-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J+6w6P/MJ1OoWtiA2a93aO9YeC6Vj4WzcF0FuwoO7zjJ3E8XdgZKJ974LOmcZiZ3 Q0K+7NN7b6VCcLg6UEMlpw== 0000928385-02-001995.txt : 20020515 0000928385-02-001995.hdr.sgml : 20020515 ACCESSION NUMBER: 0000928385-02-001995 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERISTAR HOSPITALITY CORP CENTRAL INDEX KEY: 0001012967 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752648842 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11903 FILM NUMBER: 02648197 BUSINESS ADDRESS: STREET 1: 1010 WISCONSIN AVENUE N W CITY: WASHINGTON STATE: DC ZIP: 20007 BUSINESS PHONE: 9725506800 MAIL ADDRESS: STREET 1: 1010 WISCONSIN AVENUE N W CITY: WASHINGTON STATE: DC ZIP: 20007 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL HOSPITALITY CORP DATE OF NAME CHANGE: 19960428 10-Q 1 d10q.txt 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2002 or [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to COMMISSION FILE NUMBER 1-11903 MERISTAR HOSPITALITY CORPORATION (Exact name of Registrant as specified in its Charter) MARYLAND 75-2648842 (State of Incorporation) (IRS Employer Identification No.) 1010 WISCONSIN AVENUE, N.W. WASHINGTON, D.C. 20017 (Address of Principal Executive Offices)(Zip Code) 202-295-1000 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period for which the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of Common Stock, par value $0.01 per share, outstanding at May 13, 2002 was 44,861,259. MERISTAR HOSPITALITY CORPORATION INDEX Page ---- PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets - March 31, 2002 and December 31, 2001 3 Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) - Three months ended March 31, 2002 and 2001 4 Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2002 and 2001 6 Notes to Condensed Consolidated Financial Statements 7 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 20 PART II. OTHER INFORMATION 22 ITEM 5: OTHER INFORMATION 22 ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 22 2 PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS MERISTAR HOSPITALITY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, 2002 December 31, 2001 -------------- ----------------- (unaudited) Assets Investments in hotel properties $3,195,949 $3,183,677 Accumulated depreciation (425,765) (397,380) ---------- ---------- 2,770,184 2,786,297 Cash and cash equivalents 25,974 23,448 Accounts receivable, net of allowance for doubtful accounts of $964 and $973 59,432 47,178 Prepaid expenses and other 16,672 18,306 Notes receivable from MeriStar Hotels 58,069 36,000 Due from MeriStar Hotels - 8,877 Investments in affiliates 41,714 41,714 Restricted cash 18,352 21,304 Intangible assets, net of accumulated amortization of $12,140 and $11,224 26,126 26,736 ---------- ---------- $3,016,523 $3,009,860 ========== ========== Liabilities, Minority Interests and Stockholders' Equity Accounts payable, accrued expenses and other liabilities $ 129,459 $ 129,786 Accrued interest 41,309 45,009 Due to MeriStar Hotels 3,968 - Income taxes payable 93 350 Dividends and distributions payable 447 1,090 Deferred income taxes 8,714 9,031 Interest rate swaps 8,703 12,100 Long-term debt 1,713,778 1,700,134 ---------- ---------- Total liabilities 1,906,471 1,897,500 ---------- ---------- Minority interests 89,028 89,797 Stockholders' equity: Preferred stock, par value $0.01 per share Authorized - 100,000 shares - - Common stock, par value $0.01 per share Authorized - 250,000 shares Issued - 48,962 and 48,761 shares 489 487 Additional paid-in capital 1,186,616 1,183,463 Retained earnings (deficit) (78,664) (68,241) Accumulated other comprehensive loss (7,245) (12,503) Unearned stock-based compensation (4,407) (5,287) Less common stock held in treasury - 4,307 and 4,237 shares (75,765) (75,356) ---------- ---------- Total stockholders' equity 1,021,024 1,022,563 ---------- ---------- $3,016,523 $3,009,860 ========== ==========
See accompanying notes to condensed consolidated financial statements. 3 MERISTAR HOSPITALITY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended March 31, --------- 2002 2001 ---- ---- Revenue: Hotel operations: Rooms $170,548 $200,380 Food and beverage 62,065 71,291 Other operating departments 19,108 22,471 Participating lease revenue - 3,784 Office rental and other revenues 4,943 4,758 -------- -------- Total revenue 256,664 302,684 -------- -------- Hotel operating expenses by department: Rooms 38,935 45,722 Food and beverage 44,405 51,404 Other operating departments 10,694 11,570 Office rental, parking and other operating expenses 814 937 Undistributed operating expenses: Administrative and general 43,471 44,917 Property operating costs 37,382 42,699 Property taxes, insurance and other 20,061 18,387 Depreciation and amortization 30,901 29,697 Write-off of deferred financing costs 1,529 - Loss on fair value of non-hedging derivatives 4,735 - Write down of investment in STS Hotel Net - 2,112 Swap termination costs - 9,297 -------- -------- Total operating expenses 232,927 256,742 -------- -------- Net operating income 23,737 45,942 Interest expense, net 34,588 30,229 -------- -------- Income (loss) before minority interests, income tax expense (benefit), loss on sale of assets and extraordinary loss (10,851) 15,713 Minority interests (627) 1,104 -------- -------- Income (loss) before income tax expense (benefit), loss on sale of assets and extraordinary loss (10,224) 14,609 Income tax expense (benefit) (281) 511 -------- -------- Income (loss) before loss on sale of assets and extraordinary loss (9,943) 14,098 Loss on sale of assets, net of tax effect of ($22) - (1,059) Extraordinary loss on early extinguishments of debt, net of tax effect of ($19) - (1,224) -------- -------- Net income (loss) $ (9,943) $ 11,815 ======== ========
4
Three months ended March 31, -------- 2002 2001 ---- ---- Other comprehensive income (loss): Net income (loss) $ (9,943) $ 11,815 Foreign currency translation adjustment 12 (974) Derivative instruments transition adjustment - (2,842) Change in valuation of derivative instruments 511 (4,793) -------- -------- Comprehensive income (loss) $ (9,420) $ 3,206 ======== ======== Earnings per share: Basic: Income (loss) before extraordinary loss $ (0.22) $ 0.29 Extraordinary loss - (0.03) -------- -------- Net income (loss) $ (0.22) $ 0.26 ======== ======== Diluted: Income (loss) before extraordinary loss $ (0.22) $ 0.28 Extraordinary loss - (0.03) -------- -------- Net income (loss) $ (0.22) $ 0.25 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 MERISTAR HOSPITALITY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (IN THOUSANDS)
Three months ended March 31, -------- 2002 2001 ---- ---- Operating activities: Net income (loss) $ (9,943) $ 11,815 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 30,901 29,697 Loss on fair value of non-hedging derivatives 4,735 - Write-off of deferred financing costs 1,529 Loss on sale of assets, before tax effect - 1,081 Write down of investment in STS Hotel Net - 2,112 Extraordinary loss on early extinguishment of debt, before tax effect - 1,243 Minority interests (627) 1,104 Amortization of unearned stock based compensation 880 797 Interest rate swaps marked to fair value (2,887) - Deferred income taxes (317) 164 Changes in operating assets and liabilities: Accounts receivable, net (12,254) (7,173) Prepaid expenses and other 1,634 (2,580) Due to/from MeriStar Hotels (224) 11,512 Accounts payable, accrued expenses and other liabilities (328) (4,788) Accrued interest (3,700) 2,592 Income taxes payable (257) 208 --------- -------- Net cash provided by operating activities 9,142 47,784 --------- -------- Investing activities: Investment in hotel properties (12,292) (8,743) Proceeds from disposition of assets - 7,274 Hotel operating cash received in lease conversions - 3,778 Notes receivable from MeriStar Hotels (9,000) (36,000) Change in restricted cash 2,952 1,697 --------- -------- Net cash used in investing activities (18,340) (31,994) --------- -------- Financing activities: Deferred financing costs (3,131) (9,322) Proceeds from issuance of long-term debt 234,545 578,379 Principal payments on long-term debt (220,901) (541,752) Proceeds from issuance of common stock, net 3,155 280 Purchase of treasury stock (409) - Dividends paid to stockholders (475) (22,669) Distributions to minority investors (789) (2,190) --------- -------- Net cash provided by financing activities 11,995 2,726 --------- -------- Effect of exchange rate changes on cash and cash equivalents (271) 216 --------- -------- Net increase in cash and cash equivalents 2,526 18,732 Cash and cash equivalents, beginning of period 23,448 250 --------- -------- Cash and cash equivalents, end of period $ 25,974 $ 18,982 ========= ========
See accompanying notes to condensed consolidated financial statements. 6 MERISTAR HOSPITALITY CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1. ORGANIZATION We own a portfolio of upscale, full-service hotels in the United States and Canada. Our portfolio is diversified by franchise and brand affiliations. As of March 31, 2002, we owned 112 hotels, with 28,653 rooms, all of which are leased by our taxable subsidiaries and managed by MeriStar Hotels & Resorts, Inc. We were created on August 3, 1998, when American General Hospitality Corporation, a corporation operating as a real estate investment trust, and its associated entities merged with CapStar Hotel Company and its associated entities. In connection with the merger between CapStar and American General, we created MeriStar Hotels, a separate publicly traded company, to be the lessee and manager of nearly all of our hotels. On January 1, 2001, changes to the federal tax laws governing real estate investment trusts became effective, Those changes are commonly known as the REIT Modernization Act, or RMA. The RMA permits real estate investment trusts to create taxable subsidiaries that are subject to taxation similar to subchapter C-Corporations. Because of the RMA, we have created a number of these taxable subsidiaries to lease our real property. The RMA prohibits our taxable subsidiaries from engaging in the following activities: . Managing the properties they lease (our taxable subsidiaries must enter into an "arms length" management agreement with an independent third-party manager that is actively involved in the trade or business of hotel management and manages properties on behalf of other owners), . Leasing a property that contains gambling operations; and . Owning a brand or franchise. We believe establishing taxable subsidiaries to lease the properties we own provides a more efficient alignment of and ability to capture the economic interests of property ownership. Under the prior lease structure with MeriStar Hotels, we received lease payments based on the revenues generated by the properties; MeriStar Hotels, however, operated the properties in order to maximize net operating income from the properties. This inconsistency could potentially result in the properties being operated in a way that did not maximize revenues. With the assignment of the leases from MeriStar Hotels to our taxable subsidiaries and the execution of the new management agreements (as described below), we gained the economic risks and rewards usually associated with ownership of real estate, and property revenues became the basis for MeriStar Hotels' management fees. Subsidiaries of MeriStar Hotels assigned the participating leases to our wholly-owned taxable subsidiaries as of January 1, 2001. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels to manage our hotels. Under these management agreements, the taxable subsidiaries pay a management fee to MeriStar Hotels for each property. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements have been structured to substantially mirror the economics of the former leases. The assignment of the leases from MeriStar Hotels to our taxable subsidiaries did not result in any cash consideration exchanged among the parties except for the transfer of hotel operating assets and liabilities to the taxable subsidiaries. Under the new management agreements, the base management fee is 2.5% of total hotel revenue plus incentives payments, based on meeting performance thresholds, that could total up to 1.5% of total hotel revenue. The agreements have an initial term of 10 years with three renewal periods of five years each at the option of MeriStar Hotels, subject to some exceptions. Because these leases have been assigned to our taxable subsidiaries, we now bear the operating risk associated with our hotels. During 2001, we acquired the eight leases from Prime Hospitality for our hotels that were previously leased and managed by Prime. These hotels are now managed by MeriStar Hotels under management agreements identical to our other management agreements with MeriStar Hotels, except that the term on four of the agreements is one year with additional one- year renewal periods. 7 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES We have prepared these unaudited interim financial statements according to the rules and regulations of the Securities and Exchange Commission. We have omitted certain information and footnote disclosures that are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These interim financial statements should be read in conjunction with the financial statements, accompanying notes and other information included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2001. Certain 2001 amounts have been reclassified to conform to the 2002 presentation. In our opinion, the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the financial condition and results of operations and cash flows for the periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" requires a public entity to report selected information about operating segments in financial reports issued to shareholders. Based on the guidance provided in the standard, we have determined that our business is conducted in one reportable segment. The standard also establishes requirements for related disclosures about products and services, geographic areas and major customers. Revenues for Canadian operations totaled $4,525 and $5,522 for the three months ended March 31, 2002 and 2001, respectively. Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. FAS No. 137 and No. 138 amended certain provisions of FAS No. 133. We adopted these accounting pronouncements on January 1, 2001. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows. We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows, and by evaluating hedging opportunities. We do not enter into derivative instruments for any purpose other than cash flow hedging purposes. Our interest rate swap agreements were initially designated as hedges against changes in future cash flows associated with specific variable rate debt obligations. As of March 31, 2002, we had three swap agreements with notional amounts totaling $300 million. All of these swap agreements have been converted to non-hedging derivatives due to our repayment of the floating-rate borrowings they originally hedged and they are currently being marked to market through our statement of operations. We have interest rate exposure going forward as the change in fair value of our non-hedging derivatives will have an impact on our statement of operations. The interest rate swap agreements are reflected at fair value in our consolidated balance sheet as of March 31, 2002. For more information regarding our interest rate hedging activities, see "Quantitative and Qualitative Disclosures about Market Risk." In August 2001, the Financial Accounting Standards Board issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121. We did not have any asset sales or impairments in the first three months of 2002; therefore, SFAS No. 144 has no effect on our financial statement for that period. In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 143 "Accounting for Asset Retirement Obligations." These new standards have no effect on our financial statements for the three months ended March 31, 2002. 3. NOTE RECEIVABLE FROM LESSEE We may lend MeriStar Hotels up to $50,000 for general corporate purposes under a revolving credit agreement. The 8 interest rate on this credit agreement is 650 basis points over the 30-day London Interbank Offered Rate. As of March 31, 2002, $45,000 was outstanding under this revolving credit agreement. MeriStar Hotels also issued us a term note effective January 1, 2002. This $13,069 term note refinances outstanding accounts payable MeriStar Hotels owed to us. The term note bears interest at 650 basis points over the 30-day LIBOR. The maturity date is the same as that of the revolving credit agreement. 4. LONG-TERM DEBT Long-term debt consisted of the following: March 31, 2002 December 31, 2001 -------------- ----------------- Senior unsecured notes.............. $ 950,000 $ 750,000 Revolving credit facility........... 43,000 224,000 Secured facility.................... 330,000 330,000 Subordinated notes.................. 205,000 205,000 Convertible notes................... 154,300 154,300 Mortgage debt and other............. 51,687 52,335 Unamortized issue discount.......... (20,209) (15,501) ---------- ---------- $1,713,778 $1,700,134 ========== ========== As of March 31, 2002 aggregate future maturities of the above obligations are as follows: 2002............. $ 14,057 2003............. 51,589 2004............. 171,168 2005............. 9,265 2006............. 10,006 Thereafter....... 1,457,693 --------- $1,713,778 ========== In February 2002, we issued an additional $200,000 ($196,250, net of discount) aggregate principal amount of 9.13% senior unsecured notes due 2011. We used the proceeds from the issuance of these notes to repay approximately $195,000 of the outstanding balance under our revolving credit agreement. As a result of this financing, we redesignated some swap agreements as non-hedging derivatives. We recognized a $4,735 loss when this amount was transferred out of accumulated other comprehensive income because the debt being hedged was repaid. In February 2002, we amended our revolving credit agreement. The amendment allows us to reduce the revolving commitments to below $300,000. In March 2002, we reduced the borrowing capacity on our revolving credit agreement from $310,000 to $150,000. We recognized a $1,529 loss due to the write-off of deferred financing costs related to reducing the borrowing capacity of our revolving credit agreement. On January 26, 2001, we issued $300,000 aggregate principal amount of 9.0% senior notes due 2008 and $200,000 of 9.13% senior notes due 2011. The notes are unsecured obligations of certain subsidiaries of ours and we guarantee payment of principal and interest on the notes. The net proceeds from the sale of $492,000 were used to repay amounts outstanding under the credit facility and to make payments to terminate certain swap agreements that hedged variable interest rates of the loans that were repaid. The repayments of term loans under the credit facility resulted in an extraordinary loss of $1,243 ($1,224, net of tax) from the write-off of deferred financing costs. Also, in conjunction with the sales of the senior unsecured notes, we terminated three swap agreements with notional amounts totaling $300,000. These swap agreements were designated to the credit facility term loans that were repaid with the proceeds from the sale of these notes. We made payments totaling $9,297 to terminate these swap agreements. 5. DIVIDENDS AND DISTRIBUTIONS PAYABLE On March 20, 2002, we declared a dividend for the three months ended March 31, 2002 of $0.01 per share of common stock and per unit of limited partnership interest in our subsidiary operating partnership. We paid the dividend on April 30, 2002. 9 6. EARNINGS PER SHARE The following table presents the computation of basic and diluted earnings per share:
Three months ended ------------------ March 31, --------- 2002 2001 ---- ---- BASIC EARNINGS (LOSS) PER SHARE COMPUTAION: Income (loss) before extraordinary loss $ (9,943) $ 13,039 Dividends paid on unvested restricted stock (2) (183) -------- -------- Income (loss) available to common stockholders (9,945) 12,856 Weighted average number of shares of common stock outstanding 44,553 44,494 -------- -------- Basic earnings (loss) per share before extraordinary loss $ (0.22) $ 0.29 ======== ======== DILUTED EARNINGS (LOSS) PER SHARE COMPUTATION: Income (loss) available to common Stockholders $ (9,945) $ 12,856 Minority interest, net of tax - 933 -------- -------- Adjusted net income (loss) $ (9,945) $ 13,789 ======== ======== Weighted average number of shares of Common stock outstanding 44,553 44,494 Common stock equivalents: Operating partnership units - 3,928 Stock options - 322 -------- -------- Total weighted average number of diluted shares of Common Stock outstanding 44,553 48,744 ======== ======== Diluted earnings (loss) per share before extraordinary loss $ (0.22) $ 0.28 ======== ========
Stock options and operating partnership units are not included in the computation of diluted earnings (loss) per share when their effect is antidilutive. 10 7. SUPPLEMENTAL CASH FLOW INFORMATION
Three months ended March 31, ---------------------------- 2002 2001 ---- ---- Cash paid for interest and income taxes: Interest, net of capitalized interest of $919 and $2,005 respectively ............... $ 38,288 $ 27,637 Income taxes ............................... 93 142 Non-cash investing and financing activities: Conversion of OP Units to Common Stock - 2,640 Operating assets received and liabilities assumed from lease conversion: Accounts receivable - 47,305 Prepaid expenses and other - 12,874 Furniture and fixtures, net - 152 Investment in affiliates, net - 1,629 --------- --------- Total operating assets received - 61,960 ========= ========= Accounts payable and accrued expenses - 65,706 Long-term debt - 32 --------- --------- Total liabilities acquired - 65,738 ========= =========
8. STOCK-BASED COMPENSATION As of March 31, 2002, we have granted 479,000 shares of restricted stock to employees. This restricted stock vests ratably over three-year or five-year periods. The issuance of restricted stock has resulted in $4,407 of unearned stock-based compensation recorded as a reduction to stockholders' equity on our condensed consolidated balance sheet as of March 31, 2002. As of March 31, 2002, we have granted 737,500 Profits-Only OP Units, or POPs, to some of our employees pursuant to our POPs Plan. These POPs are fixed awards and vest ratably over three years. 9. RESTRUCTURING EXPENSES During 2001, we incurred a restructuring charge of $1,080 in connection with operational changes at our corporate headquarters. The restructuring included eliminating seven corporate staff positions and office space no longer needed under the new structure. During 2002, we applied $52 of lease termination costs against the restructuring reserve. Approximately $340 of the restructuring accrual remains at March 31, 2002. 10. DISPOSITIONS On March 21, 2001, we sold one hotel and received proceeds of $7,274. The sale resulted in a loss of $1,081 ($1,059, net of tax). 11. CONSOLIDATING FINANCIAL INFORMATION We and certain subsidiaries of MeriStar Hospitality Operating Partnership, L.P. (MHOP), our subsidiary operating partnership, are guarantors of senior unsecured notes issued by MHOP. MHOP and certain of its subsidiaries are guarantors of our unsecured subordinated notes. We own a one percent general partner interest in MHOP and MeriStar LP, Inc., our wholly-owned subsidiary, owns approximately a 90 percent limited partner interest in MHOP. All guarantees 11 are full and unconditional, and joint and several. Exhibit 99 to this Quarterly Report on Form 10-Q presents supplementary consolidating information for MHOP, including each of the guarantor subsidiaries. This schedule presents MHOP consolidating balance sheets as of March 31, 2002 and 2001, and consolidating statements of operations and cash flows for each of the three months ended March 31, 2002 and 2001. 12. SUBSEQUENT EVENT On May 2, 2002, MeriStar Hotels, the manager of our hotels, announced an agreement to merge with Interstate Hotels Corporation, or Interstate. The transaction will be a stock-for-stock merger of Interstate into MeriStar Hotels in which Interstate stockholders will receive 4.6 shares of common stock for each share of Interstate stock outstanding. Holders of MeriStar Hotels common stock and operating partnership units will continue to hold their stock and units following the merger. The combined company will operate approximately 86,000 rooms in 412 hotels. MeriStar Hotels expects the transaction to close in the third quarter of 2002. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL We own a portfolio of upscale, full-service hotels in the United States and Canada. Our portfolio is diversified by franchise and brand affiliations. As of March 31, 2002, we owned 112 hotels, with 28,653 rooms, all of which were leased by our taxable subsidiaries and managed by MeriStar Hotels & Resorts, Inc. We were created on August 3, 1998, when American General Hospitality Corporation, a corporation operating as a real estate investment trust, and its associated entities merged with CapStar Hotel Company and its associated entities. In connection with the merger between CapStar and American General, we created MeriStar Hotels, a separate publicly traded company, to be the lessee and manager of nearly all of our hotels. On January 1, 2001, changes to the federal tax laws governing REITs became effective. Those changes are commonly known as the REIT Modernization Act, or RMA. The RMA permits real estate investment trusts to create taxable subsidiaries that are subject to taxation similar to subchapter C-Corporations. We have created a number of these taxable subsidiaries to lease our real property. The RMA prohibits our taxable subsidiaries from engaging in the following activities: . Managing the properties they lease (our taxable subsidiaries must enter into an "arms length" management agreement with an independent third-party manager actively involved in the trade or business of hotel management and manages properties on behalf of other owners); . Leasing a property that contains gambling operations; and . Owning a brand or franchise. We believe establishing taxable subsidiaries to lease the properties we own provides a more efficient alignment of and ability to capture the economic interests of property ownership. Under the prior lease structure with MeriStar Hotels, we received lease payments based on the revenues generated by the properties; MeriStar Hotels, however, operated the properties in order to maximize net operating income from the properties. This inconsistency could potentially result in the properties being operated in a way that did not maximize revenues. With the assignment of the leases from MeriStar Hotels to our taxable subsidiaries and the execution of the new management agreements (as describe below), we gained the economic risks and rewards usually associated with ownership of real estate, and property revenues became the basis for MeriStar Hotels' management fees. Subsidiaries of MeriStar Hotels assigned the participating leases to our wholly-owned taxable subsidiaries as of January 1, 2001. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels to manage our hotels. Under these management agreements, the taxable subsidiaries pay a management fee to MeriStar Hotels for each property. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements have been structured to substantially mirror the economics of the former leases. The assignment of the leases from MeriStar Hotels to our taxable subsidiaries did not result in any cash consideration exchanged among the parties except for the transfer of hotel operating assets and liabilities to the taxable subsidiaries. Under the new management agreements, the base management fee is 2.5% of total hotel revenue. MeriStar Hotels can also earn incentive management fees, based on meeting performance thresholds, of up to 1.5% of total hotel revenue. The agreements have an initial term of 10 years with three renewal periods of five years each at the option of MeriStar Hotels, subject to some exceptions. Because these leases have been assigned to our taxable subsidiaries, we now bear the operating risk associated with our hotels. During 2001, we acquired the eight leases from Prime Hospitality for our hotels that were previously leased and managed by Prime. These hotels are now managed by MeriStar Hotels under management agreements identical to our other management agreements with MeriStar Hotels, except that the term on four of the agreements is one year with additional one- year renewal periods. Business Summary Our results continue to reflect a cautious economy which has caused declines in business and leisure travel demand 13 nationwide. Our group business at our hotels improved during the first quarter, but our transient business continues to be significantly lower than prior to the terrorist attacks on September 11, 2001, and also lower than our internal projections for 2002. Overall, our occupancies were ahead of our internal plan for the quarter, but our average daily rate was lower than we projected. We have continued to work with MeriStar Hotels, the manager of our hotels to focus on cost reduction and control measures at our hotels. We expect year-over-year performance measures to improve in the second half of 2002 when the economy is expected to gain momentum. The September 11, 2001 terrorist attacks have had a dramatic effect on the insurance and reinsurance industries. Many companies are being subject to nonrenewal or cancellations of insurance polices, or renewals of existing coverage with extreme price increases. Our total annual property and casualty insurance premiums are approximately $25.0 million under our current policies. Also our secured facility requires our property insurance carrier to be rated AA or better by Standard & Poors. Our manager, MeriStar Hotels, is responsible for securing property insurance and is in the process of renewing this coverage. As part of that process, they intend to attempt to obtain coverage from a carrier or carriers that are appropriately rated by S&P. If we are unable to obtain insurance that meets our debt covenant requirements and if we are unable to amend or waive those covenants, it could have a material adverse effect on our business. At our insurance policy renewals in mid-2002, we may be subject to restrictions as compared to our current coverages, price increases, or a combination of both restrictions and increases. Critical Accounting Policies Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to the impairment of long-lived assets and the recording of certain accrued liabilities. Some of our estimates are material to the financial statements. These estimates are therefore particularly sensitive as future events could cause the actual results to be significantly different from our estimates. Our critical accounting policies are as follows: . Impairment of long-lived assets; . Estimating certain accrued liabilities; and . Determining the impact of future interest rate changes on our statement of operations. Impairment of long-lived assets Whenever events or changes in circumstances indicate that the carrying values of long-lived assets (including property and equipment and all intangibles) may be impaired, we perform an analysis to determine the recoverability of the asset's carrying value. The carrying value of the asset includes the original purchase price (net of depreciation) plus the value of all capital improvements (net of depreciation). We make estimates of the undiscounted cash flows from the expected future operations of the asset. If the analysis indicates that the carrying value is not recoverable from future cash flows, we write down the asset to estimated fair value and recognize an impairment loss. Any impairment losses we recognize are recorded as operating expenses. We did not recognize any impairment losses for the three months ended 2002 or 2001. Estimating certain accrued liabilities Estimates for certain accruals such as real and personal property taxes could have a material effect on our financial statements. Currently, we estimate real and personal property taxes based on a combination of preliminary estimates from state and local jurisdictions, and historical information. The assessed values of these properties could change significantly from the values or rates we use in our estimates. Property tax assessments are subject to periodic and often lengthy appeals. For example, in instances where a jurisdiction increases our assessed value, we frequently appeal that assessment. Similarly, when hotel operations are declining, we may appeal an assessment as too high if it is based on past operating results. These appeals of assessed values are subject to a potentially wide range of outcomes. As a result of the economic slowdown and events of September 11, 2001, we have filed a number of appeals for lower assessments. As of March 31, 2002, we had ongoing appeals in several jurisdictions with respect to more than 20 properties. We accrue for these liabilities based on what we believe is a reasonable judgment of the most likely outcome of the appeals. Based on our current estimate of the outcome, however, we do not expect to incur any additional expense even if all of our appeals proved unsuccessful. We cannot predict with certainty the outcome of these appeals, or their effect on our accruals for such items. Also, actual property tax expense could vary greatly from our estimates used for the current property tax accrual based on a change in the assessed value, a change in the tax rate, and/or a different outcome of the appeals process than we currently expect. Determining impact of future interest rate changes on our statement of operations SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires a company to recognize all derivatives as either assets or liabilities in the balance sheet and record those instruments at fair value. SFAS No. 137 and No. 138 amended certain provisions of SFAS No. 133. We adopted these accounting pronouncements effective January 14 1, 2001. