<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
March 26, 1999
Commission File Number 1-9320
WYNDHAM INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
94-2878485
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207
- --------------------------------------------------------------------------------
(Address of principal executive offices)(Zip Code)
(214) 863-1000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
<PAGE>
WYNDHAM INTERNATIONAL, INC.
ITEM 5. OTHER EVENTS
The pro forma balance sheet information for June 30, 1999 and pro forma
results of operations for the six months ended June 30, 1999 and for the year
ended December 31, 1998 are being filed in accordance with Article 11 of
Regulation S-X.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
None.
(b) Pro Forma Financial Information
The index to the separate and combined pro forma financial information for
Patriot American Hospitality, Inc. and Wyndham International, Inc. is included
on page F-1 of this report.
(c) Exhibits
None.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrants have duly caused the report to be signed on their behalf by the
undersigned thereunto duly authorized.
DATED: September 3, 1999
WYNDHAM INTERNATIONAL, INC.
/s/ Richard Mahoney
By: _________________________________
Richard Mahoney
Chief Financial Officer
(Principal Financial and
Accounting Officer)
3
<PAGE>
WYNDHAM INTERNATIONAL, INC.
INDEX TO FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Wyndham International, Inc--Adjusted for the Investment, Restructuring,
New Debt Financing and Interstate Spin-off:
Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1999 (unaudited).............................................. F-7
Pro Forma Condensed Consolidated Statement of Operations for the six
months
ended June 30, 1999 (unaudited)........................................ F-9
Patriot American Hospitality Inc. and Old Wyndham International Inc.:
Pro Forma Condensed Combined Statement of Operations for the year ended
December 31, 1998 (unaudited).......................................... F-12
Patriot American Hospitality Inc.:
Pro Forma Condensed Consolidated Statement of Operations for the year
ended
December 31, 1998 (unaudited).......................................... F-16
Old Wyndham International, Inc.:
Pro Forma Condensed Consolidated Statement of Operations for the year
ended
December 31, 1998 (unaudited).......................................... F-19
</TABLE>
F-1
<PAGE>
WYNDHAM INTERNATIONAL, INC.
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands)
Background
Patriot American Hospitality, Inc. (collectively with its subsidiaries,
"Patriot"), was formed April 17, 1995 as a self-administered real estate
investment trust ("REIT") for the purpose of acquiring equity interests in
hotel properties. Wyndham International, Inc. (collectively with its
subsidiaries, "Old Wyndham") was formed in connection with Patriot's merger
with and into California Jockey Club and Bay Meadows Operating Company on July
1, 1997. Patriot and Old Wyndham are both Delaware corporations.
Prior to June 30, 1999, the shares of common stock of Patriot were paired
and traded together with the shares of Old Wyndham, on a one for one basis, as
a single unit pursuant to a stock pairing arrangement, and were referred to as
a paired share.
Effective June 30, 1999, Patriot and Old Wyndham completed a series of
transactions which included a restructuring of their existing organizational
structure. As a result of this restructuring, a wholly-owned subsidiary of Old
Wyndham was merged with and into Patriot, with Patriot being the surviving
entity. As such, Patriot is now a wholly-owned subsidiary of Old Wyndham, and
this combined entity, together with all subsidiaries, is hereafter referred to
as Wyndham. In connection with this restructuring, the pairing agreement
between Patriot and Old Wyndham was terminated, Patriot's status as a real
estate investment trust terminated effective January 1, 1999, and Patriot
became a taxable corporation as of that date.
The restructuring was reflected as a reorganization of two companies under
common control and was accounted for in a manner similar to that used in
pooling of interest accounting. As such, there was no revaluation of the
assets and liabilities of Old Wyndham or Patriot. The 1999 pro forma financial
statements are presented on a consolidated basis, representing the operations
of the corporation and its subsidiaries, including Patriot. The 1998 pro forma
financial statements are presented on a combined basis, representing the
combined results of both Old Wyndham and Patriot.
Unless otherwise stated herein, all information with respect to shares
refers to Wyndham common stock since June 30, 1999 and to paired shares for
periods before June 30, 1999.
Patriot and Wyndham conduct substantially all of their operations through
Patriot American Hospitality Partnership, L.P. ("Patriot Partnership") and
Wyndham International Operating Partnership, L.P. ("Wyndham Partnership"),
respectively. Patriot Partnership, and Wyndham Partnership are collectively
referred to as the operating partnerships. As of June 30, 1999, Patriot
directly and through its wholly-owned subsidiary PAH LP, Inc. owns an
approximate 99% interest in the Patriot Partnership and Wyndham owns an
approximate 99% in the Wyndham Partnership.
At June 30, 1999, Wyndham, through the operating partnerships and other
subsidiaries, including hotels owned through unconsolidated subsidiaries,
owned interests in 173 hotels with an aggregate of over 43,300 guest rooms and
leased 39 hotels from third parties with over 5,700 guest rooms. In addition,
Wyndham manages 95 hotels for third party owners with over 22,300 guest rooms
and franchises 11 hotels with over 2,600 guest rooms.
Restructuring and New Financial Transactions
Investment
Effective June 30, 1999, Wyndham completed a $1 billion equity investment
with a group of investors. Pursuant to the terms of this investment, Wyndham
issued 9.55 million shares of series B preferred stock in exchange for gross
proceeds of $955 million. On July 1, 1999, the remaining $45 million was
funded through the transfer of one of the investor's loan receivable from PAH
Realty Company, LLC to Wyndham International, Inc. for the purchase of 450,000
shares of series B preferred stock.
F-2
<PAGE>
Wyndham will pay dividends on its series B preferred stock quarterly, on a
cumulative basis, at a rate of 9.75% per year. For the first six years,
dividends will be payable partly in cash and partly in additional shares of
preferred stock, with the cash component initially equal to 30% for the first
dividend payment and declining over the period to approximately 19.8% for the
final dividend in year six. Each share of series B preferred stock may be
converted, at the option of its holder, into that number of shares of Wyndham
common stock equal to $100.00 divided by the conversion price of the series B
preferred stock. Initially the conversion price will be $8.59, but is subject
to potential downward adjustments.
Restructuring
Under the terms of the purchase agreement, relating to the $1 billion equity
investment, Patriot and Wyndham were required to complete a restructuring of
their existing paired share REIT structure prior to the investment. Under the
terms of the restructuring, the following events occurred:
. A reverse stock split of the common stock of Wyndham and Patriot.
. A wholly-owned subsidiary of Wyndham merged with and into Patriot
with Patriot surviving.
. The pairing agreement between Patriot and Wyndham terminated.
. Patriot terminated its status as a real estate investment trust
effective January 1, 1999.
. The non-voting stock of specified corporate subsidiaries held by the
Patriot Partnership will be transferred so that it will be owned
directly by Patriot rather than through the Patriot Partnership.
. The third party partners in both the Patriot Partnership and the
Wyndham Partnership were offered an opportunity to exchange their
limited partner interests for Wyndham common stock.
. The preferred stockholders of Wyndham were offered an opportunity to
exchange their preferred stock for Wyndham common stock, and
preferred stock not exchanged will be redeemed by Wyndham.
Pursuant to the merger of a wholly-owned subsidiary of Old Wyndham with
Patriot, each outstanding paired share and share of Patriot series A preferred
stock was converted into a single share of Wyndham Class A common stock, and
each outstanding share of Patriot series B preferred stock was converted into
$25 per share and $1.61 of accrued dividends.
Redemption Option
For a period of 170 days following the completion of the $1 billion equity
investment, Wyndham may redeem up to $300 million of the series B preferred
stock at a redemption price of $102.00 per share (102% of the stated amount
$100.00) plus all accrued dividends. Wyndham currently plans to fund this
redemption through the issuance of rights to purchase $300 million of series A
preferred stock to its stockholders and holders of limited partnership units
in the Patriot Partnership or Wyndham Partnership. The series A preferred
stock will generally have the same economic terms as the series B preferred
stock, but will have no voting rights, except as required by law and except
for a limited right to elect two directors if dividends are in arrears for six
quarterly periods.
New Credit Facility
Concurrent with the closing of the $1 billion equity investment described
above, Wyndham closed on a new $2.45 billion credit facility which consists
of: a $1.3 billion term loan with a seven year term, a $500 million revolving
credit facility with a five year term, and a $650 million increasing rate loan
facility with a five year term. Proceeds, net of closing costs and fees of
approximately $41.1 million from the term loan and the revolving credit
facility, and proceeds, net of closing costs and fees of approximately $17.9
million from the increasing rate loan facility, were used to retire existing
indebtedness. At June 30, 1999, $50 million was drawn on the new revolving
credit facility.
