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, OlpbKX8Hi5QQX9xTVJSkUaIFE4BgoIxg4NPHGpBnOSm16BRfQMxS8+RIjIargMBm yMLuQHBEOABPyQums/UVwQ== 0000950133-03-003814.txt : 20031112 0000950133-03-003814.hdr.sgml : 20031111 20031112123450 ACCESSION NUMBER: 0000950133-03-003814 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031112 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: 03992369 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 w91540e10vq.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 September 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)

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 October 31, 2003 was 62,939,078.

INDEX


		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets — September 30, 2003 and December 31, 2002		2
	Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2003 and 2002		3
	Consolidated Statements of Cash Flows — Nine Months Ended September 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		15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 4.	Controls and Procedures		28
PART II. OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K		29
Signatures			30

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED BALANCE SHEETS

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


			September 30,
			2003			December 31,
			(Unaudited)			2002

ASSETS
Property and equipment			$	2,577,640		$	3,020,909
Accumulated depreciation				(426,576	)		(460,972	)

				2,151,064			2,559,937
Restricted cash				38,403			20,365
Investment in affiliate				40,000			40,000
Note receivable from Interstate Hotels & Resorts				—			42,052
Prepaid expenses and other assets				44,409			44,942
Accounts receivable, net of allowance for doubtful accounts of $1,709 and $848				64,469			56,828
Marketable securities (Note 2)				1,000			—
Cash and cash equivalents (Note 2)				270,282			33,896

			$	2,609,627		$	2,798,020

LIABILITIES AND STOCKHOLDERS’ EQUITY
Long-term debt			$	1,729,125		$	1,654,102
Accounts payable and accrued expenses				103,261			109,790
Accrued interest				40,185			52,907
Due to Interstate Hotels & Resorts				5,969			10,500
Other liabilities				14,025			18,013

Total liabilities				1,892,565			1,845,312

Minority interests				37,857			74,422
Stockholders’ equity:
	Common stock, par value $0.01 per share
		Authorized — 100,000 shares
		Issued — 63,437 and 49,555 shares		634			495
	Additional paid-in capital			1,303,061			1,192,387
	Accumulated deficit			(580,029	)		(230,870	)
	Accumulated other comprehensive loss			(1,659	)		(7,052	)
	Common stock held in treasury — 2,318 and 4,324 shares			(42,802	)		(76,674	)

Total stockholders’ equity				679,205			878,286

			$	2,609,627		$	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						Nine Months Ended
				September 30,						September 30,

				2003			2002			2003			2002

Revenue:
	Hotel operations:
		Rooms		$	146,057		$	147,548		$	455,590		$	474,540
		Food and beverage			53,660			54,089			181,230			181,174
		Other hotel operations			17,570			17,469			56,736			55,174
	Office rental, parking and other revenue				3,579			3,309			10,337			12,331

Total revenue					220,866			222,415			703,893			723,219

Hotel operating expenses:
		Rooms			40,360			38,259			116,040			114,197
		Food and beverage			43,268			41,998			134,257			131,551
		Other hotel operating expenses			11,080			10,424			34,119			31,621
Office rental, parking and other expenses					933			740			2,147			2,237
Other operating expenses:
		General and administrative			39,426			39,781			121,679			121,936
		Property operating costs			37,730			37,287			109,844			109,275
		Depreciation and amortization			27,451			28,544			84,845			88,308
		Loss on asset impairments			21,000			—			263,377			—
		Property taxes, insurance and other			17,816			15,478			57,292			50,268

Operating expenses					239,064			212,511			923,600			649,393

Operating (loss) income					(18,198	)		9,904			(219,707	)		73,826
Gain on early extinguishments of debt					4,574			—			4,574			—
Change in fair value of non-hedging derivatives, net of swap payments					—			(1,132	)		—			(4,211	)
Loss on fair value of non-hedging derivatives					—			—			—			(4,735	)
Minority interest income					1,662			1,584			15,937			1,965
Interest expense, net					(36,404	)		(33,949	)		(106,017	)		(102,786	)

Loss from continuing operations before income taxes					(48,366	)		(23,593	)		(305,213	)		(35,941	)
Income tax benefit					410			649			625			989

Loss from continuing operations					(47,956	)		(22,944	)		(304,588	)		(34,952	)
Discontinued operations:
	Loss from discontinued operations before income tax (expense) benefit				(2,737	)		(6,591	)		(22,168	)		(1,410	)
	Income tax (expense) benefit				(1	)		133			(44	)		(10	)

Loss from discontinued operations					(2,738	)		(6,458	)		(22,212	)		(1,420	)

Net loss				$	(50,694	)	$	(29,402	)	$	(326,800	)	$	(36,372	)

Loss per share:
	Basic and Diluted:
		Loss from continuing operations		$	(1.00	)	$	(0.51	)	$	(6.56	)	$	(0.78	)
		Loss from discontinued operations			(0.06	)		(0.14	)		(0.48	)		(0.03	)

			Net loss per basic and diluted share	$	(1.06	)	$	(0.65	)	$	(7.04	)	$	(0.81	)

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)



				Nine Months Ended
				September 30,

				2003			2002

Operating activities:
	Net loss			$	(326,800	)	$	(36,372	)
	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization			86,752			94,227
		Loss on asset impairments			285,677			—
		Loss on sale of assets, before tax effect			2,772			6,403
		Gain on early extinguishments of debt			(4,574	)		—
		Loss on fair value of non-hedging derivatives			—			4,735
		Minority interests			(15,937	)		(1,965	)
		Amortization of unearned stock-based compensation			2,380			3,538
		Change in value of interest rate swaps			(3,977	)		(4,787	)
		Deferred income taxes			(2,523	)		(871	)
		Changes in operating assets and liabilities:
			Accounts receivable		(7,641	)		(5,613	)
			Prepaid expenses and other assets		2,763			(5,051	)
			Due from/to Interstate Hotels & Resorts		(4,531	)		5,762
			Accounts payable, accrued expenses, accrued interest and other liabilities		(19,639	)		(12,690	)

Net cash (used in) provided by operating activities					(5,278	)		47,316

Investing activities:
	Capital expenditures for property and equipment				(21,826	)		(35,824	)
	Proceeds from sales of assets				74,470			25,150
	Purchases of marketable securities				(18,040	)		—
	Sales of marketable securities				17,040			—
	Net payments from (advances to) Interstate Hotels & Resorts				42,052			(7,000	)
	(Increase) decrease in restricted cash				(18,038	)		4,861
	Other, net				(299	)		—

Net cash provided by (used in) investing activities					75,359			(12,813	)

Financing activities:
	Principal payments on long-term debt				(179,309	)		(313,618	)
	Proceeds from issuance of long-term debt				271,000			283,138
	Deferred financing fees				(7,513	)		(3,416	)
	Proceeds from common stock issuance				82,920			—
	Proceeds from option exercises				—			3,156
	Dividends paid to stockholders				—			(1,395	)
	Distributions to minority investors				(424	)		(1,072	)
	Purchase of limited partnership unit				(65	)		—

Net cash provided by (used in) financing activities					166,609			(33,207	)
Effect of exchange rate changes on cash and cash equivalents					(304	)		(9	)

Net increase in cash and cash equivalents					236,386			1,287
Cash and cash equivalents, beginning of period					33,896			23,448

Cash and cash equivalents, end of period				$	270,282		$	24,735

Supplemental Cash Flow Information
Cash paid for interest and income taxes:
	Interest, net of capitalized interest			$	118,739		$	110,619

	Income taxes			$	1,920		$	726

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 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 September 30, 2003, we owned 101 hotels, with 26,290 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”). In October 2003, we sold one hotel with 71 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 for each property to a subsidiary of Interstate Hotels. The taxable subsidiaries in turn make rental payments to our operating partnership 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. Our consolidated financial statements include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany balances and transactions have been eliminated in 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. 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. On October 9, 2003, the FASB issued FIN 46-6 which deferred to December 31, 2003 the effective date for applying the interpretation to variable interest entities created before February 1, 2003. We do not expect the application of the second phase of the interpretation to have a material effect 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.

Marketable Securities. We classify investments in equity securities and debt securities with original maturities greater than three months as marketable securities. We record debt securities at amortized cost and equity securities at market value based on quoted market prices. As of September 30, 2003, our marketable securities consisted of investments in debt securities, including commercial paper and agency discount notes. As of September 30, 2003, the securities had a fair value of $1 million.

Cash and Cash Equivalents. We classify investments with original maturities of three months or less as cash equivalents. Our cash equivalents include investments in debt securities, including commercial paper, overnight repurchase agreements and money market funds.

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

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 require payments to Interstate Hotels upon termination. 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 and infrequent transactions to be reclassified. See Note 6 for details on the early extinguishment of substantially all of our 4.75% convertible notes and a portion of our 8.75% senior subordinated notes during the third quarter of 2003.

Stock-Based Compensation. We adopted the recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended in December 2002 by SFAS No. 148, on January 1, 2003 for new stock options issued under our compensation programs. As permitted by SFAS No. 148, we elected to apply the provisions prospectively, which includes recognizing compensation expense for only those stock options issued in 2003 and after. During the nine months ended September 30, 2003, we granted 207,500 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 nine months ended September 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 fair 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						Nine Months Ended
		September 30,						September 30,

		2003			2002			2003			2002

Net loss, as reported		$	(50,694	)	$	(29,402	)	$	(326,800	)	$	(36,372	)
	Add: Stock-based employee compensation expense included in reported net loss, net of related tax effect		762			1,251			2,344			3,441
	Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect		(890	)		(1,478	)		(2,790	)		(4,182	)

Net loss, pro forma		$	(50,822	)	($	29,629	)	$	(327,246	)	$	(37,113	)

Loss per share:
	Basic and diluted, as reported	$	(1.06	)	$	(0.65	)	$	(7.04	)	$	(0.81	)
	Basic and diluted, pro forma	$	(1.06	)	$	(0.66	)	$	(7.05	)	$	(0.83	)

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. 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, became effective on January 1, 2003. The interpretation requires recognition of liabilities at their fair value for newly-issued guarantees. We have no guarantees which require recognition under the provisions of this interpretation.

Derivative Instruments and Hedging Activities. SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” became effective on July 1, 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 provisions. This statement applies to any freestanding financial derivative instruments entered into or modified after June 30, 2003. This standard did not affect our results of operations or financial condition as we have not entered into any freestanding financial derivative instruments since June 30, 2003.

Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The FASB issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” in May 2003. The provisions of the statement require 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 applied immediately to any such financial instrument entered into or modified after May 31, 2003, and to all other instruments on July 1, 2003. We have not entered into or modified any financial instruments within the scope of this standard subsequent to May 31, 2003, nor do we have any existing financial instruments that fall within the scope of SFAS No. 150.

3. Comprehensive Loss

Comprehensive loss was $50.2 million and $30.1 million for the three months ended September 30, 2003 and 2002, respectively. Comprehensive loss consisted of net loss of $50.7 million and $29.4 million for the three months ended September 30, 2003 and 2002, respectively, and foreign currency translation adjustments.

Comprehensive loss was $321.4 million and $35.8 million for the nine months ended September 30, 2003 and 2002, respectively. Comprehensive loss consisted of net loss of $326.8 million and $36.4 million for the nine months ended September 30, 2003 and 2002, respectively, foreign currency translation adjustments, and in 2002 a $0.5 million fair value gain adjustment for derivatives.

4. Property and Equipment

Property and equipment consisted of the following (dollars in thousands):


	September 30,		December 31,
	2003		2002

Land	$	251,933	$	288,611
Buildings and improvements		2,005,884		2,351,769
Furniture, fixtures and equipment		286,007		344,541
Construction-in-progress		33,816		35,988

	$	2,577,640	$	3,020,909

For the nine months ended September 30, 2003 and 2002, we capitalized interest of $2.4 million and $3.1 million, respectively.

In late 2002, due to the decision to market non-core assets as a part of our program to dispose of assets that do not fit our long-term strategy and changes in economic conditions, 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: secondary market locations, secondary brand affiliations, higher than average future capital expenditure requirements, limited future growth potential, 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 contemplated disposition of these 41 assets during the second quarter of 2003.

During the third quarter of 2003, we made the determination to dispose of one additional asset and retain one of our assets previously included in our disposition program. We also changed our expected holding period for another asset and revised our estimated sales prices on certain other assets included in our disposition program. As a result, we recognized an additional impairment loss of $21 million during the three months ended September 30, 2003. Including one asset sale in October, we have sold seven hotels included in our asset disposition program since January 1, 2003.

nearly all cases, our estimates have reflected the results of an extensive marketing effort and negotiations with prospective buyers. Actual results could differ materially from these estimates.

As of September 30, 2003, our property and equipment included $8.6 million for one asset (sold in October 2003 for a gain of approximately $7 million), which met our criteria for held-for-sale classification. The remaining hotels included in our asset disposition program do not meet the probability criteria as prescribed by SFAS No. 144 to classify as held-for-sale.

5. Investment in Affiliate

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 September 30, 2003, cumulative preferred returns of $16.6 million were due from MIP and included in accounts receivable on the accompanying consolidated balance sheet. We expect that any cumulative unpaid preferred returns will be paid in the future from excess cash flow above our current return and from potential partnership hotel 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 current economic environment continue and the performance of the MIP properties not improve, the value of our original investment may also decline.

6. Long-Term Debt

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


	September 30,			December 31,
	2003			2002

Senior unsecured notes	$	950,000		$	950,000
Secured facility, due 2009		310,475			314,626
Secured facility, due 2013		101,000			—
Convertible subordinated notes		173,705			154,300
Senior subordinated notes		164,400			205,000
Mortgage and other debt		36,018			38,030
Unamortized issue discount		(6,473	)		(7,854	)

	$	1,729,125		$	1,654,102

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


2003 (three months)	$	2,255
2004		21,717
2005		10,375
2006		11,238
2007		175,560
Thereafter		1,507,980

	$	1,729,125

As of September 30, 2003, all of our debt bore fixed rates of interest. Our overall weighted average interest rate was 8.91%. Based on market prices at September 30, 2003, the fair value of our long-term debt was $1.81 billion.

Senior unsecured notes. These 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 September 30, 2003, our fixed charge coverage ratio was below 2 to 1, and therefore we were not permitted generally 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, except as noted below.

There are certain exceptions 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 also permitted to invest five percent of consolidated net tangible assets (as defined in the indentures) in unrestricted subsidiaries and mortgage the properties contributed to the unrestricted subsidiaries. We completed a qualifying transaction under this exception during the third quarter of 2003 through a new secured facility financing (see discussion below).

Secured facilities. On September 26, 2003, we completed a $101 million, 10-year, commercial mortgage-backed securities financing, secured by a portfolio of four hotels, as permitted by the indentures to our senior unsecured notes and senior subordinated notes. The loan carries a fixed annual interest rate of 6.88% and matures in 2013. We incurred approximately $0.9 million in debt issuance costs related to the facility. The proceeds will be used to repay debt carrying higher interest rates or to fund capital expenditures or acquisitions to the extent that higher interest rate debt cannot be acquired at attractive prices.

We completed a $330 million non-recourse financing secured by a portfolio of 19 hotels in 1999. The loan bears a fixed annual 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 $19.9 million of cash was held in escrow under this provision as of September 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. 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. Escrowed funds totaling approximately $11 million were available to fund capital expenditures under this provision as of September 30, 2003.

Convertible subordinated notes. On July 1, 2003, we completed an offering of $170 million aggregate principal amount of 9.5% convertible subordinated notes due 2010. 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). These convertible notes are unsecured obligations and provide for semi-annual payments of interest each on October 1 and April 1. We incurred approximately $6.5 million in debt issuance costs related to the issuance.

recognized this gain and wrote off approximately $0.6 million of deferred financing costs related to the repurchase, which write off is classified as amortization expense on our consolidated statements of operations. The remaining proceeds from the issuance were also used to repurchase a portion of our senior subordinated notes (see discussion below).

Senior subordinated notes. The notes are unsecured obligations due in 2007, and provide for semi-annual payments of interest each February 15 and August 15 at an annual rate of 8.75%. The related indenture contains various restrictive covenants, which are similar to those in our senior unsecured notes.

A portion of the proceeds from the July 2003 issuance of 9.5% convertible notes discussed above were used to repurchase $22.6 million principal amount of our senior subordinated notes, at varying prices, resulting in an aggregate discount of approximately $1.5 million. We recognized this gain during the third quarter of 2003. Also during the third quarter, we redeemed $18 million of these notes in exchange for 2,792,880 shares of our common stock, resulting in a gain of $1.7 million. In connection with the repurchases of these notes, we wrote off deferred financing costs totaling approximately $0.5 million, which write off is classified as amortization expense on our consolidated statements of operations.

In October 2003, we repurchased $59.3 million face amount of these notes, at varying prices. During the fourth quarter, we expect to recognize a loss of approximately $1.2 million, including the write off of deferred financing costs related to the repurchases. As of November 1, 2003, we had approximately $105 million of senior subordinated notes outstanding.

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 September 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, two in the first half of 2003, as well as the settlement of our note receivable with Interstate Hotels, negatively affected 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 November 19, 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 September 30, 2003, which would be written off should we decide to terminate the facility.

Derivatives. We had three swap agreements that did not qualify for treatment as cash-flow hedges under SFAS No. 133 expire since September 30, 2002, one in December 2002, one in April 2003 and one in July 2003. As of September 30, 2003, we had no outstanding derivative instruments.

During the three and nine months ended September 30, 2003, we recognized $0.6 million and $4.0 million, respectively, of income related to the decrease in fair value of the liability recorded for the interest rate swap in place in those time periods. For the three and nine months ended September 30, 2003, we made cash payments on this swap of $0.6 million and $4.0 million, respectively. The change in fair value and the swap payments are netted together on our statement of operations, resulting in no effect on net income.

During the three and nine months ended September 30, 2002, we recognized $1.9 million and $4.8 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 nine months ended September 30, 2002, we made cash payments on those swaps of $3 million and $9 million, respectively. The change in fair value and the swap payments are netted together on our statement of operations. During the nine months ended September 30, 2002, we also recognized a $4.7 million loss on the fair value of derivatives no longer classified as cash-flow hedges due to the repayment of the related hedged debt.

7. Stockholders’ Equity and Minority Interests

Common Stock Transactions. On September 24, 2003, we issued 12,000,000 shares of common stock at a price of $7.20 per share ($82.9 million of net proceeds) pursuant to our effective shelf registration statement filed under the Securities Act of 1933. In October 2003, we issued 1,800,000 shares of common stock at a price of $7.20 per share ($12.4 million of net proceeds) under the over-allotment option that we granted to the underwriter in connection with the September 24, 2003 issuance.

During the third quarter of 2003, we issued 2,792,880 shares of common stock in exchange for $18 million of our senior subordinated notes (see Note 6). We reissued 2,056,210 shares held in treasury in connection with this transaction.

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.

Restricted Stock Transactions. In 2003, we issued 211,721 shares of restricted stock to employees pursuant to employment agreements, with an aggregate value of $0.7 million.

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 883,000 and 400,000 of their OP Units, with a value of $20.1 million and $6.1 million, respectively, into common stock during the nine months ended September 30, 2003 and 2002, respectively. There were no material conversions for cash during the nine months ended September 30, 2003 and 2002.

In May 2002, we issued 162,500 POPs to an executive officer pursuant to an employment agreement. If all of the vesting criteria for the POPs were met, then each POP would have a value equivalent to the value of one share of our stock, which for this issuance totaled $2.9 million.

8. Loss Per Share

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



		Three Months Ended						Nine Months Ended
		September 30,						September 30,

		2003			2002			2003			2002

Basic and Diluted Loss Per Share:
	Loss from continuing operations	$	(47,956	)	$	(22,944	)	$	(304,588	)	$	(34,952	)
	Dividends declared on unvested restricted stock		—			(2	)		—			(5	)

	Loss available to common stockholders	$	(47,956	)	$	(22,946	)	$	(304,588	)	$	(34,957	)

	Weighted average number of basic and diluted shares of common stock outstanding		47,709			45,045			46,445			44,851

	Basic and diluted loss per share from continuing operations	$	(1.00	)	$	(0.51	)	$	(6.56	)	$	(0.78	)

For the three months ended September 30, 2003 and 2002, 20,989,775 and 9,135,672 shares, respectively, consisting of shares issuable upon exercise, redemption or conversion of outstanding stock options, operating partnership units and convertible notes, were excluded from the calculation of diluted loss per share as the effect of their inclusion would be anti-dilutive. For the nine months ended September 30, 2003 and 2002,

12,986,759 and 9,347,966 shares, respectively, underlying these instruments were excluded from the calculation of diluted loss per share as the effect of their inclusion would be anti-dilutive.