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows. We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We do not enter into derivative instruments for any purpose other than cash flow hedging purposes. Our interest rate swap agreements were initially designated as hedges against changes in future cash flows associated with specific variable rate debt obligations. As of March 31, 2002, we had three swap agreements with notional amounts totaling $300 million. These swap agreements have been converted to non-hedging derivatives due to our repayment of the floating-rate borrowings they originally hedged and they are currently being marked to market through our statement of operations. We have interest rate exposure going forward as the change in fair value of our non-hedging derivatives will have an impact on our statement of operations. The fair value of swap agreements is $8,703 at March 31, 2002. For more information regarding our interest rate hedging activities, see "Quantitative and Qualitative Disclosures about Market Risk." FINANCIAL CONDITION MARCH 31, 2002 COMPARED WITH DECEMBER 31, 2001 Our total assets increased by $6.6 million to $3,016.5 million at March 31, 2002 from $3,009.9 million at December 31, 2001 primarily due to: . the $22.1 million increase in notes receivable from MeriStar Hotels is due primarily to the new $13.1 million term note and additional borrowing of $9.0 million by MeriStar Hotels; . capital expenditures of $12.3 million at the hotels; and . the $12.3 million increase in accounts receivable due to the improved occupancy since December 31, 2001; partially offset by . the decrease of $8.9 million in due from MeriStar Hotels primarily due to the $13.1 million term note; and . depreciation on hotel assets of $28.4 million. Total liabilities increased by $9.0 million to $1,906.5 million at March 31, 2002 from $1,897.5 million at December 31, 2001 due mainly to: . net borrowings of long-term debt of $13.7 million; and . a $4.0 million increase in due to MeriStar Hotels; partially offset by . a $3.7 million decrease in accrued interest due to the payment of interest on several senior secured notes; and . a $3.4 million decrease in market value of our derivative instruments. Long-term debt increased by $13.7 million to $1,713.8 million at March 31, 2002 from $1,700.1 million at December 31, 2001 due primarily to: . $200 million ($196.2 million, net of discount) in senior unsecured notes issued in February, partially offset by . $181.0 million of net repayments on our revolving credit facility using proceeds of the issuance of senior unsecured notes in February and cash generated by operations. Stockholders' equity decreased $1.6 million to $1,021.0 million at December 31, 2001 from $1,022.6 million at December 31, 2001 due primarily to: . the $9.9 million of net loss for the first quarter of 2002; partially offset by . a $5.3 million decrease in accumulated other comprehensive loss due mainly to the conversion of our swap agreements to non-hedging derivatives; and . $3.1 million of exercised stock options. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2001 Until January 1, 2001, MeriStar Hotels leased substantially all of our hotels from us. Effective January 1, 2001, MeriStar Hotels assigned the hotel leases to our newly created, wholly-owned, taxable REIT 15 subsidiaries in turn, entered into management agreements with MeriStar Hotels to manage the hotels. As a result of this change in structure, our wholly-owned taxable REIT subsidiaries have assumed the operating risks and rewards of the hotels and now pay MeriStar Hotels a management fee to manage the hotels for us. For consolidated financial statement purposes, effective January 1, 2001, we now record all of the revenues and expenses of the hotels in our statements of operations, including the management fee paid to MeriStar Hotels. The following table provides our hotels' operating statistics on a same store basis for the three months ended March 31, 2002 and 2001. 2002 2001 Change ---------- ---------- -------- Revenue per available room $ 66.44 $ 81.05 (18.0)% Average daily rate $104.93 $115.56 (9.2)% Occupancy 63.3% 70.1% (9.7)% Overall, the slowing United States economy had a major negative effect on our hotels during the first quarter of 2002 compared to the first quarter of 2001. This effect is evidenced by a sharp reduction in business travel, as well as leisure travel. This is reflected in the 9.2% reduction in average daily rate and the 9.7% reduction in occupancy in the first quarter 2002 compared to 2001. Total revenue decreased $46.0 million to $256.7 million in 2002 from $302.7 million in 2001 primarily due to: . a $29.8 million decrease in room revenue due to a decrease in occupancy and average daily rate; . a $9.2 million decrease in food and beverage revenue due to a decrease in occupancy; and . a $3.8 million decrease in lease revenue due to us no longer leasing hotels in 2002. Total operating expenses decreased $23.8 million to $232.9 for the three months ended March 31, 2002 compared to $256.7 million for the same period in 2001 due primarily to: . a $6.8 million decrease in room expenses due to lower occupancy; . a $7.0 million decrease in food and beverage expenses due to lower occupancy; . a $5.3 million decrease in property operating costs due primarily to a $1.9 million decrease in energy costs and a $1.4 million decrease in management fees; . $9.3 million in swap termination fees during 2001; and . a $2.1 million write down of investment in STS Hotel Net during 2001; partially offset by . a $4.7 million loss on fair value of non-hedging derivatives in 2002 due to the repayment of debt that was originally hedged; and . a $1.5 million write-off of deferred costs due to the reduction in our borrowing capacity on our revolving credit agreement in 2002. Interest expense increased $4.4 million to $34.6 million for the three months ended March 31, 2002 compared to $30.2 million for the same period in 2001 due primarily to the issuance of $250 million of senior secured notes in December 2001 and $200 million of senior secured notes in February 2002 at fixed rates greater than the variable rate of the debt they repaid. In 2001, we paid down $300 million of our revolving credit facility. This resulted in an extraordinary loss of $1.2 million, net of tax. In the first quarter of 2001, we sold one hotel and received $7.3 million. This resulted in a loss on the sale of the asset of $1.1 million, net of tax. The National Association of Real Estate Investment Trusts or NAREIT defines Funds from Operations, or FFO as net income (loss), computed in accordance with generally accepted accounting principles, also called GAAP, excluding gains (or losses) from sales of properties, plus real estate related depreciation and amortization and after comparable adjustments for our portion of these items related to unconsolidated partnerships and joint ventures. Extraordinary items under GAAP are excluded from the calculation of FFO. We believe FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flow from operating activities, financing activities and investing activities, it provides investors with an indication of our ability to incur and service debt, to make capital expenditures and 16 to fund other cash needs. FFO does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income determined in accordance with GAAP as an indication of our financial performance or to cash flow from operating activities determined in accordance with GAAP as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. FFO may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions, and other commitments and uncertainties. We use recurring FFO as a measure of our performance. Recurring FFO represents FFO, as defined above, adjusted for significant non-recurring items. The following is a reconciliation between income (loss) before loss on the sale of assets and extraordinary items and recurring FFO on a diluted basis for the three months ended March 31, 2002 and 2001 (in thousands): 2002 2001 ---------- ---------- Income (loss) before loss on sale of assets and extraordinary items $(9,943) $14,098 Minority interest to common OP Unit Holders (768) 963 Interest on convertible debt 1,832 1,832 Hotel depreciation and amortization 28,651 28,619 Non-recurring items (net of minority interests and income taxes): Write down of deferred financing costs 1,490 - Loss on fair value of non-hedging derivatives 4,615 - Swap termination costs - 8,998 Write down of investment in STS Hotel Net - 2,046 ---------- ---------- Recurring FFO $25,877 $56,556 ========== ========== 17 LIQUIDITY AND CAPITAL RESOURCES Sources of Cash We generated $9.1 million of cash from operations during the first three months of 2002. Our principal sources of liquidity are cash on hand, cash generated from operations, and funds from external borrowings and debt offerings. We expect to fund our continuing operations through cash generated by our hotels. In addition, as of May 13, 2002, we had $112.0 million available under our revolving credit facility. We also expect to finance hotel acquisitions, hotel renovations and joint venture investments through a combination of internally generated cash, external borrowings, and the issuance of OP Units and/or common stock. Factors that may influence our liquidity include: . Factors that affect our results of operations, including general economic conditions, demand for business and leisure travel, public concerns about travel safety and other operating risks described under the caption, "Risk Factors--Operating Risks" in our 2001 Annual Report on Form 10-K; . Factors that affect our access to bank financing and the capital markets, including interest rate fluctuations, operational risks and other risks described under the caption "Risk Factors--Financing Risks" in our 2001 Annual Report on Form 10-K; and . The other factors described under the caption, "Special Note Regarding Forward-Looking Statements." We must distribute to stockholders at least 90% of our taxable income, excluding net capital gains to preserve the favorable tax treatment accorded to real estate investment trusts under the Internal Revenue Code. We expect to fund such distributions through cash generated from operations and borrowings on our credit agreement. Due to the sluggish economy, we expect our taxable income to decrease in 2002 compared to 2001. Any future distributions will be at the discretion of our Board of Directors and will be determined by factors including our operating results, capital expenditure requirements, the economic outlook, the Internal Revenue Service dividend payout requirements for REITs and such other factors as our Board of Directors deems relevant. We cannot provide assurance that any such distributions will be made in the future. We generated $12.0 million of cash from financing activities during the first three months of 2002 primarily from: . $13.6 million of net borrowings under our credit agreement; . $3.2 million of proceeds from issuances of common stock; partially offset by . $3.1 million from additional deferred financing costs related to issuing the $200 million of senior unsecured notes. Uses of Cash We used $18.3 million of cash in investing activities during the first three months of 2002 primarily for: . $ 9.0 million of notes receivable with MeriStar Hotels; and . $12.3 million of capital expenditures at hotels. Long-Term Debt In February 2002, we issued $200 million ($196.2 million, net of discount) aggregate principal amount of 9.13% senior unsecured notes due 2011. We used the proceeds from the issuance of these notes to repay approximately $195.0 million of the outstanding balance under our revolving credit agreement. As a result of this financing, we redesignated some swap agreements as non-hedging derivatives. We recognized a $4.7 million loss when this amount was transferred out of accumulated other comprehensive income because the debt being hedged was repaid. In February 2002, we amended our revolving credit agreement. The amendment allows us to reduce the revolving commitments to below $300 million. In March 2002, we reduced the borrowing capacity on our revolving credit agreement from $310 million to $150 million. We recognized a $1,529 loss due to the write-off of deferred financing costs related to reducing the borrowing capacity of our revolving credit agreement. The weighted average interest rate on borrowings outstanding under the revolving credit agreement as of March 31, 2002 was 5.94%. As of May 13, 2002, we had $112.0 million of indebtedness outstanding under our revolving credit agreement. 18 Minimum payments due under our debt obligations as of March 31, 2002 are (in thousands): 2002 ....................................... $ 14,057 2003 ....................................... 51,589 2004 ....................................... 171,168 2005 ....................................... 9,265 2006 ....................................... 10,006 Thereafter ................................. 1,457,693 --------------- $1,713,778 =============== Capital Resources We must make ongoing capital expenditures in order to keep our hotels competitive in their markets. We expect a combination of internally generated cash and external borrowings to provide capital for renovation work. Initial renovation programs for most of our hotels are complete or nearing completion. Once initial renovation programs for a hotel are completed, we expect to spend approximately 4% annually of hotel revenues for ongoing capital expenditure programs. These ongoing programs will include room and facilities refurbishments, renovations, and furniture and equipment replacements. For the three months ended March 31, 2002, we spent $11 million on renovation and ongoing property capital expenditure programs. We intend to spend approximately $37 million during the remaining three quarters of 2002 for our ongoing capital expenditure programs. We believe cash generated by operations, together with anticipated borrowing capacity under our senior credit agreements, will be sufficient to fund our existing working capital requirements, ongoing capital expenditures, and debt service requirements. We believe, however, that our future capital decisions will also be made in response to specific acquisition and/or investment opportunities, depending on conditions in the capital and/or other financial markets. Seasonality Demand in the lodging industry is affected by recurring seasonal patterns. For non-resort properties, demand is lower in the winter months due to decreased travel and higher in the spring and summer months during peak travel season. For resort properties, demand is generally higher in winter and early spring. Since the majority of our hotels are non-resort properties, our operations generally reflect non-resort seasonality patterns. We have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters. 19 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in interest rates on long-term debt obligations that impact the fair value of these obligations. Our policy is to manage interest rates through the use of a combination of fixed and variable rate debt. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we borrow at a combination of fixed and variable rates, and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes. We have no cash flow exposure due to general interest rate changes for our fixed long-term debt obligations. The table below presents, as of March 31, 2002, the principal amounts (in thousands of dollars) for our fixed and variable rate debt instruments, weighted-average interest rates, and fair values by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.
Long-term Debt -------------------------------------------------------------------------- Average Average Interest Variable Interest Expected Maturity Fixed Rate Rate Rate Rate --------------------------- -------------- ----------------- -------------- ---------------- 2002 $ 14,057 8.6% $ - N/A 2003 8,589 8.2% 43,000 6.0% 2004 171,168 5.1% - N/A 2005 9,265 8.4% - N/A 2006 10,006 8.1% - N/A Thereafter 1,457,693 9.0% - N/A -------------- ----------------- -------------- ------------- Total $ 1,670,778 8.5% $ 43,000 8.2% ============== ================= ============== ============= Fair Value at 3/31/02 $ 1,668,010 $ 43,000 ============== ==============
Upon the issuance in February 2002 of $200 million aggregate principal amount of 9.13% senior unsecured notes due 2011, we reduced the borrowings under our senior secured credit agreement by $195.0 million. At that time, we converted some swap agreements to non-hedging derivatives. As a result of this financing, we redesignated some swap agreements as non-hedging derivatives. These swap agreements had notional principal amounts of approximately $200 million and were originally designated to hedge variable rate borrowings under our senior secured credit facility that were repaid. We recognized a $4.7 million loss when this amount was transferred out of accumulated other comprehensive income because the debt being hedged was repaid. As of March 31, 2002, we had three swap agreements with notional principal amounts totaling $300 million. All of these swap agreements have been converted to non-hedging derivatives. The swap agreements effectively fix the 30-day LIBOR between 4.77% and 6.4%. The swap agreements expire between December 2002 and July 2003. For the three months ended March 31, 2002 and 2001, we have made net payments of approximately $2.9 million and $0.1 million, respectively. In anticipation of the August 1999 completion of our mortgage-backed secured facility, we entered into two separate hedge transactions during July 1999. Upon completion of the secured facility, we terminated the underlying treasury lock agreements, resulting in a net payment to us of $5.1 million. This amount was deferred and is being recognized as a reduction to interest expense over the life of the underlying debt. As a result, the effective interest rate on the secured facility is 7.76%. Additionally, in anticipation of the August 1997 offering of $150 million aggregate principal amount of our 8.75% senior subordinated notes due 2007, we entered into separate hedge transactions during June and July 1997. Upon completion of the subordinated notes offering, we terminated the underlying swap agreements, resulting in a net payment to us of $836,000. This amount was deferred and is being recognized as a reduction to interest expense over the life of the underlying debt. As a result, the effective interest rate on the subordinated notes is 8.69%. 20 As of March 31, 2002, 97.5% of our debt was fixed and our overall weighted average interest rate was 8.52%. Although we conduct business in Canada, the Canadian operations were not material to our consolidated financial position, results of operations or cash flows during the three months ended March 31, 2002 and 2001. Additionally, foreign currency transaction gains and losses were not material to our results of operations for the years ended March 31, 2002 and 2001. Accordingly, we were not subject to material foreign currency exchange rate risk from the effects that exchange rate movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign subsidiaries. To date, we have not entered into any significant foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. 21 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION Forward-Looking Statements Information both included and incorporated by reference in this annual report on Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of them or other variations of them or comparable terminology. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to: . the current slowdown of the national economy; . economic conditions generally and the real estate market specifically; . the impact of the September 11, 2001 terrorist attacks or actual or threatened future terrorist incidents; . legislative/regulatory changes, including changes to laws governing the taxation of REITs; . availability of capital; . interest rates; . competition; . supply and demand for hotel rooms in our current and proposed market areas; and . changes in general accounting principles, policies and guidelines applicable to REITs. These risks and uncertainties, along with the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2001 under "Risk Factors", should be considered in evaluating any forward-looking statements contained in this Form 10-Q. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than required by law. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.6 Form of Employment Agreement between MeriStar Hospitality Corporation and Paul W. Whetsell. 13 Unaudited Financial Statements of MeriStar Hospitality Operating Partnership, L.P. as of March 31, 2002 and December 31, 2001 and for the three months ended March 31, 2002 and 2001. 99 Consolidating Financial Information of MeriStar Hospitality Operating Partnership, L.P. (b) Reports on Form 8-k 22 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 thereunto duly authorized. MeriStar Hospitality Corporation Dated: May 15, 2002 /s/ James A. Calder _____________________ James A. Calder Chief Accounting Officer 23 EX-10.6 3 dex106.txt EXHIBIT 10.6 Exhibit 10.6 EXECUTIVE EMPLOYMENT AGREEMENT EXECUTIVE EMPLOYMENT AGREEMENT, effective as of November 1, 2001 by and between MERISTAR HOSPITALITY CORPORATION, a Maryland corporation (the "Company"), MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the "Partnership"), and PAUL W. WHETSELL (the "Executive"), an individual residing at 10901 Tara Road, Potomac, Maryland 20854. The Company and the Partnership desire to employ the Executive in the capacities of Chairman of the Board and Chief Executive Officer, and the Executive desires to be so employed, on the terms and subject to the conditions set forth in this agreement (the "Agreement"); Now, Therefore, in consideration of the mutual covenants set forth herein and other good and valuable consideration the parties hereto hereby agree as follows: 1. Employment; Term. The Company and the Partnership each hereby ---------------- employ the Executive, and the Executive agrees to be employed by the Company and the Partnership, upon the terms and subject to the conditions set forth herein, for an initial term of three and one-half (3-1/2) years, commencing on November 1, 2001 (the "Commencement Date"), unless terminated earlier in accordance with Section 5 of this Agreement; provided that such term shall automatically be -------- extended from time to time for additional periods of one calendar year from the date on which it would otherwise expire unless the Executive, on one hand, or the Company and the Partnership, on the other, gives notice to the other party or parties prior to such date that it elects to permit the term of this Agreement to expire without extension on such date. (The initial term of this Agreement as the same may be extended in accordance with the terms of this Agreement is hereinafter referred to as the "Term"). 2. Positions; Conduct. ------------------ (a) During the Term, the Executive will hold the titles and offices of, and serve in the positions of, Chairman of the Board and Chief Executive Officer of the Company and the Partnership. The Executive shall report to the Board of Directors of the Company (the "Board") and shall perform such specific duties and services (including service as an officer, director or equivalent position of any direct or indirect subsidiary without additional compensation) as they shall reasonably request consistent with the Executive's positions. (b) During the Term, the Executive agrees to devote his full business time and attention to the business and affairs of the Company and the Partnership and to faithfully and diligently perform, to the best of his ability, all of his duties and responsibilities hereunder. The Company is aware that Executive has an employment agreement, dated as of November 1, 2001 ("MHR Agreement"), with MeriStar Hotels & Resorts, Inc. and MeriStar Management Company, LLC (collectively, 2 "MHR") and may perform duties as required under such agreement so long as those duties are not in violation of this Agreement. Nothing in this Agreement shall preclude the Executive from devoting reasonable time and attention to (i) serving, with the approval of the Board, as a director, trustee or member of any committee of any organization, (ii) engaging in charitable and community activities and (iii) managing his personal investments and affairs; provided -------- that such activities do not involve any material conflict of interest with the - ---- interests of the Company or, individually or collectively, interfere materially with the performance by the Executive of his duties and responsibilities under this Agreement. Notwithstanding the foregoing and except as expressly provided herein, during the Term, the Executive may not accept employment with any other individual or entity, or engage in any other venture which is directly or indirectly in conflict or competition with the business of the Company or the Partnership. (c) The Executive's office and place of rendering his services under this Agreement shall be in the principal executive offices of the Company which shall be in the Washington, D.C. metropolitan area. Under no circumstances shall the Executive be required to relocate from the Washington, D.C. metropolitan area or provide services under this Agreement in any other location other than in connection with reasonable and customary business travel. During the Term, the Company shall provide the Executive with executive office space, and administrative and secretarial assistance and other support services consistent with his position as Chairman of the Board and Chief Executive Officer and with his duties and responsibilities hereunder. 3. Board of Directors. While it is understood that the right to ------------------ elect directors of the Company is by law vested in the stockholders and directors of the Company, it is nevertheless mutually contemplated that, subject to such rights, during the Term the Executive will serve as a member of the Company's Board of Directors. 4. Salary; Additional Compensation; Perquisites and Benefits. (a) During the Term, the Company and the Partnership will pay the Executive a base salary at an aggregate annual rate of not less than $285,000 per annum, subject to annual review by the Compensation Committee of the Board (the "Compensation Committee"), and in the discretion of such Committee, increased from time to time. Once increased, such base salary may not be decreased. Such salary shall be paid in periodic installments in accordance with the Company's standard practice, but not less frequently than semi-monthly. (b) For each fiscal year during the Term, the Executive will be eligible to receive a bonus from the Company. The award and amount of such bonus shall be based upon the achievement of predefined operating or performance goals and other criteria established by the Compensation Committee, which goals shall give the Executive the opportunity to earn a bonus in the following amounts: threshold target - 25% of base salary; target - 165% of base salary; and maximum bonus amount - 200% of base salary. 3 (c) During the Term, the Executive will participate in all plans now existing or hereafter adopted by the Company or the Partnership for their management employees or the general benefit of their employees, such as any pension, profit-sharing, bonuses, stock option or other incentive compensation plans, life and health insurance plans, or other insurance plans and benefits on the same basis and subject to the same qualifications as other senior executive officers. (d) (i) Annual stock option grants shall be at the discretion of the Board. (ii) Executive shall be granted annually, on May 1 of 2002, 2003 and 2004, pursuant to the Company's Profits-Only Operating Partnership Units ("POPs") Plan, a minimum of 125,000 POPs and a maximum of 200,000 POPs as determined by the Board. The POPs shall vest equally on the first, second and third anniversary of the date of grant. Annual POPs grants thereafter shall be at the discretion of the Board. The Company or the Partnership will pay the executive a distribution on each POP, while such POPs are outstanding, equal to, and at the same time as, distributions made to common operating partnership units of the Partnership. (e) The Company and the Partnership will reimburse the Executive, in accordance with their standard policies from time to time in effect, for all out-of-pocket business expenses as may be incurred by the Executive in the performance of his duties under this Agreement. (f) The Executive shall be entitled to vacation time to be credited and taken in accordance with the Company's policy from time to time in effect for senior executives, which in any event shall not be less than a total of four weeks per calendar year. Such vacation time shall not be carried over year to year, and shall not be paid out upon termination of employment, or upon expiration of this Agreement. (g) The Company (or MHR), at its sole cost, shall pay (i) up to $20,000 annually (to be increased annually by the prior year's consumer price index, "CPI") toward the premium of a life insurance policy with a death benefit of at least $2,000,000 payable to a beneficiary designated by the Executive and (ii) up to $20,000 annually (to be increased annually by the prior year's CPI) toward the premium of a disability policy which, upon a determination of the Executive's Disability (as hereinafter defined), pays at least $2,000,000 to the Executive. The premiums for such insurance policies are to be split equally between the Company and MHR for so long as the Executive remains employed by MHR. While the Executive is employed by both the Company and MHR, both the Company and MHR, in the aggregate, shall not pay in excess of $20,000 annually (as increased by CPI) toward each premium. 4 (h) The Executive shall be granted a car allowance of up to $1,000 per month toward the lease of an automobile to be leased by the Company (or MHR) for the use of the Executive. The monthly lease payment for such car is to be split equally between the Company and MHR for so long as the Executive is employed by MHR. While the Executive is employed by both the Company and MHR, the Company and MHR, in the aggregate, shall not pay in excess of $1,000 monthly toward such car lease. (i) To the fullest extent permitted by applicable law, the Executive shall be indemnified and held harmless by the Company and the Partnership against any and all judgments, penalties, fines, amounts paid in settlement, and other reasonable expenses (including, without limitation, reasonable attorneys' fees and disbursements) actually incurred by the Executive in connection with any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative, investigative or other) for any action or omission in his capacity as a director, officer or employee of the Company or the Partnership. Indemnification under this Section 4(i) shall be in addition to, and not in substitution of, any other indemnification by the Company or the Partnership of its officers and directors. Expenses incurred by the Executive in defending an action, suit or proceeding for which he claims the right to be indemnified pursuant to this Section 4(i) shall be paid by the Company or the Partnership, as the case may be, in advance of the final disposition of such action, suit or proceeding upon the Company's or the Partnership's receipt of (x) a written affirmation by the Executive of his good faith belief that the standard of conduct necessary for his indemnification hereunder and under the provisions of applicable law has been met and (y) a written undertaking by or on behalf of the Executive to repay the amount advanced if it shall ultimately be determined by a court that the Executive engaged in conduct which precludes indemnification under the provisions of such applicable law. Such written undertaking in clause (y) shall be accepted by the Company or the Partnership, as the case may be, without security therefor and without reference to the financial ability of the Executive to make repayment thereunder. The Company and the Partnership shall use commercially reasonable efforts to maintain in effect for the Term of this Agreement a directors' and officers' liability insurance policy, with a policy limit of at least $5,000,000, subject to customary exclusions, with respect to claims made against officers and directors of the Company or the Partnership; provided, however, the Company or the Partnership, -------- ------- as the case may be, shall be relieved of this obligation to maintain directors' and officers' liability insurance if, in the good faith judgment of the Company or the Partnership, it cannot be obtained at a reasonable cost. 5. Termination. ----------- (a) The Term will terminate immediately upon the Executive's death or, upon thirty (30) days' prior written notice by the Company, in the case of a determination of the Executive's Disability. As used herein the term "Disability" means the Executive's inability to perform his duties and responsibilities under this Agreement for a period of more than 120 consecutive days, or for more than 180 days, whether or 5 not continuous, during any 365-day period, due to physical or mental incapacity or impairment. A determination of Disability will be made by a physician reasonably satisfactory to both the Executive and the Company and paid for by the Company or the Partnership whose decision shall be final and binding on the Executive and the Company; provided that if they cannot agree as to a physician, -------- ---- then each shall select and pay for a physician and these two together shall select a third physician whose fee shall be borne equally by the Executive and either the Company or the Partnership and whose determination of Disability shall be binding on the Executive and the Company. Should the Executive become incapacitated, his employment shall continue and all base and other compensation due the Executive hereunder shall continue to be paid through the date upon which the Executive's employment is terminated for Disability in accordance with this section. (b) The Term may be terminated by the Company upon notice to the Executive upon the occurrence of any event constituting "Cause" as defined herein. (c) The Term may be terminated by the Executive upon notice to the Company of any event constituting "Good Reason" as defined herein. 