e10vq

-----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, L9u0xNYUTtOU/ON6bNreePgTSIvK3Pj9+ep/sUtsHGG/OcHhXTMZZb3+v4RofZ7D d5b8n8h9YFUHMMATWcQ7xw== 0000950133-03-001862.txt : 20030515 0000950133-03-001862.hdr.sgml : 20030515 20030515082918 ACCESSION NUMBER: 0000950133-03-001862 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 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: 03701057 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 w86517e10vq.htm FORM 10-Q e10vq

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR

o		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 (State or other jurisdiction of incorporation or organization)		75-2648842 (I.R.S. Employer Identification No.)





1010 Wisconsin Avenue, N.W. Washington, D.C. (Address of principal executive offices)		20007 (Zip Code)

Registrant’s telephone number, including area code: (202) 295-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered:

Common Stock, par value $.01 per share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

The number of shares of the registrant’s common stock outstanding at April 30, 2003 was 46,067,896.

TABLE OF CONTENTS


PART I.FINANCIAL INFORMATION
	ITEM 1.FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4.CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
CERTIFICATIONS
CERTIFICATIONS
Exhibit 3.2.1
Exhibit 10.18
Exhibit 10.19
Exhibit 10.20
Exhibit 10.4.2
Exhibit 13
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3

INDEX


		Page





PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements




	Consolidated Balance Sheets — March 31, 2003 and December 31, 2002		2




	Consolidated Statements of Operations — Three months ended March 31, 2003 and 2002		3




	Consolidated Statements of Cash Flows — Three months ended March 31, 2003 and 2002		4




	Notes to Unaudited Consolidated Financial Statements		5




Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12




Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23




Item 4.	Controls and Procedures		23




PART II. OTHER INFORMATION




Item 6.	Exhibits and Reports on Form 8-K		24




Signatures			25




Certifications			26

PART I. FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars and shares in thousands, except per share amounts)


		March 31,
		2003			December 31,
		(Unaudited)			2002

ASSETS
Investments in hotel properties		$	2,943,118		$	3,020,909
Accumulated depreciation			(467,021	)		(460,972	)

			2,476,097			2,559,937
Restricted cash			22,021			20,365
Investments in and advances to affiliates			41,714			41,714
Note receivable from Interstate Hotels & Resorts			—			42,052
Prepaid expenses and other assets			40,729			43,228
Accounts receivable, net of allowance for doubtful accounts of $771 and $848			69,765			56,828
Cash and cash equivalents			65,488			33,896

		$	2,715,814		$	2,798,020

LIABILITIES AND STOCKHOLDERS’ EQUITY
Long-term debt		$	1,652,510		$	1,654,102
Accounts payable and accrued expenses			110,156			109,790
Accrued interest			40,744			52,907
Due to Interstate Hotels & Resorts			10,593			10,500
Other liabilities			19,712			18,013

Total liabilities			1,833,715			1,845,312


Minority interests			52,495			74,422




Stockholders’ equity:
	Common stock, par value $0.01 per share Authorized — 250,000 shares Issued — 50,392 and 49,555 shares		504			495
	Additional paid-in capital		1,215,046			1,196,025
	Retained deficit		(300,616	)		(230,870	)
	Accumulated other comprehensive loss		(5,994	)		(7,052	)
	Unearned stock-based compensation		(2,662	)		(3,638	)
	Common stock held in treasury — 4,324 shares		(76,674	)		(76,674	)

Total stockholders’ equity			829,604			878,286

		$	2,715,814		$	2,798,020

See accompanying notes to the unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(Dollars in thousands, except per share amounts)



				Three Months Ended
				March 31,

				2003			2002

Revenue:




	Hotel operations:
		Rooms		$	158,260		$	164,740
		Food and beverage			62,830			60,988
		Other hotel operations			18,879			18,802
	Office rental, parking and other revenue				3,197			4,301

Total revenue					243,166			248,831

Hotel operating expenses:
		Rooms			38,586			37,524
		Food and beverage			46,086			43,567
		Other hotel operating expenses			11,125			10,519
Office rental, parking and other expenses					641			761




Other operating expenses:
		Administrative and general			42,551			42,233
		Property operating costs			36,980			35,622
		Depreciation and amortization			28,994			29,853
		Loss on asset impairments			56,677			—
		Property taxes, insurance and other			20,269			19,582
		Loss on fair value of non-hedging derivatives			—			4,735
		Write-off of deferred financing costs			—			1,529

Operating expenses					281,909			225,925

Operating (loss) income					(38,743	)		22,906
Interest expense, net					34,876			34,622

Loss before minority interests, income taxes, and discontinued operations					(73,619	)		(11,716	)
Minority interests					3,677			627
Income tax benefit					196			305

Loss from continuing operations					(69,746	)		(10,784	)
Income from discontinued operations, net of income taxes of $24					—			841

Net loss				$	(69,746	)	$	(9,943	)

Earnings per share:




	Basic:
		Loss from continuing operations		$	(1.53	)	$	(0.24	)
		Income from discontinued operations			—			0.02

			Net loss	$	(1.53	)	$	(0.22	)

	Diluted:
		Loss from continuing operations		$	(1.53	)	$	(0.24	)
		Income from discontinued operations			—			0.02

			Net loss	$	(1.53	)	$	(0.22	)

See accompanying notes to the unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)



				Three Months Ended
				March 31,

				2003			2002

Operating activities:
	Net loss			$	(69,746	)	$	(9,943	)




	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization			28,994			30,901
		Loss on asset impairments			56,677			—
		Write-off of deferred financing costs			—			1,529
		Loss on fair value of non-hedging derivatives			—			4,735
		Minority interests			(3,677	)		(627	)
		Amortization of unearned stock-based compensation			976			880
		Unrealized gain on interest rate swaps recognized in net loss			(2,055	)		(2,887	)
		Deferred income taxes			(931	)		(317	)




		Changes in operating assets and liabilities:
			Accounts receivable		(12,937	)		(12,254	)
			Prepaid expenses and other assets		1,416			1,634
			Due from/to Interstate Hotels & Resorts		93			(224	)
			Accounts payable, accrued expenses, accrued interest and other liabilities		(9,039	)		(4,285	)

Net cash (used in) provided by operating activities					(10,229	)		9,142

Investing activities:
	Investments in hotel properties				(8,622	)		(12,292	)
	Proceeds from sale of asset				12,650			—
	Net payments from (advances to) Interstate Hotels & Resorts				42,052			(9,000	)
	(Increase) decrease in restricted cash				(1,656	)		2,952
	Other, net				(299	)		—

Net cash provided by (used in) investing activities					44,125			(18,340	)

Financing activities:
	Deferred financing fees				—			(3,131	)
	Proceeds from issuance of long-term debt				—			234,545
	Principal payments on long-term debt				(1,889	)		(220,901	)
	Proceeds from issuances of common stock				—			3,155
	Purchases of common stock				—			(409	)
	Dividends paid to stockholders				—			(475	)
	Distributions to minority investors				(141	)		(789	)

Net cash (used in) provided by financing activities					(2,030	)		11,995

Effect of exchange rate changes on cash and cash equivalents					(274	)		(271	)
Net increase in cash and cash equivalents					31,592			2,526
Cash and cash equivalents, beginning of period					33,896			23,448

Cash and cash equivalents, end of period				$	65,488		$	25,974

Supplemental Cash Flow Information




Cash paid for interest and income taxes:
	Interest, net of capitalized interest			$	46,989		$	38,288

	Income taxes			$	207		$	93

See accompanying notes to the unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(Amounts in thousands, except per share and share amounts)

1. Organization

MeriStar Hospitality Corporation is a real estate investment trust, or REIT. We own a portfolio of upscale, full-service hotels and resorts in the United States and Canada. Our portfolio is diversified geographically and by franchise and brand affiliations. As of March 31, 2003, we owned 106 hotels with 27,432 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”).

Our taxable subsidiaries are parties to management agreements with a subsidiary of Interstate Hotels to manage all of our hotels. Under these management agreements, the taxable subsidiaries pay a management fee to Interstate Hotels for each property. The taxable subsidiaries in turn make rental payments to us under the participating leases. Under the management agreements, the base management fee is 2.5% of total hotel revenue, plus incentive payments based on meeting performance thresholds that could total up to 1.5% of total hotel revenue. All of the agreements, except for two agreements with terms that renew annually, have an initial term of 10 years with three renewal periods of five years each at the option of Interstate Hotels, subject to some exceptions.

2. Summary of Significant Accounting Policies

Interim Financial Statements. 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. 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 for the year ended December 31, 2002. Certain 2002 amounts have been reclassified to conform to the 2003 presentation.

In our opinion, the accompanying unaudited 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 results of operations for the interim periods are not necessarily indicative of the results for the entire year.

Principles of Consolidation. We adopted the Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities,” an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” on January 1, 2003. The interpretation addresses how to identify variable interest entities and when to consolidate those entities. Consolidation of variable interest entities is required by the primary beneficiary. We do not have an interest in any variable interest entities.

Held for Sale Properties. We classify the properties we are actively marketing as held for sale once all of the following conditions are met:

• Our board has approved the sale,

• We have a fully executed agreement with a qualified buyer which provides for no significant outstanding or continuing obligations with the property after sale, and

• We have a significant non-refundable deposit.

We carry properties held for sale at the lower of their carrying values or estimated fair values less costs to sell. We cease depreciation at the time the asset is classified as held for sale. If material to our total portfolio, we segregate the held for sale properties on our consolidated balance sheet.

January 1, 2002. SFAS No. 144 requires the current and prior period operating results of any asset that has been classified as held for sale or has been disposed of on or after January 1, 2002 and where we have no continuing involvement, including any gain or loss recognized, to be recorded as discontinued operations.

The provisions of SFAS No. 144 also require that whenever events or changes in circumstances indicate that the carrying value of a long-lived asset may be impaired that an analysis be performed to determine the recoverability of the asset’s carrying value. We make estimates of the undiscounted cash flows from the expected future operations or potential sale of the asset. If the analysis indicates that the carrying value is not recoverable from these estimates of cash flows, we write down the asset to estimated fair value and recognize an impairment loss. Any impairment losses we recognize on assets held for use are recorded as operating expenses. We record any impairment losses on assets held for sale as a component of discontinued operations.

We adopted the provisions of SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” on January 1, 2003. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. As part of our strategy includes the disposition of certain hotel assets, all of which are managed under agreements which typically include termination penalty clauses with Interstate Hotels, we may incur termination obligations related to our asset dispositions. Any such liability will be recognized at the time the asset disposition is complete and a termination notice is provided to Interstate Hotels. At that time, the recognition of the termination obligation will be included in the calculation of the final gain or loss on sale and will be included in discontinued operations. For further discussion of potential termination obligations, see “Asset Dispositions” included in Item 2 of this Quarterly Report on Form 10-Q.

Gains and Losses From Extinguishments of Debt. We adopted the provisions of SFAS No. 145, “Rescission of FASB Statements No. 4, No. 44 and No. 64, Amendment of SFAS No. 13, and Technical Corrections,” on January 1, 2003. The rescission of SFAS No. 4 and No. 64 requires that all gains and losses from extinguishments of debt be classified as extraordinary only if the gains and losses are from unusual or infrequent transactions. It also requires prior period gains or losses that are not from unusual or infrequent transactions to be reclassified as an operational expense. Adoption of the standard did not have a material impact on our results of operations for the three months ended March 31, 2003.

Stock-Based Compensation. We adopted the recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended in December 2002 by SFAS No. 148, on January 1, 2003 for new stock options issued under our compensation programs. As permitted by SFAS No. 148, we elected to apply the provisions prospectively, which includes recognizing compensation expense for only those stock options issued in 2003 and forward. Adoption of the standard did not have a significant impact on our results of operations or financial condition. We apply the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for our stock options issued under our compensation programs prior to January 1, 2003. As we granted these compensation awards at market value, no compensation cost has been recognized. For our other equity-based compensation plans, we record the fair value of the cost at the time of issuance and recognize compensation expense over the respective vesting periods.

Had compensation cost been determined based on fair value at the grant date for awards granted prior to our adoption of SFAS No. 123, as amended by SFAS No. 148, our net loss and per share amounts would have been adjusted to the pro forma amounts indicated as follows:



		Three Months Ended
		March 31,

		2003			2002

Net loss, as reported		$	(69,746	)	$	(9,943	)
	Add: Stock-based employee compensation expense included in reported net loss, net of related tax effect		929			1,891
	Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1,081	)		(2,137	)

Net loss, pro forma		$	(69,898	)	$	(10,189	)



		Three Months Ended
		March 31,

		2003			2002

Earnings per share
	Basic, as reported	$	(1.53	)	$	(0.22	)
	Basic, pro forma	$	(1.53	)	$	(0.23	)

	Diluted, as reported	$	(1.53	)	$	(0.22	)
	Diluted, pro forma	$	(1.53	)	$	(0.23	)

The effects of applying SFAS No. 123 for disclosing pro forma compensation costs may not be representative of the actual effects on reported net income and earnings per share in future periods.

Accounting for Guarantees. We adopted FASB FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34, on January 1, 2003. The interpretation requires disclosures, which we have included in Footnote 9, “Commitments and Contingencies.” The interpretation also requires recognition of liabilities at their fair value for newly issued guarantees. As we did not issue any new guarantees during the three months ended March 31, 2003, the adoption did not have a material impact on our results of operations or financial condition.

3. Comprehensive Loss

Comprehensive loss was $68,688 and $9,420 for the three months ended March 31, 2003 and 2002, respectively. Comprehensive loss consisted primarily of net loss ($69,746 and $9,943 for the three months ended March 31, 2003 and 2002, respectively), foreign currency translation adjustments, and in 2002 a $511 fair value adjustment for derivatives.

4. Investments in Hotel Properties

Investments in hotel properties consisted of the following:


	March 31,		December 31,
	2003		2002

Land	$	281,461	$	288,611
Buildings		2,287,118		2,351,769
Furniture, fixtures and equipment		331,406		344,541
Construction-in-progress		43,133		35,988

	$	2,943,118	$	3,020,909

For the three months ended March 31, 2003 and 2002, we capitalized interest of $779 and $919, respectively.

In late 2002, due to changes in economic conditions and the decision to market non-core assets as part of our program to sell assets that do not fit our long-term strategy, we performed an analysis to determine the recoverability of each of our hotel properties. Assets we have identified as “non-core” typically have one or more of the following characteristics: limited future growth potential, secondary market locations, secondary brand affiliations, higher than average future capital expenditure requirements, or an over-weighted market location.

We recognized an impairment loss in 2002 on certain non-core assets we were then actively marketing. Late in the first quarter of 2003, we expanded our asset sales program to include a total of 16 non-core assets. We recognized an impairment loss of $56,677 related to these 16 hotels during the three months ended March 31, 2003.

regarding these 19 assets. Based on expected net sales proceeds, we expect to incur an impairment charge of approximately $155,000 to $175,000 in the second quarter of 2003.

The impairment charges discussed above are based on our estimates of the fair value of the properties we plan to dispose of. These estimates require us to make assumptions about the sales prices that we expect to realize for each property as well as the timing of a potential sale. In making these estimates, we consider the operating results of the assets, the market for comparable properties, and quotes from brokers, among other information. Actual results could differ materially from these estimates.

5. Investments in and Advances to Affiliates

In 1999, we invested $40,000 in MeriStar Investment Partners, LP (“MIP”), a joint venture established to acquire upscale, full-service hotels. Our investment is in the form of a preferred partnership interest, in which we receive a 16% preferred return on our investment. We account for this investment using the cost method. As of March 31, 2003, cumulative preferred returns of $12,840 were due from MIP. We have included this receivable in accounts receivable on the accompanying consolidated balance sheet. We evaluate the collectibility of our preferred return based on the underlying value of the hotel properties and our preference to distributions. On March 27, 2003, MIP completed a refinancing of its long-term debt, which allows the release of excess cash flow to pay our preferred return currently. We expect to begin receiving distributions representing payments of our current return during the second quarter of 2003. In the future, we expect that our cumulative unpaid preferred returns will be paid from excess cash flow above our current return and from potential disposition proceeds in excess of debt allocated to individual assets. Given the current economic environment, we do not expect the partnership’s operations to provide adequate cash flow in the near term for significant repayments of our cumulative unpaid preferred returns.

6. Long-Term Debt

Long-term debt consisted of the following:


	March 31,			December 31,
	2003			2002

Senior unsecured notes	$	950,000		$	950,000
Secured facility		313,270			314,626
Senior subordinated notes		205,000			205,000
Convertible notes		154,300			154,300
Mortgage debt and other		37,498			38,030
Unamortized issue discount		(7,558	)		(7,854	)

	$	1,652,510		$	1,654,102

Aggregate future maturities as of March 31, 2003 were as follows:


2003 (nine months)	$	6,776
2004		170,715
2005		8,666
2006		9,407
2007		213,514
Thereafter		1,243,432

	$	1,652,510

As of March 31, 2003, all of our debt bore fixed rates of interest. Our overall weighted average interest rate was 8.6%. The fair value of our fixed rate long-term debt was $1,419,651 at March 31, 2003. We determined fair value based on market prices as of March 31, 2003.

Senior unsecured notes. The notes are unsecured obligations of certain subsidiaries of ours, and we guarantee payment of principal and interest on the notes. These notes contain various restrictive incurrence covenants, limiting our ability to transact certain business activities, including additional borrowings, if specific financial thresholds are not achieved. One of those thresholds is maintaining a 2 to 1 fixed charge coverage ratio (as defined in the indentures, fixed charges only include interest on debt obligations and preferred equity). As of March 31, 2003, our fixed charge coverage ratio was 1.5 to 1, and therefore we were not able to enter into certain transactions. These limitations include the repurchase of our stock, the issuance of any preferred stock, the payment of dividends (unless required to maintain our status as a REIT), the incurrence of any additional debt, or the repayment of outstanding debt before it comes due.

There are certain exceptions, or “carve-out,” features with respect to the incurrence of additional debt and early repayment of debt features in the indentures. We currently have the ability to incur $300,000 of secured non-recourse financing within restricted subsidiaries. Proceeds within the restricted subsidiaries could not be used to retire the Convertible Notes prior to their maturity but could be used to repay them at maturity. Additionally, we are permitted to invest five percent of consolidated net tangible assets in an unrestricted subsidiary. We would then be able to leverage the properties contributed to the unrestricted subsidiary and could use any proceeds from new financings to retire the Convertible Notes prior to their maturity. We also have a general carve-out to incur $50,000 of any type of additional debt within a restricted subsidiary.

Credit facility. On October 29, 2002, we entered into a new three-year $100,000 senior revolving credit facility, secured by the equity interest in most of our subsidiaries. The initial interest rate is LIBOR plus 388 basis points. We terminated our previous credit facility with this new revolving credit facility and wrote off $1,615 of deferred financing costs related to this termination. As of March 31, 2003, there were no outstanding borrowings on the new facility.

This facility contains customary compliance measures we must meet in order to borrow on the facility, which became more stringent on a quarterly basis beginning in the first quarter of 2003. The sale of two hotels during the fourth quarter of 2002 and one in January 2003, as well as the settlement of our note receivable with Interstate Hotels, impacted our leverage covenant due to the loss of trailing 12-month EBITDA (as defined in the credit agreement) on a pro forma basis. We have obtained a waiver of compliance with this leverage covenant from our lending group through May 20, 2003. We currently intend to request an extension of the waiver for a 90-day period. Because we do not anticipate needing to draw under the bank line or having borrowing capacity to do so in the near term, we expect to significantly reduce or terminate the facility. We have approximately $1,400 of unamortized capitalized financing costs related to this facility as of March 31, 2003. These costs, or a significant portion thereof, would be written off if we decide to terminate or significantly reduce the facility.

Secured facility. We completed a $330,000 10-year non-recourse financing secured by a portfolio of 19 hotels in 1999. The loan bears a fixed interest rate of 8.01% and matures in 2009. The secured facility contains standard provisions that require the servicer to maintain in escrow cash balances for certain items such as property taxes and funding of capital expenditures. In addition, the facility contains a provision that requires our mortgage servicer to retain in escrow the excess cash from the encumbered hotels after payment of debt service (“Excess Cash”), if net hotel operating income after payment of FF&E reserves and franchise fees (“NOI”) for the trailing twelve months declines below $57,000. This provision was triggered in October 2002 and will be effective until the hotels generate the minimum cash flow required for two consecutive quarters, at which time the cash being held in escrow will be released to us. Approximately $8,800 of cash was held in escrow under this provision as of March 31, 2003. Additional amounts continue to be held in escrow. The security agreement permits us to substitute unleveraged properties into the portfolio in place of existing properties in order to increase the NOI to a level at which the portfolio will meet this requirement. We have begun discussions with the servicer regarding this substitution. We are also in the process of negotiating the release of up to $5,000 of cash held in escrow for funding of capital expenditures on the 19 encumbered properties.