9. Commitments and Contingencies

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

Minimum Lease Payments. We lease the land at certain of our hotels under long-term arrangements from third parties. Certain leases contain contingent rent features based on gross revenues at the respective property. Future minimum lease payments required under these operating leases as of September 30, 2003 were as follows (dollars in thousands):


2003 (three months)	$	360
2004		1,437
2005		1,440
2006		1,427
2007		1,427
Thereafter		56,368

	$	62,459

Our obligations under other operating lease commitments, primarily for equipment and office space, 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 September 30, 2003 were as follows (dollars in thousands):


2003 (three months)	$	1,175
2004		4,428
2005		2,896
2006		2,027
2007		1,456
Thereafter		1,929

	$	13,911

10. Asset Dispositions

We sold three hotels during the third quarter of 2002, two hotels in the fourth quarter of 2002, one in the first quarter of 2003, one in the second quarter of 2003, and four hotels in the third quarter of 2003. In October 2003, we sold one hotel that met our criteria for held-for-sale classification as of September 30, 2003 (see Note 4). Operating results for these hotels, and where applicable the gain or loss on final disposition, are included in discontinued operations.

Summary financial information included in discontinued operations for these hotels were as follows (dollars in thousands):



	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,

	2003			2002			2003			2002

Revenue	$	4,844		$	13,973		$	25,589		$	50,195
Loss on asset impairments		—			—			(22,300	)		—
Pretax income (loss) from operations		35			(188	)		(19,396	)		4,993
Loss on disposal		(2,772	)		(6,403	)		(2,772	)		(6,403	)

The properties we intend to dispose of represent approximately one-third of our total properties. For the nine months ended September 30, 2003, the 35 disposition assets accounted for approximately 20% of our consolidated revenue and approximately 13% of consolidated operating income. For purposes of this calculation, we exclude depreciation and amortization and loss on asset impairments from operating income.

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 senior subordinated notes. We own a one percent general partner interest in MHOP, and MeriStar LP, Inc., our wholly-owned subsidiary, owns approximately a 93 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 September 30, 2003 and December 31, 2002, consolidating statements of operations for the three and nine months ended September 30, 2003 and 2002, and consolidating statements of cash flows for the nine months ended September 30, 2003 and 2002. In connection with the $101 million secured financing completed at the end of September 2003 (see Note 6), certain of MHOP’s guarantor subsidiaries became non-guarantor subsidiaries.


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 September 30, 2003, we owned 101 hotels, with 26,290 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”). In October 2003, we sold one hotel with 71 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 September 30, 2003 compared with the three months ended September 30, 2002

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


	2003		2002		Change

Average daily rate	$	90.76	$	94.61		(4.1)%
Occupancy		67.0%		64.9%		3.2%
Revenue per available room (RevPAR)	$	60.81	$	61.43		(1.0)%

Revenues. Total revenue decreased $1.5 million to $220.9 million for the three months ended September 30, 2003 from $222.4 million for the same period in 2002, primarily due to a $1.5 million decrease in room revenue mainly attributable to a decrease in average daily rate. The average daily rate declined 4.1% for the three months ended September 30, 2003 when compared with the same period in 2002 primarily due to an increase in rooms sold through discounted internet sales channels. The increase in occupancy of 3.2% for the same period partially offset the rate decline.

Operating expenses. Total operating expenses increased a net $26.6 million to $239.1 million for the quarter ended September 30, 2003 compared to $212.5 million for the same period in 2002. Hotel operating expenses increased from $91.4 million for the three months ended September 30, 2002 to $95.6 million for the same period in 2003 due mainly to an increase in room and food and beverage expenses stemming from improvements in occupancy at our hotels.

Other operating expenses increased $22.3 million to $143.4 million for the three months ended September 30, 2003 from $121.1 million for the same period in 2002 resulting mainly from a loss on asset

impairments of $21 million. General and administrative expenses and property operating costs remained essentially flat over these periods. Property taxes, insurance and other costs increased $2.3 million due primarily to favorable resolutions with taxing jurisdictions in 2002.

Significant items. We recognized a loss on asset impairment of $21 million related to our asset disposition program during the three months ended September 30, 2003. As of September 30, 2003, we had 36 assets planned for disposition, one of which was sold in October 2003 (see “Discontinued operations” discussion below).

On July 1, 2003, we completed an offering of $170 million aggregate principal amount of 9.5% convertible subordinated notes due 2010. The proceeds from the new issuance were used to repurchase $150.6 million of the $154.3 million of outstanding 4.75% convertible notes due 2004, at varying prices, resulting in a $1.4 million gain.

The proceeds from the issuance were also used to repurchase $22.6 million of outstanding 8.75% senior subordinated notes due 2007, at varying prices, resulting in a $1.5 million gain. Also during the third quarter of 2003, we redeemed a further $18 million of these senior subordinated notes in exchange for 2,792,880 shares of our common stock, resulting in a gain of $1.7 million.

We had three swap agreements that did not qualify for treatment as cash-flow hedges under SFAS No. 133, expire since September 30, 2002, one in December 2002, one in April 2003 and one in July 2003. As of September 30, 2003, we had no outstanding derivative instruments. Results for the 2002 third quarter included a net expense of $1.1 million related to the swap agreements in place during that time. Current quarter results were not materially affected by marking to market the swap agreement that expired in July 2003.

Interest expense. Interest expense increased $2.5 million due primarily to the July 2003 issuance of 9.5% convertible subordinated notes due 2010 to repurchase substantially all of our 4.75% convertible notes (see Note 6 to our unaudited consolidated financial statements).

Discontinued operations. During 2002, we sold five hotels in separate transactions for an aggregate of $60.7 million in cash. During the first nine months of 2003, we completed the sale of six hotels in separate transactions for an aggregate of $74.5 million in cash. As of September 30, 2003, we had one hotel classified as held for sale, which we sold in early October 2003 for $16.5 million in cash (for a gain of approximately $7 million). For the three months ended September 30, 2003, we recognized a $2.8 million loss on disposal related to the four hotels we sold during the third quarter. We recognized a $6.4 million loss on disposal related to the three hotels we sold during the third quarter of 2002.

Nine months ended September 30, 2003 compared with the nine months ended September 30, 2002

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


	2003		2002		Change

Average daily rate	$	96.53	$	100.72		(4.2)%
Occupancy		66.3%		66.1%		0.3%
Revenue per available room (RevPAR)	$	63.98	$	66.59		(3.9)%

Revenues. Total revenue decreased $19.3 million to $703.9 million for the nine months ended September 30, 2003 from $723.2 million for the same period in 2002, primarily due to a $19 million decrease in room revenue directly attributable to a decrease in average daily rate. The average daily rate declined 4.2% for the nine months ended September 30, 2003 when compared with the same period in 2002 primarily due to an increase in discounted internet sales as previously noted. The slight increase in occupancy over the same period did not significantly offset the rate decline.

Operating expenses. Total operating expenses increased a net $274.2 million to $923.6 million for the nine months ended September 30, 2003 compared with $649.4 million for the same period in 2002. Hotel operating expenses increased $7 million from $279.6 million for the nine months ended September 30, 2002 to $286.6 million for the same period in 2003 due primarily to increases in food and beverage expenses and other hotel operations. These expenses increased mainly due to customer satisfaction initiatives.

Other operating expenses increased $267.2 million to $637.0 million for the nine months ended September 30, 2003 from $369.8 million for the same period in 2002, resulting mainly from losses on asset impairments totaling $263.4 million in the first three quarters of 2003 (see “Significant items” discussion below). General and administrative and property operating costs remained essentially flat. Property tax refunds and favorable resolution of property tax liabilities, totaling approximately $6 million, during 2002 contributed to the $7 million increase in property taxes, insurance and other expenses for the 2003 comparative period.

Significant items. We recognized losses on asset impairments totaling $285.7 million ($22.3 million of which is included in discontinued operations) related to our asset disposition program during the nine months ended September 30, 2003. As of September 30, 2003, we had 36 assets planned for disposition, one of which was sold in October 2003. (See the discussion in quarter over quarter comparison for further details related to the significant items occurring in the three months ended September 30, 2003).

Prior year results included a net expense of $4.2 million related to the swap agreements previously discussed. Current period results were not materially affected by marking to market the swap agreements that expired during 2003. Prior year results also included a $4.7 million loss on the fair value of derivatives no longer classified as cash flow hedges due to the repayment of the debt that was originally hedged.

Interest expense. Interest expense increased $3.3 million due primarily to the July 2003 issuance of 9.5% convertible subordinated notes due 2010 to substantially repurchase our 4.75% convertible notes (see Note 6 to our unaudited consolidated financial statements).

Discontinued operations. During 2002, we sold five hotels in separate transactions for an aggregate of $60.7 million in cash. During the first nine months of 2003, we completed the sale of six hotels in separate transactions for an aggregate of $74.5 million in cash. As of September 30, 2003, we had one hotel classified as held for sale, which we sold in early October 2003 for $16.5 million in cash (with a gain of approximately $7 million). As previously noted, discontinued operations for the nine months ended September 30, 2003 included impairment charges totaling $22.3 million related to the assets included in our disposition program. Discontinued operations for the nine months ended September 30, 2003 included a $2.8 million loss on disposal related to the four hotels we sold in the third quarter. Discontinued operations for the nine months ended September 30, 2002 included a $6.4 million loss on disposal related to three hotels we sold in the third quarter of 2002.

FUNDS FROM OPERATIONS

Substantially all of our non-current 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 ratably 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, management 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, 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

and cumulative effect of changes in accounting principle as defined by GAAP are also excluded from the calculation of FFO. As defined by NAREIT, FFO also does not include reductions from asset impairment charges. The Securities and Exchange Commission, however, recommends that FFO include the effect of asset impairment charges, which presentation we have adopted. 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. Management also uses FFO in our annual budget process.

FFO should not be considered as an alternative to any other performance measures prescribed by GAAP. Although FFO is considered a standard benchmark utilized by the investment community, our FFO may not be comparable to a similarly titled measure reported by other companies.

FFO

We use FFO as a measure of our performance. The following reconciles our GAAP net loss to FFO on a diluted basis (amounts in thousands, except per share amounts):



			Three Months Ended						Nine Months Ended
			September 30,						September 30,

			2003			2002			2003			2002

	Net loss		$	(50,694	)	$	(29,402	)	$	(326,800	)	$	(36,372	)
	Loss on disposal of assets			2,772			6,403			2,772			6,403
	Hotel depreciation and amortization			25,244			28,594			80,900			86,845
	Minority interest income to common
		OP unit holders		(1,803	)		(1,725	)		(16,360	)		(2,389	)

FFO				(24,481	) ^(a)		3,870			(259,488	) ^(a)		54,487
	Interest on convertible debt			—			—			—			5,346

FFO, assuming dilutive conversions			$	(24,481	)	$	3,870		$	(259,488	)	$	59,833

FFO per diluted share			$	(0.48	) ^(a)	$	0.08		$	(5.23	) ^(a)	$	1.12

Weighted average number of diluted shares of common stock outstanding for loss per share				47,709			45,045			46,445			44,851
Common stock equivalents:
	Operating partnership units			2,887			3,904			3,099			3,979
	Stock options and POPs			69			5			32			18
	Convertible debt shares			—			—			—			4,538

Weighted average number of diluted shares of common stock outstanding for FFO				50,665			48,954			49,576			53,386

^(a)
Funds from operations for the three and nine months ended September 30, 2003, include the effect of loss on asset impairments of $21 million and $285.7 million (or ($0.41) and $(5.76) per diluted share), respectively.

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, debt repurchases, and investments in hotels (including capital projects and possible future acquisitions). 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, build liquidity, reduce our leverage and extend our debt maturities. We have been committed this year to hold cash balances of generally $60 million to $80 million in our operating accounts as a hedge against economic and geopolitical uncertainties, as well as to provide for our recurring cash requirements. We will seek to establish a new $50 million secured revolving credit facility prior to year-end 2003, which we anticipate would add to our liquidity.

As part of our strategy to reduce our leverage and extend our debt maturities, 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 our 4.75% convertible subordinated notes due 2004. The proceeds from the issuance were mainly used to repurchase substantially all of the 4.75% convertible notes due 2004, which were our next significant maturity, and $22.6 million of our 8.75% senior subordinated notes due 2007. As a result of this transaction, we now have no material debt maturities until the senior subordinated notes mature in 2007. During the third quarter, we also issued 2,792,880 shares of common stock in exchange for a further $18 million of senior subordinated notes, and in October 2003, we repurchased an additional $59.3 million of the senior subordinated notes. We currently have less than $4 million of the 2004 convertible notes outstanding and have reduced the amount of our senior subordinated notes to $105 million.

We completed a $101 million, 10-year, 6.88% commercial mortgage-backed securities financing, secured by a portfolio of four hotels, at the end of September. In September and October 2003, we also issued 13,800,000 shares of common stock at a price of $7.20 per share for net proceeds totaling $95.3 million (of which 1.8 million shares, or $12.4 million of net proceeds, were issued in October 2003). To date, we have raised in 2003 approximately $91 million from the sale of seven of our properties, including the October 2003 sale of one hotel for $16.5 million. We ended the third quarter of 2003 with cash balances of $309.7 million (including marketable securities of $1 million), of which $271.3 million was unrestricted.

We currently have 35 hotels (after the October sale) planned for disposition. We expect to generate proceeds of approximately $280 million to $320 million over the next six to nine months from the disposition of these properties. 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, to repurchase our senior debt and to fund acquisitions. Our strategy includes acquiring those hotels located in major urban markets or destination resorts with minimal seasonality and branded, larger hotels with significant meeting space.

Sources and Uses of Cash

We used a total of $5.3 million of cash in operations during the first nine months of 2003 compared with $47.3 million generated in the first nine months of 2002. Our operating results and the amount of cash generated by our hotel operations have been adversely affected by the continuing sluggish economy, the reduction in travel resulting from events of September 11, 2001, the threat of further terrorist attacks, and other factors affecting business and leisure travel. Cash flow from operations also decreased in 2003 due to higher interest rates on our senior unsecured notes issued in February 2002 as well as the higher interest rate on our new 9.50% convertible subordinated notes issued in July of this year. Partially offsetting these increases in interest was savings of approximately $3.2 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 September 30, 2003, approximately $16.6 million of cumulative preferred returns remained unpaid. We expect that any cumulative unpaid preferred returns will be paid in the future from excess cash flow above our current return and from potential partnership hotel 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 $75.4 million of cash during the first nine months of 2003, resulting primarily from:

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

• $74.5 million in proceeds from the sale of six non-core hotel assets; partially offset by

• $21.8 million in capital expenditures (including $2.4 million of capitalized interest); and

• $18 million increase in cash restricted for mortgage escrows.

We generated a net $166.6 million of cash from financing activities during the first nine months of 2003 due mainly to:

• $271 million from the issuance of new debt;

• $82.9 million from the issuance of common stock (total proceeds of $95.3 million, including the October 2003 issuance of an additional 1.8 million shares for $12.4 million); partially offset by

• $179.3 million in repayments of debt.

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

Convertible subordinated notes. On July 1, 2003, we completed an offering of $170 million aggregate principal amount of 9.5% convertible subordinated notes due 2010. 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). These convertible subordinated notes are unsecured obligations and provide for semi-annual payments of interest each October 1 and April 1. We incurred approximately $6.5 million in debt issuance costs related to the issuance.

The proceeds from the new issuance were used to repurchase $150.6 million of our $154.3 million 4.75% convertible notes due 2004, at varying prices, resulting in an aggregate discount of approximately $1.4 million. These convertible notes are also unsecured obligations that pay interest semi-annually, on each April 15 and October 15. These convertible notes are convertible into our common stock at a rate of 23.2558 shares per $1,000 in principal amount, which equals approximately $43.00 per share. During the third quarter, we recognized this gain and wrote off approximately $0.6 million of deferred financing costs related to the repurchase. The remaining proceeds from the issuance were also used to repurchase a portion of our senior subordinated notes (see discussion below).

Senior subordinated notes. As of September 30, 2003, we had outstanding $164.4 million aggregate principal amount of 8.75% senior subordinated notes due 2007. The notes are unsecured obligations and provide for semi-annual payments of interest each February 15 and August 15. The related indenture contains various restrictive covenants, which are similar to those in our senior unsecured notes.

A portion of the proceeds from the July 2003 issuance of 9.5% convertible notes discussed above were used to repurchase $22.6 million principal amount of our senior subordinated notes, at varying prices, resulting in an aggregate discount of approximately $1.5 million. We recognized this gain during the third quarter. Also during the third quarter of 2003, we redeemed $18 million of these notes in exchange for 2,792,880 shares of our common stock, resulting in a gain of $1.7 million. In connection with the repurchases of these notes during the third quarter, we wrote off deferred financing costs totaling approximately $0.5 million.

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 September 30, 2003, we had no outstanding borrowings under this facility.

Senior unsecured notes. As of September 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 September 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, except as noted below.

There are certain exceptions 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 also permitted generally to invest five percent of consolidated net tangible assets (as defined in the indentures) in an unrestricted subsidiary and mortgage the properties contributed to the unrestricted subsidiary. We completed a qualifying transaction under this exception during the third quarter of 2003 through a new secured facility financing (see discussion below).

Secured facilities. On September 26, 2003, we completed a $101 million commercial mortgage-backed securities financing, secured by a portfolio of four hotels, as permitted by the indentures to our senior unsecured notes and senior subordinated notes. The loan carries a fixed annual interest rate of 6.88% and matures in 2013. We incurred approximately $0.9 million in debt issuance costs related to the facility. The proceeds will be used to repay debt carrying higher interest rates, or to fund capital expenditures or acquisitions to the extent that higher interest rate debt cannot be acquired at attractive prices.

Asset Dispositions

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:

• secondary market locations;

• secondary brand affiliations;

• higher than average future capital expenditure requirements;

• limited future growth potential; or

• an over-weighted market location.

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 the 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 73 of our current 100 assets are unencumbered and only 13 of those assets are subject to ground leases. Excluding the assets included in our asset disposition program, we would have 41 unencumbered assets and seven subject to ground leases.

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. 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 second quarter of 2003. In the third quarter of 2003, we sold four more of these hotels for $59 million. During the third quarter of 2003, we made the determination to dispose of one additional asset and retain one of our assets previously included in our disposition program. We also changed our expected holding period for another asset and revised our sales prices on certain other assets included in our disposition program. As a result, we recognized an additional impairment loss of $21 million during the three months ended September 30, 2003. In October 2003, we sold another hotel included in our disposition program for $16.5 million.

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 we dispose of the remaining 35 assets in our disposition program, we may incur termination obligations due to Interstate Hotels of up to a maximum of approximately $21 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 or do not assume the obligation as part of the sale transaction. 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 35 properties previously discussed. The properties we are disposing of represent approximately one-third of our total properties. For the nine months ended September 30, 2003, these 35 assets accounted for approximately 20% of our consolidated revenue and approximately 13% of consolidated operating income. For purposes of this calculation, we exclude depreciation and amortization and loss on asset impairments from operating income.

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 $21.8 million (including $2.4 million of capitalized interest) for ongoing capital expenditures during the first nine months of 2003, and we anticipate investing a total of $15 million to $20 million on capital expenditures during the fourth quarter 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.

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.

We carry properties held for sale at the lower of their carrying values or estimated fair values less costs to sell. If our estimates are incorrect, the carrying values may not be accurately reflected. 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. We also reclassify the operating results of properties held for sale as discontinued operations for all periods presented.

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 September 30, 2003, we were not involved in any off-balance sheet arrangements with MIP.

The following table summarizes our aggregate contractual obligations as of September 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	$	944,540		$	—	$	—	$	548,221		$	396,319
	Secured facility, due 2009		310,474			5,423		13,906		291,145			—
	Secured facility, due 2013		101,000			1,304		3,605		6,188			89,903
	Senior subordinated notes		163,388	^(b)		—		—		163,388	^(b)		—
	Convertible subordinated notes		173,705			—		3,705		—			170,000
	Mortgage debt and other		36,018			2,108		12,636		8,110			13,164

	Total long-term debt		1,729,125			8,835		33,852		1,017,052			669,386

Ground lease obligations			62,459			1,318		2,990		3,594			54,557

Aggregate contractual obligations		$	1,791,584		$	10,153	$	36,842	$	1,020,646		$	723,943

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

^(b)
In October 2003, we repurchased a further $59.3 million of these notes.

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 Rules 13a-15(e) and 15d-15(e) 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.

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer, our chief financial officer and chief accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2003. Based on this evaluation, we concluded that our disclosure controls and procedures were effective.

Changes in Internal Controls

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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a.) Exhibits


Exhibit
No.			Description of Document

	4	.1	Indenture, dated as of July 1, 2003, by and among the registrant, MeriStar Hospitality Operating Partnership, L.P., the guarantors party thereto and U.S. Bank Trust National Association, as trustee (incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K dated July 3, 2003).
	4	.2	Officer’s Certificate establishing the terms of the registrant’s 9.50% Convertible Subordinated Notes due 2010 (incorporated by reference to Exhibit 4.2 to the registrant’s current report on Form 8-K dated July 3, 2003).
	4	.8	Letter agreement dated November 11, 2003 relating to exhibits.
	13		Financial Statements of MeriStar Hospitality Operating Partnership, L.P. as of and for the three and nine months ended September 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
	32	.2	Sarbanes-Oxley Act Section 906 Certifications of Chief Financial Officer.
	99	.1	Consolidating Financial Information of MeriStar Hospitality Operating Partnership, L.P.

