SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) March 5, 1997
HOST MARRIOTT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-5664
(Commission File Number)
53-0085950
(I.R.S. Employer 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>
Item 5. Other Events
On March 5, 1997, the Registrant reported its comprehensive results of
operations for 1996, including revenues, operating profit, net loss and certain
disclosures concerning Earnings Before Interest Expense, Taxes, Depreciation and
Amortization and other non-cash items ("EBITDA"). 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 EBITDA can be used
to measure the Company's ability to service debt, fund capital expenditures and
expand its business. EBITDA is used by certain investors to determine the
Company's ability to meet debt service requirements and is used in the senior
notes indenture as part of the tests determining the Company's ability to incur
debt and to make certain restricted payments. Such information should not be
considered as an alternative to net income, operating profit, cash flows from
operations, or any other operating or liquidity performance measure prescribed
by generally accepted accounting principles ("GAAP"). 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. On a historical
basis, cash from continuing operations was $205 million and $110 million in 1996
and 1995, respectively. Cash used in investing activities from continuing
operations was $504 million and $156 million in 1996 and 1995, respectively, and
cash from financing activities from continuing operations was $806 million and
$204 million in 1996 and 1995, respectively. The Company's ratio of earnings to
fixed charges was 1.0 to 1.0 in 1996, while the Company's deficiency of earnings
to fixed charges was $70 million in 1995.
The press release is included as an exhibit to this filing.
Item 7. Financial Statements and Exhibits
(c) 99.1 News Release dated March 5, 1997.
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/ Donald D. Olinger
-------------------------
Donald D. Olinger
Senior Vice President and
Corporate Controller
March 6, 1997
2
Exhibit 99.1
HOST MARRIOTT REPORTS
RESULTS FOR 1996
BETHESDA, MD, March 5, 1997 -- Host Marriott Corporation (NYSE: HMT) today
reported its 1996 comprehensive results of operations, noting that Earnings
Before Interest Expense, Taxes, Depreciation and Amortization and Other Non-Cash
Items (EBITDA) were $442 million for the year ended January 3, 1997, a 42
percent increase over $311 million for 1995. EBITDA increased 61 percent to $159
million during the 1996 fourth quarter as compared to $99 million in the 1995
fourth quarter. Full year and fourth quarter results for 1996 include 53 and 17
weeks, respectively, versus 52 and 16 weeks, respectively, included in the
comparable 1995 periods.
For the year, the company reported $416 million of full service hotel EBITDA, a
66 percent improvement from $251 million in 1995. The increase in full service
hotel EBITDA was driven primarily by comparable full service hotel EBITDA growth
of 19 percent on an 11 percent increase in room revenue per available room
(REVPAR), as well as incremental EBITDA from its 1995 and 1996 acquisitions.
Mr. Terence C. Golden, president and chief executive officer of Host Marriott
said, "Host Marriott Corporation was extremely successful in carrying out its
strategy in 1996. We acquired, or purchased controlling interests in, 23 hotels
(10,881 rooms) with an aggregate value of approximately $1.5 billion and
completed the divestiture of our limited service properties. The hotels added
during the year are high quality properties. They were acquired at very
attractive EBITDA multiples and have excellent growth potential."
"We are continuing our acquisition momentum into 1997, having already purchased
or acquired controlling interests in four hotels this year with an aggregate
asset value totaling over $400 million," Mr. Golden added. "We are well on our
way to meeting our 1997 acquisition target of $1 billion. We expect to continue
to add high quality full service hotels to our portfolio at attractive returns
throughout 1997 and will continue to explore opportunities for diversification
into related lodging real estate investments."
Host Marriott continued to strengthen its balance sheet during 1996, raising
nearly $1 billion of capital through separate common stock and "Convertible
Preferred Securities" offerings. As of year-end, the Company's debt to total
assets had improved to 51 percent from 61 percent at the 1995 year-end. For the
year, interest coverage, defined as EBITDA divided by cash interest expense,
increased to 2.0 times from 1.8 times in 1995.
The company reported 1996 revenues of $732 million, a 51 percent increase over
revenues of $484 million for 1995. Operating profit for 1996 increased 104
percent to $233 million, reflecting the dramatic increase in hotel operating
results. Operating profit for 1996 was affected by the $4 million write-down of
one undeveloped land parcel and $15 million in additional depreciation expense
for certain hotel properties. Operating profit for 1995 was impacted by the $60
million write-down of one undeveloped land parcel and a $10 million write- down
of five Courtyard and Residence Inn properties to their individual net sales
prices. The 1996 loss from continuing operations totaled $13 million ($.07 per
share) compared to $62 million ($.39 per share) in 1995.
Mr. Golden commented, "Host Marriott strengthened its management team during
1996, nearly doubling the size of our acquisition and asset management areas. We
have also invested in state-of-the-art computer and decision support systems."
Mr. Golden added, "In spite of the incremental costs associated with these
staffing and infrastructure increases, we have carefully controlled costs,
reducing corporate expenses as a percentage of revenues by 28 percent from 1994
to 1996."