$2,055 and $2,887, respectively, of income related to the decrease in fair value of these interest rate swaps. For the three months ended March 31, 2003 and 2002, we made cash payments on these swaps of $2,105 and $2,876, respectively. The change in fair value and the swap payments are netted together on our statement of operations and included in net interest expense. The fair value of these swap agreements was a liability of $1,922 at March 31, 2003, and is included in other liabilities in the accompanying consolidated balance sheets.

On April 14, 2003, one swap agreement with a notional principal amount of $100,000 expired with no significant impact on our results of operations or financial condition. The remaining swap with a notional principal amount of $100,000 expires in July 2003. As of March 31, 2003, the fair value of the liability related to this swap was $1,456. At that time, the 30-day LIBOR was 1.03%. If LIBOR remains at that rate through the expiration of the swap in July 2003, we would make additional cash payments of approximately $1,200. If LIBOR increases or decreases by 50 basis points during this same period, our payments would decrease or increase by approximately $100.

7. Stockholders’ Equity and Minority Interests

Common Stock Transactions. We issued 50,000 shares of common stock to an employee in connection with the formal separation of management functions with Interstate Hotels during the three months ended March 31, 2003. POPs totaling 50,000 were also relinquished in connection with the separation.

OP Units. Substantially all of our assets are held indirectly by and operated through MeriStar Hospitality Operating Partnership, L.P., our subsidiary operating partnership (Commission file number 333-63768). Our operating partnership’s partnership agreement provides for five classes of partnership interests: Common OP Units, Class B OP Units, Class C OP Units, Class D OP Units and Profits-Only OP Units (POPs).

Common OP Unit holders converted 787,000 of their OP Units, with a value of $18,109, into common stock during the three months ended March 31, 2003. There were no conversions for cash during the quarter.

8. Earnings Per Share

The following table presents the computation of basic and diluted earnings per share:



		Three Months Ended
		March 31,

		2003			2002

Basic and Diluted Earnings Per Share Computation:
	Net loss from continuing operations	$	(69,746	)	$	(10,784	)
	Dividends declared on unvested restricted stock		—			(2	)

	Loss available to common stockholders	$	(69,746	)	$	(10,786	)

	Weighted average number of basic and diluted shares of common stock outstanding		45,548			44,553

	Basic and diluted loss per share from continuing operations	$	(1.53	)	$	(0.24	)

For the three months ended March 31, 2003 and 2002, 10,572 and 9,267 securities, respectively, were excluded from the calculation of diluted earnings per share as the effect of their inclusion would be anti-dilutive.

9. Commitments and Contingencies

Litigation. In the course of our normal business activities, various lawsuits, claims and proceedings have been or may be instituted or asserted against us. Based on currently available facts, we believe that the disposition of matters that are pending or asserted will not have a material adverse effect on our financial position, results of operations or liquidity.

Minimum Lease Payments. We lease the land at certain of our hotels under long-term arrangements from third parties. Certain leases contain contingent rent features based on gross revenues at the respective property. Future minimum lease payments required under these operating leases as of March 31, 2003 were as follows:


2003 (nine months)	$	1,078
2004		1,437
2005		1,440
2006		1,427
2007		1,427
Thereafter		56,368

	$	63,177

Our obligations under other operating lease commitments, primarily for equipment, are not significant.

We lease certain office, retail and parking space to outside parties under non-cancelable operating leases with initial or remaining terms in excess of one year. Future minimum rental receipts under these leases as of March 31, 2003 were as follows:


2003 (nine months)	$	3,523
2004		4,428
2005		2,896
2006		2,027
2007		1,456
Thereafter		1,929

	$	16,259

10. Dispositions

We sold five hotels during 2002. In January 2003, we sold one hotel classified as held for sale at December 31, 2002. Operating results for these six hotels have been reclassified as discontinued operations for the three months ended March 31, 2002. Revenue of $7,305 and pre-tax income of $865 is included in discontinued operations for 2002 related to these six hotels. Results of operations for the three months ended March 31, 2003 for the one hotel sold in January were insignificant and were therefore included in continuing operations. In April 2003, we completed the sale of another hotel for approximately $3,100.

11. Consolidating Financial Statements

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 are full and unconditional, and joint and several. Exhibit 99.1 to this Quarterly Report on Form 10-Q presents supplementary consolidating financial statements for MHOP, including each of the guarantor subsidiaries. This exhibit presents MHOP’s consolidating balance sheets as of March 31, 2003 and December 31, 2002, consolidating statements of operations for the three months ended March 31, 2003 and 2002, and consolidating statements of cash flows for the three months ended March 31, 2003 and 2002.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, 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 identified by our use of words such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative. All statements regarding our expected financial position, business and financing plans are forward-looking statements.

Factors which 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;

• governmental actions;

• legislative/ regulatory changes, including changes to laws governing the taxation of real estate investment trusts;

• level of proceeds from asset sales;

• cash available for capital expenditures;

• availability of capital;

• ability to refinance debt;

• rising interest rates;

• rising insurance premiums;

• competition;

• supply and demand for hotel rooms in our current and proposed market areas, including the existing and continuing weakness in business travel and lower-than-expected daily room rates;

• other factors that may influence the travel industry, including health, safety and economic factors; and

• generally accepted accounting principles, policies and guidelines applicable to real estate investment trusts.

These risks and uncertainties should be considered in evaluating any forward-looking statements contained in this report or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.

BUSINESS SUMMARY

We are a real estate investment trust, or REIT, and own a portfolio of upscale, full-service hotels and resorts in the United States and Canada. Our portfolio is diversified by franchise and brand affiliations. As of March 31, 2003, we owned 106 hotels, with 27,432 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts (“Interstate Hotels”). In addition, we are party to an intercompany agreement with Interstate Hotels that governs a number of aspects of our relationship.

The following discussion should be read in conjunction with our 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission and with the unaudited consolidated financial statements included herein.

RESULTS OVERVIEW

Revenues declined to $243.2 million for the three months ended March 31, 2003 compared to $248.8 million for the same period in 2002. Our results reflect the effects of the conflict in Iraq, an elevated terrorist alert level and the continued sluggish economy, all of which have caused declines in business transient travel demand nationwide. We continue to focus on increasing group sales at our hotels to offset the decline in business travel.

Hotel operating expenses increased to $96.4 million for the three months ended March 31, 2003 from $92.4 million for the same period in 2002. The comparison between the two periods is difficult, as the 2002 first quarter results reflect significant cost reductions instituted in the aftermath of the September 11, 2001 terrorist attacks. These severe cost-reduction measures were scaled back later in 2002 in an effort to improve guest satisfaction. As the war in Iraq commenced in 2003, we also adjusted our expense levels as appropriate in certain markets. We are continuing to work with Interstate Hotels to identify revenue enhancement opportunities as well as additional cost reduction and control measures at our hotels. Other operating expenses increased to $185.5 million for the three months ended March 31, 2003 from $133.6 million for the same period in 2002 primarily resulting from an asset impairment charge of $56.7 million in the first quarter of 2003, which is more fully described in the “Results of Operations” section below.

Our revenues have been derived from the operations of our hospitality properties, including room, food and beverage revenues, as well as from our leases of office, retail and parking rentals. Operating costs include direct costs to run our hotels, management fees to Interstate Hotels to manage our properties, depreciation of our properties, as well as sales, marketing and general and administrative costs. Our expenses also include interest on our debt and minority interest allocations, which represent the allocation of income to outside investors for properties that are not wholly owned. Our expenses included depreciation of our properties, and related property tax expense, general and administrative costs, as well as interest on our debt and minority interest allocations.

RESULTS OF OPERATIONS

The provisions of Statement of Financial Accounting Standards (SFAS) No. 144 require that current and prior period operating results of any asset that has been classified as held for sale or has been disposed of on or after January 1, 2002, including any gain or loss recognized on the sale, be recorded as discontinued operations. Accordingly, we have reclassified 2002 results of operations to conform to the requirements of SFAS No. 144. See Footnote 10 “Dispositions,” included in Item 1 of this Quarterly Report on Form 10-Q for further information regarding the amounts reclassified.

Three months ended March 31, 2003 compared with the three months ended March 31, 2002

The following table provides our hotels’ operating statistics on a comparable hotel basis for the three months ended March 31 (comparable hotels are those that were owned for substantially all of both periods):


	2003		2002		Change

Average daily rate	$	102.14	$	105.87		(3.5)%
Occupancy		63.1%		63.3%		(0.3)%
Revenue per available room (RevPAR)	$	64.48	$	67.05		(3.8)%

The conflict in Iraq, an elevated terrorist alert level and the sluggish economy, have had a negative effect on our hotel operations, evidenced by a reduction in transient business travel. This is reflected in the 3.5% reduction in average daily rate and a 0.3% reduction in occupancy for the three months ended March 31, 2003 compared to the same period in 2002. We have shifted our marketing efforts towards lower-rated group and contract business in most markets in order to maintain occupancy at our properties. Due to the short booking window for most business, including our group and contract customers, we anticipate being able to shift our customer mix toward more business transient customers when the economy and corporate profits strengthen, bringing renewed strength to this vital customer segment.

Revenues. Total revenue from continuing operations decreased $5.6 million to $243.2 million for the three months ended March 31, 2003 from $248.8 million for the same period in 2002, primarily due to a $6.5 million decrease in room revenue directly attributable to a decrease in average daily rate and occupancy. Revenue from other sources decreased $1.1 million primarily due to a reduction in telephone services stemming from usage of other communication devices in lieu of hotel telephones. The overall decrease was partially offset by a $1.8 million increase in food and beverage revenue, resulting primarily from an increase in banquet revenue.

Operating expenses. Total operating expenses increased a net $56 million to $281.9 million for the quarter ended March 31, 2003 compared to $225.9 million for the same period in 2002. Hotel operating expenses increased from $92.4 million for the three months ended March 31, 2002 to $96.4 million for the same period in 2003 due primarily to increases in room expenses of $1.1 million and food and beverage costs of $2.5 million. Operating expenses in 2002 reflected severe cost cuts instituted in the aftermath of the September 11, 2001 terrorist attacks.

Other operating expenses. Other operating expenses increased $51.9 million to $185.5 million for the three months ended March 31, 2003 from $133.6 million for the same period in 2002, primarily resulting from an impairment charge of $56.7 million in the first quarter of 2003. Excluding this charge and the significant charges in 2002 described in greater detail below, other operating expenses increased $1.5 million for the quarter ended March 31, 2003. This increase stems mainly from an increase in our property operating costs, which consist of repairs and maintenance, energy, franchise and management costs. Our property operating costs increased $1.4 million during the quarter, primarily due to a $1.1 million increase in energy costs due to the civil disruptions in Venezuela and the war in Iraq, as well as an unusually cold winter in the northeastern United States in 2003. Due to the conclusion of the war in Iraq, we expect our energy costs to return to more normal levels in the coming months.

Significant charges. Late in the first quarter of 2003, we expanded our asset sales program to include a total of 16 non-core assets. This was based on our decision to raise additional cash to reduce our overall leverage and provide additional capital for reinvestment in our core holdings. We recognized an impairment loss of $56.7 million related to these additional hotels for the three months ended March 31, 2003.

We also incurred several significant charges for the three months ended March 31, 2002, as follows:

• a $4.7 million loss on fair value of non-hedging derivatives 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 March 2002.

Discontinued operations. During 2002, we sold five hotels in separate transactions and received $60.7 million in cash. In mid-January 2003, we completed the sale of one hotel and received $12.7 million in cash. This hotel was classified as held for sale at December 31, 2002. We classified $0.8 million, net of tax, of income from the six hotels’ operations as discontinued for the three months ended March 31, 2002. Results of operations for the three months ended March 31, 2003 for the one hotel sold in January were insignificant and were therefore included in continuing operations.

FUNDS FROM OPERATIONS AND EBITDA

The National Association of Real Estate Investment Trusts, or NAREIT, created Funds from Operations, or FFO, as an alternative earnings measure and defines it as net income (computed in accordance with accounting principles generally accepted in the United States, or GAAP), excluding gains (or losses) from sales or real estate and 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 as defined by GAAP are excluded from the calculation of FFO. We believe FFO is an indicative measure of our operating performance due to the significance of our hotel real estate assets and can be used to measure our ability to service debt, fund capital expenditures, and expand our business. We also use FFO in our annual budget process. In addition, some of the restrictive covenants in our debt instruments are based on FFO.

Substantially all of our assets consist of real estate, and in accordance with GAAP, those assets are subject to straight-line depreciation, which reflects the assumption that the value of real estate assets, other than land, will decline over time. That assumption is often not true with respect to the actual market value and other conditions. As a result, we and many industry investors believe that presentation of GAAP operating measures for real estate companies to be more informative and useful when other measures, adjusted for depreciation and amortization, are also presented. In an effort to address these concerns, NAREIT adopted a definition of FFO, as described above, which we adopted.

EBITDA represents consolidated earnings before interest expense, income taxes, depreciation and amortization and includes operations from the assets included in discontinued operations. We believe EBITDA provides useful information to investors for evaluating our operating performance and the capacity of our operations to incur and service debt, fund capital expenditures, and expand our business. Also, we use EBITDA to provide a measure of unleveraged cash flow that can be isolated on an asset by asset basis, to determine overall property performance and to measure our ability to service debt. We believe that the rating agencies and a number of our lenders also use EBITDA for those purposes. Restrictive covenants in our senior and subordinated note indentures contain financial ratios based on EBITDA. We also use EBITDA as one measure in determining the value of acquisitions and dispositions and, like FFO, it is also widely used in our annual budget process.

FFO and EBITDA should not be considered as alternatives to any other operating or liquidity performance measure prescribed by GAAP. Although FFO and EBITDA are considered standard benchmarks utilized by the investment community, our FFO and EBITDA may not be comparable to similarly titled measures reported by other companies.

FFO

We use FFO as a measure of our performance. We define FFO as NAREIT’s definition as described above. The following reconciles our GAAP net loss to FFO on a diluted basis for the three months ended March 31 (in thousands):


		2003			2002

	Net loss	$	(69,746	)	$	(9,943	)
	Loss on asset impairments		56,677			—
	Hotel depreciation and amortization		27,613			28,651
	Minority interest to common OP unit holders		(3,818	)		(768	)

FFO			10,726			17,940
	Interest on convertible debt		—			1,832

FFO on a diluted basis		$	10,726		$	19,772

EBITDA

EBITDA for the three months ended March 31 was as follows (in thousands):


	2003			2002

Operating (loss) income from continuing operations	$	(38,743	)	$	22,906	^(a)
Loss on asset impairments		56,677			—
Depreciation and amortization		28,994			29,853

EBITDA from continuing operations	$	46,928		$	52,759	^(a)

Income from discontinued operations	$	—		$	841
Income tax expense		—			24
Interest expense, net		—			(34	)
Depreciation and amortization		—			1,048

EBITDA from discontinued operations	$	—		$	1,879

EBITDA, total operations	$	46,928		$	54,638	^(a)

^(a) Operating income from continuing operations, EBITDA from continuing operations and EBITDA, total operations, include the effects of a $4,735 non-cash loss due to our swap agreements being converted to non-hedging derivatives in January 2002 and a $1,529 non-cash write-off of deferred financing costs due to reduction in our borrowing capacity on our revolving credit agreement in March 2002.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

Our principal sources of liquidity are cash generated from operations, funds from borrowings, funds from the sales of non-core assets and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, and investments in hotels (primarily capital projects currently), and may include in the future the repurchase of our debt in the open market.

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 related primarily to terrorism and the developments in the conflict in Iraq and related concerns, and other operating risks described under the caption, “Risk Factors — Operating Risks” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2002;

• Factors that affect our access to bank financing and the capital markets, including operational risks, high leverage, interest rate fluctuations, and other risks described under the caption “Risk Factors — Financing Risks” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2002; and

• Other factors described previously under the caption, “Cautionary Statement Regarding Forward-Looking Statements.”

We believe we have sufficient free cash flow currently, and we expect to have adequate cash flow during the next twelve months in order to fund our operations, capital commitments and debt service obligations. Our current and future liquidity is, however, greatly dependent upon our operating results, which are driven largely by overall economic conditions, and since September 11, 2001 have been heavily impacted by geopolitical concerns and other factors impacting business and leisure travel. If general economic conditions are significantly worse than we expect for an extended period, this will likely have a negative effect on our projections of available cash flow and liquidity. We continue to take steps to strengthen our balance sheet and to maintain financial flexibility and liquidity. We sold one non-core asset in the first quarter of 2003 for approximately $12.7 million. We ended the first quarter of 2003 with a cash balance of approximately $87.5 million, of which $65.5 million was unrestricted. We intend to carry balances of similar amounts, or slightly higher, on our balance sheet for the foreseeable future, as we believe this cash reserve should be adequate to protect us from a potential downturn in our business. In April 2003, we sold another non-core hotel asset for approximately $3.1 million.

We have been actively marketing 15 non-core hotels for sale, from which we expect to generate proceeds of approximately $95 million to $105 million. Subsequent to March 31, 2003, we identified an additional 19 non-core assets that we plan to dispose of. We anticipate estimated proceeds of $180 million to $200 million. Our ability to realize these estimated proceeds is, however, dependent upon finding qualified buyers willing to pay a purchase price that we consider reasonable. Subject to the limits and restrictions imposed on us by our borrowing arrangements, we are currently able to utilize any proceeds from the sale of assets to invest in capital expenditures and repay our senior unsecured notes.

To reduce the overall amount and cost of our debt, we will consider opportunities to repurchase some of our current outstanding debt. Any such transactions, however, are subject to the limits and restrictions imposed by our borrowing arrangements. See “Long-Term Debt” section below for a discussion of such restrictions.

Sources and Uses of Cash

We used a total of $10.2 million of cash from operations during the first quarter of 2003 compared with $9.1 million generated in the first quarter of 2002. Our operating results and the amount of cash generated by our hotel operations have been negatively impacted by the events of September 11, 2001, the continuing sluggish economy, the threat of further terrorist attacks, and other factors affecting business and leisure travel. Cash flow from operations also decreased in 2003 due to the timing of interest payments and higher interest rates on our senior unsecured notes issued in February 2002. Our first semi-annual interest payment on these notes was made in July 2002. We made an interest payment of approximately $9 million on these notes in January 2003. Partially offsetting this increase in interest was savings of approximately $2.5 million in interest on our previous revolving credit facility, which was repaid with the net proceeds from the February 2002 senior unsecured notes issuance.

Included in our operating results is the 16% preferred return on our preferred investment in MIP. As of March 31, 2003, approximately $12.8 million of cumulative preferred returns remained unpaid. We evaluate the collectibility of our preferred return based on the underlying value of the hotel properties and our preference to distributions. On March 27, 2003, MIP completed a refinancing of its long-term debt, which allows the release of excess cash flow to pay our preferred return currently. We expect to begin receiving distributions representing payments of our current return during the second quarter of 2003. In the future, we expect that our cumulative unpaid preferred returns will be paid from excess cash flow above our current return and from potential disposition proceeds in excess of debt allocated to individual assets. Given the current economic environment, we do not expect the partnership’s operations to provide adequate cash flow in the near term for significant repayments of our cumulative unpaid preferred returns.

Our investing activities provided a net $44.1 million of cash during the first quarter of 2003, resulting primarily from:

• $42.1 million from Interstate Hotels for the repayment of their note receivable; and

• $12.7 million of proceeds from the sale of one hotel; partially offset by

• $8.6 million of hotel capital expenditures (including $0.8 million of capitalized interest).

We used $2 million of cash in financing activities during the first quarter of 2003 due mainly to the repayment of our long-term debt obligations.

