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 28, 1997 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 25, 1997
- ------------------- ------------------
Common Stock, $1.00 202,928,000
par value per share ------------------
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
INDEX
-----
Page No.
--------
Part I. FINANCIAL INFORMATION (Unaudited):
Condensed Consolidated Balance Sheets - 4
March 28, 1997 and January 3, 1997
Condensed Consolidated Statements of Operations - 5
Twelve Weeks Ended March 28, 1997 and
March 22, 1996
Condensed Consolidated Statements of Cash Flows - 6
Twelve Weeks Ended March 28, 1997 and
March 22, 1996
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Results of 10
Operations and Financial Condition
Part II. OTHER INFORMATION AND SIGNATURE 13
<PAGE>
PART I. FINANCIAL INFORMATION
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
March 28, January 3,
1997 1997
----------- -----------
(unaudited)
ASSETS
------
<S> <C> <C>
Property and Equipment, net............................................................ $ 4,214 $ 3,805
Notes and Other Receivables (including amounts due from
affiliates of $149 million and $156 million, respectively)........................... 187 297
Due from Hotel Managers................................................................ 109 89
Investments in Affiliates.............................................................. 10 11
Other Assets........................................................................... 251 246
Cash and Cash Equivalents.............................................................. 530 704
-------- --------
$ 5,301 $ 5,152
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Debt
Senior notes issued by the company or its subsidiaries............................... $ 1,021 $ 1,021
Mortgage debt........................................................................ 1,614 1,529
Other................................................................................ 96 97
-------- --------
2,731 2,647
Accounts Payable and Accrued Expenses.................................................. 79 74
Deferred Income Taxes.................................................................. 479 464
Other Liabilities...................................................................... 321 290
-------- --------
Total Liabilities 3,610 3,475
-------- --------
Company-obligated Mandatorily Redeemable Convertible Preferred
Securities of a Subsidiary Trust Holding Company, Substantially
all of Whose Assets are the Convertible Subordinated Debentures
due 2026 ("Convertible Preferred Securities")........................................ 550 550
-------- --------
Shareholders' Equity
Common Stock, 300 million shares authorized; 202.6 million
shares and 202.0 million shares issued and outstanding,
respectively....................................................................... 203 202
Additional Paid-in Capital........................................................... 928 926
Retained Earnings.................................................................... 10 (1)
-------- --------
Total Shareholders' Equity 1,141 1,127
-------- --------
$ 5,301 $ 5,152
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve weeks ended March 28, 1997 and March 22, 1996
(unaudited, in millions, except per common share amounts)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
REVENUES
Hotels............................................................................. $ 248 $ 126
Net gains on property transactions................................................. 1 1
Equity in earnings of affiliates................................................... 1 1
Other ............................................................................. 2 2
--------- ---------
Total revenues................................................................... 252 130
--------- ---------
OPERATING COSTS AND EXPENSES
Hotels (including Marriott International management fees of
$42 million and $17 million in 1997 and 1996, respectively)...................... 151 83
Other ............................................................................. 10 9
--------- ---------
Total operating costs and expenses............................................... 161 92
--------- ---------
OPERATING PROFIT BEFORE MINORITY INTEREST,
CORPORATE EXPENSES AND INTEREST...................................................... 91 38
Minority interest...................................................................... (11) (1)
Corporate expenses..................................................................... (9) (9)
Interest expense....................................................................... (63) (48)
Dividends on Convertible Preferred Securities of a subsidiary trust.................... (9) --
Interest income........................................................................ 12 6
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM................................................................... 11 (14)
Benefit (provision) for income taxes................................................... (5) 2
--------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM................................................ 6 (12)
Extraordinary item - Gain on extinguishment of debt
(net of income taxes of $3 million).................................................. 5 --
--------- ---------
NET INCOME (LOSS)...................................................................... $ 11 $ (12)
========= =========
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item................................................ $ .03 $ (.07)
Extraordinary item - Gain on extinguishment of debt (net of income taxes).............. .02 --
--------- ---------
NET INCOME (LOSS)...................................................................... $ .05 $ (.07)
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve weeks ended March 28, 1997 and March 22, 1996
