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, OWK91Bxd0jHBmPDYqlH+HZAFFgtb3dBeVpx1jihQ2schK2o1Pz64qWgKYQ2Zi5DZ AuCQ9PA73vvq1vAWicd9rQ== 0000950133-03-002822.txt : 20030812 0000950133-03-002822.hdr.sgml : 20030812 20030812143710 ACCESSION NUMBER: 0000950133-03-002822 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030812 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: 03837161 BUSINESS ADDRESS: STREET 1: 4501 N. FAIRFAX DRIVE CITY: ARLINGTON STATE: VA ZIP: 22203 BUSINESS PHONE: 7038127200 MAIL ADDRESS: STREET 1: 4501 N. FAIRFAX DRIVE CITY: ARLINGTON STATE: VA ZIP: 22203 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL HOSPITALITY CORP DATE OF NAME CHANGE: 19960428 10-Q 1 w89038e10vq.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 June 30, 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.)

4501 North Fairfax Drive Arlington, Virginia (Address of principal executive offices)		22203 (Zip Code)

(703) 812-7200

(Registrant’s telephone number, including area code)

1010 Wisconsin Avenue, N.W.

Washington, D.C. 20007

(202) 295-1000

(Former name, former address and former fiscal year, if changed since last report)

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 July 31, 2003 was 46,111,977.

INDEX


		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Consolidated Balance Sheets — June 30, 2003 and December 31, 2002		2
	Consolidated Statements of Operations — Three and six months ended June 30, 2003 and 2002		3
	Consolidated Statements of Cash Flows — Six months ended June 30, 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		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26
Item 4.	Controls and Procedures		26
PART II. OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders		27
Item 6.	Exhibits and Reports on Form 8-K		28
Signatures			29

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED BALANCE SHEETS

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


		June 30,
		2003			December 31,
		(Unaudited)			2002

ASSETS
Investments in hotel properties		$	2,653,959		$	3,020,909
Accumulated depreciation			(407,965	)		(460,972	)

			2,245,994			2,559,937
Restricted cash			30,105			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			36,155			43,228
Accounts receivable, net of allowance for doubtful accounts of $980 and $848			68,996			56,828
Marketable securities (Note 2)			18,056			—
Cash and cash equivalents (Note 2)			56,307			33,896

		$	2,497,327		$	2,798,020

LIABILITIES AND STOCKHOLDERS’ EQUITY
Long-term debt		$	1,650,487		$	1,654,102
Accounts payable and accrued expenses			104,681			109,790
Accrued interest			52,121			52,907
Due to Interstate Hotels & Resorts			5,925			10,500
Other liabilities			15,064			18,013

Total liabilities			1,828,278			1,845,312


Minority interests			39,693			74,422
Stockholders’ equity:
	Common stock, par value $0.01 per share Authorized — 100,000 shares Issued — 50,484 and 49,555 shares		505			495
	Additional paid-in capital		1,217,049			1,196,025
	Retained deficit		(506,976	)		(230,870	)
	Accumulated other comprehensive loss		(2,141	)		(7,052	)
	Unearned stock-based compensation		(2,195	)		(3,638	)
	Common stock held in treasury — 4,374 and 4,324 shares		(76,886	)		(76,674	)

Total stockholders’ equity			629,356			878,286

		$	2,497,327		$	2,798,020

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(Dollars in thousands, except per share amounts)



				Three Months Ended						Six Months Ended
				June 30,						June 30,

				2003			2002			2003			2002

Revenue:
	Hotel operations:
		Rooms		$	164,393		$	174,945		$	319,610		$	336,830
		Food and beverage			68,496			69,817			130,196			129,673
		Other hotel operations			21,693			20,614			40,402			39,298
	Office rental, parking and other revenue				3,461			4,240			6,756			8,501

Total revenue					258,043			269,616			496,964			514,302

Hotel operating expenses:
		Rooms			40,036			41,199			77,902			78,085
		Food and beverage			47,803			48,752			93,042			91,515
		Other hotel operating expenses			12,787			11,382			23,835			21,827
Office rental, parking and other expenses					583			684			1,213			1,497
Other operating expenses:
		General and administrative			42,612			42,717			84,301			84,161
		Property operating costs			37,893			39,085			74,116			73,999
		Depreciation and amortization			29,842			29,969			58,562			60,900
		Loss on asset impairments			207,630			—			262,608			—
		Property taxes, insurance and other			20,454			16,179			40,509			35,546
		Change in fair value of non-hedging derivatives, net of swap payments			—			3,090			—			3,079
		Loss on fair value of non-hedging derivatives			—			—			—			4,735

Operating expenses					439,640			233,057			716,088			455,344

Operating (loss) income					(181,597	)		36,559			(219,124	)		58,958
Interest expense, net					34,739			34,112			69,565			68,767

(Loss) income before minority interests, income taxes, and discontinued operations					(216,336	)		2,447			(288,689	)		(9,809	)
Minority interests					10,598			(245	)		14,275			382
Income tax (expense) benefit					(28	)		(60	)		175			259

(Loss) income from continuing operations					(205,766	)		2,142			(274,239	)		(9,168	)
Discontinued operations:
	(Loss) income from discontinued operations before tax benefit (expense)				(598	)		855			(1,864	)		2,260
	Income tax benefit (expense)				3			(24	)		(3	)		(62	)

(Loss) income from discontinued operations					(595	)		831			(1,867	)		2,198

Net (loss) income				$	(206,361	)	$	2,973		$	(276,106	)	$	(6,970	)

Earnings per share:
	Basic:
		(Loss) income from continuing operations		$	(4.47	)	$	0.05		$	(5.99	)	$	(0.21	)
		(Loss) income from discontinued operations			(0.01	)		0.02			(0.04	)		0.05

			Net (loss) income per basic share	$	(4.48	)	$	0.07		$	(6.03	)	$	(0.16	)

	Diluted:
		(Loss) income from continuing operations		$	(4.47	)	$	0.04		$	(5.99	)	$	(0.21	)
		(Loss) income from discontinued operations			(0.01	)		0.02			(0.04	)		0.05

			Net (loss) income per diluted share	$	(4.48	)	$	0.06		$	(6.03	)	$	(0.16	)

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)



				Six Months Ended
				June 30,

				2003			2002

Operating activities:
	Net loss			$	(276,106	)	$	(6,970	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			59,055			63,879
		Loss on asset impairments			264,677			—
		Loss on fair value of non-hedging derivatives			—			4,735
		Minority interests			(14,275	)		(382	)
		Amortization of unearned stock-based compensation			1,443			1,920
		Unrealized gain on interest rate swaps recognized in net loss			(3,395	)		(2,905	)
		Deferred income taxes			(2,094	)		(375	)
		Changes in operating assets and liabilities:
			Accounts receivable		(12,168	)		(4,817	)
			Prepaid expenses and other assets		4,225			3,098
			Due from/to Interstate Hotels & Resorts		(4,575	)		4,900
			Accounts payable, accrued expenses, accrued interest and other liabilities		(4,977	)		3,847

Net cash provided by operating activities					11,810			66,930

Investing activities:
	Investments in hotel properties				(14,547	)		(24,696	)
	Proceeds from sales of assets				15,720			—
	Purchases of marketable securities				(18,056	)		—
	Net payments from (advances to) Interstate Hotels & Resorts				42,052			(10,000	)
	(Increase) decrease in restricted cash				(9,740	)		4,384
	Other, net				(299	)		—

Net cash provided by (used in) investing activities					15,130			(30,312	)

Financing activities:
	Principal payments on long-term debt				(4,208	)		(265,840	)
	Proceeds from issuance of long-term debt				—			234,841
	Deferred financing fees				—			(3,571	)
	Proceeds from option exercises				—			3,156
	Dividends paid to stockholders				—			(930	)
	Distributions to minority investors				(141	)		(282	)
	Purchase of limited partnership unit				(65	)		—

Net cash used in financing activities					(4,414	)		(32,626	)

Effect of exchange rate changes on cash and cash equivalents					(115	)		(28	)
Net increase in cash and cash equivalents					22,411			3,964
Cash and cash equivalents, beginning of period					33,896			23,448

Cash and cash equivalents, end of period				$	56,307		$	27,412

Supplemental Cash Flow Information
Cash paid for interest and income taxes:
	Interest, net of capitalized interest			$	70,399		$	60,454

	Income taxes			$	1,902		$	602

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2003

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 as well as by franchise and brand affiliations. As of June 30, 2003, we owned 105 hotels, with 27,269 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”). In July 2003, we sold two hotels with 422 rooms.

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 a subsidiary of 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 an additional 1.5% of total hotel revenue. All of the agreements expire in 2010 and have 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, 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. In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities,” an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements.” 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. The interpretation applied immediately to variable interest entities created after January 31, 2003, and applies beginning July 1, 2003 to those variable interest entities that were acquired before February 1, 2003. The initial application of the interpretation did not affect our results of operations or financial condition as we have not obtained an interest in any qualifying entity on or after January 31, 2003. We do not expect the application of the second phase to have a material affect on our results of operations or financial condition.

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.

Cash and Cash Equivalents. Our cash equivalents consist of investments in debt securities, including commercial paper, overnight repurchase agreements and money market funds, with an original maturity of three months or less. We classify investments in these types of securities with original maturities greater than three months as marketable securities.

Marketable Securities. Our marketable securities consist of investments in debt securities, including commercial paper and agency discount notes, with maturities less than six months from their date of purchase. As of June 30, 2003, the majority of the securities mature within 90 days. We record these securities at amortized cost. As of June 30, 2003, the fair value of these securities was $18.1 million.

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 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. Our strategy includes the disposition of certain hotel assets, all of which are managed under agreements that typically include termination penalty clauses with Interstate Hotels. As a result, 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 operating expense. See Note 6 for details on the early extinguishment in July 2003 of substantially all of our convertible notes and a portion of our senior subordinated notes.

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 after. During the six months ended June 30, 2003, we granted 172,500 stock options to employees which vest ratably over three years. Compensation costs related to these stock options were not material to our results of operations for the six months ended June 30, 2003. 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 stock

options at market value, no compensation cost has been recognized. For our other equity-based compensation plans, we recognize compensation expense over the vesting period based on the fair market value of the award at the date of grant.

Had compensation cost been determined based on fair value at the grant date for awards granted prior to our adoption of the fair value method prescribed in 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 (dollars in thousands, except per share amounts):



		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2003			2002			2003			2002

Net (loss) income, as reported		$	(206,361	)	$	2,973		$	(276,106	)	$	(6,970	)
	Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effect		677			1,206			1,606			2,252
	Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect		(816	)		(1,411	)		(1,900	)		(2,704	)

Net (loss) income, pro forma		$	(206,500	)	$	2,768		$	(276,400	)	$	(7,422	)

Earnings per share:
	Basic, as reported	$	(4.48	)	$	0.07		$	(6.03	)	$	(0.16	)
	Basic, pro forma	$	(4.48	)	$	0.06		$	(6.03	)	$	(0.17	)

	Diluted, as reported	$	(4.48	)	$	0.06		$	(6.03	)	$	(0.16	)
	Diluted, pro forma	$	(4.48	)	$	0.06		$	(6.03	)	$	(0.17	)

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 recognition of liabilities at their fair value for newly-issued guarantees. We have no guarantees which require accounting under the provisions of this interpretation.

New Accounting Pronouncements. The FASB issued FASB No. 149 “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” in April 2003. The statement clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative, clarifies when a derivative contains a financing component, amends the definition of an underlying derivative, and amends certain other pronouncements. The statement applies to any freestanding financial derivative instruments entered into or modified after June 30, 2003. We do not expect adoption of this standard to have a material effect on our results of operations or financial condition, but we will assess its impact if and when we enter into any new derivative instruments that fall within the scope of this standard.

The FASB issued FASB No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” in May 2003. The statement establishes standards for how to classify and measure certain financial instruments with characteristics of both liabilities and equity. It requires many instruments which were previously classified as equity to now be classified as a liability (or an asset in some circumstances), including: mandatorily redeemable instruments, instruments with repurchase obligations and instruments with obligations to issue a variable number of shares. The statement applies immediately to any freestanding financial instruments entered into or modified after May 31, 2003, and applies to all other instruments on July 1, 2003. We have no financial instruments which are covered by the provisions of this standard.

3. Comprehensive (Loss) Income

Comprehensive loss was $202.5 million and comprehensive income was $3.8 million for the three months ended June 30, 2003 and 2002, respectively. Comprehensive (loss) income consisted of net loss of $206.4 million and net income of $3 million for the three months ended June 30, 2003 and 2002, respectively, and foreign currency translation adjustments.

Comprehensive loss was $271.2 million and $5.6 million for the six months ended June 30, 2003 and 2002, respectively. Comprehensive loss consisted of net loss of $276.1 million and $7 million for the six months ended June 30, 2003 and 2002, respectively, foreign currency translation adjustments, and in 2002 a $0.5 million fair value gain adjustment for derivatives.

4. Investments in Hotel Properties

Investments in hotel properties consisted of the following (dollars in thousands):


	June 30,		December 31,
	2003		2002

Land	$	260,613	$	288,611
Buildings and improvements		2,063,912		2,351,769
Furniture, fixtures and equipment		286,405		344,541
Construction-in-progress		43,029		35,988

	$	2,653,959	$	3,020,909

For the six months ended June 30, 2003 and 2002, we capitalized interest of $1.6 million and $1.9 million, respectively.

In late 2002, due to changes in economic conditions and the decision to market non-core assets as part of our program to dispose of 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 disposition program to include a total of 16 non-core assets and recognized an impairment loss of $56.7 million as a result of the change in our expected holding period for these assets.

During the second quarter of 2003, we made the determination to dispose of an additional 19 non-core assets, for a total of 35 non-core assets included in our disposition program. Also during the second quarter, due to the market interest in certain of our other hotel assets, we decided to add an additional six assets to our disposition program. Due to this change in our expected holding period for these assets, we recognized an additional impairment loss of $208 million related to the disposition of these 41 assets during the three months ended June 30, 2003. We sold one of these hotels in April 2003 and two more hotels in July 2003.

The impairment charges are based on our estimates of the fair value of the disposition properties. 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 of June 30, 2003, our net investments in hotel properties included $16 million for two assets (both sold in July 2003), which met our criteria for held-for-sale classification. The remaining hotels included in our asset disposition program do not meet the probability criterion as prescribed by SFAS No. 144 to classify as held-for-sale.

5. Investments in and Advances to Affiliates

In 1999, we invested $40 million in MeriStar Investment Partners, L.P. (“MIP”), a joint venture established to acquire upscale, full-service hotels. Our cost-basis investment is in the form of a partnership interest, in which we earn a 16% cumulative preferred return. We recognize the return quarterly as it becomes due to us. As of June 30, 2003, cumulative preferred returns of $15 million were due from MIP and included in accounts receivable on the accompanying consolidated balance sheet. We expect that any cumulative unpaid preferred returns would be paid in the future 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 MIP’s operations to provide adequate cash flow in the near term for significant payment of our current returns or repayments of our cumulative unpaid preferred returns. We evaluate the collectibility of our preferred return based on our preference to distributions and the underlying value of the hotel properties. Should the cash flow from MIP’s operations or the underlying value of the hotel properties continue to weaken over an extended period of time, the value of our original investment may also decline.

6. Long-Term Debt

Long-term debt consisted of the following (dollars in thousands):


	June 30,			December 31,
	2003			2002

Senior unsecured notes	$	950,000		$	950,000
Secured facility		311,886			314,626
Senior subordinated notes		205,000			205,000
Convertible notes		154,300			154,300
Mortgage and other debt		36,562			38,030
Unamortized issue discount		(7,261	)		(7,854	)

	$	1,650,487		$	1,654,102

Aggregate future maturities as of June 30, 2003 were as follows (dollars in thousands):


2003 (six months)	$	3,956
2004		170,720	^(a)
2005		8,670
2006		9,412
2007		213,616	^(b)
Thereafter		1,244,113

	$	1,650,487

^(a)
Includes the $154.3 million convertible notes, substantially all of which were repurchased in July 2003 with the proceeds from a new convertible note issuance. See “New convertible notes” discussion below for further details.

^(b)
Includes the $205 million senior subordinated notes, $22.6 million of which were repurchased in July 2003 with the proceeds from a new convertible note issuance. See “New convertible notes” discussion below for further details.

As of June 30, 2003, all of our debt bore fixed rates of interest. Our overall weighted average interest rate was 8.59%. The fair value, based on market prices at the end of the period, of our fixed-rate, long-term debt was $1.62 billion at June 30, 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 initiate or transact certain business activities 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 June 30, 2003, our fixed charge coverage ratio was below 2 to 1, and therefore we were not permitted to enter into certain

transactions, including the repurchase of our stock, the issuance of any preferred stock, the payment of dividends, the incurrence of any additional debt, or the repayment of outstanding debt before it comes due.

There are certain exceptions, however, 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 financing within restricted subsidiaries. We also have a general carve-out to incur $50 million of unspecified borrowings within a restricted subsidiary. Additionally, we are permitted to repay subordinated debt prior to its maturity from the proceeds of a pari passu or junior financing with a longer term than the debt refinanced, an equity offering, or a financing within an unrestricted subsidiary. We are permitted to invest five percent of consolidated net tangible assets (as defined in the indentures) in an unrestricted subsidiary. We would then be able to mortgage the properties contributed to the unrestricted subsidiary. See “Financial Condition, Liquidity, and Capital Resources” in Item 2 of this Quarterly Report on Form 10-Q for our expectations in this regard.

Secured facility. We completed a $330 million, 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 insurance. 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 (“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 $14.5 million of cash was held in escrow under this provision as of June 30, 2003. In July 2003, we signed an amendment to the loan agreement that permits the release of cash placed in escrow for all capital expenditures incurred on the 19 encumbered properties on or after April 1, 2003 (approximately one million as of June 30, 2003). Although the servicer will continue to retain in escrow any excess cash from the encumbered hotels, they will release cash for all capital expenditures we have incurred from April 1, 2003 through the date of the amendment and future capital expenditures we incur on the 19 properties.

New convertible notes. On July 1, 2003, we completed an offering of $170 million aggregate principal amount of 9.5% convertible subordinated notes due 2010. The convertible notes are unsecured obligations and provide for semi-annual payments of interest on October 1 and April 1. We incurred approximately $6.5 million in debt issuance costs, which will be capitalized and amortized over the life of the new notes.

The proceeds from the new issuance were used to repurchase $150.6 million of the $154.3 million 4.75% convertible notes, at varying prices, resulting in an aggregate discount of approximately $1.4 million. During the third quarter, we will recognize this gain and write off approximately $0.6 million of deferred financing costs related to the repurchase. The proceeds from the issuance were also used to repurchase $22.6 million of our $205 million senior subordinated notes, at varying prices, resulting in an aggregate discount of approximately $2 million. During the third quarter, we will recognize this gain and write off approximately $0.2 million of deferred financing costs related to the repurchases.

Credit facility. In May 2003, we reduced our borrowing capacity on our senior credit facility from $100 million to $50 million and wrote off approximately $0.7 million in related deferred financing costs. As of June 30, 2003, we had no outstanding borrowings under this facility.

This facility contains customary financial compliance measures, 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, one in January 2003, and one in April 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. If we are not in compliance with the leverage covenant or any other financial covenants at the end of a quarterly measuring period, we will be in default under the credit facility and will not be permitted to borrow under the credit facility. We have obtained a waiver of compliance with this leverage covenant from our lending group, which was extended through August 20, 2003. 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

terminate the facility in late 2003. We have approximately $0.6 million of unamortized capitalized financing costs related to this facility as of June 30, 2003, which would be written off should we decide to terminate the facility.