We must distribute to stockholders at least 90% of our REIT taxable income, excluding net capital gains, to preserve the favorable tax treatment accorded to REITs under the Internal Revenue Code. The payment of dividends is restricted under our senior unsecured notes if our fixed charge coverage ratio falls below 2 to 1, except that the indenture permits us to pay dividends necessary to maintain our status as a REIT. Under certain circumstances, we may be required to make distributions in excess of available cash in order to meet the Internal Revenue Code requirements. In that event, we would seek to borrow additional funds or sell additional non-core assets, or both, to the extent necessary to obtain cash sufficient to make the dividends required to retain our qualification as a REIT. Any future distributions will be at the discretion of our board of directors and will be based on factors including, but not limited to, our operating results, restrictions imposed by our borrowing agreements, capital expenditure requirements, the economic outlook, and the Internal Revenue Service dividend payout requirements for REITs. The timing and amount of any future distributions is dependent upon these

factors, and we cannot provide assurance of the amounts of any such distributions that we may make in the future. At current operating levels, we do not expect to be able to pay a dividend in 2003.

Long-Term Debt

Convertible notes. As of March 31, 2003, we had outstanding $154.3 million aggregate principal amount of 4.75% convertible subordinated notes due in 2004. We are currently actively exploring a variety of sources to repay these securities. Under the indentures related to our $950 million of senior unsecured notes and our $205 million of senior subordinated unsecured notes, prepayment of our convertible subordinated notes prior to maturity is prohibited as long as our fixed charge coverage ratio, as defined, is less than 2 to 1. At March 31, 2003, such ratio was 1.5 to 1 and, therefore, under these circumstances, we can only repay these securities at maturity (our indentures permit such repayment at maturity). We do not currently expect this ratio to improve to a level that would permit repayment of the convertible notes prior to their maturity. Among the sources of repayment of these securities which are currently under active consideration, all of which are permitted under our indentures, are:

• Our available cash flow;

• The proceeds of borrowings on a non-recourse basis (limited to $300 million), with such borrowings secured by certain of our hotel properties;

• Borrowing under our $50 million general debt “basket” under our indentures;

• CMBS or other secured borrowings through a special purpose, “unrestricted” subsidiary; our indentures permit us to fund such a subsidiary with assets equal to up to 5% of our Consolidated Net Tangible Assets, as defined (approximately $135 million at March 31, 2003);

• The proceeds of a pari passu refinancing of our convertible subordinated notes; or

• A combination of the above.

We are currently reviewing these alternatives and believe that a combination of secured borrowings under the permitted “baskets” for this type of financing is the alternative that we will most likely employ. Our ability to issue secured debt is enhanced by the fact that our hotel portfolio contains 82 unencumbered properties out of our total current portfolio of 105 hotels, and only 13 of these assets are subject to ground leases. Our ability to incur secured debt is generally limited by tests in our senior note indentures requiring us to maintain certain levels of unencumbered assets. However, we do not believe that these requirements will prevent us from accessing any of the above sources of secured financing at the convertible notes’ maturity in October 2004. While we generally may not repay the convertible notes prior to maturity, we may raise our secured financing prior to that date to take advantage of the favorable rates and borrowing capacity that currently exists in the market even though such action will likely result in higher net interest expense for the period prior to repayment of the convertible notes.

Credit facility. On October 29, 2002, we entered into a new three-year $100 million senior revolving credit facility, secured by our equity interests in most of our subsidiaries. The initial interest rate is LIBOR plus 388 basis points. As of March 31, 2003, there were no outstanding borrowings on this facility.

This facility contains customary compliance measures we must meet in order to borrow on the facility, which became more stringent on a quarterly basis beginning in the first quarter of 2003. The sale of two hotels during the fourth quarter of 2002 and one in January 2003, as well as the settlement of our note receivable with Interstate Hotels, impacted our leverage covenant due to the loss of trailing 12-month EBITDA (as defined in the credit agreement) on a pro forma basis. While we cannot currently borrow under the facility, we have obtained a waiver of compliance with this leverage covenant from our lending group through May 20, 2003. We currently intend to request an extension of the waiver for a 90-day period. Because we do not anticipate needing to draw under the bank line or having borrowing capacity to do so in the near term, we expect to significantly reduce or terminate the facility. We have approximately $1.4 million of unamortized capitalized financing costs related to this facility as of March 31, 2003. These costs, or a significant portion thereof, would be written off if we decide to terminate or significantly reduce the facility.

Senior unsecured notes. In February 2002, we issued an additional $200 million ($196.2 million, net of discount and related fees) 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 million of the outstanding balance under our previous credit facility.

As of March 31, 2003, we had $950 million of aggregate principal of these notes outstanding. These notes contain various restrictive incurrence covenants, limiting our ability to transact certain business activities, including additional borrowings, if specific financial thresholds are not achieved. One of those thresholds is maintaining a 2 to 1 fixed charge coverage ratio (as defined in the indentures, fixed charges only include interest on debt obligations and preferred equity). As of March 31, 2003, our fixed charge coverage ratio was 1.5 to 1, and therefore we were not able to enter into certain transactions. These limitations include the repurchase of our stock, the issuance of any preferred stock, the payment of dividends (unless required to maintain our status as a REIT), the incurrence of any additional debt, or the repayment of outstanding debt before it comes due.

There are certain exceptions, or “carve-out,” features with respect to the incurrence of additional debt and early repayment of debt features in the indentures. We currently have the ability to incur $300 million of secured non-recourse financing within restricted subsidiaries. Proceeds within the restricted subsidiaries could not be used to retire the Convertible Notes prior to their maturity but could be used to repay them at maturity. Additionally, we are permitted to invest five percent of consolidated net tangible assets in an unrestricted subsidiary. We would then be able to leverage the properties contributed to the unrestricted subsidiary and could use any proceeds from new financings to retire the Convertible Notes prior to their maturity. We also have a general carve-out to incur $50 million of any type of additional debt within a restricted subsidiary.

Senior subordinated notes. We completed in 1997 the offering of $150 million aggregate principal amount of 8.75% senior subordinated notes due 2007. The related indenture contains various restrictive covenants, which are similar to those in our senior unsecured notes. In 1999, we issued $55 million aggregate principal amount of 8.75% senior subordinated notes due 2007 under an indenture substantially similar to that governing the 1997 notes. These notes are unsecured obligations and provide for semi-annual payments of interest each February 15 and August 15.

Secured facility. We completed a $330 million, 10-year non-recourse financing during 1999. The facility is secured by a portfolio of 19 hotels and contains standard provisions that require the servicer to maintain in escrow cash balances for certain items such as property taxes and funding of capital expenditures. In addition, the facility contains a provision that requires our mortgage servicer to retain in escrow the excess cash from the encumbered hotels after payment of debt service (“Excess Cash”), if net hotel operating income after payment of FF&E reserves and franchise fees (“NOI”) for the trailing twelve months declines below $57 million. This provision was triggered in October 2002 and will be effective until the hotels generate the minimum cash flow required for two consecutive quarters, at which time the cash being held in escrow will be released to us. Approximately $8.8 million of cash was held in escrow under this provision as of March 31, 2003. Additional amounts continue to be held in escrow. The security agreement permits us to substitute unleveraged properties into the portfolio in place of existing properties in order to increase the NOI to a level at which the portfolio will meet this requirement. We have begun discussions with the servicer regarding this substitution. We are also in the process of negotiating the release of up to $5 million of cash held in escrow for funding of capital expenditures on the 19 encumbered properties.

Use of Asset Sales Proceeds

As discussed elsewhere, one of our key short-term strategies is to sell selected non-core assets, many of which were acquired as part of a portfolio. These “non-core” assets generally possess one or more of the following characteristics:

• limited future growth potential;

• secondary market location;

• secondary brand affiliation;

• higher than average capital expenditure requirements; or

• our portfolio is over-weighted in the market.

We believe that these asset sale transactions will have the following benefits:

• improve the overall quality of the hotel assets remaining in our portfolio;

• enhance the ability of our portfolio to perform well in all cycles of the economy;

• enhance future growth prospects when strength returns to the economy;

• reduce future capital requirements on a relative basis; and

• reduce our leverage and requirements on our liquidity resources.

Our plan is to monitor our operations and developments in the economic and geopolitical environment. To the extent we complete additional asset dispositions, and we believe that our liquidity levels are appropriate, we will consider applying proceeds from those dispositions to repurchase debt and reinvest in our core assets.

Asset Dispositions

We continued to actively market non-core assets as part of our program to sell assets that do not fit our long-term strategy. Initially, we intend to retain the proceeds from any asset sales for additional liquidity. To the extent we complete additional asset dispositions, and we believe that our liquidity levels are appropriate, we will consider applying proceeds from asset sales to repurchase debt and reinvest in our core assets. We sold one hotel in January 2003 for $12.7 million. Late in the first quarter of 2003, we expanded our asset disposition program to include a total of 16 non-core assets. This was based on our decision to raise additional cash to reduce our overall leverage and provide additional capital for reinvestment in our core holdings. Based on our expected proceeds of approximately $95 million to $105 million, we recorded an impairment charge in the first quarter of 2003 of $56.7 million. In April 2003, we sold one of these hotels for $3.1 million. Also, subsequent to quarter end, we made the determination to dispose of an additional 19 non-core assets that we anticipate will generate expected proceeds of $180 million to $200 million. Our ability to realize these estimated proceeds is, however, dependent upon finding qualified buyers willing to pay a purchase price that we consider reasonable. The 34 properties we are disposing of represent approximately one-third of our total properties, but only ten percent of our total EBITDA.

We expect to incur an impairment charge of $155 million to $175 million (excluding contract termination costs) in the second quarter of 2003. These impairment charges are based on our estimates of the fair value of the properties we plan to dispose of. These estimates require us to make assumptions about the sales prices that we expect to realize for each property as well as the timing of a potential sale. In making these estimates, we consider the operating results of the assets, the market for comparable properties, and quotes from brokers, among other information. Actual results could differ materially from these estimates.

As we dispose of these assets, we may incur termination obligations due to Interstate Hotels of up to a maximum of $19 million, calculated assuming sale of the properties in 2003 and assuming buyers of our hotel properties elect to have the properties managed by third-parties other than Interstate Hotels. Any such obligation would affect the calculation of the final gain or loss on the sale of a particular asset, since in accordance with current accounting guidance, the obligation is not recognized until such time as the asset disposition is complete and a termination notice is provided to Interstate Hotels. At that time, the recognition of any termination obligation will be included in discontinued operations. Payment of any obligation due under termination provisions of the contract is payable over a period of 30 months.

In addition, we are frequently approached by potential buyers interested in other assets that we might consider selling and have recently engaged in discussions with some of those potential buyers of hotel assets, both on an individual and a portfolio basis. Any such portfolio may include both core and non-core assets, if the disposition arrangement would be beneficial to shareholder value. However, there can be no assurance that any such transactions will be initiated or concluded. Any additional sales of assets under these scenarios may result in additional impairment charges in future periods, if and when such transactions might be undertaken. While we always consider any opportunities that may improve our financial condition or results of operations, we have not

committed to the disposition of any of these other assets at this time. As such, we are not able at this time to estimate the timing or the amount of any additional impairment charges that might result. We are aided in our disposition program by the fact that we can terminate any management agreement of any hotel we sell, in some cases, subject to the payment of a fee as discussed above, as well as the fact that 82 of our current 105 assets are unencumbered and only 13 of those assets are subject to ground leases. Excluding the non-core assets included in our asset disposition program, we have 51 unencumbered assets.

Capital Resources

We make ongoing capital expenditures in order to keep our hotels competitive in their markets and to comply with franchise obligations, as described further in “Operating Risks” (the potential adverse impact of our failure to meet the requirements contained in our franchise and licensing agreements) included in Item 1 — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2002. We fund our capital expenditures primarily from cash generated from operations and existing cash on hand, but may also use proceeds from the sales of non-core assets to provide capital for renovation work. We invested approximately $8.6 million (including $0.8 million of capitalized interest) for ongoing capital expenditures during the first quarter of 2003, and we anticipate investing a total of $30 million to $40 million on capital expenditure programs during 2003. These ongoing programs will include room and facilities refurbishments, renovations, and furniture and equipment replacements. We have shifted a portion of our 2003 planned capital expenditures to the second half of the year due to the current sluggish economy and uncertainty in the current economic operating environment. If operating conditions warrant, we may defer elements of our capital expenditure program to 2004. The deferral of capital spending will require that we spend a higher percentage of future revenue to fund future capital expenditures. The deferral of capital spending has not significantly impacted our business as, generally in the past, we acquired good quality assets and spent a relatively high level of capital in the early years of ownership. Continued deferral of capital spending, however, could materially affect our operations in the future. We believe the properties we are now marketing for sale typically have higher per room capital expenditure requirements than our core assets. Sales of these properties will allow us to focus our capital spending dollars in the future on our core portfolio.

We believe cash on hand and cash generated by operations will be sufficient to fund our existing working capital requirements, ongoing capital expenditures, and debt service requirements. 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.

OTHER FINANCIAL INFORMATION

Critical Accounting Policies

Our consolidated financial statements include the accounts of all wholly-owned and majority-owned subsidiaries. Preparing financial statements in conformity with accounting principles generally accepted in the United States 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 ongoing 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 include the accounting for the impairment or disposal of long-lived assets and the classification of properties as held for sale. Our hotel properties generally fall into two categories, held for use and held for sale. Our held for use properties may include those that we are actively marketing. Until such time as our criteria for held for sale are met, as described below in further detail, we maintain classification as an operational asset. At the time we determine an asset to meet the criteria noted below, we reclassify the asset and its operations to discontinued operations. Both categories are subject to an impairment analysis whenever events or changes in circumstances indicate that the carrying value may be impaired.

Accounting for the impairment or disposal of long-lived assets

We adopted the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” on January 1, 2002. SFAS No. 144 requires the current and prior period operating results of any asset that has been classified as held for sale or had been disposed of on or after January 1, 2002 and where we have no continuing involvement, including any gain or loss recognized, to be recorded as discontinued operations.

Classification of properties as held for sale

Real estate companies have differing standards with respect to which properties may be classified as “held for sale.” We classify the properties we are actively marketing as held for sale once all of the following conditions are met:

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

We have future long-term debt and ground lease obligations related to our consolidated entities and properties. As of March 31, 2003, we were not involved in any off-balance sheet arrangements with MIP.

The following table summarizes our aggregate contractual obligations as of March 31, 2003 (in thousands):


				Less than		One to		Three to
		Total		One Year		Three Years		Five Years		Thereafter

Long-term debt, net of unamortized discount^(a):
	Senior unsecured notes	$	944,140	$	—	$	—	$	299,359	$	644,781
	Secured facility		313,270		5,211		13,362		24,338		270,359
	Senior subordinated notes		203,302		—		—		203,302		—
	Convertible notes		154,300		—		154,300		—		—
	Mortgage debt and other		37,498		2,419		12,654		8,004		14,421

	Total long-term debt		1,652,510		7,630		180,316		535,003		929,561

Ground lease obligations			63,177		1,317		2,995		4,308		54,557

Aggregate contractual obligations		$	1,715,687	$	8,947	$	183,311	$	539,311	$	984,118

^(a)
For a description of the material terms of our long-term debt, see “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt” section above.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes with respect to this item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2002.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and regulations, and that the information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures based closely on the definition of “disclosure controls and procedures” in Rule 13a-1(c) of the Securities Exchange Act of 1934. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, we have investments in certain unconsolidated entities. As we do not control or manage these entities, our disclosure controls and procedures with respect to these entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries.

Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial and chief accounting officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, we concluded that our disclosure controls and procedures were effective.

Changes in Internal Controls

Subsequent to the date of our evaluation, there were no significant changes in our internal controls or in other factors that could significantly affect these controls.

PART II. OTHER INFORMATION


ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K

(a.) Exhibits


Exhibit
No.			Description of Document

	3	.2.1	Amended and Restated By-laws of the Registrant, dated and effective April 22, 2003.
	10	.18*	Amendment to the Executive Employment Agreement effective as of November 1, 2001, between MeriStar Hospitality Corporation and MeriStar Hospitality Operating Partnership, L.P. and Paul W. Whetsell, effective November 20, 2002.
	10	.19*	Second Amendment to the Executive Employment Agreement effective as of November 1, 2001, between MeriStar Hospitality Corporation and MeriStar Hospitality Operating Partnership, L.P. and Paul. W. Whetsell, effective April 22, 2003.
	10	.20*	Executive Employment Agreement, effective February 17, 2003, between MeriStar Hospitality Corporation, MeriStar Hospitality Operating Partnership, L.P. and Jerome J. Kraisinger.
	10	.4.2	Second Amendment, dated as of April 1, 2003, to Intercompany Agreement.
	13		Financial Statements of MeriStar Hospitality Operating Partnership, L.P. as of and for the three months ended March 31, 2003.
	99	.1	Consolidating Financial Information of MeriStar Hospitality Operating Partnership, L.P.
	99	.2	Sarbanes-Oxley Act Section 906 Certifications of Chief Executive Officer.
	99	.3	Sarbanes-Oxley Act Section 906 Certifications of Chief Financial Officer.


*	Indicates a management contract or compensatory plan or arrangement required to be filed pursuant to Item 14(c) of Form 10-K.

(b.) Reports on Form 8-K

On March 10, 2003, we filed a current report on Form 8-K (Items 7 and 9) displaying the slide show presented at the investor and analyst meeting on March 10, 2003.

On February 12, 2003, we filed a current report on Form 8-K (Items 5 and 7) announcing the financial results for the fourth quarter and year ended December 31, 2002.

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

By: /s/ PAUL W. WHETSELL

Paul W. Whetsell

Chief Executive Officer

Dated: May 15, 2003

CERTIFICATIONS

I, Paul W. Whetsell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MeriStar Hospitality Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

/s/ Paul W. Whetsell

Paul W. Whetsell

Chief Executive Officer

MeriStar Hospitality Corporation

CERTIFICATIONS

I, Donald D. Olinger, certify that:

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: May 15, 2003

/s/ Donald D. Olinger

Donald D. Olinger

Executive Vice President and Chief Financial Officer

MeriStar Hospitality Corporation

27 EX-3.2.1 3 w86517exv3w2w1.htm EXHIBIT 3.2.1 exv3w2w1

Exhibit 3.2.1

Bylaws

RESOLVED, that, pursuant to Article XIII of the bylaws of the Company, Article II, Section 2 of the bylaws of the Company be, and it hereby is, amended and restated in its entirety to read as follows:

“Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors during the month of May in each year or such later month as may be selected by the Board of Directors in its reasonable discretion; provided, however, that the first annual meeting of stockholders to be held in 1996 shall be held during the month of July; provided further, that the annual meeting of stockholders to be held in 1998 shall be held during the month of July.”

EX-10.18 4 w86517exv10w18.htm EXHIBIT 10.18 exv10w18

Exhibit 10.18

AMENDMENT

This AMENDMENT to the EXECUTIVE EMPLOYMENT AGREEMENT effective as of November 1, 2001, (“Employment Agreement”), by and among MeriStar Hospitality Corporation (the “Company”), and MeriStar Hospitality Operating Partnership, LP . (the “Partnership”), and Paul W. Whetsell (the “Executive”), is hereby entered into on this 20th day of November 2002 by and among the parties.

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Executive, the Company, and the LLC, the parties each agree to amend the Employment Agreement as follows:

Section 4(d)(ii) of the Employment Agreement is hereby deleted and replaced, in its entirety as follows:

“(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 75,000 POPs and a maximum of 225,000 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.”

IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date first above written.


EXECUTIVE:		MERISTAR HOSPITALITY CORPORATION, INC.


By:	/s/ Paul W. Whetsell	By:	/s/ Christopher L. Bennett

	Paul W. Whetsell		Name: Christopher L. Bennett
			Title: Senior Vice President and General Counsel


		MERISTAR HOSPITALITY OPERATING PARTNERSHIP, LP By: MeriStar Hospitality Corporation, its general partner


		By:	/s/ Christopher L. Bennett

			Name: Christopher L. Bennett
			Title: Senior Vice President and General Counsel

EX-10.19 5 w86517exv10w19.htm EXHIBIT 10.19 exv10w19

Exhibit 10.19

SECOND AMENDMENT

This SECOND AMENDMENT to the EXECUTIVE EMPLOYMENT AGREEMENT effective as of November 1, 2001, (“Employment Agreement’’), by and among MeriStar Hospitality Corporation (the “Company”, and MeriStar Hospitality Operating Partnership, L.P. (the “Partnership”), and Paul W. Whetsell (the “Executive”), is hereby entered into on this 22nd day of April 2003 by and among the parties.