Interest rates are based upon LIBOR spreads varying from 2.75% to 3.50% per
annum for the term loan, and 1.25% to 2.75% per annum for the revolving credit
facility, based both on Wyndham's leverage ratio, as defined, and whether any
increasing rate loans are outstanding. The term loan, and the revolving credit
facility are guaranteed by the domestic subsidiaries of Wyndham, and are
secured by pledges of equity interests held by Wyndham and its subsidiaries.
Wyndham's ability to borrow under its revolving credit facility is subject to
Wyndham's compliance with a number of customary financial and other covenants,
including total leverage and interest coverage ratios.
F-3
<PAGE>
Interest rates for the increasing rate loans are based on LIBOR rates (less
statutory reserves), plus 3.50% through September 30, 1999, and increasing
0.50% every three months, with a cap of LIBOR plus 4.75%. The lender under the
increasing rate loans receives the benefit of the same guarantees and pledges
of security provided under the new term loan, and revolving credit facility.
New Mortgage Debt
Effective June 30, 1999 Wyndham also closed on a $346 million mortgage loan
with Bear, Stearns Funding, Inc., which is secured by twenty-five properties.
The loan matures on July 1, 2004 and bears interest at the LIBOR rate, plus
3.25% per annum. Proceeds from the mortgage debt were used to retire existing
mortgage indebtedness.
Additionally, effective June 30, 1999 Wyndham closed on a $235 million
mortgage loan with Lehman Brothers Holdings Inc. which is secured by ten
properties. The mortgage loan has a three-year term, with a one year extension
option, and bears interest at the LIBOR rate plus 3.50% per annum, plus an
additional 1.75% on the principal amount payable at maturity. Proceeds from
this mortgage loan were used to retire existing mortgage indebtedness.
For purposes of the pro forma financial statements the New Credit Facility
and new mortgage debt are collectively referred to as new debt financing.
Interstate Spin-off
Interstate's Third-Party Hotel Management Business
On May 27, 1998, Old Wyndham and Interstate Hotels Company ("Old
Interstate") entered into a settlement agreement, as amended, with Marriott
International, Inc. ("Marriott"), which addressed certain claims asserted by
Marriott in connection with Wyndham's then proposed merger with Old
Interstate. The settlement agreement provided for the dismissal of litigation
brought by Marriott, and allowed Old Wyndham's merger with Old Interstate to
close. In addition to dismissal of the Marriott litigation, the settlement
agreement provides for the re-branding of ten Marriott hotels under the
Wyndham name, the assumption by Marriott of the management of ten Marriott
hotels formerly managed by Old Interstate for the remaining term of the
Marriott franchise agreement, and the spin-off by Wyndham of the third-party
management business.
Effective June 18, 1999, Old Wyndham distributed approximately 92% of
Interstate Hotels Corporation ("Interstate") in the form of a dividend to
shareholders. Shareholders of record on June 7, 1999 received one share of
newly issued Interstate stock for every thirty paired shares owned of Patriot
and Old Wyndham. The remaining 8% is owned equally by Wyndham and Marriott.
As a result of the spin-off, Wyndham now also owns an approximate 55% non-
controlling interest in the subsidiary of Interstate which now operates the
existing third-party management business that Old Wyndham acquired from Old
Interstate.
Other 1999 Transactions
In January 1999, Patriot acquired the remaining 25% minority interests in
each of the five following hotels: Embassy Suites Schaumburg, the Hilton
Dania, the Marriott Suites at Valley Forge, the Marriott Boston Andover and
the Marriott Tysons Corner from CIGNA. The acquisition of such interests was
financed through additional mortgage indebtedness totaling $49.8 million and
the sale of an additional 10% interest in the Marriott Warner Center.
Also in January 1999, Patriot acquired four of its leaseholds from DTR North
Canton Inc. (the "Doubletree Lessee"). At June 30, 1999, only one hotel was
leased to a third party lessee.
In February 1999, Patriot and Old Wyndham sold their interest in the Bay
Meadows Racecourse located in San Mateo, California. Patriot and Old Wyndham
received cash proceeds of approximately $3.4 million after payment of legal
costs and other closing costs. Patriot and Old Wyndham recognized an estimated
impairment loss on assets held for sale of $42.2 million related to the
racecourse facility in 1998. In connection with the transaction, Patriot
terminated its lease to Old Wyndham for the racecourse facilities.
F-4
<PAGE>
In March 1999, Patriot sold the Holiday Inn Crockett, realizing net cash
proceeds of approximately $18.0 million and recognized a gain of approximately
$2.6 million.
In April 1999, Patriot acquired the remaining 10% minority interests in each
of the four following hotels: the Radisson Akron; the Courtyard Beachwood; the
Holiday Inn Westlake; and the Radisson Beachwood from IAH Snavely L.L.C.
("Snavely"). In addition, Patriot sold the Holiday Inn Beachwood to Snavely.
The transaction generated net proceeds of approximately $8.8 million.
On April 30, 1999, Patriot sold the following hotels: Hampton Inn Rochester,
Hampton Inn Jacksonville, Hampton Inn Cleveland, and the Hampton Inn Canton,
for net proceeds of approximately $23.5 million and recognized a loss of
approximately $1.4 million.
On May 11, 1999, Old Wyndham sold the Holiday Inn Sebring for net proceeds
of approximately $4.1 million, and recognized a gain of approximately $0.6
million.
1998 Business Transactions
Wyndham Hotel Corporation
On January 5, 1998, Wyndham Hotel Corporation merged with and into Patriot,
with Patriot being the surviving corporation. As a result, its financial
position and substantially all of its operations have been recognized in the
Patriot and Wyndham combined financial statements as of and for the year ended
December 31, 1998.
Recent transactions
On January 16, 1998, a subsidiary of Old Wyndham merged with and into WHG
Casinos & Resorts, Inc., with WHG being the surviving corporation.
Additionally during 1998, Patriot acquired the minority partners' interests in
WHG Casinos and Resorts, Inc.'s subsidiaries. Patriot, acquired the Buena
Vista Hotel located in Orlando, Florida and the Golden Door Spa located in
Escondiado, California. These transactions are collectively referred to as the
Recent Transactions.
Arcadian International Limited
In April 1998, Patriot completed its acquisition of Arcadian International
Limited (the "Arcadian acquisition"). The transaction included the exercise of
all outstanding options to purchase shares, the assumption of debt and the
acquisition of the remaining shares in the Malmaison Group.
Interstate Hotels Company
On June 2, 1998 Interstate Hotels Company merged with and into Patriot with
Patriot being the surviving company ("Interstate merger").
SF Hotel Company, L.P.
On June 5, 1998, Patriot, through the Patriot operating partnership,
acquired all of the partnership interests in SF Hotel Company, L.P.
("Summerfield acquisition").
CHC International, Inc
On June 30, 1998 the hospitality-related businesses of CHCI merged (the
"CHCI merger") with and into Old Wyndham with Old Wyndham being the surviving
company.
Asset Sales
During 1998, Patriot sold its interest in four hotel assets: Courtyard by
Marriott Hotel in Orange, Connecticut; Courtyard by Marriott Hotel in St.
Louis, Missouri; Residence Inn by Marriott in Pittsburgh, Pennsylvania; and
the Westborough by Marriott in Westborough, Massachusetts, collectively
hereinafter referred to as the Fine Transaction, for a net purchase price of
approximately $32.5 million.
F-5
<PAGE>
Additionally in December 1998, Patriot sold its interest in three hotel
assets previously leased to NorthCoast Hotels, LLC (a third party lessee of
Patriot); the WestCoast Roosevelt Hotel, the WestCoast Gateway Hotel located
in Seattle, Washington and the WestCoast Wenatchee Hotel located in Wenatchee,
Washington to an affiliate of NorthCoast. Patriot received net cash proceeds
of approximately $23.7 million plus a mortgage note receivable in the amount
of $2.0 million. In addition Patriot acquired 6 leaseholds from NorthCoast,
LLC and leased those hotels to Wyndham.
