================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported) April 3, 2001 ------------------------------- HOST MARRIOTT, L.P. (Exact Name of Registrant as Specified in its Charter) Delaware (State or Other Jurisdiction of Incorporation) 0-25087 52-2095412 (Commission File Number) (I.R.S. Employer Identification Number) 10400 Fernwood Road, Bethesda, Maryland 20817 (Address of Principal Executive Offices) (Zip Code) ------------------------------- Registrant's Telephone Number, Including Area Code (301) 380-9000 (Former Name or Former Address, if changed since last report.) ================================================================================ 1
Form 8-K/A ITEM 5. OTHER EVENTS Effective January 1, 2001, we completed a transaction with Crestline Capital Corporation ("Crestline") for the termination of the Crestline leases through the purchase of the entities, or "Crestline Lessee Entities", owning the leasehold interests with respect to 116 of our full-service hotels for $207 million in cash, including approximately $6 million of legal fees and transfer taxes. The transaction was consummated by our wholly-owned subsidiary that will elect to be treated as a taxable REIT subsidiary, or "TRS," for income tax purposes. In connection therewith, we recorded a non-recurring, pre-tax loss of $207 million during the fourth quarter of 2000, net of an $82 million tax benefit which we have recorded as a deferred tax asset, because for income tax purposes, the acquisition is recorded as an asset that will be amortized over the remaining term of the leases. In addition, the existing working capital of the respective hotels, valued at $90 million as of December 31, 2000, including the existing obligations under the working capital note, was transferred from Crestline to the TRS. Crestline remains the lessee of one of our full-service properties. The TRS will pay rent to us, and will be obligated to the managers for the fees and costs reimbursements under the management agreements. On a consolidated basis, our results of operations beginning in 2001 will reflect the revenues and expenses generated by these hotels rather than rental income. As a result, our 2001 results will not be comparable to the historical reported amounts for 2000 and 1999. In order to provide a clearer understanding and comparability of our results of operations we have presented unaudited pro forma statements of operations by quarter and year-to-date for the two fiscal years ended December 31, 2000 (see Item 7(b)), adjusted to reflect the acquisition of the Crestline Lessee Entities as if it occurred on January 1, 1999. This Form 8- K/A reflects adjustments to the recognition of the tax provision. The transaction is permitted as a result of the passage of the REIT Modernization Act, enacted in December 1999, which amended the tax laws to permit REITs, effective January 1, 2001, (i) to lease hotels to a subsidiary that qualifies as a TRS, and (ii) to own all of the voting stock of such TRS. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Pro forma financial information. (see pg.3) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto authorized. Host Marriott, LP By: its general partner HOST MARRIOTT CORPORATION By: /s/ Donald D. Olinger -------------------------- Donald D. Olinger Senior Vice President and Corporate Controller Date: April 3, 2001 2
Item 7(b). Pro Forma Consolidated Statements of Operations of Host Marriott L.P. Because of the significant changes to our corporate structure as a result of the transaction with Crestline for the termination of the Crestline leases through the purchase of the entities, or "Crestline Lessee Entities" during January 2001, management believes that a discussion of our pro forma results of operations is meaningful and relevant to an investor's understanding of our present and future operations. The pro forma results of operations set forth below are based on the unaudited condensed consolidated statements of operations for the twelve weeks ended March 24, 2000 and March 26, 1999, June 16, 2000 and June 18, 1999, and September 8, 2000 and September 10, 1999, and the sixteen weeks ended December 31, 2000 and 1999, and the audited consolidated statements of operations for the years ended December 31, 2000 and 1999, and are only adjusted to reflect the January 2001 acquisition of the Crestline Lessee Entities for $207 million in cash as if the transaction occurred at the beginning of 1999. The following pro forma results do not include adjustments for any transactions other than the Crestline lease repurchase and are not presented in accordance with Article 11 of SEC Regulation S-X. As a result of the Crestline acquisition, effective January 1, 2001, we leased 116 of our full-service hotels to our TRS, and therefore, our consolidated operations with respect to those hotels will represent property- level revenues and expenses rather than rental income from third-party lessees. In addition, the net income applicable to the TRS will be subject to federal and state income taxes. The non-recurring pre-tax loss of $207 million net of a tax benefit of $82 million that was recorded in our historical results of operations for the fourth quarter of 2000 is excluded from the pro forma results of operations for 2000. In addition, the pro forma statements of operations reflecting the lease repurchase also include the following adjustments: . record hotel-level revenues and expenses and reduce historical rental income with respect to the 116 properties; . reduce historical interest income for amounts related to the working capital note with Crestline; . reduce historical equity in earnings of affiliates for interest earned at our non-controlled subsidiary on the related FF&E loans with Crestline; . record interest expense related to the additional borrowings from the 9 1/4% Series F senior notes to fund the $207 million cash payment; and . record the tax provision attributable to the income of the TRS at an effective rate of 39.5%. The unaudited pro forma financial information does not purport to represent what our results of operations or financial condition would actually have been if the transaction had in fact occurred at the beginning of 1999, or to project our results of operations or financial condition for any future period. The unaudited pro forma financial information is based upon available information and upon assumptions and estimates that we believe are reasonable under the circumstances. The following unaudited pro forma financial information should be read in conjunction with our audited financial statements contained in our annual report on Form 10-K for the fiscal year ended December 31, 2000 and our unaudited quarterly financial statements contained in our quarterly reports on Form 10-Q for each quarter within the two fiscal years ended December 31, 2000. 3