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Executive, the Company, and the Partnership, the parties each agree to amend the Employment Agreement as follows:

Section 4(d)(ii) of the Employment Agreement is hereby deleted and replaced, in its entirety as follows:

"(ii) The Executive shall be granted annually, on May 1 2002, 2003 and 2004, pursuant to either the Company’s Profits-Only Operating Partnership Units (“POPs”) Plan or the Company’s Incentive Plan, a minimum of 75,000 POPs or shares of restricted Common Stock (“Restricted Stock”) and a maximum of 225,000 POPs or Restricted Stock as determined by the Board. The POPs or Restricted Stock shall vest equally on the first, second and third anniversaries of the date of grant. Annual POPs or Restricted Stock grants thereafter shall be at the discretion of the Board. The Company or the Partnership will pay the executive a distribution on each POP, which such POPs are outstanding, equal to, and at the same time as, distributions made to common operating partnership units of the Partnership. The Company or the Partnership will pay the Executive a dividend on each share of Restricted Stock equal to, and at the same time as, dividends are paid to holders of the Company’s Common Stock.”

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment effective as of the date first above written.


EXECUTIVE		MERISTAR HOSPITALITY CORPORATION, INC.

By:	/s/ Paul W. Whetsell	By:	/s/ Jerome J. Kraisinger

	Paul W. Whetsell		Name: Jerome J. Kraisinger
			Title: Executive Vice President and General Counsel

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.
By: Meristar Hospitality Corporation, its general partner

By: /s/ Jerome J. Kraisinger

Name: Jerome J. Kraisinger
Title: Executive Vice President and General Counsel

EX-10.20 6 w86517exv10w20.htm EXHIBIT 10.20 exv10w20

Exhibit 10.20

EXECUTIVE EMPLOYMENT AGREEMENT

EXECUTIVE EMPLOYMENT AGREEMENT, effective as of February 17, 2003 by and between MERISTAR HOSPITALITY CORPORATION, a Maryland corporation (the “Company”), MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “Partnership”), and Jerome J. Kraisinger (the “Executive”), an individual residing at 9609 Barroll Lane, Kensington, MD 20895-3504.

The Company and the Partnership desire to employ the Executive in the capacity of Executive Vice President, General Counsel, and Corporate Secretary 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 a term of three (3) years, commencing on February 17, 2003 (the “Commencement Date”), unless terminated earlier in accordance with Section 4 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 title and office of, and serve in the position of, Executive Vice President, General Counsel, and Corporate Secretary of the Company and the Partnership. The Executive shall undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in similar executive capacity, and shall perform such other 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 position.

(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. 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 Executive Vice President, General Counsel, and Corporate Secretary and with his duties and responsibilities hereunder.

3. 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 $210,000 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. 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; internal plan: 50% of base salary; target — 75% of base salary; and maximum bonus amount — 100% of base salary.

(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)(1) The Executive shall be eligible for stock option grants from time to time pursuant to the Company’s Incentive Plan in accordance with the terms thereof. The Compensation Committee has granted to the executive, effective on the

commencement date, options to purchase 50,000 shares of the common stock of the company at an exercise price equal to the fair market value on the commencement date. Such options shall vest over three years as follows:


		First Anniversary of the Commencement Date		33-1/3%

		Vested Second Anniversary of the Commencement Date		66-2/3%

		Vested Third Anniversary of the Commencement Date		100% vested

Such options shall be exercisable, vest and in all other respects shall be subject to the terms and conditions of the incentive plan.

(2) On the Commencement Date the Company shall issue to the executive 15,000 shares of the Company’s common stock (the “Restricted Common Stock”). Subject to the Executive’s continued employment [and the other terms of the Company’s Restricted Stock Plan] the Restricted Common Stock shall vest over three years as follows:


		First Anniversary of the Commencement Date		33-1/3%

		Vested Second Anniversary of the Commencement Date		66-2/3%

		Vested Third Anniversary of the Commencement Date		100% vested

[The Restricted Stock shall in all other respects be governed by the terms of the Company’s Restricted Stock Plan]

(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) 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 3(g) 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 3(g) 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.

4. 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 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.

Notwithstanding the foregoing, the Executive shall not be considered “Disabled” unless he qualifies for disability benefits under the terms and conditions of the Company’s then existing long-term disability plan. 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.

5. 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 and unvested restricted shares 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 unvested restricted shares 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.

(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; and

(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.

(d) Subject to Section 5(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) one (1) times the sum of (A) the Executive’s then annual base salary and (B) the amount of the Executive’s bonus for the preceding year, or in the case of the initial year of the Executive’s employment, the bonus amount will be $157,500;

(ii) all of the Executive’s unvested stock options will immediately vest and such options, along with those previously vested, will become exercisable for a period of one (1) year thereafter; and

(iii) and the Company shall continue in effect the Executive’s health insurance benefits until the earlier of (x) one (1) year from the end of the term or (y) the date on which the Executive obtains health insurance coverage from a subsequent employer.

(e) If, within eighteen (18) months following a Change in Control, the Term is terminated by the Executive for Good Reason, or by the Company without Cause, or if the Agreement is not renewed by the Company in accordance with Section 1, 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 5(d) hereof; provided, that the amount of the multiplier described in clause (d) of Section 5 hereof shall be increased from one times to one and one-half (1 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 5(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; or

(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.

(iv) Executive’s material breach of this Agreement; or

(vi) Gross misconduct by Executive that is of such a serious or substantial nature that a substantial likelihood exists that such misconduct would injure the reputation of the Company if the Executive were to remain employed by the Company or the Partnership.

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 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 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;

(iii) any material breach of this Agreement by the Company or the Partnership which is continuing; or

(iv) a Change in Control; provided that a Change of Control shall only constitute Good Reason if (a) the Company terminates the Executive within eighteen months following a Change of Control or (b) the Company changes the Executive’s job title, responsibilities or decreases Executive’s compensation within eighteen months following a Change of Control and Executive within six months after such change (but not later than eighteen months following the Change of Control) terminates his employment;

provided, however, that the Executive shall not be deemed to have Good Reason pursuant to clauses (ii) and (iii) 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. Change of Control will not be deemed “Good Reason,” however, if the Executive maintains the same title, job responsibilities and compensation following a Change of Control.

(i) As used herein, the term “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 fifty (50%) percent or more of the combined voting power of the Company’s then outstanding voting securities; or

(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, transaction (including without limitation a “going private transaction”), 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

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to clause (i) above solely because fifty (50%) 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 5 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 5.

(k) Notwithstanding the previous provisions, if payments made pursuant to this Section 5 are considered “parachute payments” under Section 280G of the Internal Revenue Code of 1986, then the sum of such parachute payments plus any other payments made by the Company to the Executive which are considered parachute payments shall be limited to the greatest amount which may be paid to the Executive under Section 280G without causing any loss of deduction to the Company under such section; but only if, by reason of such reduction, the net after tax benefit of Executive shall exceed the net after tax benefit if such reduction were not made. “Net after tax benefit” for purposes of this Agreement shall mean the sum of (i) the total amounts payable to Executive under Section 5, plus (ii) all other payments and benefits which the Executive receives or is then entitled to receive from the Company that would constitute a “parachute payment” which the meaning of Section 280G of the Code, less (iii) the amount of federal income taxes payable with respect to the foregoing shall be paid to Executive (based upon the rate in effect for such years as set forth in the Code at the time

of termination of Executive’s employment), less (iv) the amount of excise taxes imposed with respect to the payments and benefits described in (i) and (ii) above by Section 4999 of the Code.

6. Confidential Information and Covenants.

(a) The Executive acknowledges that the Company and its subsidiaries or affiliated ventures (“Company Affiliates”) own and have developed and compiled, 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. In particular, Executive covenants and agrees that Executive shall not, directly or indirectly, communicate or divulge, or use for the benefit of Executive or for any other person, or to the disadvantage of the Company, the Confidential Information or any information in any way relating to the Confidential Information, without prior written consent from the Company.

(b) As used herein, the term “Confidential Information” means any trade secrets, confidential or proprietary information, or other knowledge, know-how, information, documents, materials, owned, developed or possessed by a Company Affiliate pertaining to its businesses, including, but not limited to, records, memoranda, computer files and disks, audio and video tapes, CD’s, and property in any form containing information generally not known in the hospitality industry, including but not limited to trade secrets, techniques, know-how (including designs, plans, procedures, processes and research records), operations, market structure, formulas, data, programs, licenses, prices, costs, 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 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) Upon demand by the Company and/or upon termination of employment with the Company for any reason, Executive shall promptly deliver to the Company all property and materials, whether written, descriptive, or maintained in some

other form belonging to or relating to the Company, its business affairs and those of its Affiliates, including all Confidential Information. If Executive desires to retain copies of any forms or other materials developed by Executive during his employment with the Company, he may request permission to do so from the Chief Executive Officer, which permission shall not be unreasonably withheld.

(d) The Executive agrees that during his employment hereunder and for a period of twelve 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.

(e) The Executive agrees that during his employment hereunder and for a period of twelve (12) months thereafter he will not solicit or accept the business of, or assist any other person to solicit or accept the business of, any persons or entities who were customers of the Company, as of, or within one (1) year prior to, the Executive’s termination of employment, for the purposes of providing products or services competitive with the products or services of the Company or to cause such customers to reduce or end their business with the Company.

(f) The Company understands and acknowledges that the rules of professional conduct for attorneys prohibit certain restrictions on the practice of law, and agrees that restrictions stated in this section 6 are enforceable only to the extent that the restrictions do not violate rules of professional conduct to which Executive is subject.

7. Cooperation with Company. Following the termination of the Executive’s employment for any reason, Executive shall fully cooperate with the Company in all matters relating to the winding up of his pending work on behalf of the Company including, but not limited to, any litigation in which the Company is involved and the orderly transfer of any such pending work to other employees of the Company as may be designated by the Company. The Company agrees to reimburse the Executive for any out-of-pocket expense he incurs in performing any work on behalf of the Company following the termination of his employment.

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 6 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 6 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 5 of this Agreement and such failure shall continue for twenty (20) days after notice thereof from the Executive, all restrictions on the activities of the Executive under Section 6 hereof shall be immediately and permanently terminated.

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:

Jerome J. Kraisinger
9609 Barroll Lane
Kensington, MD 20895-3504______________

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. The Company will not be deemed to have breached this Agreement if any obligations of the Company to make payments to the Executive are satisfied by the Partnership.

(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) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

(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 (including, without limitation, the offer letter dated January 3, 2003), 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.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above written.


		EXECUTIVE:

		- -s- Jerome J. Kraisinger

		Jerome J. Kraisinger

		COMPANY:

		MERISTAR HOSPITALITY CORPORATION

		By:	- -s- Paul W. Whetsell

			Name: Paul W. Whetsell Title: Chief Executive Officer

		PARTNERSHIP:

		MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

		By:	MERISTAR HOSPITALITY CORPORATION, Its General Partner

		By:	- -s- Paul W. Whetsell

			Name: Paul W. Whetsell Title: Chief Executive Officer

EX-10.4.2 7 w86517exv10w4w2.htm EXHIBIT 10.4.2 exv10w4w2

Exhibit 10.4.2

SECOND AMENDMENT TO INTERCOMPANY AGREEMENT

This Amendment (the “Amendment”), dated as of April 1, 2003, is made among MeriStar Hospitality Corporation (“MSH”), a Maryland corporation, MeriStar Hospitality Operating Partnership, L.P. (“MSH OP”), a Delaware limited partnership, MeriStar Hotels Lessee, Inc. (“Leasing” and, together with MSH and MSH OP, the “MSH Parties”), a Delaware corporation, Interstate Hotels & Resorts, Inc. (“OPCO”), a Delaware corporation and formerly known as MeriStar Hotels & Resorts, Inc., and MeriStar H&R Operating Company, L.P. (“OPCO OP” and, together with OPCO, the “OPCO Parties”), a Delaware limited partnership.

RECITALS

WHEREAS:

A. MSH, MSH OP and the OPCO Parties entered into that certain Intercompany Agreement (the “Agreement”), dated as of August 3, 1998, as amended January 1, 2001, whereupon Leasing became a party to the Agreement.

B. The Board of Directors of each of MSH and OPCO have determined that it is in the best interests of their respective corporations to amend the Agreement in light of the current relationship between the corporations.

NOW, THEREFORE, the parties agree as follows:

1. All capitalized terms used in this Amendment and not otherwise defined shall have the meanings set forth in the Agreement as such meanings may be modified hereby.

2. Section 6 of the Agreement is hereby deleted in its entirety and replaced with the following:

“6. MeriStar Trademark. Effective April 1, 2003, the OPCO Parties shall transfer, for consideration of $1.00, all right, title and interest held by the OPCO Parties in and to the name “MeriStar”, and all variants thereof, to MSH OP, and the OPCO Parties shall have no further rights to use such names and shall discontinue all use of such names.”

3. Section 7(a) of the Agreement is hereby deleted in its entirety.

4. Section 7(c) of the Agreement is hereby deleted in its entirety.

5. Section 8 of the Agreement is hereby deleted in its entirety.

6. As amended hereby, the Agreement is ratified and shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.


		MERISTAR HOSPITALITY COPORATION

		By:	/s/ Jerome J. Kraisinger

		Name: Title:	Jerome J. Kraisinger Executive Vice President and General Counsel

		MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

		By:	MeriStar Hospitality Corporation, its general partner

		By:	/s/ Jerome J. Kraisinger

		Name: Title:	Jerome J. Kraisinger Executive Vice President and General Counsel

		MERISTAR HOTEL LESSEE, INC.

		By:	/s/ Jerome J. Kraisinger

		Name: Title:	Jerome J. Kraisinger Vice President and Secretary

		INTERSTATE HOTELS & RESORTS, INC.

		By:	/s/ Christopher L. Bennett

		Name: Title:	Christopher L. Bennett Senior Vice President and General Counsel

		MERISTAR H&R OPERATING COMPANY, L.P.

		By:	Interstate Hotels & Resorts, Inc.

		By:	/s/ Christopher L. Bennett

		Name: Title:	Christopher L. Bennett Senior Vice President and General Counsel

EX-13 8 w86517exv13.htm EXHIBIT 13 exv13

Exhibit 13

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	March 31,
	2003			December 31,
	(Unaudited)			2002

ASSETS
Investments in hotel properties	$	2,943,118		$	3,020,909
Accumulated depreciation		(467,021	)		(460,972	)

		2,476,097			2,559,937
Restricted cash		22,021			20,365
Investments in and advances to affiliates		41,714			41,714
Note receivable from Interstate Hotels & Resorts		—			42,052
Prepaid expenses and other assets		37,007			39,197
Accounts receivable, net of allowance for doubtful accounts of $771 and $848		69,765			56,828
Cash and cash equivalents		65,481			33,889

	$	2,712,085		$	2,793,982

LIABILITIES AND PARTNERS’ CAPITAL
Long-term debt	$	1,294,908		$	1,296,597
Notes payable to MeriStar Hospitality Corporation		357,602			357,505
Accounts payable and accrued expenses		105,855			104,677
Accrued interest		40,744			52,907
Due to Interstate Hotels & Resorts		10,593			10,500
Other liabilities		17,848			15,967

Total liabilities		1,827,550			1,838,153

Minority interests		2,635			2,624
Redeemable OP units at redemption value, 3,357,748 and 4,194,925 outstanding		24,945			38,205
Partners’ capital — Common OP Units, 46,067,896 and 45,230,719 issued and outstanding		856,955			915,000

	$	2,712,085		$	2,793,982

See accompanying notes to the unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(Dollars in thousands, except per unit amounts)



				Three Months Ended
				March 31,

				2003			2002

Revenue:




	Hotel operations:
		Rooms		$	158,260		$	164,740
		Food and beverage			62,830			60,988
		Other hotel operations			18,879			18,802
	Office rental, parking and other revenue				3,197			4,301

Total revenue					243,166			248,831

Hotel operating expenses:
		Rooms			38,586			37,524
		Food and beverage			46,086			43,567
		Other hotel operating expenses			11,125			10,519
Office rental, parking and other expenses					641			761




Other operating expenses:
		Administrative and general			42,551			42,233
		Property operating costs			36,980			35,622
		Depreciation and amortization			28,706			29,564
		Loss on asset impairments			56,677			—
		Property taxes, insurance and other			20,269			19,582
		Loss on fair value of non-hedging derivatives			—			4,735
		Write-off of deferred financing costs			—			1,529

Operating expenses					281,621			225,636

Operating (loss) income					(38,455	)		23,195
Interest expense, net					34,876			34,622

Loss before minority interests, income taxes, and discontinued operations					(73,331	)		(11,427	)
Minority interests					(11	)		(11	)
Income tax benefit					144			270

Loss from continuing operations					(73,198	)		(11,168	)
Income from discontinued operations, net of income taxes of $21					—			844

Net loss				$	(73,198	)	$	(10,324	)

Preferred distributions				$	(141	)	$	(141	)

Net loss applicable to common unitholders				$	(73,339	)	$	(10,465	)

Net loss applicable to general partner unitholders				$	(68,125	)	$	(9,585	)

Net loss applicable to limited partner unitholders				$	(5,214	)	$	(880	)

Earnings per unit:




	Basic:
		Loss from continuing operations		$	(1.50	)	$	(0.23	)
		Income from discontinued operations			—			0.01

			Net loss	$	(1.50	)	$	(0.22	)

	Diluted:
		Loss from continuing operations		$	(1.50	)	$	(0.23	)
		Income from discontinued operations			—			0.01

			Net loss	$	(1.50	)	$	(0.22	)

See accompanying notes to the unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)



				Three Months Ended
				March 31,

				2003			2002

Operating activities:
	Net loss			$	(73,198	)	$	(10,324	)




	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization			28,706			30,592
		Loss on asset impairments			56,677			—
		Write-off of deferred financing costs			—			1,529
		Loss on fair value of non-hedging derivatives			—			4,735
		Minority interests			11			11
		Amortization of unearned stock-based compensation			976			880
		Unrealized gain on interest rate swaps recognized in net loss			(2,055	)		(2,887	)
		Deferred income taxes			(682	)		(281	)




		Changes in operating assets and liabilities:
			Accounts receivable		(12,937	)		(12,254	)
			Prepaid expenses and other assets		1,416			1,634
			Due from/to Interstate Hotels & Resorts		93			(224	)
			Accounts payable, accrued expenses, accrued interest and other liabilities		(9,236	)		(4,270	)

Net cash (used in) provided by operating activities					(10,229	)		9,141

Investing activities:
	Investments in hotel properties				(8,622	)		(12,292	)
	Proceeds from sales of assets				12,650			—
	Net payments from (advances to) Interstate Hotels & Resorts				42,052			(9,000	)
	(Increase) decrease in restricted cash				(1,656	)		2,952
	Other, net				(299	)		—

Net cash provided by (used in) investing activities					44,125			(18,340	)

Financing activities:
	Deferred financing costs				—			(3,131	)
	Proceeds from issuance of long-term debt				—			234,545
	Principal payments on long-term debt				(1,889	)		(220,901	)
	Contributions from partners				—			3,155
	Repurchase of units				—			(409	)
	Distributions paid to partners				(141	)		(1,264	)

Net cash (used in) provided by financing activities					(2,030	)		11,995

Effect of exchange rate changes on cash and cash equivalents					(274	)		(271	)
Net increase in cash and cash equivalents					31,592			2,525
Cash and cash equivalents, beginning of period					33,889			23,441

Cash and cash equivalents, end of period				$	65,481		$	25,966

Supplemental Cash Flow Information




Cash paid for interest and income taxes:
	Interest, net of capitalized interest			$	46,989		$	38,288

	Income taxes			$	207		$	82

See accompanying notes to the unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(Amounts in thousands, except per unit and unit amounts)

1. Organization

MeriStar Hospitality Operating Partnership, L.P. is the subsidiary operating partnership of MeriStar Hospitality Corporation (“MeriStar Hospitality,” which is a real estate investment trust, or REIT). We own a portfolio of upscale, full-service hotels and resorts in the United States and Canada. Our portfolio is diversified geographically and by franchise and brand affiliations. As of March 31, 2003, we owned 106 hotels, with 27,432 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”).