(unaudited, in millions)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Income (loss) from continuing operations............................................... $ 6 $ (12)
Adjustments to reconcile to cash from continuing operations:
Depreciation and amortization...................................................... 51 34
Income taxes....................................................................... 1 (2)
Equity in earnings of affiliates................................................... (1) (1)
Changes in operating accounts...................................................... 8 14
Other.............................................................................. 25 10
--------- ---------
Cash from continuing operations.................................................... 90 43
Cash used in discontinued operations............................................... - (3)
--------- ---------
Cash from operations............................................................... 90 40
--------- ---------
INVESTING ACTIVITIES
Proceeds from sales of assets.......................................................... 3 90
Less noncash proceeds.............................................................. - (9)
--------- ---------
Cash received from sales of assets .................................................... 3 81
Acquisitions........................................................................... (115) (165)
Capital expenditures:
Renewals and replacements.......................................................... (35) (18)
Lodging construction funded by project financing................................... - (1)
Other.............................................................................. (7) (12)
Note receivable collections............................................................ 1 3
Affiliate collections (advances), net.................................................. 4 5
Other ................................................................................. 14 (25)
--------- ---------
Cash used in investing activities.................................................. (135) (132)
--------- ---------
FINANCING ACTIVITIES
Issuances of debt...................................................................... 90 50
Issuances of common stock.............................................................. 2 4
Scheduled principal repayments......................................................... (4) (12)
Debt prepayments ...................................................................... (222) --
Other ................................................................................. 5 17
--------- ---------
Cash from (used in) financing activities........................................... (129) 59
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS.................................................. $ (174) $ (33)
========= =========
Non-cash financing activities:
Assumption of mortgage debt for the acquisition of
certain hotel properties......................................................... $ 231 $ 206
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<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 January 3, 1997.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary to
present fairly the financial position of the Company as of March 28, 1997
and January 3, 1997, and the results of operations and cash flows for the
twelve weeks ended March 28, 1997 and March 22, 1996. 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"). Cash used
in discontinued operations through 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, net gains (losses) on property transactions, and equity in
earnings (losses) 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 and equipment rent, insurance and
management fees and certain other costs, which are classified as operating
costs and expenses.
House profit generated by the Company's hotels for 1997 and 1996 consists
of:
<TABLE>
<CAPTION>
Twelve Weeks Ended
---------------------
March 28, March 22,
1997 1996
--------- ---------
(in millions)
<S> <C> <C>
Sales
Rooms............................................................................ $ 408 $ 247
Food & Beverage.................................................................. 171 98
Other............................................................................ 41 25
-------- --------
Total Hotel Sales.............................................................. 620 370
-------- --------
Department Costs
Rooms............................................................................ 92 62
Food & Beverage.................................................................. 127 79
Other............................................................................ 21 13
-------- --------
Total Department Costs......................................................... 240 154
-------- --------
Department Profit................................................................... 380 216
Other Deductions.................................................................... 132 90
-------- --------
House Profit................................................................... $ 248 $ 126
======== ========
</TABLE>
<PAGE>
4. Net income (loss) per common share is computed based on the weighted
average number of common shares outstanding. Common equivalent shares and
other potentially dilutive securities have been excluded from the weighted
average number of outstanding shares as they were not material or were
antidilutive for the twelve weeks ended March 28, 1997 and March 22, 1996,
respectively. The weighted average shares were 202.3 million and 161.4
million for the twelve weeks ended March 28, 1997 and March 22, 1996,
respectively.
5. As of March 28, 1997, the Company had minority interests in 25 affiliates
that own an aggregate of 251 properties, 31 of which are full-service
properties, managed by Marriott International, Inc. The Company's equity in
earnings of affiliates was $1 million for the twelve weeks ended March 28,
1997 and March 22, 1996, respectively.