(b.) Reports on Form 8-K

On September 29, 2003, we filed a current report on Form 8-K (Items 5 and 7) announcing we had completed a $101 million commercial mortgage-backed securities financing, secured by four of our properties.

On September 23, 2003, we filed a current report on Form 8-K (Items 5 and 7) announcing we had issued approximately 2.79 million shares of our common stock in exchange for $18.0 million of our 8.75% senior subordinated notes due 2007.

On July 28, 2003, we furnished a current report on Form 8-K (Item 12) announcing the financial results for the quarter ended June 30, 2003.

On July 3, 2003, we furnished a current report on Form 8-K (Items 7 and 9) announcing we had completed the sale of $170 million of 9.5% convertible subordinated notes.

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: November 12, 2003

30 EX-4.8 3 w91540exv4w8.htm EXHIBIT 4.8 exv4w8

Exhibit 4.8

(LOGO)

November 11, 2003

Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549


RE:		MeriStar Hospitality Corporation
		Commission File No. 1-11903

Gentlemen:

Pursuant to Item 601 (b) (4) (iii) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, MeriStar Hospitality Corporation (the “Company”) hereby agrees to furnish copies of certain long-term debt instruments to the Securities and Exchange Commission upon the request of the Commission, and, in accordance with such regulation, such instruments are not being filed as part of the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2003.

Very truly yours,

MERISTAR HOSPITALITY CORPORATION


By:		/s/ Jerome J. Kraisinger
		Jerome J. Kraisinger
		Executive Vice President, Secretary and General Counsel

MeriStar Hospitality Corporation • 4501 North Fairfax Drive • Suite 500 • Arlington, VA 22203 • 703/812-7200 • Fax 703/812-7255

EX-13 4 w91540exv13.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)


	September 30,
	2003			December 31,
	(Unaudited)			2002

ASSETS
Property and equipment	$	2,577,640		$	3,020,909
Accumulated depreciation		(426,576	)		(460,972	)

		2,151,064			2,559,937
Restricted cash		38,403			20,365
Investment in affiliate		40,000			40,000
Note receivable from Interstate Hotels & Resorts		—			42,052
Prepaid expenses and other assets		42,437			40,911
Accounts receivable, net of allowance for doubtful accounts of $1,709 and $848		64,469			56,828
Marketable securities (Note 2)		1,000			—
Cash and cash equivalents (Note 2)		270,274			33,889

	$	2,607,647		$	2,793,982


LIABILITIES AND PARTNERS’ CAPITAL
Long-term debt	$	1,392,032		$	1,296,597
Notes payable to MeriStar Hospitality Corporation		337,093			357,505
Accounts payable and accrued expenses		100,324			104,677
Accrued interest		40,185			52,907
Due to Interstate Hotels & Resorts		5,969			10,500
Other liabilities		12,734			15,967

Total liabilities		1,888,337			1,838,153

Minority interests		2,565			2,624
Redeemable OP units at redemption value, 3,312 and 4,195 outstanding		33,535			38,205
Partners’ capital – Common OP Units, 61,119 and 45,231 issued and outstanding		683,210			915,000

	$	2,607,647		$	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						Nine Months Ended
			September 30,						September 30,

			2003			2002			2003			2002

Revenue:




	Hotel operations:
		Rooms	$	146,057		$	147,548		$	455,590		$	474,540
		Food and beverage		53,660			54,089			181,230			181,174
		Other hotel operations		17,570			17,469			56,736			55,174
	Office rental, parking and other revenue			3,579			3,309			10,337			12,331

Total revenue				220,866			222,415			703,893			723,219

Hotel operating expenses:
		Rooms		40,360			38,259			116,040			114,197
		Food and beverage		43,268			41,998			134,257			131,551
		Other hotel operating expenses		11,080			10,424			34,119			31,621
Office rental, parking and other expenses				933			740			2,147			2,237




Other operating expenses:
		General and administrative		39,426			39,781			121,679			121,936
		Property operating costs		37,730			37,287			109,844			109,275
		Depreciation and amortization		26,032			28,256			82,849			87,316
		Loss on asset impairments		21,000			—			263,377			—
		Property taxes, insurance and other		17,816			15,478			57,292			50,268

Operating expenses				237,645			212,223			921,604			648,401

Operating (loss) income				(16,779	)		10,192			(217,711	)		74,818
Gain on early extinguishments of debt				4,574			—			4,574			—
Change in fair value of non-hedging derivatives, net of swap payments				—			(1,132	)		—			(4,211	)
Loss on fair value of non-hedging derivatives				—			—			—			(4,735	)
Minority interest income (expense)				—			18			(6	)		10
Interest expense, net				(36,404	)		(33,949	)		(106,017	)		(102,786	)

Loss from continuing operations before income taxes				(48,609	)		(24,871	)		(319,160	)		(36,904	)
Income tax benefit				305			591			462			748

Loss from continuing operations				(48,304	)		(24,280	)		(318,698	)		(36,156	)




Discontinued operations:
	Loss from discontinued operations before income tax (expense) benefit			(2,737	)		(6,591	)		(22,168	)		(1,410	)
	Income tax benefit (expense)			—			132			(32	)		6

Loss from discontinued operations				(2,737	)		(6,459	)		(22,200	)		(1,404	)

Net loss			$	(51,041	)	$	(30,739	)	$	(340,898	)	$	(37,560	)

	Preferred distributions			(141	)		(141	)		(424	)		(424	)

	Net loss applicable to common unitholders		$	(51,182	)	$	(30,880	)	$	(341,322	)	$	(37,984	)

	Net loss applicable to general partner unitholder		$	(48,261	)	$	(28,437	)	$	(319,974	)	$	(34,922	)

	Net loss applicable to limited partner unitholders		$	(2,921	)	$	(2,443	)	$	(21,348	)	$	(3,062	)


Loss per unit:




	Basic and Diluted:
		Loss from continuing operations	$	(0.96	)	$	(0.50	)	$	(6.44	)	$	(0.75	)
		Loss from discontinued operations		(0.05	)		(0.13	)		(0.45	)		(0.03	)

	Net loss per basic and diluted unit		$	(1.01	)	$	(0.63	)	$	(6.89	)	$	(0.78	)

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(Dollars in thousands)



				Nine Months Ended
				September 30,

				2003			2002

Operating activities:
	Net loss			$	(340,898	)	$	(37,560	)




	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			84,095			93,299
		Loss on asset impairments			285,677			—
		Loss on sale of assets, before tax effect			2,772			6,403
		Gain on early extinguishments of debt			(4,574	)		—
		Loss on fair value of non-hedging derivatives			—			4,735
		Minority interests			6			(10	)
		Amortization of unearned stock-based compensation			2,380			3,538
		Change in value of interest rate swaps			(3,977	)		(4,787	)
		Deferred income taxes			(1,848	)		(772	)




		Changes in operating assets and liabilities:
			Accounts receivable		(7,641	)		(5,613	)
			Prepaid expenses and other assets		2,763			(5,051	)
			Due from/to Interstate Hotels & Resorts		(4,531	)		5,762
			Accounts payable, accrued expenses, accrued interest and other liabilities		(19,503	)		(12,628	)

Net cash (used in) provided by operating activities					(5,279	)		47,316

Investing activities:
	Capital expenditures for property and equipment				(21,826	)		(35,824	)
	Proceeds from sales of assets				74,470			25,150
	Purchases of marketable securities				(18,040	)		—
	Sales of marketable securities				17,040			—
	Net payments from (advances to) Interstate Hotels & Resorts				42,052			(7,000	)
	(Increase) decrease in restricted cash				(18,038	)		4,861
	Other, net				(299	)		—

Net cash provided by (used in) investing activities					75,359			(12,813	)

Financing activities:
	Principal payments on long-term debt				(179,309	)		(313,618	)
	Proceeds from issuance of long-term debt				271,000			283,138
	Deferred financing fees				(7,513	)		(3,416	)
	Contributions from partners				82,920			3,156
	Distributions paid to partners				(424	)		(2,467	)
	Purchase of limited partnership unit				(65	)		—

Net cash provided by (used in) financing activities					166,609			(33,207	)
Effect of exchange rate changes on cash and cash equivalents					(304	)		(9	)

Net increase in cash and cash equivalents					236,385			1,287
Cash and cash equivalents, beginning of period					33,889			23,441

Cash and cash equivalents, end of period				$	270,274		$	24,728

Supplemental Cash Flow Information




Cash paid for interest and income taxes:
	Interest, net of capitalized interest			$	118,739		$	110,619

	Income taxes			$	1,920		$	726

See accompanying notes to unaudited consolidated financial statements.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 2003, we owned 101 hotels, with 26,290 rooms, all of which were leased by our taxable subsidiaries and managed by Interstate Hotels & Resorts, Inc. (“Interstate Hotels”). In October 2003, we sold one hotel with 71 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 for each property to a subsidiary of Interstate Hotels. 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

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 and infrequent transactions to be reclassified. See Note 6 for details on the early extinguishment of substantially all of our 4.75% notes payable to MeriStar Hospitality and a portion of our 8.75% notes payable to MeriStar Hospitality during the third quarter of 2003.

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						Nine Months Ended
		September 30,						September 30,

		2003			2002			2003			2002

Net loss, as reported		$	(51,041	)	$	(30,739	)	$	(340,898	)	$	(37,560	)
	Add: Stock-based employee compensation expense included in reported net loss, net of related tax effect		768			1,255			2,353			3,452
	Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect		(890	)		(1,478	)		(2,790	)		(4,182	)

Net loss, pro forma		$	(51,163	)	$	(30,962	)	$	(341,335	)	$	(38,290	)

Loss per unit:
	Basic and diluted, as reported	$	(1.01	)	$	(0.63	)	$	(6.89	)	$	(0.78	)
	Basic and diluted, pro forma	$	(1.01	)	$	(0.63	)	$	(6.89	)	$	(0.78	)

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 unit in future periods.

Liabilities and Equity” in May 2003. The provisions of the statement require 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 applied immediately to any such financial instrument entered into or modified after May 31, 2003, and to all other instruments on July 1, 2003. We have not entered into or modified any financial instruments within the scope of this standard subsequent to May 31, 2003, nor do we have any existing financial instruments that fall within the scope of SFAS No. 150.

3. Comprehensive Loss

Comprehensive loss was $50.5 million and $31.5 million for the three months ended September 30, 2003 and 2002, respectively. Comprehensive loss consisted of net loss of $51.0 million and $30.7 million for the three months ended September 30, 2003 and 2002, respectively, and foreign currency translation adjustments.

Comprehensive loss was $335.5 million and $36.9 million for the nine months ended September 30, 2003 and 2002, respectively. Comprehensive loss consisted of net loss of $340.9 million and $37.6 million for the nine months ended September 30, 2003 and 2002, respectively, foreign currency translation adjustments, and in 2002 a $0.5 million fair value gain adjustment for derivatives.

4. Property and Equipment

Property and equipment consisted of the following (dollars in thousands):


	September 30,		December 31,
	2003		2002

Land	$	251,933	$	288,611
Buildings and improvements		2,005,884		2,351,769
Furniture, fixtures and equipment		286,007		344,541
Construction-in-progress		33,816		35,988

	$	2,577,640	$	3,020,909

For the nine months ended September 30, 2003 and 2002, we capitalized interest of $2.4 million and $3.1 million, respectively.

for another asset and revised our estimated sales prices on certain other assets included in our disposition program. As a result, we recognized an additional impairment loss of $21 million during the three months ended September 30, 2003. Including one asset sale in October, we have sold seven hotels included in our asset disposition program since January 1, 2003.

The impairment charges are based on our estimates of the fair value of the properties to be disposed of. These estimates require us to make assumptions about the sales prices that we expect to realize for each property as well as the timing of a potential sale. In making these estimates, we consider the operating results of the assets, the market for comparable properties, and quotes from brokers, among other information. In nearly all cases, our estimates have reflected the results of an extensive marketing effort and negotiations with prospective buyers. Actual results could differ materially from these estimates.

5. Investment in Affiliate

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

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


		September 30,			December 31,
		2003			2002

Senior unsecured notes		$	950,000		$	950,000
Secured facility, due 2009			310,475			314,626
Secured facility, due 2013			101,000			—
Mortgage and other debt			36,018			38,030
Unamortized issue discount			(5,461	)		(6,059	)

	Long-term debt	$	1,392,032		$	1,296,597

Notes payable to MeriStar Hospitality		$	338,105		$	359,300
Unamortized issue discount			(1,012	)		(1,795	)

	Notes payable	$	337,093		$	357,505

Total long-term debt and notes payable to MeriStar Hospitality		$	1,729,125		$	1,654,102

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


2003 (three months)	$	2,255
2004		21,717
2005		10,375
2006		11,238
2007		175,560
Thereafter		1,507,980

	$	1,729,125

Senior unsecured notes. These 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 September 30, 2003, our fixed charge coverage ratio was below 2 to 1, and therefore we were not permitted generally 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, except as noted below.

Secured facilities. On September 26, 2003, we completed a $101 million, 10-year, commercial mortgage-backed securities financing, secured by a portfolio of four hotels, as permitted by the indentures to our senior unsecured notes and MeriStar Hospitality’s senior subordinated notes. The loan carries a fixed annual interest rate of 6.88% and matures in 2013. We incurred approximately $0.9 million in debt issuance costs related to the facility. The proceeds will be used to repay debt carrying higher interest rates or to fund capital expenditures or acquisitions to the extent that higher interest rate debt cannot be acquired at attractive prices.

expenditures we have incurred from April 1, 2003 through the date of the amendment and future capital expenditures we incur on the 19 properties. Escrowed funds totaling approximately $11 million were available to fund capital expenditures under this provision as of September 30, 2003.

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 each October 1 and April 1. In conjunction with this transaction, we borrowed $170 million from MeriStar Hospitality under terms matching those of the 9.5% convertible subordinated notes. We incurred approximately $6.5 million in debt issuance costs related to the borrowing.

The proceeds from the new borrowing were used to repay $150.6 million of our 4.75% notes payable to MeriStar Hospitality due 2004, at an aggregate discount of approximately $1.4 million. The remaining proceeds from the borrowing were used to repurchase $22.6 million principal amount of our 8.75% notes payable to MeriStar Hospitality due in 2007, at varying prices, resulting in an aggregate discount of approximately $1.5 million. We recognized these gains, totaling $2.9 million, during the third quarter of 2003.

Also during the third quarter, we redeemed $18 million of the 8.75% notes payable to MeriStar Hospitality in exchange for 2,792,880 common OP units, resulting in a gain of $1.7 million. In October 2003, we repaid $59.3 million of these notes, at varying prices. We expect to recognize a loss of approximately $0.5 million during the fourth quarter related to these repurchases. As of November 1, 2003, we had approximately $105 million of the 8.75% notes payable to MeriStar Hospitality outstanding.

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).

On September 24, 2003, MeriStar Hospitality issued 12,000,000 shares of its common stock at a price of $7.20 per share ($82.9 million of net proceeds). In October 2003, MeriStar Hospitality issued an additional 1,800,000 shares at a price of $7.20 per share for $12.4 million of net proceeds. In connection with this issuance, MeriStar LP, Inc., a wholly-owned subsidiary of MeriStar Hospitality, contributed the net proceeds to us in exchange for the same number of Common OP Units, thereby increasing their limited partner interest from 90 percent to approximately 93 percent.

During the third quarter of 2003, we issued 2,792,880 Common OP Units in exchange for the redemption of $18 million of our 8.75% notes payable to MeriStar Hospitality (see Note 6). Also during 2003, MeriStar Hospitality issued 211,721 shares of restricted stock to employees pursuant to employment agreements, with an aggregate value of $0.7 million.

Redeemable OP Unit holders converted 883,000 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 nine months ended September 30, 2003 and 2002 respectively. There were no material conversions for cash during the nine months ended September 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. If all of the vesting criteria for the POPs were met, then each POP would have a value equivalent to the value of one share of MeriStar Hospitality’s common stock, which for this issuance totaled $2.9 million.

8. Loss Per Unit

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



		Three Months Ended						Nine Months Ended
		September 30,						September 30,

		2003			2002			2003			2002

Basic and Diluted Loss Per Unit:
	Loss from continuing operations	$	(48,304	)	$	(24,280	)	$	(318,698	)	$	(36,156	)
	Dividends paid on unvested restricted stock of MeriStar Hospitality		—			(2	)		—			(5	)
	Preferred distributions		(141	)		(141	)		(424	)		(424	)

	Loss available to common unitholders	$	(48,445	)	$	(24,423	)	$	(319,122	)	$	(36,585	)

	Weighted average number of basic and diluted OP units outstanding		50,596			48,950			49,543			48,830

	Basic and diluted loss per unit from continuing operations	$	(0.96	)	$	(0.50	)	$	(6.44	)	$	(0.75	)

For the three months ended September 30, 2003 and 2002, 18,556,838 and 5,806,522 units, respectively, consisting of OP units issuable upon exercise, redemption or conversion of outstanding operating partnership units, MeriStar Hospitality’s stock options and its convertible notes, were excluded from the calculation of diluted loss per unit as the effect of their inclusion would be anti-dilutive. For the nine months ended

September 30, 2003 and 2002, 10,331,176 and 5,855,456 units, respectively, underlying these instruments were excluded from the calculation of diluted loss per unit as the effect of their inclusion would be anti-dilutive.

9. Commitments and Contingencies


2003 (three months)	$	360
2004		1,437
2005		1,440
2006		1,427
2007		1,427
Thereafter		56,368

	$	62,459

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


2003 (three months)	$	1,175
2004		4,428
2005		2,896
2006		2,027
2007		1,456
Thereafter		1,929

	$	13,911

10. Asset Dispositions

Summary financial information included in discontinued operations for these hotels were as follows (dollars in thousands):



	Three Months Ended						Nine Months Ended
	September 30,						September 30,

	2003			2002			2003			2002

Revenue	$	4,844		$	13,973		$	25,589		$	50,195
Loss on asset impairments		—			—			(22,300	)		—
Pretax income (loss) from operations		35			(188	)		(19,396	)		4,993
Loss on disposal		(2,772	)		(6,403	)		(2,772	)		(6,403	)

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 senior 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 September 30, 2003 and December 31, 2002, consolidating statements of operations for the three and nine months ended September 30, 2003 and 2002, and consolidating statements of cash flows for the nine months ended September 30, 2003 and 2002. In connection with the $101 million secured financing completed at the end of September 30, 2003 (see Note 6), certain of our guarantor subsidiaries became non-guarantor subsidiaries.