2. Summary of Significant Accounting Policies

Held for Sale Properties. We classify the properties we are actively marketing as held for sale once all of the following conditions are met:

Impairment or Disposal of Long-Lived Assets. We adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” on January 1, 2002. SFAS No. 144 requires the current and prior period operating results of any asset that has been classified as held for sale or has been disposed of on or after January 1, 2002 and where we have no continuing involvement, including any gain or loss recognized, to be recorded as discontinued operations.



		Three Months Ended
		March 31,

		2003			2002

Net loss, as reported		$	(73,198	)	$	(10,324	)
Add: Stock-based employee compensation expense included in reported net loss, net of related tax effect			929			1,891
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(1,081	)		(2,137	)

Net loss pro forma		$	(73,350	)	$	(10,570	)

Earnings per unit:
	Basic, as reported	$	(1.50	)	$	(0.22	)
	Basic, pro forma	$	(1.50	)	$	(0.22	)

	Diluted, as reported	$	(1.50	)	$	(0.22	)
	Diluted, pro forma	$	(1.50	)	$	(0.22	)

The effects of applying SFAS No. 123 for disclosing pro forma compensation costs may not be representative of the actual effects on reported net income and earnings per share in future periods.

3. Comprehensive Loss

Comprehensive loss was $72,140 and $5,066 for the three months ended March 31, 2003 and 2002, respectively. Comprehensive loss consisted primarily of net loss ($73,198 and $10,324 for the three months ended March 31, 2003 and 2002, respectively), foreign currency translation adjustments, and in 2002 a $5,246 fair value adjustment for derivatives.

4. Investments in Hotel Properties

Investments in hotel properties consisted of the following:


		March 31,		December 31,
		2003		2002

Land		$	281,461	$	288,611
	Buildings		2,287,118		2,351,769
	Furniture, fixtures and equipment		331,406		344,541
	Construction-in-progress		43,133		35,988

		$	2,943,118	$	3,020,909

For the three months ended March 31, 2003 and 2002, we capitalized interest of $779 and $919, respectively.

Subsequent to March 31, 2003, we identified an additional 19 non-core assets that we plan to dispose of. As a result of this change in our expected holding period for these assets, we updated our impairment analysis regarding these 19 assets. Based on expected net sales proceeds, we expect to incur an impairment charge of approximately $155,000 to $175,000 in the second quarter of 2003.

5. Investments in and Advances to Affiliates

6. Long-Term Debt and Notes Payable to MeriStar Hospitality

Long-term debt consisted of the following:


				March 31,			December 31,
				2003			2002

Senior unsecured notes				$	950,000		$	950,000
	Secured facility				313,270			314,626
	Mortgage debt and other				37,498			38,030
	Unamortized issue discount				(5,860	)		(6,059	)

		Long-term debt		$	1,294,908		$	1,296,597

	Notes payable to MeriStar Hospitality			$	359,300		$	359,300
	Unamortized issue discount				(1,698	)		(1,795	)

	Notes payable			$	357,602		$	357,505

	Total long-term debt and notes payable to MeriStar Hospitality			$	1,652,510		$	1,654,102





Aggregate future maturities as of March 31, 2003 were as follows:

			2003 (nine months)	$	6,776
			2004		170,715
			2005		8,666
			2006		9,407
			2007		213,514
			Thereafter		1,243,432

				$	1,652,510

There are certain exceptions, or “carve-out,” features with respect to the incurrence of additional debt and early repayment of debt features in the indentures. We currently have the ability to incur $300,000 of secured non-recourse financing within restricted subsidiaries. Proceeds within the restricted subsidiaries could not be used to retire MeriStar Hospitality’s convertible notes and our notes payable to MeriStar Hospitality prior to their maturity but could be used to repay them at maturity. Additionally, we are permitted to invest five percent of consolidated net tangible assets in an unrestricted subsidiary. We would then be able to leverage the properties contributed to the unrestricted subsidiary and could use any proceeds from new financings to retire MeriStar Hospitality’s convertible notes and our notes payable to MeriStar Hospitality prior to their maturity. We also have a general carve-out to incur $50,000 of any type of additional debt within a restricted subsidiary.

Derivatives. We have exposure going forward as the change in fair value of our non-hedging derivatives will have an impact on our operations. As of March 31, 2003, we had two non-hedged swap agreements with notional principal amounts totaling $200,000. These swap agreements are currently being marked to market through our statement of operations. During the three months ended March 31, 2003 and 2002, we recognized $2,055 and $2,887, respectively, of income related to the decrease in fair value of these interest rate swaps. For the three months ended March 31, 2003 and 2002, we made cash payments on these swaps of $2,105 and $2,876, respectively. The change in fair value and the swap payments are netted together on our statement of operations and included in net interest expense. The fair value of these swap agreements was a liability of $1,922 at March 31, 2003, and is included in other liabilities in the accompanying consolidated balance sheets.

7. Partnership Units and Minority Interests

OP Units. Our partnership agreement provides for five classes of partnership interests: Common OP Units, Class B OP Units, Class C OP Units, Class D OP Units and Profits-Only OP Units (POPs).

Common OP Unit holders converted 787,000 of their OP Units, with a value of $18,109, into MeriStar Hospitality’s common stock during the three months ended March 31, 2003. There were no conversions for cash during the quarter.

POPs totaling 50,000 were relinquished in connection with the formal separation of management functions with Interstate Hotels during the three months ended March 31, 2003. MeriStar Hospitality also issued 50,000 shares of its common stock to an employee in connection with the separation.

8. Earnings Per Unit

The following table presents the computation of basic and diluted earnings per unit:



		Three Months Ended
		March 31,

		2003			2002

Basic and Diluted Earnings Per Unit Computation:
	Net loss from continuing operations	$	(73,198	)	$	(11,168	)
	Dividends paid on unvested MeriStar Hospitality restricted stock		—			(2	)
	Preferred distributions		(141	)		(141	)

	Loss available to common unitholders		(73,339	)		(11,311	)
	Weighted average number of OP Units outstanding		49,033			48,670

	Basic and diluted loss per unit from continuing operations	$	(1.50	)	$	(0.23	)

For the three months ended March 31, 2003 and 2002, 7,086 and 5,173 units, respectively, were excluded from the calculation of diluted earnings per unit as the effect of their inclusion would be anti-dilutive.

9. Commitments and Contingencies


2003 (nine months)	$	1,078
2004		1,437
2005		1,440
2006		1,427
2007		1,427
Thereafter		56,368

	$	63,177

Our obligations under other operating lease commitments, primarily for equipment, are not significant.


2003 (nine months)	$	3,523
2004		4,428
2005		2,896
2006		2,027
2007		1,456
Thereafter		1,929

	$	16,259

10. Dispositions

11. Consolidating Financial Statements

Certain of our subsidiaries and MeriStar Hospitality are guarantors of our senior unsecured notes. Certain of our subsidiaries are guarantors of MeriStar Hospitality’s unsecured subordinated notes. All guarantees are full and unconditional, and joint and several. Exhibit 99.1 to this Quarterly Report on Form 10-Q presents our supplementary consolidating financial statements, including each of our guarantor subsidiaries. This exhibit presents our consolidating balance sheets as of March 31, 2003 and December 31, 2002, consolidating statements of operations for the three months ended March 31, 2003 and 2002, and consolidating statements of cash flows for the three months ended March 31, 2003 and 2002.