Financing Transactions
Credit Facility
In connection with the Interstate merger, the companies closed on the
commitment from The Chase Manhattan Bank and Chase Securities, Inc. and
PaineWebber Real Estate Securities, Inc. to increase Patriot's existing
unsecured credit facilities to an aggregate of $2.7 billion. The increased
credit facilities include the $900 million revolving credit facility
("Revolving Credit Facility") and a series of unsecured term loans in the
aggregate amount of up to $1.8 billion (the "Term Loans"). Proceeds from the
increased credit facilities were used to fund the cash portion of the
Interstate merger consideration, as well as to refinance certain outstanding
indebtedness of Patriot. Interest rates are based on the companies' leverage
ratio and may vary from 1.5% to 2.5% over LIBOR.
Under the original terms of Patriot's credit facility, two of the term loans
were scheduled to mature on January 31, 1999 ($350 million) and March 31, 1999
($400 million), respectively. The Revolving Credit Facility and Term Loans
were repaid in the full with the proceeds from the $1 billion equity
transactions and new debt financing.
Summary
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the entire $1 billion equity investment had occurred on June
30, 1999.
Additionally, the Pro Forma Condensed Combined Consolidated Statements of
Operations of the companies for the six months ended June 30, 1999 and the
year ended December 31, 1998 assume that the $1 billion equity investment, the
restructuring of Wyndham and Patriot, the new debt financing, the Interstate
spin-off and the effects of the business transactions completed in 1998 and
1999 as detailed on pages F-2 through F-6 had occurred as of the beginning of
the periods presented.
The following unaudited Pro Forma Condensed Combined Consolidated Statements
of Operations were derived from the Consolidated Statements of Operations of
Wyndham (together with its respective subsidiaries) filed with the Wyndham's
Quarterly Report on Form 10-Q for the six months ended June 30, 1999 and
Patriot and Old Wyndham's Annual Report on Form 10-K for the year ended
December 31, 1998. The unaudited Pro Forma Condensed Combined Consolidated
Statement of Operations were also derived in part from Interstate Hotels
Management, Inc.'s unaudited Pro Forma Combined Statements of Operations and
Owners' Equity filed on Form S-1A dated May 17, 1999. In management's opinion
all the material adjustments necessary to reflect the effects of the described
transactions have been made.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet does
not purport to present the future financial position of Wyndham.
Additionally, the following unaudited Pro Forma Condensed Combined
Consolidated Statements of Operations are not necessarily indicative of what
the actual results of operations of Wyndham would have been assuming such
transactions had been completed at the beginning of the periods presented, nor
do they purport to present the results of operations for future periods.
Further, the unaudited Pro Forma Condensed Consolidated Statement of
Operations for the interim period ended June 30, 1999 is not necessarily
indicative of the results of operations for a full year.
F-6
<PAGE>
WYNDHAM INTERNATIONAL, INC.
Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Historical Equity Pro Forma
(A) Investment Total
----------- ---------- -----------
(in thousands, except per share
amounts)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............ $ 158,579 $ -- $ 158,579
Restricted Cash...................... 93,927 -- 93,927
Accounts and lease revenue
receivable, net...................... 190,600 -- 190,600
Inventories.......................... 22,837 -- 22,837
Prepaid expense and other assets..... 42,503 -- 42,503
----------- -------- -----------
Total current assets................ 508,446 -- 508,446
Investment in real estate and related
improvements and land held for
development, net of accumulated
depreciation......................... 5,495,442 -- 5,495,442
Investment in unconsolidated
subsidiaries......................... 177,103 -- 177,103
Mortgage notes and other receivables
from unconsolidated subsidiaries..... 4,744 -- 4,744
Notes and other receivables.......... 28,267 -- 28,267
Management contracts, net of
accumulated amortization............. 128,398 -- 128,398
Leaseholds, net of accumulated
amortization......................... 137,760 -- 137,760
Trade names and franchise costs, net
of accumulated amortization.......... 106,217 -- 106,217
Goodwill and intangibles, net of
accumulated amortization............. 368,204 -- 368,204
Deferred expenses, net of accumulated
amortization......................... 102,711 -- 102,711
Deferred acquisition costs........... 9,920 -- 9,920
Other Assets......................... 42,056 42,056
----------- -------- -----------
Total assets........................ $ 7,109,268 $ -- $ 7,109,268
=========== ======== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses............................. $ 284,413 $ -- $ 284,413
Deposits............................. 30,901 -- 30,901
Current portion of borrowings under
the credit facility, term loans,
mortgage notes and capital leases.... 194,673 (45,000)(B) 149,673
----------- -------- -----------
Total current liabilities........... 509,987 (45,000) 464,987
Borrowings under the credit facility,
term loans, mortgage notes and
capital leases....................... 3,328,839 -- 3,328,839
Due to unconsolidated subsidiaries... 374 -- 374
Deferred income...................... 16,369 -- 16,369
Deferred income taxes................ 733,970 -- 733,970
Minority interest in the Operating
partnerships......................... 23,550 -- 23,550
Minority interest in consolidated
subsidiaries......................... 193,514 -- 193,514
Stockholders' equity:
Preferred Stock...................... 96 4 (B) 100
Excess stock......................... -- -- --
Common Stock......................... 1,663 -- 1,663
Additional Paid in Capital........... 3,671,884 44,996 (B) 3,716,880
Notes receivable from shareholders
and affiliates....................... (16,716) -- (16,716)
Unearned stock compensation, net of
accumulated amortization............. (562) -- (562)
Unrealized loss on securities
available for sale................... (384) -- (384)
Unrealized foreign exchange gain..... (9,641) -- (9,641)
Accumulated deficit and dividend
distributions........................ (1,343,675) -- (1,343,675)
----------- -------- -----------
Total shareholders' equity.......... 2,302,665 45,000 2,347,665
----------- -------- -----------
Total liabilities and shareholders'
equity.............................. $ 7,109,268 $ -- $ 7,109,268
=========== ======== ===========
</TABLE>
See notes on following pages.
F-7
<PAGE>
Notes to Pro Forma Condensed Consolidated Balance Sheet:
(A) Represents the historical balance sheet of Wyndham as of June 30, 1999, as
reported on Wyndham's Report on Form 10Q.
(B) Represents the funding on July 1, 1999 of $45,000 through the transfer of
one of the investor's loan receivable from PAH Realty Company, LLC to
Wyndham for the purchase of 450,000 shares of series B preferred stock at
$0.01 par. The note payable from PAH Realty Company, LLC to Wyndham would
be eliminated upon consolidation.
F-8
<PAGE>
Wyndham International, Inc.
Pro Forma Condensed Consolidated Statements of Operations
for the six months ended June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Wyndhan Other Interstate Exchange Equity Pro Forma
Historical(A) Transactions(B) Spin-off(C) Offer Investment Total
------------- --------------- ----------- -------- ---------- ----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Hotel revenue.......... $1,267,162 $14,332 $ (86,122) $ -- $ -- $1,195,372
Participating lease
revenue................ 588 -- -- -- -- 588
Racecourse facility
and land lease
revenue................ 4,561 (4,561) -- -- -- --
Management fee and
service fee income..... 43,218 -- (17,573) -- -- 25,645
Interest and other
income................. 6,699 (40) (131) -- -- 6,528
---------- ------- --------- ------- -------- ----------
Total revenue........ 1,322,228 9,731 (103,826) -- -- 1,228,133
Expenses:
Hotel expenses......... 896,276 12,068 (83,059) -- -- 825,285
Racecourse facility
operations............. 3,867 (3,867) -- -- -- --
General and
administrative......... 111,358 -- (17,394) -- -- 93,964
Interest expense....... 181,200 (659) -- -- (22,528)(F) 158,013
Cost of acquiring
license agreements..... 803 -- -- -- -- 803
(Gain) loss on sale of
assets................. 5,327 (4,528) -- -- -- 799
Depreciation and
amortization........... 156,905 1,018 (8,602) (2,500)(D) (1,095)(G) 145,726
Restructuring costs.... 185,382 -- -- -- -- 185,382
---------- ------- --------- ------- -------- ----------
1,541,118 4,032 (109,055) (2,500) (23,623) 1,409,972
---------- ------- --------- ------- -------- ----------
Operating (loss)
income.................. (218,890) 5,699 5,229 2,500 23,623 (181,839)
Equity in earnings of
unconsolidated
subsidiaries........... 3,931 (3,126) (2,980) -- -- (2,175)
---------- ------- --------- ------- -------- ----------
Income (loss) before
income tax provision,
and minority interests.. (214,959) 2,573 2,249 2,500 23,623 (184,014)
Income tax
(provision)/benefit.... (654,439) 20 3,071 -- 9,321 (H) (642,027)
---------- ------- --------- ------- -------- ----------
(Loss) income before
minority interests...... (869,398) 2,593 5,320 2,500 32,944 (826,041)
Minority interest in
the operating
partnership............ 6,642 -- -- (6,184)(E) -- 458
Minority interest in
consolidated
subsidiaries........... (4,064) 110 (28) -- -- (3,982)
---------- ------- --------- ------- -------- ----------
Net (loss) income before
extraordinary item...... $ (866,820) $ 2,703 $ 5,292 $(3,684) $ 32,944 $ (829,565)
========== ======= ========= ======= ======== ==========
Basic (loss) per common
share before
extraordinary item(I)... $ (5.71) $ (5.28)
========== ==========
Dilutive loss per common
share before
extraordinary item(I)... $ (5.84) $ (5.28)
========== ==========
</TABLE>
See notes on following pages.