15 EX-31.1 5 w91540exv31w1.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 September 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: November 12, 2003		/s/ Paul W. Whetsell
		Paul W. Whetsell
		Chief Executive Officer
		MeriStar Hospitality Corporation

EX-31.2 6 w91540exv31w2.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 September 30, 2003 of MeriStar Hospitality Corporation;

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

EX-32.1 7 w91540exv32w1.htm EXHIBIT 32.1 exv32w1

Exhibit 32.1

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this quarterly report on Form 10-Q of MeriStar Hospitality Corporation (the “Issuer”) for the quarterly period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul W. Whetsell, Chief Executive Officer of the Issuer, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: November 12, 2003

/s/ Paul W. Whetsell

Paul W. Whetsell

Chief Executive Officer

MeriStar Hospitality Corporation

EX-32.2 8 w91540exv32w2.htm EXHIBIT 32.2 exv32w2

Exhibit 32.2

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this quarterly report on Form 10-Q of MeriStar Hospitality Corporation (the “Issuer”) for the quarterly period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald D. Olinger, Chief Financial Officer of the Issuer, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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: November 12, 2003

/s/ Donald D. Olinger

Donald D. Olinger

Chief Financial Officer

MeriStar Hospitality Corporation

EX-99.1 9 w91540exv99w1.txt EXHIBIT 99.1 . . . MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 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 Property and equipment 18,132 1,418,980 -- -- 4,137 Accumulated depreciation (12,063) (234,185) -- -- (644) ---------- --------- ---------- ---------- ---------- 6,069 1,184,795 -- -- 3,493 Restricted cash 33,088 5,200 -- -- -- Investments in affiliates 2,273,079 8,200 32 2,989 -- Due from subsidiaries (706,261) 282,441 -- 74 4,144 Note receivable from Interstate Hotels & Resorts 120,855 -- -- -- -- Prepaid expenses and other assets 27,550 (942) -- -- (10) Accounts receivable, net 16,392 1,109 -- -- -- Marketable securities 1,000 -- -- -- -- Cash and cash equivalents 251,448 -- -- -- -- ---------- --------- ---------- ---------- ---------- 2,023,220 1,480,803 32 3,063 7,627 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 1,006,708 346,441 -- -- -- Notes payable to MeriStar Hospitality Corporation 337,093 -- -- -- -- Accounts payable and accrued expenses 20,406 8,052 -- -- 38 Accrued interest 36,600 3,271 -- -- -- Due to Interstate Hotels & Resorts 796 -- -- -- -- Other liabilities 4,186 (304) -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 1,405,789 357,460 -- -- 38 ---------- --------- ---------- ---------- ---------- Minority interests 2,565 -- -- -- -- Redeemable OP units at redemption value 33,535 -- -- -- -- Partners' capital - Common OP Units 581,331 1,123,343 32 3,063 7,589 ---------- --------- ---------- ---------- ---------- 2,023,220 1,480,803 32 3,063 7,627 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC ----------- --------- ---------- ---------- ---------- ASSETS Property and equipment -- 11,501 -- 10,862 82,693 Accumulated depreciation -- (2,356) -- -- (11,680) ---------- --------- ---------- ---------- ---------- -- 9,145 -- 10,862 71,013 Restricted cash -- 115 -- -- -- Investments in affiliates -- -- 72 -- -- Due from subsidiaries -- 6,568 9 6,619 30,008 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- (15) -- 1 13 Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- -- 15,813 81 17,482 101,034 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses -- 72 -- 230 2,535 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities -- 72 -- 230 2,535 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units -- 15,741 81 17,252 98,499 ---------- --------- ---------- ---------- ---------- -- 15,813 81 17,482 101,034 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 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 Property and equipment 25,534 15,356 7,263 11,684 17,436 Accumulated depreciation (5,647) (2,875) -- (607) (3,522) ---------- --------- ---------- ---------- ---------- 19,887 12,481 7,263 11,077 13,914 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries (2,846) 6,432 4,982 4,327 4,920 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (43) (6) 1 (14) 35 Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 16,998 18,907 12,246 15,390 18,869 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 46 (81) 219 50 239 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 46 (81) 219 50 239 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 16,952 18,988 12,027 15,340 18,630 ---------- --------- ---------- ---------- ---------- 16,998 18,907 12,246 15,390 18,869 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ----------- --------- ---------- ---------- ---------- ASSETS Property and equipment -- 17,439 44,763 5,044 18,557 Accumulated depreciation -- (2,757) (9,554) -- (3,935) ---------- --------- ---------- ---------- ---------- -- 14,682 35,209 5,044 14,622 Restricted cash -- -- -- -- -- Investments in affiliates 43 -- -- -- -- Due from subsidiaries (43) 7,938 21,079 3,194 15,026 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- (5) (20) (15) (19) Accounts receivable, net -- 115 -- -- 96 Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- -- 22,730 56,268 8,223 29,725 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 37 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses -- (38) (367) 253 68 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities -- (38) (367) 253 105 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units -- 22,768 56,635 7,970 29,620 ---------- --------- ---------- ---------- ---------- -- 22,730 56,268 8,223 29,725 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 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 Property and equipment 17,292 22,527 5,821 -- 4,870 Accumulated depreciation -- (4,800) (158) -- (66) ---------- --------- ---------- ---------- ---------- 17,292 17,727 5,663 -- 4,804 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries 12,324 6,389 5,189 -- (761) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (37) (7) 35 -- (4) Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 29,579 24,109 10,887 -- 4,039 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 278 (138) (409) -- 144 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 278 (138) (409) -- 144 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 29,301 24,247 11,296 -- 3,895 ---------- --------- ---------- ---------- ---------- 29,579 24,109 10,887 -- 4,039 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7E, SUB 3D, SUB 1A, SUB 7A SUB 2B, LLC LLC LLC JOINT VENTURE LLC ---------- --------- ---------- ------------- ---------- ASSETS Property and equipment 18,211 22,674 11,499 5,845 3,854 Accumulated depreciation (3,171) (6,844) (2,815) (61) (75) ---------- --------- ---------- ---------- ---------- 15,040 15,830 8,684 5,784 3,779 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries 6,389 8,343 7,088 4,836 (1,139) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (4) (10) (31) (1) 4 Accounts receivable, net -- -- -- -- (14) Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 21,425 24,163 15,741 10,619 2,630 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 5,721 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 30 164 30 108 (17) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 30 164 30 108 5,704 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 21,395 23,999 15,711 10,511 (3,074) ---------- --------- ---------- ---------- ---------- 21,425 24,163 15,741 10,619 2,630 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 3A, SUB 4A, SUB 4D, SUB 2A, SUB 6L, LLC L.P. L.P. LLC LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 3,193 3,419 -- 4,831 12,619 Accumulated depreciation -- (31) -- (64) (116) ---------- --------- ---------- ---------- ---------- 3,193 3,388 -- 4,767 12,503 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries 1,777 4,321 2,922 (1,423) 5,933 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (3) (7) 3 26 (5) Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 4,967 7,702 2,925 3,370 18,431 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- 9,331 -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 140 285 -- 24 (22) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 140 285 -- 9,355 (22) ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 4,827 7,417 2,925 (5,985) 18,453 ---------- --------- ---------- ---------- ---------- 4,967 7,702 2,925 3,370 18,431 ========== ========= ========== ========== ==========

MDV MERISTAR MERISTAR MERISTAR MERISTAR LIMITED SUB 5C, SUB 6J, SUB 1D, SUB 7B, PARTNERSHIP LLC LLC LLC L.P. ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 3,849 3,903 19,454 68,621 4,759 Accumulated depreciation (651) (60) (3,638) (11,467) (57) ---------- --------- ---------- ---------- ---------- 3,198 3,843 15,816 57,154 4,702 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries 2,423 818 7,183 18,787 (3,371) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 1 (19) 30 (122) (8) Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 5,622 4,642 23,029 75,819 1,323 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 80 836 (276) 84 906 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 80 836 (276) 84 906 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 5,542 3,806 23,305 75,735 417 ---------- --------- ---------- ---------- ---------- 5,622 4,642 23,029 75,819 1,323 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7D, SUB 7G, SUB 6B, SUB 4I, SUB 5D, LLC LLC LLC L.P. LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 52,241 4,878 10,781 2,440 42,047 Accumulated depreciation (9,362) (104) (2,076) (78) (7,738) ---------- --------- ---------- ---------- ---------- 42,879 4,774 8,705 2,362 34,309 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- 51,368 Due from subsidiaries 24,174 233 2,888 639 (6,576) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 226 (6) (1) 5 (3) Accounts receivable, net 1,030 -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 68,309 5,001 11,592 3,006 79,098 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 24,000 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 3,642 (54) (156) 332 247 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts (200) -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 3,442 (54) (156) 332 24,247 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 64,867 5,055 11,748 2,674 54,851 ---------- --------- ---------- ---------- ---------- 68,309 5,001 11,592 3,006 79,098 ========== ========= ========== ========== ==========

MERISTAR MERISTAR AGH MERISTAR MERISTAR SUB 5H, SUB 7H, PSS I, SUB 2D, SUB 4F, LLC LLC INC. LLC L.P. ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment -- 4,247 -- 5,799 32,387 Accumulated depreciation -- (43) -- (81) (5,530) ---------- --------- ---------- ---------- ---------- -- 4,204 -- 5,718 26,857 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries 35,086 6,225 25,570 602 4,996 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- 2 -- 2 (6) Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 35,086 10,431 25,570 6,322 31,847 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 13 -- 10,812 -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (2) 198 -- (34) 290 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities (2) 211 -- 10,778 290 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 35,088 10,220 25,570 (4,456) 31,557 ---------- --------- ---------- ---------- ---------- 35,086 10,431 25,570 6,322 31,847 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5K, SUB 5M, SUB 1E, SUB 5O, SUB 4B, LLC LLC L.P. LLC L.P. ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 28,238 22,041 10,477 8,735 7,273 Accumulated depreciation (4,882) (2,237) (1,886) (1,087) -- ---------- --------- ---------- ---------- ---------- 23,356 19,804 8,591 7,648 7,273 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries (530) 7,769 8,370 3,021 (4,810) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (43) (29) (13) (9) (5) Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 22,783 27,544 16,948 10,660 2,458 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 3,201 130 (126) 44 353 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 3,201 130 (126) 44 353 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 19,582 27,414 17,074 10,616 2,105 ---------- --------- ---------- ---------- ---------- 22,783 27,544 16,948 10,660 2,458 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2C, SUB 4G, SUB 3B, SUB 5G, SUB 5P, LLC L.P. LLC L.P. LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 10,523 12,566 -- 163,814 39 Accumulated depreciation (175) -- -- (28,929) (22) ---------- --------- ---------- ---------- ---------- 10,348 12,566 -- 134,885 17 Restricted cash -- -- -- -- -- Investments in affiliates -- -- -- -- -- Due from subsidiaries 5,206 8,295 8,540 42,027 2,934 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (19) (52) (3) (146) (2) Accounts receivable, net -- -- -- -- -- Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 15,535 20,809 8,537 176,766 2,949 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 18,883 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 141 380 -- 1,537 -- Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 19,024 380 -- 1,537 -- ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units (3,489) 20,429 8,537 175,229 2,949 ---------- --------- ---------- ---------- ---------- 15,535 20,809 8,537 176,766 2,949 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5J, SUB 5Q, SUB 5A, SUB 8D, SUB 4J, LLC LLC LLC LLC LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 109,816 16,682 35,380 9,237 38,231 Accumulated depreciation (15,946) (2,129) (10,422) (120) (6,812) ---------- --------- ---------- ---------- ---------- 93,870 14,553 24,958 9,117 31,419 Restricted cash -- -- -- -- -- Investments in affiliates -- -- 4,627 -- -- Due from subsidiaries 21,791 4,550 6,751 7,958 7,217 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets (227) (31) (18) (6) (12) Accounts receivable, net -- -- -- -- (16) Marketable securities -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 115,434 19,072 36,318 17,069 38,608 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- 23,609 -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 673 (97) 356 (166) 193 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 673 (97) 23,965 (166) 193 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 114,761 19,169 12,353 17,235 38,415 ---------- --------- ---------- ---------- ---------- 115,434 19,072 36,318 17,069 38,608 ========== ========= ========== ========== ==========