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS Twelve Weeks Ended March 24, 2000 ------------------------------------ Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 512 $ 512 Food and beverage........................................... - 250 250 Other....................................................... - 64 64 -------- -------- -------- Total hotel property-level revenues....................... - 826 826 Rental income(1)............................................ 173 (142) 31 Net gains on property transactions.......................... 1 - 1 Equity in earnings of affiliates and other.................. 2 - 2 -------- -------- -------- Total revenues............................................ 176 684 860 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 121 121 Food and beverage........................................... - 183 183 Other departmental costs and deductions..................... - 200 200 Management fees and other................................... - 51 51 Other property-level expenses............................... 59 - 59 Depreciation and amortization............................... 74 - 74 -------- -------- -------- Total operating costs and expenses........................ 133 555 688 OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 43 129 172 Minority interest............................................. (5) - (5) Corporate expenses............................................ (10) - (10) Interest expense.............................................. (104) (5) (109) Interest income............................................... 9 (1) 8 Other......................................................... (6) - (6) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. (73) 123 50 Provision for income taxes.................................... (1) (4) (5) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... (74) 119 45 Less: Distributions on preferred limited partner interests.... (5) - (5) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ (79) $ 119 $ 40 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders.............................. $ (.28) $ .42 $ .14 ======== ======== ======== Twelve Weeks Ended March 26, 1999 ------------------------------------ Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 494 $ 494 Food and beverage........................................... - 239 239 Other....................................................... - 54 54 -------- -------- -------- Total hotel property-level revenues....................... - 787 787 Rental income(1)............................................ 171 (135) 36 Net gains on property transactions.......................... 12 - 12 Equity in earnings of affiliates and other.................. 1 - 1 -------- -------- -------- Total revenues............................................ 184 652 836 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotek operating expenses Rooms....................................................... - 113 113 Food and beverage........................................... - 174 174 Other departmental costs and deductions..................... - 192 192 Management fees and other................................... - 49 49 Other property-level expenses............................... 58 - 58 Depreciation and amortization............................... 68 - 68 -------- -------- -------- Total operating costs and expenses........................ 126 528 654 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 58 124 182 Minority interest............................................. (4) - (4) Corporate expenses............................................ (7) - (7) Interest expense.............................................. (108) (5) (113) Interest income............................................... 8 (1) 7 Other......................................................... (2) - (2) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. (55) 118 63 Provision for income taxes.................................... (1) (4) (5) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... (56) 114 58 Less: Distributions on preferred limited partner interests.... - - - -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ (56) $ 114 $ 58 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders.............................. $ (.19) $ .39 $ .20 ======== ======== ========
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS Twelve Weeks Ended June 16, 2000 -------------------------------- Lease Historical Repurchase Pro Forma ---------- -------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 605 $ 605 Food and beverage........................................... - 308 308 Other....................................................... - 73 73 -------- -------- -------- Total hotel property-level revenues....................... - 986 986 Rental income(1)............................................ 183 (156) 27 Net gains on property transactions.......................... 2 - 2 Equity in earnings of affiliates and other.................. 6 - 6 -------- -------- -------- Total revenues............................................ 191 830 1,021 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 138 138 Food and beverage........................................... - 218 218 Other departmental costs and deductions.................... - 229 229 Management fees and other................................... - 62 62 Other property-level expenses............................... 