6. Severance. --------- (a) If the Term is terminated by the Company for Cause, (i) the Company and the Partnership will pay to the Executive an aggregate amount equal to the Executive's accrued and unpaid base salary through the date of such termination; (ii) all unvested options, restricted shares, and POPs will terminate immediately; and (iii) any vested options issued pursuant to the Company's Incentive Plan and held by the Executive at termination, will expire ninety (90) days after the termination date. (b) If the Term is terminated by the Executive other than because of death, Disability or for Good Reason, (i) the Company and the Partnership will pay to the Executive an aggregate amount equal to the Executive's accrued and unpaid base salary through the date of such termination; (ii) all unvested options and restricted shares terminate immediately; 6 (iii) any vested options issued pursuant to the Company's Incentive Plan and held by the Executive at termination, will expire ninety (90) days after the termination date; and (iv) all POPs granted through the date of such termination shall immediately vest and convert, on a one-for-one basis, into common operating partnership units ("Common OP Units") of the Partnership and become free and clear of all contractual restrictions. (c) If the Term is terminated upon the Executive's death or Disability, (i) the Company and the Partnership will pay to the Executive's estate or the Executive, as the case may be, a lump sum payment equal to the Executive's base salary through the termination date, plus a pro rata portion of the Executive's bonus for the fiscal year in which the termination occurred; (ii) the Company will make payments for one (1) year of all compensation otherwise payable to the Executive pursuant to this Agreement, including, but not limited to, base salary, bonus and welfare benefits; (iii) all of the Executive's unvested stock options will immediately vest and such options, along with those previously vested and unexercised, will become exercisable for a period of one (1) year thereafter; (iv) all of the Executive's unvested restricted stock will immediately vest and all of the restricted stock of the Company held by the Executive shall become free from all contractual restrictions; and (v) all POPs to be granted to Executive on May 1 of 2002, 2003 or 2004 (assuming 165,000 POPs were granted on each date that is subsequent to the date of termination) which have not yet been granted by the date of termination shall be immediately granted and vested, all of the Executive's unvested POPs will immediately vest, and all of the Executive's POPs held at termination (including POPs granted and/or vested pursuant to this Paragraph 6(c)(v)) 7 will be converted, on a one-for-one basis, to Common OP Units of the Partnership and shall become free from all contractual restrictions. (d) Subject to Section 6(e) hereof, if the Term is terminated by the Company without Cause or other than by reason of Executive's death or Disability, in addition to any other remedies available, or if the Executive terminates the Term for Good Reason, (i) the Company and the Partnership shall pay the Executive a lump sum equal to the product of (x) the sum of (A) the Executive's then annual base salary and (B) the amount of the Executive's bonus for the preceding year, multiplied by (y) the greater of (A) two and one-half (2 1/2) and (B) a fraction, the numerator of which is the number of days remaining in the Term (without further extension) and the denominator of which is 365; (ii) all of the Executive's unvested stock options will immediately vest and such options, along with those previously vested and unexercised, will become exercisable for a period of one (1) year thereafter; (iii) all of the Executive's unvested restricted stock will immediately vest and all of the restricted stock of the Company held by the Executive shall become free from all contractual restrictions; (iv) all POPs to be granted to Executive on May 1 of 2002, 2003 or 2004 (assuming 165,000 POPs were granted on each date that is subsequent to the date of termination) which have not yet been granted by the date of termination shall be immediately granted and vested, all of the Executive's unvested POPs will immediately vest, and all of the Executive's POPs held at termination (including POPs granted and/or vested pursuant to this Paragraph 6(c)(iv)) will be converted, on a one-for-one basis, to Common OP Units of the Partnership and shall become free from all contractual restrictions; and (v) the Company shall also continue in effect the Executive's health benefits noted in Section 4(c) hereof or their equivalent for a period equal to the greater of (X) two and one-half (2 1/2) years or the remaining Term, without further extension or (Y) 8 the date on which the Executive obtains health insurance coverage from a subsequent employer; provided, however, that in the event the Executive remains in the employ of MHR following such termination, his health insurance benefits shall be provided by MHR pursuant to the MHR Agreement rather than pursuant to this Section (6)(d)(v). (e) If, within twenty-four (24) months following a Change in Control, the Term is terminated by the Executive for Good Reason or by the Company without Cause, in addition to any other rights which the Executive may have under law or otherwise, the Executive shall receive the same payments and benefits provided for under Section 6(d) hereof; provided, that the amount of -------- the multiplier described in clause (d)(i)(y)(A) of Section 6 hereof shall be increased from two and one-half (2 1/2) times to three and one-half (3 1/2) times. (f) If at any time the Term is not extended pursuant to the proviso to Section 1 hereof as a result of the Company giving notice thereunder that it elects to permit the term of this Agreement to expire without extension, the Company shall be deemed to have terminated the Executive's employment without Cause. (g) As used herein, the term "Cause" means: (i) the Executive's willful and intentional failure or refusal to perform or observe any of his material duties, responsibilities or obligations set forth in this Agreement; provided, -------- however, that the Company shall not be deemed to have Cause pursuant ------- to this clause (i) unless the Company gives the Executive written notice that the specified conduct has occurred and making specific reference to this Section 6(g)(i) and the Executive fails to cure the conduct within thirty (30) days after receipt of such notice; (ii) any willful and intentional act of the Executive involving malfeasance, fraud, theft, misappropriation of funds, embezzlement or dishonesty affecting the Company or the Partnership; (iii) the Executive's conviction of, or a plea of guilty or nolo contendere to, an offense which is a felony in the jurisdiction involved; or (iv) the Executive is terminated by MHR for Cause (as defined in the MHR Agreement). Termination of the Executive for Cause shall be communicated by a Notice of Termination. For purposes of this Agreement, a "Notice of Termination" shall mean delivery to the Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Company's Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and reasonable opportunity for the Executive, together with the Executive's counsel, to be heard before the Board prior to such vote) of finding that in the good faith opinion of the 9 Board, the Executive was guilty of conduct constituting Cause and specifying the particulars thereof in detail, including, with respect to any termination based upon conduct described in clause (i) above that the Executive failed to cure such conduct during the thirty-day period following the date on which the Company gave written notice of the conduct referred to in such clause (i). For purposes of this Agreement, no such purported termination of the Executive's employment shall be effective without such Notice of Termination; (h) As used herein, the term "Good Reason" means the occurrence of any of the following, without the prior written consent of the Executive: (i) assignment of the Executive of duties materially inconsistent with the Executive's positions as described in Section 2(a) hereof, or any significant diminution in the Executive's duties or responsibilities, other than in connection with the termination of the Executive's employment for Cause, Disability or as a result of the Executive's death or by the Executive other than for Good Reason; (ii) the failure of the Company to nominate the Executive to the Board or the failure of the Executive to be elected to the Board; (iii) the change in the location of the Company's principal executive offices or of the Executive's principal place of employment to a location outside the Washington, D.C. metropolitan area; (iv) any material breach of this Agreement by the Company or the Partnership which is continuing; or (v) a Change in Control; provided that a Change of Control shall only constitute Good Reason if (i) the Executive terminates this Agreement within the six month period following a Change of Control, (ii) the Company terminates the Executive within two years following a Change of Control or (iii) the Company changes the Executive's job title, responsibilities or decreases Executive's compensation within two years following a Change of Control and Executive within six months after such change (but not later than two years following the Change of Control) terminates the Term of this Agreement; or (vi) termination of the MHR Agreement by MHR without Cause (as such term is defined in the MHR Agreement) or termination of the MHR Agreement by Executive for Good Reason (as such term is defined in the MHR Agreement); provided that such terminations of the MHR Agreement shall only constitute Good Reason (for purposes of this Agreement) if the Company does not, effective immediately upon the termination of the Executive's employment with MHR, increase the Executive's total annual compensation under this Agreement by the amount of total annual compensation (including, base salary, bonus, restricted stock, POPs, and other similar types of annual compensation) the Executive was receiving from MHR. 10 provided, however, that the Executive shall not be deemed to have -------- ------ Good Reason pursuant to clauses (h)(i), (ii) or (iv) above unless the Executive gives the Company or the Partnership, as the case may be, written notice that the specified conduct or event has occurred and the Company or the Partnership fails to cure such conduct or event within thirty (30) days of the receipt of such notice. (i) As used herein, the term "Change in Control" shall have the following meaning: "Change in Control" means the occurrence of any one of the following events: (i) the acquisition (other than from the Company) by any "Person" (as the term is used for purposes of Sections 13(d) or 14(d) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty (30%) percent or more of the combined voting power of the Company's then outstanding voting securities; (ii) the individuals who were members of the Board (the "Incumbent Board") during the previous twelve (12) month period, cease for any reason to constitute at least a majority of the Board; provided, however, that if the election, or nomination for election by -------- ------- the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; (iii) approval by the stockholders of the Company of (a) merger or consolidation involving the Company if the stockholders of the Company, immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty (50%) percent of the combined voting power of the then outstanding voting securities of the corporation resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the voting securities of the Company outstanding immediately before such merger or consolidation or (b) a complete liquidation or dissolution of the Company or an agreement for the sale or other disposition of all or substantially all of the assets of the Company; or (iv) approval by the stockholders of the Company of any transaction (including without limitation a "going private transaction") involving the Company if the stockholders of the Company, immediately before such transaction, do not as a result of such transaction, own directly or indirectly, more than fifty (50%) percent of the combined voting power of the then outstanding voting securities of the corporation resulting from such transaction in substantially the same proportion as their ownership of the combined voting power of the 11 voting securities of the Company outstanding immediately before such transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to clause (i)(A)(i) above solely because thirty (30%) percent or more of the combined voting power of the Company's then outstanding securities is acquired by (a) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Company or any of its subsidiaries or (b) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the stockholders of the Company in the same proportion as their ownership of stock in the Company immediately prior to such acquisition. (j) The amounts required to be paid and the benefits required to be made available to the Executive under this Section 6 are absolute. Under no circumstances shall the Executive, upon the termination of his employment hereunder, be required to seek alternative employment and, in the event that the Executive does secure other employment, no compensation or other benefits received in respect of such employment shall be set-off or in any other way limit or reduce the obligations of the Company under this Section 6. (k) Intentionally omitted. (l) Excise Tax Payments. ------------------- (i) Gross-Up Payment. If it shall be determined ---------------- that any payment or distribution of any type to or in respect of the Executive, by the Company, the Partnership, or any other person, whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed by Section 4999 of the Internal Code of 1986, as amended (the "Code") or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes) imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. 12 (ii) Determination by Accountant. --------------------------- (A) All computations and determinations relevant to this Section 6(l) shall be made by a national accounting firm selected by the Company from among the five (5) largest accounting firms in the United States (the "Accounting Firm") which firm may be the Company's accountants. Such determinations shall include whether any of the Total Payments are "parachute payments" (within the meaning of Section 280G of the Code). In making the initial determination hereunder as to whether a Gross-Up Payment is required the Accounting Firm shall determine that no Gross-Up Payment is required, if the Accounting Firm is able to conclude that no "Change of Control" has occurred (within the meaning of Section 280G of the Code) on the basis of "substantial authority" (within the meaning of Section 6230 of the Code) and shall provide opinions to that effect to both the Company and the Executive. If the Accounting Firm determines that a Gross-Up Payment is required, the Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter both to the Company and the Executive by no later than ten (10) days following the Termination Date, if applicable, or such earlier time as is requested by the Company or the Executive (if the Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive and the Company with a written statement that such Accounting Firm has concluded that no Excise Tax is payable (including the reasons therefor) and that the Executive has substantial authority not to report any Excise Tax on his federal income tax return. (B) If a Gross-Up Payment is determined to be payable, it shall be paid to the Executive within twenty (20) days after the later of (i) the Determination (and all accompanying calculations and other material supporting the Determination) is delivered to the Company by the Accounting Firm or (ii) the date of the event which leads to the Gross-up Payment. Any determination by the Accounting Firm shall be binding upon the Company and the Executive, absent manifest error. (C) As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made by the Company should have been made ("Underpayment"), or that Gross-Up Payments will have been made by the Company which should not have been made ("Overpayments"). In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such Underpayment (together with any interest and penalties payable by the Executive as a result of such Underpayment) shall be promptly paid by the Company to or for the benefit of the Executive. 13 (D) In the case of an Overpayment, the Executive shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise reasonably cooperate with the Company to correct such Overpayment, provided, however, that (i) the Executive shall not in any event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that he has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Section 6(l)(i), which is to make the Executive whole, on an after-tax basis, from the application of the Excise Taxes, it being acknowledged and understood that the correction of an Overpayment may result in the Executive repaying to the Company an amount which is less than the Overpayment. (E) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service relating to the possible application of the Excise Tax under Section 4999 of the Code to any of the payments and amounts referred to herein and shall afford the Company, at its expense, the opportunity to control the defense of such claim. 7. Confidential Information. (a) The Executive acknowledges that the Company and its subsidiaries or affiliated ventures ("Company Affiliates") own and have developed and compile, and will in the future own, develop and compile, certain Confidential Information and that during the course of his rendering services hereunder Confidential Information will be disclosed to the Executive by the Company Affiliates. The Executive hereby agrees that, during the Term and for a period of three years thereafter, he will not use or disclose, furnish or make accessible to anyone, directly or indirectly, any Confidential Information of the Company Affiliates. (b) As used herein, the term "Confidential Information" means any trade secrets, confidential or proprietary information, or other knowledge, know-how, information, documents or materials, owned, developed or possessed by a Company Affiliate pertaining to its businesses the confidentiality of which such company takes reasonable measures to protect, including, but not limited to, trade secrets, techniques, know-how (including designs, plans, procedures, processes and research records), software, computer programs, innovations, discoveries, improvements, research, developments, test results, reports, specifications, data, formats, marketing data and business plans and strategies, customer lists, client lists and client contact lists, agreements and other forms of documents, expansion plans, budgets, projections, and salary, staffing and employment information. Notwithstanding the foregoing, Confidential Information shall not in any event include information which (i) was generally known or generally available to the public prior to its disclosure to the Executive, (ii) becomes generally known or generally available to the public subsequent 14 to its disclosure to the Executive through no wrongful act of the Executive, (iii) is or becomes available to the Executive from sources other than the Company Affiliates which sources are not known to the Executive to be under any duty of confidentiality with respect thereto or (iv) the Executive is required to disclose by applicable law or regulation or by order of any court or federal, state or local regulatory or administrative body (provided that the Executive provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company, at the Company's sole expense, in seeking a protective order or other appropriate protection of such information). (c) The Executive agrees that during his employment hereunder and for a period of twenty-four months thereafter he will not solicit, raid, entice or induce any person that then is or at any time during the twelve-month period prior to the end of the Term was an employee of a Company Affiliate (other than a person whose employment with such Company Affiliate has been terminated by such Company Affiliate), to become employed by any person, firm or corporation. 8. Specific Performance. (a) The Executive acknowledges that the services to be rendered by him hereunder are of a special, unique, extraordinary and personal character and that the Company Affiliates would sustain irreparable harm in the event of a violation by the Executive of Section 7 hereof. Therefore, in addition to any other remedies available, the Company shall be entitled to specific enforcement and/or an injunction from any court of competent jurisdiction restraining the Executive from committing or continuing any such violation of this Agreement without proving actual damages or posting a bond or other security. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages. (b) If any of the restrictions on activities of the Executive contained in Section 7 hereof shall for any reason be held by a court of competent jurisdiction to be excessively broad, such restrictions shall be construed so as thereafter to be limited or reduced to be enforceable to the maximum extent compatible with the applicable law as it shall then appear; it being understood that by the execution of this Agreement the parties hereto regard such restrictions as reasonable and compatible with their respective rights. (c) Notwithstanding anything in this Agreement to the contrary, in the event that the Company fails to make any payment of any amounts or provide any of the benefits to the Executive when due as called for under Section 6 of this Agreement and such failure shall continue for twenty (20) days after notice thereof from the Executive, in addition to any other remedies available to the Executive, all restrictions on the activities of the Executive under Section 7 hereof shall be immediately and permanently terminated. 15 9. Withholding. The parties agree that all payments to ----------- be made to the Executive by the Company pursuant to the Agreement shall be subject to all applicable withholding obligations of such company. 10. Notices. All notices required or permitted hereunder ------- shall be in writing and shall be deemed given and received when delivered personally, four (4) days after being mailed if sent by registered or certified mail, postage pre-paid, or by one (1) day after delivery if sent by air courier (for next-day delivery) with evidence of receipt thereof or by facsimile with receipt confirmed by the addressee. Such notices shall be addressed respectively: If to the Executive, to: 10901 Tara Road Potomac, Maryland 20854 If to the Company or to the Partnership, to: MeriStar Hospitality Corporation 1010 Wisconsin Avenue, N.W. Washington, D.C. 20007 Attention: Legal Department or to any other address of which such party may have given notice to the other parties in the manner specified above. 11. Miscellaneous. ------------- (a) This Agreement is a personal contract calling for the provision of unique services by the Executive, and the Executive's rights and obligations hereunder may not be sold, transferred, assigned, pledged or hypothecated by the Executive. The rights and obligations of the Company and the Partnership hereunder will be binding upon and run in favor of their respective successors and assigns. Neither the Company nor the Partnership will be deemed to have breached this Agreement if any obligations of such party to make payments to the Executive are satisfied by the other party. (b) This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to conflict of laws principles. (c) Any controversy arising out of or relating to this Agreement or any breach hereof shall be settled by arbitration in Washington, D.C. by a single neutral arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon any award rendered may be entered in any court having jurisdiction thereof, except in the event of a controversy relating to any alleged violation by the Executive of Section 7 hereof, in which case the Company 16 shall be entitled to seek injunctive relief from a court of competent jurisdiction without the requirement to seek arbitration. (d) The headings of the various sections of this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (e) The provisions of this Agreement which by their terms call for performance subsequent to the expiration or termination of the Term shall survive such expiration or termination. (f) The Company and the Partnership shall reimburse the Executive for all costs incurred by the Executive in any proceeding for the successful enforcement of the terms of this Agreement, including without limitation all costs of investigation and reasonable attorneys fees and expenses. (g) This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof (other than previously executed option agreements, restricted stock agreements and POPs agreements executed by the Executive and the Company and/or the Partnership, the "Grant Agreements"), all of which shall be terminated on the Commencement Date. In addition, the parties hereto hereby waive all rights such party may have under all other prior agreements (other then the Grant Agreements), including without limitation, the Executive Employment Agreement entered into as of August 3, 1998 and the Executive Employment Agreement entered into as of April 1, 2000, between the Executive and the Company, all of which shall be terminated on the Commencement Date. In addition, the parties hereto hereby waive all rights such party may have under all other prior agreements and undertakings, both written and oral, among the parties hereto (other than the Grant Agreements). [SIGNATURE PAGE FOLLOWS] 17 IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above written. EXECUTIVE: ____________________________________ Paul W. Whetsell COMPANY: MERISTAR HOSPITALITY CORPORATION By: _________________________________ Name: Title: PARTNERSHIP: MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By: _________________________________ Name: Title: EX-13 4 dex13.txt EXHIBIT 13 PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, 2002 December 31, 2001 -------------- ----------------- (unaudited) Assets Investments in hotel properties $ 3,195,949 $ 3,183,677 Accumulated depreciation (425,765) (397,380) ----------- ----------- 2,770,184 2,786,297 Cash and cash equivalents 25,966 23,441 Accounts receivable, net of allowance for doubtful Accounts of $964 and $973 59,432 47,178 Prepaid expenses and other 16,672 18,306 Notes receivable from MeriStar Hotels 58,069 36,000 Due from MeriStar Hotels -- 8,877 Investments in affiliates 41,714 41,714 Restricted cash 18,352 21,304 Intangible assets, net of accumulated amortization of $6,439 and $5,289 21,167 21,469 ----------- ----------- $ 3,011,556 $ 3,004,586 =========== =========== Liabilities, Minority Interests and Stockholders' Equity Accounts payable, accrued expenses and other liabilities $ 124,143 $ 123,972 Accrued interest 41,309 45,009 Due to MeriStar Hotels 3,968 -- Income taxes payable 82 310 Distributions payable 447 1,090 Deferred income taxes 6,849 7,130 Interest rate swaps 8,703 12,100 Notes payable to MeriStar Hospitality 357,214 357,117 Long-term debt 1,356,564 1,343,017 ----------- ----------- Total liabilities 1,899,279 1,889,745 ----------- ----------- Minority interests 2,650 2,639 Redeemable OP units at redemption value 82,117 67,012 Partners' capital - common OP units 44,654,578 and 44,524,147 issued and outstanding 1,027,510 1,045,190 ----------- ----------- $ 3,011,556 $ 3,004,586 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended March 31, --------- 2002 2001 ---- ---- Revenue: Hotel operations: Rooms $ 170,548 $ 200,380 Food and beverage 62,065 71,291 Other operating departments 19,108 22,471 Participating lease revenue -- 3,784 Office rental and other revenues 4,943 4,758 --------- --------- Total revenue 256,664 302,684 --------- --------- Hotel operating expenses by department: Rooms 38,935 45,722 Food and beverage 44,405 51,404 Other operating departments 10,694 11,570 Office rental, parking and other operating expenses 814 937 Undistributed operating expenses: Administrative and general 43,471 44,917 Property operating costs 37,381 42,699 Property taxes, insurance and other 20,082 18,387 Depreciation and amortization 30,592 29,387 Write-off of deferred financing costs 1,529 -- Loss on fair value of non-hedging derivatives 4,735 -- Write down of investment in STS Hotel Net -- 2,112 Swap termination costs -- 9,297 --------- --------- Total operating expenses 232,638 256,432 --------- --------- Net operating income 24,026 46,252 Interest expense, net 34,588 30,229 --------- --------- Income (loss) before minority interests, income tax expense (benefit), loss on sale of assets and extraordinary loss (10,562) 16,023 Minority interests 11 11 --------- --------- Income (loss) before income tax expense (benefit), loss on sale of assets and extraordinary loss (10,573) 16,012 Income tax expense (benefit) (249) 453 --------- --------- Income (loss) before loss on sale of assets and extraordinary loss (10,324) 15,559 Loss on sale of assets, net of tax effect of ($19) -- (1,062) Extraordinary loss on early extinguishments of debt, net of tax effect of ($17) -- (1,226) --------- --------- Net income (loss) $ (10,324) $ 13,271 Preferred distributions (141) (141) --------- --------- Net income (loss) applicable to common unitholders $ (10,465) $ 13,130 ========= =========
4
Three months ended March 31, --------- 2002 2001 ---- ---- Net income (loss) applicable to common unitholders $ (10,465) $ 13,130 ========= ========= Net income (loss) applicable to general partner common unitholder $ (9,585) $ 11,970 ========= ========= Net income (loss) applicable to third party limited partner common unitholders $ (880) $ 1,160 ========= ========= Earnings per unit: Basic: Income (loss) before extraordinary loss $ (0.22) $ 0.29 Extraordinary loss -- (0.02) --------- --------- Net income (loss) $ (0.22) $ 0.27 ========= ========= Diluted: Income (loss) before extraordinary loss $ (0.22) $ 0.29 Extraordinary loss -- (0.02) --------- --------- Net income (loss) $ (0.22) $ 0.27 ========= =========
See accompanying notes to condensed consolidated financial statements. 5 MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL IN THOUSANDS UNAUDITED
Three months ended March 31, 2002 2001 ---- ---- Balance at beginning of year $ 1,045,190 $ 1,142,772 Net income (loss) (10,324) 13,271 Foreign currency translation adjustment 12 (974) Transition adjustment -- (2,842) Change in fair value of cash flow hedges 511 (4,793) ----------- ----------- Comprehensive income (loss) (9,801) 4,662 Reclassification of non-hedging derivatives 4,735 -- Contributions 3,155 280 Contribution from general partner related to amortization of unearned stock-based compensation 880 797 Repurchase of units (409) -- Allocations from (to) redeemable OP units (15,793) 2,674 Distributions (447) (24,283) ----------- ----------- Balance at end of period $ 1,027,510 $ 1,126,902 =========== ===========
6 MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (IN THOUSANDS)
Three months ended March 31, --------- 2002 2001 ---- ---- Operating activities: Net income (loss) $ (10,324) $ 13,271 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 30,592 29,387 Loss on fair value of non-hedging derivatives 4,735 -- Write-off of deferred financing costs 1,529 -- Loss on sale of assets, before tax effect -- 1,081 Write down of investment in STS Hotel Net -- 2,112 Extraordinary loss on early extinguishment of debt, before tax effect -- 1,243 Minority interests 11 11 Amortization of unearned stock based compensation 880 797 Interest rate swaps marked to fair value (2,887) -- Deferred income taxes (281) 144 Changes in operating assets and liabilities: Accounts receivable, net (12,254) (7,173) Prepaid expenses and other 1,634 (2,580) Due to/from MeriStar Hotels (224) 11,512 Accounts payable, accrued expenses and other liabilities (342) (4,888) Accrued interest (3,700) 2,592 Income taxes payable (228) 283 --------- --------- Net cash provided by operating activities 9,141 47,792 --------- --------- Investing activities: Investment in hotel properties (12,292) (8,743) Proceeds from disposition of assets -- 7,274 Hotel operating cash received in lease conversions -- 3,778 Notes receivable from MeriStar Hotels (9,000) (36,000) Change in restricted cash 2,952 1,697 --------- --------- Net cash used in investing activities (18,340) (31,994) --------- --------- Financing activities: Deferred financing costs (3,131) (9,322) Proceeds from mortgages and notes payable 234,545 578,347 Principal payments on mortgages and notes payable (220,901) (541,720) Contributions from partners 3,155 280 Repurchase of units (409) -- Distributions paid to partners (1,264) (24,859) --------- --------- Net cash provided by financing activities 11,995 2,726 --------- --------- Effect of exchange rate changes on cash and cash equivalents (271) 216 --------- --------- Net increase in cash and cash equivalents 2,525 18,740 Cash and cash equivalents, beginning of period 23,441 242 --------- --------- Cash and cash equivalents, end of period $ 25,966 $ 18,982 ========= =========