MERISTAR GUARANTOR HOTEL SUBSIDIARIES TOTAL LESSEE, INC. TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ ------------ ASSETS Property and equipment 3,146 1,140,528 -- 2,577,640 Accumulated depreciation (3,018) (180,328) -- (426,576) ---------- ------------ ------------ ------------ 128 960,200 -- 2,151,064 Restricted cash -- 115 -- 38,403 Investments in affiliates -- 59,131 (2,300,410) 40,000 Due from subsidiaries 435 423,820 -- -- Note receivable from Interstate Hotels & Resorts -- -- (120,855) -- Prepaid expenses and other assets 16,481 15,829 -- 42,437 Accounts receivable, net 45,757 46,968 -- 64,469 Marketable securities -- -- -- 1,000 Cash and cash equivalents 18,826 18,826 -- 270,274 ---------- --------- ---------- ---------- 81,627 1,524,889 (2,421,265) 2,607,647 ========== ========= ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 67,332 159,738 (120,855) 1,392,032 Notes payable to MeriStar Hospitality Corporation -- -- -- 337,093 Accounts payable and accrued expenses 55,273 71,866 -- 100,324 Accrued interest 314 314 -- 40,185 Due to Interstate Hotels & Resorts 5,373 5,173 -- 5,969 Other liabilities 8,852 8,852 -- 12,734 ---------- --------- ---------- ---------- Total liabilities 137,144 245,943 (120,855) 1,888,337 ---------- --------- ---------- ---------- Minority interests -- -- -- 2,565 Redeemable OP units at redemption value -- -- -- 33,535 Partners' capital - Common OP Units (55,517) 1,278,946 (2,300,410) 683,210 ---------- --------- ---------- ---------- 81,627 1,524,889 (2,421,265) 2,607,647 ========== ========= ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ---------- --------- ---------- ---------- ---------- ASSET Property and equipment 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 2,590,345 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 22,541 304 -- -- -- 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 L.P. LLC L.P. LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment -- 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 Property and equipment 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 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment -- 17,430 44,495 24,741 18,416 Accumulated depreciation -- (2,347) (8,334) (3,986) (3,529) ---------- --------- ---------- ---------- ---------- -- 15,083 36,161 20,755 14,887 Restricted cash -- -- -- -- -- Investments in and advances to affiliates 43 -- -- -- -- Due from subsidiaries (43) 6,781 18,092 2,772 12,954 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- -- -- 2 1 Accounts receivable, net of allowance for doubtful accounts -- 101 -- -- 96 Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- -- 21,965 54,253 23,529 27,938 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 48 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses -- 18 (132) 415 51 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities -- 18 (132) 415 99 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units -- 21,947 54,385 23,114 27,839 ---------- --------- ---------- ---------- ---------- -- 21,965 54,253 23,529 27,938 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (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 Property and equipment 31,539 22,381 11,400 -- 12,462 Accumulated depreciation (4,421) (4,166) -- -- (2,253) ---------- --------- ---------- ---------- ---------- 27,118 18,215 11,400 -- 10,209 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 10,473 5,200 4,587 11,521 (738) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 5 -- 1 -- 14 Accounts receivable, net of allowance for doubtful accounts -- -- -- 1 -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 37,596 23,415 15,988 11,522 9,485 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 170 108 (77) 98 172 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 170 108 (77) 98 172 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 37,426 23,307 16,065 11,424 9,313 ---------- --------- ---------- ---------- ---------- 37,596 23,415 15,988 11,522 9,485 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 7E, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC VENTURE ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 17,972 22,549 11,318 52,868 13,161 Accumulated depreciation (2,711) (6,261) (2,478) (8,155) (1,761) ---------- --------- ---------- ---------- ---------- 15,261 16,288 8,840 44,713 11,400 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 5,820 7,409 6,231 14,226 4,352 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 3 -- -- 1 5 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 21,084 23,697 15,071 58,940 15,757 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 86 61 121 184 218 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 86 61 121 184 218 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 20,998 23,636 14,950 58,756 15,539 ---------- --------- ---------- ---------- ---------- 21,084 23,697 15,071 58,940 15,757 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC L.P. L.P. ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 22,855 9,672 5,740 4,617 4,037 Accumulated depreciation (4,296) (1,985) (254) -- -- ---------- --------- ---------- ---------- ---------- 18,559 7,687 5,486 4,617 4,037 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 16,890 (804) 1,500 4,097 (74) Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- 1 -- -- 21 Accounts receivable, net of allowance for doubtful accounts -- (12) -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 35,449 6,872 6,986 8,714 3,984 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 4,890 -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 122 75 163 346 112 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 122 4,965 163 346 112 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 35,327 1,907 6,823 8,368 3,872 ---------- --------- ---------- ---------- ---------- 35,449 6,872 6,986 8,714 3,984 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LC LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 8,294 29,650 3,838 14,088 19,412 Accumulated depreciation (1,464) (3,354) (547) (2,812) (3,208) ---------- --------- ---------- ---------- ---------- 6,830 26,296 3,291 11,276 16,204 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries (884) 4,928 2,169 242 5,957 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 21 -- 9 70 45 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 5,967 31,224 5,469 11,588 22,206 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 7,977 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 65 51 95 866 (116) Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 8,042 51 95 866 (116) ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units (2,075) 31,173 5,374 10,722 22,322 ---------- --------- ---------- ---------- ---------- 5,967 31,224 5,469 11,588 22,206 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, LLC L.P. LLC LLC LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 68,456 15,314 52,184 16,620 10,645 Accumulated depreciation (9,754) -- (8,132) (4,107) (1,742) ---------- --------- ---------- ---------- ---------- 58,702 15,314 44,052 12,513 8,903 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 16,638 (3,681) 21,885 122 2,423 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 11 -- 309 1 3 Accounts receivable, net of allowance for doubtful accounts -- -- 1,026 -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 75,351 11,633 67,272 12,636 11,329 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 20 1,148 4,552 37 (95) Accrued interest 117 -- -- -- -- Due to Interstate Hotels & Resorts -- -- (200) -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 137 1,148 4,352 37 (95) ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 75,214 10,485 62,920 12,599 11,424 ---------- --------- ---------- ---------- ---------- 75,351 11,633 67,272 12,636 11,329 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 3,800 42,013 53,422 5,700 17,855 Accumulated depreciation -- (6,645) (7,989) -- (2,049) ---------- --------- ---------- ---------- ---------- 3,800 35,368 45,433 5,700 15,806 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- 51,368 -- -- -- Due from subsidiaries 895 (7,027) 8,773 5,754 10,810 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- 18 -- -- -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 4,695 79,727 54,206 11,454 26,616 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 24,000 -- 13 -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 411 206 146 267 107 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 411 24,206 146 280 107 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 4,284 55,521 54,060 11,174 26,509 ---------- --------- ---------- ---------- ---------- 4,695 79,727 54,206 11,454 26,616 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (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 Property and equipment 15,465 31,912 28,057 22,022 10,457 Accumulated depreciation (2,435) (4,714) (3,916) (1,883) (1,649) ---------- --------- ---------- ---------- ---------- 13,030 27,198 24,141 20,139 8,808 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 416 4,392 (705) 6,601 7,355 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 -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 13,447 31,602 23,436 26,740 16,163 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 9,243 -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 63 399 4,316 48 13 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 9,306 399 4,316 48 13 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 4,141 31,203 19,120 26,692 16,150 ---------- --------- ---------- ---------- ---------- 13,447 31,602 23,436 26,740 16,163 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 8,727 32,975 8,265 20,855 28,658 Accumulated depreciation (916) (4,779) -- (3,592) (5,385) ---------- --------- ---------- ---------- ---------- 7,811 28,196 8,265 17,263 23,273 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 2,486 15,876 (4,592) 10,175 4,873 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- 21 -- -- 1 Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 10,297 44,093 3,673 27,438 28,147 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- 16,143 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 7 (117) 443 (142) 238 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 7 (117) 443 (142) 16,381 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 10,290 44,210 3,230 27,580 11,766 ---------- --------- ---------- ---------- ---------- 10,297 44,093 3,673 27,438 28,147 ========== ========= ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (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 Property and equipment 25,601 8,550 163,237 39 107,471 Accumulated depreciation (4,015) -- (24,213) (18) (13,334) ---------- --------- ---------- ---------- ---------- 21,586 8,550 139,024 21 94,137 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- -- -- -- -- Due from subsidiaries 7,456 2,201 35,538 1,989 17,649 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets 9 -- 5 -- -- Accounts receivable, net of allowance for doubtful accounts -- -- -- -- -- Cash and cash equivalents -- -- -- -- -- ---------- --------- ---------- ---------- ---------- 29,051 10,751 174,567 2,010 111,786 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- -- -- -- -- Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses 558 173 838 4 453 Accrued interest -- -- -- -- -- Due to Interstate Hotels & Resorts -- -- -- -- -- Other liabilities -- -- -- -- -- ---------- --------- ---------- ---------- ---------- Total liabilities 558 173 838 4 453 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 28,493 10,578 173,729 2,006 111,333 ---------- --------- ---------- ---------- ---------- 29,051 10,751 174,567 2,010 111,786 ========== ========= ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. ---------- --------- ---------- ---------- ---------- ASSETS Property and equipment 16,509 34,981 30,687 38,154 2,252 Accumulated depreciation (1,709) (9,395) (5,080) (5,862) (2,219) ---------- --------- ---------- ---------- ---------- 14,800 25,586 25,607 32,292 33 Restricted cash -- -- -- -- -- Investments in and advances to affiliates -- 4,627 -- -- -- Due from subsidiaries 3,274 5,147 6,942 5,438 5,245 Note receivable from Interstate Hotels & Resorts -- -- -- -- -- Prepaid expenses and other assets -- -- -- 5 17,389 Accounts receivable, net of allowance for doubtful accounts -- -- -- (24) 42,400 Cash and cash equivalents -- -- -- -- 12,517 ---------- --------- ---------- ---------- ---------- 18,074 35,360 32,549 37,711 77,584 ========== ========= ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt -- 23,609 -- -- 21,397 Notes payable to MeriStar Hospitality Corporation -- -- -- -- -- Accounts payable and accrued expenses (122) (3) (117) 171 58,595 Accrued interest -- -- -- -- 107 Due to Interstate Hotels & Resorts -- -- -- -- 10,328 Other liabilities -- -- -- -- 11,376 ---------- --------- ---------- ---------- ---------- Total liabilities (122) 23,606 (117) 171 101,803 ---------- --------- ---------- ---------- ---------- Minority interests -- -- -- -- -- Redeemable OP units at redemption value -- -- -- -- -- Partners' capital - Common OP Units 18,196 11,754 32,666 37,540 (24,219) ---------- --------- ---------- ---------- ---------- 18,074 35,360 32,549 37,711 77,584 ========== ========= ========== ========== ==========
6 MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING BALANCE SHEET DECEMBER 31, 2002 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Assets Property and equipment 1,536,518 -- 3,020,909 Accumulated depreciation (231,359) -- (460,972) ---------- ---------- ---------- 1,305,159 -- 2,559,937 Restricted cash 115 -- 20,365 Investments in and advances to affiliates 59,198 (2,617,743) 40,000 Due from subsidiaries 398,815 -- -- Note receivable from Interstate Hotels & Resorts -- (108,605) 42,052 Prepaid expenses and other assets 18,066 -- 40,911 Accounts receivable, net of allowance for doubtful accounts 43,571 -- 56,828 Cash and cash equivalents 12,517 -- 33,889 ---------- ---------- ---------- 1,837,441 (2,726,348) 2,793,982 ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Long-term debt 107,320 (108,605) 1,296,597 Notes payable to MeriStar Hospitality Corporation -- -- 357,505 Accounts payable and accrued expenses 79,359 -- 104,677 Accrued interest 224 -- 52,907 Due to Interstate Hotels & Resorts 10,128 -- 10,500 Other liabilities 11,376 -- 15,967 ---------- ---------- ---------- Total liabilities 208,407 (108,605) 1,838,153 ---------- ---------- ---------- Minority interests -- -- 2,624 Redeemable OP units at redemption value -- -- 38,205 Partners' capital - Common OP Units 1,629,034 (2,617,743) 915,000 ---------- ---------- ---------- 1,837,441 (2,726,348) 2,793,982 ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 1,620 (241) -- -- -- Participating lease revenue -- 30,382 -- -- 165 ----------- ------------ ----------- ----------- ----------- Total revenue 1,620 30,141 -- -- 165 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- 78 -- -- -- Other operating expenses: General and administrative 1,774 258 -- -- -- Property operating costs (359) (1) -- -- -- Depreciation and amortization 2,162 12,022 -- -- 34 Loss on asset impairments -- (278) -- -- -- Property taxes, insurance and other (397) 3,998 -- -- 27 ----------- ------------ ----------- ----------- ----------- Operating expenses 3,180 16,077 -- -- 61 ----------- ------------ ----------- ----------- ----------- Operating income (loss) (1,560) 14,064 -- -- 104 Gain on early extinguishment of debt 4,574 -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (26,806) (6,870) -- -- -- Equity in loss from consolidated entities (27,554) -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations (51,346) 7,194 -- -- 104 Income tax benefit 305 -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations (51,041) 7,194 -- -- 104 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- 683 -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- 683 -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income (51,041) 7,877 -- -- 104 =========== ============ =========== =========== ===========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue -- 587 -- 317 1,818 ----------- ------------ ----------- ----------- ----------- Total revenue -- 587 -- 317 1,818 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 162 -- 160 601 Loss on asset impairments -- -- -- 500 -- Property taxes, insurance and other -- 156 -- 24 346 ----------- ------------ ----------- ----------- ----------- Operating expenses -- 318 -- 684 947 ----------- ------------ ----------- ----------- ----------- Operating income (loss) -- 269 -- (367) 871 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations -- 269 -- (367) 871 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations -- 269 -- (367) 871 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income -- 269 -- (367) 871 =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 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 ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 6 -- -- -- Participating lease revenue 178 362 269 254 347 ----------- ------------ ----------- ----------- ----------- Total revenue 178 368 269 254 347 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 254 143 99 34 176 Loss on asset impairments -- -- 400 -- -- Property taxes, insurance and other 180 55 41 38 99 ----------- ------------ ----------- ----------- ----------- Operating expenses 434 198 540 72 275 ----------- ------------ ----------- ----------- ----------- Operating income (loss) (256) 170 (271) 182 72 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations (256) 170 (271) 182 72 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations (256) 170 (271) 182 72 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income (256) 170 (271) 182 72 =========== ============ =========== =========== ===========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 15 -- 1 340 Participating lease revenue -- 497 1,193 351 695 ----------- ------------ ----------- ----------- ----------- Total revenue -- 512 1,193 352 1,035 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 137 397 81 122 Loss on asset impairments -- -- -- 736 -- Property taxes, insurance and other -- 92 194 113 17 ----------- ------------ ----------- ----------- ----------- Operating expenses -- 229 591 930 139 ----------- ------------ ----------- ----------- ----------- Operating income (loss) -- 283 602 (578) 896 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations -- 283 602 (578) 896 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations -- 283 602 (578) 896 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income -- 283 602 (578) 896 =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 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. ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 1 -- -- Participating lease revenue 669 615 500 -- 95 ----------- ------------ ----------- ----------- ----------- Total revenue 669 615 501 -- 95 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 209 204 158 -- 66 Loss on asset impairments 2,000 -- -- -- -- Property taxes, insurance and other 107 95 167 -- 44 ----------- ------------ ----------- ----------- ----------- Operating expenses 2,316 299 325 -- 110 ----------- ------------ ----------- ----------- ----------- Operating income (loss) (1,647) 316 176 -- (15) Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations (1,647) 316 176 -- (15) Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations (1,647) 316 176 -- (15) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income (1,647) 316 176 -- (15) =========== ============ =========== =========== ===========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7E, SUB 3D, SUB 1A, SUB 5E, SUB 7A JOINT LLC LLC LLC LLC VENTURE ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 336 407 526 994 305 ----------- ------------ ----------- ----------- ----------- Total revenue 336 407 526 994 305 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 153 191 113 476 60 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 49 60 111 101 56 ----------- ------------ ----------- ----------- ----------- Operating expenses 202 251 224 577 116 ----------- ------------ ----------- ----------- ----------- Operating income (loss) 134 156 302 417 189 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations 134 156 302 417 189 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations 134 156 302 417 189 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income 134 156 302 417 189 =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC L.P. L.P. ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 3 -- -- -- Participating lease revenue 940 164 127 255 -- ----------- ------------ ----------- ----------- ----------- Total revenue 940 167 127 255 -- ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 168 79 55 31 -- Loss on asset impairments -- -- 640 -- -- Property taxes, insurance and other 97 39 27 65 -- ----------- ------------ ----------- ----------- ----------- Operating expenses 265 118 722 96 -- ----------- ------------ ----------- ----------- ----------- Operating income (loss) 675 49 (595) 159 -- Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (119) -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations 675 (70) (595) 159 -- Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations 675 (70) (595) 159 -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income 675 (70) (595) 159 -- =========== ============ =========== =========== ===========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 173 532 126 376 569 ----------- ------------ ----------- ----------- ----------- Total revenue 173 532 126 376 569 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 69 116 35 60 138 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 50 55 35 165 68 ----------- ------------ ----------- ----------- ----------- Operating expenses 119 171 70 225 206 ----------- ------------ ----------- ----------- ----------- Operating income (loss) 54 361 56 151 363 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (194) -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations (140) 361 56 151 363 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations (140) 361 56 151 363 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income (140) 361 56 151 363 =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, LLC L.P. LLC LLC LLC ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 191 -- 1,403 -- -- Participating lease revenue 973 401 610 150 275 ----------- ------------ ----------- ----------- ----------- Total revenue 1,164 401 2,013 150 275 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses 31 -- 586 -- -- Other operating expenses: General and administrative (25) -- (177) -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 559 56 430 104 105 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 412 187 538 54 50 ----------- ------------ ----------- ----------- ----------- Operating expenses 977 243 1,377 158 155 ----------- ------------ ----------- ----------- ----------- Operating income (loss) 187 158 636 (8) 120 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations 187 158 636 (8) 120 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations 187 158 636 (8) 120 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income 187 158 636 (8) 120 =========== ============ =========== =========== ===========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 20 510 -- 323 -- ----------- ------------ ----------- ----------- ----------- Total revenue 20 510 -- 323 -- ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 78 365 -- 43 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 58 57 -- 127 -- ----------- ------------ ----------- ----------- ----------- Operating expenses 136 422 -- 170 -- ----------- ------------ ----------- ----------- ----------- Operating income (loss) (116) 88 -- 153 -- Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (267) -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations (116) (179) -- 153 -- Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations (116) (179) -- 153 -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- (1,599) -- (32) Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- (1,599) -- (32) ----------- ------------ ----------- ----------- ----------- Net (loss) income (116) (179) (1,599) 153 (32) =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 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. ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 4 -- -- -- Participating lease revenue 491 459 471 304 -- ----------- ------------ ----------- ----------- ----------- Total revenue 491 463 471 304 -- ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 85 272 322 118 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 76 88 98 70 -- ----------- ------------ ----------- ----------- ----------- Operating expenses 161 360 420 188 -- ----------- ------------ ----------- ----------- ----------- Operating income (loss) 330 103 51 116 -- Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (224) -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations 106 103 51 116 -- Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations 106 103 51 116 -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- 388 Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- 388 ----------- ------------ ----------- ----------- ----------- Net (loss) income 106 103 51 116 388 =========== ============ =========== =========== ===========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- 1 18 Participating lease revenue 136 1,200 44 790 422 ----------- ------------ ----------- ----------- ----------- Total revenue 136 1,200 44 791 440 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 57 274 145 193 185 Loss on asset impairments -- -- 374 -- -- Property taxes, insurance and other 26 66 67 57 150 ----------- ------------ ----------- ----------- ----------- Operating expenses 83 340 586 250 335 ----------- ------------ ----------- ----------- ----------- Operating income (loss) 53 860 (542) 541 105 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- (391) Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations 53 860 (542) 541 (286) Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations 53 860 (542) 541 (286) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income 53 860 (542) 541 (286) =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 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 ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 11 -- -- Participating lease revenue 483 -- 2,313 267 1,822 ----------- ------------ ----------- ----------- ----------- Total revenue 483 -- 2,324 267 1,822 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 136 -- 1,571 1 871 Loss on asset impairments 500 -- -- -- -- Property taxes, insurance and other 159 -- 486 2 391 ----------- ------------ ----------- ----------- ----------- Operating expenses 795 -- 2,057 3 1,262 ----------- ------------ ----------- ----------- ----------- Operating income (loss) (312) -- 267 264 560 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations (312) -- 267 264 560 Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations (312) -- 267 264 560 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- (1,150) -- -- -- Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- (1,150) -- -- -- ----------- ------------ ----------- ----------- ----------- Net (loss) income (312) (1,150) 267 264 560 =========== ============ =========== =========== ===========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. ----------- ------------- ----------- ----------- ----------- Hotel operations: Rooms -- -- -- -- 146,057 Food and beverage -- -- -- -- 53,660 Other operating departments -- -- -- -- 17,570 Office rental and other revenues -- 32 -- 174 -- Participating lease revenue 363 1,351 595 683 -- ----------- ------------ ----------- ----------- ----------- Total revenue 363 1,383 595 857 217,287 ----------- ------------ ----------- ----------- ----------- Hotel operating expenses by department: Rooms -- -- -- -- 40,360 Food and beverage -- -- -- -- 43,268 Other operating departments -- -- -- -- 11,080 Office rental, parking and other operating expenses -- -- -- 238 -- Other operating expenses: General and administrative -- -- -- (48) 37,644 Property operating costs -- -- -- -- 38,090 Depreciation and amortization 140 257 120 312 268 Loss on asset impairments -- -- 16,128 -- -- Property taxes, insurance and other 57 179 114 74 68,379 ----------- ------------ ----------- ----------- ----------- Operating expenses 197 436 16,362 576 239,089 ----------- ------------ ----------- ----------- ----------- Operating income (loss) 166 947 (15,767) 281 (21,802) Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (708) -- -- (825) Equity in loss from consolidated entities -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- (Loss) gain before income taxes and discontinued operations 166 239 (15,767) 281 (22,627) Income tax benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from continuing operations 166 239 (15,767) 281 (22,627) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- (1,027) Income tax (expense) benefit -- -- -- -- -- ----------- ------------ ----------- ----------- ----------- Loss from discontinued operations -- -- -- -- (1,027) ----------- ------------ ----------- ----------- ----------- Net (loss) income 166 239 (15,767) 281 (23,654) =========== ============ =========== =========== ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------- ------------ Hotel operations: Rooms 146,057 -- 146,057 Food and beverage 53,660 -- 53,660 Other operating departments 17,570 -- 17,570 Office rental and other revenues 2,200 -- 3,579 Participating lease revenue 30,198 (60,580) -- ----------- ------------ ----------- Total revenue 249,685 (60,580) 220,866 ----------- ------------ ----------- Hotel operating expenses by department: Rooms 40,360 -- 40,360 Food and beverage 43,268 -- 43,268 Other operating departments 11,080 -- 11,080 Office rental, parking and other operating expenses 855 -- 933 Other operating expenses: -- -- General and administrative 37,394 -- 39,426 Property operating costs 38,090 -- 37,730 Depreciation and amortization 11,848 -- 26,032 Loss on asset impairments 21,278 -- 21,000 Property taxes, insurance and other 74,795 (60,580) 17,816 ----------- ------------ ----------- Operating expenses 278,968 (60,580) 237,645 ----------- ------------ ----------- Operating income (loss) (29,283) -- (16,779) Gain on early extinguishment of debt -- -- 4,574 Minority interest expense -- -- -- Interest expense, net (2,728) -- (36,404) Equity in loss from consolidated entities -- 27,554 -- ----------- ------------ ----------- (Loss) gain before income taxes and discontinued operations (32,011) 27,554 (48,609) Income tax benefit -- -- 305 ----------- ------------ ----------- Loss from continuing operations (32,011) 27,554 (48,304) Discontinued operations: -- -- -- Income (loss) from discontinued operations before tax (expense) benefit (3,420) -- (2,737) Income tax (expense) benefit -- -- -- ----------- ------------ ----------- Loss from discontinued operations (3,420) -- (2,737) ----------- ------------ ----------- Net (loss) income (35,431) 27,554 (51,041) =========== ============ ===========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 2,073 1,267 -- -- -- Participating lease revenue -- 33,126 -- -- 153 -------- -------- -------- -------- -------- Total revenue 2,073 34,393 -- -- 153 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- 400 -- -- -- Other operating expenses: General and administrative 2,247 75 -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 2,506 12,549 -- -- 33 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other (2,378) 5,374 -- -- 25 -------- -------- -------- -------- -------- Operating expenses 2,375 18,398 -- -- 58 -------- -------- -------- -------- -------- Operating (loss) income (302) 15,995 -- -- 95 Change in fair value of non-hedging derivatives, net of swap payments (1,132) -- -- -- -- Minority interest expense 18 -- -- -- -- Interest expense, net (26,249) (6,436) -- -- 2 Equity in income from consolidated entities 3,797 -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (31,462) 9,559 -- -- 97 Income tax benefit 591 -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (30,871) 9,559 -- -- 97 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- 880 -- -- -- Income tax (expense) benefit 132 -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations 132 880 -- -- -- -------- -------- -------- -------- -------- Net income (loss) (30,739) 10,439 -- -- 97 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue -- 571 -- 371 1,435 -------- -------- -------- -------- -------- Total revenue -- 571 -- 371 1,435 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- 113 -- 108 595 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 169 -- 27 348 -------- -------- -------- -------- -------- Operating expenses -- 282 -- 135 944 -------- -------- -------- -------- -------- Operating (loss) income -- 289 -- 236 491 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- 3 -- 1 27 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations -- 292 -- 237 518 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations -- 292 -- 237 518 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit (4,710) -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations (4,710) -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) (4,710) 292 -- 237 518 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 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 -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 5 -- -- -- Participating lease revenue 175 397 283 172 340 -------- -------- -------- -------- -------- Total revenue 175 402 283 172 340 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 3 1 1 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization 254 152 115 34 176 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 179 48 37 37 117 -------- -------- -------- -------- -------- Operating expenses 436 201 153 72 294 -------- -------- -------- -------- -------- Operating (loss) income (261) 201 130 100 46 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 14 1 3 2 6 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (247) 202 133 102 52 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (247) 202 133 102 52 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) (247) 202 133 102 52 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 4 -- 5 1 Participating lease revenue -- 480 1,354 327 664 -------- -------- -------- -------- -------- Total revenue -- 484 1,354 332 665 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- 127 422 230 146 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 64 195 107 52 -------- -------- -------- -------- -------- Operating expenses -- 191 617 338 199 -------- -------- -------- -------- -------- Operating (loss) income -- 293 737 (6) 466 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- 7 17 8 6 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations -- 300 754 2 472 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations -- 300 754 2 472 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) -- 300 754 2 472 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5F, SUB 6G, SUB 8C, SUB 4C, SUB 4H, L.P. LLC LLC L.P L.P. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 615 591 487 -- 101 -------- -------- -------- -------- -------- Total revenue 615 591 487 -- 101 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- 1 -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization 264 209 346 -- 135 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 102 104 157 -- 52 -------- -------- -------- -------- -------- Operating expenses 366 313 504 -- 188 -------- -------- -------- -------- -------- Operating (loss) income 249 278 (17) -- (87) Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 13 13 11 -- 3 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 262 291 (6) -- (84) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 262 291 (6) -- (84) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- (1,531) -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- (1,531) -- -------- -------- -------- -------- -------- Net income (loss) 262 291 (6) (1,531) (84) ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 7E, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 1 -- -- -- -- Participating lease revenue 313 518 481 1,353 354 -------- -------- -------- -------- -------- Total revenue 314 518 481 1,353 354 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 1 1 1 -- Property operating costs -- -- -- -- -- Depreciation and amortization 158 202 111 485 104 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 41 76 123 97 60 -------- -------- -------- -------- -------- Operating expenses 200 279 235 583 164 -------- -------- -------- -------- -------- Operating (loss) income 114 239 246 770 190 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 5 12 5 8 10 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 119 251 251 778 200 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 119 251 251 778 200 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) 119 251 251 778 200 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC L.P. L.P. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 1,011 152 133 248 -- -------- -------- -------- -------- -------- Total revenue 1,011 152 133 248 -- Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- 1 1 1 -- Property operating costs -- -- -- -- -- Depreciation and amortization 182 102 61 -- -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 106 48 31 65 -- -------- -------- -------- -------- -------- Operating expenses 288 151 93 66 -- -------- -------- -------- -------- -------- Operating (loss) income 723 1 40 182 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 10 (95) 15 11 -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 733 (94) 55 193 -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 733 (94) 55 193 -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- 39 Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- 39 -------- -------- -------- -------- -------- Net income (loss) 733 (94) 55 193 39 ======== ======== ======== ======== ========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC -------- -------- ----------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 163 541 71 395 477 -------- -------- -------- -------- -------- Total revenue 163 541 71 395 477 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative (1) -- -- 1 -- Property operating costs -- -- -- -- -- Depreciation and amortization 80 222 35 149 160 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 49 52 29 145 67 -------- -------- -------- -------- -------- Operating expenses 128 274 64 295 227 -------- -------- -------- -------- -------- Operating (loss) income 35 267 7 100 250 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (170) 5 -- 11 12 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (135) 272 7 111 262 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (135) 272 7 111 262 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) (135) 272 7 111 262 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, LLC L.P. LLC LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 114 -- 374 -- -- Participating lease revenue 1,279 391 1,387 146 293 -------- -------- -------- -------- -------- Total revenue 1,393 391 1,761 146 293 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses 33 -- 187 -- -- Other operating expenses: General and administrative -- -- -- 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization 584 231 412 188 114 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 361 (34) 544 61 55 -------- -------- -------- -------- -------- Operating expenses 978 197 1,143 250 170 -------- -------- -------- -------- -------- Operating (loss) income 415 194 618 (104) 123 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 3 41 12 7 3 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 418 235 630 (97) 126 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 418 235 630 (97) 126 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) 418 235 630 (97) 126 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSSI, L.P. LLC LLC LLC INC. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 19 454 -- 315 -- -------- -------- -------- -------- -------- Total revenue 19 454 -- 315 -- Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- 1 -- 1 -- Property operating costs -- -- -- -- -- Depreciation and amortization 98 361 -- 51 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 87 90 -- 99 -- -------- -------- -------- -------- -------- Operating expenses 185 452 -- 151 -- -------- -------- -------- -------- -------- Operating (loss) income (166) 2 -- 164 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 12 (354) -- 7 -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (154) (352) -- 171 -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (154) (352) -- 171 -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- (65) -- 316 Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- (65) -- 316 -------- -------- -------- -------- -------- Net income (loss) (154) (352) (65) 171 316 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 2D, SUB 4F, SUB 5K, SUB 5M, SUB 1E, LLC L.P. LLC LLC L.P. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 4 -- -- -- Participating lease revenue 458 467 525 303 -- -------- -------- -------- -------- -------- Total revenue 458 471 525 303 -- Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 -- 1 1 -- Property operating costs -- -- -- -- -- Depreciation and amortization 118 280 297 113 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 70 100 95 70 -- -------- -------- -------- -------- -------- Operating expenses 189 380 393 184 -- -------- -------- -------- -------- -------- Operating (loss) income 269 91 132 119 -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (194) 11 30 6 -- Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 75 102 162 125 -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 75 102 162 125 -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- 431 Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- 431 -------- -------- -------- -------- -------- Net income (loss) 75 102 162 125 431 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- 5 10 Participating lease revenue 124 1,146 32 671 483 -------- -------- -------- -------- -------- Total revenue 124 1,146 32 676 493 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 1 -- 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization 55 302 118 191 258 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 24 74 102 56 254 -------- -------- -------- -------- -------- Operating expenses 80 377 220 248 513 -------- -------- -------- -------- -------- Operating (loss) income 44 769 (188) 428 (20) Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 2 8 72 13 (336) Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 46 777 (116) 441 (356) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 46 777 (116) 441 (356) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) 46 777 (116) 441 (356) ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC L.P. LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 9 -- 17 -- -- Participating lease revenue 456 -- 2,193 148 1,781 -------- -------- -------- -------- -------- Total revenue 465 -- 2,210 148 1,781 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 -- -- -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization 229 -- 1,548 1 871 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 161 -- 460 (6) 259 -------- -------- -------- -------- -------- Operating expenses 391 -- 2,008 (5) 1,131 -------- -------- -------- -------- -------- Operating (loss) income 74 -- 202 153 650 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 7 -- 41 -- 42 Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 81 -- 243 153 692 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 81 -- 243 153 692 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- (24) -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- (24) -- -- -- -------- -------- -------- -------- -------- Net income (loss) 81 (24) 243 153 692 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. -------- -------- -------- -------- ------------ Hotel operations: Rooms -- -- -- -- 147,548 Food and beverage -- -- -- -- 54,089 Other operating departments -- -- -- -- 17,469 Office rental and other revenues -- 29 -- 41 (650) Participating lease revenue 359 1,418 579 718 -- -------- -------- -------- -------- -------- Total revenue 359 1,447 579 759 218,456 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- 38,259 Food and beverage -- -- -- -- 41,998 Other operating departments -- -- -- -- 10,424 Office rental, parking and other operating expenses -- -- -- 120 -- Other operating expenses: General and administrative 1 1 1 1 37,423 Property operating costs -- -- -- -- 37,287 Depreciation and amortization 120 364 317 336 134 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 57 172 109 153 70,197 -------- -------- -------- -------- -------- Operating expenses 178 537 427 610 235,722 -------- -------- -------- -------- -------- Operating (loss) income 181 910 152 149 (17,266) Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 25 (690) 7 24 (39) Equity in income from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 206 220 159 173 (17,305) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 206 220 159 173 (17,305) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- (1,927) Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- Income (loss) from discontinued operations -- -- -- -- (1,927) -------- -------- -------- -------- -------- Net income (loss) 206 220 159 173 (19,232) ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Hotel operations: Rooms 147,548 -- 147,548 Food and beverage 54,089 -- 54,089 Other operating departments 17,469 -- 17,469 Office rental and other revenues (31) -- 3,309 Participating lease revenue 30,871 (63,997) -- -------- -------- -------- Total revenue 249,946 (63,997) 222,415 Hotel operating expenses by department: -- -- -- Rooms 38,259 -- 38,259 Food and beverage 41,998 -- 41,998 Other operating departments 10,424 -- 10,424 Office rental, parking and other operating expenses 340 -- 740 Other operating expenses: -- -- General and administrative 37,459 -- 39,781 Property operating costs 37,287 -- 37,287 Depreciation and amortization 13,201 -- 28,256 Loss on asset impairments -- -- -- Property taxes, insurance and other 76,479 (63,997) 15,478 -------- -------- -------- Operating expenses 255,447 (63,997) 212,223 -------- -------- -------- Operating (loss) income (5,501) -- 10,192 Change in fair value of non-hedging derivatives, net of swap payments -- -- (1,132) Minority interest expense -- -- 18 Interest expense, net (1,264) -- (33,949) Equity in income from consolidated entities -- (3,797) -- -------- -------- -------- (Loss) income before income taxes and discontinued operations (6,765) 3,797 (24,871) Income tax benefit -- -- 591 -------- -------- -------- Loss from continuing operations (6,765) 3,797 (24,280) Discontinued operations: -- -- -- Income (loss) from discontinued operations before tax (expense) benefit (7,471) -- (6,591) Income tax (expense) benefit -- -- 132 -------- -------- -------- Income (loss) from discontinued operations (7,471) -- (6,459) -------- -------- -------- Net income (loss) (14,236) 3,797 (30,739) ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC ----------- ------------ -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 5,831 2,147 -- -- -- Participating lease revenue -- 94,162 -- -- 680 -------- -------- -------- -------- -------- Total revenue 5,831 96,309 -- -- 680 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- 893 -- -- -- Other operating expenses: General and administrative 7,878 -- -- -- -- Property operating costs (359) -- -- -- -- Depreciation and amortization 7,234 37,401 -- -- 103 Loss on asset impairments -- 119,269 -- -- -- Property taxes, insurance and other 1,632 16,475 -- -- 79 -------- -------- -------- -------- -------- Operating expenses 16,385 174,038 -- -- 182 -------- -------- -------- -------- -------- Operating income (loss) (10,554) (77,729) -- -- 498 Gain on early extinguishment of debt 4,574 -- -- -- -- Minority interest expense (6) -- -- -- -- Interest expense, net (77,586) (20,862) -- -- -- Equity in loss from consolidated entities (257,756) -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (341,328) (98,591) -- -- 498 Income tax benefit 462 -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (340,866) (98,591) -- -- 498 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- 657 -- -- -- Income tax (expense) benefit (32) -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations (32) 657 -- -- -- -------- -------- -------- -------- -------- Net (loss) income (340,898) (97,934) -- -- 498 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, SUB 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue -- 1,759 -- 886 5,454 -------- -------- -------- -------- -------- Total revenue -- 1,759 -- 886 5,454 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 423 -- 412 1,821 Loss on asset impairments -- -- -- 500 -- Property taxes, insurance and other -- 401 -- 71 1,038 -------- -------- -------- -------- -------- Operating expenses -- 824 -- 983 2,859 -------- -------- -------- -------- -------- Operating income (loss) -- 935 -- (97) 2,595 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations -- 935 -- (97) 2,595 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations -- 935 -- (97) 2,595 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income -- 935 -- (97) 2,595 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 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 -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 16 -- -- -- Participating lease revenue 1,012 1,086 721 801 1,316 -------- -------- -------- -------- -------- Total revenue 1,012 1,102 721 801 1,316 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 762 434 328 103 532 Loss on asset impairments -- -- 2,037 -- -- Property taxes, insurance and other 554 163 122 99 296 -------- -------- -------- -------- -------- Operating expenses 1,316 597 2,487 202 828 -------- -------- -------- -------- -------- Operating income (loss) (304) 505 (1,766) 599 488 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- (2) -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (304) 505 (1,766) 597 488 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (304) 505 (1,766) 597 488 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (304) 505 (1,766) 597 488 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 23 -- 4 341 Participating lease revenue -- 1,460 3,984 1,054 1,969 -------- -------- -------- -------- -------- Total revenue -- 1,483 3,984 1,058 2,310 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization -- 410 1,219 502 406 Loss on asset impairments -- -- -- 15,347 -- Property taxes, insurance and other -- 251 516 336 111 -------- -------- -------- -------- -------- Operating expenses -- 661 1,735 16,185 517 -------- -------- -------- -------- -------- Operating income (loss) -- 822 2,249 (15,127) 1,793 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- (10) Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations -- 822 2,249 (15,127) 1,783 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations -- 822 2,249 (15,127) 1,783 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income -- 822 2,249 (15,127) 1,783 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 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. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 3 -- -- Participating lease revenue 2,156 1,863 1,500 -- 244 -------- -------- -------- -------- -------- Total revenue 2,156 1,863 1,503 -- 244 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 743 634 535 -- 330 Loss on asset impairments 9,231 -- 5,213 -- 5,187 Property taxes, insurance and other 305 284 513 -- 141 -------- -------- -------- -------- -------- Operating expenses 10,279 918 6,261 -- 5,658 -------- -------- -------- -------- -------- Operating income (loss) (8,123) 945 (4,758) -- (5,414) Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (8,123) 945 (4,758) -- (5,414) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (8,123) 945 (4,758) -- (5,414) Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (8,123) 945 (4,758) -- (5,414) ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7A SUB 7E, SUB 3D, SUB 1A, SUB 5E, JOINT LLC LLC LLC LLC VENTURE -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 1 -- -- -- Participating lease revenue 1,009 1,133 1,421 3,934 876 -------- -------- -------- -------- -------- Total revenue 1,009 1,134 1,421 3,934 876 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 462 583 338 1,438 275 Loss on asset impairments -- -- -- -- 5,478 Property taxes, insurance and other 148 177 321 302 149 -------- -------- -------- -------- -------- Operating expenses 610 760 659 1,740 5,902 -------- -------- -------- -------- -------- Operating income (loss) 399 374 762 2,194 (5,026) Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 399 374 762 2,194 (5,026) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 399 374 762 2,194 (5,026) Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income 399 374 762 2,194 (5,026) ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC L.P. L.P. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 3 -- -- -- Participating lease revenue 2,980 378 409 766 -- -------- -------- -------- -------- -------- Total revenue 2,980 381 409 766 -- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 538 292 186 31 -- Loss on asset impairments -- 4,670 2,137 1,455 -- Property taxes, insurance and other 288 113 80 222 -- -------- -------- -------- -------- -------- Operating expenses 826 5,075 2,403 1,708 -- -------- -------- -------- -------- -------- Operating income (loss) 2,154 (4,694) (1,994) (942) -- Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (347) -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 2,154 (5,041) (1,994) (942) -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 2,154 (5,041) (1,994) (942) -- Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- (939) Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- (939) -------- -------- -------- -------- -------- Net (loss) income 2,154 (5,041) (1,994) (942) (939) ======== ======== ======== ======== ========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC -------- -------- ----------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 410 1,291 379 990 1,620 -------- -------- -------- -------- -------- Total revenue 410 1,291 379 990 1,620 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 233 561 104 349 440 Loss on asset impairments 2,828 13,286 -- 7,187 -- Property taxes, insurance and other 144 164 105 372 198 -------- -------- -------- -------- -------- Operating expenses 3,205 14,011 209 7,908 638 -------- -------- -------- -------- -------- Operating income (loss) (2,795) (12,720) 170 (6,918) 982 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (566) -- -- -- 2 Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (3,361) (12,720) 170 (6,918) 984 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (3,361) (12,720) 170 (6,918) 984 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income (3,361) (12,720) 170 (6,918) 984 ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, LLC L.P. LLC LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 197 -- 1,403 -- -- Participating lease revenue 3,402 1,204 4,275 450 825 -------- -------- -------- -------- -------- Total revenue 3,599 1,204 5,678 450 825 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses 78 -- 776 -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 1,707 398 1,292 412 337 Loss on asset impairments -- 10,288 -- 7,416 -- Property taxes, insurance and other 1,247 551 1,663 161 150 -------- -------- -------- -------- -------- Operating expenses 3,032 11,237 3,731 7,989 487 -------- -------- -------- -------- -------- Operating income (loss) 567 (10,033) 1,947 (7,539) 338 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 567 (10,033) 1,947 (7,539) 338 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 567 (10,033) 1,947 (7,539) 338 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income 567 (10,033) 1,947 (7,539) 338 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P. LLC LLC LLC INC. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 60 1,534 -- 970 -- -------- -------- -------- -------- -------- Total revenue 60 1,534 -- 970 -- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 223 1,095 -- 140 -- Loss on asset impairments 1,259 -- -- 1,383 -- Property taxes, insurance and other 178 169 -- 380 -- -------- -------- -------- -------- -------- Operating expenses 1,660 1,264 -- 1,903 -- -------- -------- -------- -------- -------- Operating income (loss) (1,600) 270 -- (933) -- Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (911) -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (1,600) (641) -- (933) -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (1,600) (641) -- (933) -- Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- (18,966) -- (929) Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- (18,966) -- (929) -------- -------- -------- -------- -------- Net (loss) income (1,600) (641) (18,966) (933) (929) ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 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. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 11 -- -- -- Participating lease revenue 1,068 1,440 1,730 1,280 -- -------- -------- -------- -------- -------- Total revenue 1,068 1,451 1,730 1,280 -- Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 319 828 966 354 -- Loss on asset impairments 8,685 -- -- -- -- Property taxes, insurance and other 216 261 285 201 -- -------- -------- -------- -------- -------- Operating expenses 9,220 1,089 1,251 555 -- -------- -------- -------- -------- -------- Operating income (loss) (8,152) 362 479 725 -- Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (655) -- -- -- -- Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (8,807) 362 479 725 -- Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (8,807) 362 479 725 -- Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- 927 Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- 927 -------- -------- -------- -------- -------- Net (loss) income (8,807) 362 479 725 927 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- 6 50 Participating lease revenue 576 3,277 136 2,192 1,171 -------- -------- -------- -------- -------- Total revenue 576 3,277 136 2,198 1,221 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 171 890 413 580 697 Loss on asset impairments -- -- 638 -- 15,255 Property taxes, insurance and other 78 231 199 169 416 -------- -------- -------- -------- -------- Operating expenses 249 1,121 1,250 749 16,368 -------- -------- -------- -------- -------- Operating income (loss) 327 2,156 (1,114) 1,449 (15,147) Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- (1,145) Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 327 2,156 (1,114) 1,449 (16,292) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 327 2,156 (1,114) 1,449 (16,292) Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- -- -------- -------- -------- -------- -------- Net (loss) income 327 2,156 (1,114) 1,449 (16,292) ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 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 -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 36 -- -- Participating lease revenue 1,509 -- 7,636 953 7,191 -------- -------- -------- -------- -------- Total revenue 1,509 -- 7,672 953 7,191 Hotel operating expenses by department: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 584 -- 4,716 3 2,612 Loss on asset impairments 8,500 -- -- -- -- Property taxes, insurance and other 478 -- 1,441 6 1,130 -------- -------- -------- -------- -------- Operating expenses 9,562 -- 6,157 9 3,742 -------- -------- -------- -------- -------- Operating income (loss) (8,053) -- 1,515 944 3,449 Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- -- -- (3) Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (8,053) -- 1,515 944 3,446 Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations (8,053) -- 1,515 944 3,446 Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- (2,034) -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- (2,034) -- -- -- -------- -------- -------- -------- -------- Net (loss) income (8,053) (2,034) 1,515 944 3,446 ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. -------- -------- -------- -------- ------------ Hotel operations: Rooms -- -- -- -- 455,590 Food and beverage -- -- -- -- 181,230 Other operating departments -- -- -- -- 56,736 Office rental and other revenues -- 88 -- 177 -- Participating lease revenue 1,561 4,232 1,785 2,313 -- -------- -------- -------- -------- -------- Total revenue 1,561 4,320 1,785 2,490 693,556 Hotel operating expenses by department: Rooms -- -- -- -- 116,040 Food and beverage -- -- -- -- 134,257 Other operating departments -- -- -- -- 34,119 Office rental, parking and other operating expenses -- -- -- 400 -- Other operating expenses: General and administrative -- -- 6 -- 113,795 Property operating costs -- -- -- -- 110,203 Depreciation and amortization 420 1,028 747 955 800 Loss on asset impairments -- -- 16,128 -- -- Property taxes, insurance and other 166 534 333 234 212,718 -------- -------- -------- -------- -------- Operating expenses 586 1,562 17,214 1,589 721,932 -------- -------- -------- -------- -------- Operating income (loss) 975 2,758 (15,429) 901 (28,376) Gain on early extinguishment of debt -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (2,125) -- -- (1,807) Equity in loss from consolidated entities -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations 975 633 (15,429) 901 (30,183) Income tax benefit -- -- -- -- -- -------- -------- -------- -------- -------- Loss from continuing operations 975 633 (15,429) 901 (30,183) Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- (884) Income tax (expense) benefit -- -- -- -- -- -------- -------- -------- -------- -------- (Loss) income from discontinued operations -- -- -- -- (884) -------- -------- -------- -------- -------- Net (loss) income 975 633 (15,429) 901 (31,067) ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ Hotel operations: Rooms 455,590 -- 455,590 Food and beverage 181,230 -- 181,230 Other operating departments 56,736 -- 56,736 Office rental and other revenues 2,359 -- 10,337 Participating lease revenue 98,311 (192,473) -- -------- -------- -------- Total revenue 794,226 (192,473) 703,893 Hotel operating expenses by department: Rooms 116,040 -- 116,040 Food and beverage 134,257 -- 134,257 Other operating departments 34,119 -- 34,119 Office rental, parking and other operating expenses 1,254 -- 2,147 Other operating expenses: General and administrative 113,801 -- 121,679 Property operating costs 110,203 -- 109,844 Depreciation and amortization 38,214 -- 82,849 Loss on asset impairments 144,108 -- 263,377 Property taxes, insurance and other 231,658 (192,473) 57,292 -------- -------- -------- Operating expenses 923,654 (192,473) 921,604 -------- -------- -------- Operating income (loss) (129,428) -- (217,711) Gain on early extinguishment of debt -- -- 4,574 Minority interest expense -- -- (6) Interest expense, net (7,569) -- (106,017) Equity in loss from consolidated entities -- 257,756 -- -------- -------- -------- (Loss) income before income taxes and discontinued operations (136,997) 257,756 (319,160) Income tax benefit -- -- 462 -------- -------- -------- Loss from continuing operations (136,997) 257,756 (318,698) Discontinued operations: Income (loss) from discontinued operations before tax (expense) benefit (22,825) -- (22,168) Income tax (expense) benefit -- -- (32) -------- -------- -------- -- (Loss) income from discontinued operations (22,825) -- (22,200) -------- -------- -------- -- Net (loss) income (159,822) 257,756 (340,898) ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR HOSPITALITY GUARANTOR Sub 7C, UPREIT, SUB 5N, OP, L.P. SUBSIDIARIES LLC LLC LLC -------------- ------------ -------- ------ -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 5,611 4,463 -- -- -- Participating lease revenue -- 99,020 -- -- 716 -------- -------- ------ ------ -------- Total revenue 5,611 103,483 -- -- 716 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- 961 -- -- -- Other operating expenses: General and administrative 7,397 31 -- -- -- Property operating costs (454) -- -- -- -- Depreciation and amortization 9,196 37,355 -- -- 99 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other (4,310) 14,631 -- -- 78 -------- -------- ------ ------ -------- Operating expenses 11,829 52,978 -- -- 177 -------- -------- ------ ------ -------- Operating (loss) income (6,218) 50,505 -- -- 539 Change in fair value of non-hedging derivatives, net of swap payments (4,211) -- -- -- -- Loss on fair value of non-hedging derivatives (4,735) -- -- -- -- Minority interest expense 10 -- -- -- -- Interest expense, net (78,325) (20,415) -- -- 5 Equity in income from consolidated entities (55,165) -- -- -- -- -------- -------- ------ ------ -------- (Loss) income before income taxes and discontinued operations (38,314) 30,090 -- -- 544 Income tax benefit 748 -- -- -- -- -------- -------- ------ ------ -------- Loss from continuing operations (37,566) 30,090 -- -- 544 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- 2,961 -- -- -- Income tax (expense) benefit 6 -- -- -- -- -------- -------- ------ ------ -------- Loss from discontinued operations 6 2,961 -- -- -- -------- -------- ------ ------ -------- Net income (loss) (37,560) 33,051 -- -- 544 ======== ======== ====== ====== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8A, SUB 8F, 8G, SUB 6H, SUB 8B, LLC L.P. LLC L.P. LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue -- 1,712 -- 1,162 5,309 -------- -------- ------ ------ -------- Total revenue -- 1,712 -- 1,162 5,309 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- 1 -- 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- 339 -- 323 1,785 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 545 -- 74 1,066 -------- -------- ------ ------ -------- Operating expenses -- 885 -- 398 2,852 -------- -------- ------ ------ -------- Operating (loss) income -- 827 -- 764 2,457 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- 7 -- 2 67 Equity in income from consolidated entities -- -- -- -- -- -------- -------- ------ ------ -------- (Loss) income before income taxes and discontinued operations -- 834 -- 766 2,524 Income tax benefit -- -- -- -- -- -------- -------- ------ ------ -------- Loss from continuing operations -- 834 -- 766 2,524 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit (4,203) -- -- -- -- Income tax (expense) benefit -- -- -- -- -- -------- -------- ------ ------ -------- Loss from discontinued operations (4,203) -- -- -- -- -------- -------- ------ ------ -------- Net income (loss) (4,203) 834 -- 766 2,524 ======== ======== ====== ====== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 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 -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 21 -- -- -- Participating lease revenue 989 1,205 878 783 1,329 ------ ------ ------ ------ ------ Total revenue 989 1,226 878 783 1,329 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 7 1 1 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization 767 448 348 101 529 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 578 140 106 96 342 ------ ------ ------ ------ ------ Operating expenses 1,352 589 455 198 872 ------ ------ ------ ------ ------ Operating (loss) income (363) 637 423 585 457 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 35 6 8 6 15 Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before income taxes and discontinued operations (328) 643 431 591 472 Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from continuing operations (328) 643 431 591 472 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net income (loss) (328) 643 431 591 472 ====== ====== ====== ====== ======