F-9
<PAGE>
Notes to Pro Forma Condensed Consolidated Statement of Operations
(A) Represents Wyndham's historical results of operations for the six months
ended June 30, 1999 as reported in the Wyndham's Report on Form 10-Q.
(B) Represents the pro forma adjustments to Wyndham's results of operations
assuming the Other 1999 Transactions, including the sales of the Bay
Meadows Racecourse, Holiday Inn Crockett, Holiday Inn Sebring, Holiday Inn
Beachwood, and the four Hampton Inns, along with the acquisition of the
minority interest from CIGNA and Snavely and the leases from the
Doubletree Lessee had occurred as of January 1, 1999.
(C) Represents the pro forma adjustments based on the Pro Forma Combined
Statement of Operations of Interstate Hotels Corporation.
(D) Represents the pro forma adjustment to reduce depreciation and
amortization for the adjustment in basis of certain assets as a result of
the use of the purchase method of accounting for the exchange of certain
partners' common and preferred OP units for the Companies' common stock.
(E) Represents the reduction in minority interest due to a reduction in
minority interest percentage as a result of the exchange of the of limited
partners' common and preferred OP units for the Companies' common stock.
(F) Represents the pro forma adjustment to debt and interest expense as a
result of the investment and new debt financing as follows:
<TABLE>
<CAPTION>
Balance Interest
----------- --------
<S> <C> <C>
Pro forma adjustments as a result of New Debt
Financing:
New revolving loan facility bearing interest at a
rate of 7.71% per annum (LIBOR plus 2.75%)....... $ 50,000 $ 1,954
New term loan facility bearing interest at a rate
of 8.46% per annum (LIBOR plus 3.50%)............ 1,300,000 55,737
Increasing rate loans bearing interest at a rate
of .25% below the initial new term loan facility
increasing .50% every three months............... 650,000 27,868
Mortgage financing bearing interest at a rate of
8.46% per annum
(LIBOR plus 3.50%)............................... 235,000 10,075
Mortagage financing bearing interest at a rate of
8.21% (LIBOR plus 3.25%) ........................ 346,000 14,396
Additional deferred loan costs of approximately
$91,782 amortized over periods of 3 to 7 years... -- 8,938
----------- --------
2,581,000 118,968
Reduction of debt for the repayment of the following
long-term obligations:
Existing credit facility......................... (875,587) (34,103)
Tranche III and B term loans..................... (1,049,000) (41,694)
Amortization of deferred loan costs related to
the existing credit facility for the six months
ended June 30, 1999.............................. -- (21,881)
----------- --------
(1,924,587) (97,678)
----------- --------
Current portion of long term debt repaid:
Tranche I and II term loans...................... (733,000) (29,122)
Promissory note payable to Chase Securities,
Inc. ............................................ (49,255) (1,937)
Unsecured note payable to PaineWebber Real
Estate, Inc. .................................... (160,000) (7,492)
Mortgage note payable to PaineWebber Real Estate,
Inc. ............................................ (103,000) (3,948)
Mortgage note payable to PaineWebber Real Estate,
Inc. ............................................ (35,000) (1,319)
----------- --------
$(1,080,255) $(43,818)
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
Balance Interest
------- --------
<S> <C> <C>
Pro Forma adjustments to interest expense:
Pro forma adjustments to interest as a result of new
debt financing......................................... $118,968
Reduction of interest expense for the repayment of
long-term debt obligations............................. (97,678)
Interest expense related to current portion of debt
obligations repaid..................................... (43,818)
--------
Pro Forma adjustment to interest expense........... $(22,528)
========
</TABLE>
An increase of 0.125% in the interest rate would increase pro forma
interest expense to $159,649, decreasing net income to $831,201. Net loss
applicable to common shareholders would increase to $880,367, loss per
common share would increase to $5.29 based on 166,304 weighted average
number of common shares outstanding.
(G) Represents the adjustment to reduce depreciation and amortization for the
intangible asset to be written off in connection with the restructuring.
(H) Represents the tax benefit to Wyndham as a result of the restructuring of
Wyndham and Patriot. The restructuring of Wyndham and Patriot results in
Wyndham, Patriot and certain corporate subsidiaries of Patriot reporting
and filing on a consolidated basis for federal income tax purposes. The
tax benefit is derived from the reversal of certain timing differences
between financial and income tax reporting methods and does not represent
the amount of cash taxes for which Wyndham would be liable.
(I) As a result of the $1 billion equity investment and the restructuring of
Patriot and Wyndham, Wyndham issued 10 million shares of series B
preferred stock to the investors at $100.00 per share for a total
investment of $1 billion. Proceeds from the investment were used to repay
the obligations in connection with the forward equity contracts of
approximately $335,800. A total of 100.7 million shares of common stock
were retired in connection with the repayment of the forward equity
contracts. Pursuant to the merger, each outstanding paired share of
Patriot series A preferred stock was converted into a single share of
Wyndham common stock. Additionally, the holders of Wyndham Series A and B
Preferred Stock were offered the opportunity to exchange their securities
for Wyndham common stock. For purposes of the calculation, Wyndham Series
A and B Preferred Stock and Patriot series A preferred stock will be
assumed to be converted to Wyndham common stock at the beginning of the
period being presented. Holders of Patriot preferred series B stock
received $25.00 for each of their shares and $1.61 per share for accrued
dividends. As a result, the total number of common shares outstanding on a
pro forma basis would be 166,304. Pro forma basic and dilutive earnings
per share are as follows:
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Basic Dilutive
---------- ----------
<S> <C> <C>
Earnings per common share:
Net loss attributable to common shareholders..... $ (829,565) $ (829,565)
Investor Preferred Dividends..................... (49,166) (49,166)
---------- ----------
Net loss available to common shareholders........ $ (878,731) $ (878,731)
========== ==========
Weighted average shares.......................... 166,304 166,304
========== ==========
</TABLE>
For the pro forma calculation, the dilutive effect of the series B
preferred shares of 120,435, and the option to purchase 27 common shares
were excluded from the computation of dilutive earnings per share for the
six months ended June 30, 1999 because they are anti-dilutive.
F-11
<PAGE>
Patriot American Hospitality, Inc. and
Old Wyndham International Inc.