Derivatives. As of June 30, 2003, we had one swap agreement with a notional principal amount of $100 million that does not qualify for treatment as a cash-flow hedge under SFAS No. 133. This swap agreement is currently being marked to market through our statement of operations. The fair value of this swap as of June 30, 2003 was a liability of $0.6 million, and is included in other liabilities in the accompanying consolidated balance sheet. We made additional cash payments on this swap of $0.6 million through its date of expiration, July 31, 2003.

During the three and six months ended June 30, 2003, we recognized $1.3 million and $3.4 million, respectively, of income related to the decrease in fair value of the liability recorded for the interest rate swaps in place in those time periods. For the three and six months ended June 30, 2003, we made cash payments on these swaps of $1.3 million and $3.4 million, respectively. The change in fair value and the swap payments are netted together on our statement of operations.

During the six months ended June 30, 2002, we recognized $2.9 million of income related to the decrease in fair value of the liability recorded for the interest rate swaps in place in that time period. For the three and six months ended June 30, 2002, we made cash payments on these swaps of $3.1 million and $6 million, respectively. The change in fair value and the swap payments are netted together on our statement of operations.

7. Stockholders’ Equity and Minority Interests

Common Stock Transactions. We issued 50,000 shares of common stock to a former executive officer and director in connection with the formal separation of management functions with Interstate Hotels, during the first quarter of 2003. This former executive officer and director also relinquished 50,000 Profits-Only OP Units (POPs) in the first quarter 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 POPs.

Common OP Unit holders converted 878,000 and 400,000 of their OP Units, with a value of $20.1 million and $6.1 million, respectively, into common stock during the six months ended June 30, 2003 and 2002, respectively. There were no material conversions for cash during the six months ended June 30, 2003 and 2002.

In May 2002, we issued 162,500 POPs to an executive officer pursuant to an employment agreement, with a value of $2.9 million.

8. Earnings Per Share

The following table presents the computation of basic and diluted earnings per share (amounts in thousands, except per share amounts):



			Three Months Ended						Six Months Ended
			June 30,						June 30,

			2003			2002			2003			2002

Basic Earnings Per Share:
	(Loss) income from continuing operations		$	(205,766	)	$	2,142		$	(274,239	)	$	(9,168	)
	Dividends declared on unvested restricted stock			—			(2	)		—			(3	)

	(Loss) income available to common stockholders		$	(205,766	)	$	2,140		$	(274,239	)	$	(9,171	)

	Weighted average number of basic shares of common stock outstanding			46,078			44,955			45,813			44,754

	Basic (loss) earnings per share from continuing operations		$	(4.47	)	$	0.05		$	(5.99	)	$	(0.21	)

Diluted Earnings Per Share:
	(Loss) income available to common stockholders		$	(205,766	)	$	2,140		$	(274,239	)	$	(9,171	)
	Minority interest, net of tax			—			104			—			—

	Adjusted net (loss) income		$	(205,766	)	$	2,244		$	(274,239	)	$	(9,171	)

	Weighted average number of basic shares of common stock outstanding			46,078			44,955			45,813			44,754
	Common stock equivalents:
		Operating partnership units		—			3,420			—			—
		Stock options		—			75			—			—

	Total weighted average number of diluted shares of common stock outstanding			46,078			48,450			45,813			44,754

	Diluted (loss) earnings per share from continuing operations		$	(4.47	)	$	0.04		$	(5.99	)	$	(0.21	)

For the three months ended June 30, 2003 and 2002, 9,152 shares and 5,445 shares, respectively, were excluded from the calculation of diluted earnings per share as the effect of their inclusion would be anti-dilutive. For the six months ended June 30, 2003 and 2002, 9,433 shares and 8,947 shares, respectively, were excluded from the calculation of diluted earnings per share as the effect of their inclusion would be anti-dilutive.

On July 1, 2003, we completed an offering of $170 million aggregate principal amount of 9.5% convertible subordinated notes due 2010 (see Note 6). These notes are convertible into our common stock at any time prior to or at maturity, April 1, 2010, at a conversion price of $10.18 per share (equal to a conversion rate of 98.2318 shares per $1,000 principal amount of notes).

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 June 30, 2003 were as follows (dollars in thousands):


2003 (six months)	$	719
2004		1,437
2005		1,440
2006		1,427
2007		1,427
Thereafter		56,368

	$	62,818

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 June 30, 2003 were as follows (dollars in thousands):


2003 (six months)	$	2,349
2004		4,428
2005		2,896
2006		2,027
2007		1,456
Thereafter		1,929

	$	15,085

10. Asset Dispositions

We sold three hotels during the third quarter of 2002, two hotels in the fourth quarter of 2002, one in January 2003 and one in April 2003. In July 2003, we sold two hotels that met our criteria for held-for-sale classification as of June 30, 2003 (see Note 4). Operating results for the three and six months ended June 30, 2002 for these nine hotels have been reclassified to discontinued operations, and where applicable included in discontinued operations in the current periods’ results. Results of operations for the three and six months ended June 30, 2003 included impairment charges of $0.4 million and $2.1 million, respectively.

Revenue included in discontinued operations for these hotels were (dollars in thousands):



	Three Months				Six Months
	Ended June 30,				Ended June 30,

	2003		2002		2003		2002

Revenue	$	2,564	$	11,285	$	6,808	$	22,724

11. Consolidating Financial Statements

We and certain subsidiaries of MeriStar Hospitality Operating Partnership, L.P. (MHOP) 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 June 30, 2003 and December 31, 2002, consolidating statements of operations for the three and six months ended June 30, 2003 and 2002, and consolidating statements of cash flows for the six months ended June 30, 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;

• the threatened or actual outbreak of hostilities and international political instability;

• 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 June 30, 2003, we owned 105 hotels, with 27,269 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”). In July 2003, we sold two hotels with 422 rooms.

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.

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2002 as filed with the Securities and Exchange Commission, and with the unaudited consolidated financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q.

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 results of operations for 2003 and 2002 to conform to the requirements of SFAS No. 144. See Note 10 “Asset Dispositions,” included in Item 1 of this Quarterly Report on Form 10-Q for further information regarding the amounts reclassified. The following results of operations discussions compare revenues, operating expenses and significant charges for continuing operations. Discontinued operations are discussed as a separate component within each period’s comparison.

Three months ended June 30, 2003 compared with the three months ended June 30, 2002

The following table provides our hotels’ operating statistics on a comparable hotel basis for the three months ended June 30 (comparable hotels are those that were owned for substantially all of both periods):


	2003		2002		Change

Average daily rate	$	98.36	$	102.67		(4.2)%
Occupancy		68.3%		69.5%		(1.8)%
Revenue per available room (RevPAR)	$	67.18	$	71.37		(5.9)%

The conflict in Iraq and an elevated terrorist alert level had a negative effect on our hotel operations, evidenced by a reduction in transient business travel. This is reflected in the 4.2% reduction in average daily rate and the 1.8% reduction in occupancy for the three months ended June 30, 2003 compared to the same period in 2002. We did however begin to see improvement in our hotel reservations in May as the conflict in Iraq ended. Also, our sales and marketing efforts focused on group business, which helped to partially offset lower levels of transient business travel.

Revenues. Total revenue decreased $11.6 million to $258.0 million for the three months ended June 30, 2003 from $269.6 million for the same period in 2002, primarily due to a $10.6 million decrease in room revenue directly attributable to a decrease in average daily rate and occupancy. The decrease was also due to a $1.3 million decrease in food and beverage revenue related to a decrease in occupancy.

Operating expenses. Total operating expenses increased a net $206.5 million to $439.6 million for the quarter ended June 30, 2003 compared to $233.1 million for the same period in 2002. Hotel operating expenses (including office rental, parking and other expenses) decreased from $102.0 million for the three

months ended June 30, 2002 to $101.2 million for the same period in 2003 due mainly to a reduction in room expenses stemming from our cost-cutting measures.

Other operating expenses increased $207.4 million to $338.4 million for the three months ended June 30, 2003 from $131.0 million for the same period in 2002, resulting mainly from an impairment charge of $207.6 million in the second quarter of 2003 (see discussion under “Significant charges” below). General and administrative costs remained essentially flat period over period. Property tax refunds totaling approximately $2.7 million during the three months ended June 30, 2002 contributed to the $4.3 million increase in property taxes for the 2003 comparative period. Property operating costs decreased $1.2 million due to a reduction in franchise fees, which are generally calculated as a percentage of revenues. As previously noted, revenues declined in the quarter from prior year levels.

Significant charges. During the second quarter of 2003, we made the determination to dispose of an additional 19 non-core assets. Also, due to the market interest in certain of our other hotel assets, we decided to add an additional six assets to our disposition program. We recognized an impairment loss of $208 million ($0.4 million of which is included in discontinued operations) related to our asset disposition program during the three months ended June 30, 2003. As of June 30, 2003, we had 40 assets planned for disposition, two of which were sold in July 2003.

We had two swap agreements that did not qualify for treatment as cash-flow hedges under SFAS No. 133, expire since June 30, 2002, one in December 2002 and one in April 2003. As of June 30, 2003, we had one swap agreement, which we account for as a fair-value hedge, with a notional principal amount of $100 million remaining outstanding. Results for the 2002 second quarter include a net expense of $3.1 million related to these agreements. Current period results were not materially affected by marking to market the remaining swap agreement. This swap expired on July 31, 2003.

Discontinued operations. During 2002, we sold five hotels in separate transactions for an aggregate of $60.7 million in cash. In mid-January 2003, we completed the sale of one hotel, which was classified as held for sale at December 31, 2002, for $12.7 million in cash. In April 2003, we completed the sale of another hotel for $3.1 million in cash. As of June 30, 2003, we had two hotels classified as held for sale, both of which were sold during July 2003 for an aggregate of $17.3 million in cash. We classified losses of $0.6 million and income of $0.8 million (both net of tax) from these nine hotels’ operations as discontinued for the three months ended June 30, 2003 and 2002, respectively. As previously noted, discontinued operations for the three months ended June 30, 2003 include a $0.4 million impairment charge related to these hotels.

Six months ended June 30, 2003 compared with the six months ended June 30, 2002

The following table provides our hotels’ operating statistics on a comparable hotel basis for the six months ended June 30 (comparable hotels are those that were owned for substantially all of both periods):


	2003		2002		Change

Average daily rate	$	100.25	$	104.25		(3.8)%
Occupancy		65.8%		66.5%		(1.1)%
Revenue per available room (RevPAR)	$	65.94	$	69.33		(4.9)%

Revenues. Total revenue decreased $17.3 million to $497 million for the six months ended June 30, 2003 from $514.3 million for the same period in 2002, primarily due to a $17.2 million decrease in room revenue directly attributable to a decrease in average daily rate and occupancy.

Operating expenses. Total operating expenses increased a net $260.8 million to $716.1 million for the six months ended June 30, 2003 compared to $455.3 million for the same period in 2002. Hotel operating expenses (including office rental, parking and other expenses) increased $3.1 million from $192.9 million for the six months ended June 30, 2002 to $196 million for the same period in 2003 due primarily to increases in food and beverage expenses stemming from increases in general conference expenses, as well as from expenses related to our real estate brokerage activities at one property.

Other operating expenses increased $257.7 million to $520.1 million for the six months ended June 30, 2003 from $262.4 million for the same period in 2002, resulting mainly from impairment charges of $262.6 million in the first half of 2003 (see discussion under “Significant charges” below). General and administrative and property operating costs remained essentially flat period over period. Property tax refunds totaling approximately $2.7 million during 2002 contributed to the $5 million increase in property taxes for the 2003 comparative period. Depreciation and amortization decreased $2.3 million, stemming mainly from a write off of deferred financing fees in 2002 totaling approximately $1.5 million related to the reduction in our borrowing capacity on our revolving credit agreement in place at that time.

Significant charges. We recognized impairment losses totaling $264.7 million ($2.1 million is included in discontinued operations) related to our asset disposition program during the six months ended June 30, 2003. As of June 30, 2003, we had 40 assets planned for disposition, two of which were sold in July 2003.

Prior year results include a net expense of $3.1 million related to the swap agreements previously discussed. Current period results were not materially affected by marking to market the remaining swap agreement. This swap expired on July 31, 2003. Prior year results also include a $4.7 million loss on the fair value of derivatives due to the repayment of debt that was originally hedged.

Discontinued operations. During 2002, we sold five hotels in separate transactions for an aggregate of $60.7 million in cash. In mid-January 2003, we completed the sale of one hotel, which was classified as held for sale at December 31, 2002, for $12.7 million in cash. In April 2003, we completed the sale of another hotel for $3.1 million in cash. As of June 30, 2003, we had two hotels classified as held for sale, both of which sold during July 2003 for an aggregate of $17.3 million in cash. We classified losses of $1.9 million and income of $2.2 million (both net of tax) from these nine hotels’ operations as discontinued for the six months ended June 30, 2003 and 2002, respectively. As previously noted, discontinued operations for the six months ended June 30, 2003 include impairment charges totaling $2.1 million related to these hotels.

FUNDS FROM OPERATIONS AND EBITDA

Substantially all of our assets consist of real estate, and in accordance with accounting principles generally accepted in the United States, or 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 values of real estate assets (and, in particular, hotels), which fluctuate based on economic, market and other conditions. As a result, we and many industry investors believe the 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, the National Association of Real Estate Investment Trusts, or NAREIT, adopted a definition of Funds From Operations, or FFO, which we have also adopted.

NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of 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 also 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.

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 regarding our financial condition and results of operations because EBITDA is useful for evaluating our operating performance and our capacity 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 performance measures 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) income to FFO on a diluted basis (amounts in thousands, except per share amounts):



		Three Months					Six Months Ended
		Ended June 30,					June 30,

		2003			2002		2003			2002

	Net (loss) income	$	(206,361	)	$	2,973	$	(276,106	)	$	(6,970	)
	Loss on asset impairments		208,000			—		264,677			—
	Hotel depreciation and amortization		28,042			29,598		55,656			58,250
	Minority interest (income) expense to common OP unit holders		(10,738	)		104		(14,558	)		(664	)

FFO			18,943			32,675		29,669			50,616
	Interest on convertible debt		1,805			1,833		—			3,665

FFO on a diluted basis		$	20,748		$	34,508	$	29,669		$	54,281

FFO per diluted share		$	0.39		$	0.65	$	0.60		$	1.02

Weighted average number of diluted shares of common stock outstanding for earnings per share			46,078			48,450		45,813			44,754
Common stock equivalents:
	Operating partnership units		2,922			—		3,204			4,016
	Stock options and POPs		35			496		23			49
	Convertible debt shares		4,538			4,538		—			4,538

Weighted average number of diluted shares of common stock outstanding for FFO			53,573			53,484		49,040			53,357

EBITDA

EBITDA was as follows (dollars in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2003			2002			2003			2002

(Loss) income from continuing operations	$	(205,766	)	$	2,142	^(a)	$	(274,239	)	$	(9,168	) ^(a)(b)
(Loss) income from discontinued operations		(595	)		831			(1,867	)		2,198

Net (loss) income	$	(206,361	)	$	2,973	^(a)	$	(276,106	)	$	(6,970	) ^(a)(b)

(Loss) income from continuing operations	$	(205,766	)	$	2,142		$	(274,239	)	$	(9,168	)
Interest expense, net		34,739			34,112			69,565			68,767
Income tax expense (benefit)		28			60			(175	)		(259	)
Minority interests		(10,598	)		245			(14,275	)		(382	)
Depreciation, amortization and loss on asset impairments		237,472			29,969			321,170			60,900

EBITDA from continuing operations	$	55,875		$	66,528	^(a)	$	102,046		$	119,858	^(a)(b)

(Loss) income from discontinued operations	$	(595	)	$	831		$	(1,867	)	$	2,198
Interest expense, net		—			(49	)		—			(105	)
Income tax (benefit) expense		(3	)		24			3			62
Depreciation, amortization and loss on asset impairments		589			1,480			2,562			2,979

EBITDA from discontinued operations	$	(9	)	$	2,286		$	698		$	5,134

EBITDA, total operations	$	55,866		$	68,814	^(a)	$	102,744		$	124,992	^(a)(b)

^(a)
(Loss) income from continuing operations, net (loss) income, EBITDA from continuing operations and EBITDA, total operations, included the effect of changes in fair value of non-hedging derivatives, net of swap payments, of $3.1 million for both the three and six months ended June 30, 2002.

^(b)
(Loss) income from continuing operations, net (loss) income, EBITDA from continuing operations and EBITDA, total operations, included the effect of a $4.7 million loss due to our swap agreements being converted to non-hedging derivatives in January 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 assets and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, investments in hotels (primarily capital projects currently), and the repurchase of our debt. We do not expect to pay a dividend on our common stock during 2003. 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 affected by geopolitical concerns and other factors affecting 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.

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 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 continue to take steps to strengthen our balance sheet and to maintain financial flexibility and liquidity. On July 1, 2003, we completed an offering of $170 million of 9.5% convertible subordinated notes due 2010, which securities rank pari passu with the 4.75% convertible subordinated notes. The proceeds from the issuance were mainly used to repurchase substantially all of our 4.75% convertible notes due 2004 and $22.6 million of our $205 million senior subordinated notes due in 2007. We currently have less than $4 million of the 2004 convertible notes outstanding and no significant maturities until 2007.

We sold two non-core hotel assets in the first half of 2003 for an aggregate of approximately $15.7 million in cash. We ended the second quarter of 2003 with cash and marketable securities balances of approximately $104.5 million, of which $74.4 million was unrestricted. These cash and marketable securities balances are higher than we have historically carried prior to this year. We intend to carry higher than historical levels of unrestricted cash on our balance sheet for the foreseeable future, as we believe this cash reserve should be adequate to provide for our working capital needs and protect us from a potential downturn in our business. In July 2003, we sold two additional non-core hotel assets for an aggregate of approximately $17.3 million in cash.

We currently have 38 hotels (after the July 2003 sales of two hotels) planned for disposition, from which we expect to generate proceeds of approximately $330 million to $400 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. We intend to use a majority of the proceeds from any asset sales to reinvest in our core assets and to repurchase our senior debt.

Sources and Uses of Cash

We generated a total of $11.8 million of cash from operations during the first half of 2003 compared with $66.9 million generated in the first half of 2002. Our operating results and the amount of cash generated by our hotel operations have been adversely affected 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. Partially offsetting this increase in interest was savings of approximately $2.8 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 our 16% cumulative preferred return on our partnership interest in MIP. As of June 30, 2003, approximately $15 million of cumulative preferred returns remained unpaid. We expect that any cumulative unpaid preferred returns would be paid in the future 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 MIP’s operations to provide adequate cash flow in the near term for significant payment of our current returns or repayments of our cumulative unpaid preferred returns.

Our investing activities provided a net $15.1 million of cash during the first half of 2003, resulting primarily from:

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

• $15.8 million in proceeds from the sale of two non-core hotel assets; partially offset by

• $18.1 million investment in marketable securities;

• $14.5 million in capital expenditures (including $1.6 million of capitalized interest); and

• $9.7 million increase in restricted cash.

We used $4.4 million of cash in financing activities during the first half 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. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution 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 for cash, or both, to the extent necessary to obtain cash sufficient to make the distributions required to retain our qualification as a REIT. Any future distributions will be at the discretion of our board of directors and will be determined by factors including our operating results, restrictions imposed by our borrowing agreements, capital expenditure requirements, the economic outlook, the distribution requirements for REITs under the Internal Revenue Code and such other factors as our board of directors deems relevant. Our senior unsecured notes indenture permits the payment of dividends in order to maintain REIT qualification if we fall below a 2 to 1 fixed charge coverage ratio. However, our senior subordinated notes indenture is more restrictive in that it permits the payment of dividends only if we exceed the 2 to 1 fixed charge coverage ratio. The timing and amount of any future distributions is dependent upon these factors, and we cannot provide assurance that any such distributions will be made in the future.