Combined summarized operating results reported by affiliates follows:
<TABLE>
<CAPTION>
Twelve Weeks Ended
---------------------
March 28, March 22,
1997 1996
--------- ---------
(in millions)
<S> <C> <C>
Revenues............................................................................. $ 141 $ 176
Operating expenses:
Cash charges (including interest)................................................. 94 110
Depreciation and other non-cash charges........................................... 50 59
-------- --------
Income (loss) before extraordinary item.............................................. (3) 7
Extraordinary item - forgiveness of debt............................................. 18 --
-------- --------
Net income........................................................................ $ 15 $ 7
======== ========
</TABLE>
On January 15, 1997, the Company acquired a controlling interest in the
Marriott Hotel Properties Limited Partnership ("MHPLP") for approximately
$268 million, including $231 million in assumed mortgage debt. MHPLP owns
the 1,503-room Marriott Orlando World Center and a 50.5% controlling
partnership interest in the 624-room Marriott Harbor Beach Resort.
During the second quarter of 1997, the Company acquired a controlling
interest in the Hanover Marriott Limited Partnership ("Hanover LP") for $42
million, including $27 million in assumed mortgage debt. Hanover LP, an
affiliated partnership of the Company, owns the 353-room Hanover Marriott
Hotel near Morristown, New Jersey.
6. In the first quarter of 1997, the Company acquired the 306-room
Ritz-Carlton, Marina del Rey, for $57 million and a controlling interest in
the 197-room Waterford Hotel in Oklahoma City, Oklahoma, for $18 million,
which has been converted to the Marriott brand. In addition, the Company
completed the acquisition of the 504-room New York Marriott Financial
Center, after acquiring the mortgage on the hotel for $101 million in late
1996.
7. In March 1997, the Company purchased 100% of the outstanding bonds secured
by a first mortgage on the San Francisco Marriott Hotel. The Company
purchased the bonds for $219 million, an $11 million discount to the face
value of $230 million. In connection with the redemption and defeasance of
the bonds, the Company recognized an extraordinary gain of $5 million,
which represents the $11 million discount and the write-off of deferred
financing fees, net of taxes.
8. In March 1997, the Company obtained $90 million in first mortgage financing
secured by the Philadelphia Marriott Hotel. The mortgage bears interest at
a fixed rate of 8.49% and matures in April 2009.
9. In March 1997, the Company signed a letter of intent to acquire 29 premier
senior living communities from Marriott International for $433 million. The
Company has developed a plan to add over one thousand expansion units to
these properties by January 1999 for an additional $107 million. This
transaction is expected to close in the second quarter of 1997.
<PAGE>
10. The Company is required to adopt SFAS No. 128, "Earnings per Share" in the
fourth quarter of 1997. The adoption of SFAS No. 128 is not expected to
have a material effect on the Company's consolidated financial statements.
Earnings (loss) per share determined based on the method in SFAS No. 128
for the twelve weeks ended March 28, 1997 and March 22, 1996 did not have a
material impact. Therefore, pro forma results for SFAS No. 128 have not
been presented.
<PAGE>
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Forward-looking Statements
- --------------------------
Certain matters discussed in this Form 10-Q 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 the Company to be
different from any future results, performance or achievements expressed or
implied by such forward- looking statements. Although the Company 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. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
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 $122 million, or 94%, to $252 million
for the first quarter of 1997 from $130 million for the first quarter of 1996.
The Company's revenue and operating profit were impacted by:
. improved lodging results for comparable full-service hotel properties;
. the addition of 23 full-service hotel properties during 1996 and five
full-service properties during the first quarter of 1997; and
. the 1996 sale and leaseback of 16 of the Company's Courtyard properties and
18 of the Company's Residence Inns.
Hotel revenues increased $122 million, or 97%, to $248 million in the first
quarter of 1997 as all three of the Company's lodging concepts reported growth
in room revenues generated per available room ("REVPAR") and the addition of 28
full-service properties acquired in 1996 and through the first quarter of 1997.
