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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) September 10, 1997
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HOST MARRIOTT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-5664 53-0085950
(Commission File Number) (I.R.S. Employer Identification Number)
10400 Fernwood Road, Bethesda, Maryland 20817
(Address of Principal Executive Offices) (Zip Code)
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Registrant's Telephone Number, Including Area Code (301) 380-9000
(Former Name or Former Address, if changed since last report.)
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<PAGE>
FORM 8-K/A
ITEM 2. ACQUISITIONS OR DISPOSITIONS OF ASSETS
The Registrant hereby amends its Current Report on Form 8-K dated September 10,
1997 by filing financial statements of an acquired business, Chesapeake Hotel
Limited Partnership, and certain pro forma financial information for Host
Marriott Corporation.
Certain matters discussed within this Form 8-K/A 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
Corporation to be different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Although Host Marriott
Corporation 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.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Chesapeake Hotel Limited Partnership:
Page
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Condensed Balance Sheet as of September 12, 1997 (unaudited) 3
Condensed Statements of Operations for the thirty-six weeks
ended September 12, 1997 and September 6, 1996 (unaudited) 4
Condensed Statements of Cash Flows for the thirty-six weeks
ended September 12, 1997 and September 6, 1996 (unaudited) 5
Notes to Condensed Financial Statements (unaudited) 6
The Registrant previously filed audited financial statements as of
December 31, 1996 and 1995 and unaudited condensed financial
statements as of June 20, 1997 on its Current Report on Form 8-K dated
September 10, 1997.
(b) Pro Forma financial information of the Registrant reflecting the
acquisition of Chesapeake Hotel Limited Partnership as of and for the
thirty-six weeks ended September 12, 1997 and for the fiscal year
ended January 3, 1997 (unaudited):
Page
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Pro Forma Condensed Consolidated Financial Data 8
Pro Forma Condensed Consolidated Statement of Operations
for the thirty-six weeks ended September 12, 1997 10
Pro Forma Condensed Consolidated Statement of Operations
for the fiscal year ended January 3, 1997 11
Notes to Pro Forma Condensed Consolidated Financial Data 12
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
Date: November 24, 1997
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<PAGE>
<TABLE>
Chesapeake Hotel Limited Partnership
Condensed Balance Sheet
(Unaudited)
<CAPTION>
September 12,
1997
-------------
(in thousands)
ASSETS
<S> <C>
Property and equipment, net............................. $ 126,896
Due from Marriott International, Inc.................... 2,365
Other assets............................................ 497
Cash and cash equivalents............................... 7,622
-----------
$ 137,380
===========
LIABILITIES AND PARTNERS' DEFICIT
Mortgage debt........................................... $ 2,182
Debt payable to Host Marriott
Corporation and affiliates........................... 196,656
Note and other payables due to Host
Marriott Corporation and affiliates.................. 37,129
Due to Willmar Distributors, Inc........................ 8,049
Due to Marriott International, Inc...................... 161,045
Accounts payable and accrued interest................... 3,956
-----------
Total Liabilities.................................. 409,017
-----------
PARTNERS' DEFICIT
General Partner......................................... (2,670)
Limited Partners........................................ (268,967)
-----------
Total Partners' Deficit............................ (271,637)
-----------
$ 137,380
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</TABLE>
See Notes to Condensed Financial Statements.
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<PAGE>
<TABLE>
Chesapeake Hotel Limited Partnership
Condensed Statements of Operations
(Unaudited)
<CAPTION>
Thirty-Six Weeks Ended
------------------------------
September 12, September 6,
1997 1996
------------- ------------
(in thousands)
<S> <C> <C>
REVENUES.................................... $ 35,343 $ 29,657
----------- -----------
OPERATING COSTS AND EXPENSES
Interest................................. 21,636 20,512
Depreciation and amortization............ 8,988 9,394
Incentive management fee................. 6,682 5,442
Property taxes........................... 4,377 4,310
Base management fee...................... 3,077 2,750
Ground rent, insurance and other......... 2,647 2,771
----------- -----------
47,407 45,179
----------- -----------
NET LOSS.................................... $ (12,064) $ (15,522)
=========== ===========
</TABLE>
See Notes to Condensed Financial Statements.