See accompanying notes to condensed consolidated financial statements. 7 MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1. ORGANIZATION We are a subsidiary operating partnership of MeriStar Hospitality Corporation. We own a portfolio of upscale, full-service hotels in the United States and Canada. Our portfolio is diversified by franchise and brand affiliations. As of March 31, 2002, we owned 112 hotels, with 28,653 rooms, all of which are leased by our taxable subsidiaries and managed by MeriStar Hotels & Resorts, Inc. We were created on August 3, 1998, as a result of the merger between CapStar Hotel Company and American General Hospitality Corporation, and the subsequent formation of MeriStar Hospitality, the merged entity. MeriStar Hospitality, a real estate investment trust, or REIT, is our general partner and owns a one percent interest in us as of March 31, 2002. The limited partners are as follows: . MeriStar LP, Inc., a wholly-owned subsidiary of MeriStar Hospitality, which owns approximately a 90 percent interest as of March 31, 2002; and . various third parties, which owned an aggregate interest of nine percent at March 31, 2002. Partners' capital includes the partnership interests of MeriStar Hospitality and MeriStar LP, Inc. MeriStar Hospitality held 482,838 common OP units as of March 31, 2002. MeriStar LP, Inc. held 44,171,740 common OP units as of March 31, 2002. Due to the redemption rights of the limited partnership units held by third parties, these units have been excluded from partner's capital and classified as Redeemable OP units and are recorded at redemption value. At March 31, 2002, there were 4,121,355 redeemable units outstanding. On January 1, 2001, changes to the federal tax laws governing real estate investment trusts became effective. Those changes are commonly known as the REIT Modernization Act, or RMA. The RMA permits real estate investment trusts to create taxable subsidiaries that are subject to taxation similar to subchapter C-Corporations. Because of the RMA, we have created a number of these taxable subsidiaries to lease our real property. The RMA prohibits our taxable subsidiaries from engaging in the following activities: . Managing the properties they lease (our taxable subsidiaries must enter into an "arms length" management agreement with an independent third-party manager that is actively involved in the trade or business of hotel management and manages properties on behalf of other owners), . Leasing a property that contains gambling operations; and . Owning a brand or franchise. We believe establishing taxable subsidiaries to lease the properties we own provides a more efficient alignment of and ability to capture the economic interests of property ownership. Under the prior lease structure with MeriStar Hotels, we received lease payments based on the revenues generated by the properties; MeriStar Hotels, however, operated the properties in order to maximize net operating income from the properties. This inconsistency could potentially result in the properties being operated in a way that did not maximize revenues. With the assignment of the leases from MeriStar Hotels to our taxable subsidiaries and the execution of the new management agreements (as described below), we gained the economic risks and rewards usually associated with ownership of real estate, and property revenues became the basis for MeriStar Hotels' management fees. Subsidiaries of MeriStar Hotels assigned the participating leases to our wholly-owned taxable subsidiaries as of January 1, 2001. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels to manage our hotels. Under these management agreements, the taxable subsidiaries pay a management fee to MeriStar Hotels for each property. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements have been structured to substantially mirror the economics of the former leases. The assignment of the leases from MeriStar Hotels to our taxable subsidiaries did not result in any cash consideration exchanged among the parties except for the transfer of hotel operating assets and liabilities to the taxable subsidiaries. Under the new management agreements, the base management fee is 2.5% of total hotel revenue plus incentives payments, based on meeting performance thresholds, that could total up to 1.5% of total hotel revenue. The 8 agreements have an initial term of 10 years with three renewal periods of five years each at the option of MeriStar Hotels, subject to some exceptions. Because these leases have been assigned to our taxable subsidiaries, we now bear the operating risk associated with our hotels. During 2001, we acquired the eight leases from Prime Hospitality for our hotels that were previously leased and managed by Prime. These hotels are now managed by MeriStar Hotels under management agreements identical to our other management agreements with MeriStar Hotels, except that the term on four of the agreements is one year with additional one- year renewal periods. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES We have prepared these unaudited interim financial statements according to the rules and regulations of the Securities and Exchange Commission. We have omitted certain information and footnote disclosures that are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These interim financial statements should be read in conjunction with the financial statements, accompanying notes and other information included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2001. Certain 2001 amounts have been reclassified to conform to the 2002 presentation. In our opinion, the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the financial condition and results of operations and cash flows for the periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" requires a public entity to report selected information about operating segments in financial reports issued to shareholders. Based on the guidance provided in the standard, we have determined that our business is conducted in one reportable segment. The standard also establishes requirements for related disclosures about products and services, geographic areas and major customers. Revenues for Canadian operations totaled $4,525 and $5,522 for the three months ended March 31, 2002 and 2001, respectively. Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. FAS No. 137 and No. 138 amended certain provisions of FAS No. 133. We adopted these accounting pronouncements on January 1, 2001. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows. We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows, and by evaluating hedging opportunities. We do not enter into derivative instruments for any purpose other than cash flow hedging purposes. Our interest rate swap agreements were initially designated as hedges against changes in future cash flows associated with specific variable rate debt obligations. As of March 31, 2002, we had three swap agreements with notional amounts totaling $300 million. All of these swap agreements have been converted to non-hedging derivatives due to our repayment of the floating-rate borrowings they originally hedged and they are currently being marked to market through our statement of operations. We have interest rate exposure going forward as the change in fair value of our non-hedging derivatives will have an impact on our statement of operations. The interest rate swap agreements are reflected at fair value in our consolidated balance sheet as of March 31, 2002. For more information regarding our interest rate hedging activities, see "Quantitative and Qualitative Disclosures about Market Risk." In August 2001, the Financial Accounting Standards Board issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121. We did not have any asset sales or impairments in the first three months of 2002; therefore, SFAS No. 144 has no effect on our financial statement for that period. 9 In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 143 "Accounting for Asset Retirement Obligations." These new standards have no effect on our financial statements for the first three months of 2002. 3. NOTE RECEIVABLE FROM LESSEE We may lend MeriStar Hotels up to $50,000 for general corporate purposes under a revolving credit agreement. The interest rate on this credit agreement is 650 basis points over the 30-day London Interbank Offered Rate. As of March 31, 2002, $45,000 was outstanding under this revolving credit agreement. MeriStar Hotels also issued us a term note effective January 1, 2002. This $13,069 term note refinances outstanding accounts payable MeriStar Hotels owed to us. The term note bears interest at 650 basis points over the 30-day LIBOR. The maturity date is the same as that of the revolving credit agreement. 4. LONG-TERM DEBT Long-term debt consisted of the following: March 31, 2002 December 31, 2001 -------------- ----------------- Senior unsecured notes .............. $ 950,000 $ 750,000 Revolving credit facility ........... 43,000 224,000 Secured facility .................... 330,000 330,000 Mortgage debt and other ............. 51,687 52,335 ----------- ----------- 1,374,687 1,356,335 Notes payable to MeriStar Hospitality 359,300 359,300 Unamortized issue discount .......... (20,209) (15,501) ----------- ----------- $ 1,713,778 $ 1,700,134 =========== =========== As of March 31, 2002 aggregate future maturities of the above obligations are as follows: 2002................................. $ 14,057 2003................................. 51,589 2004................................. 171,168 2005................................. 9,265 2006................................. 10,006 Thereafter........................... 1,457,693 ---------- $1,713,778 ========== In February 2002, we issued an additional $200,000 ($196,250, net of discount) aggregate principal amount of 9.13% senior unsecured notes due 2011. We used the proceeds from the issuance of these notes to repay approximately $195,000 of the outstanding balance under our revolving credit agreement. As a result of this financing, we redesignated some swap agreements as non-hedging derivatives. We recognized a $4,735 loss when this amount was transferred out of accumulated other comprehensive income because the debt being hedged was repaid. In February 2002, we amended our revolving credit agreement. The amendment allows us to reduce the revolving commitments to below $300,000. In March 2002, we reduced the borrowing capacity on our revolving credit agreement from $310,000 to $150,000. We recognized a $1,529 loss due to the write-off of deferred financing costs related to reducing the borrowing capacity of our revolving credit agreement. On January 26, 2001, we issued $300,000 aggregate principal amount of 9.0% senior notes due 2008 and $200,000 of 9.13% senior notes due 2011. The notes are unsecured obligations of certain subsidiaries of ours and we guarantee payment of principal and interest on the notes. The net proceeds from the sale of $492,000 were used to repay amounts outstanding under the credit facility and to make payments to terminate certain swap agreements that hedged variable interest rates of the loans that were repaid. The repayments of term loans under the credit facility resulted in an extraordinary loss of $1,243 ($1,226, net of tax) from the write-off of deferred financing costs. Also, in conjunction with the sales of the senior unsecured notes, we terminated three swap agreements with notional amounts totaling $300,000. 10 These swap agreements were designated to the credit facility term loans that were repaid with the proceeds from the sale of these notes. We made payments totaling $9,297 to terminate these swap agreements. 5. DISTRIBUTIONS PAYABLE On March 20, 2002, we declared a dividend for the three months ended March 31, 2002 of $0.01 per unit of limited partnership interest. We paid the distributions on April 30, 2002. 6. EARNINGS PER UNIT The following table presents the computation of basic and diluted earnings per unit: Three months ended ------------------ March 31, --------- 2002 2001 ---- ---- BASIC EARNINGS (LOSS) PER UNIT COMPUTAION: Income (loss) before extraordinary loss $(10,324) $ 14,497 Dividends paid on unvested restricted stock (2) (183) Preferred distributions (141) (141) -------- -------- Income (loss) available to common unitholders (10,467) 14,173 Weighted average number of OP units outstanding 48,670 48,421 -------- -------- Basic earnings (loss) per unit before extraordinary loss $ (0.22) $ 0.29 ======== ======== DILUTED EARNINGS (LOSS) PER UNIT COMPUTATION: Income (loss) available to common unitholders $(10,467) $ 14,173 ======== ======== Weighted average number of OP units outstanding 48,670 48,421 Stock options of MeriStar -- 322 -------- -------- Total weighted average number of diluted OP units outstanding 48,670 48,743 ======== ======== Diluted earnings (loss) per unit before extraordinary loss $ (0.22) $ 0.29 ======== ======== Stock options and operating partnership units are not included in the computation of diluted earnings (loss) per share when their effect is antidilutive. 7. SUPPLEMENTAL CASH FLOW INFORMATION
Three months ended March 31, ---------------------------- 2002 2001 ---- ---- Cash paid for interest and income taxes: Interest, net of capitalized interest of $919 and $2,005 respectively $ 38,288 $ 27,637 Income taxes 82 994
11
Non-cash investing and financing activities: Redemption of redeemable OP units -- 2,640 Operating assets received and liabilities assumed from lease conversion: Accounts receivable -- 47,305 Prepaid expenses and other -- 12,874 Furniture and fixtures, net -- 152 Investment in affiliates, net -- 1,629 -------- -------- Total operating assets received -- 61,960 ======== ======== Accounts payable and accrued expenses -- 65,706 Long-term debt -- 32 -------- -------- Total liabilities acquired -- (65,738) ======== ========
8. STOCK-BASED COMPENSATION As of March 31, 2002, MeriStar Hospitality has granted 479,000 shares of restricted stock to employees. This restricted stock vests ratably over three-year or five-year periods. As of March 31, 2002, we have granted 737,500 Profits-Only OP Units, or POPs, to some of employees pursuant to our POPs Plan. These POPs are fixed awards and vest ratably over three years. 9. RESTRUCTURING EXPENSES During 2001, we incurred a restructuring charge of $1,080 in connection with operational changes at our corporate headquarters. The restructuring included eliminating seven corporate staff positions and office space no longer needed under the new structure. During 2002, we applied $52 of lease termination costs against the restructuring reserve. Approximately $340 of the restructuring accrual remains at March 31, 2002. 10. DISPOSITIONS On March 21, 2001, we sold one hotel and received proceeds of $7,274. The sale resulted in a loss of $1,081 ($1,062, net of tax). 11. CONSOLIDATING FINANCIAL INFORMATION Certain of our subsidiaries and MeriStar Hospitality are guarantors of our senior unsecured notes. Our guarantor subsidiaries also guarantee the unsecured subordinated notes of MeriStar Hospitality. All guarantees are full and unconditional, and joint and several. Exhibit 99 to this Quarterly Report on Form 10-Q presents supplementary consolidating information for us, our non-guarantor subsidiaries, and each of our guarantor subsidiaries. The supplementary consolidating information in Exhibit 99 presents our consolidating balance sheets as of March 31, 2002 and December 31, 2001, and consolidating statements of operations and cash flows for the three months ended March 31, 2002 and 2001. 12. SUBSEQUENT EVENT On May 2, 2002, MeriStar Hotels, the manager of our hotels, announced an agreement to merge with Interstate Hotels Corporation, or Interstate. The transaction will be a stock-for-stock merger of Interstate into MeriStar Hotels in which Interstate stockholders will receive 4.6 shares of common stock for each share of Interstate stock outstanding. Holders of MeriStar Hotel's common stock and operating partnership units will continue to hold their stock and units following the 12 merger. The combined company will operate approximately 86,000 rooms in 412 hotels. MeriStar Hotels expects the transaction to close in the third quarter of 2002. 13 EX-99 5 dex99.txt EXHIBIT 99 Exhibit 99 MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Non- Hospitality OP, Guarantor MeriStar Sub AGH Upreit, L.P. Subsidiaries 7C, LLC LLC Assets Investment in hotel properties 15,528 1,552,900 - - Accumulated depreciation (5,570) (197,731) - - --------------------------------------------------------------- 9,958 1,355,169 - - Cash and cash equivalents 4,374 - - - Accounts receivable, net 6,823 1,294 - - Prepaid expenses and other 1,949 110 - - Note receivable 147,278 - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries (426,114) 114,716 - 7 Investments in affiliates 2,648,040 8,200 32 3,056 Restricted cash 12,658 5,579 - - Intangible assets, net 19,428 856 - - --------------------------------------------------------------- 2,424,394 1,485,924 32 3,063 =============================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 15,753 8,408 - - Accrued interest 37,355 3,866 - - Due to MeriStar Hotels & Resorts 88 - - - Income taxes payable 57 - - - Distributions payable 447 - - - Deferred income taxes 7,186 - - - Interest rate swaps 8,703 - - - Notes payable to MeriStar 357,214 - - - Long-term debt 988,565 369,618 - - --------------------------------------------------------------- Total liabilities 1,415,368 381,892 - - --------------------------------------------------------------- Minority interests 2,650 - - - Redeemable OP units at redemption value 82,117 - - - Partners' capital 924,259 1,104,032 32 3,063 --------------------------------------------------------------- 2,424,394 1,485,924 32 3,063 =============================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5N, LLC 8A, LLC 8F, L.P. 8G, LLC Assets Investment in hotel properties 4,079 5,319 11,340 - Accumulated depreciation (441) (994) (1,594) - ----------------------------------------------------------- 3,638 4,325 9,746 - Cash and cash equivalents - - - - Accounts receivable, net - (16) (28) - Prepaid expenses and other - - 2 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 3,108 5,002 4,303 10 Investments in affiliates - - - 72 Restricted cash - - 115 - Intangible assets, net - - - - ----------------------------------------------------------- 6,746 9,311 14,138 82 =========================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 40 (42) 210 - Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ----------------------------------------------------------- Total liabilities 40 (42) 210 - ----------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - Partners' capital 6,706 9,353 13,928 82 ----------------------------------------------------------- 6,746 9,311 14,138 82 =========================================================== MeriStar Sub MeriStar Sub MeriStar Sub 6H, L.P. 8B, LLC 1C, L.P. Assets Investment in hotel properties 13,569 81,552 25,013 Accumulated depreciation (1,553) (8,099) (4,121) -------------------------------------------- 12,016 73,453 20,892 Cash and cash equivalents - - - Accounts receivable, net - - - Prepaid expenses and other - - 30 Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 4,829 22,605 (3,049) Investments in affiliates - - - Restricted cash - - - Intangible assets, net - 47 1 -------------------------------------------- 16,845 96,105 17,874 ============================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 192 2,706 199 Accrued interest - - - Due to MeriStar Hotels & Resorts - - - Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt - - - -------------------------------------------- Total liabilities 192 2,706 199 -------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 16,653 93,399 17,675 -------------------------------------------- 16,845 96,105 17,874 ============================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 8E, LLC 7F, LLC 5L, LLC 3C, LLC Assets Investment in hotel properties 15,202 12,004 11,296 17,293 Accumulated depreciation (1,995) (2,108) (401) (2,475) ------------------------------------------------------------- 13,207 9,896 10,895 14,818 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 4,573 3,747 3,427 3,283 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net 7 - - 56 ------------------------------------------------------------- 17,787 13,643 14,322 18,157 ============================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (40) 196 55 318 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ------------------------------------------------------------- Total liabilities (40) 196 55 318 ------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 17,827 13,447 14,267 17,839 ------------------------------------------------------------- 17,787 13,643 14,322 18,157 ============================================================= MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5R, LLC 6D, LLC 6E, LLC 4E, L.P. Assets Investment in hotel properties - 17,382 44,173 24,612 Accumulated depreciation - (1,953) (7,067) (3,300) ----------------------------------------------------------- - 15,429 37,106 21,312 Cash and cash equivalents - - - - Accounts receivable, net - 125 - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries (43) 5,524 14,750 1,840 Investments in affiliates 43 - - - Restricted cash - - - - Intangible assets, net - - - 6 ----------------------------------------------------------- - 21,078 51,856 23,158 =========================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities - 122 (33) 119 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ----------------------------------------------------------- Total liabilities - 122 (33) 119 ----------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital - 20,956 51,889 23,039 ----------------------------------------------------------- - 21,078 51,856 23,158 =========================================================== MeriStar Sub MeriStar Sub MeriStar Sub 1B, LLC 5F, L.P. 6G, LLC Assets Investment in hotel properties 18,255 31,007 22,223 Accumulated depreciation (3,085) (3,627) (3,538) -------------------------------------------- 15,170 27,380 18,685 Cash and cash equivalents - - - Accounts receivable, net - - - Prepaid expenses and other - - - Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 11,390 9,504 3,820 Investments in affiliates - - - Restricted cash - - - Intangible assets, net - - - -------------------------------------------- 26,560 36,884 22,505 ============================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (5) 236 241 Accrued interest - - - Due to MeriStar Hotels & Resorts - - - Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt 48 - - -------------------------------------------- Total liabilities 43 236 241 -------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 26,517 36,648 22,264 -------------------------------------------- 26,560 36,884 22,505 ============================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 8C, LLC 4C, L.P. 4H, L.P. 7E, LLC Assets Investment in hotel properties 36,755 16,367 12,389 17,840 Accumulated depreciation (4,262) (3,507) (1,847) (2,238) ---------------------------------------------------------- 32,493 12,860 10,542 15,602 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - 10 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 3,517 231 (1,061) 5,078 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net 2 - - 6 ---------------------------------------------------------- 36,012 13,091 9,491 20,686 ========================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (174) 212 47 87 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ---------------------------------------------------------- Total liabilities (174) 212 47 87 ---------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 36,186 12,879 9,444 20,599 ---------------------------------------------------------- 36,012 13,091 9,491 20,686 ========================================================== MeriStar Sub MeriStar Sub MeriStar Sub 3D, LLC 1A, LLC 5E, LLC Assets Investment in hotel properties 22,361 11,244 52,824 Accumulated depreciation (5,651) (2,143) (6,703) ------------------------------------------- 16,710 9,101 46,121 Cash and cash equivalents - - - Accounts receivable, net - - - Prepaid expenses and other - - - Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 6,308 5,220 10,231 Investments in affiliates - - - Restricted cash - - - Intangible assets, net - - 8 ------------------------------------------- 23,018 14,321 56,360 =========================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 53 105 339 Accrued interest - - - Due to MeriStar Hotels & Resorts - - - Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt - - - ------------------------------------------- Total liabilities 53 105 339 ------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 22,965 14,216 56,021 ------------------------------------------- 23,018 14,321 56,360 =========================================== MeriStar Sub 7A MeriStar Sub MeriStar Sub Joint Venture 6K, LLC 2B, LLC Assets Investment in hotel properties 13,026 22,747 9,450 Accumulated depreciation (1,449) (3,746) (1,662) ------------------------------------------------- 11,577 19,001 7,788 Cash and cash equivalents - - - Accounts receivable, net - - (12) Prepaid expenses and other - - - Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 3,607 14,281 (538) Investments in affiliates - - - Restricted cash - - - Intangible assets, net - - 1 ------------------------------------------------- 15,184 33,282 7,239 ================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 165 195 148 Accrued interest - - - Due to MeriStar Hotels & Resorts - - - Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt - - 4,848 ------------------------------------------------- Total liabilities 165 195 4,996 ------------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 15,019 33,087 2,243 ------------------------------------------------- 15,184 33,282 7,239 =================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 3A, LLC 4A, LLC 4D, LLC 2A, LLC Assets Investment in hotel properties 6,762 8,676 8,733 8,205 Accumulated depreciation (1,362) (1,112) (1,258) (1,217) ------------------------------------------------------------ 5,400 7,564 7,475 6,988 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 1,378 3,546 55 (664) Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - - 25 24 ------------------------------------------------------------ 6,778 11,110 7,555 6,348 ============================================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 115 158 99 68 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - 7,907 ------------------------------------------------------------ Total liabilities 115 158 99 7,975 ------------------------------------------------------------ Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 6,663 10,952 7,456 (1,627) ------------------------------------------------------------ 6,778 11,110 7,555 6,348 ============================================================ MeriStar Sub MDV Limited MeriStar Sub MeriStar Sub 6L, LLC Partnership 5C, LLC 6J, LLC Assets Investment in hotel properties 29,502 3,819 13,846 19,250 Accumulated depreciation (2,687) (443) (2,364) (2,732) -------------------------------------------------------- 26,815 3,376 11,482 16,518 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - 57 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 3,896 1,918 (210) 4,611 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - 9 - 55 -------------------------------------------------------- 30,711 5,303 11,329 21,184 ======================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 117 58 853 3 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - -------------------------------------------------------- Total liabilities 117 58 853 3 -------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 30,594 5,245 10,476 21,181 -------------------------------------------------------- 30,711 5,303 11,329 21,184 ======================================================== MeriStar Sub MeriStar Sub MeriStar Sub 1D, L.P. 7B, L.P. 7D, LLC Assets Investment in hotel properties 68,252 25,403 52,097 Accumulated depreciation (8,063) (2,508) (6,917) ------------------------------------------- 60,189 22,895 45,180 Cash and cash equivalents - - - Accounts receivable, net - - 645 Prepaid expenses and other - - - Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 14,132 (4,849) 18,739 Investments in affiliates - - - Restricted cash - - - Intangible assets, net 44 - 372 ------------------------------------------- 74,365 18,046 64,936 =========================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 342 778 4,116 Accrued interest 71 - - Due to MeriStar Hotels & Resorts - - (200) Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt - - - ------------------------------------------- Total liabilities 413 778 3,916 ------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 73,952 17,268 61,020 ------------------------------------------- 74,365 18,046 64,936 ===========================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 7G, LLC 6B, LLC 4I, L.P. 5D, LLC Assets Investment in hotel properties 16,481 10,578 12,549 41,660 Accumulated depreciation (3,567) (1,404) (3,822) (5,560) ---------------------------------------------------------- 12,914 9,174 8,727 36,100 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries (31) 1,745 995 (6,914) Investments in affiliates - - - 51,368 Restricted cash - - - - Intangible assets, net 25 8 - 21 ---------------------------------------------------------- 12,908 10,927 9,722 80,575 ========================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 18 (46) 192 259 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - 24,000 ---------------------------------------------------------- Total liabilities 18 (46) 192 24,259 ---------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 12,890 10,973 9,530 56,316 ---------------------------------------------------------- 12,908 10,927 9,722 80,575 ========================================================== MeriStar Sub MeriStar Sub AGH PSS I, MeriStar Sub 5H, LLC 7H, LLC Inc. 2D, LLC Assets Investment in hotel properties 52,851 10,005 17,567 15,306 Accumulated depreciation (6,505) (4,215) (2,049) (2,065) -------------------------------------------------------- 46,346 5,790 15,518 13,241 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 7,966 5,287 10,184 134 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - - - 2 -------------------------------------------------------- 54,312 11,077 25,702 13,377 ======================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 276 320 201 (27) Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - 13 - 9,162 -------------------------------------------------------- Total liabilities 276 333 201 9,135 -------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 54,036 10,744 25,501 4,242 -------------------------------------------------------- 54,312 11,077 25,702 13,377 ======================================================== MeriStar Sub MeriStar Sub MeriStar Sub 4F, L.P. 5K, LLC 5M, LLC Assets Investment in hotel properties 31,663 27,735 21,962 Accumulated depreciation (3,891) (3,026) (1,542) ---------------------------------------------- 27,772 24,709 20,420 Cash and cash equivalents - - - Accounts receivable, net - - - Prepaid expenses and other - - - Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 3,219 (503) 6,007 Investments in affiliates - - - Restricted cash - - - Intangible assets, net 31 - - ---------------------------------------------- 31,022 24,206 26,427 ============================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 134 5,688 153 Accrued interest - - - Due to MeriStar Hotels & Resorts - - - Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt - - - ---------------------------------------------- Total liabilities 134 5,688 153 ---------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 30,888 18,518 26,274 ---------------------------------------------- 31,022 24,206 26,427 ==============================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1E, L.P. 5O, LLC 6M Company 4B, L.P. Assets Investment in hotel properties 10,406 8,697 32,802 16,484 Accumulated depreciation (1,426) (752) (3,890) (4,797) ---------------------------------------------------------- 8,980 7,945 28,912 11,687 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - 13 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 6,142 2,206 12,965 (4,200) Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - - 40 19 ---------------------------------------------------------- 15,122 10,151 41,930 7,506 ========================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (18) 65 (31) 192 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ---------------------------------------------------------- Total liabilities (18) 65 (31) 192 ---------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 15,140 10,086 41,961 7,314 ---------------------------------------------------------- 15,122 10,151 41,930 7,506 ========================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 6C, LLC 2C, LLC 4G, L.P. 3B, LLC Assets Investment in hotel properties 20,547 28,293 25,507 24,771 Accumulated depreciation (3,014) (4,575) (3,336) (3,201) ---------------------------------------------------------- 17,533 23,718 22,171 21,570 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 8,407 5,147 6,058 2,107 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - 2 23 - ---------------------------------------------------------- 25,940 28,867 28,252 23,677 ========================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (104) 282 194 261 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - 16,003 - - ---------------------------------------------------------- Total liabilities (104) 16,285 194 261 ---------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 26,044 12,582 28,058 23,416 ---------------------------------------------------------- 25,940 28,867 28,252 23,677 ========================================================== MeriStar Sub MeriStar Sub MeriStar Sub 5G, L.P. 5P, LLC 5J, LLC Assets Investment in hotel properties 162,558 - 104,845 Accumulated depreciation (19,559) - (10,725) -------------------------------------------- 142,999 - 94,120 Cash and cash equivalents - - - Accounts receivable, net - (10) - Prepaid expenses and other - - - Note receivable - - - Due from MeriStar Hotels & Resorts - - - Due from subsidiaries 30,683 1,565 16,011 Investments in affiliates - - - Restricted cash - - - Intangible assets, net - - - -------------------------------------------- 173,682 1,555 110,131 ============================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 1,144 25 1,122 Accrued interest - - - Due to MeriStar Hotels & Resorts - - - Income taxes payable - - - Distributions payable - - - Deferred income taxes - - - Interest rate swaps - - - Notes payable to MeriStar - - - Long-term debt - - - -------------------------------------------- Total liabilities 1,144 25 1,122 -------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 172,538 1,530 109,009 -------------------------------------------- 173,682 1,555 110,131 ============================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5Q, LLC 5A, LLC 8D, LLC 4J, LLC Assets Investment in hotel properties 16,313 34,774 30,469 37,969 Accumulated depreciation (1,336) (8,286) (4,130) (4,886) ------------------------------------------------------- 14,977 26,488 26,339 33,083 Cash and cash equivalents - - - - Accounts receivable, net - - - (10) Prepaid expenses and other - - 1 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 2,500 3,822 5,747 3,548 Investments in affiliates - 4,627 - - Restricted cash - - - - Intangible assets, net - 12 - 37 ------------------------------------------------------- 17,477 34,949 32,087 36,658 ======================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (41) 142 (86) 84 Accrued interest - - - - Due to MeriStar Hotels & Resorts - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - 23,609 - - ------------------------------------------------------- Total liabilities (41) 23,751 (86) 84 ------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 17,518 11,198 32,173 36,574 ------------------------------------------------------- 17,477 34,949 32,087 36,658 ======================================================= MeriStar Hotel Total Lessee, Inc. Eliminations Consolidated Assets Investment in hotel properties 862 - 3,195,949 Accumulated depreciation (683) - (425,765) ----------------------------------------------- 179 - 2,770,184 - Cash and cash equivalents 21,592 - 25,966 Accounts receivable, net 50,621 - 59,432 Prepaid expenses and other 14,500 - 16,672 Note receivable - (89,209) 58,069 Due from MeriStar Hotels & Resorts - - - Due from subsidiaries (7,455) - - Investments in affiliates 1,629 (2,675,353) 41,714 Restricted cash - - 18,352 Intangible assets, net - - 21,167 ----------------------------------------------- 81,066 (2,764,562) 3,011,556 =============================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 77,695 - 124,143 Accrued interest 17 - 41,309 Due to MeriStar Hotels & Resorts 4,080 - 3,968 Income taxes payable 25 - 82 Distributions payable - - 447 Deferred income taxes (337) - 6,849 Interest rate swaps - - 8,703 Notes payable to MeriStar - - 357,214 Long-term debt 2,000 (89,209) 1,356,564 ----------------------------------------------- Total liabilities 83,480 (89,209) 1,899,279 ----------------------------------------------- Minority interests - - 2,650 Redeemable OP units at redemption value - - 82,117 Partners' capital (2,414) (2,675,353) 1,027,510 ----------------------------------------------- 81,066 (2,764,562) 3,011,556 ===============================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriSta Non- Hospitality Guarantor MeriStar Sub AGH Upreit, MeriStar Sub OP, L.P Subsidiaries 7C, LLC LLC 5N, LLC Participating lease revenue - 35,087 - - 319 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues 1,833 1,378 - - - ------------------------------------------------------------------- Total revenue 1,833 36,465 - - 319 ------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - 201 - - - Undistributed operating expenses: Administrative and general 2,335 56 - - - Property operating costs (454) 12 - - - Property taxes, insurance and other (760) 6,281 - - 27 Depreciation and amortization 2,671 13,259 - - 33 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs 1,529 - - - - Loss on fair value of non-hedging derivatives 4,735 - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ------------------------------------------------------------------- Total