Long-Term Debt

The proceeds from the new issuance were used to repurchase $150.6 million of the $154.3 million 4.75% convertible notes due 2004, at varying prices, resulting in an aggregate discount of approximately $1.4 million. During the third quarter, we will recognize this gain and write off approximately $0.6 million of deferred financing costs on the transaction. The proceeds from the issuance were also used to repurchase $22.6 million of our $205 million senior subordinated notes due in 2007, at varying prices, resulting in an aggregate discount of approximately $2.0 million. During the third quarter, we will recognize this gain and write off approximately $0.2 million of deferred financing costs related to the repurchases.

Credit facility. In May 2003, we reduced our borrowing capacity on this facility from $100 million to $50 million and wrote off approximately $0.7 million in related deferred financing costs. As of June 30, 2003, we had no outstanding borrowings under this facility.

Senior unsecured notes. As of June 30, 2003, we had $950 million of aggregate principal of these notes outstanding. These notes contain various restrictive incurrence covenants, limiting our ability to initiate or transact certain business activities 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 June 30, 2003, our fixed charge coverage ratio was below 2 to 1, and therefore we were not permitted to enter into certain transactions, including the repurchase of our stock, the issuance of any preferred stock, the payment of dividends, the incurrence of any additional debt, or the repayment of outstanding debt before it comes due.

We expect to enter into a new commercial mortgaged-backed security facility, which would be secured by four hotel properties, in the third quarter of 2003. We intend to use the expected proceeds of approximately $100 million to selectively redeem more expensive debt.

Senior subordinated notes. As of June 30, 2003, we had outstanding $205 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. These notes are unsecured obligations and provide for semi-annual payments of interest each February 15 and August 15. We used proceeds from our July 2003 issuance of new convertible notes to repurchase $22.6 million aggregate principal amount of these notes.

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 insurance. 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 (“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 $14.5 million of cash was held in escrow under this provision as of June 30, 2003. In July 2003, we signed an amendment to the loan agreement that permits the release of cash placed in escrow for all capital expenditures incurred on the 19 encumbered properties on or after April 1, 2003 (approximately one million as of June 30, 2003). Although the servicer will continue to retain in escrow any excess cash from the encumbered hotels, they will release cash for all capital expenditures we have incurred from April 1, 2003 through the date of the amendment and future capital expenditures we incur on the 19 properties.

Asset Dispositions

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 its 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.

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 below, as well as the fact that 80 of our current 103 assets are unencumbered and only 13 of those assets are subject to ground leases. Excluding the assets included in our asset disposition program and our contemplated CMBS financing, we would have 42 unencumbered assets.

We recognized an impairment loss in 2002 on certain non-core assets we were then actively marketing. 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 and recorded an impairment charge in the first quarter of $56.7 million. In April 2003, we sold one of these hotels for $3.1 million. In July 2003, we sold two more of these hotels for $17.3 million. During the second quarter of 2003, we made the determination to dispose of an additional 19 non-core assets. Also, due to the market interest in certain of our other hotel assets, we decided to add an additional six assets to our disposition program. We recognized an additional impairment loss of $208 million related to our asset disposition program during the three months ended June 30, 2003.

As we dispose of these assets, we may incur termination obligations due to Interstate Hotels of up to a maximum of $26 million, calculated assuming the immediate sale of the properties 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. This amount may be reduced by replacement management contracts.

In addition, we may from time to time receive offers on assets which we might consider selling. Any additional sales of assets 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 are not actively marketing any other assets than the 38 properties previously discussed. The properties we are disposing of represent approximately one-third of our total properties, but a much smaller portion of our cash flow.

Capital Expenditures

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, and intend to use a portion of the proceeds from the sales of non-core assets to provide capital for renovation work. We

invested $14.5 million (including $1.6 million of capitalized interest) for ongoing capital expenditures during the first half of 2003, and we anticipate investing a total of $30 million to $35 million on capital expenditure programs during second half of 2003. These ongoing programs will include room and facilities refurbishments, renovations, and furniture and equipment replacements. The deferral of capital spending to date has not significantly affected 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. 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.

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.

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. 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. As a result, 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.

Classification of properties as held for sale

Held-for-sale classification requires that the sale be probable and that the transfer of the asset is expected to be completed within one year, among other criteria. Assessing the probability of the sale requires significant judgment due to the uncertainty surrounding completing the transaction. As a result, we have the following policy in aiding in assessing probability. We classify the properties we are actively marketing as held for sale once all of these 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 June 30, 2003, we were not involved in any off-balance sheet arrangements with MIP.

The following table summarizes our aggregate contractual obligations as of June 30, 2003 (dollars 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	$	944,340	$	—	$	—		$	548,135		$	396,205
	Secured facility		311,886		5,316		13,631			24,074			268,865
	Senior subordinated notes		203,399		—		—			203,399	^(c)		—
	Convertible notes		154,300		—		154,300	^(b)		—			—
	Mortgage debt and other		36,562		2,061		12,645			7,932			13,924

	Total long-term debt		1,650,487		7,377		180,576			783,540			678,994	^(d)

Ground lease obligations			62,818		1,318		2,992			4,288			54,220

Aggregate contractual obligations		$	1,713,305	$	8,695	$	183,568		$	787,828		$	733,214

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

^(b)
Repurchased $150.6 million face amount in July 2003 with the proceeds from the issuance of our new 9.5% convertible subordinated notes. See “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt — New Convertible Notes.”

^(c)
Repurchased $22.6 million face amount in July 2003 with the proceeds from the issuance of our new 9.5% convertible subordinated notes. See “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt — New Convertible Notes.”

^(d)
In July 2003, we issued $170 million of 9.5% convertible subordinated notes due 2010, which are not reflected on this table. See “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt — New Convertible Notes.”

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 an additional 1.5% of total hotel revenue. All of the agreements expire in 2010 and have three renewal periods of five years each at the option of Interstate Hotels, subject to some exceptions.


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.

As of June 30, 2003, 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

During the three months ended June 30, 2003, there were no significant changes in our internal controls or in other factors that could significantly affect these controls.

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of the stockholders was held on June 9, 2003. At that meeting, the following matters were submitted to a vote of our stockholders:

Item No. 1

To elect members of the Board of Directors to serve three-year terms expiring on the date of the annual meeting in 2006, and until their successors are duly elected and qualified.


J. Taylor Crandall	For	36,377,785
	Withheld	460,811
William S. Janes	For	36,479,757
	Against	358,839
Steven D. Jorns	For	36,536,607
	Against	301,989

Item No. 2

To ratify the appointment of KPMG LLP as independent auditors for the Company for the fiscal year ending December 31, 2003.


		For		36,720,829
		Against		89,395
		Abstain		28,372

Item No. 3

To consider ratification of a 200,000 share increase in the annual limit on individual employee stock awards.


		For		33,863,103
		Against		2,926,701
		Abstain		48,792

Item No. 4

To consider a stockholder proposal, if properly presented at the annual meeting, to declassify the Board of Directors and establish annual elections of its members.

The proponent of this proposal did not present at the annual meeting, and as such the proposal was not considered. Therefore, there was no vote on the matter at the annual meeting.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a.) Exhibits


Exhibit
No.			Description of Document

	13		Financial Statements of MeriStar Hospitality Operating Partnership, L.P. as of and for the three and six months ended June 30, 2003.
	31	.1	Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer.
	31	.2	Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer.
	32	.1	Sarbanes-Oxley Act Section 906 Certifications of Chief Executive Officer and Chief Financial Officer.
	99	.1	Consolidating Financial Information of MeriStar Hospitality Operating Partnership, L.P.

(b.) Reports on Form 8-K

On May 8, 2003, we filed a current report on Form 8-K (Item 9) announcing the financial results for the first quarter ended March 31, 2003.

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

(Principal Executive Officer and

Duly Authorized Officer)

Dated: August 12, 2003

29 EX-13 3 w89038exv13.htm EXHIBIT 13 exv13

Exhibit 13

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(Dollars and units in thousands)


	June 30,
	2003			December 31,
	(Unaudited)			2002

ASSETS
Investments in hotel properties	$	2,653,959		$	3,020,909
Accumulated depreciation		(407,965	)		(460,972	)

		2,245,994			2,559,937
Restricted cash		30,105			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		32,222			39,197
Accounts receivable, net of allowance for doubtful accounts of $980 and $848		68,996			56,828
Marketable securities (Note 2)		18,056			—
Cash and cash equivalents (Note 2)		56,300			33,889

	$	2,493,387		$	2,793,982


LIABILITIES AND PARTNERS’ CAPITAL
Long-term debt	$	1,292,788		$	1,296,597
Notes payable to MeriStar Hospitality Corporation		357,699			357,505
Accounts payable and accrued expenses		99,231			104,677
Accrued interest		52,121			52,907
Due to Interstate Hotels & Resorts		5,925			10,500
Other liabilities		13,637			15,967

Total liabilities		1,821,401			1,838,153

Minority interests		2,565			2,624
Redeemable OP units at redemption value, 3,267 and 4,195 outstanding		28,851			38,205
Partners’ capital – Common OP Units, 46,110 and 45,231 issued and outstanding		640,570			915,000

	$	2,493,387		$	2,793,982

See accompanying notes to 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						Six Months Ended
			June 30,						June 30,

			2003			2002			2003			2002

Revenue:




	Hotel operations:
		Rooms	$	164,393		$	174,945		$	319,610		$	336,830
		Food and beverage		68,496			69,817			130,196			129,673
		Other hotel operations		21,693			20,614			40,402			39,298
	Office rental, parking and other revenue			3,461			4,240			6,756			8,501

Total revenue				258,043			269,616			496,964			514,302

Hotel operating expenses:
		Rooms		40,036			41,199			77,902			78,085
		Food and beverage		47,803			48,752			93,042			91,515
		Other hotel operating expenses		12,787			11,382			23,835			21,827
Office rental, parking and other expenses				583			684			1,213			1,497




Other operating expenses:
		General and administrative		42,612			42,717			84,301			84,161
		Property operating costs		37,893			39,085			74,116			73,999
		Depreciation and amortization		29,553			29,681			57,985			60,323
		Loss on asset impairments		207,630			—			262,608			—
		Property taxes, insurance and other		20,454			16,179			40,509			35,546
		Change in fair value of non-hedging derivatives, net of swap payments		—			3,090			—			3,079
		Loss on fair value of non-hedging derivatives		—			—			—			4,735

Operating expenses				439,351			232,769			715,511			454,767

Operating (loss) income				(181,308	)		36,847			(218,547	)		59,535
Interest expense, net				34,739			34,112			69,565			68,767

(Loss) income before minority interests, income taxes, and discontinued operations				(216,047	)		2,735			(288,112	)		(9,232	)
Minority interests				5			3			(6	)		(8	)
Income tax (expense) benefit				(21	)		(69	)		127			214

(Loss) income from continuing operations				(216,063	)		2,669			(287,991	)		(9,026	)




Discontinued operations:
	(Loss) income from discontinued operations before tax benefit (expense)			(598	)		855			(1,864	)		2,260
	Income tax benefit (expense)			2			(21	)		(2	)		(55	)

(Loss) income from discontinued operations				(596	)		834			(1,866	)		2,205

Net (loss) income			$	(216,659	)	$	3,503		$	(289,857	)	$	(6,821	)

Preferred distributions				(141	)		(141	)		(282	)		(282	)

Net (loss) income applicable to common unitholders			$	(216,800	)	$	3,362		$	(290,139	)	$	(7,103	)

Net (loss) income applicable to general partner unitholders			$	(203,867	)	$	3,095		$	(271,172	)	$	(6,525	)

Net (loss) income applicable to limited partner unitholders			$	(12,933	)	$	267		$	(18,967	)	$	(578	)


Earnings per unit:




	Basic:
		(Loss) income from continuing operations	$	(4.41	)	$	0.05		$	(5.88	)	$	(0.19	)
		(Loss) income from discontinued operations		(0.01	)		0.02			(0.04	)		0.04

	Net (loss) income per basic unit		$	(4.42	)	$	0.07		$	(5.92	)	$	(0.15	)

	Diluted:
		(Loss) income from continuing operations	$	(4.41	)	$	0.05		$	(5.88	)	$	(0.19	)
		(Loss) income from discontinued operations		(0.01	)		0.02			(0.04	)		0.04

	Net (loss) income per diluted unit		$	(4.42	)	$	0.07		$	(5.92	)	$	(0.15	)

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(Dollars in thousands)



				Six Months Ended
				June 30,

				2003			2002

Operating activities:
	Net loss			$	(289,857	)	$	(6,821	)




	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			58,478			63,260
		Loss on asset impairments			264,677			—
		Loss on fair value of non-hedging derivatives			—			4,735
		Minority interests			6			8
		Amortization of unearned stock-based compensation			1,433			1,920
		Unrealized gain on interest rate swaps recognized in net loss			(3,395	)		(2,905	)
		Deferred income taxes			(1,534	)		(332	)




		Changes in operating assets and liabilities:
			Accounts receivable		(12,168	)		(4,817	)
			Prepaid expenses and other assets		4,225			3,098
			Due from/to Interstate Hotels & Resorts		(4,575	)		4,900
			Accounts payable, accrued expenses, accrued interest and other liabilities		(5,480	)		3,884

Net cash provided by operating activities					11,810			66,930

Investing activities:
	Investments in hotel properties				(14,547	)		(24,696	)
	Proceeds from sales of assets				15,720			—
	Purchases of marketable securities				(18,056	)		—
	Net payments from (advances to) Interstate Hotels & Resorts				42,052			(10,000	)
	(Increase) decrease in restricted cash				(9,740	)		4,384
	Other, net				(299	)		—

Net cash provided by (used in) investing activities					15,130			(30,312	)

Financing activities:
	Principal payments on long-term debt				(4,208	)		(265,840	)
	Proceeds from issuance of long-term debt				—			234,841
	Deferred financing fees				—			(3,571	)
	Contributions from partners				—			3,156
	Distributions paid to partners				(141	)		(1,212	)
	Purchase of limited partnership unit				(65	)		—

Net cash used in financing activities					(4,414	)		(32,626	)

Effect of exchange rate changes on cash and cash equivalents					(115	)		(28	)
Net increase in cash and cash equivalents					22,411			3,964
Cash and cash equivalents, beginning of period					33,889			23,441

Cash and cash equivalents, end of period				$	56,300		$	27,405

Supplemental Cash Flow Information




Cash paid for interest and income taxes:
	Interest, net of capitalized interest			$	70,399		$	60,454

	Income taxes			$	1,902		$	602

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003

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 as well as by franchise and brand affiliations. As of June 30, 2003, we owned 105 hotels, with 27,269 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”). In July 2003, we sold two hotels with 422 rooms.

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:

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 operating expense. The adoption of the standard did not have a significant affect on our results of operation or financial condition.

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



		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2003			2002			2003			2002

Net (loss) income, as reported		$	(216,659	)	$	3,503		$	(289,857	)	$	(6,821	)
	Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effect		677			1,206			1,606			2,252
	Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect		(816	)		(1,411	)		(1,900	)		(2,704	)

Net (loss) income, pro forma		$	(216,798	)	$	3,298		$	(290,151	)	$	(7,273	)

Earnings per unit
	Basic, as reported	$	(4.42	)	$	0.07		$	(5.92	)	$	(0.15	)
	Basic, pro forma	$	(4.42	)	$	0.07		$	(5.93	)	$	(0.15	)

	Diluted, as reported	$	(4.42	)	$	0.07		$	(5.92	)	$	(0.15	)
	Diluted, pro forma	$	(4.42	)	$	0.07		$	(5.93	)	$	(0.15	)

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.

instruments on July 1, 2003. We have no financial instruments which are covered by the provisions of this standard.

3. Comprehensive (Loss) Income

Comprehensive loss was $212.8 million and comprehensive income was $3.8 million for the three months ended June 30, 2003 and 2002, respectively. Comprehensive (loss) income consisted of net loss of $216.7 million and net income of $3.5 million for the three months ended June 30, 2003 and 2002, respectively, and foreign currency translation adjustments.

Comprehensive loss was $284.9 million and $5.6 million for the six months ended June 30, 2003 and 2002, respectively. Comprehensive loss consisted of net loss of $289.9 million and $6.8 million for the six months ended June 30, 2003 and 2002, respectively, foreign currency translation adjustments, and in 2002 a $0.5 million fair value gain adjustment for derivatives.

4. Investments in Hotel Properties

Investments in hotel properties consisted of the following (dollars in thousands):


	June 30,		December 31,
	2003		2002

Land	$	260,613	$	288,611
Buildings and improvements		2,063,912		2,351,769
Furniture, fixtures and equipment		286,405		344,541
Construction-in-progress		43,029		35,988

	$	2,653,959	$	3,020,909

For the six months ended June 30, 2003 and 2002, we capitalized interest of $1.6 million and $1.9 million, respectively.

5. Investments in and Advances to Affiliates

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

Long-term debt consisted of the following (dollars in thousands):


		June 30,			December 31,
		2003			2002

Senior unsecured notes		$	950,000		$	950,000
Secured facility			311,886			314,626
Mortgage and other debt			36,562			38,030
Unamortized issue discount			(5,660	)		(6,059	)

	Long-term debt	$	1,292,788		$	1,296,597

Notes payable to MeriStar Hospitality		$	359,300		$	359,300
Unamortized issue discount			(1,601	)		(1,795	)

	Notes payable	$	357,699		$	357,505

Total long-term debt and notes payable to MeriStar Hospitality		$	1,650,487		$	1,654,102

Aggregate future maturities as of June 30, 2003 were as follows (dollars in thousands):


2003 (six months)	$	3,956
2004		170,720
2005		8,670
2006		9,412
2007		213,616
Thereafter		1,244,113

	$	1,650,487

Senior unsecured notes. The notes are unsecured obligations of certain subsidiaries of ours, and MeriStar Hospitality guarantees payment of principal and interest on the notes. These notes contain various restrictive incurrence covenants, limiting our ability to initiate or transact certain business activities 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 June 30, 2003, our fixed charge coverage ratio was below 2 to 1, and therefore we were not permitted to enter into certain transactions, including the repurchase of our stock, the issuance of any preferred stock, the payment of dividends, the incurrence of any additional debt, or the repayment of outstanding debt before it comes due.

Notes payable to MeriStar Hospitality. On July 1, 2003, MeriStar Hospitality completed an offering of $170 million aggregate principal amount of 9.5% convertible subordinated notes due 2010. The convertible notes are unsecured obligations and provide for semi-annual payments of interest on October 1 and April 1. The proceeds from the new issuance were used to repurchase $150.6 million of their $154.3 million 4.75% convertible notes due 2004 and $22.6 million of their $205 million senior subordinated notes due in 2007.

In connection with this offering, during the third quarter of 2003, we anticipate refinancing with MeriStar Hospitality all or a portion of our term loan that comes due in 2004, under terms matching those of MeriStar Hospitality’s 9.5% convertible notes due 2010.

covenants at the end of a quarterly measuring period, we will be in default under the credit facility and will not be permitted to borrow under the credit facility. We have obtained a waiver of compliance with this leverage covenant from our lending group, which was extended through August 20, 2003. 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 terminate the facility late in late 2003. We have approximately $0.6 million of unamortized capitalized financing costs related to this facility as of June 30, 2003, which would be written off should we decide to terminate the facility.

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).

Redeemable OP Unit holders converted 878,000 and 400,000 of their OP Units, with a value of $20.1 million and $6.1 million, into MeriStar Hospitality’s common stock during the six months ended June 30, 2003 and 2002 respectively. There were no material conversions for cash during the six months ended June 30, 2003 and 2002.

POPs totaling 50,000 were relinquished in connection with the formal separation of management functions with Interstate Hotels during the first quarter of 2003. MeriStar Hospitality also issued 50,000 shares of its common stock to a former executive officer and director in connection with the separation.

In May 2002, we issued 162,500 POPs to an executive officer pursuant to an employment agreement, with a value of $2.9 million.