Hotel sales (gross hotel sales, including room sales, food and beverage sales,
and other ancillary sales such as telephone sales) increased $250 million, or
68%, to $620 million in the first quarter of 1997, reflecting the REVPAR
increases for comparable units and the addition of full-service properties in
1996 and 1997. Improved results for the Company's full-service hotels were
driven by an increase in REVPAR for comparable units of 19% to $103.54 for the
1997 first quarter. On a comparable basis for the Company's full-service
properties, average room rates increased 13%, while average occupancy increased
over four percentage points. The Company's 1997 first quarter results were
substantially impacted by the exclusion of the New Year's holiday from the 1997
results due to the timing of the Company's fiscal year-end and the milder winter
weather in 1997. Excluding the impact of the timing of the New Year's holiday,
comparable REVPAR increased by nearly 12%. Results were further enhanced by a
four percentage point increase in the house profit margin for comparable
properties.
The Company's leased limited-service properties continued to perform well. The
Company's moderate- price Courtyard properties reported a REVPAR increase of
almost 13%. The increase in REVPAR was primarily a result of a 9% increase in
average room rates and a two percentage point increase in average occupancy. The
Company's extended-stay Residence Inns reported an increase in REVPAR of 6%, due
primarily to increases in average room rates of 10%, while average occupancy
decreased three percentage points. 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,
building and equipment rent, insurance and certain other costs. Operating costs
and expenses increased $69 million to $161 million in the first quarter of 1997
from $92 million in the first quarter of 1996, primarily representing increased
hotel operating costs, including depreciation. Hotel operating costs increased
$68 million to $151 million for the first quarter of 1997 primarily due to the
addition of 28 full-service properties during 1996 and the first quarter of 1997
and increased management fees and rentals tied to improved property results, as
well as the impact of the lease payments on the Courtyard and Residence Inn
properties which have been sold and leased back. As a percentage of hotel
revenues, hotel operating costs and expenses decreased to 61% of revenues in the
first quarter of 1997 from 66% of revenues in the first quarter of 1996 due to
the significant increases in REVPAR discussed above, as well as the operating
leverage as a result of a significant portion of the Company's hotel operating
costs and expenses being fixed.
Operating Profit. As a result of the changes in revenues and operating costs and
expenses discussed above, the Company's operating profit increased $53 million,
or 139%, to $91 million for the first quarter of 1997. Hotel operating profit
increased $54 million, or 126%, to $97 million, or 39% of hotel revenues, for
the first quarter of 1997 from $43 million, or 34% of hotel revenues, for the
first quarter of 1996. Across the board, the Company's hotels recorded
substantial improvements in comparable operating results. In addition, several
hotels, including the Marriott World Trade Center, the San Francisco Marriott,
the San Diego Marriott Hotel and Marina, the Denver Marriott Tech Center, the
Philadelphia Marriott, and the Toronto Marriott Eaton Centre posted particularly
significant improvements in operating profit.
Corporate Expenses. Corporate expenses remained at $9 million for the 1997 first
quarter. As a percentage of revenues, corporate expenses decreased to 4% of
revenues in the first quarter of 1997 from 7% in the first quarter of 1996,
reflecting the Company's efforts to control its corporate expenses in spite of
the substantial growth in revenues.
Interest Expense. Interest expense increased 31% to $63 million in the first
quarter of 1997, primarily due to the additional debt of approximately $927
million incurred in connection with the 1996 and 1997 full-service hotel
additions.
Dividends on Convertible Preferred Securities. The Dividends on Convertible
Preferred Securities reflect the dividends accrued during the first twelve weeks
of fiscal year 1997 on the $550 million in 6.75% Convertible Preferred
Securities issued by the Company in December 1996.
Interest Income. Interest income increased $6 million to $12 million for the
first quarter of 1997, primarily reflecting the interest income on the proceeds
generated by the December 1996 offering of Convertible Preferred Securities,
which will be invested in the acquisition of full-service lodging properties and
other compatible lodging-related investments, repayment of indebtedness and used
for general corporate purposes.
Income (Loss) before Extraordinary Item. Income before extraordinary item for
the first quarter of 1997 was $6 million, compared to a $12 million loss for the
first quarter of 1996.