63 - 63 Depreciation and amortization............................... 75 - 75 -------- -------- -------- Total operating costs and expenses........................ 138 647 785 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 53 183 236 Minority interest............................................. (5) - (5) Corporate expenses............................................ (10) - (10) Interest expense.............................................. (104) (5) (109) Interest income............................................... 8 (1) 7 Other......................................................... (6) - (6) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. (64) 177 113 Provision for income taxes.................................... (2) (8) (10) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... (66) 169 103 Less: Distributions on preferred limited partner interests.... (5) - (5) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ (71) $ 169 $ 98 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders.............................. $ (.25) $ .60 $ .35 ======== ======== ======== Twelve Weeks Ended June 18, 1999 -------------------------------- Lease Historical Repurchase Pro Forma ---------- -------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 559 $ 559 Food and beverage........................................... - 277 277 Other....................................................... - 65 65 -------- -------- -------- Total hotel property-level revenues....................... - 901 901 Rental income(1)............................................ 187 (151) 36 Net gains on property transactions.......................... 4 - 4 Equity in earnings of affiliates and other.................. 4 - 4 -------- -------- -------- Total revenues............................................ 195 750 945 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 128 128 Food and beverage........................................... - 197 197 Other departmental costs and deductions..................... - 214 214 Management fees and other................................... - 52 52 Other property-level expenses............................... 62 - 62 Depreciation and amortization............................... 67 - 67 -------- -------- -------- Total operating costs and expenses........................ 129 591 720 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 66 159 225 Minority interest............................................. (7) - (7) Corporate expenses............................................ (8) - (8) Interest expense.............................................. (109) (5) (114) Interest income............................................... 8 (1) 7 Other......................................................... (4) - (4) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. (54) 153 99 Provision for income taxes.................................... (1) (8) (9) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... (55) 145 90 Less: Distributions on preferred limited partner interests.... - - - -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ (55) $ 145 $ 90 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders.............................. $ (.19) $ .50 $ .31 ======== ======== ========
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS Twelve Weeks Ended September 8, 2000 ------------------------------------ Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 554 $ 554 Food and beverage........................................... - 239 239 Other....................................................... - 61 61 -------- -------- -------- Total hotel property-level revenues....................... - 854 854 Rental income(1)............................................ 224 (200) 24 Net gains on property transactions.......................... 1 - 1 Equity in earnings of affiliates and other.................. 5 - 5 -------- -------- -------- Total revenues............................................ 230 654 884 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 137 137 Food and beverage........................................... - 193 193 Other departmental costs and deductions..................... - 222 222 Management fees and other................................... - 47 47 Other property-level expenses............................... 66 - 66 Depreciation and amortization............................... 75 - 75 -------- -------- -------- Total operating costs and expenses........................ 141 599 740 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 89 55 144 Minority interest............................................. (1) - (1) Corporate expenses............................................ (7) - (7) Interest expense.............................................. (107) (5) (112) Interest income............................................... 9 (1) 8 Other......................................................... - - - -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. (17) 49 32 Provision for income taxes.................................... (4) 7 3 -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... (21) 56 35 Less: Distributions on preferred limited partner interests.... (5) - (5) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS................................................. $ (26) $ 56 $ 30 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders............................. $ (.09) $ .20 $ .11 ======== ======== ======== Twelve Weeks Ended September 10, 1999 ------------------------------------ Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 502 $ 502 Food and beverage........................................... - 223 223 Other....................................................... - 58 58 -------- -------- -------- Total hotel property-level revenues....................... - 783 783 Rental income(1)............................................ 188 (168) 20 Net gains on property transactions.......................... - - - Equity in earnings of affiliates and other.................. 