8. Earnings Per Unit

The following table presents the computation of basic and diluted earnings per unit (amounts in thousands, except per unit amounts):



			Three Months Ended						Six Months Ended
			June 30,						June 30,

			2003			2002			2003			2002

Basic Earnings Per Unit:
	(Loss) income from continuing operations		$	(216,063	)	$	2,669		$	(287,991	)	$	(9,026	)
	Dividends paid on unvested restricted stock of MeriStar Hospitality			—			(2	)		—			(3	)
	Preferred distributions			(141	)		(141	)		(282	)		(282	)

	(Loss) income available to common stockholders		$	(216,204	)	$	2,526		$	(288,273	)	$	(9,311	)

	Weighted average number of basic OP units outstanding			49,001			48,770			49,017			48,770

	Basic (loss) income per unit from continuing operations		$	(4.41	)	$	0.05		$	(5.88	)	$	(0.19	)


Diluted Earnings Per Unit:
	(Loss) income available to common unitholders		$	(216,204	)	$	2,526		$	(288,273	)	$	(9,311	)

	Weighted average number of basic OP units outstanding			49,001			48,770			49,017			48,770
		Stock options of MeriStar Hospitality		—			75			—			—

	Total weighted average number of diluted OP units outstanding			49,001			48,845			49,017			48,770

	Diluted (loss) income per unit from continuing operations		$	(4.41	)	$	0.05		$	(5.88	)	$	(0.19	)

For the three months ended June 30, 2003 and 2002, 6,666 units and 5,445 units, respectively, were excluded from the calculation of diluted earnings per unit as the effect of their inclusion would be anti-dilutive. For the six months ended June 30, 2003 and 2002, 6,666 units and 5,373 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

property. Future minimum lease payments required under these operating leases as of June 30, 2003 were as follows (dollars in thousands):


2003 (six months)	$	719
2004		1,437
2005		1,440
2006		1,427
2007		1,427
Thereafter		56,368

	$	62,818

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


2003 (six months)	$	2,349
2004		4,428
2005		2,896
2006		2,027
2007		1,456
Thereafter		1,929

	$	15,085

10. Asset Dispositions

Revenue included in discontinued operations for these hotels were (dollars in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,

	2003		2002		2003		2002

Revenue	$	2,564	$	11,285	$	6,808	$	22,724

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 June 30, 2003 and December 31, 2002, consolidating statements of operations for the three and six months ended June 30, 2003 and 2002, and consolidating statements of cash flows for the six months ended June 30, 2003 and 2002.

14 EX-31.1 4 w89038exv31w1.htm EXHIBIT 31.1 exv31w1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Paul W. Whetsell, certify that:

1. I have reviewed this Form 10-Q for the quarterly period ended June 30, 2003 of MeriStar Hospitality Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

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

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 12, 2003		/s/ Paul W. Whetsell Paul W. Whetsell Chief Executive Officer MeriStar Hospitality Corporation

EX-31.2 5 w89038exv31w2.htm EXHIBIT 31.2 exv31w2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Donald D. Olinger, certify that:

1. I have reviewed this Form 10-Q for the quarterly period ended June 30, 2003 of MeriStar Hospitality Corporation;

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 12, 2003		/s/ Donald D. Olinger Donald D. Olinger Chief Financial Officer MeriStar Hospitality Corporation

EX-32.1 6 w89038exv32w1.htm EXHIBIT 32.1 exv32w1

Exhibit 32.1

SARBANES-OXLEY ACT SECTION 906 CERTIFICATIONS

In connection with this quarterly report on Form 10-Q of MeriStar Hospitality Corporation (the “Issuer”) for the quarterly period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Paul W. Whetsell, Chief Executive Officer, and 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:

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: August 12, 2003


		/s/ Paul W. Whetsell Paul W. Whetsell
		Chief Executive Officer
		MeriStar Hospitality Corporation

		/s/ Donald D. Olinger Donald D. Olinger
		Chief Financial Officer
		MeriStar Hospitality Corporation

EX-99.1 7 w89038exv99w1.txt EXHIBIT 99.1 . . . MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 17,489 1,291,206 -- -- 4,130 Accumulated depreciation (10,935) (195,598) -- -- (610) ---------- ---------- ---------- ---------- ---------- 6,554 1,095,608 -- -- 3,520 -- -- -- -- -- Restricted cash 25,066 4,924 -- -- -- Investments in and advances to affiliates 2,393,978 8,200 32 3,056 -- Due from subsidiaries (700,592) 258,772 -- 7 3,987 Note receivable from Interstate Hotels 120,855 -- -- -- -- Prepaid expenses and other assets 15,307 286 -- -- -- Accounts receivable, net of allowance for doubtful accounts 14,736 1,169 -- -- -- Marketable securities 18,056 -- -- -- -- Cash and cash equivalents 40,245 -- -- -- -- ---------- ---------- ---------- ---------- ---------- 1,934,205 1,368,959 32 3,063 7,507 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 927,788 348,399 -- -- -- Notes payable to MeriStar Hospitality Corporation 357,699 -- -- -- -- Accounts payable, accrued expenses and other liabilities 17,345 5,977 -- -- 22 Accrued interest 48,497 3,374 -- -- -- Due to Interstate Hotels & Resorts 1,095 -- -- -- -- Other liabilities 5,133 (602) -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 1,357,557 357,148 -- -- 22 ---------- ---------- ---------- ---------- ---------- Minority interests 2,565 -- -- -- -- Redeemable OP units at redemption value 28,851 -- -- -- -- Partners' capital - Common OP Units 545,232 1,011,811 32 3,063 7,485 ---------- ---------- ---------- ---------- ---------- 1,934,205 1,368,959 32 3,063 7,507 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties -- 11,492 -- 13,642 82,608 Accumulated depreciation -- (2,195) -- (2,129) (11,085) ---------- ---------- ---------- ---------- ---------- -- 9,297 -- 11,513 71,523 -- -- -- -- -- Restricted cash -- 115 -- -- -- Investments in and advances to affiliates -- -- 72 -- -- Due from subsidiaries 4,878 6,129 9 6,312 28,664 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets -- 7 -- 5 22 Accounts receivable, net of allowance for doubtful accounts (17) -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 4,861 15,548 81 17,830 100,209 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities (37) 77 -- 210 2,582 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities (96) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities (133) 77 -- 210 2,582 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 4,994 15,471 81 17,620 97,627 ---------- ---------- ---------- ---------- ---------- 4,861 15,548 81 17,830 100,209 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 25,404 15,342 7,760 11,671 17,392 Accumulated depreciation (5,393) (2,732) -- (572) (3,348) ---------- ---------- ---------- ---------- ---------- 20,011 12,610 7,760 11,099 14,044 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (2,776) 6,185 4,719 4,104 4,616 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 17 -- -- 6 43 Accounts receivable, net of allowance for doubtful accounts -- -- -- (20) -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 17,252 18,795 12,479 15,189 18,703 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 43 (23) 182 31 146 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 43 (23) 182 31 146 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 17,209 18,818 12,297 15,158 18,557 ---------- ---------- ---------- ---------- ---------- 17,252 18,795 12,479 15,189 18,703 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties -- 17,430 44,621 5,820 18,496 Accumulated depreciation -- (2,620) (9,156) -- (3,813) ---------- ---------- ---------- ---------- ---------- -- 14,810 35,465 5,820 14,683 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates 43 -- -- -- -- Due from subsidiaries (43) 7,581 20,391 2,883 13,984 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- 37 Accounts receivable, net of allowance for doubtful accounts -- 106 -- -- 96 Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- -- 22,497 55,856 8,703 28,800 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 37 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities -- 12 (177) 155 38 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities -- 12 (177) 155 75 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units -- 22,485 56,033 8,548 28,725 ---------- ---------- ---------- ---------- ---------- -- 22,497 55,856 8,703 28,800 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 19,400 22,485 5,820 -- 4,850 Accumulated depreciation -- (4,596) -- -- -- ---------- ---------- ---------- ---------- ---------- 19,400 17,889 5,820 -- 4,850 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 11,758 6,001 5,057 11,503 (836) Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 5 -- 22 (5) 7 Accounts receivable, net of allowance for doubtful accounts -- -- -- 1 -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 31,163 23,890 10,899 11,499 4,021 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 216 (42) (222) 125 111 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- (32) -- ---------- ---------- ---------- ---------- ---------- Total liabilities 216 (42) (222) 93 111 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 30,947 23,932 11,121 11,406 3,910 ---------- ---------- ---------- ---------- ---------- 31,163 23,890 10,899 11,499 4,021 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 7E, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC VENTURE ---------- ---------- ---------- ---------- ---------- ASSETS Investment in hotel properties 18,066 22,657 11,412 52,917 5,820 Accumulated depreciation (3,018) (6,653) (2,703) (9,116) -- ---------- ---------- ---------- ---------- ---------- 15,048 16,004 8,709 43,801 5,820 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 6,314 7,952 6,728 17,062 4,665 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 1 -- -- -- 5 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 21,363 23,956 15,437 60,863 10,490 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 101 115 29 340 167 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 101 115 29 340 167 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 21,262 23,841 15,408 60,523 10,323 ---------- ---------- ---------- ---------- ---------- 21,363 23,956 15,437 60,863 10,490 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 22,864 3,880 3,880 3,395 -- Accumulated depreciation (4,666) -- -- -- -- ---------- ---------- ---------- ---------- ---------- 18,198 3,880 3,880 3,395 -- -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 18,611 (1,164) 1,658 4,091 3,029 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets -- -- 2 -- 3 Accounts receivable, net of allowance for doubtful accounts -- (14) -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 36,809 2,702 5,540 7,486 3,032 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 5,700 -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 9 (44) 119 228 107 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 9 5,656 119 228 107 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 36,800 (2,954) 5,421 7,258 2,925 ---------- ---------- ---------- ---------- ---------- 36,809 2,702 5,540 7,486 3,032 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ---------- ---------- ----------- ---------- ---------- ASSETS Investment in hotel properties 4,850 12,610 3,846 3,880 19,446 Accumulated depreciation -- -- (616) -- (3,504) ---------- ---------- ----------- ---------- ---------- 4,850 12,610 3,230 3,880 15,942 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (1,378) 5,563 2,310 546 6,778 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 22 2 9 44 39 Accounts receivable, net of allowance for doubtful accounts 1 -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ----------- ---------- ---------- 3,495 18,175 5,549 4,470 22,759 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 9,297 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities (14) 83 63 815 (183) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ----------- ---------- ---------- Total liabilities 9,283 83 63 815 (183) ---------- ---------- ----------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units (5,788) 18,092 5,486 3,655 22,942 ---------- ---------- ----------- ---------- ---------- 3,495 18,175 5,549 4,470 22,759 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 68,542 4,722 52,231 4,850 10,748 Accumulated depreciation (10,907) -- (8,953) -- (1,971) ---------- ---------- ----------- ---------- ---------- 57,635 4,722 43,278 4,850 8,777 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 17,810 (3,352) 24,026 118 2,847 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets -- -- 267 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- 844 -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ----------- ---------- ---------- 75,445 1,370 68,415 4,968 11,624 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities (104) 1,111 4,383 (95) (3) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- (200) -- -- Other liabilities -- -- -- -- -- ---------- ---------- ----------- ---------- ---------- Total liabilities (104) 1,111 4,183 (95) (3) ---------- ---------- ----------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 75,549 259 64,232 5,063 11,627 ---------- ---------- ----------- ---------- ---------- 75,445 1,370 68,415 4,968 11,624 ========== ========== ========== ========== ==========

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 2,425 42,040 26,432 4,237 14,065 Accumulated depreciation -- (7,374) -- -- -- ---------- ---------- ---------- ---------- ---------- 2,425 34,666 26,432 4,237 14,065 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- 51,368 -- -- -- Due from subsidiaries 639 (6,803) 10,443 6,087 11,732 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 8 17 1 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 3,072 79,248 36,876 10,324 25,797 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 24,000 -- 13 -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 282 219 189 244 195 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 282 24,219 189 257 195 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 2,790 55,029 36,687 10,067 25,602 ---------- ---------- ---------- ---------- ---------- 3,072 79,248 36,876 10,324 25,797 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 5,820 32,250 28,117 22,035 10,476 Accumulated depreciation -- (5,258) (4,560) (2,119) (1,807) ---------- ---------- ---------- ---------- ---------- 5,820 26,992 23,557 19,916 8,669 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 342 4,672 (882) 7,472 8,002 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 1 -- -- (2) -- Accounts receivable, net of allowance for doubtful accounts 7 -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 6,170 31,664 22,675 27,386 16,671 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 10,772 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities (95) 210 3,145 87 (14) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 10,677 210 3,145 87 (14) ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units (4,507) 31,454 19,530 27,299 16,685 ---------- ---------- ---------- ---------- ---------- 6,170 31,664 22,675 27,386 16,671 ========== ========== ========== ========== ==========

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 8,733 32,991 7,760 20,911 10,573 Accumulated depreciation (1,030) (5,382) -- (3,979) -- ---------- ---------- ---------- ---------- ---------- 7,703 27,609 7,760 16,932 10,573 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 2,887 17,907 (4,817) 11,453 5,170 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets -- 8 -- -- 1 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 10,590 45,524 2,943 28,385 15,744 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 18,815 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 26 19 296 (101) 36 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 26 19 296 (101) 18,851 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 10,564 45,505 2,647 28,486 (3,107) ---------- ---------- ---------- ---------- ---------- 10,590 45,524 2,943 28,385 15,744 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (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 13,165 7,275 163,629 39 109,109 Accumulated depreciation -- -- (27,357) (21) (15,075) ---------- ---------- ---------- ---------- ---------- 13,165 7,275 136,272 18 94,034 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 7,848 2,540 39,898 2,667 20,672 Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets 3 11 5 8 (29) Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 21,016 9,826 176,175 2,693 114,677 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities 276 138 1,211 8 478 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total liabilities 276 138 1,211 8 478 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 20,740 9,688 174,964 2,685 114,199 ---------- ---------- ---------- ---------- ---------- 21,016 9,826 176,175 2,693 114,677 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5R, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. ---------- ---------- ---------- ---------- ------------ ASSETS Investment in hotel properties 16,620 35,211 31,050 38,176 3,146 Accumulated depreciation (1,989) (10,166) (5,707) (6,500) (2,752) ---------- ---------- ---------- ---------- ---------- 14,631 25,045 25,343 31,676 394 -- -- -- -- -- Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- 4,627 -- -- 1,629 Due from subsidiaries 4,248 6,246 7,503 6,596 (29) Note receivable from Interstate Hotels -- -- -- -- -- Prepaid expenses and other assets -- -- 23 -- 16,014 Accounts receivable, net of allowance for doubtful accounts -- -- -- (12) 52,099 Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- 16,055 ---------- ---------- ---------- ---------- ---------- 18,879 35,918 32,869 38,260 86,162 ========== ========== ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 23,609 -- -- 45,213 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable, accrued expenses and other liabilities (124) 194 (132) 128 58,318 Accrued interest -- -- -- -- 250 Due to Interstate Hotels & Resorts -- -- -- -- 5,030 Other liabilities -- -- -- -- 9,234 ---------- ---------- ---------- ---------- ---------- Total liabilities (124) 23,803 (132) 128 118,045 ---------- ---------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 19,003 12,115 33,001 38,132 (31,883) ---------- ---------- ---------- ---------- ---------- 18,879 35,918 32,869 38,260 86,162 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET JUNE 30, 2003 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ ASSETS Investment in hotel properties 1,345,264 -- 2,653,959 Accumulated depreciation (201,432) -- (407,965) ---------- ---------- ---------- 1,143,832 -- 2,245,994 -- -- -- Restricted cash 115 -- 30,105 Investments in and advances to affiliates 60,827 (2,421,291) 41,714 Due from subsidiaries 441,820 -- -- Note receivable from Interstate Hotels -- (120,855) -- Prepaid expenses and other assets 16,629 -- 32,222 Accounts receivable, net of allowance for doubtful accounts 53,091 -- 68,996 Marketable securities -- -- 18,056 Cash and cash equivalents 16,055 -- 56,300 ---------- ---------- ---------- 1,732,369 (2,542,146) 2,493,387 ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL -- Long-term debt 137,456 (120,855) 1,292,788 Notes payable to MeriStar Hospitality Corporation -- -- 357,699 Accounts payable, accrued expenses and other liabilities 75,909 -- 99,231 Accrued interest 250 -- 52,121 Due to Interstate Hotels & Resorts 4,830 -- 5,925 Other liabilities 9,106 -- 13,637 ---------- ---------- ---------- Total liabilities 227,551 (120,855) 1,821,401 ---------- ---------- ---------- Minority interests -- 2,565 Redeemable OP units at redemption value -- 28,851 Partners' capital - Common OP Units 1,504,818 (2,421,291) 640,570 ---------- ---------- ---------- 1,732,369 (2,542,146) 2,493,387 ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR AGH MERISTAR HOSPITALITY NON-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 advances 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 -- -- -- -- ---------- ---------- ----- ----- ------ 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 ---------- ---------- ----- ----- ------ 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 -- -- -- -- -- ------ ------ ------ ------- ------- 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 ------ ------ ------ ------- ------- 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 -- -- -- -- -- ------- ------- ------- ------- ------ 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 ------- ------- ------- ------- ------ 17,448 18,474 13,959 14,779 18,365 ======= ======= ======= ======= ======

OLD MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, 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 -- -- -- -- -- ------- -------- ------- ------- ------- -- -- 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 ------- -------- ------- ------- ------- -- -- 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 -- Re stricted 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 -- -- -- -- -- ------- ------- ------- -------- ------ 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 ------- ------- ------- -------- ------ 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) ------- ------- ------- -------- ------ Restricted cash 10,209 15,261 16,288 8,840 44,713 Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries -- -- -- -- -- Note receivable from Interstate Hotels & Resorts (738) 5,820 7,409 6,231 14,226 Prepaid expenses and other assets -- -- -- -- -- Accounts receivable, net of allowance for doubtful accounts 14 3 -- -- 1 Cash and cash equivalents -- -- -- -- -- ------- ------- ------- ------- ------- 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 ------- ------- ------- ------- ------- 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 MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 6K, SUB 2B, SUB 3A, SUB 4A, JOINT 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 -- -- -- -- -- ------ ------ ----- ----- ----- 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 ------ ------ ----- ----- ----- 15,757 35,449 6,872 6,986 8,714 ====== ====== ===== ===== =====

MERISTAR MERISTAR MERISTAR MDV MERISTAR SUB 4D, SUB 2A, SUB 6L, LIMITED SUB 5C, LLC LLC INC. 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 -- -- -- -- -- ----- ----- ------ ----- ------ 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 ----- ----- ------ ----- ------ 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 -- -- -- -- -- ------ ------ ------ ------ ------ 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 ------ ------ ------ ------ ------ 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 -- -- -- -- -- ------ ----- ------ ------ ------ 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 ------ ----- ------ ------ ------ 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 -- -- -- -- -- ------ ------ ------ ------ ------ 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 ------ ------ ------ ------ ------ 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 -- -- -- -- -- ------ ----- ------ ----- ------ 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 ------ ----- ------ ----- ------ 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 -- -- -- -- -- ------ ------ ------ ------- ----- 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 ------ ------ ------ ------- ----- 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 -- -- -- -- -- ------- ------- -------- ------- ------- 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 ------- ------- -------- ------- ------- 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 SUBSIDIARIES ELIMINATIONS TOTAL LESSEE, INC. TOTAL 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 ------ --------- ---------- ----------- 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 ------ --------- ---------- ----------- 77,584 1,837,441 (2,726,348) $ 2,793,982 ====== ========= ========== ===========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues 2,158 1,719 -- -- -- Participating lease revenue -- 31,088 -- -- 234 -------- -------- -------- -------- -------- Total revenue 2,158 32,807 -- -- 234 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- 525 -- -- -- Other operating expenses: General and administrative 3,185 (261) -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 2,858 12,790 -- -- 35 Loss on asset impairments -- 115,941 -- -- -- Property taxes, insurance and other 1,337 6,019 -- -- 25 -------- -------- -------- -------- -------- Operating expenses 7,380 135,014 -- -- 60 -------- -------- -------- -------- -------- Operating (loss) income (5,222) (102,207) -- -- 174 Interest expense, net 25,285 6,950 -- -- -- Equity in income from consolidated entities 186,138 -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (216,645) (109,157) -- -- 174 Minority interests 5 -- -- -- -- Income tax expense (21) -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (216,661) (109,157) -- -- 174 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- 199 -- -- -- Income tax benefit 2 -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations 2 199 -- -- -- -------- -------- -------- -------- -------- Net (loss) income (216,659) (108,958) -- -- 174 ======== ======== ======== ======== ========