operating expenses 10,056 19,809 - - 60 ------------------------------------------------------------------- Net operating income (8,223) 16,656 - - 259 ------------------------------------------------------------------- Interest expense, net 26,199 6,942 - - (2) Equity in income from consolidated entities (23,860) - - - - ------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (10,562) 9,714 0 0 261 Minority interests 11 - - - - ------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (10,573) 9,714 - - 261 Income tax benefit (249) - - - - ------------------------------------------------------------------- Income (loss) before loss on sale of assets (10,324) 9,714 - - 261 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ------------------------------------------------------------------- Net income (loss) (10,324) 9,714 - - 261 =================================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 8A, LLC 8F, L.P. 8G, LLC 6H, L.P. 8B, LLC Participating lease revenue 345 571 - 378 1,791 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - - - ---------------------------------------------------------------------- Total revenue 345 571 - 378 1,791 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - 1 - 1 - Property operating costs - - - - - Property taxes, insurance and other 38 230 - 25 358 Depreciation and amortization 59 113 - 107 595 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 97 344 - 133 953 ---------------------------------------------------------------------- Net operating income 248 227 - 245 838 ---------------------------------------------------------------------- Interest expense, net (4) (2) - (1) (14) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 252 229 0 246 852 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 252 229 - 246 852 Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 252 229 - 246 852 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) 252 229 - 246 852 ======================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1C, L.P. 8E, LLC 7F, LLC 5L, LLC 3C, LLC Participating lease revenue 410 376 274 317 541 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - 8 - - - --------------------------------------------------------------------- Total revenue 410 384 274 317 541 --------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 202 46 34 30 114 Depreciation and amortization 257 147 118 33 176 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - --------------------------------------------------------------------- Total operating expenses 459 193 152 63 290 --------------------------------------------------------------------- Net operating income (49) 191 122 254 251 --------------------------------------------------------------------- Interest expense, net (10) (4) (2) (3) (5) Equity in income from consolidated entities - - - - - --------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (39) 195 124 257 256 Minority interests - - - - - --------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (39) 195 124 257 256 Income tax benefit - - - - - --------------------------------------------------------------------- Income (loss) before loss on sale of assets (39) 195 124 257 256 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - --------------------------------------------------------------------- Net income (loss) (39) 195 124 257 256 ===================================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5R, LLC 6D, LLC 6E, LLC 4E, L.P. 1B, LLC Participating lease revenue - 517 1,264 342 505 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - 6 - 3 581 --------------------------------------------------------------------- Total revenue - 523 1,264 345 1,086 --------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other - 46 207 97 39 Depreciation and amortization - 133 425 230 158 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - --------------------------------------------------------------------- Total operating expenses - 179 632 327 197 --------------------------------------------------------------------- Net operating income - 344 632 18 889 --------------------------------------------------------------------- Interest expense, net - (6) (12) (6) (3) Equity in income from consolidated entities - - - - - --------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 0 350 644 24 892 Minority interests - - - - - --------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets - 350 644 24 892 Income tax benefit - - - - - --------------------------------------------------------------------- Income (loss) before loss on sale of assets - 350 644 24 892 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - --------------------------------------------------------------------- Net income (loss) - 350 644 24 892 =====================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5F, L.P. 6G, LLC 8C, LLC 4C, L.P 4H, L.P. Participating lease revenue 802 563 487 310 171 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - 2 - - --------------------------------------------------------------------- Total revenue 802 563 489 310 171 --------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general 1 - (1) - 47 Property operating costs - - - - - Property taxes, insurance and other 84 75 151 101 135 Depreciation and amortization 264 209 346 152 - Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - --------------------------------------------------------------------- Total operating expenses 349 284 496 253 182 --------------------------------------------------------------------- Net operating income 453 279 (7) 57 (11) --------------------------------------------------------------------- Interest expense, net (7) (9) (10) (9) (2) Equity in income from consolidated entities - - - - - --------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 460 288 3 66 (9) Minority interests - - - - - --------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 460 288 3 66 (9) Income tax benefit - - - - - --------------------------------------------------------------------- Income (loss) before loss on sale of assets 460 288 3 66 (9) Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - --------------------------------------------------------------------- Net income (loss) 460 288 3 66 (9) ====================================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 7A 7E, LLC 3D, LLC 1A, LLC 5E, LLC Joint Venture Participating lease revenue 362 713 401 1,080 272 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - - - ------------------------------------------------------------------------ Total revenue 362 713 401 1,080 272 ------------------------------------------------------------------------ Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - 1 Property operating costs - - - - - Property taxes, insurance and other 39 18 82 96 56 Depreciation and amortization 158 240 119 485 104 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ------------------------------------------------------------------------ Total operating expenses 197 258 201 581 161 ------------------------------------------------------------------------ Net operating income 165 455 200 499 111 ------------------------------------------------------------------------ Interest expense, net (5) (9) (5) (8) (7) Equity in income from consolidated entities - - - - - ------------------------------------------------------------------------ Income (loss) before minority interests, income tax benefit, loss on sale of assets 170 464 205 507 118 Minority interests - - - - - ------------------------------------------------------------------------ Income (loss) before income tax benefit, loss on sale of assets 170 464 205 507 118 Income tax benefit - - - - - ------------------------------------------------------------------------ Income (loss) before loss on sale of assets 170 464 205 507 118 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ------------------------------------------------------------------------ Net income (loss) 170 464 205 507 118 ========================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 6K, LLC 2B, LLC 3A, LLC 4A, L.P. 4D, LLC Participating lease revenue 882 109 133 248 117 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - - - ---------------------------------------------------------------------- Total revenue 882 109 133 248 117 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 120 36 28 60 46 Depreciation and amortization 186 105 71 - 80 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 306 141 99 60 126 ---------------------------------------------------------------------- Net operating income 576 (32) 34 188 (9) ---------------------------------------------------------------------- Interest expense, net (8) 95 (5) (7) (9) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 584 (127) 39 195 0 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 584 (127) 39 195 - Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 584 (127) 39 195 - Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) 584 (127) 39 195 - ====================================================================== MeriStar Sub MeriStar Sub MDV Limited MeriStar Sub MeriStar Sub 2A, LLC 6L, LLC Partnership 5C, LLC 6J, LLC Participating lease revenue 127 350 190 259 622 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - - - ---------------------------------------------------------------------- Total revenue 127 350 190 259 622 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general 2 1 - - - Property operating costs - - - - - Property taxes, insurance and other 37 50 38 98 46 Depreciation and amortization 78 222 34 149 162 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 117 273 72 247 208 ---------------------------------------------------------------------- Net operating income 10 77 118 12 414 ---------------------------------------------------------------------- Interest expense, net 167 (2) (1) (8) (9) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (157) 79 119 20 423 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (157) 79 119 20 423 Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets (157) 79 119 20 423 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) (157) 79 119 20 423 ======================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1D, L.P. 7B, L.P. 7D, LLC 7G, LLC 6B, LLC Participating lease revenue 1,382 391 1,387 146 253 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues 107 - 341 - - ---------------------------------------------------------------------- Total revenue 1,489 391 1,728 146 253 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses 31 - 483 - - Undistributed operating expenses: Administrative and general - 1 - - - Property operating costs - - - - - Property taxes, insurance and other 267 223 533 59 60 Depreciation and amortization 554 231 416 189 114 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 852 455 1,432 248 174 ---------------------------------------------------------------------- Net operating income 637 (64) 296 (102) 79 ---------------------------------------------------------------------- Interest expense, net (22) (4) (11) (6) (1) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 659 (60) 307 (96) 80 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 659 (60) 307 (96) 80 Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 659 (60) 307 (96) 80 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) 659 (60) 307 (96) 80 ====================================================================== MeriStar Sub MeriStar Sub MeriStar Sub AGH PSS I, 5D, LLC 5H, LLC 7H, LLC Inc. Participating lease revenue 416 1,239 315 737 Hotel operations: Rooms - - - - Food and beverage - - - - Other operating departments - - - - Office rental and other revenues - - - 1 ----------------------------------------------------- Total revenue 416 1,239 315 738 ----------------------------------------------------- Hotel operating expenses by department: Rooms - - - - Food and beverage - - - - Other operating departments - - - - Office rental, parking and other operating expenses - - - - Undistributed operating expenses: Administrative and general - - - - Property operating costs - - - - Property taxes, insurance and other 87 168 92 105 Depreciation and amortization 362 493 152 - Write down of investment in STS Hotel Net - - - - Loss on asset impairment - - - - Write down of deferred costs - - - - Loss on fair value of non-hedging derivatives - - - - FelCor merger costs - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - Restructuring charge - - - - ----------------------------------------------------- Total operating expenses 449 661 244 105 ----------------------------------------------------- Net operating income (33) 578 71 633 ----------------------------------------------------- Interest expense, net 399 (18) (5) (8) Equity in income from consolidated entities - - - - ----------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (432) 596 76 641 Minority interests - - - - ----------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (432) 596 76 641 Income tax benefit - - - - ----------------------------------------------------- Income (loss) before loss on sale of assets (432) 596 76 641 Loss on sale of assets, net of tax effect - - - - Extraordinary item, net of tax effect - - - - ----------------------------------------------------- Net income (loss) (432) 596 76 641 =====================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 2D, LLC 4F, L.P. 5K, LLC 5M, LLC 1E, L.P. Participating lease revenue 245 467 736 649 317 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - 4 - - - ---------------------------------------------------------------------- Total revenue 245 471 736 649 317 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 56 93 76 76 36 Depreciation and amortization 117 280 297 113 76 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 173 373 373 189 112 ---------------------------------------------------------------------- Net operating income 72 98 363 460 205 ---------------------------------------------------------------------- Interest expense, net 192 (7) (22) (5) (4) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (120) 105 385 465 209 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (120) 105 385 465 209 Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets (120) 105 385 465 209 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) (120) 105 385 465 209 ====================================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5O, LLC 6M Company 4B, L.P. 6C, LLC 2C, LLC Participating lease revenue 276 917 55 714 343 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - 4 19 ---------------------------------------------------------------------- Total revenue 276 917 55 718 362 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 35 71 86 50 86 Depreciation and amortization 55 302 177 199 255 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 90 373 263 249 341 ---------------------------------------------------------------------- Net operating income 186 544 (208) 469 21 ---------------------------------------------------------------------- Interest expense, net (2) (4) (56) (7) 332 Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 188 548 (152) 476 (311) Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 188 548 (152) 476 (311) Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 188 548 (152) 476 (311) Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) 188 548 (152) 476 (311) ======================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002
MeriStar Sub 4G, L.P. Participating lease revenue 726 Hotel operations: Rooms - Food and beverage - Other operating departments - Office rental and other revenues 6 ------------- Total revenue 732 ------------- Hotel operating expenses by department: Rooms - Food and beverage - Other operating departments - Office rental, parking and other operating expenses - Undistributed operating expenses: Administrative and general - Property operating costs - Property taxes, insurance and other 124 Depreciation and amortization 229 Write down of investment in STS Hotel Net - Loss on asset impairment - Write down of deferred costs - Loss on fair value of non-hedging derivatives - FelCor merger costs - Costs to terminate leases with Prime Hospitality Corporation - Restructuring charge - ------------- Total operating expenses 353 ------------- Net operating income 379 ------------- Interest expense, net (6) Equity in income from consolidated entities - ------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 385 Minority interests - ------------- Income (loss) before income tax benefit, loss on sale of assets 385 Income tax benefit - ------------- Income (loss) before loss on sale of assets 385 Loss on sale of assets, net of tax effect - Extraordinary item, net of tax effect - ------------- Net income (loss) 385 =============
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 3B, LLC 5G, L.P. 5P, LLC 5J, LLC 5Q, LLC Participating lease revenue 368 3,220 119 2,790 653 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues 6 18 - - - ---------------------------------------------------------------------- Total revenue 374 3,238 119 2,790 653 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - 2 - - - Property operating costs - - - - - Property taxes, insurance and other 81 465 6 471 68 Depreciation and amortization 230 1,548 - 866 120 Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 311 2,015 6 1,337 188 ---------------------------------------------------------------------- Net operating income 63 1,223 113 1,453 465 ---------------------------------------------------------------------- Interest expense, net (7) (30) - (26) (22) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 70 1,253 113 1,479 487 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 70 1,253 113 1,479 487 Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 70 1,253 113 1,479 487 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) 70 1,253 113 1,479 487 ---------------------------------------------------------------------- MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Hotel 5A, LLC 8D, LLC 4J, LLC Lessee, Inc. Eliminations Participating lease revenue 1,582 579 776 - (73,053) Hotel operations: Rooms - - - 170,548 - Food and beverage - - - 62,065 - Other operating departments - - - 19,108 - Office rental and other revenues 23 - 65 538 - ------------------------------------------------------------------------- Total revenue 1,605 579 841 252,259 (73,053) ------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - 38,935 - Food and beverage - - - 44,405 - Other operating departments - - - 10,694 - Office rental, parking and other operating expenses - - 99 - - Undistributed operating expenses: Administrative and general - - - 41,071 - Property operating costs - - - 37,824 - Property taxes, insurance and other 151 106 101 80,904 (73,053) Depreciation and amortization 313 317 336 294 - Write down of investment in STS Hotel Net - - - - - Loss on asset impairment - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ------------------------------------------------------------------------- Total operating expenses 464 423 536 254,127 (73,053) ------------------------------------------------------------------------- Net operating income 1,141 156 305 (1,868) - ------------------------------------------------------------------------- Interest expense, net 693 (5) (11) 61 - Equity in income from consolidated entities - - - - 23,860 ------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 448 161 316 (1,929) (23,860) Minority interests - - - - - ------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 448 161 316 (1,929) (23,860) Income tax benefit - - - - - ------------------------------------------------------------------------- Income (loss) before loss on sale of assets 448 161 316 (1,929) (23,860) Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ------------------------------------------------------------------------- Net income (loss) 448 161 316 (1,929) (23,860) =========================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 (in thousands of dollars)
Total Consolidated Participating lease revenue - Hotel operations: - Rooms 170,548 Food and beverage 62,065 Other operating departments 19,108 Office rental and other revenues 4,943 ------------- Total revenue 256,664 ------------- - Hotel operating expenses by department: - Rooms 38,935 Food and beverage 44,405 Other operating departments 10,694 Office rental, parking and other operating expenses 814 Undistributed operating expenses: - Administrative and general 43,471 Property operating costs 37,382 Property taxes, insurance and other 20,081 Depreciation and amortization 30,592 Write down of investment in STS Hotel Net - Loss on asset impairment - Write down of deferred costs 1,529 Loss on fair value of non-hedging derivatives 4,735 FelCor merger costs - Costs to terminate leases with Prime Hospitality - Corporation - Restructuring charge - ------------- Total operating expenses 232,638 ------------- - Net operating income 24,026 ------------- - Interest expense, net 34,588 Equity in income from consolidated entities - ------------- Income (loss) before minority interests, income - tax benefit, loss on sale of assets (10,562) Minority interests 11 ------------- - Income (loss) before income tax benefit, loss on - sale of assets (10,573) Income tax benefit (249) ------------- - Income (loss) before loss on sale of assets (10,324) Loss on sale of assets, net of tax effect - Extraordinary item, net of tax effect - ------------- Net income (loss) (10,324) =============
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar MeriStar MeriStar Hospitality OP, Non-Guarantor Sub AGH Sub 5N, L.P. Subsidiaries 7C, LLC Upreit, LLC LLC Cash flows from operating activities: Net Income (loss) (10,324) 9,714 - - 261 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,671 13,259 - - 33 Equity in earnings (23,860) - - - - Loss on fair value of non-hedging derivatives 4,735 - - - - Write off of deffered financing costs 1,529 - - - - Minority interests 11 - - - - Amortization of unearned stock based compensation 880 - - - - Interest rate swaps marked to fair value (2,887) - - - - Deferred income taxes (281) - - - - Changes in operating assets and liabilities: Accounts receivable, net (2,731) (111) - - (16) Prepaid expenses and other 2,033 502 - - - Due from/to Meristar Hotels (589) - - - - Accounts payable, accrued expenses and other liabilities (3,030) (5,383) - - 26 Accrued interest (3,558) (156) - - - Due from subsidiaries 24,316 (11,553) - - (299) Income taxes payable (228) - - - - ------------------------------------------------------------ Net cash provided by (used in) operating activities (11,313) 6,272 - - 5 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net (833) (5,862) - - (5) Proceeds from disposition of assets - - - - - Investments in and advances to affiliates, net - - - - - Note receivable (9,000) (389) - - - Change in restricted cash 1,093 1,859 - - - ------------------------------------------------------------ Net cash provided by (used in) investing activities (8,740) (4,392) - - (5) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs (3,131) - - - - Proceeds from mortgages and notes payable 234,545 - - - - Principal payments on mortgages and notes payable (215,000) (1,880) - - - Borrowings from MeriStar Hospitality - - - - - Repayments to MeriStar Hospitality on borrowing - - - - - Purchase of treasury stock (409) - - - - Contributions from partners 3,155 - - - - Distributions to partners (1,264) - - - - ------------------------------------------------------------ Net cash provided by (used in) financing activities 17,896 (1,880) - - - ------------------------------------------------------------ Effect of exchange rate changes on cash (271) - - - - ------------------------------------------------------------ Net change in cash (2,428) - - - - Cash and cash equivalents, beginning of period 6,798 - - - - ------------------------------------------------------------ Cash and cash equivalents, end of period 4,370 - - - - ============================================================ MeriStar MeriStar MeriStar Sub MeriStar Sub 8G, MeriStar Sub Sub 8A, LLC Sub 8F, L.P. LLC 6H, L.P. 8B, LLC Cash flows from operating activities: Net Income (loss) 252 229 - 246 852 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 59 113 - 107 595 Equity in earnings - - - - - Loss on fair value of non-hedging derivatives - - - - - Write off of deffered financing costs - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net (16) 8 - - - Prepaid expenses and other - 19 - - - Due from/to Meristar Hotels - - - - - Accounts payable, accrued expenses and other liabilities - 50 - 8 294 Accrued interest - - - - - Due from subsidiaries (2,282) (414) - (361) (1,161) Income taxes payable - - - - - ------------------------------------------------------------ Net cash provided by (used in) operating activities (1,987) 5 - - 580 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net 1,987 (5) - - (580) Proceeds from disposition of assets - - - - - Investments in and advances to affiliates, net - - - - - Note receivable - - - - - Change in restricted cash - - - - - ------------------------------------------------------------ Net cash provided by (used in) investing activities 1,987 (5) - - (580) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Borrowings from MeriStar Hospitality - - - - - Repayments to MeriStar Hospitality on borrowing - - - - - Purchase of treasury stock - - - - - Contributions from partners - - - - - Distributions to partners - - - - - ------------------------------------------------------------ Net cash provided by (used in) financing activities - - - - - ------------------------------------------------------------ Effect of exchange rate changes on cash - - - - - ------------------------------------------------------------ Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - ------------------------------------------------------------ Cash and cash equivalents, end of period - - - - - ============================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub 1C, L.P. 8E, LLC 7F, LLC Cash flows from operating activities: Net Income (loss) (39) 195 124 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 257 147 118 Equity in earnings - - - Loss on fair value of non-hedging derivatives - - - Write off of deffered financing costs - - - Minority interests - - - Amortization of unearned stock based compensation - - - Interest rate swaps marked to fair value - - - Deferred income taxes - - - Changes in operating assets and liabilities: Accounts receivable, net - - - Prepaid expenses and other (30) - - Due from/to Meristar Hotels - - - Accounts payable, accrued expenses and other liabilities 154 (48) 28 Accrued interest - - - Due from subsidiaries (254) (249) (251) Income taxes payable - - - --------------------------------------- Net cash provided by (used in) operating activities 88 45 19 --------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (88) (45) (19) Proceeds from disposition of assets - - - Investments in and advances to affiliates, net - - - Note receivable - - - Change in restricted cash - - - --------------------------------------- Net cash provided by (used in) investing activities (88) (45) (19) --------------------------------------- Cash flows from financing activities: Deferred financing costs - - - Proceeds from mortgages and notes payable - - - Principal payments on mortgages and notes payable - - - Borrowings from MeriStar Hospitality - - - Repayments to MeriStar Hospitality on borrowing - - - Purchase of treasury stock - - - Contributions from partners - - - Distributions to partners - - - --------------------------------------- Net cash provided by (used in) financing activities - - - --------------------------------------- Effect of exchange rate changes on cash - - - --------------------------------------- Net change in cash - - - Cash and cash equivalents, beginning of period - - - --------------------------------------- Cash and cash equivalents, end of period - - - ======================================= MeriStar MeriStar MeriStar MeriStar MeriStar Sub Sub Sub Sub Sub 5L, LLC 3C, LLC 5R, LLC 8A, LLC 6D, LLC Cash flows from operating activities: Net Income (loss) 257 256 - - 350 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 33 176 - - 133 Equity in earnings - - - - - Loss on fair value of non-hedging derivatives - - - - - Write off of deffered financing costs - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - (10) Prepaid expenses and other - - - 1 - Due from/to Meristar Hotels - - - - - Accounts payable, accrued expenses and other liabilities 52 148 - (46) 21 Accrued interest - - - - - Due from subsidiaries (338) (561) - 46 (378) Income taxes payable - - - - - ------------------------------------------------------------ Net cash provided by (used in) operating activities 4 19 - 1 116 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net (4) (19) - (1) (116) Proceeds from disposition of assets - - - - - Investments in and advances to affiliates, net - - - - - Note receivable - - - - - Change in restricted cash - - - - - ------------------------------------------------------------ Net cash provided by (used in) investing activities (4) (19) - (1) (116) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Borrowings from MeriStar Hospitality - - - - - Repayments to MeriStar Hospitality on borrowing - - - - - Purchase of treasury stock - - - - - Contributions from partners - - - - - Distributions to partners - - - - - ------------------------------------------------------------ Net cash provided by (used in) financing activities - - - - - ------------------------------------------------------------ Effect of exchange rate changes on cash - - - - - ------------------------------------------------------------ Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - ------------------------------------------------------------ Cash and cash equivalents, end of period - - - - - ============================================================ MeriStar Sub MeriStar 6E, LLC 4E, L.P. Cash flows from operating activities: Net Income (loss) 644 24 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 425 230 Equity in earnings - - Loss on fair value of non-hedging derivatives - - Write off of deffered financing costs - - Minority interests - - Amortization of unearned stock based compensation - - Interest rate swaps marked to fair value - - Deferred income taxes - - Changes in operating assets and liabilities: Accounts receivable, net - - Prepaid expenses and other - - Due from/to Meristar Hotels - - Accounts payable, accrued expenses and other liabilities 262 (337) Accrued interest - - Due from subsidiaries (1,089) 148 Income taxes payable - - ------------------------------ Net cash provided by (used in) operating activities 242 65 ------------------------------ Cash flows from investing activities: Investment in hotel properties, net (242) (65) Proceeds from disposition of assets - - Investments in and advances to affiliates, net - - Note receivable - - Change in restricted cash - - ------------------------------ Net cash provided by (used in) investing activities (242 ) (65) ------------------------------ Cash flows from financing activities: Deferred financing costs - - Proceeds from mortgages and notes payable - - Principal payments on mortgages and notes payable - - Borrowings from MeriStar Hospitality - - Repayments to MeriStar Hospitality on borrowing - - Purchase of treasury stock - - Contributions from partners - - Distributions to partners - - ------------------------------ Net cash provided by (used in) financing activities - - ------------------------------ Effect of exchange rate changes on cash - - ------------------------------ Net change in cash - - Cash and cash equivalents, beginning of period - - ------------------------------ Cash and cash equivalents, end of period - - ==============================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar MeriStar MeriStar Sub MeriStar MeriStar Sub 1B, Sub 5F, 6G, LLC Sub 8C, LLC Sub 4C, LLC L.P. L.P. Cash flows from operating activities: Net Income (loss) 892 460 288 3 66 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 158 264 209 346 152 Equity in earnings - - - - - Loss on fair value of non-hedging derivatives - - - - - Write off of deffered financing costs - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - - Prepaid expenses and other - - - - - Due from/to Meristar Hotels - - - - - Accounts payable, accrued expenses and other liabilities 6 142 90 (153) (235) Accrued interest - - - - - Due from subsidiaries (911) (812) (414) (109) 39 Income taxes payable - - - - - ------------------------------------------------------------ Net cash provided by (used in) operating activities 145 54 173 87 22 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net (145) (54) (173) (87) (22) Proceeds from disposition of assets - - - - - Investments in and advances to affiliates, net - - - - - Note receivable - - - - - Change in restricted cash - - - - - ------------------------------------------------------------ Net cash provided by (used in) investing activities (145) (54) (173) (87) (22) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Borrowings from MeriStar Hospitality - - - - - Repayments to MeriStar Hospitality on borrowing - - - - - Purchase of treasury stock - - - - - Contributions from partners - - - - - Distributions to partners - - - - - ------------------------------------------------------------ Net cash provided by (used in) financing activities - - - - - ------------------------------------------------------------ Effect of exchange rate changes on cash - - - - - ------------------------------------------------------------ Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - ------------------------------------------------------------ Cash and cash equivalents, end of period - - - - - ============================================================ MeriStar Sub MeriStar Sub MeriStar Sub 4H, L.P. 7E, LLC 3D, LLC Cash flows from operating activities: Net Income (loss) (9) 170 464 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 135 158 240 Equity in earnings - - - Loss on fair value of non-hedging derivatives - - - Write off of deffered financing costs - - - Minority interests - - - Amortization of unearned stock based compensation - - - Interest rate swaps marked to fair value - - - Deferred income taxes - - - Changes in operating assets and liabilities: Accounts receivable, net - - - Prepaid expenses and other (10) - - Due from/to Meristar Hotels - - - Accounts payable, accrued expenses and other liabilities (146) (30) 53 Accrued interest - - - Due from subsidiaries 56 (280) (701) Income taxes payable - - - -------------------------------------------- Net cash provided by (used in) operating activities 26 18 56 -------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (26) (18) (56) Proceeds from disposition of assets - - - Investments in and advances to affiliates, net - - - Note receivable - - - Change in restricted cash - - - -------------------------------------------- Net cash provided by (used in) investing activities (26) (18) (56) -------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - Proceeds from mortgages and notes payable - - - Principal payments on mortgages and notes payable - - - Borrowings from MeriStar Hospitality - - - Repayments to MeriStar Hospitality on borrowing - - - Purchase of treasury stock - - - Contributions from partners - - - Distributions to partners - - - -------------------------------------------- Net cash provided by (used in) financing activities - - - -------------------------------------------- Effect of exchange rate changes on cash - - - -------------------------------------------- Net change in cash - - - Cash and cash equivalents, beginning of period - - - -------------------------------------------- Cash and cash equivalents, end of period - - - ============================================ MeriStar Sub MeriStar Sub 1A, LLC 5E, LLC Cash flows from operating activities: Net Income (loss) 205 507 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 119 485 Equity in earnings - - Loss on fair value of non-hedging derivatives - - Write off of deffered financing costs - - Minority interests - - Amortization of unearned stock based compensation - - Interest rate swaps marked to fair value - - Deferred income taxes - - Changes in operating assets and liabilities: Accounts receivable, net - - Prepaid expenses and other - - Due from/to Meristar Hotels - - Accounts payable, accrued expenses and other liabilities (43) 38 Accrued interest - - Due from subsidiaries (268) (1,023) Income taxes payable - - --------------------------- Net cash provided by (used in) operating activities 13 7 --------------------------- Cash flows from investing activities: Investment in hotel properties, net (13) (7) Proceeds from disposition of assets - - Investments in and advances to affiliates, net - - Note receivable - - Change in restricted cash - - --------------------------- Net cash provided by (used in) investing activities (13) (7) --------------------------- Cash flows from financing activities: Deferred financing costs - - Proceeds from mortgages and notes payable - - Principal payments on mortgages and notes payable - - Borrowings from MeriStar Hospitality - - Repayments to MeriStar Hospitality on borrowing - - Purchase of treasury stock - - Contributions from partners - - Distributions to partners - - ---------------------------- Net cash provided by (used in) financing activities - - ---------------------------- Effect of exchange rate changes on cash - - ---------------------------- Net change in cash - - Cash and cash equivalents, beginning of period - - ---------------------------- Cash and cash equivalents, end of period - - ============================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars) CAPTION MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 7A Joint Venture 6K, LLC 2B, LLC 3A, LLC Cash flows from operating activities: Net Income (loss) 118 584 (127) 39 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 104 186 105 71 Equity in earnings - - - - Loss on fair value of non-hedging derivatives - - - - Write off of deffered financing costs - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - Prepaid expenses and other - - - - Due from/to Meristar Hotels - - - - Accounts payable, accrued expenses and other liabilities (65) 117 - 17 Accrued interest - - - - Due from subsidiaries (22) (782) 51 361 Income taxes payable - - - - ----------------------------------------------------- Net cash provided by (used in) operating activities 135 105 29 488 ----------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (135) (105) (26) (488) Proceeds from disposition of assets - - - - Investments in and advances to affiliates, net - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------- Net cash provided by (used in) investing activities (135) (105) (26) (488) ----------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - (3) - Borrowings from MeriStar Hospitality - - - - Repayments to MeriStar Hospitality on borrowing - - - - Purchase of treasury stock - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------- Net cash provided by (used in) financing activities - - (3) - ----------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------- Cash and cash equivalents, end of period - - - - =====================================================