5 - 5 -------- -------- -------- Total revenues............................................ 193 615 808 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 130 130 Food and beverage........................................... - 178 178 Other departmental costs and deductions..................... - 204 204 Management fees and other................................... - 42 42 Other property-level expenses............................... 62 - 62 Depreciation and amortization............................... 68 - 68 -------- -------- -------- Total operating costs and expenses........................ 130 554 684 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 63 61 124 Minority interest............................................. (2) - (2) Corporate expenses............................................ (5) - (5) Interest expense.............................................. (108) (5) (113) Interest income............................................... 10 (1) 9 Other......................................................... (1) - (1) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. (43) 55 12 Provision for income taxes.................................... (1) 7 6 -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... (44) 62 18 Less: Distributions on preferred limited partner interests.... (1) - (1) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ (45) $ 62 $ 17 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders.............................. $ (.15) $ .21 $ .06 ======== ======== ========
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS Sixteen Weeks Ended December 31, 2000 ------------------------------------- Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 770 $ 770 Food and beverage........................................... - 420 420 Other....................................................... - 90 90 -------- -------- -------- Total hotel property-level revenues....................... - 1,280 1,280 Rental income(1)............................................ 810 (741) 69 Net gains on property transactions.......................... 2 - 2 Equity in earnings of affiliates and other.................. 24 - 24 -------- -------- -------- Total revenues............................................ 836 539 1,375 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 182 182 Food and beverage........................................... - 300 300 Other departmental costs and deductions..................... - 302 302 Management fees and other................................... - 76 76 Other property-level expenses............................... 84 - 84 Depreciation and amortization............................... 107 - 107 -------- -------- -------- Total operating costs and expenses........................ 191 860 1,051 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 645 (321) 324 Minority interest............................................. (16) - (16) Corporate expenses............................................ (15) - (15) Lease repurchase expense...................................... (207) 207 - Interest expense.............................................. (151) (1) (152) Interest income............................................... 14 (1) 13 Other......................................................... (11) - (11) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES............................. 259 (116) 143 Benefit for income taxes...................................... 105 (86) 19 -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... 364 (202) 162 Less: Distributions on preferred limited partner interests.... (5) - (5) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS........................................ $ 359 $ (202) $ 157 ======== ======== ======== Basic earnings (loss) per unit before extraordinary items available to common unitholders........................ $ 1.26 $ (.71) $ .55 ======== ======== ======== Sixteen Weeks Ended December 31, 1999 ------------------------------------- Lease Historical Repurchase Pro Forma ---------- ---------- ---------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 712 $ 712 Food and beverage........................................... - 390 390 Other....................................................... - 86 86 -------- -------- ----- Total hotel property-level revenues....................... - 1,188 1,188 Rental income(1)............................................ 749 (676) 73 Net gains on property transactions.......................... 12 - 12 Equity in earnings of affiliates and other.................. 4 - 4 -------- -------- ---- Total revenues............................................ 765 512 1,277 -------- -------- ----- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 171 171 Food and beverage........................................... - 283 283 Other departmental costs and deductions..................... - 285 285 Management fees and other................................... - 66 66 Other property-level expenses............................... 82 - 82 Depreciation and amortization............................... 90 - 90 -------- -------- ----- Total operating costs and expenses........................ 172 805 977 -------- -------- ----- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 593 (293) 300 Minority interest............................................. (8) - (8) Corporate expenses............................................ (14) - (14) Loss on litigation settlement................................. (40) - (40) Interest expense.............................................. (144) (5) (149) Interest income............................................... 13 (1) 12 Other......................................................... (8) - (8) -------- --------- ----- INCOME (LOSS) BEFORE INCOME TAXES............................. 392 (299) 93 Benefit for income taxes...................................... 19 (5) 14 -------- -------- ----- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS...................... 411 (304) 107 Less: Distributions on preferred limited partner interests.... (5) - (5) -------- -------- ----- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ 406 $ (304) $102 ======== ======== ===== Basic earnings (loss) per unit before extraordinary items available to common unitholders........................ $ 1.40 $ (1.05) $.35 ======== ======== =====