Host Marriott Corporation is a lodging real estate company which currently owns,
or holds controlling interests in, 83 upscale and luxury full service hotel
properties primarily operated under the Marriott and Ritz-Carlton brand names.
The company also serves as general partner and holds minority interests in
various unconsolidated partnerships that own 251 lodging properties, 31 of which
are full service hotels.
Certain matters discussed within this news release are forward-looking
statements within the meaning of the Private Litigation Reform Act of 1995 and,
as such, may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Host Marriott
to be different from any future results, performance or achievements expressed
or implied by such forward-looking statements. Although Host Marriott believes
the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
attained. These risks are detailed from time to time in the Company's filings
with the Securities and Exchange Commission.
*** Table follows ***
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HOST MARRIOTT CORPORATION
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(in millions)
<TABLE>
<CAPTION>
Seventeen Weeks Sixteen Weeks
Ended Ended Year Ended
--------------- ------------- ---------------------------
January 3, December 29, January 3, December 29,
1997 1995 1997 1995
------------- ------------ ---------- ------------
(unaudited)
<S> <C> <C> <C> <C>
EBITDA
Full-Service Hotels................................. $ 160 $ 87 $ 416 $ 251
Limited Service Hotels.............................. 2 14 23 69
----------- ----------- ----------- -----------
Total Hotels.................................... 162 101 439 320
Other Operating..................................... (8) (4) (18) (13)
Corporate and Other, Net of Interest Income......... 5 2 21 4
----------- ----------- ----------- -----------
EBITDA.......................................... $ 159 $ 99 $ 442 $ 311
=========== =========== =========== ===========
EBITDA to Cash Interest Expense......................... 2.0x 1.8x
Hotel EBITDA
Hotels owned prior to January 1, 1994............... $ 169 $ 148
Hotels added in 1994................................ 87 72
Hotels added/opened in 1995......................... 80 31
Hotels added/opened in 1996......................... 80 --
----------- -----------
Total Full-Service.............................. 416 251
Limited-Service..................................... 23 69
----------- -----------
Total Hotel EBITDA.............................. $ 439 $ 320
=========== ===========
Comparable Full-Service Hotel Statistics
Room Rate Increase.................................. 8%
Occupancy Increase.................................. Two Percentage Points
REVPAR Increase..................................... 11%
EBITDA Increase..................................... 19%
<PAGE>
</TABLE>
HOST MARRIOTT CORPORATION
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(in millions, except per common share amounts)
<TABLE>
<CAPTION>
Seventeen Weeks Sixteen Weeks
Ended Ended Year Ended
--------------- ------------ ----------------------------
January 3, December 29, January 3, December 29,
1997 1995 1997 1995
--------------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
(unaudited)
REVENUES
Hotels ............................................. $ 262 $ 159 $ 717 $ 474
Other ............................................. 6 6 15 10
------------ ------------ ------------ -----------
Total Revenues.................................. 268 165 732 484
------------ ------------ ------------ -----------
OPERATING COSTS AND EXPENSES
Hotels ............................................. 170 99 461 281
Other ............................................. 14 70 38 89
------------ ------------ ------------ -----------
Total Operating Costs and Expenses.............. 184 169 499 370
------------ ------------ ------------ -----------
OPERATING PROFIT (LOSS)................................. 84 (4) 233 114
Minority Interest....................................... (4) (2) (6) (2)
Corporate Expenses...................................... (18) (10) (43) (36)
Interest Expense........................................ (85) (56) (237) (178)
Dividends on Convertible Preferred Securities........... (3) -- (3) --
Interest Income......................................... 19 9 48 27
------------ ------------ ------------ -----------
Loss from Continuing Operations
Before Income Taxes................................... (7) (63) (8) (75)
Benefit (Provision) for Income Taxes.................... 1 14 (5) 13
------------ ------------ ------------ -----------
Loss from Continuing Operations......................... $ (6) $ (49) $ (13) $ (62)
============ ============ ============ ===========
Loss Before Extraordinary Item.......................... $ (6) $ (91) $ (13) $ (123)
============ ============ ============ ===========
Net Loss ............................................. $ (6) $ (94) $ (13) $ (143)
============ ============= ============ ===========
Loss Per Common Share
Continuing Operations............................... $ (.03) $ (.31) $ (.07) $ (.39)
Discontinued Operations............................. -- (.26) -- (.39)
Extraordinary Item.................................. -- (.02) -- (.12)
------------ ------------ ------------ -----------
Net Loss........................................ $ (.03) $ (.59) $ (.07) $ (.90)
============ ============ ============ ===========
Weighted Average Common Shares Outstanding.............. 200.4 159.4 188.7 158.3
============ ============ ============ ===========
Balance Sheet Data as of January 3, 1997:
Cash and Cash Equivalents........................... $ 704
Total Assets........................................ 5,152
Total Debt.......................................... 2,647
Shareholders' Equity................................ 1,127
</TABLE>