Pro Forma Condensed Combined Statements of Operations
for the year ended December 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Patriot Wyndham Elimination Combined Exchange Equity Pro Forma
Pro Forma(A) Pro Forma(B) Entries Pro Forma (G) Offer Investment Total
------------ ------------ ----------- ------------- -------- ---------- ----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Hotel revenue.......... $ -- $2,260,860 $ -- $2,260,860 $ -- $ -- $2,260,860
Participating lease
revenue................ 680,537 -- (679,741)(C) 796 -- -- 796
Racecourse facility
and land lease
revenue................ -- -- -- -- -- -- --
Management fee and
service fee income..... -- 56,012 (916)(D) 55,096 -- -- 55,096
Interest and other
income................. 25,049 23,373 (28,719)(E) 19,703 -- -- 19,703
-------- ---------- --------- ---------- -------- -------- ----------
Total revenue........ 705,586 2,340,245 (709,376) 2,336,455 -- -- 2,336,455
Expenses:
Hotel expenses......... 120,770 1,499,332 -- 1,620,102 -- -- 1,620,102
Racecourse facility
operations............. -- -- -- -- -- -- --
General and
administrative......... 31,132 76,612 -- 107,744 -- 2,722 (J) 110,466
Interest expense....... 323,579 46,316 (28,719)(E) 341,176 -- (22,711)(K) 318,465
Cost of acquiring
leaseholds and license
agreements............. 11,686 52,721 -- 64,407 -- -- 64,407
Treasury lock
settlement............. 49,334 -- -- 49,334 -- -- 49,334
Loss on sale of
assets................. 9,453 -- -- 9,453 -- -- 9,453
Impairment loss on
assets held for sale... 8,803 23,184 -- 31,987 -- -- 31,987
Depreciation and
amortization........... 190,749 70,322 -- 261,071 (5,000)(H) (2,193)(L) 253,878
Participating lease
payments............... -- 679,741 (679,741)(C) -- -- -- --
-------- ---------- --------- ---------- -------- -------- ----------
745,506 2,448,228 (708,460) 2,485,274 (5,000) (22,182) 2,458,092
-------- ---------- --------- ---------- -------- -------- ----------
Operating loss.......... (39,920) (107,983) (916) (148,819) 5,000 22,182 (121,637)
Equity in earnings of
unconsolidated
subsidiaries........... 38,467 2,283 (37,799)(F) 2,951 -- -- 2,951
-------- ---------- --------- ---------- -------- -------- ----------
Loss before income tax
provision, and minority
interests............... (1,453) (105,700) (38,715) (145,868) 5,000 22,182 (118,686)
Income tax
(provision)/benefit.... (2,777) (13,414) -- (16,191) -- 10,095 (M) (6,096)
-------- ---------- --------- ---------- -------- -------- ----------
Loss before minority
interests............... (4,230) (119,114) (38,715) (162,059) 5,000 32,277 (124,782)
Minority interest in
the operating
partnership............ 352 12,523 -- 12,875 (12,045)(I) -- 830
Minority interest in
consolidated
subsidiaries........... (5,602) (38,534) 37,799 (F) (6,337) -- -- (6,337)
-------- ---------- --------- ---------- -------- -------- ----------
Net (loss) income....... $ (9,480) $ (145,125) $ (916) $ (155,521) $ (7,045) $ 32,277 $ (130,289)
======== ========== ========= ========== ======== ======== ==========
Basic loss per common
share(N)................ $ (0.24) $ (0.98) $ (1.22) $ (1.39)
======== ========== ========== ==========
Dilutive loss per common
share(N)................ $ (1.34) $ (0.98) $ (2.33) $ (1.39)
======== ========== ========== ==========
</TABLE>
See notes on following pages.
F-12
<PAGE>
Notes to Pro Forma Condensed Combined Statement of Operations:
(A) Represents the Pro Forma Condensed Consolidated Statements of Operations
for Patriot for the year ended December 31, 1998. See page F-16.
(B) Represents the Pro Forma Condensed Consolidated Statements of Operations
for Wyndham for the year ended December 31, 1998. See page F-19.
(C) Represents elimination of lease revenue and expense related to the hotels
and the Racecourse facility leased by Patriot to Wyndham.
(D) Represents elimination of design and construction fees related to the
hotels leased by Patriot to Wyndham.
(E) In connection with the mergers and other transactions, Patriot (including
the Patriot Partnership) subscribed for shares of Wyndham common stock or
units of limited partnership interest in the Wyndham Partnership and
Wyndham subscribed for shares of Patriot common stock in order to effect
the exchange of paired shares or pairs of units of limited partnership
interest in the operating partnerships in consummation of the
transactions. These subscriptions for shares of common stock and units of
limited partnership interest were funded through the issuance of
promissory notes referred to as "subscription notes" payable to Wyndham or
Patriot, as the case may be. The subscription notes accrue interest at
rates ranging from LIBOR plus 1% to a fixed rate of 8.7% per annum and
mature on various dates through 2002. The pro forma elimination entry
relating to interest income and expense consists of:
<TABLE>
<S> <C>
Interest income and expense related to the Subscription Notes.. $ 18,293
Interest income and expense related to the mortgage notes held
by Patriot related to Crowne Plaza Ravinia Hotel and the
Wyndham Windwatch Hotel....................................... 7,099
Interest income and expense related to the participating note
held by Wyndham related to the Buena Vista Palace Hotel....... 1,852
Interest income and expense related to a note receivable issued
to
Old Patriot in connection with the sale of certain assets to
PAH RSI, L.L.C., which assets were acquired by Wyndham........ 1,186
Other intercompany income and expense items.................... 289
--------
$ 28,719
========
</TABLE>
(F) Represents elimination of Patriot's equity in the earnings of certain non-
controlled subsidiaries that were formed in connection with various
mergers and acquisitions in 1998. The entities are controlled by Wyndham,
and as a result, the operating results of these entities have been
combined with those of Wyndham for pro forma financial reporting purposes.
(G) Represents the pro forma results of operations for Patriot and Wyndham
combined for the year ended December 31, 1998 adjusted for the 1998
transactions and the Interstate spin-off transaction, as if they had been
consummated as of the beginning of the period being presented.
(H) Represents the pro forma adjustment to reduce depreciation and
amortization for the adjustment in basis of certain assets as a result of
the use of the purchase method of accounting for the exchange of certain
partners' common and preferred OP units for the Companies' common stock.
(I) Represents the reduction in minority interest due to a reduction in
minority interest percentage as a result of the exchange of the minimum of
amount of limited partners' common and preferred OP units for the
Companies' common stock.
(J) Represents the pro forma adjustment for $2,722 in fees related to
settlement of the forward equity contracts.
F-13
<PAGE>
(K) Represents the pro forma adjustment to debt and interest expense as a
result of the investment and new debt financing as follows:
<TABLE>
<CAPTION>
Interest
---------
<S> <C>
Pro forma adjustments to interest expense as a result of New
Debt Financing:
New revolving loan facility bearing interest at a rate of
8.00% per annum
(LIBOR plus 2.75%)............................................ $ 4,056
New term loan facility bearing interest at a rate of 8.75% per
annum
(LIBOR plus 3.50%)............................................ 115,330
Increasing rate loans bearing interest at a rate of .25% below
the initial
new term loan facility increasing .50% every three months..... 60,960
Mortgage financing bearing interest at a rate of 8.75% per
annum
(LIBOR plus 3.50%)............................................ 20,848
Mortgage financing bearing interest at a rate of 8.50% per
annum
(LIBOR plus 3.25%)............................................ 29,818
Additional deferred loan costs of approximately $91,782
amortized over
periods of 3 to 7 years....................................... 17,875
---------
248,887
Reduction of interest expense for the assumed repayment of the
following long-term obligations:
Existing credit facility...................................... (72,968)
Tranche III and B term loans.................................. (85,462)
Amortization of deferred loan costs related to the existing
credit facility
for the year ended December 31, 1998.......................... (31,661)
---------
(190,091)
---------
Reduction of interest expense for the current portion of long
term debt to be repaid:
Tranche I and II term loans................................... (58,085)
Promissory note payable to Chase Securities, Inc. ............ (606)
Unsecured note payable to PaineWebber Real Estate, Inc. ...... (12,113)
Mortgage note payable to PaineWebber Real Estate, Inc. ....... (8,044)
Mortgage note payable to PaineWebber Real Estate, Inc. ....... (2,659)
---------
$(81,507)
---------
Pro Forma adjustments to interest expense:
Pro forma adjustments to interest as a result of new debt
financing..................................................... $ 248,887
Reduction of interest expense for the assumed repayment of
long-term debt obligations.................................... (190,091)
Interest expense related to current portion of debt
obligations to be repaid...................................... (81,507)
---------
Pro Forma adjustment to interest expense.................. $ (22,711)
=========
</TABLE>
An increase of 0.125% in the interest rate would increase pro forma
interest expense to $321,800, increasing net loss to $133,624. Net loss
applicable to common shareholders would increase to $233,660, loss per
common share would increase to $1.41 based on 166,183 weighted average
number of common shares outstanding.
(L) Represents the adjustment to reduce depreciation and amortization for the
intangible to be written off in connection with the restructuring.
(M) Represents the tax benefit to Wyndham as a result of the restructuring of
Wyndham and Patriot. The restructuring of Wyndham and Patriot results in
Wyndham, Patriot and certain corporate subsidiaries of Patriot reporting
and filing on a consolidated basis for federal income tax purposes. The tax
benefit is derived from the reversal of certain timing differences between
financial and income tax reporting methods and does not represent the
amount of cash taxes for which Wyndham would be liable.