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<PAGE>
<TABLE>
Chesapeake Hotel Limited Partnership
Condensed Statements of Cash Flows
(Unaudited)
<CAPTION>
Thirty-Six Weeks Ended
------------------------------
September 12, September 6,
1997 1996
------------- ------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss................................ $ (12,064) $ (15,522)
Noncash items........................... 24,307 22,668
Changes in operating accounts........... 573 1,007
----------- ----------
Cash provided by operations.......... 12,816 8,153
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INVESTING ACTIVITIES
Additions to property and equipment..... (667) (3,377)
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FINANCING ACTIVITIES
Repayment of Willmar loan............... (5,000) (2,853)
Repayment of mortgage and other debt.... (3,834) (3,023)
Saddle Brook renovation loan............ -- 2,139
----------- ----------
Cash used in financing activities.... (8,834) (3,737)
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INCREASE IN CASH AND
CASH EQUIVALENTS........................ 3,315 1,039
CASH AND CASH EQUIVALENTS
at beginning of period.................. 4,307 4,468
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CASH AND CASH EQUIVALENTS
at end of period........................ $ 7,622 $ 5,507
=========== ==========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Cash paid for interest.................. $ 10,465 $ 10,267
=========== ==========
NON-CASH INVESTING ACTIVITIES
Additions to property and
equipment through capital lease...... $ 5,288 $ 5,417
=========== ==========
</TABLE>
See Notes to Condensed Financial Statements.
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<PAGE>
Chesapeake Hotel Limited Partnership
Notes to Condensed Financial Statements
(Unaudited)
1. The accompanying condensed financial statements have been prepared by
Chesapeake Hotel Limited Partnership (the "Partnership") 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 from the accompanying statements.
The Partnership believes the disclosures made are adequate to make the
information presented not misleading. However, the condensed financial
statements should be read in conjunction with the Partnership's audited
financial statements for the year ended December 31, 1996. Interim results
are not necessarily indicative of fiscal year performance because of
seasonal and short-term variations.
For financial reporting purposes, the net loss of the Partnership is
allocated 99% to the limited partners and 1% to Marriott PLP Corporation
(the "General Partner"). Significant differences exist between the net loss
for financial reporting purposes and the net loss for Federal income tax
purposes. These differences are due primarily to the use, for income tax
purposes, of accelerated depreciation methods and shorter depreciable lives
on higher asset bases and differences in the timing of the recognition of
interest and incentive management fee expenses.
2. Revenues represent house profit which is hotel sales less hotel-level
expenses, excluding certain operating costs and expenses such as
depreciation and amortization, property taxes, ground rent, insurance and
other, and management fees.
Revenues consist of the following for 1997 and 1996:
<TABLE>
<CAPTION>
Thirty-Six Weeks Ended
-------------------------------
September 12, September 6,
1997 1996
------------- ------------
(in thousands)
<S> <C> <C>
HOTEL SALES
Rooms................................... $ 66,175 $ 58,118
Food and beverage....................... 31,299 28,902
Other .................................. 5,045 4,659
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102,519 91,679
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HOTEL EXPENSES
Departmental Direct Costs
Rooms................................ 16,154 14,593
Food and beverage.................... 24,669 22,746
Other hotel operating expenses.......... 26,353 24,683
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67,176 62,022
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REVENUES................................... $ 35,343 $ 29,657
=========== ==========
</TABLE>
3. Marriott International, Inc. was not paid any incentive management fees
during the thirty-six weeks ended September 12, 1997 since cash flow did
not meet levels specified in the hotel management agreement. However, these
fees were accrued as a liability in the condensed financial statements in
accordance with generally accepted accounting principles. Subsequently, the
hotel management agreement with Marriott International, Inc. was
renegotiated, resulting in the forgiveness of deferred incentive management
fees totalling approximately $159 million at September 12, 1997. The
deferred incentive management fees were previously assigned an estimated
fair value of $0 in the Partnership's audited financial statements for the
year ended December 31, 1996.
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<PAGE>
4. On September 10, 1997, the General Partner of CHLP, a wholly-owned
subsidiary of Host Marriott Corporation, purchased 434 units, or 98.6% of
the limited partnership units, for an aggregate payment of $31.5 million.
Combined with its general partner and existing limited partnership
positions, Host Marriott Corporation now owns, through affiliates, 99.9% of
the Partnership.
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<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The unaudited Pro Forma Condensed Consolidated Statements of Operations of Host
Marriott Corporation (the "Company") reflect the following transactions for the
thirty-six weeks ended September 12, 1997 and the fiscal year ended January 3,
1997, as if such transactions had been completed on December 30, 1995:
* 1997 purchase of a controlling interest in the Chesapeake Hotel Limited
Partnership ("CHLP")
* 1997 acquisition of the outstanding common stock of Forum Group, Inc.