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS Fiscal Year Ended December 31, 2000 ------------------------------------- Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 2,441 $ 2,441 Food and beverage........................................... - 1,217 1,217 Other....................................................... - 288 288 -------- -------- -------- Total hotel property-level revenues....................... - 3,946 3,946 Rental income(1)............................................ 1,390 (1,239) 151 Net gains on property transactions.......................... 6 - 6 Equity in earnings of affiliates and other.................. 37 - 37 -------- -------- -------- Total revenues............................................ 1,433 2,707 4,140 -------- -------- -------- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 578 578 Food and beverage........................................... - 894 894 Other departmental costs and deductions..................... - 953 953 Management fees and other................................... - 236 236 Other property-level expenses............................... 272 - 272 Depreciation and amortization............................... 331 - 331 -------- -------- -------- Total operating costs and expenses........................ 603 2,661 3,264 -------- -------- -------- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 830 46 876 Minority interest............................................. (27) - (27) Corporate expenses............................................ (42) - (42) Lease repurchase expense...................................... (207) 207 - Interest expense.............................................. (466) (16) (482) Interest income............................................... 40 (4) 36 Other......................................................... (23) - (23) -------- -------- -------- INCOME BEFORE INCOME TAXES.................................... 105 233 338 Benefit (provision) for income taxes.......................... 98 (91) 7 -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEMS............................. 203 142 345 Less: Distributions on preferred limited partner interests.... (20) - (20) -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ 183 $ 142 $ 325 ======== ======== ======== Basic earnings per unit before extraordinary items available to common unitholders.............................. $ .64 $ .50 $ 1.14 ======== ======== ======== Fiscal Year Ended December 31, 1999 ------------------------------------- Lease Historical Repurchase Pro Forma ---------- ---------- --------- (in millions, except per unit amounts) REVENUE Hotel property-level revenues Rooms....................................................... $ - $ 2,267 $ 2,267 Food and beverage........................................... - 1,129 1,129 Other....................................................... - 263 263 -------- -------- ----- Total hotel property-level revenues....................... - 3,659 3,659 Rental income(1)............................................ 1,295 (1,130) 165 Net gains on property transactions.......................... 28 - 28 Equity in earnings of affiliates and other.................. 14 - 14 -------- -------- ---- Total revenues............................................ 1,337 2,529 3,866 -------- -------- ----- OPERATING COSTS AND EXPENSES Hotel operating expenses Rooms....................................................... - 542 542 Food and beverage........................................... - 832 832 Other departmental costs and deductions..................... - 895 895 Management fees and other................................... - 209 209 Other property-level expenses............................... 264 - 264 Depreciation and amortization............................... 293 - 293 -------- -------- ----- Total operating costs and expenses........................ 557 2,478 3,035 -------- -------- ----- OPERATING PROFIT BEFORE MINORITY INTEREST, CORPORATE EXPENSES, INTEREST, AND OTHER.......................................... 780 51 831 Minority interest............................................. (21) - (21) Corporate expenses............................................ (34) - (34) Loss on litigation settlement................................. (40) - (40) Interest expense.............................................. (469) (20) (489) Interest income............................................... 39 (4) 35 Other......................................................... (15) - (15) -------- -------- ----- INCOME BEFORE INCOME TAXES.................................... 240 27 267 Benefit (provision) for income taxes.......................... 16 (10) 6 -------- -------- ----- INCOME BEFORE EXTRAORDINARY ITEMS............................. 256 17 273 Less: Distributions on preferred limited partner interests.... (6) - (6) -------- -------- ----- INCOME BEFORE EXTRAORDINARY ITEMS AVAILABLE TO COMMON UNITHOLDERS.................................................. $ 250 $ 17 $ 267 ======== ======== ===== Basic earnings per unit before extraordinary items available to common unitholders.............................. $ .86 $ .06 $ .92 ======== ======== ===== - ------------- (1) In December 1999, the Company retroactively changed its method of accounting for contingent rental revenues to conform to the Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 101. As a result, contingent rental revenue is deferred on the balance sheet until certain revenue thresholds are realized. SAB No. 101 has no impact on full-year 2000 and 1999 revenues, net income, or earnings per share because all rental revenues considered contingent under SAB No. 101 were earned as of December 31, 2000 and 1999. The change in accounting principle has no effect prior to 1999 because percentage rent relates to rental income on our leases, which began in 1999.