11 EX-99.1 9 w86517exv99w1.txt EXHIBIT 99.1 . . . MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ ----------- ---------- ---------- ASSETS Investment in hotel properties 17,245 1,454,270 -- -- 4,126 Accumulated depreciation (9,807) (231,789) -- -- (576) ---------- ---------- ---------- ---------- ---------- 7,438 1,222,481 -- -- 3,550 Restricted cash 17,162 4,744 -- -- -- Investments in and advances to affiliates 2,580,119 8,200 32 3,056 -- Due from subsidiaries (650,084) 240,273 -- 7 3,757 Note receivable 120,855 -- -- -- -- Prepaid expenses and other assets 16,884 1,477 -- -- 9 Accounts receivable, net of allowance of doubtful accounts 12,991 1,241 -- -- -- Cash and cash equivalents 47,624 -- -- -- -- ---------- ---------- ---------- ---------- ---------- 2,152,989 1,478,416 32 3,063 7,316 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 943,158 350,174 -- -- -- Notes payable to MeriStar Hospitality Corporation 357,602 -- -- -- -- Accounts payable and accrued expenses 19,677 4,598 -- -- 5 Accrued interest 36,918 3,475 -- -- -- Due to Interstate Hotels & Resorts 509 -- -- -- -- Other liabilities 6,311 (600) -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 1,364,175 357,647 -- -- 5 ---------- ---------- ---------- ---------- ---------- Minority interests 2,635 -- -- -- -- Redeemable OP units at redemption value 24,945 -- -- -- -- Partners' capital 761,234 1,120,769 32 3,063 7,311 ---------- ---------- ---------- ---------- ---------- 2,152,989 1,478,416 32 3,063 7,316 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC LLC LLC L.P. LLC ---------- ---------- ----------- ---------- ---------- ASSETS Investment in hotel properties -- 11,479 -- 13,636 82,475 Accumulated depreciation -- (2,048) -- (1,985) (10,479) ---------- ---------- ---------- ---------- ---------- -- 9,431 -- 11,651 71,996 Restricted cash -- 115 -- -- -- Investments in and advances to affiliates -- -- 72 -- -- Due from subsidiaries 4,879 5,679 9 6,008 27,340 Note receivable -- -- -- -- -- Prepaid expenses and other assets -- 20 -- 4 30 Accounts receivable, net of allowance of doubtful accounts (17) (28) -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 4,862 15,217 81 17,663 99,366 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (36) 86 -- 190 2,601 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities (96) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities (132) 86 -- 190 2,601 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 4,994 15,131 81 17,473 96,765 ---------- ---------- ---------- ---------- ---------- 4,862 15,217 81 17,663 99,366 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1C, SUB 8E, SUB 7F, SUB 5L, SUB 3C, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 25,358 15,339 12,075 11,596 17,387 Accumulated depreciation (5,139) (2,587) (2,567) (538) (3,173) ---------- ---------- ---------- ---------- ---------- 20,219 12,752 9,508 11,058 14,214 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (2,846) 5,820 4,542 3,953 4,482 Note receivable -- -- -- -- -- Prepaid expenses and other assets 72 6 4 24 51 Accounts receivable, net of allowance of doubtful accounts 4 -- -- (20) -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 17,449 18,578 14,054 15,015 18,747 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 162 (71) 191 13 290 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 162 (71) 191 13 290 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 17,287 18,649 13,863 15,002 18,457 ---------- ---------- ---------- ---------- ---------- 17,449 18,578 14,054 15,015 18,747 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5B, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC. LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties -- 17,430 44,595 24,830 18,430 Accumulated depreciation -- (2,483) (8,748) (4,196) (3,672) ---------- ---------- ---------- ---------- ---------- -- 14,947 35,847 20,634 14,758 Restricted cash -- -- -- -- -- Investments in and advances to affiliates 43 -- -- -- -- Due from subsidiaries (43) 7,043 19,078 2,535 13,458 Note receivable -- -- -- -- -- Prepaid expenses and other assets -- 4 18 15 21 Accounts receivable, net of allowance of doubtful accounts -- 108 -- -- 96 Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- -- 22,102 54,943 23,184 28,333 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 37 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses -- (64) (176) 57 68 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities -- (64) (176) 57 105 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital -- 22,166 55,119 23,127 28,228 ---------- ---------- ---------- ---------- ---------- -- 22,102 54,943 23,184 28,333 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5F, SUB 6G, SUB 8C, SUB 4C, SUB 4H, L.P. LLC LLC L.P. L.P. ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 31,565 22,389 7,081 -- 12,496 Accumulated depreciation (4,688) (4,381) -- -- (2,385) ---------- ---------- ---------- ---------- ---------- 26,877 18,008 7,081 -- 10,111 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 11,019 5,537 4,587 11,503 (856) Note receivable -- -- -- -- -- Prepaid expenses and other assets 43 7 13 -- 17 Accounts receivable, net of allowance of doubtful accounts -- -- -- 1 -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 37,939 23,552 11,681 11,504 9,272 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 155 37 (375) 130 77 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- (32) -- ---------- ---------- ---------- ---------- ---------- Total liabilities 155 37 (375) 98 77 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 37,784 23,515 12,056 11,406 9,195 ---------- ---------- ---------- ---------- ---------- 37,939 23,552 11,681 11,504 9,272 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB SUB 7E, SUB 3D, SUB 1A, SUB 5E, 7A JOINT LLC. LLC LLC LLC. VENTURE ---------- ---------- ---------- ---------- ------------ ASSETS Investment in hotel properties 17,981 22,558 11,328 52,888 13,182 Accumulated depreciation (2,866) (6,458) (2,590) (8,637) (1,869) ---------- ---------- ---------- ---------- ---------- 15,115 16,100 8,738 44,251 11,313 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 6,062 7,699 6,479 15,393 4,468 Note receivable -- -- -- -- -- Prepaid expenses and other assets 7 9 33 11 13 Accounts receivable, net of allowance of doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 21,184 23,808 15,250 59,655 15,794 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 56 66 70 251 154 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 56 66 70 251 154 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 21,128 23,742 15,180 59,404 15,640 ---------- ---------- ---------- ---------- ---------- 21,184 23,808 15,250 59,655 15,794 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 22,861 4,487 5,742 4,683 3,015 Accumulated depreciation (4,482) -- (320) -- -- ---------- ---------- ---------- ---------- ---------- 18,379 4,487 5,422 4,683 3,015 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 17,673 (947) 1,577 4,031 (14) Note receivable -- -- -- -- -- Prepaid expenses and other assets 2 12 5 7 24 Accounts receivable, net of allowance of doubtful accounts -- (13) -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 36,054 3,539 7,004 8,721 3,025 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 5,258 -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 62 44 140 171 131 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 62 5,302 140 171 131 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 35,992 (1,763) 6,864 8,550 2,894 ---------- ---------- ---------- ---------- ---------- 36,054 3,539 7,004 8,721 3,025 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC. LLC PARTNERSHIP LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 5,279 29,687 3,841 5,335 19,424 Accumulated depreciation -- (3,577) (581) -- (3,363) ---------- ---------- ---------- ---------- ---------- 5,279 26,110 3,260 5,335 16,061 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (1,068) 5,219 2,200 206 6,312 Note receivable -- -- -- -- -- Prepaid expenses and other assets 31 7 16 102 47 Accounts receivable, net of allowance of doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 4,242 31,336 5,476 5,643 22,420 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 8,576 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 85 84 47 797 (141) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 8,661 84 47 797 (141) ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital (4,419) 31,252 5,429 4,846 22,561 ---------- ---------- ---------- ---------- ---------- 4,242 31,336 5,476 5,643 22,420 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, L.P. L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 68,506 7,275 52,186 5,820 10,657 Accumulated depreciation (10,321) -- (8,543) -- (1,857) ---------- ---------- ---------- ---------- ---------- 58,185 7,275 43,643 5,820 8,800 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 17,270 (3,751) 22,446 105 2,614 Note receivable -- -- -- -- -- Prepaid expenses and other assets 111 7 306 6 3 Accounts receivable, net of allowance of doubtful accounts -- -- 783 -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 75,566 3,531 67,178 5,931 11,417 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 137 937 3,857 (33) (52) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- (200) -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 137 937 3,657 (33) (52) ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 75,429 2,594 63,521 5,964 11,469 ---------- ---------- ---------- ---------- ---------- 75,566 3,531 67,178 5,931 11,417 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 3,818 42,026 53,492 5,705 17,871 Accumulated depreciation (73) (7,010) (8,494) (51) (2,049) ---------- ---------- ---------- ---------- ---------- 3,745 35,016 44,998 5,654 15,822 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- 51,368 -- -- -- Due from subsidiaries 642 (7,014) 9,590 5,775 11,188 Note receivable -- -- -- -- -- Prepaid expenses and other assets 8 37 98 5 45 Accounts receivable, net of allowance of doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 4,395 79,407 54,686 11,434 27,055 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 24,000 -- 13 -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 232 191 70 122 106 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 232 24,191 70 135 106 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 4,163 55,216 54,616 11,299 26,949 ---------- ---------- ---------- ---------- ---------- 4,395 79,407 54,686 11,434 27,055 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2D, SUB 4F, SUB 5K, SUB 5M, SUB 1E, LLC L.P. LLC LLC L.P. ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 6,229 32,146 28,097 22,030 10,466 Accumulated depreciation -- (4,986) (4,238) (2,001) (1,728) ---------- ---------- ---------- ---------- ---------- 6,229 27,160 23,859 20,029 8,738 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 346 4,318 (294) 7,049 7,654 Note receivable -- -- -- -- -- Prepaid expenses and other assets 13 13 40 20 12 Accounts receivable, net of allowance of doubtful accounts - -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 6,588 31,491 23,605 27,098 16,404 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 9,937 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (11) 132 4,291 44 19 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 9,926 132 4,291 44 19 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital (3,338) 31,359 19,314 27,054 16,385 ---------- ---------- ---------- ---------- ---------- 6,588 31,491 23,605 27,098 16,404 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 8,730 32,979 8,275 20,895 11,465 Accumulated depreciation (973) (5,081) (136) (3,786) -- ---------- ---------- ---------- ---------- ---------- 7,757 27,898 8,139 17,109 11,465 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 2,691 16,755 (4,846) 10,716 5,132 Note receivable -- -- -- -- -- Prepaid expenses and other assets 8 23 9 7 32 Accounts receivable, net of allowance of doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 10,456 44,676 3,302 27,832 16,629 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 17,355 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 9 (59) 239 (149) 290 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 9 (59) 239 (149) 17,645 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 10,447 44,735 3,063 27,981 (1,016) ---------- ---------- ---------- ---------- ---------- 10,456 44,676 3,302 27,832 16,629 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 25,608 7,760 163,395 39 108,685 Accumulated depreciation (4,235) -- (25,785) (20) (14,204) ---------- ---------- ---------- ---------- ---------- 21,373 7,760 137,610 19 94,481 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 7,374 2,541 37,857 2,162 18,420 Note receivable -- -- -- -- -- Prepaid expenses and other assets 55 7 145 6 147 Accounts receivable, net of allowance of doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 28,802 10,308 175,612 2,187 113,048 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 172 229 885 4 285 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 172 229 885 4 285 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 28,630 10,079 174,727 2,183 112,763 ---------- ---------- ---------- ---------- ---------- 28,802 10,308 175,612 2,187 113,048 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LESSEE, LLC LLC LLC LLC INC. ---------- ---------- ---------- ---------- ------------- ASSETS Investment in hotel properties 16,598 35,041 30,817 38,166 2,248 Accumulated depreciation (1,849) (9,781) (5,394) (6,182) (2,260) ---------- ---------- ---------- ---------- ---------- 14,749 25,260 25,423 31,984 (12) Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- 4,627 -- -- 1,629 Due from subsidiaries 3,685 5,810 7,271 5,867 (2,343) Note receivable -- -- -- -- -- Prepaid expenses and other assets 28 16 8 11 16,736 Accounts receivable, net of allowance of doubtful accounts -- -- -- (16) 54,635 Cash and cash equivalents -- -- -- -- 17,857 ---------- ---------- ---------- ---------- ---------- 18,462 35,713 32,702 37,846 88,502 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 23,609 -- -- 33,646 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (151) 33 (133) 61 64,466 Accrued interest -- -- -- -- 351 Due to Interstate Hotels & Resorts -- -- -- -- 10,284 Other liabilities -- -- -- -- 12,265 ---------- ---------- ---------- ---------- ---------- Total liabilities (151) 23,642 (133) 61 121,012 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital 18,613 12,071 32,835 37,785 (32,510) ---------- ---------- ---------- ---------- ---------- 18,462 35,713 32,702 37,846 88,502 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ---------- ------------ ASSETS Investment in hotel properties 1,471,603 -- 2,943,118 Accumulated depreciation (225,425) -- (467,021) ---------- ---------- ---------- 1,246,178 -- 2,476,097 ---------- ---------- ---------- Restricted cash 115 -- 22,021 Investments in and advances to affiliates 60,827 (2,607,432) 41,714 Due from subsidiaries 409,811 -- -- Note receivable -- (120,855) -- Prepaid expenses and other assets 18,646 -- 37,007 Accounts receivable, net of allowance of doubtful accounts 55,533 -- 69,765 Cash and cash equivalents 17,857 -- 65,481 ---------- ---------- ---------- 1,808,967 (2,728,287) 2,712,085 ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL -- -- Long-term debt 122,431 (120,855) 1,294,908 Notes payable to MeriStar Hospitality Corporation -- -- 357,602 Accounts payable and accrued expenses 81,580 -- 105,855 Accrued interest 351 -- 40,744 Due to Interstate Hotels & Resorts 10,084 -- 10,593 Other liabilities 12,137 -- 17,848 ---------- ---------- ---------- Total liabilities 226,583 (120,855) 1,827,550 ---------- ---------- ---------- Minority interests -- -- 2,635 Redeemable OP units at redemption value -- -- 24,945 Partners' capital 1,582,384 (2,607,432) 856,955 ---------- ---------- ---------- 1,808,967 (2,728,287) 2,712,085 ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ ---------- ---------- ---------- ASSETS Investments in hotel properties 16,986 1,467,405 -- -- 4,117 Accumulated depreciation (8,686) (220,927) -- -- (541) ---------- ---------- ---------- ---------- ---------- 8,300 1,246,478 -- -- 3,576 Restricted cash 15,374 4,876 -- -- -- Investments in and ances to affiliates 2,590,429 8,200 32 3,056 -- Due from subsidiaries (595,139) 196,324 -- 66 3,522 Note receivable from Interstate Hotels & Resorts 150,657 -- -- -- -- Prepaid expenses and other assets 22,457 304 -- -- -- Accounts receivable, net of allowance for doubtful accounts 11,944 1,313 -- -- -- Cash and cash equivalents 21,372 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 2,225,394 1,457,495 32 3,122 7,098 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 945,830 352,052 -- -- -- Notes payable to MeriStar Hospitality Corporation 357,505 -- -- -- -- Accounts payable and accrued expenses 15,585 9,733 -- -- 7 Accrued interest 49,106 3,577 -- -- -- Due to Interstate Hotels & Resorts 372 -- -- -- -- Other liabilities 4,591 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 1,372,989 365,362 -- -- 7 ---------- ---------- ---------- ---------- ---------- Minority interests 2,624 -- -- -- -- Redeemable OP units at redemption value 38,205 -- -- -- -- Partners' capital - Common OP Units 811,576 1,092,133 32 3,122 7,091 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 2,225,394 1,457,495 32 3,122 7,098 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties -- 11,471 -- 13,635 81,872 Accumulated depreciation -- (1,933) -- (1,877) (9,874) ---------- ---------- ---------- ---------- ---------- -- 9,538 -- 11,758 71,998 Restricted cash -- 115 -- -- -- Investments in and advances to affiliates -- -- 72 -- -- Due from subsidiaries 4,879 5,385 10 5,770 26,553 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- 2 -- -- 32 Accounts receivable, net of allowance for doubtful accounts (17) (28) -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 4,862 15,012 82 17,528 98,583 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (132) 207 -- 179 2,626 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities (132) 207 -- 179 2,626 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 4,994 14,805 82 17,349 95,957 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 4,862 15,012 82 17,528 98,583 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1C, SUB 8E, SUB 7F, SUB 5L, SUB 3C, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 25,327 15,274 12,046 11,579 17,380 Accumulated depreciation (4,885) (2,441) (2,453) (504) (2,998) ---------- ---------- ---------- ---------- ---------- 20,442 12,833 9,593 11,075 14,382 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (2,994) 5,641 4,366 3,676 3,935 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- 48 Accounts receivable, net of allowance for doubtful accounts -- -- -- 28 -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 17,448 18,474 13,959 14,779 18,365 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 186 (8) 162 35 208 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 186 (8) 162 35 208 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 17,262 18,482 13,797 14,744 18,157 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 17,448 18,474 13,959 14,779 18,365 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5B, SUB 8A, SUB 6D, SUB 6E, SUB 4E, LLC LLC LLC LLC L.P. ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties -- -- 17,430 44,495 24,741 Accumulated depreciation -- -- (2,347) (8,334) (3,986) ---------- ---------- ---------- ---------- ---------- -- -- 15,083 36,161 20,755 Restricted cash -- -- -- -- -- Investments in and advances to affiliates 43 -- -- -- -- Due from subsidiaries (43) -- 6,781 18,092 2,772 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- 2 Accounts receivable, net of allowance for doubtful accounts -- -- 101 -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets -- -- 21,965 54,253 23,529 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses -- -- 18 (132) 415 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities -- -- 18 (132) 415 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units -- -- 21,947 54,385 23,114 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital -- -- 21,965 54,253 23,529 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1B, SUB 5F, SUB 6G, SUB 8C, SUB 4C, LLC L.P. LLC LLC L.P. ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 18,416 31,539 22,381 11,400 -- Accumulated depreciation (3,529) (4,421) (4,166) -- -- ---------- ---------- ---------- ---------- ---------- 14,887 27,118 18,215 11,400 -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 12,954 10,473 5,200 4,587 11,521 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 1 5 -- 1 -- Accounts receivable, net of allowance for doubtful accounts 96 -- -- -- 1 Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 27,938 37,596 23,415 15,988 11,522 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 48 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 51 170 108 (77) 98 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 99 170 108 (77) 98 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 27,839 37,426 23,307 16,065 11,424 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 27,938 37,596 23,415 15,988 11,522 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4H, SUB 7E, SUB 3D, SUB 1A, SUB 5E, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 12,462 17,972 22,549 11,318 52,868 Accumulated depreciation (2,253) (2,711) (6,261) (2,478) (8,155) ---------- ---------- ---------- ---------- ---------- 10,209 15,261 16,288 8,840 44,713 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (738) 5,820 7,409 6,231 14,226 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 14 3 -- -- 1 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 9,485 21,084 23,697 15,071 58,940 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 172 86 61 121 184 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 172 86 61 121 184 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 9,313 20,998 23,636 14,950 58,756 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 9,485 21,084 23,697 15,071 58,940 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR SUB MERISTAR MERISTAR MERISTAR MERISTAR 7A JOINT SUB 6K, SUB 2B, SUB 3A, SUB 4A, VENTURE LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investments in hotel properties 13,161 22,855 9,672 5,740 4,617 Accumulated depreciation (1,761) (4,296) (1,985) (254) -- ---------- ---------- ---------- ---------- ---------- 11,400 18,559 7,687 5,486 4,617 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 4,352 16,890 (804) 1,500 4,097 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 5 -- 1 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- (12) -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 15,757 35,449 6,872 6,986 8,714 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- 4,890 -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 218 122 75 163 346 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 218 122 4,965 163 346 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 15,539 35,327 1,907 6,823 8,368 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 15,757 35,449 6,872 6,986 8,714 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MDV MERISTAR SUB 4D, SUB 1A, SUB 6L, LIMITED SUB 5C, LLC LLC LLC PARTNERSHIP LLC ---------- ---------- ---------- ----------- ---------- ASSETS Investments in hotel properties 4,037 8,294 29,650 3,838 14,088 Accumulated depreciation -- (1,464) (3,354) (547) (2,812) ---------- ---------- ---------- ---------- ---------- 4,037 6,830 26,296 3,291 11,276 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (74) (884) 4,928 2,169 242 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 21 21 -- 9 70 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 3,984 5,967 31,224 5,469 11,588 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 7,977 -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 112 65 51 95 866 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 112 8,042 51 95 866 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 3,872 (2,075) 31,173 5,374 10,722 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 3,984 5,967 31,224 5,469 11,588 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6J, SUB 1D, SUB 7B, SUB 7D, SUB 7G, LLC L.P. L.P. LLC LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 19,412 68,456 15,314 52,184 16,620 Accumulated depreciation (3,208) (9,754) -- (8,132) (4,107) ---------- ---------- ---------- ---------- ---------- 16,204 58,702 15,314 44,052 12,513 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 5,957 16,638 (3,681) 21,885 122 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 45 11 -- 309 1 Accounts receivable, net of allowance for doubtful accounts -- -- -- 1,026 -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 22,206 75,351 11,633 67,272 12,636 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (116) 20 1,148 4,552 37 Accrued interest -- 117 -- -- -- Due to Interstate Hotels & Resorts -- -- -- (200) -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities (116) 137 1,148 4,352 37 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 22,322 75,214 10,485 62,920 12,599 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 22,206 75,351 11,633 67,272 12,636 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6B, SUB 4I, SUB 5D, SUB 5H, SUB 7H, LLC L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 10,645 3,800 42,013 53,422 5,700 Accumulated depreciation (1,742) -- (6,645) (7,989) -- ---------- ---------- ---------- ---------- ---------- 8,903 3,800 35,368 45,433 5,700 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- 51,368 -- -- Due from subsidiaries 2,423 895 (7,027) 8,773 5,754 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 3 -- 18 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 11,329 4,695 79,727 54,206 11,454 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- 24,000 -- 13 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (95) 411 206 146 267 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities (95) 411 24,206 146 280 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 11,424 4,284 55,521 54,060 11,174 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 11,329 4,695 79,727 54,206 11,454 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
AGH MERISTAR MERISTAR MERISTAR MERISTAR PSS I, SUB 2D, SUB 4F, SUB 5K, SUB 5M, INC. LLC L.P. LLC LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 17,855 15,465 31,912 28,057 22,022 Accumulated depreciation (2,049) (2,435) (4,714) (3,916) (1,883) ---------- ---------- ---------- ---------- ---------- 15,806 13,030 27,198 24,141 20,139 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 10,810 416 4,392 (705) 6,601 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- 1 12 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 26,616 13,447 31,602 23,436 26,740 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 9,243 -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 107 63 399 4,316 48 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 107 9,306 399 4,316 48 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 26,509 4,141 31,203 19,120 26,692 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 26,616 13,447 31,602 23,436 26,740 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1E, SUB 5O, SUB 6M, SUB 4B, SUB 6C, L.P. LLC COMPANY L.P. LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 10,457 8,727 32,975 8,265 20,855 Accumulated depreciation (1,649) (916) (4,779) -- (3,592) ---------- ---------- ---------- ---------- ---------- 8,808 7,811 28,196 8,265 17,263 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 7,355 2,486 15,876 (4,592) 10,175 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- -- 21 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 16,163 10,297 44,093 3,673 27,438 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 13 7 (117) 443 (142) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 13 7 (117) 443 (142) ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 16,150 10,290 44,210 3,230 27,580 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 16,163 10,297 44,093 3,673 27,438 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2C, SUB 4G, SUB 3B, SUB 5G, SUB 5P, LLC L.P. LLC L.P. LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 28,658 25,601 8,550 163,237 39 Accumulated depreciation (5,385) (4,015) -- (24,213) (18) ---------- ---------- ---------- ---------- ---------- 23,273 21,586 8,550 139,024 21 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 4,873 7,456 2,201 35,538 1,989 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 1 9 -- 5 -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 28,147 29,051 10,751 174,567 2,010 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 16,143 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 238 558 173 838 4 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 16,381 558 173 838 4 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 11,766 28,493 10,578 173,729 2,006 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 28,147 29,051 10,751 174,567 2,010 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5J, SUB 5Q, SUB 5A, SUB 8D, SUB 4J, LLC LLC LLC LLC LLC ---------- ---------- ---------- ---------- ------------- ASSETS Investments in hotel properties 107,471 16,509 34,981 30,687 38,154 Accumulated depreciation (13,334) (1,709) (9,395) (5,080) (5,862) ---------- ---------- ---------- ---------- ---------- 94,137 14,800 25,586 25,607 32,292 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- 4,627 -- -- Due from subsidiaries 17,649 3,274 5,147 6,942 5,438 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- 5 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- (24) Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Assets 111,786 18,074 35,360 32,549 37,711 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- 23,609 -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 453 (122) (3) (117) 171 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 453 (122) 23,606 (117) 171 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 111,333 18,196 11,754 32,666 37,540 ---------- ---------- ---------- ---------- ---------- Total Liabilities and Capital 111,786 18,074 35,360 32,549 37,711 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR GUARANTOR HOTEL LESSEE, SUBSIDIARIES TOTAL INC. TOTAL ELIMINATIONS CONSOLIDATED Assets Investments in hotel properties 2,252 1,536,518 -- $ 3,020,909 Accumulated depreciation (2,219) (231,359) -- (460,972) ----------- ----------- ----------- ----------- 33 1,305,159 -- 2,559,937 Restricted cash -- 115 -- 20,365 Investments in and advances to affiliates 1,630 60,828 (2,617,743) 41,714 Due from subsidiaries 5,245 398,815 -- -- Note receivable from Interstate Hotels & Resorts -- -- (108,605) 42,052 Prepaid expenses and other assets 15,759 16,436 -- 39,197 Accounts receivable, net of allowance for doubtful accounts 42,400 43,571 -- 56,828 Cash and cash equivalents 12,517 12,517 -- 33,889 ----------- ----------- ----------- ----------- Total Assets 77,584 1,837,441 (2,726,348) $ 2,793,982 =========== =========== =========== =========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 21,397 107,320 (108,605) 1,296,597 Notes payable to MeriStar Hospitality Corporation -- -- -- 357,505 Accounts payable and accrued expenses 58,595 79,359 -- 104,677 Accrued interest 107 224 -- 52,907 Due to Interstate Hotels & Resorts 10,328 10,128 -- 10,500 Other liabilities 11,376 11,376 -- 15,967 ----------- ----------- ----------- ----------- Total liabilities 101,803 208,407 (108,605) 1,838,153 ----------- ----------- ----------- ----------- Minority interests -- -- -- 2,624 Redeemable OP units at redemption value -- -- -- 38,205 Partners' capital - Common OP Units (24,219) 1,629,034 (2,617,743) 915,000 ----------- ----------- ----------- ----------- Total Liabilities and Capital 77,584 1,837,441 (2,726,348) $ 2,793,982 =========== =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ ---------- ---------- ---------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 2,053 563 -- -- -- Participating lease revenue -- 32,050 -- -- 281 ---------- ---------- ---------- ---------- ---------- Total revenue 2,053 32,613 -- -- 281 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- 300 -- -- -- Other operating expenses: Administrative and general 2,919 -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 2,214 12,792 -- -- 34 Loss on asset impairments -- 3,975 -- -- -- Property taxes, insurance and other 642 5,400 -- -- 27 ---------- ---------- ---------- ---------- ---------- Operating expenses 5,775 22,467 -- -- 61 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (3,722) 10,146 -- -- 220 Interest expense, net 25,545 6,994 -- -- -- Equity in income from consolidated entities 44,064 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit (73,331) 3,152 -- -- 220 Minority interests (11) -- -- -- -- Income tax benefit 144 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (73,198) 3,152 -- -- 220 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC ---------- ---------- ---------- ---------- ------------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue -- 586 -- 256 1,818 ---------- ---------- ---------- ---------- ---------- Total revenue -- 586 -- 256 1,818 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 115 -- 108 610 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 146 -- 24 346 ---------- ---------- ---------- ---------- ---------- Operating expenses -- 261 -- 132 956 ---------- ---------- ---------- ---------- ---------- Operating (loss) income -- 325 -- 124 862 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit -- 325 -- 124 862 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income -- 325 -- 124 862 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1C, SUB 8E, SUB 7F, SUB 5L, SUB 3C, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ------------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 5 -- -- -- Participating lease revenue 526 362 226 319 594 ---------- ---------- ---------- ---------- ---------- Total revenue 526 367 226 319 594 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 254 146 115 34 179 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 242 54 40 24 98 ---------- ---------- ---------- ---------- ---------- Operating expenses 496 200 155 58 277 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 30 167 71 261 317 Interest expense, net -- -- -- 2 -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 30 167 71 259 317 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 30 167 71 259 317 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5H, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ------------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 4 -- 1 -- Participating lease revenue -- 432 1,308 351 590 ---------- ---------- ---------- ---------- ---------- Total revenue -- 436 1,308 352 590 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 137 414 211 143 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 79 161 111 46 ---------- ---------- ---------- ---------- ---------- Operating expenses -- 216 575 322 189 ---------- ---------- ---------- ---------- ---------- Operating (loss) income -- 220 733 30 401 Interest expense, net -- -- -- -- 10 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit -- 220 733 30 391 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income -- 220 733 30 391 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5F, SUB 6G, SUB 8C, SUB 4C, SUB 4H, L.P. LLC LLC L.P. L.P. ---------- ---------- ---------- ---------- ------------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- 1 -- -- Participating lease revenue 726 516 500 -- 63 ---------- ---------- ---------- ---------- ---------- Total revenue 726 516 501 -- 63 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 267 215 200 -- 132 Loss on asset impairments -- -- 4,127 -- -- Property taxes, insurance and other 99 88 173 -- 45 ---------- ---------- ---------- ---------- ---------- Operating expenses 366 303 4,500 -- 177 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 360 213 (3,999) -- (114) Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 360 213 (3,999) -- (114) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 360 213 (3,999) -- (114) ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB SUB 7E, SUB 3D, SUB 1A, SUB 5E, 7A JOINT LLC LLC LLC LLC VENTURE ---------- ---------- ---------- ---------- ------------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 336 374 449 1,242 271 ---------- ---------- ---------- ---------- ---------- Total revenue 336 374 449 1,242 271 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 155 197 113 484 107 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 49 59 105 101 63 ---------- ---------- ---------- ---------- ---------- Operating expenses 204 256 218 585 170 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 132 118 231 657 101 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 132 118 231 657 101 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 132 118 231 657 101 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC LLC LLC ---------- ---------- ---------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 952 102 136 255 120 ---------- ---------- ---------- ---------- ---------- Total revenue 952 102 136 255 120 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 186 113 66 -- 55 Loss on asset impairments -- 3,680 -- -- 1,004 Property taxes, insurance and other 95 34 26 64 30 ---------- ---------- ---------- ---------- ---------- Operating expenses 281 3,827 92 64 1,089 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 671 (3,725) 44 191 (969) Interest expense, net -- 110 -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 671 (3,835) 44 191 (969) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 671 (3,835) 44 191 (969) ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ---------- ---------- ----------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 111 355 126 210 462 ---------- ---------- ---------- ---------- ---------- Total revenue 111 355 126 210 462 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 84 222 35 153 158 Loss on asset impairments 1,981 -- -- 5,840 -- Property taxes, insurance and other 44 55 34 95 65 ---------- ---------- ---------- ---------- ---------- Operating expenses 2,109 277 69 6,088 223 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (1,998) 78 57 (5,878) 239 Interest expense, net 179 -- -- -- (1) Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit (2,177) 78 57 (5,878) 240 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (2,177) 78 57 (5,878) 240 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, L.P. L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 79 -- 358 -- -- Participating lease revenue 1,188 401 1,425 150 225 ---------- ---------- ---------- ---------- ---------- Total revenue 1,267 401 1,783 150 225 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses 42 -- 201 -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 578 181 421 178 116 Loss on asset impairments -- 7,894 -- 6,549 -- Property taxes, insurance and other 387 182 561 53 50 ---------- ---------- ---------- ---------- ---------- Operating expenses 1,007 8,257 1,183 6,780 166 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 260 (7,856) 600 (6,630) 59 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 260 (7,856) 600 (6,630) 59 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 260 (7,856) 600 (6,630) 59 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4L, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- ---------- ---------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 20 475 1,284 323 585 ---------- ---------- ---------- ---------- ---------- Total revenue 20 475 1,284 323 585 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 73 365 505 51 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 58 58 217 126 135 ---------- ---------- ---------- ---------- ---------- Operating expenses 131 423 722 177 135 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (111) 52 562 146 450 Interest expense, net -- 328 -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit (111) (276) 562 146 450 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (111) (276) 562 146 450 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2D, SUB 4F, SUB 5K, SUB 5M, SUB 1E, LLC L.P. LLC LLC L.P. ---------- ---------- ---------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 3 -- -- -- Participating lease revenue 225 526 627 547 360 ---------- ---------- ---------- ---------- ---------- Total revenue 225 529 627 547 360 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 127 279 322 118 79 Loss on asset impairments 7,650 -- -- -- -- Property taxes, insurance and other 66 86 94 66 43 ---------- ---------- ---------- ---------- ---------- Operating expenses 7,843 365 416 184 122 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (7,618) 164 211 363 238 Interest expense, net 208 -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit (7,826) 164 211 363 238 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (7,826) 164 211 363 238 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ---------- ---------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- 4 28 Participating lease revenue 240 917 47 649 361 ---------- ---------- ---------- ---------- ---------- Total revenue 240 917 47 653 389 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 57 308 136 194 278 Loss on asset impairments -- -- -- -- 13,282 Property taxes, insurance and other 26 83 67 56 126 ---------- ---------- ---------- ---------- ---------- Operating expenses 83 391 203 250 13,686 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 157 526 (156) 403 (13,297) Interest expense, net -- -- -- -- 363 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 157 526 (156) 403 (13,660) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 157 526 (156) 403 (13,660) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC L.P. LLC LLC ---------- ---------- ---------- ---------- ----------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 6 9 -- -- Participating lease revenue 528 406 3,056 181 2,693 ---------- ---------- ---------- ---------- ---------- Total revenue 528 412 3,065 181 2,693 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 225 130 1,572 1 871 Loss on asset impairments -- 695 -- -- -- Property taxes, insurance and other 154 78 481 3 370 ---------- ---------- ---------- ---------- ---------- Operating expenses 379 903 2,053 4 1,241 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 149 (491) 1,012 177 1,452 Interest expense, net -- -- -- -- 3 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 149 (491) 1,012 177 1,449 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 149 (491) 1,012 177 1,449 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LESSEE, LLC LLC LLC LLC INC. ---------- ---------- ---------- ---------- ------------- Revenue: Hotel operations: Rooms -- -- -- -- 158,260 Food and beverage -- -- -- -- 62,830 Other hotel operations -- -- -- -- 18,879 Office rental, parking and other revenue -- 29 -- 54 -- Participating lease revenue 613 1,593 595 725 -- ---------- ---------- ---------- ---------- ---------- Total revenue 613 1,622 595 779 239,969 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- 38,586 Food and beverage -- -- -- -- 46,086 Other operating departments -- -- -- -- 11,125 Office rental, parking and other operating expenses -- -- -- 98 -- Other operating expenses: Administrative and general -- -- -- -- 39,632 Property operating costs -- -- -- -- 36,980 Depreciation and amortization 140 386 314 326 (73) Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 54 177 109 81 75,428 ---------- ---------- ---------- ---------- ---------- Operating expenses 194 563 423 505 247,764 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 419 1,059 172 274 (7,795) Interest expense, net -- 708 -- -- 427 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit 419 351 172 274 (8,222) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 419 351 172 274 (8,222) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Revenue: Hotel operations: Rooms 158,260 -- 158,260 Food and beverage 62,830 -- 62,830 Other hotel operations 18,879 -- 18,879 Office rental, parking and other revenue 581 -- 3,197 Participating lease revenue 35,920 (67,970) -- ---------- ---------- ---------- Total revenue 276,470 (67,970) 243,166 ---------- ---------- ---------- Hotel operating expenses: Rooms 38,586 -- 38,586 Food and beverage 46,086 -- 46,086 Other operating departments 11,125 -- 11,125 Office rental, parking and other operating expenses 341 -- 641 Other operating expenses: Administrative and general 39,632 -- 42,551 Property operating costs 36,980 -- 36,980 Depreciation and amortization 13,700 -- 28,706 Loss on asset impairments 52,702 -- 56,677 Property taxes, insurance and other 82,197 (67,970) 20,269 ---------- ---------- ---------- Operating expenses 321,349 (67,970) 281,621 ---------- ---------- ---------- Operating (loss) income (44,879) -- (38,455) Interest expense, net 2,337 -- 34,876 Equity in income from consolidated entities -- (44,064) -- ---------- ---------- ---------- Income (loss) before minority interests and income tax benefit (47,216) 44,064 (73,331) Minority interests -- -- (11) Income tax benefit -- -- 144 ---------- ---------- ---------- Net (loss) income (47,216) 44,064 (73,198) ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ ---------- ---------- ---------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 1,833 1,264 -- -- -- Participating lease revenue -- 33,334 -- -- 319 ---------- ---------- ---------- ---------- ---------- Total revenue 1,833 34,598 -- -- 319 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- 148 -- -- -- Other operating expenses: Administrative and general 2,335 55 -- -- -- Property operating costs (454) 12 -- -- -- Depreciation and amortization 2,671 12,442 -- -- 33 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other (760) 6,011 -- -- 27 Loss on fair value of non-hedging derivatives 4,735 -- -- -- -- Write-off of deferred financing costs 1,529 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 10,056 18,668 -- -- 60 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (8,223) 15,930 -- -- 259 Interest expense, net 26,199 6,963 -- -- (2) Equity in income from consolidated entities (23,860) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operation (10,562) 8,967 -- -- 261 Minority interests (11) -- -- -- -- Income tax benefit 270 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations (10,303) 8,967 -- -- 261 Income (loss) from discontinued operations, net of income taxes (21) 747 -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) (10,324) 9,714 -- -- 261 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue -- 571 -- 378 1,791 ---------- ---------- ---------- ---------- ---------- Total revenue -- 571 -- 378 1,791 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- 1 -- 1 -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 113 -- 107 595 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other -- 230 -- 25 358 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses -- 344 -- 133 953 ---------- ---------- ---------- ---------- ---------- Operating (loss) income -- 227 -- 245 838 Interest expense, net -- (2) -- (1) (14) Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operations -- 229 -- 246 852 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations -- 229 -- 246 852 Income (loss) from discontinued operations, net of income taxes 252 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 252 229 -- 246 852 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1C, SUB 8E, SUB 7F, SUB 5L, SUB 3C, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 8 -- -- -- Participating lease revenue 410 376 274 317 541 ---------- ---------- ---------- ---------- ---------- Total revenue 410 384 274 317 541 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 257 147 118 33 176 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 202 46 34 30 114 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 459 193 152 63 290 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation (39) 195 124 257 256 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations (39) 195 124 257 256 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) (39) 195 124 257 256 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5B, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 6 -- 3 581 Participating lease revenue -- 517 1,264 342 505 ---------- ---------- ---------- ---------- ---------- Total revenue -- 523 1,264 345 1,086 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 133 425 230 158 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other -- 46 207 97 39 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses -- 179 632 327 197 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operations -- 350 644 24 892 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations -- 350 644 24 892 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) -- 350 644 24 892 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5F, SUB 6G, SUB 8C, SUB 4C, SUB 4H, L.P. LLC LLC L.P. L.P. ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- 2 -- -- Participating lease revenue 802 563 487 -- 171 ---------- ---------- ---------- ---------- ---------- Total revenue 802 563 489 -- 171 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general 1 -- (1) -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 264 209 346 -- 135 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 84 75 151 -- 47 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 349 284 496 -- 182 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 453 279 (7) -- (11) Interest expense, net (7) (9) (10) -- (2) Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operation 460 288 3 0 (9) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 460 288 3 -- (9) Income (loss) from discontinued operations, net of income taxes -- -- -- 66 -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 460 288 3 66 (9) ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7C, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC VENTURE ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 362 713 401 1,080 272 ---------- ---------- ---------- ---------- ---------- Total revenue 362 713 401 1,080 272 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization 158 240 119 485 104 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 39 18 82 96 56 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 197 258 201 581 161 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation 170 464 205 507 118 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 170 464 205 507 118 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 170 464 205 507 118 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 882 109 133 248 117 ---------- ---------- ---------- ---------- ---------- Total revenue 882 109 133 248 117 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 186 105 71 -- 80 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 120 36 28 60 46 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 306 141 99 60 126 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation 584 (127) 39 195 0 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 584 (127) 39 195 -- Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 584 (127) 39 195 -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ---------- ---------- ----------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 127 350 190 259 622 ---------- ---------- ---------- ---------- ---------- Total revenue 127 350 190 259 622 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general 2 1 -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 78 222 34 149 162 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 37 50 38 98 46 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 117 273 72 247 208 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation (157) 79 119 20 423 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations (157) 79 119 20 423 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) (157) 79 119 20 423 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6D, L.P. L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 107 -- 341 -- -- Participating lease revenue 1,382 391 1,387 146 253 ---------- ---------- ---------- ---------- ---------- Total revenue 1,489 391 1,728 146 253 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses 31 -- 483 -- -- Other operating expenses: Administrative and general -- 1 -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 554 231 416 189 114 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 267 223 533 59 60 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 852 455 1,432 248 174 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation 659 (60) 307 (96) 80 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 659 (60) 307 (96) 80 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 659 (60) 307 (96) 80 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4J, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- 1 Participating lease revenue 20 416 1,239 315 737 ---------- ---------- ---------- ---------- ---------- Total revenue 20 416 1,239 315 738 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 144 362 493 152 -- Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 76 87 168 92 105 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 220 449 661 244 105 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (200) (33) 578 71 633 Interest expense, net (9) 399 (18) (5) (8) Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operation (191) -- 596 76 641 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations (191) (432) 596 76 641 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) (191) (432) 596 76 641 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2D, SUB 4F, SUB 5K, SUB 5M, SUB 1E, LLC L.P. LLC LLC L.P. ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 4 -- -- -- Participating lease revenue 245 467 736 649 317 ---------- ---------- ---------- ---------- ---------- Total revenue 245 471 736 649 317 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 117 280 297 113 76 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 56 93 76 76 36 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 173 373 373 189 112 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation (120) 105 385 465 209 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations (120) 105 385 465 209 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) (120) 105 385 465 209 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- 4 19 Participating lease revenue 276 917 55 714 343 ---------- ---------- ---------- ---------- ---------- Total revenue 276 917 55 718 362 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 55 302 177 199 255 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 35 71 86 50 86 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 90 373 263 249 341 ---------- ---------- ---------- ---------- ---------- Operating (loss) 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 and discontinued operation 188 548 (152) 476 (311) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 188 548 (152) 476 (311) Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 188 548 (152) 476 (311) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC L.P. LLC LLC ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 6 6 18 -- -- Participating lease revenue 726 368 3,220 119 2,790 ---------- ---------- ---------- ---------- ---------- Total revenue 732 374 3,238 119 2,790 Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel and operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: Administrative and general -- -- 2 -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 229 230 1,548 -- 866 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 124 81 465 6 471 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 353 311 2,015 6 1,337 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 379 63 1,223 113 1,453 Interest expense, net (6) (7) (30) -- (26) Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operation 385 70 1,253 113 1,479 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 385 70 1,253 113 1,479 Income (loss) from discontinued operations, net of income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) 385 70 1,253 113 1,479 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LLC LLC LLC. LLC LESSEE, INC. ---------- ---------- ---------- ---------- ----------- Hotel operations: Rooms -- -- -- -- 164,740 Food and beverage -- -- -- -- 60,988 Other hotel operations -- -- -- -- 18,802 Office rental, parking and other revenue -- 23 -- 65 10 Participating lease revenue 653 1,582 579 776 -- ---------- ---------- ---------- ---------- ---------- Total revenue 653 1,605 579 841 244,540 Hotel operating expenses: Rooms -- -- -- -- 37,524 Food and beverage -- -- -- -- 43,567 Other hotel and operating expenses -- -- -- -- 10,519 Office rental, parking and other expenses -- -- -- 99 -- Other operating expenses: Administrative and general -- -- -- -- 39,834 Property operating costs -- -- -- -- 36,064 Depreciation and amortization 120 313 317 336 294 Loss on asset impairment -- -- -- -- -- Property taxes, insurance and other 68 151 106 101 78,406 Loss on fair value of non-hedging derivatives -- -- -- -- -- Write-off of deferred financing costs -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Operating expenses 188 464 423 536 246,208 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 465 1,141 156 305 (1,668) Interest expense, net (22) 693 (5) (11) 61 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operation 487 448 161 316 (1,729) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 487 448 161 316 (1,729) Income (loss) from discontinued operations, net of income taxes -- -- -- -- (200) ---------- ---------- ---------- ---------- ---------- Net income (loss) 487 448 161 316 (1,929) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Hotel operations: Rooms 164,740 -- 164,740 Food and beverage 60,988 -- 60,988 Other hotel operations 18,802 -- 18,802 Office rental, parking and other revenue 1,204 -- 4,301 Participating lease revenue 37,311 (70,645) -- -------- -------- -------- Total revenue 283,045 (70,645) 248,831 Hotel operating expenses: Rooms 37,524 -- 37,524 Food and beverage 43,567 -- 43,567 Other hotel and operating expenses 10,519 -- 10,519 Office rental, parking and other expenses 613 -- 761 Other operating expenses: Administrative and general 39,843 -- 42,233 Property operating costs 36,064 -- 35,622 Depreciation and amortization 14,451 -- 29,564 Loss on asset impairment -- -- -- Property taxes, insurance and other 84,976 (70,645) 19,582 Loss on fair value of non-hedging derivatives -- -- 4,735 Write-off of deferred financing costs -- -- 1,529 -------- -------- -------- Operating expenses 267,557 (70,645) 225,636 -------- -------- -------- Operating (loss) income 15,488 -- 23,195 Interest expense, net 1,460 -- 34,622 Equity in income from consolidated entities -- 23,860 -- -------- -------- -------- Income (loss) before minority interests, income tax benefit, loss on sale of assets and discontinued operations 14,028 (23,860) (11,427) Minority interests -- -- (11) Income tax benefit -- -- 270 -------- -------- -------- Income (loss) from continuing operations 14,028 (23,860) (11,168) Income (loss) from discontinued operations, net of income taxes 118 -- 844 -------- -------- -------- Net income (loss) 14,146 (23,860) (10,324) ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ ---------- ---------- ---------- Operating activities: Net (loss) income (73,198) 3,152 -- -- 220 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,214 12,792 -- -- 34 Equity in earnings 44,064 -- -- -- -- Loss on asset impairments -- 3,975 -- -- -- Minority interests 11 -- -- -- -- Amortization of unearned stock-based compensation 976 -- -- -- -- Unrealized gain on interest rate swaps recognized in net (2,055) -- -- -- -- Deferred income taxes (682) -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable (1,047) 72 -- -- -- Prepaid expenses and other assets 4,804 (1,091) -- -- (9) Due from/to Interstate Hotels & Resorts 137 -- -- -- -- Due from subsidiaries 30,077 (19,439) -- -- (234) Accounts payable, accrued expenses, accrued interest and other liabilities (6,389) (5,694) -- -- (2) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities (1,088) (6,233) -- -- 9 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (260) (4,372) -- -- (9) Proceeds from sales of assets -- 12,650 -- -- -- Net payments from Interstate Hotels & Resorts 42,052 -- -- -- -- Change in restricted cash (1,788) 132 -- -- -- Other, net -- (299) -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities 40,004 8,111 -- -- (9) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt (12,249) (1,878) -- -- -- Distributions to partners (141) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities (12,390) (1,878) -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash (274) -- -- -- -- Net change in cash and cash equivalents 26,252 -- -- -- -- Cash and cash equivalents, beginning of period 21,372 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period 47,624 -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC LLC LLC L.P. LLC ---------- ---------- ----------- ---------- ---------- Operating activities: Net (loss) income -- 325 -- 124 862 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization -- 115 -- 108 610 Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- (18) -- (4) (3) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries -- (293) -- (238) (841) Accounts payable, accrued expenses, accrued interest and other liabilities -- (121) -- 11 (25) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- 8 -- 1 603 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net -- (8) -- (1) (603) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- (8) -- (1) (603) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1C, SUB 8E, SUB 7F, SUB 5L, SUB 3C, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 30 167 71 259 317 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 254 146 115 34 179 Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable (4) -- -- 48 -- Prepaid expenses and other assets (72) (6) (4) (24) (5) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (153) (179) (182) (278) (566) Accounts payable, accrued expenses, accrued interest and other liabilities (24) (63) 29 (22) 82 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 31 65 29 17 7 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (31) (65) (29) (17) (7) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (31) (65) (29) (17) (7) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5B, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC. LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income -- 220 733 30 391 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization -- 137 414 211 143 Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- (7) -- -- -- Prepaid expenses and other assets -- (4) (18) (14) (20) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries -- (264) (985) 220 (506) Accounts payable, accrued expenses, accrued interest and other liabilities -- (82) (44) (358) 17 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- -- 100 89 25 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net -- -- (100) (89) (14) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- -- (100) (89) (14) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- (11) Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- (11) ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5F, SUB 6G, SUB 8C, SUB 4C, SUB 4H, L.P. LLC LLC L.P. L.P. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 360 213 (3,999) -- (114) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 267 215 200 -- 132 Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- 4,127 -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- 14 Prepaid expenses and other assets (38) (7) (13) -- (17) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (548) (342) (9) -- 114 Accounts payable, accrued expenses, accrued interest and other liabilities (15) (71) (298) -- (95) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 26 8 8 -- 34 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (26) (8) (8) -- (34) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (26) (8) (8) -- (34) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB SUB 7E, SUB 3D, SUB 1A, SUB 5E, 7A JOINT LLC. LLC LLC LLC. VENTURE ---------- ---------- ---------- ---------- ------------ Operating activities: Net (loss) income 132 118 231 657 101 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 155 197 113 484 107 Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (5) (9) (33) (11) (8) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (243) (302) (250) (1,177) (115) Accounts payable, accrued expenses, accrued interest and other liabilities (30) 5 (51) 67 (64) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 9 9 10 20 21 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (9) (9) (10) (20) (21) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (9) (9) (10) (20) (21) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 671 (3,835) 44 191 (969) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 186 113 66 -- 55 Equity in earnings -- -- -- -- -- Loss on asset impairments -- 3,680 -- -- 1,004 Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- 1 -- -- -- Prepaid expenses and other assets (2) (12) (5) (7) (4) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (789) 54 (80) 57 (69) Accounts payable, accrued expenses, accrued interest and other liabilities (60) -- (23) (175) 19 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 6 1 2 66 36 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (6) (1) (2) (66) (36) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (6) (1) (2) (66) (36) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC. LLC PARTNERSHIP LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (2,177) 78 57 (5,878) 240 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 84 222 35 153 158 Equity in earnings -- -- -- -- -- Loss on asset impairments 1,981 -- -- 5,840 -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (10) (7) (7) (32) (5) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 403 (289) (34) 38 (356) Accounts payable, accrued expenses, accrued interest and other liabilities 20 33 (48) (69) (25) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 301 37 3 52 12 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (301) (37) (3) (52) (12) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (301) (37) (3) (52) (12) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, L.P. L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 260 (7,856) 600 (6,630) 59 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 578 181 421 178 116 Equity in earnings -- -- -- -- -- Loss on asset impairments -- 7,894 -- 6,549 -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- 243 -- -- Prepaid expenses and other assets (111) (7) (18) (6) (1) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (677) 35 (549) 11 (205) Accounts payable, accrued expenses, accrued interest and other liabilities -- (211) (695) (70) 43 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 50 36 2 32 12 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (50) (36) (2) (32) (12) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (50) (36) (2) (32) (12) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4L, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (111) (276) 562 146 450 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 73 365 505 51 -- Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (8) (20) (98) (5) (45) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 243 (41) (823) (42) (388) Accounts payable, accrued expenses, accrued interest and other liabilities (179) (15) (76) (145) (1) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 18 13 70 5 16 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (18) (13) (70) (5) (16) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (18) (13) (70) (5) (16) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2D, SUB 4F, SUB 5K, SUB 5M, SUB 1E, LLC L.P. LLC LLC L.P. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (7,826) 164 211 363 238 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 127 279 322 118 79 Equity in earnings -- -- -- -- -- Loss on asset impairments 7,650 -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (12) (8) (40) (20) (12) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 135 66 (428) (449) (302) Accounts payable, accrued expenses, accrued interest and other liabilities (74) (267) (25) (4) 6 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- 234 40 8 9 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net -- (234) (40) (8) (9) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- (234) (40) (8) (9) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4D, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 157 526 (156) 403 (13,660) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 57 308 136 194 278 Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- 13,282 Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (8) (8) (9) (7) (31) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (205) (880) 296 (543) 79 Accounts payable, accrued expenses, accrued interest and other liabilities 2 58 (204) (7) 52 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 3 4 63 40 -- ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (3) (4) (63) (40) -- Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (3) (4) (63) (40) -- ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 149 (491) 1,012 177 1,449 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 225 130 1,572 1 871 Equity in earnings -- -- -- -- -- Loss on asset impairments -- 695 -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (50) (7) (140) (6) (147) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 69 (348) (2,333) (172) (791) Accounts payable, accrued expenses, accrued interest and other liabilities (386) 56 47 -- (168) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 7 35 158 -- 1,214 ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (7) (35) (158) -- (1,214) Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (7) (35) (158) -- (1,214) ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LESSEE, LLC LLC LLC LLC INC. ---------- ---------- ---------- ---------- ------------- Operating activities: Net (loss) income 419 351 172 274 (8,222) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 140 386 314 326 (73) Equity in earnings -- -- -- -- -- Loss on asset impairments -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock-based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- (8) (12,249) Prepaid expenses and other assets (28) (16) (8) (11) (977) Due from/to Interstate Hotels & Resorts -- -- -- -- (44) Due from subsidiaries (413) (697) (332) (459) 7,941 Accounts payable, accrued expenses, accrued interest and other liabilities (29) 36 (16) (110) 6,711 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 89 60 130 12 (6,913) ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Investment in hotel properties, net (89) (60) (130) (12) 4 Proceeds from sales of assets -- -- -- -- -- Net payments from Interstate Hotels & Resorts -- -- -- -- -- Change in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (89) (60) (130) (12) 4 ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt -- -- -- -- 12,249 Distributions to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- 12,249 ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net change in cash and cash equivalents -- -- -- -- 5,340 Cash and cash equivalents, beginning of period -- -- -- -- 12,517 ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- 17,857 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 UNAUDITED (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Operating activities: Net (loss) income (47,216) 44,064 (73,198) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 13,700 -- 28,706 Equity in earnings -- (44,064) -- Loss on asset impairments 52,702 -- 56,677 Minority interests -- -- 11 Amortization of unearned stock-based compensation -- -- 976 Unrealized gain on interest rate swaps recognized in net loss -- -- (2,055) Deferred income taxes -- -- (682) Changes in operating assets and liabilities: -- -- -- Accounts receivable (11,962) -- (12,937) Prepaid expenses and other assets (2,297) -- 1,416 Due from/to Interstate Hotels & Resorts (44) -- 93 Due from subsidiaries (10,638) -- -- Accounts payable, accrued expenses, accrued interest and -- -- other liabilities 2,847 -- (9,236) ------- ------- ------- Net cash provided by (used in) operating activities (2,908) -- (10,229) ------- ------- ------- Cash flows from investing activities: Investment in hotel properties, net (3,990) -- (8,622) Proceeds from sales of assets -- -- 12,650 Net payments from Interstate Hotels & Resorts -- -- 42,052 Change in restricted cash -- -- (1,656) Other, net -- -- (299) ------- ------- ------- Net cash provided by (used in) investing activities (3,990) -- 44,125 ------- ------- ------- Cash flows from financing activities: Principal payments on long-term debt 12,238 -- (1,889) Distributions to partners -- -- (141) ------- ------- ------- Net cash used in financing activities 12,238 -- (2,030) ------- ------- ------- Effect of exchange rate changes on cash -- -- (274) Net change in cash and cash equivalents 5,340 -- 31,592 Cash and cash equivalents, beginning of period 12,517 -- 33,889 ------- ------- ------- Cash and cash equivalents, end of period 17,857 -- 65,481 ======= ======= =======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ ----------- ---------- ---------- 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 of affiliates (23,860) -- -- -- -- Write off of deferred financing costs 1,529 -- -- -- -- Loss on fair value of non-hedging derivatives 4,735 -- -- -- -- Minority interests 11 -- -- -- -- Amortization of unearned stock based compensation 880 -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss (2,887) -- -- -- -- Deferred income taxes (281) -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable (2,731) (111) -- -- (16) Prepaid expenses and other assets 2,033 502 -- -- -- Due from/to Interstate Hotels & Resorts (589) -- -- -- -- Due from subsidiaries 24,316 (11,553) -- -- (299) Accounts payable, accrued expenses, accrued interests, and other liabilities (6,816) (5,539) -- -- 26 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities (11,313) 6,272 -- -- 5 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (833) (5,862) -- -- (5) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Retorts (9,000) (389) -- -- -- (Decrease) increase in restricted cash 1,093 1,859 -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (8,740) (4,392) -- -- (5) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs (3,131) -- -- -- -- Proceeds from issuance of long-term debt 234,545 -- -- -- -- Principal payments on long-term debt (215,000) (1,880) -- -- -- Contributions from partners 3,155 -- -- -- -- Repurchase of units (409) -- -- -- -- Distributions paid 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 increase (decrease) in cash and cash equivalents (2,428) -- -- -- -- Cash and cash equivalents, beginning of period 6,798 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period 4,370 -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC LLC LLC L.P. LLC ---------- ---------- ----------- ---------- ---------- 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 of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable (16) 8 -- -- -- Prepaid expenses and other assets -- 19 -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (2,282) (414) -- (361) (1,161) Accounts payable, accrued expenses, accrued interests, and other liabilities -- 50 -- 8 294 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities (1,987) 5 -- -- 580 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties 1,987 (5) -- -- (580) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities 1,987 (5) -- -- (580) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1C, SUB 8E, SUB 7F, SUB 5L, SUB 3C, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) (39) 195 124 257 256 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 257 147 118 33 176 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (30) -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (254) (249) (251) (338) (561) Accounts payable, accrued expenses, accrued interests, and other liabilities 154 (48) 28 52 148 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 88 45 19 4 19 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (88) (45) (19) (4) (19) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (88) (45) (19) (4) (19) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5B, SUB 8A, SUB 6D, SUB 6E, SUB 4E, LLC. LLC LLC LLC L.P. ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) -- -- 350 644 24 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization -- -- 133 425 230 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- (10) -- -- Prepaid expenses and other assets -- 1 -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries -- 46 (378) (1,089) 148 Accounts payable, accrued expenses, accrued interests, and other liabilities -- (46) 21 262 (337) ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities -- 1 116 242 65 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties -- (1) (116) (242) (65) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities -- (1) (116) (242) (65) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1B, SUB 5F, SUB 6G, SUB 8C, SUB 4C, LLC LLC LLC LLC L.P. ---------- ---------- ---------- ---------- ---------- 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 of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (911) (812) (414) (109) 39 Accounts payable, accrued expenses, accrued interests, and other liabilities 6 142 90 (153) (235) ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 145 54 173 87 22 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (145) (54) (173) (87) (22) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (145) (54) (173) (87) (22) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4H, SUB 7E, SUB 3D, SUB 1A, SUB 5E, L.P. LLC LLC LLC. LLC ---------- ---------- ---------- ---------- ------------ Operating activities: Net income (loss) (9) 170 464 205 507 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 135 158 240 119 485 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets (10) -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 56 (280) (701) (268) (1,023) Accounts payable, accrued expenses, accrued interests, and other liabilities (146) (30) 53 (43) 38 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 26 18 56 13 7 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (26) (18) (56) (13) (7) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (26) (18) (56) (13) (7) ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR SUB MERISTAR MERISTAR MERISTAR MERISTAR 7A JOINT SUB 6K, SUB 2B, SUB 3A, SUB 4A, VENTURE LLC LLC LLC L.P. ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) 118 584 (127) 39 195 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 of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (22) (782) 51 361 17 Accounts payable, accrued expenses, accrued interests, and other liabilities (65) 117 -- 17 (155) ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 135 105 29 488 57 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (135) (105) (26) (488) (57) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (135) (105) (26) (488) (57) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- (3) -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- (3) -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MDV MERISTAR SUB 4D, SUB 2A, SUB 6L, LIMITED SUB 5C, LLC. LLC LLC PARTNERSHIP LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) -- (157) 79 119 20 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 80 78 222 34 149 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- -- -- 4 (40) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (48) 43 (291) (125) (134) Accounts payable, accrued expenses, accrued interests, and other liabilities 37 37 49 (29) 25 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 69 1 59 3 20 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (69) 4 (59) (3) (20) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (69) 4 (59) (3) (20) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- (5) -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- (5) -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6J, SUB 1D, SUB 7B, SUB 7D, SUB 7G, LLC L.P. L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) 423 659 (60) 307 (96) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 162 554 231 416 189 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- 267 -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (564) (693) 66 (352) 69 Accounts payable, accrued expenses, accrued interests, and other liabilities 60 (197) (233) (572) (143) ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 81 323 4 66 19 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (81) (323) (4) (66) (19) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (81) (323) (4) (66) (19) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6B, SUB 4I, SUB 5D, SUB 5H, SUB 7H, LLC L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) 80 (191) (432) 596 76 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 114 144 362 493 152 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (158) 287 95 (1,104) (107) Accounts payable, accrued expenses, accrued interests, and other liabilities 14 (168) 18 391 (94) ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 50 72 43 376 27 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (50) (72) (43) (376) (27) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (50) (72) (43) (376) (27) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
AGH MERISTAR MERISTAR MERISTAR MERISTAR PSS I, SUB 2D, SUB 4F, SUB 5K, SUB 5M, INC. LLC L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) 641 (120) 105 385 465 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization -- 117 280 297 113 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (563) 77 65 (295) (665) Accounts payable, accrued expenses, accrued interests, and other liabili1ies 172 (70) (254) 44 132 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 250 4 196 431 45 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (250) 1 (196) (431) (45) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (250) 1 (196) (431) (45) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- (5) -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- (5) -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1E, SUB 5O SUB 6M SUB 4B, SUB 6C, L.P. LLC COMPANY L.P. LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) 209 188 548 (152) 476 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 76 55 302 177 199 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (218) (267) (840) 824 (645) Accounts payable, accrued expenses, accrued interests, and other liabilities (40) 47 68 (142) 24 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 27 23 78 707 54 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (27) (23) (78) (707) (54) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (27) (23) (78) (707) (54) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2C, SUB 4G, SUB 3B, SUB 5G, SUB 5P, LLC L.P. LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net income (loss) (311) 385 70 1,253 113 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 255 229 230 1,548 -- Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- 329 Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 30 (220) (252) (2,492) (448) Accounts payable, accrued expenses, accrued interests, and other liabilities 27 (380) 146 466 6 ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 1 14 194 775 -- ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties 7 (14) (194) (775) -- Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities 7 (14) (194) (775) -- ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt (8) -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities (8) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5J, SUB 5Q, SUB 5A, SUB 8D, SUB 4J, LLC LLC LLC LLC LLC ---------- ---------- ---------- ---------- ------------- Operating activities: Net income (loss) 1,479 487 448 161 316 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 866 120 313 317 336 Equity in earnings of affiliates -- -- -- -- -- Write off of deferred financing costs -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interests -- -- -- -- -- Amortization of unearned stock based compensation -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss -- -- -- -- -- Deferred income taxes -- -- -- -- -- Changes in operating assets and liabilities: -- -- -- -- -- Accounts receivable -- -- -- -- 31 Prepaid expenses and other assets 483 -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (3,168) (418) (861) (442) (478) Accounts payable, accrued expenses, accrued interests, and other liabilities 804 160 211 (15) (159) ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by operating activities 464 349 111 21 46 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (464) (349) (111) (21) (46) Proceeds from sale of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Decrease) increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash (used in) provided by investing activities (464) (349) (111) (21) (46) ---------- ---------- ---------- ---------- ---------- Financing activities: Deferred financing costs -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Principal payments on long-term debt -- -- -- -- -- Contributions from partners -- -- -- -- -- Repurchase of units -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- Net increase (decrease) in cash and cash equivalents -- -- -- -- -- Cash and cash equivalents, beginning of period -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents, end of period -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 UNAUDITED (DOLLARS IN THOUSANDS)
MERISTAR HOTEL GUARANTOR LESSEE, SUBSIDIARIES TOTAL INC. TOTAL ELIMINATIONS CONSOLIDATED -------------- ------------ ------------ ------------ Operating activities: Net income (loss) (1,929) 14,146 (23,860) (10,324) Adjustments to reconcile net income (loss) to net cash -- -- provided by (used in) operating activities: -- -- Depreciation and amortization 294 14,662 -- 30,592 Equity in earnings of affiliates -- -- 23,860 -- Write off of deferred financing costs -- -- -- 1,529 Loss on fair value of non-hedging derivatives -- -- -- 4,735 Minority interests -- -- -- 11 Amortization of unearned stock based compensation -- -- -- 880 Unrealized gain on interest rate swaps recognized in net loss -- -- -- (2,887) Deferred income taxes -- -- -- (281) Changes in operating assets and liabilities: -- -- -- -- Accounts receivable (10,005) (9,412) -- (12,254) Prepaid expenses and other assets (1,328) (901) -- 1,634 Due from/to Interstate Hotels & Resorts 365 365 -- (224) Due from subsidiaries 13,770 (12,763) -- -- Accounts payable, accrued expenses, accrued interests, and other liabilies 7,395 8,085 -- (4,270) -------- -------- -------- -------- Net cash (used in) provided by operating activities 8,562 14,182 -- 9,141 -------- -------- -------- -------- Investing activities: Investment in hotel properties 2 (5,597) -- (12,292) Proceeds from sale of assets -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts 389 389 -- (9,000) (Decrease) increase in restricted cash -- -- -- 2,952 -------- -------- -------- -------- -------- Net cash (used in) provided by investing activities 391 (5,208) -- (18,340) -------- -------- -------- -------- Financing activities: Deferred financing costs -- -- -- (3,131) Proceeds from issuance of long-term debt -- -- -- 234,545 Principal payments on long-term debt (4,000) (4,021) -- (220,901) Contributions from partners -- -- -- 3,155 Repurchase of units -- -- -- (409) Distributions paid to partners -- -- -- (1,264) -------- -------- -------- -------- Net cash provided by (used in) financing activities (4,000) (4,021) -- 11,995 -------- -------- -------- -------- Effect of exchange rate changes on cash -- -- -- (271) -------- Net increase (decrease) in cash and cash equivalents 4,953 4,953 -- 2,525 -------- Cash and cash equivalents, beginning of period 16,643 16,643 -- 23,441 -------- -------- -------- -------- Cash and cash equivalents, end of period 21,596 21,596 -- 25,966 ======== ======== ======== ========
EX-99.2 10 w86517exv99w2.htm EXHIBIT 99.2 exv99w2