Extraordinary gain. In March 1997, the Company purchased 100% of the outstanding
bonds secured by a first mortgage on the San Francisco Marriott Hotel. The
Company purchased the bonds for $219 million, which was an $11 million discount
to the face value of $230 million. In connection with the redemption and
defeasance of the bonds, the Company recognized an extraordinary gain of $5
million, which represents the $11 million discount and the write-off of deferred
financing fees, net of taxes.
Net Income (Loss). The Company's net income for the first quarter of 1997 was
$11 million ($.05 per share), compared to a net loss of $12 million ($.07 per
share) for the first quarter of 1996.
EBITDA
- ------
The Company's consolidated Earnings Before Interest Expense, Taxes,
Depreciation, Amortization and other non-cash items ("EBITDA") increased $79
million, or 105%, to $154 million in the 1997 first quarter. 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.
<PAGE>
Hotel EBITDA increased $74 million, or 95%, to $152 million in the first quarter
of 1997. Full-service hotel EBITDA increased $82 million, or 122%, to $149
million for the first quarter of 1997, reflecting comparable full-service hotel
EBITDA growth of 30% on a 19% increase in REVPAR, as well as incremental EBITDA
from 1996 and 1997 acquisitions.
The following is a reconciliation of EBITDA to the Company's income (loss)
before extraordinary item:
<TABLE>
<CAPTION>
Twelve Weeks Ended
--------------------
March 28, March 22,
1997 1996
--------- ---------
<S> <C> <C>
EBITDA.................................................................................... $ 154 $ 75
Interest expense.......................................................................... (63) (48)
Dividends on Convertible Preferred Securities............................................. (9) -
Depreciation and amortization............................................................. (51) (34)
Income taxes.............................................................................. (5) 2
Loss on dispositions of assets and other non-cash
charges, net............................................................................. (20) (7)
-------- ---------
Income (loss) before extraordinary item................................................ $ 6 $ (12)
======== =========
</TABLE>
For the first quarter, the Company's interest coverage, defined as EBITDA
divided by cash interest expense, improved to 2.6 times from 1.6 times for the
1996 first quarter and 2.0 times for full year 1996.
Cash Flows and Financial Condition
- ----------------------------------
The Company reported a decrease in cash and cash equivalents of $174 million
during the twelve weeks ended March 28, 1997. This decrease is primarily due to
the $219 million prepayment of the bonds secured by the San Francisco Marriott
Hotel and the acquisition of four full-service properties. This decrease is
offset by the new mortgage financing obtained on the Philadelphia Marriott
Hotel. Cash flow from continuing operations for the first quarter of 1997
increased $47 million, to $90 million due to improved lodging results.
Cash used in investing activities was $135 million for the first quarter of
1997, while cash used in investing activities was $132 million for the first
quarter of 1996. Cash used in investing activities for the first quarter of 1997
includes capital expenditures of $42 million, primarily related to renewals and
replacements on existing properties and $115 million for four full-service hotel
acquisitions.
During the first quarter of 1997, the Company acquired a controlling interest in
the Marriott Hotel Properties Limited Partnership ("MHPLP") for approximately
$268 million, including $231 million in assumed mortgage debt. MHPLP, an
affiliated partnership of the Company, owns the 1,503-room Marriott Orlando
World Center and a 50.5% controlling partnership interest in the 624-room
Marriott Harbor Beach Resort. The Company also acquired the 306-room
Ritz-Carlton, Marina del Rey, for $57 million and a controlling interest in the
197-room Waterford Hotel in Oklahoma City, Oklahoma, which has been converted to
the Marriott brand, for $18 million. In addition, the Company completed the
acquisition of the 504-room New York Marriott Financial Center, after acquiring
the mortgage on the hotel for $101 million in the fourth quarter of 1996.
During the second quarter of 1997, the Company acquired a controlling interest
in the Hanover Marriott Limited Partnership ("Hanover LP") for $42 million,
including $27 million in assumed mortgage debt. Hanover LP, an affiliated
partnership of the Company, owns the 353-room Hanover Marriott Hotel near
Morristown, New Jersey.