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 revenues -- -- -- -- -- Participating lease revenue -- 586 -- 313 1,818 -------- -------- -------- -------- -------- Total revenue -- 586 -- 313 1,818 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 146 -- 144 610 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 99 -- 23 346 -------- -------- -------- -------- -------- Operating expenses -- 245 -- 167 956 -------- -------- -------- -------- -------- Operating (loss) income -- 341 -- 146 862 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations -- 341 -- 146 862 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations -- 341 -- 146 862 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income -- 341 -- 146 862 ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues -- 5 -- -- -- Participating lease revenue 308 362 226 228 375 -------- -------- -------- -------- -------- Total revenue 308 367 226 228 375 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 254 145 114 35 177 Loss on asset impairments -- -- 1,637 -- -- Property taxes, insurance and other 132 54 41 37 99 -------- -------- -------- -------- -------- Operating expenses 386 199 1,792 72 276 -------- -------- -------- -------- -------- Operating (loss) income (78) 168 (1,566) 156 99 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (78) 168 (1,566) 156 99 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (78) 168 (1,566) 156 99 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (78) 168 (1,566) 156 99 ======== ======== ======== ======== ========

MeriStar MeriStar MeriStar MeriStar MeriStar Sub 5R, 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 revenues -- 4 -- 2 1 Participating lease revenue -- 531 1,483 352 684 -------- -------- -------- -------- -------- Total revenue -- 535 1,483 354 685 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 136 408 210 141 Loss on asset impairments -- -- -- 14,611 -- Property taxes, insurance and other -- 80 161 112 48 -------- -------- -------- -------- -------- Operating expenses -- 216 569 14,933 189 -------- -------- -------- -------- -------- Operating (loss) income -- 319 914 (14,579) 496 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations -- 319 914 (14,579) 496 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations -- 319 914 (14,579) 496 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income -- 319 914 (14,579) 496 ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues -- -- 1 -- -- Participating lease revenue 761 732 500 -- 86 -------- -------- -------- -------- -------- Total revenue 761 732 501 -- 86 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 267 215 177 -- 132 Loss on asset impairments 7,231 -- 1,086 -- 5,187 Property taxes, insurance and other 99 101 173 -- 52 -------- -------- -------- -------- -------- Operating expenses 7,597 316 1,436 -- 5,371 -------- -------- -------- -------- -------- Operating (loss) income (6,836) 416 (935) -- (5,285) Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (6,836) 416 (935) -- (5,285) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (6,836) 416 (935) -- (5,285) Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (6,836) 416 (935) -- (5,285) ======== ======== ======== ======== ========

MeriStar MeriStar MeriStar MeriStar MeriStar Sub 7A Sub 7E, Sub 3D, Sub 1A, Sub 5E, Joint LLC LLC LLC LLC Venture -------- -------- -------- -------- -------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenues -- 1 -- -- -- Participating lease revenue 337 352 446 1,698 300 -------- -------- -------- -------- -------- Total revenue 337 353 446 1,698 300 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 154 195 112 478 108 Loss on asset impairments -- -- -- -- 5,478 Property taxes, insurance and other 50 58 105 100 30 -------- -------- -------- -------- -------- Operating expenses 204 253 217 578 5,616 -------- -------- -------- -------- -------- Operating (loss) income 133 100 229 1,120 (5,316) Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations 133 100 229 1,120 (5,316) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 133 100 229 1,120 (5,316) Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income 133 100 229 1,120 (5,316) ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues -- -- -- -- -- Participating lease revenue 1,088 112 146 256 -- -------- -------- -------- -------- -------- Total revenue 1,088 112 146 256 -- -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 184 100 65 -- -- Loss on asset impairments -- 990 1,497 1,455 -- Property taxes, insurance and other 96 40 27 93 -- -------- -------- -------- -------- -------- Operating expenses 280 1,130 1,589 1,548 -- -------- -------- -------- -------- -------- Operating (loss) income 808 (1,018) (1,443) (1,292) -- Interest expense, net -- 118 -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations 808 (1,136) (1,443) (1,292) -- Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 808 (1,136) (1,443) (1,292) -- Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- 30 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- 30 -------- -------- -------- -------- -------- Net (loss) income 808 (1,136) (1,443) (1,292) 30 ======== ======== ======== ======== ========

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 revenues -- -- -- -- -- Participating lease revenue 126 404 127 404 589 -------- -------- -------- -------- -------- Total revenue 126 404 127 404 589 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 80 223 34 136 144 Loss on asset impairments 847 13,286 -- 1,347 -- Property taxes, insurance and other 50 54 36 112 65 -------- -------- -------- -------- -------- Operating expenses 977 13,563 70 1,595 209 -------- -------- -------- -------- -------- Operating (loss) income (851) (13,159) 57 (1,191) 380 Interest expense, net 193 -- -- -- (1) Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (1,044) (13,159) 57 (1,191) 381 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (1,044) (13,159) 57 (1,191) 381 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (1,044) (13,159) 57 (1,191) 381 ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues (73) -- (358) -- -- Participating lease revenue 1,241 402 2,240 150 325 -------- -------- -------- -------- -------- Total revenue 1,168 402 1,882 150 325 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses 5 -- (11) -- -- Other operating expenses: General and administrative 25 -- 177 -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 570 161 441 130 116 Loss on asset impairments -- 2,394 -- 867 -- Property taxes, insurance and other 448 182 564 54 50 -------- -------- -------- -------- -------- Operating expenses 1,048 2,737 1,171 1,051 166 -------- -------- -------- -------- -------- Operating (loss) income 120 (2,335) 711 (901) 159 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations 120 (2,335) 711 (901) 159 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 120 (2,335) 711 (901) 159 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income 120 (2,335) 711 (901) 159 ======== ======== ======== ======== ========

MeriStar MeriStar MeriStar MeriStar AGH Sub 4I, 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 revenues -- -- -- -- -- Participating lease revenue 20 549 867 324 575 -------- -------- -------- -------- -------- Total revenue 20 549 867 324 575 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 72 365 505 46 -- Loss on asset impairments 1,259 -- 18,075 1,383 1,787 Property taxes, insurance and other 62 54 217 127 134 -------- -------- -------- -------- -------- Operating expenses 1,393 419 18,797 1,556 1,921 -------- -------- -------- -------- -------- Operating (loss) income (1,373) 130 (17,930) (1,232) (1,346) Interest expense, net -- 316 -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (1,373) (186) (17,930) (1,232) (1,346) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (1,373) (186) (17,930) (1,232) (1,346) Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (1,373) (186) (17,930) (1,232) (1,346) ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues -- 4 -- -- -- Participating lease revenue 352 455 632 429 421 -------- -------- -------- -------- -------- Total revenue 352 459 632 429 421 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 107 277 322 118 79 Loss on asset impairments 1,035 -- -- -- -- Property taxes, insurance and other 74 87 93 65 42 -------- -------- -------- -------- -------- Operating expenses 1,216 364 415 183 121 -------- -------- -------- -------- -------- Operating (loss) income (864) 95 217 246 300 Interest expense, net 223 -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (1,087) 95 217 246 300 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (1,087) 95 217 246 300 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (1,087) 95 217 246 300 ======== ======== ======== ======== ========

MeriStar MeriStar MeriStar MeriStar MeriStar Sub 5O, Sub 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 revenues -- -- -- 1 4 Participating lease revenue 200 1,160 45 753 388 -------- -------- -------- -------- -------- Total revenue 200 1,160 45 754 392 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 57 308 132 193 234 Loss on asset impairments -- -- 264 -- 1,973 Property taxes, insurance and other 26 82 65 56 140 -------- -------- -------- -------- -------- Operating expenses 83 390 461 249 2,347 -------- -------- -------- -------- -------- Operating (loss) income 117 770 (416) 505 (1,955) Interest expense, net -- -- -- -- 391 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations 117 770 (416) 505 (2,346) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 117 770 (416) 505 (2,346) Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income 117 770 (416) 505 (2,346) ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (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 revenues -- -- 16 -- -- Participating lease revenue 498 -- 2,267 505 2,676 -------- -------- -------- -------- -------- Total revenue 498 -- 2,283 505 2,676 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 223 -- 1,573 1 870 Loss on asset impairments 8,000 -- -- -- -- Property taxes, insurance and other 165 -- 474 1 369 -------- -------- -------- -------- -------- Operating expenses 8,388 -- 2,047 2 1,239 -------- -------- -------- -------- -------- Operating (loss) income (7,890) -- 236 503 1,437 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (7,890) -- 236 503 1,437 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations (7,890) -- 236 503 1,437 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- (392) -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- (392) -- -- -- -------- -------- -------- -------- -------- Net (loss) income (7,890) (392) 236 503 1,437 ======== ======== ======== ======== ========

MeriStar MeriStar MeriStar MeriStar MeriStar Sub 5Q, Sub 5R, Sub 8D, Sub 4J, Hotel LLC LLC LLC LLC Lessee, Inc. -------- -------- -------- -------- -------- Revenue: Hotel operations: Rooms -- -- -- -- 164,393 Food and beverage -- -- -- -- 68,496 Other hotel operations -- -- -- -- 21,693 Office rental, parking and other revenues -- 27 -- (51) -- Participating lease revenue 585 1,288 595 905 -- -------- -------- -------- -------- -------- Total revenue 585 1,315 595 854 254,582 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- 40,036 Food and beverage -- -- -- -- 47,803 Other hotel operating expenses -- -- -- -- 12,787 Office rental, parking and other expenses -- -- -- 64 -- Other operating expenses: General and administrative -- -- 6 48 39,432 Property operating costs -- -- -- -- 37,893 Depreciation and amortization 140 385 313 317 491 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 55 178 110 79 74,346 -------- -------- -------- -------- -------- Operating expenses 195 563 429 508 252,788 -------- -------- -------- -------- -------- Operating (loss) income 390 752 166 346 1,794 Interest expense, net -- 709 -- -- 555 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations 390 43 166 346 1,239 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 390 43 166 346 1,239 Discontinued operations: (Loss) income from discontinued operations before tax benefit -- -- -- -- (435) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income on discontinued operations -- -- -- -- (435) -------- -------- -------- -------- -------- Net (loss) income 390 43 166 346 804 ======== ======== ======== ======== ========
MeriStar Hospitality Operating Partnership, L.P. Consolidating Statement of Operations Three months ended June 30, 2003 (Dollars in thousands)
Guarantor Subsidiaries Total Total Eliminations Consolidated ------------ ------------ ------------ Revenue: Hotel operations: -- Rooms 164,393 -- 164,393 Food and beverage 68,496 -- 68,496 Other hotel operations 21,693 -- 21,693 Office rental, parking and other revenues (416) -- 3,461 Participating lease revenue 36,811 (67,899) -- -------- -------- -------- Total revenue 290,977 (67,899) 258,043 -------- -------- -------- Hotel operating expenses: Rooms 40,036 -- 40,036 Food and beverage 47,803 -- 47,803 Other hotel operating expenses 12,787 -- 12,787 Office rental, parking and other expenses 58 -- 583 Other operating expenses: General and administrative 39,688 -- 42,612 Property operating costs 37,893 -- 37,893 Depreciation and amortization 13,905 -- 29,553 Loss on asset impairments 91,689 -- 207,630 Property taxes, insurance and other 80,997 (67,899) 20,454 -------- -------- -------- Operating expenses 364,856 (67,899) 439,351 -------- -------- -------- Operating (loss) income (73,879) -- (181,308) Interest expense, net 2,504 -- 34,739 Equity in income from consolidated entities -- (186,138) -- -------- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (76,383) 186,138 (216,047) Minority interests -- -- 5 Income tax expense -- -- (21) -------- -------- -------- (Loss) income from continuing operations (76,383) 186,138 (216,063) Discontinued operations: (Loss) income from discontinued operations before tax benefit (797) -- (598) Income tax benefit -- -- 2 -------- -------- -------- (Loss) income on discontinued operations (797) -- (596) -------- -------- -------- Net (loss) income (77,180) 186,138 (216,659) ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY OP, GUARANTOR SUB 7C, UPREIT, SUB 5N, L.P. SUBSIDIARIES LLC LLC LLC -------------- ------------ -------- ------- -------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 1,705 1,932 -- -- -- Participating lease revenue -- 32,854 -- -- 244 ------- ------- ------ ------ ------- Total revenue 1,705 34,786 -- -- 244 ------- ------- ------ ------ ------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- 362 -- -- -- Other operating expenses: General and administrative 2,815 1 -- -- -- Property operating costs -- (2) -- -- -- Depreciation and amortization 2,489 12,637 -- -- 33 Property taxes, insurance and other (1,171) 3,131 -- -- 26 Change in fair value of non-hedging derivatives, net of swap payments 3,090 -- -- -- -- ------- ------- ------ ------ ------- Operating expenses 7,223 16,129 -- -- 59 ------- ------- ------ ------ ------- Operating (loss) income (5,518) 18,657 -- -- 185 Interest expense, net 25,866 7,005 -- -- (1) Equity in income from consolidated entities (34,974) -- -- -- -- ------- ------- ------ ------ ------- (Loss) income before minority interests, income tax expense, and discontinued operations 3,590 11,652 -- -- 186 Minority interests 3 -- -- -- -- Income tax expense (69) -- -- -- -- ------- ------- ------ ------ ------- (Loss) income from continuing operations 3,524 11,652 -- -- 186 Discontinued operations: (Loss) income from discontinued operations before tax expense -- 1,123 -- -- -- Income tax expense (21) -- -- -- -- ------- ------- ------ ------ ------- (Loss) income from discontinued operations (21) 1,123 -- -- -- ------- ------- ------ ------ ------- Net (loss) income 3,503 12,775 -- -- 186 ======= ======= ====== ====== =======

MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, LLC L.P. LLC -------------- ------------ -------- Revenue: Rooms -- -- -- Food and beverage -- -- -- Other hotel operations -- -- -- Office rental, parking and other revenue -- -- -- Participating lease revenue -- 570 -- ---- ---- -- Total revenue -- 570 -- ---- ---- -- Hotel operating expenses: Rooms -- -- -- Food and beverage -- -- -- Other hotel operating expenses -- -- -- Office rental, parking and other expenses -- -- -- Other operating expenses: General and administrative -- -- -- Property operating costs -- -- -- Depreciation and amortization -- 113 -- Property taxes, insurance and other -- 146 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- ---- ---- -- Operating expenses -- 259 -- ---- ---- -- Operating (loss) income -- 311 -- Interest expense, net -- (2) -- Equity in income from consolidated entities -- -- -- ---- ---- -- (Loss) income before minority interests, income tax expense, and discontinued operations -- 313 -- Minority interests -- -- -- Income tax expense -- -- -- ---- ---- -- (Loss) income from continuing operations -- 313 -- Discontinued operations: (Loss) income from discontinued operations before tax expense 255 -- -- Income tax expense -- -- -- ---- ---- -- (Loss) income from discontinued operations 255 -- -- ---- ---- -- Net (loss) income 255 313 -- ==== ==== ==
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR SUB 6H, SUB 8B, SUB 1C, L.P. LLC L.P. --------- --------- --------- Revenue: Rooms -- -- -- Food and beverage -- -- -- Other hotel operations -- -- -- Office rental, parking and other revenue -- -- -- Participating lease revenue 413 2,082 404 ------ ------ ------ Total revenue 413 2,082 404 ------ ------ ------ Hotel operating expenses: Rooms -- -- -- Food and beverage -- -- -- Other hotel operating expenses -- -- -- Office rental, parking and other expenses -- -- -- Other operating expenses: General and administrative -- -- 3 Property operating costs -- -- -- Depreciation and amortization 108 595 257 Property taxes, insurance and other 24 358 198 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- ------ ------ ------ Operating expenses 132 953 458 ------ ------ ------ Operating (loss) income 281 1,129 (54) Interest expense, net -- (25) (11) Equity in income from consolidated entities -- -- -- ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations 281 1,154 (43) Minority interests -- -- -- Income tax expense -- -- -- ------ ------ ------ (Loss) income from continuing operations 281 1,154 (43) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- Income tax expense -- -- -- ------ ------ ------ (Loss) income from discontinued operations -- -- -- ------ ------ ------ Net (loss) income 281 1,154 (43) ======= ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8E, SUB 7F, SUB 5L, SUB 3C, SUB 5R, LLC LLC LLC LLC LLC ---------- --------- --------- ----------- --------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 7 -- -- -- -- Participating lease revenue 431 322 294 448 -- ---- ---- ---- ---- ---- Total revenue 438 322 294 448 -- ---- ---- ---- ---- ---- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 149 115 34 177 -- Property taxes, insurance and other 45 36 30 112 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ---- ---- ---- ---- ---- Operating expenses 194 151 64 289 -- ---- ---- ---- ---- ---- Operating (loss) income 244 171 230 159 -- Interest expense, net (1) (3) (1) (5) -- Equity in income from consolidated entities -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income before minority interests, income tax expense, and discontinued operations 245 174 231 164 -- Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from continuing operations 245 174 231 164 -- Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from discontinued operations -- -- -- -- -- ---- ---- ---- ---- ---- Net (loss) income 245 174 231 164 -- ==== ==== ==== ==== ====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6D, SUB 6E, SUB 4E, SUB 1B, SUB 5F, LLC LLC L.P. LLC L.P. -------- -------- -------- -------- -------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue 4 -- 4 (12) -- Participating lease revenue 636 1,662 357 680 729 ------ ------ ------ ------ ------ Total revenue 640 1,662 361 668 729 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 133 424 229 158 264 Property taxes, insurance and other 44 208 98 40 86 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 177 632 327 198 350 ------ ------ ------ ------ ------ Operating (loss) income 463 1,030 34 470 379 Interest expense, net (7) (16) (7) (5) (10) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations 470 1,046 41 475 389 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 470 1,046 41 475 389 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 470 1,046 41 475 389 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6G, SUB 8C, SUB 4C, SUB 4H, SUB 7E, LLC LLC L.P L.P. LLC -------- -------- -------- -------- -------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 813 486 -- 178 355 ---- ---- ---- ---- ---- Total revenue 813 486 -- 178 355 ---- ---- ---- ---- ---- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 209 346 -- 135 157 Property taxes, insurance and other 77 148 -- 47 40 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ---- ---- ---- ---- ---- Operating expenses 286 494 -- 182 197 ---- ---- ---- ---- ---- Operating (loss) income 527 (8) -- (4) 158 Interest expense, net (13) (11) -- (2) (4) Equity in income from consolidated entities -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income before minority interests, income tax expense, and discontinued operations 540 3 -- (2) 162 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from continuing operations 540 3 -- (2) 162 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- 26 -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from discontinued operations -- -- 26 -- -- ---- ---- ---- ---- ---- Net (loss) income 540 3 26 (2) 162 ==== ==== ==== ==== ====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A MERISTAR SUB 3D, SUB 1A, SUB 5E, JOINT SUB 6K, LLC LLC LLC VENTURE LLC -------- -------- -------- -------- ------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 514 470 1,824 353 1,163 ------ ------ ------ ------ ------ Total revenue 514 470 1,824 353 1,163 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 211 113 484 104 186 Property taxes, insurance and other 63 81 99 55 121 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 274 194 583 159 307 ------ ------ ------ ------ ------ Operating (loss) income 240 276 1,241 194 856 Interest expense, net (11) (4) (8) (9) (10) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations 251 280 1,249 203 866 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 251 280 1,249 203 866 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 251 280 1,249 203 866 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2B, SUB 3A, SUB 4A, SUB 4D, SUB 2A, LLC LLC L.P. LLC LLC -------- -------- -------- -------- -------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 162 132 249 -- 167 ---- ---- ---- ---- ---- Total revenue 162 132 249 -- 167 ---- ---- ---- ---- ---- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 107 62 -- -- 81 Property taxes, insurance and other 35 27 61 -- 38 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ---- ---- ---- ---- ---- Operating expenses 142 89 61 -- 119 ---- ---- ---- ---- ---- Operating (loss) income 20 43 188 -- 48 Interest expense, net 99 (13) (10) -- 174 Equity in income from consolidated entities -- -- -- -- -- (Loss) income before minority interests, income tax expense, and discontinued operations (79) 56 198 -- (126) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from continuing operations (79) 56 198 -- (126) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- 10 -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from discontinued operations -- -- -- 10 -- ---- ---- ---- ---- ---- Net (loss) income (79) 56 198 10 (126) ==== ==== ==== ==== ====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MDV MERISTAR MERISTAR MERISTAR SUB 6L, LIMITED SUB 5C, SUB 6J, SUB 1D, LLC PARTNERSHIP LLC LLC L.P. ------ ------ ------ ------ ------ Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- 108 Participating lease revenue 492 141 479 816 1,278 ------ ------ ------ ------ ------ Total revenue 492 141 479 816 1,386 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- 34 Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 223 34 149 160 564 Property taxes, insurance and other 48 27 110 47 279 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 271 61 259 207 877 ------ ------ ------ ------ ------ Operating (loss) income 221 80 220 609 509 Interest expense, net (3) (1) (9) (10) (8) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations 224 81 229 619 517 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 224 81 229 619 517 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 224 81 229 619 517 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7B, SUB 7D, SUB 7G, SUB 6B, SUB 4I, L.P. LLC LLC LLC L.P. ------ ------ ------ ------ ------ Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 331 -- -- -- Participating lease revenue 390 1,387 146 396 19 ------ ------ ------ ------ ------ Total revenue 390 1,718 146 396 19 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- 199 -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 232 416 189 113 99 Property taxes, insurance and other 221 534 61 56 76 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 453 1,149 250 169 175 ------ ------ ------ ------ ------ Operating (loss) income (63) 569 (104) 227 (156) Interest expense, net (4) (12) (6) (3) (11) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations (59) 581 (98) 230 (145) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations (59) 581 (98) 230 (145) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income (59) 581 (98) 230 (145) ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR AGH MERISTAR SUB 5D, SUB 5H, SUB 7H, PSS I, SUB 2D, LLC LLC LLC INC. LLC -------- -------- ------- ------ -------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- 1 -- Participating lease revenue 576 731 314 666 352 ---- ---- ---- ---- ---- Total revenue 576 731 314 667 352 ---- ---- ---- ---- ---- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 362 493 138 -- 120 Property taxes, insurance and other 76 164 91 107 59 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ---- ---- ---- ---- ---- Operating expenses 438 657 229 107 179 ---- ---- ---- ---- ---- Operating (loss) income 138 74 85 560 173 Interest expense, net 380 (22) (5) (14) 200 Equity in income from consolidated entities -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income before minority interests, income tax expense, and discontinued operations (242) 96 90 574 (27) Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from continuing operations (242) 96 90 574 (27) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from discontinued operations -- -- -- -- -- ---- ---- ---- ---- ---- Net (loss) income (242) 96 90 574 (27) ==== ==== ==== ==== ====