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 4A, L.P. 4D, LLC 2A, LLC 6L, LLC Cash flows from operating activities: Net Income (loss) 195 - (157) 79 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization - 80 78 222 Equity in earnings - - - - Loss on fair value of non-hedging derivatives - - - - Write off of deffered financing costs - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - Prepaid expenses and other - - - - Due from/to Meristar Hotels - - - - Accounts payable, accrued expenses and other liabilities (155) 37 37 49 Accrued interest - - - - Due from subsidiaries 17 (48) 43 (291) Income taxes payable - - - - ----------------------------------------------------- Net cash provided by (used in) operating activities 57 69 1 59 ----------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (57) (69) 4 (59) Proceeds from disposition of assets - - - - Investments in and advances to affiliates, net - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------- Net cash provided by (used in) investing activities (57) (69) 4 (59) ----------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - (5) - Borrowings from MeriStar Hospitality - - - - Repayments to MeriStar Hospitality on borrowing - - - - Purchase of treasury stock - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------- Net cash provided by (used in) financing activities - - (5) - ----------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------- Cash and cash equivalents, end of period - - - - ===================================================== MDV Limited MeriStar Sub MeriStar Sub MeriStar Sub Partnership 5C, LLC 6J, LLC 1D, L.P. Cash flows from operating activities: Net Income (loss) 119 20 423 659 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 34 149 162 554 Equity in earnings - - - - Loss on fair value of non-hedging derivatives - - - - Write off of deffered financing costs - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - Prepaid expenses and other 4 (40) - - Due from/to Meristar Hotels - - - - Accounts payable, accrued expenses and other liabilities (29) 25 60 (211) Accrued interest - - - 14 Due from subsidiaries (125) (134) (564) (693) Income taxes payable - - - - ----------------------------------------------------- Net cash provided by (used in) operating activities 3 20 81 323 ----------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (3) (20) (81) (323) Proceeds from disposition of assets - - - - Investments in and advances to affiliates, net - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------- Net cash provided by (used in) investing activities (3) (20) (81) (323) ----------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Borrowings from MeriStar Hospitality - - - - Repayments to MeriStar Hospitality on borrowing - - - - Purchase of treasury stock - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------- Net cash provided by (used in) financing activities - - - - ----------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------- Cash and cash equivalents, end of period - - - - =====================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar 7B, L.P. 7D, LLC 7G, LLC Sub 6B, LLC Cash flows from operating activities: Net Income (loss) (60) 307 (96) 80 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 231 416 189 114 Equity in earnings - - - - Loss on fair value of non-hedging derivatives - - - - Write off of deffered financing costs - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - 267 - - Prepaid expenses and other - - - - Due from/to Meristar Hotels - - - - Accounts payable, accrued expenses and other liabilities (233) (572) (143) 14 Accrued interest - - - - Due from subsidiaries 66 (352) 69 (158) Income taxes payable - - - - ----------------------------------------------------- Net cash provided by (used in) operating activities 4 66 19 50 ----------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (4) (66) (19) (50) Proceeds from disposition of assets - - - - Investments in and advances to affiliates, net - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------- Net cash provided by (used in) investing activities (4) (66) (19) (50) ----------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Borrowings from MeriStar Hospitality - - - - Repayments to MeriStar Hospitality on borrowing - - - - Purchase of treasury stock - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------- Net cash provided by (used in) financing activities - - - - ----------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------- Cash and cash equivalents, end of period - - - - ===================================================== MeriStar MeriStar MeriStar MeriStar Sub Sub Sub Sub AGH PSS I, 4I, L.P. 5D, LLC 5H, LLC 7H, LLC Inc. Cash flows from operating activities: Net Income (loss) (191) (432) 596 76 641 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 144 362 493 152 - Equity in earnings - - - - - Loss on fair value of non-hedging derivatives - - - - - Write off of deffered financing costs - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - - Prepaid expenses and other - - - - - Due from/to Meristar Hotels - - - - - Accounts payable, accrued expenses and other liabilities (168) 18 391 (94) 172 Accrued interest - - - - - Due from subsidiaries 287 95 (1,104) (107) (563) Income taxes payable - - - - - ------------------------------------------------------------ Net cash provided by (used in) operating activities 72 43 376 27 250 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net (72) (43) (376) (27) (250) Proceeds from disposition of assets - - - - - Investments in and advances to affiliates, net - - - - - Note receivable - - - - - Change in restricted cash - - - - - ------------------------------------------------------------ Net cash provided by (used in) investing activities (72) (43) (376) (27) (250) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Borrowings from MeriStar Hospitality - - - - - Repayments to MeriStar Hospitality on borrowing - - - - - Purchase of treasury stock - - - - - Contributions from partners - - - - - Distributions to partners - - - - - ------------------------------------------------------------ Net cash provided by (used in) financing activities - - - - - ------------------------------------------------------------ Effect of exchange rate changes on cash - - - - - ------------------------------------------------------------ Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - ------------------------------------------------------------ Cash and cash equivalents, end of period - - - - - ============================================================ MeriStar Sub 2D, LLC Cash flows from operating activities: Net Income (loss) (120) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 117 Equity in earnings - Loss on fair value of non-hedging derivatives - Write off of deffered financing costs - Minority interests - Amortization of unearned stock based compensation - Interest rate swaps marked to fair value - Deferred income taxes - Changes in operating assets and liabilities: Accounts receivable, net - Prepaid expenses and other - Due from/to Meristar Hotels - Accounts payable, accrued expenses and other liabilities (70) Accrued interest - Due from subsidiaries 77 Income taxes payable - ------------------ Net cash provided by (used in) operating activities 4 ------------------ Cash flows from investing activities: Investment in hotel properties, net 1 Proceeds from disposition of assets - Investments in and advances to affiliates, net - Note receivable - Change in restricted cash - ------------------ Net cash provided by (used in) investing activities 1 ------------------ Cash flows from financing activities: Deferred financing costs - Proceeds from mortgages and notes payable - Principal payments on mortgages and notes payable (5) Borrowings from MeriStar Hospitality - Repayments to MeriStar Hospitality on borrowing - Purchase of treasury stock - Contributions from partners - Distributions to partners - ------------------ Net cash provided by (used in) financing activities (5) ------------------ Effect of exchange rate changes on cash - Net change in cash - Cash and cash equivalents, beginning of period - ------------------ Cash and cash equivalents, end of period - ==================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 4F, L.P. 5K, LLC 5M, LLC 1E, L.P. Cash flows from operating activities: Net Income (loss) 105 385 465 209 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 280 297 113 76 Equity in earnings - - - - Loss on fair value of non-hedging derivatives - - - - Write off of deffered financing costs - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - - Prepaid expenses and other - - - - Due from/to Meristar Hotels - - - - Accounts payable, accrued expenses and other liabilities (254) 44 132 (40) Accrued interest - - - - Due from subsidiaries 65 (295) (665) (218) Income taxes payable - - - - ----------------------------------------------------- Net cash provided by (used in) operating activities 196 431 45 27 ----------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (196) (431) (45) (27) Proceeds from disposition of assets - - - - Investments in and advances to affiliates, net - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------- Net cash provided by (used in) investing activities (196) (431) (45) (27) ----------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Borrowings from MeriStar Hospitality - - - - Repayments to MeriStar Hospitality on borrowing - - - - Purchase of treasury stock - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------- Net cash provided by (used in) financing activities - - - - ----------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------- Cash and cash equivalents, end of period - - - - ===================================================== MeriStar Sub MeriStar Sub MeriStar Sub 5O, LLC 6M Company 4B, L.P. Cash flows from operating activities: Net Income (loss) 188 548 (152) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 55 302 177 Equity in earnings - - - Loss on fair value of non-hedging derivatives - - - Write off of deffered financing costs - - - Minority interests - - - Amortization of unearned stock based compensation - - - Interest rate swaps marked to fair value - - - Deferred income taxes - - - Changes in operating assets and liabilities: Accounts receivable, net - - - Prepaid expenses and other - - - Due from/to Meristar Hotels - - - Accounts payable, accrued expenses and other liabilities 47 68 (142) Accrued interest - - - Due from subsidiaries (267) (840) 824 Income taxes payable - - - -------------------------------------------- Net cash provided by (used in) operating activities 23 78 707 -------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (23) (78) (707) Proceeds from disposition of assets - - - Investments in and advances to affiliates, net - - - Note receivable - - - Change in restricted cash - - - -------------------------------------------- Net cash provided by (used in) investing activities (23) (78) (707) -------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - Proceeds from mortgages and notes payable - - - Principal payments on mortgages and notes payable - - - Borrowings from MeriStar Hospitality - - - Repayments to MeriStar Hospitality on borrowing - - - Purchase of treasury stock - - - Contributions from partners - - - Distributions to partners - - - -------------------------------------------- Net cash provided by (used in) financing activities - - - -------------------------------------------- Effect of exchange rate changes on cash - - - -------------------------------------------- Net change in cash - - - Cash and cash equivalents, beginning of period - - - -------------------------------------------- Cash and cash equivalents, end of period - - - ============================================ MeriStar Sub MeriStar Sub MeriStar Sub 6C, LLC 2C, LLC 4G, L.P. Cash flows from operating activities: Net Income (loss) 476 (311) 385 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 199 255 229 Equity in earnings - - - Loss on fair value of non-hedging derivatives - - - Write off of deffered financing costs - - - Minority interests - - - Amortization of unearned stock based compensation - - - Interest rate swaps marked to fair value - - - Deferred income taxes - - - Changes in operating assets and liabilities: Accounts receivable, net - - - Prepaid expenses and other - - - Due from/to Meristar Hotels - - - Accounts payable, accrued expenses and other liabilities 24 27 (380) Accrued interest - - - Due from subsidiaries (645) 30 (220) Income taxes payable - - - --------------------------------------- Net cash provided by (used in) operating activities 54 1 14 --------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (54) 7 (14) Proceeds from disposition of assets - - - Investments in and advances to affiliates, net - - - Note receivable - - - Change in restricted cash - - - --------------------------------------- Net cash provided by (used in) investing activities (54) 7 (14) --------------------------------------- Cash flows from financing activities: Deferred financing costs - - - Proceeds from mortgages and notes payable - - - Principal payments on mortgages and notes payable - (8) - Borrowings from MeriStar Hospitality - - - Repayments to MeriStar Hospitality on borrowing - - - Purchase of treasury stock - - - Contributions from partners - - - Distributions to partners - - - --------------------------------------- Net cash provided by (used in) financing activities - (8) - --------------------------------------- Effect of exchange rate changes on cash - - - --------------------------------------- Net change in cash - - - Cash and cash equivalents, beginning of period - - - --------------------------------------- Cash and cash equivalents, end of period - - - =======================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar MeriStar MeriStar 3B, LLC 5G, L.P. Sub 5P, LLC Sub 5J, Sub 5Q, LLC LLC Cash flows from operating activities: Net Income (loss) 70 1,253 113 1,479 487 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 230 1,548 - 866 120 Equity in earnings - - - - - Loss on fair value of non-hedging derivatives - - - - - Write off of deffered financing costs - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net - - 329 - - Prepaid expenses and other - - - 483 - Due from/to Meristar Hotels - - - - - Accounts payable, accrued expenses and other liabilities 146 466 6 804 160 Accrued interest - - - - - Due from subsidiaries (252) (2,492) (448) (3,168) (418) Income taxes payable - - - - - ------------------------------------------------------------ Net cash provided by (used in) operating activities 194 775 - 464 349 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net (194) (775) - (464) (349) Proceeds from disposition of assets - - - - - Investments in and advances to affiliates, net - - - - - Note receivable - - - - - Change in restricted cash - - - - - ------------------------------------------------------------ Net cash provided by (used in) investing activities (194) (775) - (464) (349) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Borrowings from MeriStar Hospitality - - - - - Repayments to MeriStar Hospitality on borrowing - - - - - Purchase of treasury stock - - - - - Contributions from partners - - - - - Distributions to partners - - - - - ------------------------------------------------------------ Net cash provided by (used in) financing activities - - - - - ------------------------------------------------------------ Effect of exchange rate changes on cash - - - - - ------------------------------------------------------------ Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - ------------------------------------------------------------ Cash and cash equivalents, end of period - - - - - ============================================================ MeriStar Sub MeriStar Sub MeriStar Sub 5A, LLC 8D, LLC 4J, LLC Cash flows from operating activities: Net Income (loss) 448 161 316 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 313 317 336 Equity in earnings - - - Loss on fair value of non-hedging derivatives - - - Write off of deffered financing costs - - - Minority interests - - - Amortization of unearned stock based compensation - - - Interest rate swaps marked to fair value - - - Deferred income taxes - - - Changes in operating assets and liabilities: Accounts receivable, net - - 31 Prepaid expenses and other - - - Due from/to Meristar Hotels - - - Accounts payable, accrued expenses and other liabilities 211 (15) (159) Accrued interest - - - Due from subsidiaries (861) (442) (478) Income taxes payable - - - -------------------------------------------- Net cash provided by (used in) operating activities 111 21 46 -------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (111) (21) (46) Proceeds from disposition of assets - - - Investments in and advances to affiliates, net - - - Note receivable - - - Change in restricted cash - - - -------------------------------------------- Net cash provided by (used in) investing activities (111) (21) (46) -------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - Proceeds from mortgages and notes payable - - - Principal payments on mortgages and notes payable - - - Borrowings from MeriStar Hospitality - - - Repayments to MeriStar Hospitality on borrowing - - - Purchase of treasury stock - - - Contributions from partners - - - Distributions to partners - - - -------------------------------------------- Net cash provided by (used in) financing activities - - - -------------------------------------------- Effect of exchange rate changes on cash - - - -------------------------------------------- Net change in cash - - - Cash and cash equivalents, beginning of period - - - -------------------------------------------- Cash and cash equivalents, end of period - - - ============================================ MeriStar Sub Total Lessee, Inc. Eliminations Consolidated Cash flows from operating activities: Net Income (loss) (1,929) (23,860) (10,324) Adjustments to reconcile net income (loss) to net cash - provided by (used in) operating activities: - Depreciation and amortization 294 - 30,592 Equity in earnings - 23,860 - Loss on fair value of non-hedging derivatives - - 4,735 Write off of deffered financing costs - - 1,529 Minority interests - - 11 Amortization of unearned stock based compensation - - 880 Interest rate swaps marked to fair value - - (2,887) Deferred income taxes - - (281) Changes in operating assets and liabilities: Accounts receivable, net (10,005) - (12,254) Prepaid expenses and other (1,328) - 1,634 Due from/to Meristar Hotels 365 - (224) Accounts payable, accrued expenses and other liabilities 7,395 - (342) Accrued interest - - (3,700) Due from subsidiaries 13,770 - - Income taxes payable - - (228) - -------------------------------------------- Net cash provided by (used in) operating activities 8,562 - 9,141 -------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net 2 - (12,292) Proceeds from disposition of assets - - - Investments in and advances to affiliates, net - - - Note receivable 389 - (9,000) Change in restricted cash - - 2,952 -------------------------------------------- Net cash provided by (used in) investing activities 391 - (18,340) -------------------------------------------- Cash flows from financing activities: Deferred financing costs - - (3,131) Proceeds from mortgages and notes payable - - 234,545 Principal payments on mortgages and notes payable (4,000) - (220,901) Borrowings from MeriStar Hospitality - - - Repayments to MeriStar Hospitality on borrowing - - - Purchase of treasury stock - - (409) Contributions from partners - - 3,155 Distributions to partners - - (1,264) -------------------------------------------- Net cash provided by (used in) financing activities (4,000) - 11,995 -------------------------------------------- Effect of exchange rate changes on cash - - (271) -------------------------------------------- Net change in cash 4,953 - 2,525 Cash and cash equivalents, beginning of period 16,643 - 23,441 -------------------------------------------- Cash and cash equivalents, end of period 21,596 - 25,966 ============================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Non- Hospitality Guarantor MeriStar Sub AGH Assets OP, L.P. Subsidiaries 7C, LLC Upreit, LLC Investment in hotel properties 14,662 1,547,038 - - Accumulated depreciation (5,085) (184,188) - - -------------------------------------------------------------------- 9,577 1,362,850 - - Cash and cash equivalents 6,798 - - - Accounts receivable, net 4,092 1,183 - - Prepaid expenses and other 3,982 612 - - Note receivable 127,550 (389) - - Due from MeriStar Hotels & Resorts 12,392 - - - Due from subsidiaries (304,270) (7,275) - 66 Investments in affiliates 2,714,272 8,242 32 3,056 Restricted cash 13,751 7,438 - - Intangible assets, net 19,791 757 - - -------------------------------------------------------------------- 2,607,935 1,373,418 32 3,122 ==================================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 17,678 14,060 - - Accrued interest 40,913 4,022 - - Income taxes payable 285 - - - Distributions payable 1,090 - - - Deferred income taxes 7,467 - - - Interest rate swaps 12,100 - - - Notes payable to MeriStar 357,117 - - - Long-term debt 1,056,444 286,512 - - -------------------------------------------------------------------- Total liabilities 1,493,094 304,594 - - -------------------------------------------------------------------- Minority interests 2,639 - - - Redeemable OP units at redemption value 67,012 - - - Partners' capital 1,045,190 1,068,824 32 3,122 -------------------------------------------------------------------- 2,607,935 1,373,418 32 3,122 ==================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 5N, LLC 8A, LLC 8F, L.P. 8G, LLC Investment in hotel properties 4,074 7,306 11,335 - Accumulated depreciation (408) (936) (1,481) - ----------------------------------------------------------------- 3,666 6,370 9,854 - Cash and cash equivalents - - - - Accounts receivable, net (16) (32) (20) - Prepaid expenses and other - - 21 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 2,809 4,720 3,889 82 Investments in affiliates - - - - Restricted cash - - 115 - Intangible assets, net - - - - ----------------------------------------------------------------- 6,459 11,058 13,859 82 ================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 14 (42) 160 - Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ----------------------------------------------------------------- Total liabilities 14 (42) 160 - ----------------------------------------------------------------- Minority interests - - - Redeemable OP units at redemption value - - - Partners' capital 6,445 11,100 13,699 82 ----------------------------------------------------------------- 6,459 11,058 13,859 82 ================================================================= MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 6H, L.P. 8B, LLC 1C, L.P. 8E, LLC Investment in hotel properties 13,569 80,972 24,925 15,157 Accumulated depreciation (1,445) (7,509) (3,865) (1,850) -------------------------------------------------------------------- 12,124 73,463 21,060 13,307 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 4,467 21,498 (3,297) 4,323 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - 52 2 9 -------------------------------------------------------------------- 16,591 95,013 17,765 17,639 ==================================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 184 2,412 45 8 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - -------------------------------------------------------------------- Total liabilities 184 2,412 45 8 -------------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 16,407 92,601 17,720 17,631 -------------------------------------------------------------------- 16,591 95,013 17,765 17,639 ====================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 7F, LLC 5L, LLC 3C, LLC 5R, LLC 8A, LLC Investment in hotel properties 11,985 11,292 17,274 - (1) Accumulated depreciation (1,989) (368) (2,302) - - ---------------------------------------------------------------------------- 9,996 10,924 14,972 - (1) Cash and cash equivalents - - - - - Accounts receivable, net - - - - - Prepaid expenses and other - - - - 1 Note receivable - - - - - Due from MeriStar Hotels & Resorts - - - - - Due from subsidiaries 3,499 3,090 2,741 (43) 7,918 Investments in affiliates - - - 43 - Restricted cash - - - - - Intangible assets, net - - 59 - - ---------------------------------------------------------------------------- 13,495 14,014 17,772 - 7,918 ============================================================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 168 3 170 - 46 Accrued interest - - - - - Income taxes payable - - - - - Distributions payable - - - - - Deferred income taxes - - - - - Interest rate swaps - - - - - Notes payable to MeriStar - - - - - Long-term debt - - - - - ---------------------------------------------------------------------------- Total liabilities 168 3 170 - 46 ---------------------------------------------------------------------------- Minority interests - - - - - Redeemable OP units at redemption value - - - - - Partners' capital 13,327 14,011 17,602 - 7,872 ---------------------------------------------------------------------------- 13,495 14,014 17,772 - 7,918 ============================================================================ MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 6D, LLC 6E, LLC 4E, L.P. 1B, LLC Investment in hotel properties 17,266 43,931 24,547 18,110 Accumulated depreciation (1,820) (6,642) (3,072) (2,927) ---------------------------------------------------------------- 15,446 37,289 21,475 15,183 Cash and cash equivalents - - - - Accounts receivable, net 115 - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 5,147 13,660 2,005 10,480 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - - 7 - ---------------------------------------------------------------- 20,708 50,949 23,487 25,663 ================================================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 101 (295) 456 (11) Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - 48 ---------------------------------------------------------------- Total liabilities 101 (295) 456 37 ---------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 20,607 51,244 23,031 25,626 ---------------------------------------------------------------- 20,708 50,949 23,487 25,663 ================================================================ MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 5F, L.P. 6G, LLC 8C, LLC 4C, L.P Investment in hotel properties 30,953 22,050 36,668 16,345 Accumulated depreciation (3,363) (3,329) (3,917) (3,356) ---------------------------------------------------------------- 27,590 18,721 32,751 12,989 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 8,695 3,410 3,419 289 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - - 3 - ---------------------------------------------------------------- 36,285 22,131 36,173 13,278 ================================================================ Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 94 151 (21) 447 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - ---------------------------------------------------------------- Total liabilities 94 151 (21) 447 ---------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 36,191 21,980 36,194 12,831 ---------------------------------------------------------------- 36,285 22,131 36,173 13,278 ================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 4H, L.P. 4H, L.P. 3D, LLC 1A, LLC Investment in hotel properties 12,363 17,822 22,305 11,231 Accumulated depreciation (1,712) (2,081) (5,411) (2,024) -------------------------------------------------------------- 10,651 15,741 16,894 9,207 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries (1,000) 4,799 5,619 4,953 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - 7 - - -------------------------------------------------------------- 9,651 20,547 22,513 14,160 ============================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 193 117 - 148 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - -------------------------------------------------------------- Total liabilities 193 117 - 148 -------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 9,458 20,430 22,513 14,012 -------------------------------------------------------------- 9,651 20,547 22,513 14,160 ============================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub 7A MeriStar Sub MeriStar Sub Assets 5E, LLC Joint Venture 6K, LLC 2B, LLC Investment in hotel properties 52,817 12,891 22,642 9,424 Accumulated depreciation (6,221) (1,345) (3,560) (1,558) ----------------------------------------------------------------- 46,596 11,546 19,082 7,866 Cash and cash equivalents - - - - Accounts receivable, net - - - (12) Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 9,219 3,585 13,504 (486) Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net 10 - - 1 ----------------------------------------------------------------- 55,825 15,131 32,586 7,369 ================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 301 230 78 147 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - 4,851 ----------------------------------------------------------------- Total liabilities 301 230 78 4,998 ----------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 55,524 14,901 32,508 2,371 ----------------------------------------------------------------- 55,825 15,131 32,586 7,369 ================================================================= MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 3A, LLC 4A, L.P. 4D, LLC 2A, LLC Investment in hotel properties 6,274 8,619 8,664 8,209 Accumulated depreciation (1,292) (1,112) (1,179) (1,141) ----------------------------------------------------------------- 4,982 7,507 7,485 7,068 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 1,742 3,572 14 (620) Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net 2 - 26 25 ----------------------------------------------------------------- 6,726 11,079 7,525 6,473 ================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 98 313 62 31 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - 7,912 ----------------------------------------------------------------- Total liabilities 98 313 62 7,943 ----------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 6,628 10,766 7,463 (1,470) ----------------------------------------------------------------- 6,726 11,079 7,525 6,473 =================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub MDV Limited MeriStar Sub MeriStar Sub MeriStar Sub Assets 6L, LLC Partnership 5C, LLC 6J, LLC 1D, L.P. Investment in hotel properties 29,443 3,816 13,826 19,169 67,929 Accumulated depreciation (2,464) (410) (2,215) (2,573) (7,516) ----------------------------------------------------------------------------- 26,979 3,406 11,611 16,596 60,413 Cash and cash equivalents - - - - - Accounts receivable, net - - - - - Prepaid expenses and other - 4 17 - - Note receivable - - - - - Due from MeriStar Hotels & Resorts - - - - - Due from subsidiaries 3,604 1,796 (345) 4,047 13,481 Investments in affiliates - - - - - Restricted cash - - - - - Intangible assets, net - 9 - 58 55 ----------------------------------------------------------------------------- 30,583 5,215 11,283 20,701 73,949 ============================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 68 87 828 (57) 553 Accrued interest - - - - 57 Income taxes payable - - - - - Distributions payable - - - - - Deferred income taxes - - - - - Interest rate swaps - - - - - Notes payable to MeriStar - - - - - Long-term debt - - - - - ----------------------------------------------------------------------------- Total liabilities 68 87 828 (57) 610 ----------------------------------------------------------------------------- Minority interests - - - - - Redeemable OP units at redemption value - - - - - Partners' capital 30,515 5,128 10,455 20,758 73,339 ----------------------------------------------------------------------------- 30,583 5,215 11,283 20,701 73,949 ============================================================================= MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 7B, L.P. 7D, LLC 7G, LLC 6B, LLC Investment in hotel properties 25,399 52,031 16,462 10,528 Accumulated depreciation (2,277) (6,516) (3,387) (1,292) -------------------------------------------------------------- 23,122 45,515 13,075 9,236 Cash and cash equivalents - - - - Accounts receivable, net - 912 - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - 200 - - Due from subsidiaries (4,749) 18,380 44 1,602 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - 393 34 9 -------------------------------------------------------------- 18,373 65,400 13,153 10,847 ============================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 1,011 4,688 161 (60) Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - -------------------------------------------------------------- Total liabilities 1,011 4,688 161 (60) -------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 17,362 60,712 12,992 10,907 -------------------------------------------------------------- 18,373 65,400 13,153 10,847 ============================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 4I, L.P. 5D, LLC 5H, LLC 7H, LLC Investment in hotel properties 12,477 41,617 52,475 9,978 Accumulated depreciation (3,677) (5,199) (6,012) (4,063) -------------------------------------------------------------- 8,800 36,418 46,463 5,915 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 1,289 (6,818) 6,867 5,202 Investments in affiliates - 51,398 - - Restricted cash - - - - Intangible assets, net - 21 - - -------------------------------------------------------------- 10,089 81,019 53,330 11,117 ============================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 360 241 (115) 414 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - 24,000 - 13 -------------------------------------------------------------- Total liabilities 360 24,241 (115) 427 -------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 9,729 56,778 53,445 10,690 -------------------------------------------------------------- 10,089 81,019 53,330 11,117 ==============================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