F-14
<PAGE>
(N) As a result of the $1 billion equity investment and the restructuring of
Patriot and Wyndham, Wyndham issued 10 million shares of series B
preferred stock to the investors at $100.00 per share for a total
investment of $1 billion. Proceeds from the investment were used to repay
the obligations in connection with the forward equity contracts of
approximately $335,800. A total of 100.7 million shares of common stock
were retired in connection with the repayment of the forward equity
contracts. Pursuant to the merger, each outstanding paired share and share
of Patriot series A preferred stock was converted into a single share of
Wyndham common stock. Additionally, the holders of Wyndham Series A and B
Preferred Stock were offered the opportunity to exchange their securities
for Wyndham common stock. For purposes of the calculation, Wyndham Series
A and B Preferred Stock and Patriot preferred series A stock will be
assumed to be converted to Wyndham common stock as of the beginning of the
period being presented. Holders of Patriot preferred series B stock
received $25.00 for each of their shares and $1.61 per share in accrued
dividends. As a result, the total number of common shares outstanding on a
pro forma basis would be 166,183. Pro forma basic and dilutive earnings
per share are as follows:
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Basic Dilutive
--------- ---------
<S> <C> <C>
Earnings per common share:
Net loss attributable to common shareholders....... $(130,289) $(130,289)
Investor Preferred Dividends....................... (100,036) (100,036)
--------- ---------
Net loss available to common shareholders.......... $(230,325) $(230,325)
========= =========
Weighted average shares............................ 166,183 166,183
========= =========
</TABLE>
For the pro forma calculation, the dilutive effect of the series B
preferred shares of 124,654, unvested stock grants of 880 and the option to
purchase 753 common shares were excluded from the computation of dilutive
earnings per share for the year ended December 31, 1998 because they are
anti-dilutive.
The combined Companies are in a loss position for the twelve months ended
December 31, 1998. Basic and dilutive earnings per share, on a pro forma
basis, before the effects of the Exchange Offer and restructuring are as
follows:
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Basic Diluted
--------- ---------
<S> <C> <C>
Combined net loss................................. $(155,521) $(155,521)
Preferred stock dividends......................... (7,956) (7,956)
Adjustment for equity forwards (1)................ (21,151) (188,592)
--------- ---------
Net loss to common shareholders.................. $(184,628) $(352,069)
========= =========
Weighted average number of paired shares
outstanding(2)................................... 151,313 151,313
========= =========
</TABLE>
- --------
(1) The adjustment relates to the mark-to-market adjustment for the UBS and
Nations forward equity contracts which can be settled in cash or stock, at
the Companies' option. At December 31, 1998, the PaineWebber Transaction
can be settled only in stock, only the guaranteed return portion as
adjusted in the earnings per share calculations. There is no mark-to-
market adjustment for the PaineWebber transaction which is accounted for
by the Reverse Treasury Method.
(2) For 1998, the dilutive effect or unvested stock grants of 880, the options
to purchase common stock of 753, shares issued in connection with forward
equity contracts of 2,507 and 8,423 of preferred shares were not included
in the computation of diluted earnings per share for the year December 31,
1998 because they are anti-dilutive.
F-15
<PAGE>
PATRIOT AMERICAN HOSPITALITY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Patriot Recent Arcadian Summerfield Interstate Other Pro
Historical Transactions Acquisition Acquisition Merger Transactions Forma
(A) (B) (C) (D) (E) (F) Total
---------- ------------ ----------- ----------- ---------- ------------ --------
(in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Participating lease
revenue.............. $578,029 $1,335 (G) $ 3,803 (G) $ 23,194 (G) $98,576 (G) (24,400) $680,537
Interest and other
income............... 17,381 472 -- -- -- 7,196 25,049
-------- ------ ------- -------- ------- ------- --------
Total revenue....... 595,410 1,807 3,803 23,194 98,576 (17,204) 705,586
-------- ------ ------- -------- ------- ------- --------
Expenses:
Hotel expenses........ 100,324 362 (H) 468 17,174 (H) 8,925 (H) (6,483) 120,770
General and
administrative....... 29,784 -- -- -- 1,373 (25) 31,132
Interest expense...... 245,205 601 (I) 6,708 (I) 7,488 (I) 59,518 (I) 4,059 (I) 323,579
Cost of acquiring
leaseholds and
license agreements... 11,686 -- -- -- -- -- 11,686
Treasury lock
settlement........... 49,334 -- -- -- -- -- 49,334
Loss on sale of
assets............... 9,453 -- -- -- -- -- 9,453
Impairment loss on
assets held for
sale................. 27,897 -- -- -- -- (19,094) 8,803
Depreciation and
amortization......... 161,857 877 (J) 2,120 (J) 3,769 (J) 27,055 (J) (4,929) 190,749
-------- ------ ------- -------- ------- ------- --------
Total expenses...... 635,540 1,840 9,296 28,431 96,871 (26,472) 745,506
-------- ------ ------- -------- ------- ------- --------
Operating (loss)
income................. (40,130) (33) (5,493) (5,237) 1,705 9,268 (39,920)
Equity in earnings
(loss) of
unconsolidated
subsidiaries......... 36,726 7,805 (K) (128)(L) (6,293)(M) 7,385 (N) (7,028) 38,467
-------- ------ ------- -------- ------- ------- --------
(Loss) income before
income tax
provision, minority
interests and
extraordinary item..... (3,404) 7,772 (5,621) (11,530) 9,090 2,240 (1,453)
Income tax provision.. (2,742) (35)(O) -- -- -- -- (2,777)
-------- ------ ------- -------- ------- ------- --------
(Loss) income before
minority interest
and extraordinary
item................... (6,146) 7,737 (5,621) (11,530) 9,090 2,240 (4,230)
Minority interest in
operating
partnership.......... (98) (931)(P) -- 1,381 (P) -- -- 352
Minority interest in
consolidated
subsidiaries......... (8,084) 27 (Q) -- -- -- 2,455 (5,602)
-------- ------ ------- -------- ------- ------- --------
Net (loss) income before
extraordinary item..... $(14,328) $6,833 $(5,621) $(10,149) $ 9,090 $ 4,695 $ (9,480)
======== ====== ======= ======== ======= ======= ========
Basic loss per common
share before
extraordinary
item (R):.............. $ (0.30) $ (0.24)
======== ========
Diluted loss per common
share before
extraordinary
item (R):.............. $ (1.51) $ (1.34)
======== ========
</TABLE>
See notes on following page.
F-16
<PAGE>
Notes to Pro Forma Condensed Consolidated Statement of Operations:
(A) Represents Patriot's historical results of operations before
extraordinary items for the twelve months ended December 31, 1998 as
reported in the Companies' Annual Report on Form 10-K.
(B) Represents adjustments to Patriot's results of operations assuming recent
transactions, including the acquisition of the Buena Vista Hotel, the
merger with WHG and related acquisition of minority interests and the
Golden Door Spa completed by Patriot during the twelve months ended
December 31, 1998 had been consummated on January 1, 1998.
(C) Represents adjustments to Patriot's results of operations assuming the
Arcadian Acquisition had been consummated as of January 1, 1998.
(D) Represents adjustments to Patriot's results of operations assuming the
Summerfield Acquisition had been consummated as of January 1, 1998.
(E) Represents adjustments to Patriot's results of operations assuming the
Interstate Merger and the related financing transactions had been
consummated as of January 1, 1998.
(F) Represents adjustments to Patriot's results of operations assuming the
1998 asset sales to North Coast, LLC and the Fine transaction along with
the other 1999 transactions, as described on F-4 through F-5 had occurred
as of the beginning of the period presented.
(G) Represents adjustments to lease revenue assuming the hotels and leasehold
interests currently owned by Patriot and its subsidiaries had been leased
to the Lessees or Wyndham as of January 1, 1998. No lease income is
included in the pro forma statement of operations for time periods prior
to completion of construction or commencement of operations.
(H) Represents pro forma ground lease payments to be made with respect to
certain of the hotels, and hotel lease expense related to the hotels
leased by Patriot from third-party owners, which Patriot sub-leases to
Wyndham.
