected in the
EBITDA presentation.
Hotel EBITDA increased $9 million, or 12%, to $78 million in the first quarter
of 1996 from $69 million in the first quarter of 1995. Full-service EBITDA
increased $18 million, or 36%, to $67 million for the 1996 first quarter.
Full-service hotel EBITDA increased to 86% of hotel EBITDA in the first quarter
of 1996 from 71% of hotel EBITDA in the first quarter of 1995. On a comparable
basis, full-service EBITDA increased 12% for the first quarter of 1996.
-9-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following is a reconciliation of EBITDA to the loss from continuing
operations:
<TABLE>
<CAPTION>
Twelve Weeks Ended
----------------------
March 22, March 24,
1996 1995
---------- ----------
(in millions)
<S> <C> <C>
EBITDA..................................... $ 75 $ 67
Interest expense........................... (48) (40)
Depreciation and amortization.............. (34) (30)
Income taxes............................... 2 1
Gain (loss) on dispositions of assets and
other non-cash charges, net............... (7) (6)
----- -----
Loss from continuing operations.......... $ (12) $ (8)
===== =====
</TABLE>
CASH FLOWS AND FINANCIAL CONDITION
- ----------------------------------
The Company reported a decrease in cash and cash equivalents of $33 million for
the first quarter of 1996. This decrease is primarily due to the use of funds
to acquire four full-service properties, repay debt, and fund capital
expenditures, partially offset by the proceeds from the sale of limited service
properties and cash flow from operations. Cash flow from continuing operations
increased $13 million, to $43 million, for the first quarter of 1996 primarily
due to improved lodging results.
Cash used in investing activities for continuing operations was $132 million in
the first quarter of 1996, while cash from investing activities from continuing
operations was $133 million for the first quarter of 1995. Cash used in
investing activities for the first quarter of 1996 includes capital expenditures
of $31 million, primarily related to renewals and replacements on existing
properties and the construction of one urban Residence Inn near National
Airport ($5 million in the first quarter of 1996), and $165 million for four
full-service hotel acquisitions, partially offset by $81 million in net sales
proceeds, principally from the sale/leaseback of eight of the Company's
Courtyard and Residence Inn properties.
During the first quarter of 1996, the Company acquired a controlling interest in
the San Diego Marriott Hotel and Marina (1,355 rooms), in which it had
previously held a five percent interest, for $216 million consisting of a cash
contribution of $10 million and $206 million in assumed debt. Also during the
first quarter of 1996, the Company acquired a controlling interest in a venture
which owns two hotels in Mexico City, Mexico (914 rooms). One of the hotels
(314 rooms) is under construction and will open in the third quarter of 1996.
In addition, the Company acquired the Toronto Delta Meadowvale Hotel and
Conference Center (374 rooms) in the first quarter of 1996 for $25 million and
an 83% interest in the mortgage loans secured by the Newport Beach Marriott
Suites for $18 million.
Cash from financing activities from continuing operations increased $55 million
to $59 million for the first quarter of 1996, primarily due to the issuance of
debt of $40 million related to the acquisition of the two hotels in Mexico City.
In the second quarter of 1996, the Company completed the issuance of 31.6
million shares of common stock for net proceeds of nearly $400 million. The
proceeds from the equity offering, along with the proceeds from the 1996 sale
and leaseback of the Courtyard and Residence Inn properties, will be utilized to
acquire full-service hotel properties and for general corporate purposes.
-10-
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
During the second quarter of 1996, the Company acquired the 254-room Dulles
Airport Marriott Suites for $29 million and acquired a 95% interest in a venture
that acquired the 400-room Pittsburgh Hyatt Regency hotel, which is being
converted to the Marriott brand and is scheduled to re-open in July 1996. The
Company has also entered into an agreement to acquire the 354-room Oklahoma City
Marriott for $23 million. In the second quarter of 1996, the Company completed
the sale and leaseback of 13 of its Courtyard properties and 13 of its Residence
Inn properties for $258 million (10% of which was deferred).
During the second quarter of 1996, the Company commenced an offer to purchase
100% of the limited partnership units of the Marriott Hotel Properties II
Limited Partnership (MHP II), an affiliated partnership of the Company in which
the Company currently owns a 1.67% general partner interest, for $125,000 per
unit, or approximately $92 million for all 740 limited partnership units. MHP
II owns the 1,290-room New Orleans Marriott hotel, the 999-room San Antonio
Marriott Rivercenter hotel, the 368-room San Ramon Marriott hotel and a 50%
limited partner interest in the 754-room Santa Clara Marriott hotel. The tender
offer is subject to a number of conditions, including the tender of a minimum of
50.1% of the total units outstanding.
-11-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
In September 1994, the Company and certain holders and purchasers of certain of
the Company's bonds (the "PPM Group") went to trial as a result of litigation
initiated by the PPM Group in response to the Marriott International
Distribution. In October 1994, the judge declared a mistrial based on the
inability of the jury to reach a verdict. In January 1995, the judge granted
the Company's motion for judgment in its favor on the PPM Group's claims as a
matter of law. An appeal was filed by the PPM Group in February 1995 and the
appeal was argued in February 1996. In March 1996, the Company settled the
litigation for a payment of $1.25 million. The settlement leaves in place the
trial court's judgment in favor of the Company on all of the PPM Group's claims.