AGH PSS I, MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets Inc. 2D, LLC 4F, L.P. 5K, LLC 5M, LLC Investment in hotel properties 17,317 15,307 31,467 27,304 21,917 Accumulated depreciation (2,049) (1,949) (3,617) (2,729) (1,429) ----------------------------------------------------------------------------- 15,268 13,358 27,850 24,575 20,488 Cash and cash equivalents - - - - - Accounts receivable, net - - - - - Prepaid expenses and other - - - - - Note receivable - - - - - Due from MeriStar Hotels & Resorts - - - - - Due from subsidiaries 9,631 215 3,292 (781) 5,344 Investments in affiliates - - - - - Restricted cash - - - - - Intangible assets, net - 2 37 - - ----------------------------------------------------------------------------- 24,899 13,575 31,179 23,794 25,832 ============================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 29 43 388 5,644 21 Accrued interest - - - - - Income taxes payable - - - - - Distributions payable - - - - - Deferred income taxes - - - - - Interest rate swaps - - - - - Notes payable to MeriStar - - - - - Long-term debt - 9,167 - - - ----------------------------------------------------------------------------- Total liabilities 29 9,210 388 5,644 21 ----------------------------------------------------------------------------- Minority interests - - - - - Redeemable OP units at redemption value - - - - - Partners' capital 24,870 4,365 30,791 18,150 25,811 ----------------------------------------------------------------------------- 24,899 13,575 31,179 23,794 25,832 ============================================================================= MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 1E, L.P. 5O, LLC 6M Company 4B, L.P. Investment in hotel properties 10,379 8,674 32,724 15,830 Accumulated depreciation (1,350) (697) (3,594) (4,630) -------------------------------------------------------------- 9,029 7,977 29,130 11,200 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - 13 - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 5,927 1,939 12,127 (3,367) Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - - 47 29 -------------------------------------------------------------- 14,956 9,916 41,317 7,862 ============================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 22 18 (99) 387 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - - - - -------------------------------------------------------------- Total liabilities 22 18 (99) 387 -------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 14,934 9,898 41,416 7,475 -------------------------------------------------------------- 14,956 9,916 41,317 7,862 ============================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 6C, LLC 2C, LLC 4G, L.P. 3B, LLC Investment in hotel properties 20,493 28,300 25,493 24,577 Accumulated depreciation (2,815) (4,322) (3,112) (2,971) --------------------------------------------------------------- 17,678 23,978 22,381 21,606 Cash and cash equivalents - - - - Accounts receivable, net - - - - Prepaid expenses and other - - - - Note receivable - - - - Due from MeriStar Hotels & Resorts - - - - Due from subsidiaries 7,763 7,596 5,849 1,864 Investments in affiliates - - - - Restricted cash - - - - Intangible assets, net - 2 28 - --------------------------------------------------------------- 25,441 31,576 28,258 23,470 =============================================================== Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (128) 255 574 115 Accrued interest - - - - Income taxes payable - - - - Distributions payable - - - - Deferred income taxes - - - - Interest rate swaps - - - - Notes payable to MeriStar - - - - Long-term debt - 16,011 - - --------------------------------------------------------------- Total liabilities (128) 16,266 574 115 --------------------------------------------------------------- Minority interests - - - - Redeemable OP units at redemption value - - - - Partners' capital 25,569 15,310 27,684 23,355 --------------------------------------------------------------- 25,441 31,576 28,258 23,470 ===============================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Assets 5G, L.P. 5P, LLC 5J, LLC 5Q, LLC 5A, LLC Investment in hotel properties 161,783 - 104,381 15,964 34,663 Accumulated depreciation (18,012) - (9,859) (1,216) (7,908) ----------------------------------------------------------------------------- 143,771 - 94,522 14,748 26,755 Cash and cash equivalents - - - - - Accounts receivable, net - 319 - - - Prepaid expenses and other - - 483 - - Note receivable - - - - - Due from MeriStar Hotels & Resorts - - - - - Due from subsidiaries 28,207 1,117 12,862 2,083 2,995 Investments in affiliates - - - - 4,627 Restricted cash - - - - - Intangible assets, net - - - - (53) ----------------------------------------------------------------------------- 171,978 1,436 107,867 16,831 34,324 ============================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities 678 19 318 (201) (69) Accrued interest - - - - - Income taxes payable - - - - - Distributions payable - - - - - Deferred income taxes - - - - - Interest rate swaps - - - - - Notes payable to MeriStar - - - - - Long-term debt - - - - 23,609 ----------------------------------------------------------------------------- Total liabilities 678 19 318 (201) 23,540 ----------------------------------------------------------------------------- Minority interests - - - - - Redeemable OP units at redemption value - - - - - Partners' capital 171,300 1,417 107,549 17,032 10,784 ----------------------------------------------------------------------------- 171,978 1,436 107,867 16,831 34,324 ============================================================================= MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Hotel Total Assets 8D, LLC 4J, LLC Lessee, Inc. Eliminations Consolidated Investment in hotel properties 30,448 37,923 864 - 3,183,677 Accumulated depreciation (3,813) (4,561) (658) - (397,380) ----------------------------------------------------------------------------- 26,635 33,362 206 - 2,786,297 Cash and cash equivalents - - 16,643 - 23,441 Accounts receivable, net - 21 40,616 - 47,178 Prepaid expenses and other 1 - 13,172 - 18,306 Note receivable - - 389 (91,550) 36,000 Due from MeriStar Hotels & Resorts - - (3,715) - 8,877 Due from subsidiaries 5,308 3,090 6,316 - - Investments in affiliates - - 1,629 (2,741,585) 41,714 Restricted cash - - - - 21,304 Intangible assets, net - 47 - - 21,469 ----------------------------------------------------------------------------- 31,944 36,520 75,256 (2,833,135) 3,004,586 ============================================================================= Liabilities and Partners' capital Accounts payable, accrued expenses and other liabilities (71) 243 70,061 - 123,972 Accrued interest - - 17 - 45,009 Income taxes payable - - 25 - 310 Distributions payable - - - - 1,090 Deferred income taxes - - (337) - 7,130 Interest rate swaps - - - - 12,100 Notes payable to MeriStar - - - - 357,117 Long-term debt - - 6,000 (91,550) 1,343,017 ----------------------------------------------------------------------------- Total liabilities (71) 243 75,766 (91,550) 1,889,745 ----------------------------------------------------------------------------- Minority interests - - - - 2,639 Redeemable OP units at redemption value - - - - 67,012 Partners' capital 32,015 36,277 (510) (2,741,585) 1,045,190 ----------------------------------------------------------------------------- 31,944 36,520 75,256 (2,833,135) 3,004,586 =============================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars)
MeriStar Non- Hospitality Guarantor MeriStar Sub AGH Upreit, MeriStar Sub OP, L.P. Subsidiaries 7C, LLC LLC 5N, LLC Participating lease revenue - 46,012 - - 416 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments 499 (777) - - - Office rental and other revenues 1,600 2,344 - - - ---------------------------------------------------------------------- Total revenue 2,099 47,579 - - 416 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - 886 - - - Undistributed operating expenses: Administrative and general 2,350 (192) - - - Property operating costs - (223) - - - Property taxes, insurance and other 1,817 3,356 - - 16 Depreciation and amortization 2,537 12,430 - - 32 Write down of investment in STS Hotel Net 2,112 - - - - Swap termination fees 9,297 - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 18,113 16,257 - - 48 ---------------------------------------------------------------------- Net operating income (16,014) 31,322 - - 368 ---------------------------------------------------------------------- Interest expense, net 29,191 (329) - - (2) Equity in income from consolidated entities (60,166) - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 14,961 31,651 - - 370 Minority interests 11 - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 14,950 31,651 - - 370 Income tax benefit 453 - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 14,497 31,651 - - 370 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect (1,226) - - - - ---------------------------------------------------------------------- Net income (loss) 13,271 31,651 - - 370 ====================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 8A, LLC 8F, L.P. 8G, LLC 6H, L.P. 8B, LLC Participating lease revenue 405 802 - 299 2,355 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - 1 - - - Office rental and other revenues - - - - - ---------------------------------------------------------------------- Total revenue 405 803 - 299 2,355 ---------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 42 112 - (60) 389 Depreciation and amortization 72 109 - 106 577 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - ---------------------------------------------------------------------- Total operating expenses 114 221 - 46 966 ---------------------------------------------------------------------- Net operating income 291 582 - 253 1,389 ---------------------------------------------------------------------- Interest expense, net (2) 4 - (1) (35) Equity in income from consolidated entities - - - - - ---------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 293 578 - 254 1,424 Minority interests - - - - - ---------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 293 578 - 254 1,424 Income tax benefit - - - - - ---------------------------------------------------------------------- Income (loss) before loss on sale of assets 293 578 - 254 1,424 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - ---------------------------------------------------------------------- Net income (loss) 293 578 - 254 1,424 ======================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1C, L.P. 8E, LLC 7F, LLC 5L, LLC 3C, LLC Participating lease revenue 622 498 239 518 648 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - 6 - - - Office rental and other revenues - - - - - -------------------------------------------------------------------------- Total revenue 622 504 239 518 648 -------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments (5) (2) - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 88 28 54 3 134 Depreciation and amortization 252 130 115 31 171 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------------- Total operating expenses 335 156 169 34 305 -------------------------------------------------------------------------- Net operating income 287 348 70 484 343 -------------------------------------------------------------------------- Interest expense, net (6) (17) (4) (3) (7) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 293 365 74 487 350 Minority interests - - - - - -------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 293 365 74 487 350 Income tax benefit - - - - - -------------------------------------------------------------------------- Income (loss) before loss on sale of assets 293 365 74 487 350 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------------- Net income (loss) 293 365 74 487 350 ========================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars) Old MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5R, LLC 8A, LLC 6D, LLC 6E, LLC 4E, L.P. Participating lease revenue - 177 540 1,582 542 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - 200 4 - 2 Office rental and other revenues - - - - - -------------------------------------------------------------------------- Total revenue - 377 544 1,582 544 -------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other - 56 116 238 72 Depreciation and amortization - 89 126 411 228 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------------- Total operating expenses - 145 242 649 300 -------------------------------------------------------------------------- Net operating income - 232 302 933 244 -------------------------------------------------------------------------- Interest expense, net - (5) (7) (10) (5) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets - 237 309 943 249 Minority interests - - - - - -------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets - 237 309 943 249 Income tax benefit - - - - - -------------------------------------------------------------------------- Income (loss) before loss on sale of assets - 237 309 943 249 Loss on sale of assets, net of tax effect - (1,062) - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------------- Net income (loss) - (825) 309 943 249 ==========================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1B, LLC 5F, L.P. 6G, LLC 8C, LLC 4C, L.P. Participating lease revenue 820 836 862 604 289 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - 2 - Office rental and other revenues - - - - - --------------------------------------------------------------------- Total revenue 820 836 862 606 289 --------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 61 (95) 225 286 248 Depreciation and amortization 154 262 185 324 176 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - --------------------------------------------------------------------- Total operating expenses 215 167 410 610 424 --------------------------------------------------------------------- Net operating income 605 669 452 (4) (135) --------------------------------------------------------------------- Interest expense, net (15) (3) (35) (17) (17) Equity in income from consolidated entities - - - - - --------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 620 672 487 13 (118) Minority interests - - - - - --------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 620 672 487 13 (118) Income tax benefit - - - - - --------------------------------------------------------------------- Income (loss) before loss on sale of assets 620 672 487 13 (118) Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - --------------------------------------------------------------------- Net income (loss) 620 672 487 13 (118) ===================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 4H, L.P. 7E, LLC 3D, LLC 1A, LLC 5E, LLC Participating lease revenue 124 458 586 535 1,259 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - - - --------------------------------------------------------------------- Total revenue 124 458 586 535 1,259 --------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - 8 Property operating costs - - - - - Property taxes, insurance and other 46 177 51 86 212 Depreciation and amortization 133 148 225 116 457 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - --------------------------------------------------------------------- Total operating expenses 179 325 276 202 677 --------------------------------------------------------------------- Net operating income (55) 133 310 333 582 --------------------------------------------------------------------- Interest expense, net (3) (6) (41) (8) (46) Equity in income from consolidated entities - - - - - --------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (52) 139 351 341 628 Minority interests - - - - - --------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (52) 139 351 341 628 Income tax benefit - - - - - --------------------------------------------------------------------- Income (loss) before loss on sale of assets (52) 139 351 341 628 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - --------------------------------------------------------------------- Net income (loss) (52) 139 351 341 628 =====================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub 7A MeriStar Sub MeriStar Sub MeriStar Sub Joint Venture 6K, LLC 2B, LLC 3A, LLC Participating lease revenue 373 988 146 149 Hotel operations: Rooms - - - - Food and beverage - - - - Other operating departments - - - - Office rental and other revenues - - - - ---------------------------------------------------------- Total revenue 373 988 146 149 ---------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - Food and beverage - - - - Other operating departments - 2 - 3 Office rental, parking and other operating expenses - - - - Undistributed operating expenses: Administrative and general - - - - Property operating costs - - - - Property taxes, insurance and other 27 251 40 (17) Depreciation and amortization 100 185 96 85 Write down of investment in STS Hotel Net - - - - Swap termination fees - - - - Write down of deferred costs - - - - Loss on fair value of non-hedging derivatives - - - - FelCor merger costs - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - Restructuring charge - - - - ---------------------------------------------------------- Total operating expenses 127 438 136 71 ---------------------------------------------------------- Net operating income 246 550 10 78 ---------------------------------------------------------- Interest expense, net (2) (8) 88 (5) Equity in income from consolidated entities - - - - ---------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 248 558 (78) 83 Minority interests - - - - ---------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 248 558 (78) 83 Income tax benefit - - - - ---------------------------------------------------------- Income (loss) before loss on sale of assets 248 558 (78) 83 Loss on sale of assets, net of tax effect - - - - Extraordinary item, net of tax effect - - - - ---------------------------------------------------------- Net income (loss) 248 558 (78) 83 ========================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MDV Limited 4A, L.P. 4D, LLC 2A, LLC 6L, LLC Partnership Participating lease revenue 347 133 186 424 191 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - - - - - -------------------------------------------------------------------- Total revenue 347 133 186 424 191 -------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general 10 - - - - Property operating costs - - - - - Property taxes, insurance and other 78 71 36 62 36 Depreciation and amortization - 71 79 220 30 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------- Total operating expenses 88 142 115 282 66 -------------------------------------------------------------------- Net operating income 259 (9) 71 142 125 -------------------------------------------------------------------- Interest expense, net (10) (16) 173 (8) (3) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 269 7 (102) 150 128 Minority interests - - - - - -------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 269 7 (102) 150 128 Income tax benefit - - - - - -------------------------------------------------------------------- Income (loss) before loss on sale of assets 269 7 (102) 150 128 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------- Net income (loss) 269 7 (102) 150 128 ==================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub 5C, LLC Participating lease revenue 233 Hotel operations: Rooms - Food and beverage - Other operating departments - Office rental and other revenues - ------------- Total revenue 233 ------------- Hotel operating expenses by department: Rooms - Food and beverage - Other operating departments - Office rental, parking and other operating expenses - Undistributed operating expenses: Administrative and general 8 Property operating costs - Property taxes, insurance and other 112 Depreciation and amortization 145 Write down of investment in STS Hotel Net - Swap termination fees - Write down of deferred costs - Loss on fair value of non-hedging derivatives - FelCor merger costs - Costs to terminate leases with Prime Hospitality Corporation - Restructuring charge - ------------- Total operating expenses 265 ------------- Net operating income (32) ------------- Interest expense, net (9) Equity in income from consolidated entities - ------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (23) Minority interests - ------------- Income (loss) before income tax benefit, loss on sale of assets (23) Income tax benefit - ------------- Income (loss) before loss on sale of assets (23) Loss on sale of assets, net of tax effect - Extraordinary item, net of tax effect - ------------- Net income (loss) (23) =============
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 6J, LLC 1D, L.P. 7B, L.P. 7D, LLC 7G, LLC Participating lease revenue 652 1,830 396 1,526 197 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental and other revenues - 85 - 661 - --------------------------------------------------------------------- Total revenue 652 1,915 396 2,187 197 --------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - 30 - 363 - Undistributed operating expenses: Administrative and general - 13 - 13 - Property operating costs - - - - - Property taxes, insurance and other 16 261 371 411 71 Depreciation and amortization 149 541 215 390 180 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - --------------------------------------------------------------------- Total operating expenses 165 845 586 1,177 251 --------------------------------------------------------------------- Net operating income 487 1,070 (190) 1,010 (54) --------------------------------------------------------------------- Interest expense, net (13) (12) (37) (41) (26) Equity in income from consolidated entities - - - - - --------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 500 1,082 (153) 1,051 (28) Minority interests - - - - - --------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 500 1,082 (153) 1,051 (28) Income tax benefit - - - - - --------------------------------------------------------------------- Income (loss) before loss on sale of assets 500 1,082 (153) 1,051 (28) Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - --------------------------------------------------------------------- Net income (loss) 500 1,082 (153) 1,051 (28) ===================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Balance Sheet December 31, 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 6B, LLC 4I, L.P. 5D, LLC 5H, LLC 7H, LLC Participating lease revenue 215 29 415 1,789 309 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - 3 - - - Office rental and other revenues - - - - - -------------------------------------------------------------------- Total revenue 215 32 415 1,789 309 -------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - 3 - - - Property operating costs - - - - - Property taxes, insurance and other 62 89 256 114 5 Depreciation and amortization 112 213 348 486 174 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------- Total operating expenses 174 305 604 600 179 -------------------------------------------------------------------- Net operating income 41 (273) (189) 1,189 130 -------------------------------------------------------------------- Interest expense, net (2) (6) 606 (10) (9) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 43 (267) (795) 1,199 139 Minority interests - - - - - -------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 43 (267) (795) 1,199 139 Income tax benefit - - - - - -------------------------------------------------------------------- Income (loss) before loss on sale of assets 43 (267) (795) 1,199 139 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------- Net income (loss) 43 (267) (795) 1,199 139 ====================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars)
AGH PSS I, MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Inc. 2D, LLC 4F, L.P. 5K, LLC 5M, LLC Participating lease revenue 1,119 278 774 872 878 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments 1 - 1 - - Office rental and other revenues - - - - - -------------------------------------------------------------------------- Total revenue 1,120 278 775 872 878 -------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 164 93 149 43 44 Depreciation and amortization - 116 270 295 110 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------------- Total operating expenses 164 209 419 338 154 -------------------------------------------------------------------------- Net operating income 956 69 356 534 724 -------------------------------------------------------------------------- Interest expense, net (2) 196 (11) (6) (8) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 958 (127) 367 540 732 Minority interests - - - - - -------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 958 (127) 367 540 732 Income tax benefit - - - - - -------------------------------------------------------------------------- Income (loss) before loss on sale of assets 958 (127) 367 540 732 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------------- Net income (loss) 958 (127) 367 540 732 ========================================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1E, L.P. 5O, LLC 6M Company 4B, L.P. 6C, LLC Participating lease revenue 352 340 1,120 85 820 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - 3 Office rental and other revenues - - - - - -------------------------------------------------------------------------- Total revenue 352 340 1,120 85 823 -------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - - - Property operating costs - - - - - Property taxes, insurance and other 33 16 35 114 25 Depreciation and amortization 71 59 298 270 185 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------------- Total operating expenses 104 75 333 384 210 -------------------------------------------------------------------------- Net operating income 248 265 787 (299) 613 -------------------------------------------------------------------------- Interest expense, net (10) (2) (5) (21) (24) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 258 267 792 (278) 637 Minority interests - - - - - -------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 258 267 792 (278) 637 Income tax benefit - - - - - -------------------------------------------------------------------------- Income (loss) before loss on sale of assets 258 267 792 (278) 637 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effe effect - - - - - -------------------------------------------------------------------------- Net income (loss) 258 267 792 (278) 637 ==========================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 2C, LLC 4G, L.P. 3B, LLC 5G, L.P. 5P, LLC Participating lease revenue 487 848 497 4,219 165 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments 12 - 3 16 - Office rental and other revenues - - - - - -------------------------------------------------------------------------- Total revenue 499 848 500 4,235 165 -------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - (9) - - Office rental, parking and other operating expenses - - - - - Undistributed operating expenses: Administrative and general - - - 2 - Property operating costs - - - - - Property taxes, insurance and other 132 268 90 45 - Depreciation and amortization 256 209 219 1,539 - Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------------- Total operating expenses 388 477 300 1,586 - -------------------------------------------------------------------------- Net operating income 111 371 200 2,649 165 -------------------------------------------------------------------------- Interest expense, net 346 (19) (11) (12) - Equity in income from consolidated entities - - - - - -------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets (235) 390 211 2,661 165 Minority interests - - - - - -------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets (235) 390 211 2,661 165 Income tax benefit - - - - - -------------------------------------------------------------------------- Income (loss) before loss on sale of assets (235) 390 211 2,661 165 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------------- Net income (loss) (235) 390 211 2,661 165 ========================================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub Meristar Sub 5J, LLC 5Q, LLC 5A, LLC 8D, LLC 4J, LLC Participating lease revenue 3,895 883 1,690 951 682 Hotel operations: Rooms - - - - - Food and beverage - - - - - Other operating departments - - 23 - 1 Office rental and other revenues - - - - 68 -------------------------------------------------------------------------- Total revenue 3,895 883 1,713 951 751 -------------------------------------------------------------------------- Hotel operating expenses by department: Rooms - - - - - Food and beverage - - - - - Other operating departments - - - 5 (10) Office rental, parking and other operating expenses - - - - 141 Undistributed operating expenses: Administrative and general 1 - - - - Property operating costs - - - - - Property taxes, insurance and other (37) 46 114 91 (89) Depreciation and amortization 840 102 417 311 310 Write down of investment in STS Hotel Net - - - - - Swap termination fees - - - - - Write down of deferred costs - - - - - Loss on fair value of non-hedging derivatives - - - - - FelCor merger costs - - - - - Costs to terminate leases with Prime Hospitality Corporation - - - - - Restructuring charge - - - - - -------------------------------------------------------------------------- Total operating expenses 804 148 531 407 352 -------------------------------------------------------------------------- Net operating income 3,091 735 1,182 544 399 -------------------------------------------------------------------------- Interest expense, net (28) (33) 701 (9) (34) Equity in income from consolidated entities - - - - - -------------------------------------------------------------------------- Income (loss) before minority interests, income tax benefit, loss on sale of assets 3,119 768 481 553 433 Minority interests - - - - - -------------------------------------------------------------------------- Income (loss) before income tax benefit, loss on sale of assets 3,119 768 481 553 433 Income tax benefit - - - - - -------------------------------------------------------------------------- Income (loss) before loss on sale of assets 3,119 768 481 553 433 Loss on sale of assets, net of tax effect - - - - - Extraordinary item, net of tax effect - - - - - -------------------------------------------------------------------------- Net income (loss) 3,119 768 481 553 433 ==========================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Operations Three Months Ended March 2001 (in thousands of dollars)