Exhibit 99.2

SARBANES-OXLEY ACT SECTION 906 CERTIFICATIONS

In connection with this quarterly report on Form 10-Q of MeriStar Hospitality Corporation (the “Issuer”) for the three months ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul W. Whetsell, Chief Executive Officer of the Issuer, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m or 78o(d)); and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date: May 15, 2003


		/s/ Paul W. Whetsell

		Paul W. Whetsell Chief Executive Officer MeriStar Hospitality Corporation

A signed original of this written statement required by Section 906 has been provided to MeriStar Hospitality Corporation and will be retained by MeriStar Hospitality Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.3 11 w86517exv99w3.htm EXHIBIT 99.3 exv99w3

Exhibit 99.3

SARBANES-OXLEY ACT SECTION 906 CERTIFICATIONS

In connection with this quarterly report on Form 10-Q of MeriStar Hospitality Corporation (the “Issuer”) for the three months ended March 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald D. Olinger, Chief Financial Officer of the Issuer, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

Date: May 15, 2003


		/s/ Donald D. Olinger

		Donald D. Olinger Executive Vice President and Chief Financial Officer MeriStar Hospitality Corporation

-----END PRIVACY-ENHANCED MESSAGE-----

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents


	•	Our board has approved the sale,

	•	We have a fully executed agreement with a qualified buyer which provides for no significant outstanding or continuing obligations with the property after sale, and

	•	We have a significant non-refundable deposit.


	•	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;

	•	governmental actions;

	•	legislative/ regulatory changes, including changes to laws governing the taxation of real estate investment trusts;

	•	level of proceeds from asset sales;

	•	cash available for capital expenditures;

	•	availability of capital;

	•	ability to refinance debt;

	•	rising interest rates;

	•	rising insurance premiums;

	•	competition;

	•	supply and demand for hotel rooms in our current and proposed market areas, including the existing and continuing weakness in business travel and lower-than-expected daily room rates;

	•	other factors that may influence the travel industry, including health, safety and economic factors; and

	•	generally accepted accounting principles, policies and guidelines applicable to real estate investment trusts.


	•	a $4.7 million loss on fair value of non-hedging derivatives 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 March 2002.


^(a)	Operating income from continuing operations, EBITDA from continuing operations and EBITDA, total operations, include the effects of a $4,735 non-cash loss due to our swap agreements being converted to non-hedging derivatives in January 2002 and a $1,529 non-cash write-off of deferred financing costs due to reduction in our borrowing capacity on our revolving credit agreement in March 2002.


	•	Factors that affect our results of operations, including general economic conditions, demand for business and leisure travel, public concerns about travel safety related primarily to terrorism and the developments in the conflict in Iraq and related concerns, and other operating risks described under the caption, “Risk Factors — Operating Risks” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2002;

	•	Factors that affect our access to bank financing and the capital markets, including operational risks, high leverage, interest rate fluctuations, and other risks described under the caption “Risk Factors — Financing Risks” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2002; and

	•	Other factors described previously under the caption, “Cautionary Statement Regarding Forward-Looking Statements.”


	•	$42.1 million from Interstate Hotels for the repayment of their note receivable; and

	•	$12.7 million of proceeds from the sale of one hotel; partially offset by

	•	$8.6 million of hotel capital expenditures (including $0.8 million of capitalized interest).


	•	Our available cash flow;

	•	The proceeds of borrowings on a non-recourse basis (limited to $300 million), with such borrowings secured by certain of our hotel properties;

	•	Borrowing under our $50 million general debt “basket” under our indentures;

	•	CMBS or other secured borrowings through a special purpose, “unrestricted” subsidiary; our indentures permit us to fund such a subsidiary with assets equal to up to 5% of our Consolidated Net Tangible Assets, as defined (approximately $135 million at March 31, 2003);

	•	The proceeds of a pari passu refinancing of our convertible subordinated notes; or

	•	A combination of the above.


	•	limited future growth potential;

	•	secondary market location;

	•	secondary brand affiliation;

	•	higher than average capital expenditure requirements; or


	•	improve the overall quality of the hotel assets remaining in our portfolio;

	•	enhance the ability of our portfolio to perform well in all cycles of the economy;

	•	enhance future growth prospects when strength returns to the economy;

	•	reduce future capital requirements on a relative basis; and

	•	reduce our leverage and requirements on our liquidity resources.


^(a)	For a description of the material terms of our long-term debt, see “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt” section above.


	1.	I have reviewed this quarterly report on Form 10-Q of MeriStar Hospitality Corporation;

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	a.	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;


	b.	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and


	c.	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	a.	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and


	b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: Meristar Hospitality Corporation, its general partner

By:	/s/ Jerome J. Kraisinger

	Name: Jerome J. Kraisinger Title: Executive Vice President and General Counsel

	(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 unvested restricted shares 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.

	(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; and

	(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.

	(i)		the Company and the Partnership shall pay the Executive a lump sum equal to the product of (x) one (1) times the sum of (A) the Executive’s then annual base salary and (B) the amount of the Executive’s bonus for the preceding year, or in the case of the initial year of the Executive’s employment, the bonus amount will be $157,500;

	(ii)		all of the Executive’s unvested stock options will immediately vest and such options, along with those previously vested, will become exercisable for a period of one (1) year thereafter; and

	(iii)		and the Company shall continue in effect the Executive’s health insurance benefits until the earlier of (x) one (1) year from the end of the term or (y) the date on which the Executive obtains health insurance coverage from a subsequent employer.

	A.		MSH, MSH OP and the OPCO Parties entered into that certain Intercompany Agreement (the “Agreement”), dated as of August 3, 1998, as amended January 1, 2001, whereupon Leasing became a party to the Agreement.

	B.		The Board of Directors of each of MSH and OPCO have determined that it is in the best interests of their respective corporations to amend the Agreement in light of the current relationship between the corporations.

	1.		All capitalized terms used in this Amendment and not otherwise defined shall have the meanings set forth in the Agreement as such meanings may be modified hereby.

	2.		Section 6 of the Agreement is hereby deleted in its entirety and replaced with the following:

			“6. MeriStar Trademark. Effective April 1, 2003, the OPCO Parties shall transfer, for consideration of $1.00, all right, title and interest held by the OPCO Parties in and to the name “MeriStar”, and all variants thereof, to MSH OP, and the OPCO Parties shall have no further rights to use such names and shall discontinue all use of such names.”

	3.		Section 7(a) of the Agreement is hereby deleted in its entirety.

	4.		Section 7(c) of the Agreement is hereby deleted in its entirety.

	5.		Section 8 of the Agreement is hereby deleted in its entirety.

	6.		As amended hereby, the Agreement is ratified and shall remain in full force and effect.

	1)		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m or 78o(d)); and

	2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.