MERISTAR OLD MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 8A, SUB 6D, SUB 6E, SUB 4E, LLC LLC LLC LLC L.P. -------- ----------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 14 -- 12 Participating lease revenue -- -- 1,633 4,280 1,026 ---- ---- ----- ----- ----- Total revenue -- -- 1,647 4,280 1,038 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- -- -- -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- -- 393 1,272 689 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- -- 155 610 303 ---- ---- ----- ----- ----- Operating expenses -- -- 548 1,882 993 ---- ---- ----- ----- ----- Operating (loss) income -- -- 1,099 2,398 45 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- -- 20 45 20 Equity in income from consolidated entities -- -- -- -- -- ---- ---- ----- ----- ----- (Loss) income before income taxes and discontinued operations -- -- 1,119 2,443 65 Income tax benefit -- -- -- -- -- ---- ---- ----- ----- ----- Loss from continuing operations -- -- 1,119 2,443 65 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ---- ---- ----- ----- ----- Loss from discontinued operations -- -- -- -- -- ---- ---- ----- ----- ----- Net income (loss) -- -- 1,119 2,443 65 ==== ==== ===== ===== =====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 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. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 570 -- -- 2 -- Participating lease revenue 1,849 2,146 1,966 1,460 -- ------ ------ ------ ------ ------ Total revenue 2,419 2,146 1,966 1,462 -- Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 1 -- -- -- Property operating costs -- -- -- -- -- Depreciation and amortization 462 792 627 1,037 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 131 271 256 457 -- ------ ------ ------ ------ ------ Operating expenses 594 1,064 883 1,494 -- ------ ------ ------ ------ ------ Operating (loss) income 1,825 1,082 1,083 (32) -- Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 14 30 35 32 -- Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before income taxes and discontinued operations 1,839 1,112 1,118 -- -- Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from continuing operations 1,839 1,112 1,118 -- -- Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- (1,439) Income tax (expense) benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from discontinued operations -- -- -- -- (1,439) ------ ------ ------ ------ ------ Net income (loss) 1,839 1,112 1,118 -- (1,439) ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4H, SUB 7E, SUB 3D, SUB 1A, SUB 5E, L.P. LLC LLC LLC LLC -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 1 -- -- -- Participating lease revenue 450 1,030 1,745 1,353 4,258 ----- ----- ----- ----- ----- Total revenue 450 1,031 1,745 1,353 4,258 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 1 1 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization 405 473 653 343 1,454 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 146 121 157 287 294 ----- ----- ----- ----- ----- Operating expenses 552 595 811 631 1,749 ----- ----- ----- ----- ----- Operating (loss) income (102) 436 934 722 2,509 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 7 15 32 14 25 Equity in income from consolidated entities -- -- -- -- -- ----- ----- ----- ----- ----- (Loss) income before income taxes and discontinued operations (95) 451 966 736 2,534 Income tax benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from continuing operations (95) 451 966 736 2,534 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from discontinued operations -- -- -- -- -- ----- ----- ----- ----- ----- Net income (loss) (95) 451 966 736 2,534 ===== ===== ===== ===== =====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR SUB 7A MERISTAR MERISTAR MERISTAR MERISTAR JOINT SUB 6K, SUB 2B, SUB 3A, SUB 4A, VENTURE LLC LLC LLC L.P. -------- -------- -------- -------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 979 3,055 423 398 745 ----- ----- ----- ----- ----- Total revenue 979 3,055 423 398 745 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 -- 1 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization 312 554 314 194 -- Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 172 346 118 85 187 ----- ----- ----- ----- ----- Operating expenses 485 900 433 280 188 ----- ----- ----- ----- ----- Operating (loss) income 494 2,155 (10) 118 557 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 26 28 (289) 33 28 Equity in income from consolidated entities -- -- -- -- -- ----- ----- ----- ----- ----- (Loss) income before income taxes and discontinued operations 520 2,183 (299) 151 585 Income tax benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from continuing operations 520 2,183 (299) 151 585 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from discontinued operations -- -- -- -- -- ----- ----- ----- ----- ----- Net income (loss) 520 2,183 (299) 151 585 ===== ===== ===== ===== =====