(I) Interest expense consists of the following components:
<TABLE>
<CAPTION>
Recent Arcadian Summerfield Interstate Other
Transactions Acquisition Acquisition Merger Transactions
------------ ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Related to acquisition
of hotels and hotel
management
businesses............ $601 $6,308 $7,256 $51,573 4,059
Related to subscription
notes payable to
Wyndham............... -- -- 232 1,254 --
Related to amortization
of deferred loan
costs................. -- 400 -- 6,691 --
---- ------ ------ ------- -----
$601 $6,708 $7,488 $59,518 4,059
==== ====== ====== ======= =====
</TABLE>
The Pro Forma amounts presented assume an average interest rate of 7.39%
per annum (assuming LIBOR plus 2.25%) on the amounts outstanding on the
Revolving Credit Facility. Amortization of deferred loan costs is computed
using the straight-line method (which approximates the interest method)
over the term of the related loans. As a result of the closing of the
repayment of debt assumed in connection with the Wyndham merger, deferred
loan costs related to the debt repaid were written off. In addition,
Patriot incurred certain prepayment penalties related to the early
repayment of certain debt. These amounts, net of the minority interest
share, were reported as an extraordinary item in Patriot's historical
results of operations and has been eliminated for pro forma presentation
purposes. In addition, as a result of the increase in Patriot's existing
credit facilities, additional deferred loan costs totaling approximately
$27,405 have been included in the borrowings under the credit facility and
mortgage notes in the pro forma financial statements.
An increase of 0.125% in the interest rate would increase pro forma
interest expense to $324,520, increasing net loss to $10,408. Net loss
applicable to common shareholders on a dilutive basis would increase to
$204,250, and loss per common share would increase to $1.35 based on
151,313 weighted average number of common shares and common share
equivalents outstanding.
F-17
<PAGE>
(J) Represents adjustments to depreciation and amortization in accordance
with Patriot's policy.
Depreciation is computed using the straight-line method and is based upon
the estimated useful lives of 30 to 40 years for the hotel buildings and
improvements, 7 years for the Racecourse facility and 3 to 10 years for
furniture, fixtures and equipment ("FF&E"). These estimated useful lives
are based on management's knowledge of the properties and the industry in
general. Amortization of intangible assets related to mergers and other
acquisitions of businesses is computed using the straight-line method over
estimated useful lives ranging from 5 to 40 years.
(K) Represents Patriot's pro forma equity in earnings of the non-controlled
subsidiaries that own the Wyndham trade names and franchise related
assets, the management and franchising contracts and the hotel management
company and which are controlled by Wyndham. In addition, represents
equity in losses of the partnerships that own the El San Juan Hotel &
Casino and the El Conquistador and the WHG management company. These
entities are also controlled by Wyndham.
(L) Represents Patriot's pro forma equity in losses of the non-controlled
subsidiaries that own certain management-related assets acquired in the
Arcadian acquisition. Subsidiaries of Wyndham own the controlling
interest in these entities.
(M) Represents Patriot's pro forma equity in earnings of the non-controlled
subsidiaries that own the management contracts and hotel management
business acquired in the Summerfield acquisition. Subsidiaries of Wyndham
own the controlling interest in these entities.
(N) Represents Patriot's pro forma equity in losses of the non-controlled
subsidiaries that own the management contracts and hotel management
business acquired in the Interstate merger. Subsidiaries of Wyndham own
the controlling interest in these entities.
(O) Represents an adjustment for estimated state income tax liabilities.
(P) Represents the adjustment to minority interest to reflect the estimated
minority interest percentage subsequent to the assumed transactions of
approximately 11%.
(Q) Represents the minority interest related to partnerships and limited
liability companies that own certain of the hotels assuming such entities
had been formed and the hotels owned by such entities had been acquired
at January 1, 1998.
(R) A reconciliation of net loss to common share holders is as follows:
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Basic Diluted
--------- ---------
<S> <C> <C>
Net loss.......................................... $ (9,480) $ (9,480)
Preferred stock dividends......................... (5,250) (5,250)
Adjustment for equity forwards (/1/).............. (21,151) (188,592)
-------- ---------
Net loss to common shareholders................. $(35,881) $(203,322)
======== =========
Weighted average number of paired shares
outstanding(2)............................... 151,313 151,313
======== =========
Diluted....................................... 151,313 151,313
======== =========
</TABLE>
- --------
(1) The adjustment relates to the mark-to-market adjustment for the UBS and
Nations forward equity contracts, which can be settled in cash or stock,
at the Companies' option. At December 31, 1998, PaineWebber can be
settled only in stock, on the guaranteed return portion as adjusted in
the earnings per share calculation. There is no mark-to-market adjustment
for PaineWebber which is accounted for by the Reverse Treasury Method.
(2) For 1998, the dilutive effect of unvested stock grants of 880, the option
to purchase common stock of 753, shares issued in connection with the
forward equity contracts of 2,507 and 8,423 of preferred shares were not
included in the computation of diluted earning per share for the year
ended December 31, 1998 because they are antidilutive.
F-18
<PAGE>
OLD WYNDHAM INTERNATIONAL, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Wyndham Recent Arcadian Summerfield Interstate CHCI Other
Historical Transactions Acquisition Acquisition Merger Merger Transactions Pro Forma
(A) (B) (C) (D) (E) (F) (G) Total
---------- ------------ ----------- ----------- ---------- ------- ------------ ----------
(in thousands, except for share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Hotel revenue..... $1,842,682 $51,770 $16,426 $53,746 $324,467 $58,785 $106,906 $2,454,782
Racecourse
facility revenue.. 51,259 -- -- -- -- -- (51,259) --
Management fee and
service fee
income............ 89,983 (1,833) -- 1,814 17,817 646 -- 108,427
Interest and other
income............ 18,303 193 690 550 2,536 1,844 (149) 23,967
---------- ------- ------- ------- -------- ------- -------- ----------
Total revenue... 2,002,227 50,130 17,116 56,110 344,820 61,275 55,498 2,587,176
---------- ------- ------- ------- -------- ------- -------- ----------
Expenses:
Hotel expenses.... 1,251,548 41,235 13,278 25,738 227,822 34,655 79,333 1,673,609
Racecourse
facility
operations........ 43,198 -- -- -- -- -- (43,198) --
General and
administrative.... 87,882 -- -- 4,964 16,627 497 -- 109,970
Interest expense.. 35,690 2,872 (H) -- -- -- 678 (I) 7,076 46,316
Cost of acquiring
leaseholds........ 52,721 -- -- -- -- -- -- 52,721
Impairment loss on
assets held for
sale.............. 23,184 -- -- -- -- -- -- 23,184
Depreciation and
amortization...... 69,375 1,758 (J) 118 (J) 1,649 (J) 11,323 (J) 619 (J) 3,664 88,506
Participating
lease payments.... 519,589 1,335 (K) 3,803 (K) 23,194 (K) 98,576 (K) 20,745 (K) 12,499 679,741
---------- ------- ------- ------- -------- ------- -------- ----------
Total expenses.. 2,083,187 47,200 17,199 55,545 354,348 57,194 59,374 2,674,047
---------- ------- ------- ------- -------- ------- -------- ----------
Operating (loss)
income............. (80,960) 2,930 (83) 565 (9,528) 4,081 (3,876) (86,871)
Equity in earnings
of unconsolidated
subsidiaries...... 3,134 (1,677) (L) -- -- -- -- -- 1,457
---------- ------- ------- ------- -------- ------- -------- ----------
(Loss) income
before income tax
provision, minority
interest and
extraordinary
item............... (77,826) 1,253 (83) 565 (9,528) 4,081 (3,876) (85,414)
Income tax
provision......... (14,381) -- -- -- -- -- (8,997)(M) (23,378)
---------- ------- ------- ------- -------- ------- -------- ----------
(Loss) income
before minority
interest and
extraordinary
item............... (92,207) 1,253 (83) 565 (9,528) 4,081 (12,873) (108,792)
Minority interest
in Wyndham
partnership....... 12,750 (175)(N) (5)(N) -- (N) -- (N) (47)(N) -- 12,523
Minority interest
in consolidated
subsidiaries...... (31,705) (6,155)(O) 128 (O) 6,293 (O) (9,934)(O) -- 3,072 (P) (38,301)
---------- ------- ------- ------- -------- ------- -------- ----------
(Loss) income
before
extraordinary
item............... $ (111,162) $(5,077) $ 40 $ 6,858 $(19,462) $ 4,034 $ (9,801) $ (134,570)
========== ======= ======= ======= ======== ======= ======== ==========
Basic loss per
common share before
extraordinary item
(T)................ $ (0.83)
----------
Diluted loss per
common share before
extraordinary item
(T)................ $ (0.83)
==========
<CAPTION>
Interstate
Spin-off Pro Forma
Transaction(Q) Total
--------------- ----------
<S> <C> <C>
Revenue:
Hotel revenue..... (193,922) 2,260,860
Racecourse
facility revenue.. -- --
Management fee and
service fee
income............ (52,415)(R) 56,012
Interest and other
income............ (594) 23,373
--------------- ----------
Total revenue... (246,931) 2,340,245
--------------- ----------
Expenses:
Hotel expenses.... (174,277) 1,499,332
Racecourse
facility
operations........ -- --
General and
administrative.... (33,358) 76,612
Interest expense.. -- 46,316
Cost of acquiring
leaseholds........ -- 52,721
Impairment loss on
assets held for
sale.............. 23,184
Depreciation and
amortization...... (18,184) 70,322
Participating
lease payments.... -- 679,741
--------------- ----------
Total expenses.. (225,819) 2,448,228
--------------- ----------
Operating (loss)
income............. (21,112) (107,983)
Equity in earnings
of unconsolidated
subsidiaries...... 826 (S) 2,283
--------------- ----------
(Loss) income
before income tax
provision, minority
interest and
extraordinary
item............... (20,286) (105,700)
Income tax
provision......... 9,964 (13,414)
--------------- ----------
(Loss) income
before minority
interest and
extraordinary
item............... (10,322) (119,114)
Minority interest
in Wyndham
partnership....... -- 12,523
Minority interest
in consolidated
subsidiaries...... (233) (38,534)
--------------- ----------
(Loss) income
before
extraordinary
item............... $(10,555) $(145,125)
=============== ==========
Basic loss per
common share before
extraordinary item
(T)................ $ (0.98)
----------
Diluted loss per
common share before
extraordinary item
(T)................ $ (0.98)
==========
</TABLE>
See notes on following page
F-19
<PAGE>
Notes to Pro Forma Condensed Consolidated Statement of Operations:
(A) Represents the historical results of operations of Wyndham for the twelve
months ended December 31, 1998 as reported in the Companies' Annual Report
on Form 10-K.