Cash used in financing activities was $129 million for the first quarter of
1997, while cash from financing activities was $59 million for the first quarter
of 1996. Cash used in financing activities for the first quarter of 1997
includes the $219 million prepayment of the outstanding bonds secured by the San
Francisco Marriott Hotel, partially offset by the $90 million in mortgage
financing obtained on the Philadelphia Marriott Hotel.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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 Earnings (Loss) Per Common Share
b. Reports on Form 8-K:
. January 14, 1997 -- Report to identify certain transactions which have
occurred subsequent to the close of the Company's third quarter, as well as
other events that have occurred throughout fiscal years 1995 and 1996, the
effects of which may be relevant to investors.
. January 16, 1997 -- Report of the announcement that the Company has named
Christopher G. Townsend as General Counsel replacing Stephen J. McKenna,
who will remain with the Company in an of counsel position.
. February 3, 1997 -- Report of the announcement that the Company reported
preliminary 1996 Earnings Before Interest Expense, Taxes, Depreciation and
Amortization and other non-cash items ("EBITDA") of approximately $442
million, a 42% increase over its 1995 full year results of $311 million.
. March 6, 1997 -- Report of the announcement that the Company reported its
comprehensive results of operations for 1996.
. March 18, 1997 -- Report of the announcement that the Company and Marriott
International have reached an agreement in principle for the Company to
acquire all of the outstanding common stock of Forum Group, Inc., from a
subsidiary of Marriott International.
<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 5, 1997 /s/ Donald D. Olinger
- ------------ -------------------------
Date Donald D. Olinger
Senior Vice President and
Corporate Controller
(Chief Accounting Officer)
<PAGE>
EXHIBIT 11
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS (LOSS) PER COMMON SHARE
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended
--------------------
March 28, March 22,
1997 1996
--------- ---------
<S> <C> <C>
Net income (loss)............................................................................ $ 11 $ (12)
========= =========
Primary Earnings (Loss) Per Common Share
- ----------------------------------------
Shares:
Weighted average number of common shares
outstanding............................................................................ 202.3 161.4
Assuming distribution of common shares granted
under comprehensive stock plan, less shares
assumed purchased at average market *.................................................. -- --
Assuming distribution of common shares issuable
for warrants, less shares assumed purchased
at average market *.................................................................... -- --
--------- ---------
202.3 161.4
========= =========
Primary Earnings (Loss) Per Common Share..................................................... $ .05 $ (.07)
========= =========
Fully Diluted Earnings (Loss) Per Common Share
- ----------------------------------------------
Shares:
Weighted average number of common shares
outstanding............................................................................ 202.3 161.4
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 issuable
for warrants, less shares assumed purchased
at higher of average or ending market *................................................ -- --
--------- ---------
202.3 161.4
========= =========
Fully Diluted Earnings (Loss) Per Common Share............................................... $ .05 $ (.07)
========= =========
</TABLE>
____________
* Common equivalent shares and other potentially dilutive securities were not
material, or were antidilutive, for the twelve weeks ended March 28, 1997
and March 22, 1996, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Host
Marriott Corporation's Condensed Consolidated Balance Sheets and Condensed
Consolidated Statements of Operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000314733
<NAME> Host Marriott Corporation
<MULTIPLIER> 1,000,000
<CURRENCY> $
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jan-2-1998
<PERIOD-START> Jan-4-1997
<PERIOD-END> Mar-28-1997
<EXCHANGE-RATE> 1
<CASH> 530
<SECURITIES> 0
<RECEIVABLES> 109
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,076
<DEPRECIATION> 862
<TOTAL-ASSETS> 5,301
<CURRENT-LIABILITIES> 0
<BONDS> 2,731
550
0
<COMMON> 203
<OTHER-SE> 938
<TOTAL-LIABILITY-AND-EQUITY> 5,301
<SALES> 0
<TOTAL-REVENUES> 252
<CGS> 0
<TOTAL-COSTS> 151
<OTHER-EXPENSES> 10
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63
<INCOME-PRETAX> 11
<INCOME-TAX> 5
<INCOME-CONTINUING> 6
<DISCONTINUED> 0
<EXTRAORDINARY> 5
<CHANGES> 0
<NET-INCOME> 11
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