MERISTAR MERISTAR MERISTAR MDV MERISTAR SUB 4D, SUB 2A, SUB 6L, LIMITED SUB 5C, L.P. LLC LLC PARTNERSHIP LLC -------- -------- -------- ----------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue -- 458 1,383 402 1,133 ----- ----- ----- ----- ----- Total revenue -- 458 1,383 402 1,133 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- 1 1 -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- 240 667 102 447 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 126 150 94 354 ----- ----- ----- ----- ----- Operating expenses -- 367 818 196 802 ----- ----- ----- ----- ----- Operating (loss) income -- 91 565 206 331 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (510) 10 2 28 Equity in income from consolidated entities -- -- -- -- -- ----- ----- ----- ----- ----- (Loss) income before income taxes and discontinued operations -- (419) 575 208 359 Income tax benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from continuing operations -- (419) 575 208 359 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit 49 -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from discontinued operations 49 -- -- -- -- ----- ----- ----- ----- ----- Net income (loss) 49 (419) 575 208 359 ===== ===== ===== ===== =====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6J, SUB 1D, SUB 7B, SUB 7D, SUB 7G, LLC LLC L.P. LLC LLC -------- -------- -------- --------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- 329 -- 1,046 -- Participating lease revenue 1,915 3,938 1,172 4,161 438 ----- ----- ----- ----- ----- Total revenue 1,915 4,267 1,172 5,207 438 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- 97 -- 869 -- Other operating expenses: General and administrative -- -- 1 -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization 482 1,702 694 1,244 566 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 160 906 409 1,610 181 ----- ----- ----- ----- ----- Operating expenses 642 2,705 1,104 3,723 748 ----- ----- ----- ----- ----- Operating (loss) income 1,273 1,562 68 1,484 (310) Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 31 33 49 35 20 Equity in income from consolidated entities -- -- -- -- -- ----- ----- ----- ----- ----- (Loss) income before income taxes and discontinued operations 1,304 1,595 117 1,519 (290) Income tax benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from continuing operations 1,304 1,595 117 1,519 (290) Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from discontinued operations -- -- -- -- -- ----- ----- ----- ----- ----- Net income (loss) 1,304 1,595 117 1,519 (290) ===== ===== ===== ===== =====

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6B, SUB 4I, SUB 5D, SUB 5H, SUB 7H, LLC L.P. LLC LLC LLC -------- -------- -------- --------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- -- Participating lease revenue 942 58 1,446 -- 944 ------ ------ ------ ------ ------ Total revenue 942 58 1,446 -- 944 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 -- 1 -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization 341 341 1,086 -- 341 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 171 240 253 -- 283 ------ ------ ------ ------ ------ Operating expenses 513 581 1,340 -- 625 ------ ------ ------ ------ ------ Operating (loss) income 429 (523) 106 -- 319 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 7 32 (1,132) -- 18 Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before income taxes and discontinued operations 436 (491) (1,026) -- 337 Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from continuing operations 436 (491) (1,026) -- 337 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- 627 -- Income tax (expense) benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from discontinued operations -- -- -- 627 -- ------ ------ ------ ------ ------ Net income (loss) 436 (491) (1,026) 627 337 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
AGH MERISTAR MERISTAR MERISTAR MERISTAR PSSI, SUB 2D, SUB 4F, SUB 5K, SUB 5M, INC. LLC L.P. LLC LLC -------- -------- -------- --------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 8 -- -- Participating lease revenue -- 1,055 1,401 1,904 1,393 ------ ------ ------ ------ ------ Total revenue -- 1,055 1,409 1,904 1,393 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- 1 -- 1 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- 355 840 891 339 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 185 287 246 221 ------ ------ ------ ------ ------ Operating expenses -- 541 1,127 1,138 561 ------ ------ ------ ------ ------ Operating (loss) income -- 514 282 766 832 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- (586) 29 80 16 Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before income taxes and discontinued operations -- (72) 311 846 848 Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from continuing operations -- (72) 311 846 848 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit 1,531 -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from discontinued operations 1,531 -- -- -- -- ------ ------ ------ ------ ------ Net income (loss) 1,531 (72) 311 846 848 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1E, SUB 5O, SUB 6M SUB 4B, SUB 6C, L.P. LLC COMPANY L.P. LLC -------- -------- -------- --------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- -- -- 12 Participating lease revenue -- 606 3,363 138 2,217 ----- ----- ----- ----- ----- Total revenue -- 606 3,363 138 2,229 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative -- 1 1 -- 1 Property operating costs -- -- -- -- -- Depreciation and amortization -- 164 905 414 585 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other -- 94 218 274 155 ----- ----- ----- ----- ----- Operating expenses -- 259 1,124 688 741 ----- ----- ----- ----- ----- Operating (loss) income -- 347 2,239 (550) 1,488 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net -- 6 18 194 31 Equity in income from consolidated entities -- -- -- -- -- ----- ----- ----- ----- ----- (Loss) income before income taxes and discontinued operations -- 353 2,257 (356) 1,519 Income tax benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from continuing operations -- 353 2,257 (356) 1,519 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit 994 -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ----- ----- ----- ----- ----- Loss from discontinued operations 994 -- -- -- -- ----- ----- ----- ----- ----- Net income (loss) 994 353 2,257 (356) 1,519 ===== ===== ===== ===== =====
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 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 -------- -------- -------- --------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues 37 18 -- 47 -- Participating lease revenue 1,245 1,803 -- 8,446 450 ------ ------ ------ ------ ------ Total revenue 1,282 1,821 -- 8,493 450 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- -- Other operating expenses: General and administrative 1 1 -- 2 -- Property operating costs -- -- -- -- -- Depreciation and amortization 777 687 -- 4,643 2 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 430 409 -- 1,380 12 ------ ------ ------ ------ ------ Operating expenses 1,208 1,097 -- 6,025 14 ------ ------ ------ ------ ------ Operating (loss) income 74 724 -- 2,468 436 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net (1,012) 20 -- 107 -- Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before income taxes and discontinued operations (938) 744 -- 2,575 436 Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from continuing operations (938) 744 -- 2,575 436 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- (42) -- -- Income tax (expense) benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from discontinued operations -- -- (42) -- -- ------ ------ ------ ------ ------ Net income (loss) (938) 744 (42) 2,575 436 ====== ====== ====== ====== ======

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5J, SUB 5Q, SUB 5A, SUB 8D, SUB 4J, LLC LLC LLC LLC LLC -------- -------- -------- --------- -------- Hotel operations: Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental and other revenues -- -- 90 -- 175 Participating lease revenue 7,157 1,555 4,418 1,737 2,310 ------ ------ ------ ------ ------ Total revenue 7,157 1,555 4,508 1,737 2,485 Hotel operating expenses by department: -- -- -- -- -- Rooms -- -- -- -- -- Food and beverage -- -- -- -- -- Other operating departments -- -- -- -- -- Office rental, parking and other operating expenses -- -- -- -- 309 Other operating expenses: General and administrative 1 1 1 1 5 Property operating costs -- -- -- -- -- Depreciation and amortization 2,604 360 1,055 951 1,007 Loss on asset impairments -- -- -- -- -- Property taxes, insurance and other 1,169 198 473 316 170 ------ ------ ------ ------ ------ Operating expenses 3,774 559 1,529 1,268 1,491 ------ ------ ------ ------ ------ Operating (loss) income 3,383 996 2,979 469 994 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- -- -- Loss on fair value of non-hedging derivatives -- -- -- -- -- Minority interest expense -- -- -- -- -- Interest expense, net 99 72 (2,074) 16 46 Equity in income from consolidated entities -- -- -- -- -- ------ ------ ------ ------ ------ (Loss) income before income taxes and discontinued operations 3,482 1,068 905 485 1,040 Income tax benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from continuing operations 3,482 1,068 905 485 1,040 Discontinued operations: -- -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit -- -- -- -- -- Income tax (expense) benefit -- -- -- -- -- ------ ------ ------ ------ ------ Loss from discontinued operations -- -- -- -- -- ------ ------ ------ ------ ------ Net income (loss) 3,482 1,068 905 485 1,040 ====== ====== ====== ====== ======
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR HOTEL GUARANTOR LESSEE, SUBSIDIARIES TOTAL INC. TOTAL ELIMINATIONS CONSOLIDATED -------- ------------ ------------ ------------ Hotel operations: Rooms 474,540 474,540 -- 474,540 Food and beverage 181,174 181,174 -- 181,174 Other operating departments 55,174 55,174 -- 55,174 Office rental and other revenues (125) 2,257 -- 12,331 Participating lease revenue -- 102,464 (201,484) -- -------- -------- -------- -------- Total revenue 710,763 815,609 (201,484) 723,219 Hotel operating expenses by department: -- -- -- -- Rooms 114,197 114,197 -- 114,197 Food and beverage 131,552 131,551 -- 131,551 Other operating departments 31,624 31,621 -- 31,621 Office rental, parking and other operating expenses -- 1,276 -- 2,237 Other operating expenses: General and administrative 114,465 114,508 -- 121,936 Property operating costs 109,729 109,729 -- 109,275 Depreciation and amortization 1,220 40,766 -- 87,316 Loss on asset impairments -- -- -- -- Property taxes, insurance and other 223,135 241,432 (201,484) 50,268 -------- -------- -------- -------- Operating expenses 725,922 785,080 (201,484) 648,401 -------- -------- -------- -------- Operating (loss) income (15,159) 30,529 -- 74,818 Change in fair value of non-hedging derivatives, net of swap payments -- -- -- (4,211) Loss on fair value of non-hedging derivatives -- -- -- (4,735) Minority interest expense -- -- -- 10 Interest expense, net 1 (4,046) -- (102,786) Equity in income from consolidated entities -- -- 55,165 -- -------- -------- -------- -------- (Loss) income before income taxes and discontinued operations (15,158) 26,483 (55,165) (36,904) Income tax benefit -- -- -- 748 -------- -------- -------- -------- Loss from continuing operations (15,158) 26,483 (55,165) (36,156) Discontinued operations: -- -- -- -- Income (loss) from discontinued operations before tax (expense) benefit (1,888) (4,371) -- (1,410) Income tax (expense) benefit -- -- -- 6 -------- -------- -------- -------- Loss from discontinued operations (1,888) (4,371) -- (1,404) -------- -------- -------- -------- Net income (loss) (17,046) 22,112 (55,165) (37,560) ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 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 (340,898) (97,934) -- -- 498 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 6,573 37,579 -- -- 103 Loss on asset impairment -- 119,639 -- -- -- Equity in earnings 257,756 -- -- -- -- Loss on sale of assets, before tax effect -- (577) -- -- -- Gain on early extinguishment of debt (4,574) -- -- -- -- Minority interests 6 -- -- -- -- Amortization of unearned stock-based compensation 2,380 -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss (3,977) -- -- -- -- Deferred income taxes (1,848) -- -- -- -- Changes in operating assets and liabilities: Accounts receivable, net (4,448) 204 -- -- -- Prepaid expenses and other (575) 1,289 -- -- 10 Due from/to Interstate Hotels & Resorts 424 -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (2,062) (7,368) -- -- 31 Due from subsidiaries 173,158 (61,471) -- -- (622) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 81,915 (8,639) -- -- 20 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (1,146) (7,029) -- -- (20) Proceeds from sales of assets -- 21,900 -- -- -- Purchases of marketable securities (18,040) -- -- -- -- Sales of marketable securities 17,040 -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts 42,052 -- -- -- -- (Increase) decrease in restricted cash (17,714) (324) -- -- -- Other, net -- (299) -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities 22,192 14,248 -- -- (20) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt (219,650) (5,609) -- -- -- Proceeds from issuance of long-term debt 271,000 -- -- -- -- Deferred financing fees (7,509) -- -- -- -- Contributions from partners 82,920 -- -- -- -- Distributions to partners (424) -- -- -- -- Purchase of limited partnership unit (65) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities 126,272 (5,609) -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash (304) -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 230,075 -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,372 -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD 251,447 -- -- -- -- ========== ========== ========== ========== ==========