* 1997 acquisition of, or purchase of controlling interests in, eight full-
service hotel properties and the completion of the acquisition of the New
York Marriott Financial Center Hotel
* July 1997 Senior Notes Offering (as defined below)
* June 1997 placement of a $500 million revolving line of credit agreement
* March 1997 placement of a $90 million mortgage note secured by the
Philadelphia Marriott Hotel
* March 1997 purchase of $230 million in outstanding bonds secured by the San
Francisco Marriott Hotel
* 1996 acquisition of, or purchase of controlling interests in, 23 full-
service hotel properties and the purchase of the mortgage note secured by
the New York Marriott Financial Center Hotel
* December 1996 Convertible Preferred Securities Offering (as defined below)
* December 1996 repayment of the $109 million mortgage note secured by the
Philadelphia Marriott Hotel
* 1996 sale/leaseback of 16 Courtyard properties and 18 Residence Inns
The unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as
of September 12, 1997 has not been presented as no material acquisitions or
other transactions have occurred subsequent to September 12, 1997.
On September 10, 1997, the Company purchased a controlling interest in the
Chesapeake Hotel Limited Partnership ("CHLP") which owns six full-service hotel
properties for approximately $32 million in cash. Prior to the purchase of CHLP,
the Company held, through a wholly-owned subsidiary, non-recourse mortgages
secured by the properties with a principal balance of approximately $137 million
at September 10, 1997. The notes mature on December 31, 2003 and bear interest
at 9%. These notes require principal paydown of approximately 44% of the
original principal amount ($168 million) prior to maturity. The notes receivable
have been eliminated in the consolidation of CHLP by the Company.
Also, during 1997, the Company acquired a controlling interest in Marriott Hotel
Properties Limited Partnership which owns Marriott's Orlando World Center Hotel
and a controlling interest in Marriott's Harbor Beach Resort. In addition, the
Company acquired The Ritz-Carlton, Marina del Rey and controlling interests in
the partnerships which own the Oklahoma City Waterford, the Hanover Marriott,
the Norfolk Waterside Marriott, the Hartford/Farmington Marriott and the
Manhattan Beach Marriott, respectively. In addition, the Company completed the
acquisition of the New York Marriott Financial Center Hotel, after acquiring the
mortgage note in late 1996. HMC Senior Communities, Inc., a wholly-owned
subsidiary of the Company, completed the acquisition of the outstanding common
stock of Forum Group, Inc., (the "Forum Group") from Marriott Senior Living
Services, Inc., a subsidiary of Marriott International, Inc. The Company also
obtained a new $90 million mortgage note secured by the Philadelphia Marriott
Hotel and purchased $230 million of outstanding bonds secured by the San
Francisco Marriott Hotel. In June 1997, HMC Capital Resources Corporation, a
wholly-owned subsidiary of the Company, entered into a revolving line of credit
agreement under which it may borrow up to $500 million for certain permitted
uses. HMH Properties, Inc., an indirect wholly-owned subsidiary of the Company,
completed the issuance of 8 7/8% senior notes for net proceeds of approximately
$570 million on July 17, 1997 (the "July 1997 Senior Notes Offering").
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<PAGE>
During 1996, the Company acquired six full-service hotel properties and a
controlling interest in 17 additional full-service hotel properties, and
purchased the mortgage note secured by the New York Marriott Financial Center
Hotel. Also during 1996, the Company sold and leased back 16 Courtyard
properties and 18 Residence Inns and repaid a mortgage note secured by the
Philadelphia Marriott Hotel. In addition, the Company completed the issuance of
11 million shares of Company-Obligated, Mandatorily-Redeemable Convertible
Preferred Securities of a Subsidiary Trust for net proceeds of $530 million on
December 2, 1996 (the "December 1996 Convertible Preferred Securities
Offering").
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 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 on Form 10-K for the fiscal year ended January 3, 1997 and
on Form 10-Q for the twelve weeks and thirty-six weeks ended September 12, 1997.
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<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Thirty-Six Weeks Ended September 12, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
CHLP
Acquisition Other Pro
Historical Adjustments Adjustments Forma
----------- ------------- ------------- -------
<S> <C> <C> <C> <C>
Revenues
Hotels....................... $ 736 $ 35 (A) $ 12 (C) $ 783
Senior living communities.... 16 -- 33 (B) 49
Other........................ 16 -- -- 16
------ ------ ----- ------
768 35 45 848
------ ------ ----- ------
Operating costs and expenses
Hotels....................... 433 17 (A) 6 (C) 456
Senior living communities.... 9 -- 17 (B) 26
Other........................ 22 -- -- 22
------ ------ ------ ------
464 17 23 504
------ ------ ------ ------
Operating profit.............. 304 18 22 344
Minority interest............. (24) -- (1)(C) (25)
Corporate expenses............ (27) -- (1)(B) (28)
Interest expense.............. (198) -- (10)(B) (234)
(2)(C)
(26)(D)
(2)(E)
5 (F)
(1)(G)
Dividends on Convertible
Preferred Securities
of a subsidiary trust....... (26) -- -- (26)
Interest income............... 37 (10)(A) (4)(B) 19
(1)(C)
(3)(F)
------ ------ ------ ------
Income (loss) before income
taxes and extraordinary
item........................ 66 8 (24) 50
Benefit (provision) for
income taxes................ (28) (3)(L) 10 (L) (21)
------ ------ ------ ------
Income (loss) before
extraordinary item.......... $ 38 $ 5 $ (14) $ 29
====== ====== ====== ======
Income per common share
before extraordinary
item......................... $ .19 $ .14
====== ======
Weighted average shares
outstanding.................. 202.8 202.8
====== ======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.