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4F, SUB 5K, SUB 5M, SUB 1E, SUB 5O, L.P. LLC LLC L.P. LLC -------- -------- ------- ------ -------- Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 467 643 440 459 206 ---- ---- ---- ---- ---- Total revenue 467 643 440 459 206 ---- ---- ---- ---- ---- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 280 297 113 74 54 Property taxes, insurance and other 93 75 74 37 34 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ---- ---- ---- ---- ---- Operating expenses 373 372 187 111 88 ---- ---- ---- ---- ---- Operating (loss) income 94 271 253 348 118 Interest expense, net (10) (28) (5) (4) (2) Equity in income from consolidated entities -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income before minority interests, income tax expense, and discontinued operations 104 299 258 352 120 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from continuing operations 104 299 258 352 120 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from discontinued operations -- -- -- -- -- ---- ---- ---- ---- ---- Net (loss) income 104 299 258 352 120 ==== ==== ==== ==== ====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6M SUB 4B, SUB 6C, SUB 2C, SUB 4G, COMPANY L.P. LLC LLC L.P. ------ ------ ------ ------ ------ Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- 4 9 4 Participating lease revenue 1,299 51 832 419 621 ------ ------ ------ ------ ------ Total revenue 1,299 51 836 428 625 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 301 119 195 264 229 Property taxes, insurance and other 73 85 50 89 125 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 374 204 245 353 354 ------ ------ ------ ------ ------ Operating (loss) income 925 (153) 591 75 271 Interest expense, net (7) (66) (11) 344 (7) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations 932 (87) 602 (269) 278 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 932 (87) 602 (269) 278 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 932 (87) 602 (269) 278 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 3B, SUB 5G, SUB 5P, SUB 5J, SUB 5Q, LLC L.P. LLC LLC LLC ------ ------ ------ ------ ------ Revenue: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- 12 -- -- -- Participating lease revenue -- 3,033 183 2,586 543 ------ ------ ------ ------ ------ Total revenue -- 3,045 183 2,586 543 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- (1) -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 1,547 1 867 120 Property taxes, insurance and other -- 456 12 439 72 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses -- 2,002 13 1,306 192 ------ ------ ------ ------ ------ Operating (loss) income -- 1,043 170 1,280 351 Interest expense, net -- (37) -- (31) (25) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before minority interests, income tax expense, and discontinued operations -- 1,080 170 1,311 376 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations -- 1,080 170 1,311 376 Discontinued operations: (Loss) income from discontinued operations before tax expense (88) -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations (88) -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income (88) 1,080 170 1,311 376 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR HOTEL GUARANTOR SUB 5A, SUB 8D, SUB 4J, LESSEE, SUBSIDIARIES LLC LLC LLC INC. TOTAL -------- -------- -------- -------- ------------ Revenue: Rooms -- -- -- 174,945 174,945 Food and beverage -- -- -- 69,817 69,817 Other hotel operations -- -- -- 20,614 20,614 Office rental, parking and other revenue 37 -- 69 25 603 Participating lease revenue 1,418 579 814 -- 38,914 -------- -------- -------- -------- -------- Total revenue 1,455 579 883 265,401 304,893 -------- -------- -------- -------- -------- Hotel operating expenses: -- Rooms -- -- -- 41,199 41,199 Food and beverage -- -- -- 48,752 48,752 Other hotel operating expenses -- -- -- 11,382 11,382 Office rental, parking and other expenses -- -- 89 -- 322 Other operating expenses: General and administrative -- -- 4 39,895 39,901 Property operating costs -- -- -- 39,087 39,087 Depreciation and amortization 377 317 335 789 14,555 Property taxes, insurance and other 150 101 (86) 79,809 85,987 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- -------- -------- -------- -------- -------- Operating expenses 527 418 342 260,913 281,185 -------- -------- -------- -------- -------- -- Operating (loss) income 928 161 541 4,488 23,708 Interest expense, net 691 (5) (11) (101) 1,241 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before minority interests, -- income tax expense, and discontinued operations 237 166 552 4,589 22,467 Minority interests -- -- -- -- -- Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 237 166 552 4,589 22,467 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- (471) (268) Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- (471) (268) -------- -------- -------- -------- -------- Net (loss) income 237 166 552 4,118 22,199 ======== ======== ======== ======== ========

TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ Revenue: Rooms -- 174,945 Food and beverage -- 69,817 Other hotel operations -- 20,614 Office rental, parking and other revenue -- 4,240 Participating lease revenue (71,768) -- -------- -------- Total revenue (71,768) 269,616 -------- -------- Hotel operating expenses: Rooms -- 41,199 Food and beverage -- 48,752 Other hotel operating expenses -- 11,382 Office rental, parking and other expenses -- 684 Other operating expenses: General and administrative -- 42,717 Property operating costs -- 39,085 Depreciation and amortization -- 29,681 Property taxes, insurance and other (71,768) 16,179 Change in fair value of non-hedging derivatives, net of swap payments -- 3,090 -------- -------- Operating expenses (71,768) 232,769 -------- -------- Operating (loss) income -- 36,847 Interest expense, net -- 34,112 Equity in income from consolidated entities 34,974 -- -------- -------- (Loss) income before minority interests, income tax expense, and discontinued operations (34,974) 2,735 Minority interests -- 3 Income tax expense -- (69) -------- -------- (Loss) income from continuing operations (34,974) 2,669 Discontinued operations: (Loss) income from discontinued operations before tax expense -- 855 Income tax expense -- (21) -------- -------- (Loss) income from discontinued operations -- 834 -------- -------- Net (loss) income (34,974) 3,503 ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues 4,211 2,386 -- -- -- Participating lease revenue -- 63,664 -- -- 515 ---------- ---------- ---------- ---------- ---------- Total revenue 4,211 66,050 -- -- 515 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- 814 -- -- -- Other operating expenses: General and administrative 6,104 (213) -- -- -- Property operating costs -- 1 -- -- -- Depreciation and amortization 5,072 25,379 -- -- 69 Loss on asset impairments -- 119,916 -- -- -- Property taxes, insurance and other 2,029 12,357 -- -- 52 ---------- ---------- ---------- ---------- ---------- Operating expenses 13,205 158,254 -- -- 121 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (8,994) (92,204) -- -- 394 Interest expense, net 50,780 13,944 -- -- -- Equity in income from consolidated entities 230,202 -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (289,976) (106,148) -- -- 394 Minority interests (6) -- -- -- -- Income tax benefit 127 -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (289,855) (106,148) -- -- 394 Discontinued operations: (Loss) income from discontinued operations before tax expense -- 344 -- -- -- Income tax benefit (2) -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations (2) 344 -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (289,857) (105,804) -- -- 394 ========== ========== ========== ========== ==========

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 revenues -- -- -- -- -- Participating lease revenue -- 1,172 -- 569 3,636 ---------- ---------- ---------- ---------- ---------- Total revenue -- 1,172 -- 569 3,636 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 261 -- 252 1,220 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 245 -- 47 692 ---------- ---------- ---------- ---------- ---------- Operating expenses -- 506 -- 299 1,912 ---------- ---------- ---------- ---------- ---------- Operating (loss) income -- 666 -- 270 1,724 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations -- 666 -- 270 1,724 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations -- 666 -- 270 1,724 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income -- 666 -- 270 1,724 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues -- 10 -- -- -- Participating lease revenue 834 724 452 547 969 ---------- ---------- ---------- ---------- ---------- Total revenue 834 734 452 547 969 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 508 291 229 69 356 Loss on asset impairments -- -- 1,637 -- -- Property taxes, insurance and other 374 108 81 61 197 ---------- ---------- ---------- ---------- ---------- Operating expenses 882 399 1,947 130 553 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (48) 335 (1,495) 417 416 Interest expense, net -- -- -- 2 -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (48) 335 (1,495) 415 416 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (48) 335 (1,495) 415 416 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (48) 335 (1,495) 415 416 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, 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 revenues -- 8 -- 3 1 Participating lease revenue -- 963 2,791 703 1,274 ---------- ---------- ---------- ---------- ---------- Total revenue -- 971 2,791 706 1,275 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 273 822 421 284 Loss on asset impairments -- -- -- 14,611 -- Property taxes, insurance and other -- 159 322 223 94 ---------- ---------- ---------- ---------- ---------- Operating expenses -- 432 1,144 15,255 378 ---------- ---------- ---------- ---------- ---------- Operating (loss) income -- 539 1,647 (14,549) 897 Interest expense, net -- -- -- -- 10 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations -- 539 1,647 (14,549) 887 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations -- 539 1,647 (14,549) 887 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income -- 539 1,647 (14,549) 887 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues -- -- 2 -- -- Participating lease revenue 1,487 1,248 1,000 -- 149 ---------- ---------- ---------- ---------- ---------- Total revenue 1,487 1,248 1,002 -- 149 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 534 430 377 -- 264 Loss on asset impairments 7,231 -- 5,213 -- 5,187 Property taxes, insurance and other 198 189 346 -- 97 ---------- ---------- ---------- ---------- ---------- Operating expenses 7,963 619 5,936 -- 5,548 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (6,476) 629 (4,934) -- (5,399) Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (6,476) 629 (4,934) -- (5,399) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (6,476) 629 (4,934) -- (5,399) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (6,476) 629 (4,934) -- (5,399) ========== ========== ========== ========== ==========

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 revenues -- 1 -- -- -- Participating lease revenue 673 726 895 2,940 571 ---------- ---------- ---------- ---------- ---------- Total revenue 673 727 895 2,940 571 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 309 392 225 962 215 Loss on asset impairments -- -- -- -- 5,478 Property taxes, insurance and other 99 117 210 201 93 ---------- ---------- ---------- ---------- ---------- Operating expenses 408 509 435 1,163 5,786 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 265 218 460 1,777 (5,215) Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations 265 218 460 1,777 (5,215) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations 265 218 460 1,777 (5,215) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 265 218 460 1,777 (5,215) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues -- -- -- -- -- Participating lease revenue 2,040 214 282 511 -- ---------- ---------- ---------- ---------- ---------- Total revenue 2,040 214 282 511 -- ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 370 213 131 -- -- Loss on asset impairments -- 4,670 1,497 1,455 -- Property taxes, insurance and other 191 74 53 157 -- ---------- ---------- ---------- ---------- ---------- Operating expenses 561 4,957 1,681 1,612 -- ---------- ---------- ---------- ---------- ---------- Operating (loss) income 1,479 (4,743) (1,399) (1,101) -- Interest expense, net -- 228 -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations 1,479 (4,971) (1,399) (1,101) -- Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations 1,479 (4,971) (1,399) (1,101) -- Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- (939) Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- (939) ---------- ---------- ---------- ---------- ---------- Net (loss) income 1,479 (4,971) (1,399) (1,101) (939) ========== ========== ========== ========== ==========

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 revenues -- -- -- -- -- Participating lease revenue 237 759 253 614 1,051 ---------- ---------- ---------- ---------- ---------- Total revenue 237 759 253 614 1,051 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 164 445 69 289 302 Loss on asset impairments 2,828 13,286 -- 7,187 -- Property taxes, insurance and other 94 109 70 207 130 ---------- ---------- ---------- ---------- ---------- Operating expenses 3,086 13,840 139 7,683 432 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (2,849) (13,081) 114 (7,069) 619 Interest expense, net 372 -- -- -- (2) Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (3,221) (13,081) 114 (7,069) 621 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (3,221) (13,081) 114 (7,069) 621 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (3,221) (13,081) 114 (7,069) 621 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues 6 -- -- -- -- Participating lease revenue 2,429 803 3,665 300 550 ---------- ---------- ---------- ---------- ---------- Total revenue 2,435 803 3,665 300 550 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses 47 -- 190 -- -- Other operating expenses: General and administrative 25 -- 177 -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 1,148 342 862 308 232 Loss on asset impairments -- 10,288 -- 7,416 -- Property taxes, insurance and other 835 364 1,125 107 100 ---------- ---------- ---------- ---------- ---------- Operating expenses 2,055 10,994 2,354 7,831 332 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 380 (10,191) 1,311 (7,531) 218 Interest expense, net -- -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations 380 (10,191) 1,311 (7,531) 218 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations 380 (10,191) 1,311 (7,531) 218 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 380 (10,191) 1,311 (7,531) 218 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, 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 revenues -- -- -- -- -- Participating lease revenue 40 1,024 2,151 647 1,160 ---------- ---------- ---------- ---------- ---------- Total revenue 40 1,024 2,151 647 1,160 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 145 730 1,010 97 -- Loss on asset impairments 1,259 -- 18,075 1,383 1,787 Property taxes, insurance and other 120 112 434 253 269 ---------- ---------- ---------- ---------- ---------- Operating expenses 1,524 842 19,519 1,733 2,056 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (1,484) 182 (17,368) (1,086) (896) Interest expense, net -- 644 -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (1,484) (462) (17,368) (1,086) (896) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (1,484) (462) (17,368) (1,086) (896) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (1,484) (462) (17,368) (1,086) (896) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues -- 7 -- -- -- Participating lease revenue 577 981 1,259 976 781 ---------- ---------- ---------- ---------- ---------- Total revenue 577 988 1,259 976 781 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 234 556 644 236 158 Loss on asset impairments 8,685 -- -- -- -- Property taxes, insurance and other 140 173 187 131 85 ---------- ---------- ---------- ---------- ---------- Operating expenses 9,059 729 831 367 243 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (8,482) 259 428 609 538 Interest expense, net 431 -- -- -- -- Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (8,913) 259 428 609 538 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (8,913) 259 428 609 538 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (8,913) 259 428 609 538 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 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 revenues -- -- -- 5 32 Participating lease revenue 440 2,077 92 1,402 749 ---------- ---------- ---------- ---------- ---------- Total revenue 440 2,077 92 1,407 781 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 114 616 268 387 512 Loss on asset impairments -- -- 264 -- 15,255 Property taxes, insurance and other 52 165 132 112 266 ---------- ---------- ---------- ---------- ---------- Operating expenses 166 781 664 499 16,033 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 274 1,296 (572) 908 (15,252) Interest expense, net -- -- -- -- 754 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations 274 1,296 (572) 908 (16,006) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations 274 1,296 (572) 908 (16,006) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income 274 1,296 (572) 908 (16,006) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (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 revenues -- -- 25 -- -- Participating lease revenue 1,026 -- 5,323 686 5,369 ---------- ---------- ---------- ---------- ---------- Total revenue 1,026 -- 5,348 686 5,369 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 448 -- 3,145 2 1,741 Loss on asset impairments 8,000 -- -- -- -- Property taxes, insurance and other 319 -- 955 4 739 ---------- ---------- ---------- ---------- ---------- Operating expenses 8,767 -- 4,100 6 2,480 ---------- ---------- ---------- ---------- ---------- Operating (loss) income (7,741) -- 1,248 680 2,889 Interest expense, net -- -- -- -- 3 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (7,741) -- 1,248 680 2,886 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (7,741) -- 1,248 680 2,886 Discontinued operations: (Loss) income from discontinued operations before tax expense -- (883) -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- (883) -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) income (7,741) (883) 1,248 680 2,886 ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5R, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. ---------- ---------- ---------- ---------- ------------ Revenue: Hotel operations: Rooms -- -- -- -- 319,610 Food and beverage -- -- -- -- 130,196 Other hotel operations -- -- -- -- 40,402 Office rental, parking and other revenues -- 56 -- 3 -- Participating lease revenue 1,198 2,881 1,190 1,630 -- ---------- ---------- ---------- ---------- ---------- Total revenue 1,198 2,937 1,190 1,633 490,208 ---------- ---------- ---------- ---------- ---------- Hotel operating expenses: Rooms -- -- -- -- 77,902 Food and beverage -- -- -- -- 93,042 Other hotel operating expenses -- -- -- -- 23,835 Office rental, parking and other expenses -- -- -- 162 -- Other operating expenses: General and administrative -- -- 6 48 78,154 Property operating costs -- -- -- -- 74,115 Depreciation and amortization 280 771 627 643 532 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 109 355 219 160 148,680 ---------- ---------- ---------- ---------- ---------- Operating expenses 389 1,126 852 1,013 496,260 ---------- ---------- ---------- ---------- ---------- Operating (loss) income 809 1,811 338 620 (6,052) Interest expense, net -- 1,417 -- -- 982 Equity in income from consolidated entities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations 809 394 338 620 (7,034) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations 809 394 338 620 (7,034) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- (386) Income tax benefit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- (Loss) income on discontinued operations -- -- -- -- (386) ---------- ---------- ---------- ---------- ---------- Net (loss) income 809 394 338 620 (7,420) ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Revenue: Hotel operations: -- Rooms 319,610 -- 319,610 Food and beverage 130,196 -- 130,196 Other hotel operations 40,402 -- 40,402 Office rental, parking and other revenues 159 -- 6,756 Participating lease revenue 72,205 (135,869) -- ---------- ---------- ---------- Total revenue 562,572 (135,869) 496,964 ---------- ---------- ---------- Hotel operating expenses: Rooms 77,902 -- 77,902 Food and beverage 93,042 -- 93,042 Other hotel operating expenses 23,835 -- 23,835 Office rental, parking and other expenses 399 -- 1,213 Other operating expenses: General and administrative 78,410 -- 84,301 Property operating costs 74,115 -- 74,116 Depreciation and amortization 27,534 -- 57,985 Loss on asset impairments 142,692 -- 262,608 Property taxes, insurance and other 161,992 (135,869) 40,509 ---------- ---------- ---------- Operating expenses 679,921 (135,869) 715,511 ---------- ---------- ---------- Operating (loss) income (117,349) -- (218,547) Interest expense, net 4,841 -- 69,565 Equity in income from consolidated entities -- (230,202) -- ---------- ---------- ---------- (Loss) income before minority interests, income tax benefit, and discontinued operations (122,190) 230,202 (288,112) Minority interests -- -- (6) Income tax benefit -- -- 127 ---------- ---------- ---------- (Loss) income from continuing operations (122,190) 230,202 (287,991) Discontinued operations: (Loss) income from discontinued operations before tax expense (2,208) -- (1,864) Income tax benefit -- -- (2) ---------- ---------- ---------- (Loss) income on discontinued operations (2,208) -- (1,866) ---------- ---------- ---------- Net (loss) income (124,398) 230,202 (289,857) ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (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 3,538 2,673 -- -- -- Participating lease revenue -- 66,334 -- -- 563 ------- ------- ------- ------- ------- Total revenue 3,538 69,007 -- -- 563 ------- ------- ------- ------- ------- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- 562 -- -- -- Other operating expenses: General and administrative 5,150 14 -- -- -- Property operating costs (454) (1) -- -- -- Depreciation and amortization 6,689 24,938 -- -- 66 Property taxes, insurance and other (1,931) 9,104 -- -- 53 Change in fair value of non-hedging derivatives, net of swap payments 3,079 -- -- -- -- Loss on fair value of non-hedging derivatives 4,735 -- -- -- -- ------- ------- ------- ------- ------- Operating expenses 17,268 34,617 -- -- 119 ------- ------- ------- ------- ------- Operating (loss) income (13,730) 34,390 -- -- 444 Interest expense, net 52,076 13,974 -- -- (3) Equity in income from consolidated entities (58,834) -- -- -- -- ------- ------- ------- ------- ------- (Loss) before minority interests, income tax benefit, and discontinued operations (6,972) 20,416 -- -- 447 Minority interests (8) -- -- -- -- Income tax benefit 214 -- -- -- -- ------- ------- ------- ------- ------- (Loss) income from continuing operations (6,766) 20,416 -- -- 447 Discontinued operations: (Loss) income from discontinued operations before tax expense -- 2,080 -- -- -- Income tax expense (55) -- -- -- -- ------- ------- ------- ------- ------- (Loss) income from discontinued operations (55) 2,080 -- -- -- ------- ------- ------- ------- ------- Net (loss) income (6,821) 22,496 -- -- 447 ======= ======= ======= ======= =======