The settlement did not have a material effect on the Company's financial
condition and results of operations.
The Company is from time to time the subject of, or involved in, judicial
proceedings. Management believes that any liability or loss resulting from such
matters will not have a material adverse effect on the financial position or
results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
-----------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibit:
#11 Statement Re: Computation of Loss Per Common Share
b. Reports on Form 8-K:
. January 11, 1996 -- Report of the announcement that the Company (i) has
reached agreements to acquire controlling interests in the San Diego
Marriott Hotel and Marina, two hotels in Mexico City and the Pittsburgh
Hyatt, and to purchase the Delta Meadowvale Hotel and Conference Center in
Toronto, Canada; (ii) has recorded a charge in the fourth quarter of 1995
to reduce an undeveloped land site to its estimated sale value; (iii)
filed a registration statement with the Securities and Exchange Commission
for the public offering of 25 million shares of the Company's common
stock; and (iv) has filed pro forma financial information of the Company.
. January 17, 1996 -- Amendment to Current Report on Form 8-K dated November
3, 1995 and December 22, 1995 by filing financial statements of the
Toronto Eaton Centre Marriott and the New York Vista Hotel.
. February 28, 1996 -- Report of the announcement that the Company filed
amendment no. 1 to a registration statement with the Securities and
Exchange Commission for the public offering of 25
-12-
<PAGE>
million shares of the Company's common stock. The Company filed the amended
registration statement as an exhibit.
. March 7, 1996 -- Amendment to Current Report on Form 8-K/A dated January
17, 1996 by filing updated financial statements of the New York Vista.
-13-
<PAGE>
SIGNATURE
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.
HOST MARRIOTT CORPORATION
May 3, 1996 /s/ Donald D. Olinger
- ----------- ----------------------------------
Date Donald D. Olinger
Vice President and Corporate Controller
(Chief Accounting Officer)
-14-
<PAGE>
EXHIBIT 11
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF LOSS PER COMMON SHARE
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Twelve Weeks Ended
---------------------------
March 22, March 24,
1996 1995
-------- --------
Net loss available for common shareholders $ (12) $ (14)
======== =====
<TABLE>
<CAPTION>
Primary Loss Per Common Share
- -----------------------------
<S> <C> <C>
Shares:
Weighted average number of common shares
outstanding.................................. 161.4 156.2
Assuming distribution of common shares granted
under comprehensive stock plan, less shares
assumed purchased at average market *....... -- --
Assuming distribution of common shares reserved
under employee stock purchase plan, based on
withholdings to date, less shares assumed
purchased at average market *............... -- --
Assuming distribution of common shares issuable
for warrants, less shares assumed purchased
at average market *......................... -- --
------ ------
161.4 156.2
====== ======
Primary Loss Per Common Share.................... $ (.07) $ (.09)
====== ======
</TABLE>
Fully Diluted Loss Per Common Share
- -----------------------------------
<TABLE>
<CAPTION>
Shares:
<S> <C> <C>
Weighted average number of common shares
outstanding................................ 161.4 156.2
Assuming distribution of common shares granted
under comprehensive stock plan, less shares
assumed purchased at higher of average or
ending market *............................ -- --
Assuming distribution of common shares reserved
under employee stock purchase plan, based
on withholdings to date, less shares assumed
purchased at higher of average or ending
market *.................................... -- --
Assuming distribution of common shares issuable
for warrants, less shares assumed purchased
at higher of average or ending market *..... -- --
Assuming issuance of common shares upon
conversion of convertible preferred stock *. --
------ ------
161.4 156.2
====== ======
Fully Diluted Loss Per Common Share.............. $ (.07) $ (.09)
====== =======
</TABLE>
- ---------
* Common equivalent shares and other potentially dilutive securities were
anti-dilutive in the twelve weeks ended March 22, 1996 and March 24, 1995,
respectively.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Host
Marriott Corporation and Subsidiaries Condensed Consolidated Balance Sheets and
Condensed Consolidated Statements of Operations and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-3-1997
<PERIOD-END> MAR-22-1996
<CASH> 168
<SECURITIES> 0
<RECEIVABLES> 80
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,791
<DEPRECIATION> 631
<TOTAL-ASSETS> 3,870
<CURRENT-LIABILITIES> 0
<BONDS> 2,424
0
0
<COMMON> 163
<OTHER-SE> 504
<TOTAL-LIABILITY-AND-EQUITY> 3,870
<SALES> 0
<TOTAL-REVENUES> 130
<CGS> 0
<TOTAL-COSTS> 92
<OTHER-EXPENSES> 10
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48
<INCOME-PRETAX> (14)
<INCOME-TAX> 2
<INCOME-CONTINUING> (12)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