(B) Represents adjustments to Wyndham's results of operations assuming that
Recent Transactions completed by the Companies during the twelve months
ended December 31, 1998 had occurred as of January 1 1998. No adjustment
is made to the results of operations for time periods prior to the
completion of construction or commencement of operations.
(C) Represents adjustments to Wyndham's results of operations for the hotel
leases and management contracts acquired as a result of the Arcadian
acquisition assuming such leases and management contracts had been
acquired as of January 1, 1998. No adjustment is made to the results of
operations for time periods prior to the completion of construction or
commencement of operations.
(D) Represents adjustments to Wyndham's results of operations for the hotel
investments and management operations acquired by Wyndham as a result of
the Summerfield acquisition assuming such investments had been acquired as
of January 1, 1998. No adjustment is made to the results of operations for
time periods prior to the completion of construction or commencement of
operations.
(E) Represents adjustments to Wyndham's results of operations for the hotel
leases and management contracts acquired as a result of the Interstate
merger, assuming such leases and management contracts had been acquired as
of January 1, 1998. No adjustment is made to the results of operations for
time periods prior to the completion of construction or commencement of
operations.
(F) Represents adjustments to Wyndham's results of operations for the hotel
leases and management contracts acquired by Wyndham as a result of the
CHCI merger assuming such leases and management contracts had been
acquired as of January 1, 1998. No adjustment is made to the results of
operations for time periods prior to the completion of construction or
commencement of operations.
(G) Represents adjustments to Patriot's results of operations assuming the
1998 asset sales to NorthCoast, LLC and the Fine transactions, along with
the Other 1999 transactions, as described on F-4 through F-5 had occurred
as of the beginning of the period being presented.
(H) Represents pro forma interest expense on debt and capital lease
obligations related to the Condado Plaza Hotel, the El San Juan Hotel &
Casino and the El Conquistador. As a result of the WHG Transactions,
Wyndham acquired a controlling interest in the partnerships that own the
El San Juan Hotel & Casino and the El Conquistador. As a result, the
results of operations of these partnerships are included in Wyndham's
consolidated operating results. These debt and capital lease obligations
bear interest at rates ranging from LIBOR plus 0.9% (estimated as 6.589%)
to 12.0% per annum.
An increase of 0.125% in the interest rate would increase pro forma
interest expense to $46,354, increasing net loss to $145,143. Net loss
applicable to common shares holders would increase to $147,849, however,
loss per common share would increase to $0.99 based on 151,313 weighted
average number of common shares and common share equivalents outstanding.
(I) Represents pro forma interest expense on debt obligations assumed in
connection with the CHCI merger.
(J) Represents the following pro forma adjustments to depreciation and
amortization in accordance with Wyndham policy. Depreciation is computed
using the straight-line method and is based upon the estimated useful
lives of 30 to 40 years for buildings and improvements and 3 to 10 years
for FF&E. Amortization of goodwill related to the acquisition of the
management operations of entities acquired is computed using the straight-
line method over estimated useful lives of 5 to 40 years. Amortization of
management contracts tradenames and franchise costs is computed using the
straight-line method over estimated useful lives ranging from 6 to 30.
(K) Represents pro forma lease payments from Wyndham to Patriot calculated
based upon the historical operating results of the hotels for the twelve
months ended December 31, 1998.
(L) Represents adjustment to eliminate Wyndham's equity in earnings of
unconsolidated subsidiaries related to WHG. Subsequent to the WHG
Transactions, these entities are consolidated with Wyndham.
F-20
<PAGE>
(M) Represents an adjustment to the estimated federal and state tax liability
as a result of the pro forma adjustments to the operating results for the
twelve months ended December 31, 1998.
(N) Represents the adjustment to minority interest to reflect the estimated
minority interest percentage in the Wyndham Partnership subsequent to the
assumed transactions of approximately 12.2%.
(O) Represents adjustments for Patriot's minority interest in the non-
controlled subsidiaries. These entities are controlled by Wyndham.
(P) Represents the elimination of minority interest from the historical
financial statements of minority interests in WHG and CHCI.
(Q) Represents the pro forma adjustments based on the Pro Forma Combined
Statement of Operations of Interstate Management for the year ended
December 31, 1998 pursuant to the spin-off.
(R) Represents the following pro forma adjustments related to the spin-off:
<TABLE>
<S> <C>
Interstate Management historical management fees............... $ 40,781
Interstate Management historical other income.................. 20,454
Management and other fees from seven of the Companies'
hotels to be managed by Interstate Management................. 3,207
Hotels owned by Patriot and managed by Interstate Management... (12,027)
--------
$ 52,415
========
</TABLE>
(S) Represents the pro forma adjustment to historical operations to reflect
the reduction of equity in earnings of unconsolidated subsidiaries for the
transfer of the Charles Hotel Complex in the spin-off. Currently the
Companies own an approximate 49% non-controlling interest in this complex.
Consequently, the results of operations for the complex are not
consolidated but are reflected through equity in earnings of
unconsolidated subsidiaries. The adjustment to reduce equity in earnings
of unconsolidated subsidiaries is $2,039. Additionally, as a result of the
spin-off, Wyndham will own a non-controlling interest of approximately 55%
of Interstate Hotels LLC, a subsidiary of Interstate Management, the newly
formed entity. Wyndham will account for their ownership as a equity
investment and record their share of estimated earnings of Interstate
Hotels, LLC as equity in earning in unconsolidated subsidiaries. The pro
forma adjustment for the estimated earnings for the year ended December
31, 1998 is $2,865.
(T) Wyndham is in a loss position for the twelve months ended December 31,
1998. Therefore basic and diluted earnings per share are identical since
the securities which could have a dilutive impact on earnings per share
are anti-dilutive.
<TABLE>
<S> <C>
Net loss..................................................... $(145,125)
Preferred stock dividend..................................... (2,706)
---------
Net loss to common stockholders............................ $(147,831)
=========
Weighted average number of common shares outstanding:
Basic...................................................... 151,313
=========
Diluted.................................................... 151,313
=========
</TABLE>
F-21