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<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Fiscal Year Ended January 3, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
CHLP
Acquisition Other Pro
Historical Adjustments Adjustments Forma
----------- ------------- ------------ -------
<S> <C> <C> <C> <C>
Revenues
Hotels...................... $ 717 $ 45 (A) $ 120 (C) $ 994
112 (H)
Senior living communities.... -- -- 68 (B) 68
Other........................ 15 -- (1)(H) 14
------ ------- ------- -------
732 45 299 1,076
------ ------- ------- -------
Operating costs and expenses
Hotels...................... 461 23 (A) 55 (C) 598
52 (H)
7 (K)
Senior living communities... -- -- 34 (B) 34
Other....................... 38 -- -- 38
------ ------- ------- -------
499 23 148 670
------ ------- ------- -------
Operating profit............. 233 22 151 406
Minority interest............ (6) -- (1)(B) (25)
(14)(C)
(4)(H)
Corporate expenses........... (43) -- (1)(B) (44)
Interest expense............. (237) -- (26)(B) (348)
(26)(C)
(56)(D)
(8)(E)
23 (F)
(3)(G)
(22)(H)
7 (J)
Dividends on Convertible
Preferred Securities of
a subsidiary trust.......... (3) -- (34)(I) (37)
Interest income.............. 48 (16)(A) 1 (B) 10
(3)(C)
(11)(F)
(9)(H)
------ ------- ------- -------
Income (loss) before
income taxes............... (8) 6 (36) (38)
Benefit (provision) for
income taxes................ (5) (2)(L) 15 (L) 8
------ ------- ----------- -------
Net income (loss)............ $ (13) $ 4 $ (21) $ (30)
====== ======= =========== =======
Loss per common share........ $ (.07) $ (.16)
====== =======
Weighted average shares
outstanding................. 188.7 188.7
====== =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.
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<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL DATA
A. Represents the adjustment to record the revenue, operating expenses and
reduction of interest income for the acquisition of Chesapeake Hotel
Limited Partnership as if the acquisition occurred at the beginning of the
applicable period.
B. Represents the adjustment to record the revenue, operating expenses,
interest expense, minority interest and interest income for the acquisition
of the Forum Group, Inc., as if the acquisition occurred at the beginning
of the applicable period.
C. Represents the adjustment to record the revenue, operating expenses,
secured debt interest expense, minority interest and to reduce interest
income for the 1997 acquisition of, or the purchase of controlling
interests in, eight full-service hotel properties as if the acquisitions
occurred at the beginning of the applicable period.
D. Represents the adjustment to record interest expense and amortization of
deferred financing fees for the July 1997 Senior Notes Offering (as defined
above).
E. Represents the adjustment to record interest expense for the $90 million
mortgage loan (interest rate of 8.49%) obtained for the Philadelphia
Marriott Hotel during the first quarter of 1997.
F. Represents the adjustment to reduce interest expense and interest income
for the first quarter 1997 purchase of the $230 million of outstanding
bonds secured by a first mortgage on the San Francisco Marriott Hotel.
G. Represents the adjustment to record commitment fees and amortization of
deferred financing fees for the June 1997 revolving line of credit
agreement.
H. Represents the adjustment to record revenue, operating expenses, secured
debt interest expense and to reduce interest income for the 1996
acquisition of, or the purchase of controlling interests in, 23
full-service hotel properties and the purchase of the mortgage note secured
by the New York Marriott Financial Center Hotel, as if they were added
on December 30, 1995.
I. Represents the adjustment to record the quarterly dividend payments for the
December 1996 Convertible Preferred Securities Offering, as if the
offering had taken place on December 30, 1995.
J. Represents the adjustment to reduce interest expense for the fourth quarter
1996 repayment of a mortgage note secured by the Philadelphia Marriott
Hotel.
K. Represents the net adjustment to eliminate the depreciation expense of $3
million and record the incremental lease expense of $10 million for the
1996 sale/leaseback of the 16 Courtyard properties and 18 Residence Inns.
L. Represents the income tax impact of pro forma adjustments at statutory
rates.
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