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 -- 935 -- (97) 2,595 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization -- 423 -- 412 1,821 Loss on asset impairment -- -- -- 500 -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 (17) (28) -- -- -- Prepaid expenses and other -- 17 -- (1) 4 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 36 (135) -- 51 (91) Due from subsidiaries (19) (1,182) -- (849) (3,508) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- 30 -- 16 821 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment -- (30) -- (16) (821) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- (30) -- (16) (821) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 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 (304) 505 (1,766) 597 488 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 762 434 328 103 532 Loss on asset impairment -- -- 2,037 -- -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 43 6 (1) 14 6 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (140) (73) 57 15 31 Due from subsidiaries (154) (790) (621) (652) (1,001) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 207 82 34 105 56 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (207) (82) (34) (105) (56) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (207) (82) (34) (105) (56) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5R, SUB 6D, SUB 6E, SUB 4E, SUB 1B, LLC LLC LLC L.P. LLC ---------- ------------ ---------- ---------- ---------- Operating activities: Net (loss) income -- 822 2,249 (15,127) 1,783 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization -- 410 1,219 502 406 Loss on asset impairment -- -- -- 15,347 -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 -- 5 20 15 20 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities -- (56) (235) (162) 17 Due from subsidiaries -- (1,158) (2,985) (441) (2,074) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities -- 9 268 134 152 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment -- (9) (268) (134) (141) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities -- (9) (268) (134) (141) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- (11) Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- (11) ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 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 (8,123) 945 (4,758) -- (5,414) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 743 634 535 -- 330 Loss on asset impairment 9,231 -- 5,213 -- 5,187 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 14 Prepaid expenses and other 42 7 (35) -- 4 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 108 (246) (332) (130) (28) Due from subsidiaries (1,853) (1,194) (613) 129 19 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 148 146 10 -- 112 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (148) (146) (10) -- (112) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (148) (146) (10) -- (112) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7E, SUB 3D, SUB 1A, SUB 5E, SUB 7A JOINT LLC LLC LLC LLC VENTURE ---------- ------------ ---------- ---------- ------------ Operating activities: Net (loss) income 399 374 762 2,194 (5,026) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 462 583 338 1,438 275 Loss on asset impairment -- -- -- -- 5,478 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 5 10 31 12 6 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (56) 103 (91) 246 (110) Due from subsidiaries (571) (945) (859) (3,833) (485) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 239 125 181 57 138 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (239) (125) (181) (57) (138) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (239) (125) (181) (57) (138) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6K, SUB 2B, SUB 3A, SUB 4A, SUB 4D, LLC LLC LLC L.P. L.P. ---------- ------------ ---------- ---------- ---------- Operating activities: Net (loss) income 2,154 (5,041) (1,994) (942) (939) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 538 292 186 31 55 Loss on asset impairment -- 4,670 2,137 1,455 1,004 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 (4) 3 7 (3) Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (215) -- (23) (61) (112) Due from subsidiaries (2,374) 85 (279) (232) (2,984) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 105 4 30 258 (2,979) ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (105) (25) (30) (258) (91) Proceeds from sales of assets -- -- -- -- 3,070 Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (105) (25) (30) (258) 2,979 ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- 21 -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- 21 -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MDV MERISTAR MERISTAR SUB 2A, SUB 6L, LIMITED SUB 5C, SUB 6J, LLC LLC PARTNERSHIP LLC LLC ---------- ------------ ----------- ---------- ---------- Operating activities: Net (loss) income (3,361) (12,720) 170 (6,918) 984 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 233 561 104 349 440 Loss on asset impairment 2,828 13,286 -- 7,187 -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 (6) 5 8 89 5 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (41) (73) (15) (30) (160) Due from subsidiaries 317 (1,005) (256) (574) (1,227) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities (30) 54 11 103 42 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (4) (54) (11) (103) (42) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (4) (54) (11) (103) (42) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt 34 -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities 34 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1D, SUB 7B, SUB 7D, SUB 7G, SUB 6B, LLC L.P. LLC LLC LLC ---------- ------------ ---------- ---------- ---------- Operating activities: Net (loss) income 567 (10,033) 1,947 (7,539) 338 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,707 398 1,292 412 337 Loss on asset impairment -- 10,288 -- 7,416 -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 -- -- (4) -- -- Prepaid expenses and other 122 8 20 6 1 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (53) (242) (910) (91) (61) Due from subsidiaries (2,178) (344) (2,288) (117) (479) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 165 75 57 87 136 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (165) (75) (57) (87) (136) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (165) (75) (57) (87) (136) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR AGH SUB 4I, SUB 5D, SUB 5H, SUB 7H, PSS I, L.P LLC LLC LLC INC. ---------- ------------ ---------- ---------- ---------- Operating activities: Net (loss) income (1,600) (641) (18,966) (933) (929) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 223 1,095 1,178 140 -- Loss on asset impairment 1,259 -- 18,075 1,383 1,787 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- 1,827 -- 318 Gain on early extinguishment of debt -- -- -- -- -- 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 (5) 19 -- (2) -- Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (79) 41 (148) (69) (107) Due from subsidiaries 247 (480) (28,315) (492) (14,769) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 45 34 (26,349) 27 (13,700) ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (45) (34) (901) (27) (800) Proceeds from sales of assets -- -- 27,250 -- 14,500 Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (45) (34) 26,349 (27) 13,700 ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 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 (8,807) 362 479 725 927 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 319 828 966 354 237 Loss on asset impairment 8,685 -- -- -- -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 (2) 6 43 29 13 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (97) (109) (1,115) 82 (139) Due from subsidiaries (124) (612) (192) (1,171) (1,018) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities (26) 475 181 19 20 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (14) (475) (181) (19) (20) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (14) (475) (181) (19) (20) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt 40 -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities 40 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, LLC COMPANY L.P. LLC LLC ---------- ------------ ---------- ---------- ---------- Operating activities: Net (loss) income 327 2,156 (1,114) 1,449 (16,292) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 171 890 413 580 697 Loss on asset impairment -- -- 638 -- 15,255 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 9 (9) 5 8 19 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 37 (100) (90) (91) (97) Due from subsidiaries (536) (2,843) 261 (1,860) 497 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 8 94 113 86 79 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (8) (94) (113) (86) (11) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (8) (94) (113) (86) (11) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- (68) Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- (68) ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 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 (8,053) (2,034) 1,515 944 3,446 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 584 259 4,716 3 2,612 Loss on asset impairment 8,500 1,064 -- -- -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- 1,204 -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 52 3 151 2 227 Due from/to Interstate Hotels & Resorts -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (178) (173) 699 (4) 220 Due from subsidiaries (851) (6,475) (6,504) (945) (4,160) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 54 (6,152) 577 -- 2,345 ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (54) (1,598) (577) -- (2,345) Proceeds from sales of assets -- 7,750 -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (54) 6,152 (577) -- (2,345) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- -- Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- -- Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ========== ========== ========== ========== ==========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, HOTEL LLC LLC LLC LLC LESSEE, INC. ---------- ------------ ---------- ---------- ------------ Operating activities: Net (loss) income 975 633 (15,429) 901 (31,067) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 420 1,028 747 955 800 Loss on asset impairment -- -- 16,128 -- -- Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- Gain on early extinguishment of debt -- -- -- -- -- 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 -- -- -- (8) (3,371) Prepaid expenses and other 31 18 6 12 911 Due from/to Interstate Hotels & Resorts -- -- -- -- (4,955) Accounts payable, accrued expenses, accrued interest and other liabilities 25 359 (49) 22 (5,636) Due from subsidiaries (1,278) (1,639) (1,019) (1,805) 4,592 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 173 399 384 77 (38,726) ---------- ---------- ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (173) (399) (384) (77) (894) Proceeds from sales of assets -- -- -- -- -- Purchases of marketable securities -- -- -- -- -- Sales of marketable securities -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities (173) (399) (384) (77) (894) ---------- ---------- ---------- ---------- ---------- Financing activities: Principal payments on long-term debt -- -- -- -- 45,934 Proceeds from issuance of long-term debt -- -- -- -- -- Deferred financing fees -- -- -- -- (4) Contributions from partners -- -- -- -- -- Distributions to partners -- -- -- -- -- Purchase of limited partnership unit -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) financing activities -- -- -- -- 45,930 ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- 6,310 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- 12,517 ---------- ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- 18,827 ========== ========== ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (DOLLARS IN THOUSANDS)
GUARANTOR SUBSIDIARIES TOTAL TOTAL ELIMINATIONS CONSOLIDATED ---------- ------------ ------------ Operating activities: Net (loss) income (159,822) 257,756 (340,898) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 39,943 -- 84,095 Loss on asset impairment 166,038 -- 285,677 Equity in earnings -- (257,756) -- Loss on sale of assets, before tax effect 3,349 -- 2,772 Gain on early extinguishment of debt -- -- (4,574) Minority interests -- -- 6 Amortization of unearned stock-based compensation -- -- 2,380 Unrealized gain on interest rate swaps recognized in net loss -- -- (3,977) Deferred income taxes -- -- (1,848) Changes in operating assets and liabilities: Accounts receivable, net (3,397) -- (7,641) Prepaid expenses and other 2,049 -- 2,763 Due from/to Interstate Hotels & Resorts (4,955) -- (4,531) Accounts payable, accrued expenses, accrued interest and other liabilities (10,073) -- (19,503) Due from subsidiaries (111,687) -- -- ---------- ---------- ---------- Net cash provided by (used in) operating activities (78,555) -- (5,279) ---------- ---------- ---------- Investing activities: Capital expenditures for property and equipment (13,651) -- (21,826) Proceeds from sales of assets 52,570 -- 74,470 Purchases of marketable securities -- -- (18,040) Sales of marketable securities -- -- 17,040 Net payments from (advances to) Interstate Hotels & Resorts -- -- 42,052 (Increase) decrease in restricted cash -- -- (18,038) Other, net -- -- (299) ---------- ---------- ---------- Net cash provided by (used in) investing activities 38,919 -- 75,359 ---------- ---------- ---------- Financing activities: Principal payments on long-term debt 45,950 -- (179,309) Proceeds from issuance of long-term debt -- -- 271,000 Deferred financing fees (4) -- (7,513) Contributions from partners -- -- 82,920 Distributions to partners -- -- (424) Purchase of limited partnership unit -- -- (65) ---------- ---------- ---------- Net cash provided by (used in) financing activities 45,946 -- 166,609 ---------- ---------- ---------- Effect of exchange rate changes on cash -- -- (304) ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,310 -- 236,385 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,517 -- 33,889 ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD 18,827 -- 270,274 ========== ========== ==========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR NON- MERISTAR AGH MERISTAR MERISTAR HOSPITALITY GUARANTOR SUB 7C, UPREIT, SUB 5N, SUB 8A, OP, L.P. SUBSIDIARIES LLC LLC LLC LLC ----------- ------------ -------- -------- -------- -------- Operating activities: Net (loss) income (37,560) 32,934 -- -- 544 (4,106) Adjustments to reconcile net income (loss) to net -- -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- -- Depreciation and amortization 9,196 40,316 -- -- 99 112 Equity in earnings (55,165) -- -- -- -- -- Loss on sale of assets, before tax effect -- 13 -- -- -- 4,812 Loss on fair value of non-hedging derivatives 4,735 -- -- -- -- -- Minority interests (10) -- -- -- -- -- Amortization of unearned stock based compensation 3,538 -- -- -- -- -- Unrealized gain on interest rate swaps recognized in net loss (4,787) -- -- -- -- -- Deferred income taxes (644) -- -- -- -- -- Changes in operating assets and liabilities: Accounts receivable, net (5,770) (57) -- -- (16) (15) Prepaid expenses and other (4,272) (477) -- -- -- -- Due from/to Interstate Hotels 4,378 -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (10,254) (2,190) -- -- 35 6 Due from subsidiaries 131,389 (53,113) -- -- (631) (2,463) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 34,774 17,426 -- -- 31 (1,654) -------- -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (837) (11,424) -- -- (31) (4,616) Proceeds from sales of assets -- 7,280 -- -- -- 6,270 Net payments from (advances to) Interstate Hotels & Resorts (7,000) 678 -- -- -- -- (Increase) decrease in restricted cash 2,513 2,348 -- -- -- -- Other, net -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (5,324) (1,118) -- -- (31) 1,654 -------- -------- -------- -------- -------- -------- Financing activities: Principal payments on long-term debt (297,310) (16,308) -- -- -- -- Proceeds from issuance of long-term debt 269,638 -- -- -- -- -- Deferred financing fees (3,416) -- -- -- -- -- Contributions from partners 3,156 -- -- -- -- -- Distributions paid to partners (2,467) -- -- -- -- -- -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) financing activities (30,399) (16,308) -- -- -- -- -------- -------- -------- -------- -------- -------- Effect of exchange rate changes on cash (9) -- -- -- -- -- -------- -------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (958) -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,798 -- -- -- -- -- -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD 5,840 -- -- -- -- -- ======== ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8F, 8G, SUB 6H, SUB 8B, SUB 1C, L.P. LLC L.P. LLC L.P. -------- -------- -------- -------- -------- Operating activities: Net (loss) income 834 -- 766 2,524 (328) Adjustments to reconcile net income (loss) to net -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- Depreciation and amortization 339 -- 323 1,785 767 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- 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 (96) -- -- -- -- Changes in operating assets and liabilities: Accounts receivable, net 8 -- -- -- -- Prepaid expenses and other 19 -- -- -- (8) Due from/to Interstate Hotels -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 8 -- 50 228 80 Due from subsidiaries (994) -- (1,079) (3,721) (210) -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 118 -- 60 816 301 -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (118) -- (60) (816) (301) Proceeds from sales of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (118) -- (60) (816) (301) -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
OLD MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 8E, SUB 7F, SUB 5L, SUB 3C, SUB 5R, SUB 8A, LLC LLC LLC LLC LLC LLC -------- -------- -------- -------- -------- -------- Operating activities: Net (loss) income 643 431 591 472 -- -- Adjustments to reconcile net income (loss) to net -- -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- -- Depreciation and amortization 448 348 101 529 -- -- Equity in earnings -- -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- -- 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 -- -- -- -- -- 1 Due from/to Interstate Hotels -- -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (65) 24 73 160 -- (46) Due from subsidiaries (921) (769) (580) (1,090) -- 46 -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 105 34 185 71 -- 1 -------- -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (105) (34) (185) (71) -- (1) Proceeds from sales of assets -- -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- -- Other, net -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (105) (34) (185) (71) -- (1) -------- -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- -- ======== ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6D, SUB 6E, SUB 4E, SUB 1B, SUB 5F, LLC LLC L.P. LLC L.P. -------- -------- -------- -------- -------- Operating activities: Net (loss) income 1,119 2,443 65 1,839 1,112 Adjustments to reconcile net income (loss) to net -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- Depreciation and amortization 393 1,272 689 462 792 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- 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 (10) -- -- -- -- Prepaid expenses and other -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (130) 165 (148) 83 248 Due from subsidiaries (1,209) (3,503) (467) (2,120) (1,708) -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 163 377 139 264 444 -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (163) (377) (139) (264) (444) Proceeds from sales of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (163) (377) (139) (264) (444) -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 6G, SUB 8C, SUB 4C, SUB 4H, SUB 7E, SUB 3D, LLC LLC L.P. L.P. LLC LLC -------- -------- -------- -------- -------- -------- Operating activities: Net (loss) income 1,118 -- (1,407) (95) 451 966 Adjustments to reconcile net income (loss) to net -- -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- -- Depreciation and amortization 627 1,037 283 405 473 653 Equity in earnings -- -- -- -- -- -- Loss on sale of assets, before tax effect -- -- 1,578 -- -- -- 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 -- -- (32) -- -- -- Changes in operating assets and liabilities: Accounts receivable, net -- -- (1) -- -- -- Prepaid expenses and other -- -- -- (3) -- -- Due from/to Interstate Hotels -- -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (103) (201) (317) (67) (73) 169 Due from subsidiaries (1,348) (716) (11,656) (158) (769) (1,588) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 294 120 (11,552) 82 82 200 -------- -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (294) (120) (48) (82) (82) (200) Proceeds from sales of assets -- -- 11,600 -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- -- Other, net -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (294) (120) 11,552 (82) (82) (200) -------- -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- -- ======== ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1A, SUB 5E, 7A JOINT SUB 6K, SUB 2B, LLC LLC VENTURE LLC LLC -------- -------- -------- -------- -------- Operating activities: Net (loss) income 736 2,534 520 2,183 (299) Adjustments to reconcile net income (loss) to net -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- Depreciation and amortization 343 1,454 312 554 314 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- 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 -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (19) 157 (67) 80 -- Due from subsidiaries (1,001) (4,098) (546) (2,619) 139 -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 59 47 219 198 154 -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (59) (47) (219) (198) (154) Proceeds from sales of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (59) (47) (219) (198) (154) -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 3A, SUB 4A, SUB 4D, SUB 2A, SUB 6L, LLC L.P. L.P. LLC LLC -------- -------- -------- -------- -------- Operating activities: Net (loss) income 151 585 49 (419) 575 Adjustments to reconcile net income (loss) to net -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- Depreciation and amortization 194 -- 233 240 667 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- 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 -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 33 (33) 115 (12) (69) Due from subsidiaries 355 (288) (124) 244 (986) -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 733 264 273 53 187 -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (733) (264) (273) (53) (187) Proceeds from sales of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (733) (264) (273) (53) (187) -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ======== ======== ======== ======== ========

MDV MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR LIMITED SUB 5C, SUB 6J, SUB 1D, SUB 7B, SUB 7D, PARTNERSHIP LLC LLC LLC L.P. LLC ----------- -------- -------- -------- -------- -------- Operating activities: Net (loss) income 208 359 1,304 1,594 117 1,519 Adjustments to reconcile net income (loss) to net -- -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- -- Depreciation and amortization 102 447 482 1,702 694 1,244 Equity in earnings -- -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- -- 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 -- -- (81) -- -- 40 Prepaid expenses and other 4 (14) -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (10) 41 (108) (360) 199 471 Due from subsidiaries (291) (616) (1,369) (2,403) (975) (3,136) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 13 217 228 533 35 138 -------- -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (13) (217) (228) (533) (35) (138) Proceeds from sales of assets -- -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- -- Other, net -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (13) (217) (228) (533) (35) (138) -------- -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- -- ======== ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 7G, SUB 6B, SUB 4I, SUB 5D, SUB 5H, SUB 7H, LLC LLC L.P. LLC LLC LLC -------- -------- -------- -------- -------- -------- Operating activities: Net (loss) income (290) 436 (491) (1,026) 627 337 Adjustments to reconcile net income (loss) to net -- -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- -- Depreciation and amortization 566 341 341 1,086 1,479 341 Equity in earnings -- -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- -- 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 -- -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (187) (90) (28) 124 516 83 Due from subsidiaries 24 (590) 365 110 (1,770) (571) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 113 97 187 294 852 190 -------- -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (113) (97) (187) (294) (852) (190) Proceeds from sales of assets -- -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- -- Other, net -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (113) (97) (187) (294) (852) (190) -------- -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- -- ======== ======== ======== ======== ======== ========

AGH MERISTAR MERISTAR MERISTAR MERISTAR PSS I, SUB 2D, SUB 4F, SUB 5K, SUB 5M, INC. LLC L.P. LLC LLC -------- -------- -------- -------- -------- Operating activities: Net (loss) income 1,531 (72) 311 846 848 Adjustments to reconcile net income (loss) to net -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- Depreciation and amortization -- 355 840 891 339 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- 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 -- -- -- -- -- Due from/to Interstate Hotels -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 311 (46) (85) (1,199) 136 Due from subsidiaries (1,341) (150) (691) 162 (1,224) -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 501 87 375 700 99 -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (501) (87) (375) (700) (99) Proceeds from sales of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (501) (87) (375) (700) (99) -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 1E, SUB 5O, SUB 6M SUB 4B, SUB 6C, SUB 2C, L.P. LLC COMPANY L.P. LLC LLC -------- -------- -------- -------- -------- -------- Operating activities: Net (loss) income 994 353 2,257 (356) 1,519 (938) Adjustments to reconcile net income (loss) to net -- -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- -- Depreciation and amortization 223 164 905 414 585 777 Equity in earnings -- -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- -- 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 -- -- 13 -- -- -- Due from/to Interstate Hotels -- -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 12 36 (93) 19 (66) (131) Due from subsidiaries (1,157) (501) (2,879) 1,215 (1,715) 455 -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 72 52 203 1,292 323 163 -------- -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (72) (52) (203) (1,292) (323) (163) Proceeds from sales of assets -- -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- -- Other, net -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (72) (52) (203) (1,292) (323) (163) -------- -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- -- ======== ======== ======== ======== ======== ========

MERISTAR MERISTAR MERISTAR MERISTAR MERISTAR SUB 4G, SUB 3B, SUB 5G, SUB 5P, SUB 5J, L.P. LLC L.P. LLC LLC -------- -------- -------- -------- -------- Operating activities: Net (loss) income 744 (42) 2,575 436 3,482 Adjustments to reconcile net income (loss) to net -- -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- -- Depreciation and amortization 687 691 4,643 2 2,604 Equity in earnings -- -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- -- 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 -- -- -- -- 483 Due from/to Interstate Hotels -- -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities (172) 134 921 8 521 Due from subsidiaries (1,163) (297) (6,957) (726) (4,781) -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 96 486 1,182 39 2,309 -------- -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (96) (486) (1,182) (39) (2,309) Proceeds from sales of assets -- -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- -- Other, net -- -- -- -- -- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (96) (486) (1,182) (39) (2,309) -------- -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- -- ======== ======== ======== ======== ========
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (DOLLARS IN THOUSANDS)
MERISTAR MERISTAR MERISTAR MERISTAR SUB 5Q, SUB 5A, SUB 8D, SUB 4J, LLC LLC LLC LLC -------- -------- -------- -------- Operating activities: Net (loss) income 1,068 905 485 1,040 Adjustments to reconcile net income (loss) to net -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- Depreciation and amortization 360 1,055 951 1,007 Equity in earnings -- -- -- -- Loss on sale of assets, before tax effect -- -- -- -- 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 -- -- -- 40 Prepaid expenses and other -- -- 1 -- Due from/to Interstate Hotels -- -- -- -- Accounts payable, accrued expenses, accrued interest and other liabilities 137 497 (41) 15 Due from subsidiaries (1,079) (2,209) (1,240) (1,924) -------- -------- -------- -------- Net cash provided by (used in) operating activities 486 248 156 178 -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (486) (248) (156) (178) Proceeds from sales of assets -- -- -- -- Net payments from (advances to) Interstate Hotels & Resorts -- -- -- -- (Increase) decrease in restricted cash -- -- -- -- Other, net -- -- -- -- -------- -------- -------- -------- Net cash provided by (used in) investing activities (486) (248) (156) (178) -------- -------- -------- -------- 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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- -- -- -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- -- -- -- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD -- -- -- -- ======== ======== ======== ========

MERISTAR GUARANTOR HOTEL SUBSIDIARIES TOTAL LESSEE, INC. TOTAL ELIMINATIONS CONSOLIDATED ------------ ------------ ------------ ------------ Operating activities: Net (loss) income (17,046) 22,231 (55,165) (37,560) Adjustments to reconcile net income (loss) to net -- -- -- -- cash provided by (used in) operating activities: -- -- -- -- Depreciation and amortization 1,221 43,787 -- 93,299 Equity in earnings -- -- 55,165 -- Loss on sale of assets, before tax effect -- 6,390 -- 6,403 Loss on fair value of non-hedging derivatives -- -- -- 4,735 Minority interests -- -- -- (10) Amortization of unearned stock based compensation -- -- -- 3,538 Unrealized gain on interest rate swaps recognized in net loss -- -- -- (4,787) Deferred income taxes -- (128) -- (772) Changes in operating assets and liabilities: Accounts receivable, net (70) 215 -- (5,613) Prepaid expenses and other (798) (302) -- (5,051) Due from/to Interstate Hotels 1,384 1,384 -- 5,762 Accounts payable, accrued expenses, accrued interest and other liabilities (2,113) (184) -- (12,628) Due from subsidiaries 7,727 (78,277) -- -- -------- -------- -------- -------- Net cash provided by (used in) operating activities (9,695) (4,884) -- 47,316 -------- -------- -------- -------- Investing activities: Capital expenditures for property and equipment (881) (23,563) -- (35,824) Proceeds from sales of assets -- 17,870 -- 25,150 Net payments from (advances to) Interstate Hotels & Resorts (678) (678) -- (7,000) (Increase) decrease in restricted cash -- -- -- 4,861 Other, net -- -- -- -- -------- -------- -------- -------- Net cash provided by (used in) investing activities (1,559) (6,371) -- (12,813) -------- -------- -------- -------- Financing activities: Principal payments on long-term debt -- -- -- (313,618) Proceeds from issuance of long-term debt 13,500 13,500 -- 283,138 Deferred financing fees -- -- -- (3,416) Contributions from partners -- -- -- 3,156 Distributions paid to partners -- -- -- (2,467) -- -- -- -- -------- -------- -------- -------- Net cash provided by (used in) financing activities 13,500 13,500 -- (33,207) -------- -------- -------- -------- Effect of exchange rate changes on cash -- -- -- (9) -------- -------- -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,246 2,245 -- 1,287 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,643 16,643 -- 23,441 -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD 18,889 18,888 -- 24,728 ======== ======== ======== ========
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	•	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


	•	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.


^(a)	Funds from operations for the three and nine months ended September 30, 2003, include the effect of loss on asset impairments of $21 million and $285.7 million (or ($0.41) and $(5.76) per diluted share), respectively.


	•	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

	•	$74.5 million in proceeds from the sale of six non-core hotel assets; partially offset by

	•	$21.8 million in capital expenditures (including $2.4 million of capitalized interest); and

	•	$18 million increase in cash restricted for mortgage escrows.


	•	$271 million from the issuance of new debt;

	•	$82.9 million from the issuance of common stock (total proceeds of $95.3 million, including the October 2003 issuance of an additional 1.8 million shares for $12.4 million); partially offset by

	•	$179.3 million in repayments of debt.


	•	secondary market locations;

	•	secondary brand affiliations;

	•	higher than average future capital expenditure requirements;

	•	limited future growth potential; or

	•	an over-weighted market location.


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

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


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

	•	reduce future capital requirements on a relative basis; and

	•	reduce our leverage and requirements on our liquidity resources.


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

^(b)	In October 2003, we repurchased a further $59.3 million of these notes.


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