MERISTAR MERISTAR AGH SUB 8A, SUB 8F, SECAUCUS, LLC L.P. LLC -------- -------- --------- Revenue: Hotel operations: Rooms -- -- -- Food and beverage -- -- -- Other hotel operations -- -- -- Office rental, parking and other revenue -- -- -- Participating lease revenue -- 1,141 -- ------ ------ ------ Total revenue -- 1,141 -- ------ ------ ------ Hotel operating expenses: Rooms -- -- -- Food and beverage -- -- -- Other hotel operating expenses -- -- -- Office rental, parking and other expenses -- -- -- Other operating expenses: General and administrative -- 1 -- Property operating costs -- -- -- Depreciation and amortization -- 226 -- Property taxes, insurance and other -- 376 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- Loss on fair value of non-hedging derivatives -- -- -- ------ ------ ------ Operating expenses -- 603 -- ------ ------ ------ Operating (loss) income -- 538 -- Interest expense, net -- (4) -- Equity in income from consolidated entities -- -- -- ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations -- 542 -- Minority interests -- -- -- Income tax benefit -- -- -- ------ ------ ------ (Loss) income from continuing operations -- 542 -- Discontinued operations: (Loss) income from discontinued operations before tax expense 507 -- -- Income tax expense -- -- -- ------ ------ ------ (Loss) income from discontinued operations 507 -- -- ------ ------ ------ Net (loss) income 507 542 -- ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR SUB 6H, SUB 8B, SUB 1C, SUB 8E, L.P. LLC L.P. LLC -------- -------- -------- -------- Revenue: Hotel operations: Rooms -- -- -- -- Food and beverage -- -- -- -- Other hotel operations -- -- -- -- Office rental, parking and other revenue -- -- -- 15 Participating lease revenue 791 3,873 814 807 ------ ------ ------ ------ Total revenue 791 3,873 814 822 ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- Food and beverage -- -- -- -- Other hotel operating expenses -- -- -- -- Office rental, parking and other expenses -- -- -- -- Other operating expenses: General and administrative 1 -- 3 -- Property operating costs -- -- -- -- Depreciation and amortization 215 1,190 514 296 Property taxes, insurance and other 49 716 400 91 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- ------ ------ ------ ------ Operating expenses 265 1,906 917 387 ------ ------ ------ ------ Operating (loss) income 526 1,967 (103) 435 Interest expense, net (1) (39) (21) (5) Equity in income from consolidated entities -- -- -- -- ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 527 2,006 (82) 440 Minority interests -- -- -- -- Income tax benefit -- -- -- -- ------ ------ ------ ------ (Loss) income from continuing operations 527 2,006 (82) 440 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- Income tax expense -- -- -- -- ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- ------ ------ ------ ------ Net (loss) income 527 2,006 (82) 440 ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7F, SUB 5L, SUB 3C, SUB 5R, SUB 5A, LLC LLC LLC LLC LLC -------- -------- -------- -------- -------- Revenue: Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operations -- -- -- -- -- Office rental, parking and other revenue -- -- -- -- -- Participating lease revenue 596 611 989 -- -- ---- ---- ---- ---- ---- Total revenue 596 611 989 -- -- ---- ---- ---- ---- ---- Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 233 67 353 -- -- Property taxes, insurance and other 70 60 226 -- -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ---- ---- ---- ---- ---- Operating expenses 303 127 579 -- -- ---- ---- ---- ---- ---- Operating (loss) income 293 484 410 -- -- Interest expense, net (5) (4) (10) -- -- Equity in income from consolidated entities -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) before minority interests, income tax benefit, and discontinued operations 298 488 420 -- -- Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from continuing operations 298 488 420 -- -- Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ---- ---- ---- ---- ---- (Loss) income from discontinued operations -- -- -- -- -- ---- ---- ---- ---- ---- Net (loss) income 298 488 420 -- -- ==== ==== ==== ==== ====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, 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 -- 10 -- 7 569 Participating lease revenue -- 1,153 2,926 699 1,185 ------ ------ ------ ------ ------ Total revenue -- 1,163 2,926 706 1,754 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 266 849 459 316 Property taxes, insurance and other -- 90 415 195 79 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses -- 356 1,264 654 395 ------ ------ ------ ------ ------ Operating (loss) income -- 807 1,662 52 1,359 Interest expense, net -- (13) (28) (13) (8) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations -- 820 1,690 65 1,367 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ --- ------ ------ (Loss) income from continuing operations -- 820 1,690 65 1,367 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income -- 820 1,690 65 1,367 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR 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 -- -- 2 -- -- Participating lease revenue 1,531 1,376 973 -- 349 ------ ------ ------ ------ ------ Total revenue 1,531 1,376 975 -- 349 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative 1 -- (1) -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 528 418 692 -- 270 Property taxes, insurance and other 170 152 299 -- 94 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 699 570 990 -- 364 ------ ------ ------ ------ ------ Operating (loss) income 832 806 (15) -- (15) Interest expense, net (17) (22) (21) -- (4) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 849 828 6 -- (11) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 849 828 6 -- (11) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- 92 -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- 92 -- ------ ------ ------ ------ ------ Net (loss) income 849 828 6 92 (11) ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR 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 717 1,227 871 2,904 625 ------ ------ ------ ------ ------ Total revenue 717 1,227 871 2,904 625 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization 315 451 232 969 208 Property taxes, insurance and other 79 81 163 195 111 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 394 532 395 1,164 320 ------ ------ ------ ------ ------ Operating (loss) income 323 695 476 1,740 305 Interest expense, net (9) (20) (9) (16) (16) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 332 715 485 1,756 321 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 332 715 485 1,756 321 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 332 715 485 1,756 321 ====== ====== ====== ====== ======

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 2,045 271 265 497 -- ------ ------ ------ ------ ------ Total revenue 2,045 271 265 497 -- ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 372 212 133 -- -- Property taxes, insurance and other 241 71 55 121 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 613 283 188 121 -- ------ ------ ------ ------ ------ Operating (loss) income 1,432 (12) 77 376 -- Interest expense, net (18) 194 (18) (17) -- Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 1,450 (206) 95 393 -- Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 1,450 (206) 95 393 -- Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- 10 Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- 10 ------ ------ ------ ------ ------ Net (loss) income 1,450 (206) 95 393 10 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
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 294 842 331 738 1,438 ------ ------ ------ ------ ------ Total revenue 294 842 331 738 1,438 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative 2 1 -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 159 445 68 298 322 Property taxes, insurance and other 75 98 65 208 93 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 236 544 133 506 415 ------ ------ ------ ------ ------ Operating (loss) income 58 298 198 232 1,023 Interest expense, net 341 (5) (2) (17) (19) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations (283) 303 200 249 1,042 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations (283) 303 200 249 1,042 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income (283) 303 200 249 1,042 ====== ====== ====== ====== ======

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 215 -- 672 -- -- Participating lease revenue 2,660 781 2,774 292 649 ------ ------ ------ ------ ------ Total revenue 2,875 781 3,446 292 649 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses 65 -- 682 -- -- Other operating expenses: General and administrative -- 1 -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 1,118 463 832 378 227 Property taxes, insurance and other 546 444 1,067 120 116 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 1,729 908 2,581 498 343 ------ ------ ------ ------ ------ Operating (loss) income 1,146 (127) 865 (206) 306 Interest expense, net (30) (8) (23) (12) (4) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 1,176 (119) 888 (194) 310 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 1,176 (119) 888 (194) 310 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 1,176 (119) 888 (194) 310 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, 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 -- -- -- -- 2 Participating lease revenue 39 992 1,970 629 1,403 ------ ------ ------ ------ ------ Total revenue 39 992 1,970 629 1,405 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 243 724 986 290 -- Property taxes, insurance and other 152 163 332 183 212 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 395 887 1,318 473 212 ------ ------ ------ ------ ------ Operating (loss) income (356) 105 652 156 1,193 Interest expense, net (20) 779 (40) (10) (22) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations (336) (674) 692 166 1,215 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations (336) (674) 692 166 1,215 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income (336) (674) 692 166 1,215 ====== ====== ====== ====== ======

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 -- 4 -- -- -- Participating lease revenue 597 934 1,379 1,089 776 ------ ------ ------ ------ ------ Total revenue 597 938 1,379 1,089 776 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 237 560 594 226 150 Property taxes, insurance and other 115 186 151 150 73 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 352 746 745 376 223 ------ ------ ------ ------ ------ Operating (loss) income 245 192 634 713 553 Interest expense, net 392 (17) (50) (10) (8) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations (147) 209 684 723 561 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations (147) 209 684 723 561 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income (147) 209 684 723 561 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 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 -- -- -- 8 28 Participating lease revenue 482 2,216 106 1,546 762 ------ ------ ------ ------ ------ Total revenue 482 2,216 106 1,554 790 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 109 603 296 394 519 Property taxes, insurance and other 69 144 171 100 175 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 178 747 467 494 694 ------ ------ ------ ------ ------ Operating (loss) income 304 1,469 (361) 1,060 96 Interest expense, net (4) (11) (122) (18) 676 Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 308 1,480 (239) 1,078 (580) Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 308 1,480 (239) 1,078 (580) Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net (loss) income 308 1,480 (239) 1,078 (580) ====== ====== ====== ====== ======

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 10 -- 30 -- -- Participating lease revenue 1,347 -- 6,253 302 5,376 ------ ------ ------ ------ ------ Total revenue 1,357 -- 6,283 302 5,376 ------ ------ ------ ------ ------ Hotel operating expenses: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other hotel operating expenses -- -- -- -- -- Office rental, parking and other expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- 2 -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 458 -- 3,095 1 1,733 Property taxes, insurance and other 249 -- 921 18 910 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- ------ ------ ------ ------ ------ Operating expenses 707 -- 4,018 19 2,643 ------ ------ ------ ------ ------ Operating (loss) income 650 -- 2,265 283 2,733 Interest expense, net (13) -- (67) -- (57) Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) before minority interests, income tax benefit, and discontinued operations 663 -- 2,332 283 2,790 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from continuing operations 663 -- 2,332 283 2,790 Discontinued operations: (Loss) income from discontinued operations before tax expense -- (18) -- -- -- Income tax expense -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income from discontinued operations -- (18) -- -- -- ------ ------ ------ ------ ------ Net (loss) income 663 (18) 2,332 283 2,790 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5R, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. -------- -------- -------- -------- ------------ Revenue: Hotel operations: Rooms -- -- -- -- 336,830 Food and beverage -- -- -- -- 129,673 Other hotel operations -- -- -- -- 39,298 Office rental, parking and other revenue -- 60 -- 134 524 Participating lease revenue 1,196 3,000 1,158 1,590 (523) -------- -------- -------- -------- -------- Total revenue 1,196 3,060 1,158 1,724 505,802 -------- -------- -------- -------- -------- Hotel operating expenses: Rooms -- -- -- -- 78,085 Food and beverage -- -- -- -- 91,515 Other hotel operating expenses -- -- -- -- 21,827 Office rental, parking and other expenses -- -- -- 188 -- Other operating expenses: General and administrative -- -- -- 4 78,981 Property operating costs -- -- -- -- 74,454 Depreciation and amortization 240 690 634 671 1,083 Property taxes, insurance and other 140 301 207 15 157,303 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- -------- -------- -------- -------- -------- Operating expenses 380 991 841 878 503,248 -------- -------- -------- -------- -------- Operating (loss) income 816 2,069 317 846 2,554 Interest expense, net (47) 1,384 (10) (22) (40) Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) before minority interests, income tax benefit, and discontinued operations 863 685 327 868 2,594 Minority interests -- -- -- -- -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from continuing operations 863 685 327 868 2,594 Discontinued operations: (Loss) income from discontinued operations before tax expense -- -- -- -- (411) Income tax expense -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- (411) -------- -------- -------- -------- -------- Net (loss) income 863 685 327 868 2,183 ======== ======== ======== ======== ========

GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Revenue: Hotel operations: Rooms 336,830 -- 336,830 Food and beverage 129,673 -- 129,673 Other hotel operations 39,298 -- 39,298 Office rental, parking and other revenue 2,290 -- 8,501 Participating lease revenue 75,217 (141,551) -- -------- -------- -------- Total revenue 583,308 (141,551) 514,302 -------- -------- -------- Hotel operating expenses: Rooms 78,085 -- 78,085 Food and beverage 91,515 -- 91,515 Other hotel operating expenses 21,827 -- 21,827 Office rental, parking and other expenses 935 -- 1,497 Other operating expenses: General and administrative 78,997 -- 84,161 Property operating costs 74,454 -- 73,999 Depreciation and amortization 28,696 -- 60,323 Property taxes, insurance and other 169,924 (141,551) 35,546 Change in fair value of non-hedging derivatives, net of swap payments -- -- 3,079 Loss on fair value of non-hedging derivatives -- -- 4,735 -------- -------- -------- Operating expenses 544,433 (141,551) 454,767 -------- -------- -------- Operating (loss) income 38,875 -- 59,535 Interest expense, net 2,717 -- 68,767 Equity in income from consolidated entities -- 58,834 -- -------- -------- -------- (Loss) before minority interests, income tax benefit, and discontinued operations 36,158 (58,834) (9,232) Minority interests -- -- (8) Income tax benefit -- -- 214 -------- -------- -------- (Loss) income from continuing operations 36,158 (58,834) (9,026) Discontinued operations: (Loss) income from discontinued operations before tax expense 180 -- 2,260 Income tax expense -- -- (55) -------- -------- -------- (Loss) income from discontinued operations 180 -- 2,205 -------- -------- -------- Net (loss) income 36,338 (58,834) (6,821) ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 (289,857) (105,804) -- -- 394 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 5,072 25,558 -- -- 69 Loss on asset impairment -- 119,917 -- -- -- Equity in earnings of affiliates 230,202 -- -- -- -- Minority interests 6 -- -- -- -- Amortization of unearned stock based compensation 1,433 -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss (3,395) -- -- -- -- Deferred income taxes (1,534) -- -- -- -- Changes in operating assets and liabilities: Accounts receivable, net (2,792) 144 -- -- -- Prepaid expenses and other 4,476 89 -- -- -- Due from/to Interstate Hotels 724 (1) -- -- -- Due to/from subsidiaries 81,069 (41,235) -- -- (465) Accounts payable, accrued expenses and other liabilities 4,348 (4,256) -- -- 15 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 29,752 (5,588) -- -- 13 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (503) (3,061) -- -- (13) Proceeds from sales of assets -- 12,650 -- -- -- Purchases of marketable securities (18,056) -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts 42,052 -- -- -- -- Decrease in restricted cash (9,692) (48) -- -- -- Other, net -- (299) -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities 13,801 9,242 -- -- (13) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt (24,359) (3,654) -- -- -- Distributions paid to partners (141) -- -- -- -- Purchase of limited partnership unit (65) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities (24,565) (3,654) -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash (115) -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH 18,873 -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,372 -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD 40,245 -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income -- 666 -- 270 1,724 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization -- 261 -- 252 1,220 Loss on asset impairment -- -- -- -- -- Equity in earnings of affiliates -- -- -- -- -- 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, net -- (28) -- -- -- Prepaid expenses and other -- (5) -- (5) -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries 1 (743) -- (541) (2,164) Accounts payable, accrued expenses and other liabilities (1) (130) -- 31 (44) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- 21 -- 7 736 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties -- (21) -- (7) (736) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- (21) -- (7) (736) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 (48) 335 (1,495) 415 416 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 508 291 229 69 356 Loss on asset impairment -- -- 1,637 -- -- Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- 48 -- Prepaid expenses and other (17) -- -- (6) -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (223) (543) (358) (430) (698) Accounts payable, accrued expenses and other liabilities (143) (15) 20 (4) (62) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 77 68 33 92 12 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (77) (68) (33) (92) (12) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (77) (68) (33) (92) (12) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income -- 539 1,647 (14,549) 887 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization -- 273 822 421 284 Loss on asset impairment -- -- -- 14,611 -- Equity in earnings of affiliates -- -- -- -- -- 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, net -- (5) -- -- -- Prepaid expenses and other -- -- -- -- (36) Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries -- (801) (2,298) (129) (1,031) Accounts payable, accrued expenses and other liabilities -- (6) (45) (260) (13) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- -- 126 94 91 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties -- -- (126) (94) (80) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- -- (126) (94) (80) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- (11) Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- (11) ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 (6,476) 629 (4,934) -- (5,399) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 534 430 377 -- 264 Loss on asset impairment 7,231 -- 5,213 -- 5,187 Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- -- 14 Prepaid expenses and other -- -- (22) 5 (7) Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (1,288) (805) (480) -- 94 Accounts payable, accrued expenses and other liabilities 46 (150) (145) (5) (61) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 47 104 9 -- 92 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (47) (104) (9) -- (92) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (47) (104) (9) -- (92) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 7E, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC VENTURE ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 265 218 460 1,777 (5,215) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 309 392 225 962 215 Loss on asset impairment -- -- -- -- 5,478 Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (495) (556) (499) (2,846) (314) Accounts payable, accrued expenses and other liabilities 15 54 (92) 156 (51) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 94 108 94 49 113 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (94) (108) (94) (49) (113) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (94) (108) (94) (49) (113) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 1,479 (4,971) (1,399) (1,101) (939) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 370 213 131 -- 55 Loss on asset impairment -- 4,670 1,497 1,455 1,004 Equity in earnings of affiliates -- -- -- -- -- 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, net -- 2 -- -- -- Prepaid expenses and other -- -- (2) -- (3) Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (1,727) 632 (160) (3) (3,091) Accounts payable, accrued expenses and other liabilities (113) -- (44) (118) (5) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 9 546 23 233 (2,979) ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (9) (546) (23) (233) (91) Proceeds from sales of assets -- -- -- -- 3,070 Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (9) (546) (23) (233) 2,979 ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (3,221) (13,081) 114 (7,069) 621 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 164 445 69 289 302 Loss on asset impairment 2,828 13,286 -- 7,187 -- Equity in earnings of affiliates -- -- -- -- -- 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, net (1) -- -- -- -- Prepaid expenses and other -- (2) -- 26 -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries 1,153 (635) (143) (302) (822) Accounts payable, accrued expenses and other liabilities (79) 32 (32) (51) (67) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 844 45 8 80 34 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (844) (45) (8) (80) (34) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (844) (45) (8) (80) (34) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 380 (10,191) 1,311 (7,531) 218 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 1,148 342 862 308 232 Loss on asset impairment -- 10,288 -- 7,416 -- Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- 182 -- -- Prepaid expenses and other -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (1,201) (364) (2,139) (2) (439) Accounts payable, accrued expenses and other liabilities (241) (37) (169) (132) 92 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 86 38 47 59 103 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (86) (38) (47) (59) (103) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (86) (38) (47) (59) (103) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (1,484) (462) (17,368) (1,086) (896) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 145 730 1,010 97 -- Loss on asset impairment 1,259 -- 18,075 1,383 1,787 Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other (8) -- (1) -- -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries 246 (254) (1,676) (354) (932) Accounts payable, accrued expenses and other liabilities (129) 13 43 (23) 88 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 29 27 83 17 47 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (29) (27) (83) (17) (47) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (29) (27) (83) (17) (47) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 (8,913) 259 428 609 538 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 234 556 644 236 158 Loss on asset impairment 8,685 -- -- -- -- Equity in earnings of affiliates -- -- -- -- -- 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, net (7) -- -- -- -- Prepaid expenses and other -- -- -- 2 -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries 968 (288) 159 (873) (650) Accounts payable, accrued expenses and other liabilities (158) (189) (1,171) 39 (27) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 809 338 60 13 19 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (809) (338) (60) (13) (19) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (809) (338) (60) (13) (19) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 274 1,296 (572) 908 (16,006) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 114 616 268 387 512 Loss on asset impairment -- -- 264 -- 15,255 Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (401) (2,032) 267 (1,280) 1,923 Accounts payable, accrued expenses and other liabilities 19 136 (147) 41 (202) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 6 16 80 56 1,482 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (6) (16) (80) (56) (1,482) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (6) (16) (80) (56) (1,482) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (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 (7,741) (883) 1,248 680 2,886 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 448 259 3,145 2 1,741 Loss on asset impairment 8,000 1,064 -- -- -- Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other (3) (11) -- (8) 29 Due from/to Interstate Hotels -- -- -- -- -- Due to/from subsidiaries (405) (475) (4,374) (678) (3,043) Accounts payable, accrued expenses and other liabilities (282) (35) 373 4 25 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 17 (81) 392 -- 1,638 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (17) 81 (392) -- (1,638) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (17) 81 (392) -- (1,638) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR HOTEL SUB 5Q, SUB 5R, SUB 8D, SUB 4J, LESSEE, LLC LLC LLC LLC INC. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 809 394 338 620 (7,420) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 280 771 627 643 532 Loss on asset impairment -- -- -- -- -- Equity in earnings of affiliates -- -- -- -- -- 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, net -- -- -- (12) (9,713) Prepaid expenses and other -- -- (23) -- (243) Due from/to Interstate Hotels -- -- -- -- (5,298) Due to/from subsidiaries (976) (1,132) (564) (1,186) 5,031 Accounts payable, accrued expenses and other liabilities (2) 197 (15) (43) (2,273) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 111 230 363 22 (19,384) ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (111) (230) (363) (22) (894) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- Decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (111) (230) (363) (22) (894) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- 23,816 Distributions paid to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash used in financing activities -- -- -- -- 23,816 ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- 3,538 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- 12,517 ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- 16,055 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING CASH FLOW SIX MONTHS ENDED JUNE 30, 2003 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Operating activities: Net (loss) income (124,398) 230,202 (289,857) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 27,848 -- 58,478 Loss on asset impairment 144,760 -- 264,677 Equity in earnings of affiliates -- (230,202) -- Minority interests -- -- 6 Amortization of unearned stock based compensation -- -- 1,433 Unrealized gain on interest rate swaps recognized in net loss -- -- (3,395) Deferred income taxes -- -- (1,534) Changes in operating assets and liabilities: Accounts receivable, net (9,520) -- (12,168) Prepaid expenses and other (340) -- 4,225 Due from/to Interstate Hotels (5,298) -- (4,575) Due to/from subsidiaries (39,834) -- -- Accounts payable, accrued expenses and other liabilities (5,572) -- (5,480) ---------- ---------- ---------- Net cash provided by (used in) operating activities (12,354) -- 11,810 ---------- ---------- ---------- Investing activities: Investment in hotel properties (10,983) -- (14,547) Proceeds from sales of assets 3,070 -- 15,720 Purchases of marketable securities -- -- (18,056) Net payments from (advances to) Interstate Hotels & Resorts -- -- 42,052 Decrease in restricted cash -- -- (9,740) Other, net -- -- (299) ---------- ---------- ---------- Net cash provided by (used in) investing activities (7,913) -- 15,130 ---------- ---------- ---------- Financing activities: Principal payments on long-term debt 23,805 -- (4,208) Distributions paid to partners -- -- (141) Purchase of limited partnership unit -- -- (65) ---------- ---------- ---------- Net cash used in financing activities 23,805 -- (4,414) ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- (115) ---------- ---------- ---------- NET CHANGE IN CASH 3,538 -- 22,411 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,517 -- 33,889 ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD 16,055 -- 56,300 ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (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 (6,821) 22,495 -- -- 447 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 6,689 26,862 -- -- 66 Equity in income from affiliates (58,834) -- -- -- -- Loss on fair value of non-hedging derivatives 4,735 -- -- -- -- Minority interests 8 -- -- -- -- Amortization of unearned stock based compensation 1,920 -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss (2,905) -- -- -- -- Deferred income taxes (332) -- -- -- -- Changes in operating assets and liabilities: Accounts receivable, net (3,922) (145) -- -- (16) Prepaid expenses and other assets 4,016 (451) -- -- -- Due from/to Interstate Hotels & Resorts (557) -- -- -- -- Due from subsidiaries 349,453 (36,605) -- -- (540) Accounts payable, accrued expenses and other liabilities 2,402 (2,668) -- -- 53 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 295,852 9,488 -- -- 10 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (523) (9,580) -- -- (10) Note receivable (2,545) 613 -- -- -- Increase in restricted cash 2,375 2,009 -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (693) (6,958) -- -- (10) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt (259,310) (2,530) -- -- -- Proceeds from issuance of long-term debt (40,915) -- -- -- -- Deferred financing fees (3,567) -- -- -- -- Contributions from partners 3,156 -- -- -- -- Distributions paid to partners (1,212) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities (301,848) (2,530) -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash (28) -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH (6,717) -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,798 -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD 81 -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR AGH SUB 8A, SUB 8F, SECAUCUS, LLC LLC LLC ---------- ---------- ---------- Operating activities: Net (loss) income 507 542 -- Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 112 226 -- Equity in income from affiliates -- -- -- 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, net (16) 8 -- Prepaid expenses and other assets -- 19 -- Due from/to Interstate Hotels & Resorts -- -- -- Due from subsidiaries (2,540) (798) -- Accounts payable, accrued expenses and other liabilities (1) 19 -- ---------- ---------- ---------- Net cash provided by (used in) operating activities (1,938) 16 -- ---------- ---------- ---------- Investing activities: Investment in hotel properties 1,938 (16) -- Note receivable -- -- -- Increase in restricted cash -- -- -- ---------- ---------- ---------- Net cash provided by (used in) investing activities 1,938 (16) -- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- Proceeds from issuance of long-term debt -- -- -- Deferred financing fees -- -- -- Contributions from partners -- -- -- Distributions paid to partners -- -- -- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR SUB 6H, SUB 8B, SUB 1C, L.P. LLC L.P. ---------- ---------- ---------- Operating activities: Net (loss) income 528 2,006 (81) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 215 1,190 514 Equity in income from affiliates -- -- -- 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, net -- -- -- Prepaid expenses and other assets -- -- (17) Due from/to Interstate Hotels & Resorts -- -- -- Due from subsidiaries (765) (2,738) (302) Accounts payable, accrued expenses and other liabilities 33 293 102 ---------- ---------- ---------- Net cash provided by (used in) operating activities 11 751 216 ---------- ---------- ---------- Investing activities: Investment in hotel properties (11) (751) (216) Note receivable -- -- -- Increase in restricted cash -- -- -- ---------- ---------- ---------- Net cash provided by (used in) investing activities (11) (751) (216) ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- Proceeds from issuance of long-term debt -- -- -- Deferred financing fees -- -- -- Contributions from partners -- -- -- Distributions paid to partners -- -- -- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8E, SUB 7F, SUB 5L, SUB 3C, SUB 5R, LLC LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 441 297 489 420 -- Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 296 233 67 353 -- Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (674) (497) (565) (798) -- Accounts payable, accrued expenses and other liabilities (3) (5) 81 54 -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 60 28 72 29 -- ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (60) (28) (72) (29) -- Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (60) (28) (72) (29) -- ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income -- 820 1,689 64 1,367 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization -- 266 849 459 316 Equity in income from affiliates -- -- -- -- -- 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, net -- (37) -- -- -- Prepaid expenses and other assets 1 -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 46 (973) (2,494) (169) (1,549) Accounts payable, accrued expenses and other liabilities (46) 65 271 (241) 40 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 1 141 315 113 174 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (1) (141) (315) (113) (174) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (1) (141) (315) (113) (174) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5F, SUB 6G, SUB 8C, SUB 4C, SUB 4H, L.P. LLC LLC L.P. L.P. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 849 827 6 92 (11) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 528 418 692 283 270 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- (7) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (1,342) (1,137) (573) (205) (112) Accounts payable, accrued expenses and other liabilities 227 161 (24) (139) (104) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 262 269 101 31 36 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (262) (269) (101) (31) (36) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (262) (269) (101) (31) (36) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 7E, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC VENTURE ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 332 716 485 1,757 320 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 315 451 232 969 208 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (623) (1,175) (683) (2,805) (350) Accounts payable, accrued expenses and other liabilities 10 116 (20) 94 (26) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 34 108 14 15 152 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (34) (108) (14) (15) (152) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (34) (108) (14) (15) (152) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 1,450 (205) 96 392 10 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 372 212 133 -- 157 Equity in income from affiliates -- -- -- -- -- 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, net -- 1 -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (1,782) 267 424 (50) (139) Accounts payable, accrued expenses and other liabilities 95 -- 7 (92) 80 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 135 275 660 250 108 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (135) (511) (660) (250) (108) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (135) (511) (660) (250) (108) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- 236 -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- 236 -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ---------- ---------- ----------- ---------- ---------- Operating activities: Net (loss) income (283) 303 201 249 1,042 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 159 445 68 298 322 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- 4 (27) -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 60 (673) (254) (449) (1,301) Accounts payable, accrued expenses and other liabilities 79 50 (15) 92 107 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 15 125 4 163 170 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (400) (125) (4) (163) (170) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (400) (125) (4) (163) (170) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt 385 -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities 385 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, L.P. L.P. LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 1,175 (118) 889 (193) 310 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 1,118 463 832 378 227 Equity in income from affiliates -- -- -- -- -- 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, net -- -- 120 -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (1,453) (312) (1,695) 53 (544) Accounts payable, accrued expenses and other liabilities (422) (10) (38) (183) 69 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 418 23 108 55 62 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (418) (23) (108) (55) (62) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (418) (23) (108) (55) (62) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (337) (674) 692 166 1,215 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 243 724 986 290 -- Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 300 56 (1,616) (395) (1,051) Accounts payable, accrued expenses and other liabilities (93) 75 556 (3) 276 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 113 181 618 58 440 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (113) (182) (618) (58) (440) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (113) (182) (618) (58) (440) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- 1 -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- 1 -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2D, SUB 4F, SUB 5K, SUB 5M, SUB 1E, LLC L.P. LLC LLC L.P. ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income (147) 210 684 723 562 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 237 560 594 226 150 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries 230 (248) 505 (1,074) (647) Accounts payable, accrued expenses and other liabilities (12) (161) (1,212) 207 (3) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 308 361 571 82 62 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (755) (361) (571) (82) (62) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (755) (361) (571) (82) (62) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt 447 -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities 447 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 307 1,480 (239) 1,078 (582) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 109 603 296 394 519 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- -- -- Prepaid expenses and other assets -- -- -- -- -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (468) (2,077) 1,033 (1,252) 549 Accounts payable, accrued expenses and other liabilities 82 141 (57) 59 131 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 30 147 1,033 279 617 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (30) (147) (1,033) (279) (1,397) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (30) (147) (1,033) (279) (1,397) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- 780 Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- 780 ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC LLC LLC LLC ---------- ---------- ---------- ---------- ---------- Operating activities: Net (loss) income 662 (18) 2,332 283 2,790 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 458 461 3,095 1 1,733 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- 319 -- Prepaid expenses and other assets -- -- -- -- 483 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Due from subsidiaries (835) (190) (5,473) (582) (4,726) Accounts payable, accrued expenses and other liabilities (256) 67 910 18 1,269 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 29 320 864 39 1,549 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (29) (320) (859) (39) (1,549) Note receivable -- -- -- -- -- Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (29) (320) (859) (39) (1,549) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- (5) -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- (5) -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5R, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. ---------- ---------- ---------- ---------- ------------ Operating activities: Net (loss) income 862 685 327 868 2,183 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 240 690 634 671 1,083 Equity in income from affiliates -- -- -- -- -- 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, net -- -- -- 31 (1,160) Prepaid expenses and other assets -- -- -- -- (923) Due from/to Interstate Hotels & Resorts -- -- -- -- 5,457 Due from subsidiaries (909) (1,563) (895) (1,447) 13,703 Accounts payable, accrued expenses and other liabilities 228 362 (15) (63) 815 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 421 174 51 60 21,158 ---------- ---------- ---------- ---------- ---------- Investing activities: Investment in hotel properties (421) (174) (51) (60) (750) Note receivable -- -- -- -- (613) Increase in restricted cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (421) (174) (51) (60) (1,363) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- (4,000) Proceeds from issuance of long-term debt -- -- -- -- (5,114) Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions paid to partners -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- (9,114) ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CASH -- -- -- -- 10,681 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- 16,643 ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- 27,324 ========== ========== ========== ========== ==========

GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Operating activities: Net (loss) income 36,339 (58,834) (6,821) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 29,709 -- 63,260 Equity in income from affiliates -- 58,834 -- Loss on fair value of non-hedging derivatives -- -- 4,735 Minority interests -- -- 8 Amortization of unearned stock based compensation -- -- 1,920 Unrealized gain on interest rate swaps recognized in net loss -- -- (2,905) Deferred income taxes -- -- (332) Changes in operating assets and liabilities: Accounts receivable, net (750) -- (4,817) Prepaid expenses and other assets (467) -- 3,098 Due from/to Interstate Hotels & Resorts 5,457 -- 4,900 Due from subsidiaries (41,281) (271,567) -- Accounts payable, accrued expenses and other liabilities 4,150 -- 3,884 ---------- ---------- ---------- Net cash provided by (used in) operating activities 33,157 (271,567) 66,930 ---------- ---------- ---------- Investing activities: Investment in hotel properties (14,593) -- (24,696) Note receivable (613) (7,455) (10,000) Increase in restricted cash -- -- 4,384 --------- ---------- ---------- Net cash provided by (used in) investing activities (15,206) (7,455) (30,312) ---------- ---------- ---------- Financing activities: Principal payments on long-term debt (4,000) -- (265,840) Proceeds from issuance of long-term debt (3,266) 279,022 234,841 Deferred financing fees (4) -- (3,571) Contributions from partners -- -- 3,156 Distributions paid to partners -- -- (1,212) ---------- ---------- ---------- Net cash provided by (used in) financing activities (7,270) 279,022 (32,626) ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- (28) ---------- ---------- ---------- NET CHANGE IN CASH 10,681 -- 3,964 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,643 -- 23,441 ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD 27,324 -- 27,405 ========== ========== ==========
-----END PRIVACY-ENHANCED MESSAGE-----


	•	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.


^(a)	Includes the $154.3 million convertible notes, substantially all of which were repurchased in July 2003 with the proceeds from a new convertible note issuance. See “New convertible notes” discussion below for further details.
^(b)	Includes the $205 million senior subordinated notes, $22.6 million of which were repurchased in July 2003 with the proceeds from a new convertible note issuance. See “New convertible notes” discussion below for further details.


	•	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;

	•	the threatened or actual outbreak of hostilities and international political instability;

	•	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.


	•	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 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

	•	$15.8 million in proceeds from the sale of two non-core hotel assets; partially offset by

	•	$18.1 million investment in marketable securities;


	•	$14.5 million in capital expenditures (including $1.6 million of capitalized interest); and

	•	$9.7 million increase in restricted cash.


	•	limited future growth potential;

	•	secondary market location;

	•	secondary brand affiliation;

	•	higher than average capital expenditure requirements; or

	•	our portfolio is over-weighted in its market.


	•	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.”

^(b)	Repurchased $150.6 million face amount in July 2003 with the proceeds from the issuance of our new 9.5% convertible subordinated notes. See “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt — New Convertible Notes.”

^(c)	Repurchased $22.6 million face amount in July 2003 with the proceeds from the issuance of our new 9.5% convertible subordinated notes. See “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt — New Convertible Notes.”

^(d)	In July 2003, we issued $170 million of 9.5% convertible subordinated notes due 2010, which are not reflected on this table. See “Financial Condition, Liquidity, and Capital Resources — Long-Term Debt — New Convertible Notes.”


	Paul W. Whetsell
	Chief Executive Officer
	(Principal Executive Officer and
	Duly Authorized Officer)

(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.