MeriStar Hotel Total Lessee, Inc. Eliminations Consolidated Participating lease revenue - (89,727) 3,784 Hotel operations: Rooms 200,380 - 200,380 Food and beverage 71,291 - 71,291 Other operating departments 22,471 - 22,471 Office rental and other revenues - - 4,758 ------------------------------------------------------------ Total revenue 294,142 (89,727) 302,684 ------------------------------------------------------------ Hotel operating expenses by department: Rooms 45,722 - 45,722 Food and beverage 51,404 - 51,404 Other operating departments 11,586 - 11,570 Office rental, parking and other operating expenses (483) - 937 Undistributed operating expenses: Administrative and general 42,701 - 44,917 Property operating costs 42,922 - 42,699 Property taxes, insurance and other 96,628 (89,727) 18,387 Depreciation and amortization 95 - 29,387 Write down of investment in STS Hotel Net - - 2,112 Swap termination fees - - 9,297 Write down of deferred costs - - - Loss on fair value of non-hedging derivatives - - - FelCor merger costs - - - Costs to terminate leases with Prime Hospitality - Corporation - - - Restructuring charge - - - ------------------------------------------------------------ Total operating expenses 290,575 (89,727) 256,432 ------------------------------------------------------------ Net operating income 3,567 - 46,252 ------------------------------------------------------------ Interest expense, net - - 30,229 Equity in income from consolidated entities - 60,166 - ------------------------------------------------------------ Income (loss) before minority interests, income tax benefit, loss on sale of assets 3,567 (60,166) 16,023 Minority interests - - 11 ------------------------------------------------------------ Income (loss) before income tax benefit, loss on sale of assets 3,567 (60,166) 16,012 Income tax benefit - - 453 ------------------------------------------------------------ Income (loss) before loss on sale of assets 3,567 (60,166) 15,559 Loss on sale of assets, net of tax effect - - (1,062) Extraordinary item, net of tax effect - - (1,226) ------------------------------------------------------------ Net income (loss) 3,567 (60,166) 13,271 ============================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
MeriStar Hospitality OP, Guarantor MeriStar Sub AGH MeriStar L.P. Subsidiaries 7C, LLC Upreit, LLC Sub 5N, LLC Cash flows from operating activities: Net Income (loss) 13,271 31,651 - - 370 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,537 12,430 - - 32 Equity in earnings (60,166) - - - - Loss on sale of assets - - - - - Write down of STS Hotel net 2,112 - - - - Extraordinary loss on extinguishment of debt 1,243 - - - - Minority interests 11 - - - - Amortization of unearned stock based compensation 797 - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes 144 - - - - Changes in operating assets and liabilities: Accounts receivable, net (1,587) 4,269 - - - Prepaid expenses and other (1,146) (596) - - - Due from/to Meristar Hotels 5,053 (1,940) - - 111 Accounts payable, accrued expenses and other liabilities 9,606 (14,235) - - (103) Accrued interest 2,737 (156) - - - Due from subsidiaries 51,538 (26,053) - - (404) Income taxes payable 283 - - - - ---------------------------------------------------------------- Net cash provided by (used in) operating activities 26,433 5,370 - - 6 ---------------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (1,295) (4,897) - - (6) Proceeds from disposition of assets - - - - - Hotel operating cash received in lease conversion - - - - - Note receivable (36,000) - - - - Change in restricted cash 1,682 (473) - - - ---------------------------------------------------------------- Net cash provided by (used in) investing activities (35,613) (5,370) - - (6) ---------------------------------------------------------------- Cash flows from financing activities: Deferred financing costs (9,321) - - - - Proceeds from mortgages and notes payable 578,347 - - - - Principal payments on mortgages and notes payable (535,725) - - - - Contributions from partners 280 - - - - Distributions to partners (24,859) - - - - ---------------------------------------------------------------- Net cash provided by (used in) financing activities 8,722 - - - - ---------------------------------------------------------------- Effect of exchange rate changes on cash 216 - - - - ---------------------------------------------------------------- Net change in cash (242) - - - - Cash and cash equivalents, beginning of period 242 - - - - ---------------------------------------------------------------- Cash and cash equivalents, end of period - - - - - ================================================================ MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar MeriStar MeriStar MeriStar 8A, LLC Sub 4F, L.P. Sub 8G, LLC Sub 6H, L.P. Sub 8B, LLC Cash flows from operating activities: Net Income (loss) 293 578 - 254 1,424 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 72 109 - 106 577 Equity in earnings - - - - - Loss on sale of assets - - - - - Write down of STS Hotel net - - - - - Extraordinary loss on extinguishment of debt - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net (31) 135 - (7) 184 Prepaid expenses and other - (6) - - (11) Due from/to Meristar Hotels 16 - - - 120 Accounts payable, accrued expenses and other liabilities 4 (127) - (95) (169) Accrued interest - (5) - - - Due from subsidiaries (328) 2,912 - (257) (2,037) Income taxes payable - - - - - ----------------------------------------------------------------- Net cash provided by (used in) operating activities 26 3,596 - 1 88 ----------------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (26) (105) - (1) (88) Proceeds from disposition of assets - - - - - Hotel operating cash received in lease conversion - - - - - Note receivable - - - - - Change in restricted cash - 488 - - - ----------------------------------------------------------------- Net cash provided by (used in) investing activities (26) 383 - (1) (88) ----------------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - (3,979) - - - Contributions from partners - - - - - Distributions to partners - - - - - ----------------------------------------------------------------- Net cash provided by (used in) financing activities - (3,979) - - - ----------------------------------------------------------------- Effect of exchange rate changes on cash - - - - - ----------------------------------------------------------------- Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - ----------------------------------------------------------------- Cash and cash equivalents, end of period - - - - - =================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 1C, L.P. 8E, LLC 7F, LLC 5L, LLC 3C, LLC Cash flows from operating activities: Net Income (loss) 293 365 74 487 350 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 252 130 115 31 171 Equity in earnings - - - - - Loss on sale of assets - - - - - Write down of STS Hotel net - - - - - Extraordinary loss on extinguishment of debt - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net (4) 62 (26) - 10 Prepaid expenses and other - - - - (3) Due from/to Meristar Hotels 1 - (2) 239 - Accounts payable, accrued expenses and other liabilities (245) (124) 41 (129) 10 Accrued interest - - - - - Due from subsidiaries (223) (412) (186) (557) (414) Income taxes payable - - - - - -------------------------------------------------------------------- Net cash provided by (used in) operating activities 74 21 16 71 124 -------------------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (74) (21) (16) (71) (124) Proceeds from disposition of assets - - - - - Hotel operating cash received in lease conversion - - - - - Note receivable - - - - - Change in restricted cash - - - - - -------------------------------------------------------------------- Net cash provided by (used in) investing activities (74) (21) (16) (71) (124) -------------------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Contributions from partners - - - - - Distributions to partners - - - - - -------------------------------------------------------------------- Net cash provided by (used in) financing activities - - - - - -------------------------------------------------------------------- Effect of exchange rate changes on cash - - - - - -------------------------------------------------------------------- Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - -------------------------------------------------------------------- Cash and cash equivalents, end of period - - - - - ==================================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) Old MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5R, LLC 8A, LLC 6D, LLC 6E, LLC 4E, L.P. Cash flows from operating activities: Net Income (loss) - (825) 309 943 249 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization - 89 126 411 228 Equity in earnings - - - - - Loss on sale of assets - 1,081 - - - Write down of STS Hotel net - - - - - Extraordinary loss on extinguishment of debt - - - - - Minority interests - - - - - Amortization of unearned stock based compensation - - - - - Interest rate swaps marked to fair value - - - - - Deferred income taxes - - - - - Changes in operating assets and liabilities: Accounts receivable, net - (31) (179) 34 (19) Prepaid expenses and other - (1) (5) - - Due from/to Meristar Hotels - - 123 - (75) Accounts payable, accrued expenses and other liabilities - (4) (110) (164) (365) Accrued interest - - - - - Due from subsidiaries - (7,583) (233) (1,179) 195 Income taxes payable - - - - - -------------------------------------------------------------------- Net cash provided by (used in) operating activities - (7,274) 31 45 213 -------------------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net - - (31) (45) (213) Proceeds from disposition of assets - 7,274 - - - Hotel operating cash received in lease conversion - - - - - Note receivable - - - - - Change in restricted cash - - - - - -------------------------------------------------------------------- Net cash provided by (used in) investing activities - 7,274 (31) (45) (213) -------------------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - - Proceeds from mortgages and notes payable - - - - - Principal payments on mortgages and notes payable - - - - - Contributions from partners - - - - - Distributions to partners - - - - - -------------------------------------------------------------------- Net cash provided by (used in) financing activities - - - - - -------------------------------------------------------------------- Effect of exchange rate changes on cash - - - - - -------------------------------------------------------------------- Net change in cash - - - - - Cash and cash equivalents, beginning of period - - - - - -------------------------------------------------------------------- Cash and cash equivalents, end of period - - - - - ====================================================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub MeriStar MeriStar Sub MeriStar Sub 1B, LLC Sub 5F, L.P. 6G, LLC 8C, LLC Cash flows from operating activities: Net Income (loss) 620 672 487 13 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 154 262 185 324 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net 16 (25) 36 8 Prepaid expenses and other (13) (11) (6) - Due from/to Meristar Hotels - - (5) - Accounts payable, accrued expenses and other liabilities (94) (257) (92) (140) Accrued interest - - - - Due from subsidiaries (659) (595) (521) (160) Income taxes payable - - - - ----------------------------------------------------------- Net cash provided by (used in) operating activities 24 46 84 45 ----------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (24) (46) (84) (45) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------------- Net cash provided by (used in) investing activities (24) (46) (84) (45) ----------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------------- Net cash provided by (used in) financing activities - - - - ----------------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - Cash and cash equivalents, end of period - - - - =========================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 4C, L.P. 4H, L.P. 7E, LLC 3D, LLC Cash flows from operating activities: Net Income (loss) (118) (52) 139 351 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 176 133 148 225 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net (47) - 53 (19) Prepaid expenses and other (6) (2) 44 - Due from/to Meristar Hotels - (14) - - Accounts payable, accrued expenses and other liabilities (103) (132) (20) (70) Accrued interest - - - - Due from subsidiaries 122 88 (326) (374) Income taxes payable - - - - ----------------------------------------------------------- Net cash provided by (used in) operating activities 24 21 38 113 ----------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (24) (21) (38) (113) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------------- Net cash provided by (used in) investing activities (24) (21) (38) (113) ----------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------------- Net cash provided by (used in) financing activities - - - - ----------------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------------- Cash and cash equivalents, end of period - - - - =========================================================== MeriStar Sub MeriStar Sub 1A, LLC 5E, LLC Cash flows from operating activities: Net Income (loss) 341 628 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 116 457 Equity in earnings - - Loss on sale of assets - - Write down of STS Hotel net - - Extraordinary loss on extinguishment of debt - - Minority interests - - Amortization of unearned stock based compensation - - Interest rate swaps marked to fair value - - Deferred income taxes - - Changes in operating assets and liabilities: Accounts receivable, net 40 18 Prepaid expenses and other - (15) Due from/to Meristar Hotels - (11) Accounts payable, accrued expenses and other liabilities (84) 180 Accrued interest - - Due from subsidiaries (363) (1,073) Income taxes payable - - ---------------------------- Net cash provided by (used in) operating activities 50 184 ---------------------------- Cash flows from investing activities: Investment in hotel properties, net (50) (184) Proceeds from disposition of assets - - Hotel operating cash received in lease conversion - - Note receivable - - Change in restricted cash - - ---------------------------- Net cash provided by (used in) investing activities (50) (184) ---------------------------- Cash flows from financing activities: Deferred financing costs - - Proceeds from mortgages and notes payable - - Principal payments on mortgages and notes payable - - Contributions from partners - - Distributions to partners - - ---------------------------- Net cash provided by (used in) financing activities - - ---------------------------- Effect of exchange rate changes on cash - - ---------------------------- Net change in cash - - Cash and cash equivalents, beginning of period - - ---------------------------- Cash and cash equivalents, end of period - - ============================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub 7A MeriStar Sub MeriStar Sub MeriStar Sub Joint Venture 6K, LLC 2B, LLC 3A, LLC Cash flows from operating activities: Net Income (loss) 248 558 (78) 83 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 100 185 96 85 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net (13) (18) 39 (35) Prepaid expenses and other (4) (1) - - Due from/to Meristar Hotels - - 389 (1) Accounts payable, accrued expenses and other liabilities (109) 39 18 (57) Accrued interest - - - - Due from subsidiaries (209) (652) (639) (55) Income taxes payable - - - - -------------------------------------------------------------- Net cash provided by (used in) operating activities 13 111 (175) 20 -------------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (13) (111) 427 (20) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - -------------------------------------------------------------- Net cash provided by (used in) investing activities (13) (111) 427 (20) -------------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - (252) - Contributions from partners - - - - Distributions to partners - - - - -------------------------------------------------------------- Net cash provided by (used in) financing activities - - (252) - -------------------------------------------------------------- Effect of exchange rate changes on cash - - - - -------------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - -------------------------------------------------------------- Cash and cash equivalents, end of period - - - - ============================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar MeriStar Sub MeriStar Sub MeriStar Sub Sub 4A, L.P. 4D, LLC 2A, LLC 6L, LLC Cash flows from operating activities: Net Income (loss) 269 7 (102) 150 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization - 71 79 220 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net (4) (7) 25 (23) Prepaid expenses and other - - (1) (5) Due from/to Meristar Hotels (2) - (154) - Accounts payable, accrued expenses and other liabilities (210) 109 (39) (70) Accrued interest - - - - Due from subsidiaries 31 (57) 324 (223) Income taxes payable - - - - -------------------------------------------------------------- Net cash provided by (used in) operating activities 84 123 132 49 -------------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (84) (123) 279 (49) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - -------------------------------------------------------------- Net cash provided by (used in) investing activities (84) (123) 279 (49) -------------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - (411) - Contributions from partners - - - - Distributions to partners - - - - -------------------------------------------------------------- Net cash provided by (used in) financing activities - - (411) - -------------------------------------------------------------- Effect of exchange rate changes on cash - - - - -------------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - -------------------------------------------------------------- Cash and cash equivalents, end of period - - - - ============================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MDV Limited MeriStar Sub Partnership 5C, LLC Cash flows from operating activities: Net Income (loss) 128 (23) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 30 145 Equity in earnings - - Loss on sale of assets - - Write down of STS Hotel net - - Extraordinary loss on extinguishment of debt - - Minority interests - - Amortization of unearned stock based compensation - - Interest rate swaps marked to fair value - - Deferred income taxes - - Changes in operating assets and liabilities: Accounts receivable, net 26 (16) Prepaid expenses and other (3) 9 Due from/to Meristar Hotels - - Accounts payable, accrued expenses and other liabilities (51) 61 Accrued interest - - Due from subsidiaries (119) (93) Income taxes payable - - -------------------------------- Net cash provided by (used in) operating activities 11 83 -------------------------------- Cash flows from investing activities: Investment in hotel properties, net (11) (83) Proceeds from disposition of assets - - Hotel operating cash received in lease conversion - - Note receivable - - Change in restricted cash - - -------------------------------- Net cash provided by (used in) investing activities (11) (83) -------------------------------- Cash flows from financing activities: Deferred financing costs - - Proceeds from mortgages and notes payable - - Principal payments on mortgages and notes payable - - Contributions from partners - - Distributions to partners - - -------------------------------- Net cash provided by (used in) financing activities - - -------------------------------- Effect of exchange rate changes on cash - - -------------------------------- Net change in cash - - Cash and cash equivalents, beginning of period - - -------------------------------- Cash and cash equivalents, end of period - - ================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 6J, LLC 1D, L.P. 7B, L.P. 7D, LLC Cash flows from operating activities: Net Income (loss) 500 1,082 (153) 1,051 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 149 541 215 390 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net 19 30 (13) 475 Prepaid expenses and other (6) (20) - - Due from/to Meristar Hotels (1) (32) (1) (4) Accounts payable, accrued expenses and other liabilities (207) (538) 73 (494) Accrued interest - 16 - - Due from subsidiaries (380) (1,049) 3 (1,047) Income taxes payable - - - - ----------------------------------------------------------- Net cash provided by (used in) operating activities 74 30 124 371 ----------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (74) (30) (124) (371) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------------- Net cash provided by (used in) investing activities (74) (30) (124) (371) ----------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------------- Net cash provided by (used in) financing activities - - - - ----------------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------------- Cash and cash equivalents, end of period - - - - =========================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 7G, LLC 6B, LLC 4I, L.P. 5D, LLC Cash flows from operating activities: Net Income (loss) (28) 43 (267) (795) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 180 112 213 348 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - - - (24) Prepaid expenses and other (4) (1) (7) (53) Due from/to Meristar Hotels - - - (37) Accounts payable, accrued expenses and other liabilities (58) 36 (191) 275 Accrued interest - - - - Due from subsidiaries 23 (185) 335 339 Income taxes payable - - - - ----------------------------------------------------------- Net cash provided by (used in) operating activities 113 5 83 53 ----------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (113) (5) (83) (40) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------------- Net cash provided by (used in) investing activities (113) (5) (83) (40) ----------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - (13) Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------------- Net cash provided by (used in) financing activities - - - (13) ----------------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------------- Cash and cash equivalents, end of period - - - - =========================================================== MeriStar Hospitality Operating Partnership, L.P Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub 5H, LLC 7H, LLC Cash flows from operating activities: Net Income (loss) 1,199 139 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 486 174 Equity in earnings - - Loss on sale of assets - - Write down of STS Hotel net - - Extraordinary loss on extinguishment of debt - - Minority interests - - Amortization of unearned stock based compensation - - Interest rate swaps marked to fair value - - Deferred income taxes - - Changes in operating assets and liabilities: Accounts receivable, net - (39) Prepaid expenses and other - - Due from/to Meristar Hotels 444 - Accounts payable, accrued expenses and other liabilitie (355) (156) Accrued interest - - Due from subsidiaries (1,683) (94) Income taxes payable - - --------------------------- Net cash provided by (used in) operating activities 91 24 --------------------------- Cash flows from investing activities: Investment in hotel properties, net Proceeds from disposition of assets (91) (24) Hotel operating cash received in lease conversion - - Note receivable - - Change in restricted cash - - - - --------------------------- Net cash provided by (used in) investing activities (91) (24) --------------------------- Cash flows from financing activities: Deferred financing costs - - Proceeds from mortgages and notes payable - - Principal payments on mortgages and notes payable - - Contributions from partners - - Distributions to partners - - --------------------------- Net cash provided by (used in) financing activities - - --------------------------- Effect of exchange rate changes on cash - - --------------------------- Net change in cash - - Cash and cash equivalents, beginning of period - - --------------------------- Cash and cash equivalents, end of period - - ===========================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
AGH PSS I, MeriStar Sub MeriStar Sub MeriStar Sub Inc. 2D, LLC 4F, L.P. 5K, LLC Cash flows from operating activities: Net Income (loss) 958 (127) 367 540 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization - 116 270 295 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net (908) (29) (4) - Prepaid expenses and other (10) - - - Due from/to Meristar Hotels - 1,226 - (24) Accounts payable, accrued expenses and other liabilities (100) (64) (312) (107) Accrued interest - - - - Due from subsidiaries 122 (1,339) (302) (318) Income taxes payable - - - - ----------------------------------------------------- Net cash provided by (used in) operating activities 62 (217) 19 386 ----------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (62) 693 (19) (386) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ----------------------------------------------------- Net cash provided by (used in) investing activities (62) 693 (19) (386) ----------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - (476) - - Contributions from partners - - - - Distributions to partners - - - - ----------------------------------------------------- Net cash provided by (used in) financing activities - (476) - - ----------------------------------------------------- Effect of exchange rate changes on cash - - - - ----------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ----------------------------------------------------- Cash and cash equivalents, end of period - - - - ===================================================== MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5M, LLC 1E, L.P. 5O, LLC 6M Company Cash flows from operating activities: Net Income (loss) 732 258 267 792 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 110 71 59 298 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - 35 - 72 Prepaid expenses and other - - - (62) Due from/to Meristar Hotels 233 (1) 17 - Accounts payable, accrued expenses and other liabilities (210) (73) (71) (26) Accrued interest - - - - Due from subsidiaries (828) (273) (274) (1,042) Income taxes payable - - - - ------------------------------------------------------- Net cash provided by (used in) operating activities 37 17 (2) 32 ------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (37) (17) 2 (32) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ------------------------------------------------------- Net cash provided by (used in) investing activities (37) (17) 2 (32) ------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Contributions from partners - - - - Distributions to partners - - - - ------------------------------------------------------- Net cash provided by (used in) financing activities - - - - ------------------------------------------------------- Effect of exchange rate changes on cash - - - - ------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ------------------------------------------------------- Cash and cash equivalents, end of period - - - - ======================================================= MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars) MeriStar Sub MeriStar Sub MeriStar Sub 4B, L.P. 6C, LLC 2C, LLC Cash flows from operating activities: Net Income (loss) (278) 637 (235) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 270 185 256 Equity in earnings - - - Loss on sale of assets - - - Write down of STS Hotel net - - - Extraordinary loss on extinguishment of debt - - - Minority interests - - - Amortization of unearned stock based compensation - - - Interest rate swaps marked to fair value - - - Deferred income taxes - - - Changes in operating assets and liabilities: Accounts receivable, net - 56 (104) Prepaid expenses and other - 29 - Due from/to Meristar Hotels - - 3,278 Accounts payable, accrued expenses and other liabilities (301) (95) (26) Accrued interest - - - Due from subsidiaries 435 (672) (3,563) Income taxes payable - - - ---------------------------------------- Net cash provided by (used in) operating activities 126 140 (394) ---------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (126) (140) 1,226 Proceeds from disposition of assets - - - Hotel operating cash received in lease conversion - - - Note receivable - - - Change in restricted cash - - - ---------------------------------------- Net cash provided by (used in) investing activities (126) (140) 1,226 ---------------------------------------- Cash flows from financing activities: Deferred financing costs - - - Proceeds from mortgages and notes payable - - - Principal payments on mortgages and notes payable - - (832) Contributions from partners - - - Distributions to partners - - - ---------------------------------------- Net cash provided by (used in) financing activities - - (832) ---------------------------------------- Effect of exchange rate changes on cash - - - ---------------------------------------- Net change in cash - - - Cash and cash equivalents, beginning of period - - - ---------------------------------------- Cash and cash equivalents, end of period - - - ========================================
MeriStar Hospitality Operating Partnership, L.P. Condensed Consolidating Statement of Cash Flows Three Months Ended March 2001 (in thousands of dollars)
MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 4G, L.P. 3B, LLC 5G, L.P. 5P, LLC Cash flows from operating activities: Net Income (loss) 390 211 2,661 165 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 209 219 1,539 - Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net 67 8 383 (165) Prepaid expenses and other - (7) (14) - Due from/to Meristar Hotels (1) (1) (1) 42 Accounts payable, accrued expenses and other liabilities (336) (10) (499) - Accrued interest - - - - Due from subsidiaries (402) (390) (4,024) (42) Income taxes payable - - - - ---------------------------------------------------------- Net cash provided by (used in) operating activities (73) 30 45 - ---------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net 73 (30) (45) - Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ---------------------------------------------------------- Net cash provided by (used in) investing activities 73 (30) (45) - ---------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Contributions from partners - - - - Distributions to partners - - - - ---------------------------------------------------------- Net cash provided by (used in) financing activities - - - - ---------------------------------------------------------- Effect of exchange rate changes on cash - - - - ---------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ---------------------------------------------------------- Cash and cash equivalents, end of period - - - - ========================================================== MeriStar Sub MeriStar Sub MeriStar Sub MeriStar Sub 5J, LLC 5Q, LLC 5A, LLC 8D, LLC Cash flows from operating activities: Net Income (loss) 3,119 768 481 553 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 840 102 417 311 Equity in earnings - - - - Loss on sale of assets - - - - Write down of STS Hotel net - - - - Extraordinary loss on extinguishment of debt - - - - Minority interests - - - - Amortization of unearned stock based compensation - - - - Interest rate swaps marked to fair value - - - - Deferred income taxes - - - - Changes in operating assets and liabilities: Accounts receivable, net - - 11 119 Prepaid expenses and other - - (11) (5) Due from/to Meristar Hotels 480 (514) (1) - Accounts payable, accrued expenses and other liabilities (1,094) (408) (27) (101) Accrued interest - - - - Due from subsidiaries (2,930) 218 (852) (855) Income taxes payable - - - - ---------------------------------------------------------- Net cash provided by (used in) operating activities 415 166 18 22 ---------------------------------------------------------- Cash flows from investing activities: Investment in hotel properties, net (415) (166) (18) (22) Proceeds from disposition of assets - - - - Hotel operating cash received in lease conversion - - - - Note receivable - - - - Change in restricted cash - - - - ---------------------------------------------------------- Net cash provided by (used in) investing activities (415) (166) (18) (22) ---------------------------------------------------------- Cash flows from financing activities: Deferred financing costs - - - - Proceeds from mortgages and notes payable - - - - Principal payments on mortgages and notes payable - - - - Contributions from partners - - - - Distributions to partners - - - - ---------------------------------------------------------- Net cash provided by (used in) financing activities - - - - ---------------------------------------------------------- Effect of exchange rate changes on cash - - - - ---------------------------------------------------------- Net change in cash - - - - Cash and cash equivalents, beginning of period - - - - ---------------------------------------------------------- Cash and cash equivalents, end of period - - - - ========================================================== MeriStar Sub MeriStar Hotel Total 4J, LLC Lessee, Inc. Eliminations Consolidated Cash flows from operating activities: Net Income (loss) 433 3,567 (60,166) 13,271 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 310 95 - 29,387 Equity in earnings - - 60,166 - Loss on sale of assets - - - 1,081 Write down of STS Hotel net - - - 2,112 Extraordinary loss on extinguishment of debt - - - 1,243 Minority interests - - - 11 Amortization of unearned stock based compensation - - - 797 Interest rate swaps marked to fair value - - - - Deferred income taxes - - - 144 Changes in operating assets and liabilities: Accounts receivable, net 42 (10,068) - (7,173) Prepaid expenses and other - (627) - (2,580) Due from/to Meristar Hotels - 2,562 - 11,512 Accounts payable, accrued expenses and other liabilities (430) 8,347 - (4,888) Accrued interest - - - 2,592 Due from subsidiaries (235) 12,078 - - Income taxes payable - - - 283 ------------------------------------------------------------ Net cash provided by (used in) operating activities 120 15,954 - 47,792 ------------------------------------------------------------ Cash flows from investing activities: Investment in hotel properties, net (120) (717) - (8,743) Proceeds from disposition of assets - - - 7,274 Hotel operating cash received in lease conversion - 3,778 - 3,778 Note receivable - - - (36,000) Change in restricted cash - - - 1,697 ------------------------------------------------------------ Net cash provided by (used in) investing activities (120) 3,061 - (31,994) ------------------------------------------------------------ Cash flows from financing activities: Deferred financing costs - (1) - (9,322) Proceeds from mortgages and notes payable - - - 578,347 Principal payments on mortgages and notes payable - (32) - (541,720) Contributions from partners - - - 280 Distributions to partners - - - (24,859) ------------------------------------------------------------ Net cash provided by (used in) financing activities - (33) - 2,726 ------------------------------------------------------------ Effect of exchange rate changes on cash - - - 216 ------------------------------------------------------------ Net change in cash - 18,982 - 18,740 Cash and cash equivalents, beginning of period - - - 242 ------------------------------------------------------------ Cash and cash equivalents, end of period - 18,982 - 18,982 ============================================================
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