-----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, C6vlgt2tFjiFm85HjnxJJyCA4GF02P7Vn9pMkiZT3WqFneh/J8MprY2KnXVD+zNk q/LhIMLwH4rzevucEf+G4A== 0001157523-06-003032.txt : 20060328 0001157523-06-003032.hdr.sgml : 20060328 20060327201025 ACCESSION NUMBER: 0001157523-06-003032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060327 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060328 DATE AS OF CHANGE: 20060327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Morgans Hotel Group Co. CENTRAL INDEX KEY: 0001342126 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 161736884 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51802 FILM NUMBER: 06713207 BUSINESS ADDRESS: STREET 1: 475 TENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-277-4100 MAIL ADDRESS: STREET 1: 475 TENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10018 8-K 1 a5111197.txt MORGANS HOTEL GROUP CO. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - -------------------------------------------------------------------------------- FORM 8-K - -------------------------------------------------------------------------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: March 27, 2006 (Date of earliest event reported) - -------------------------------------------------------------------------------- Morgans Hotel Group Co. (Exact name of registrant as specified in its charter) - -------------------------------------------------------------------------------- Delaware (State or other jurisdiction of incorporation) 000-51802 16-1736884 (Commission File Number) (IRS Employer Identification No.) 475 Tenth Avenue New York, NY 10018 (Address of Principal Executive Offices) (Zip Code) (212) 277-4100 (Registrant's Telephone Number, Including Area Code) Not applicable ------------------------------------------------------------------ (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On March 27, 2006, Morgans Hotel Group Co. issued a press release announcing its financial results for the fiscal quarter ended December 31, 2005 and for the fiscal year ended December 31, 2005. A copy of the press release is attached as Exhibit 99.1 hereto and is hereby incorporated by reference into this Item 2.02. Item 9.01. Financial Statements and Exhibits. (a) None (b) None (c) None (d) Exhibit 99.1: Press Release dated March 27, 2005. Exhibit No. Exhibit Description - ----------- ------------------- 99.1 Press Release SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MORGANS HOTEL GROUP CO. Date: March 28, 2006 By: /s/ Richard Szymanski ---------------------------- Richard Szymanski Chief Financial Officer EX-99.1 2 a5111197ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Morgans Hotel Group Co. Announces Fourth Quarter and Year End 2005 Results NEW YORK--(BUSINESS WIRE)--March 27, 2006--Morgans Hotel Group Co.(NASDAQ: MHGC): 2005 Highlights -- Owned Hotels Produce RevPAR Growth of 17.3% -- Operating Income Rises 40.4% -- Adjusted EBITDA Increases 19.3% Morgans Hotel Group Co. (NASDAQ: MHGC), a fully integrated hospitality company that operates boutique hotels in gateway cities under well-known brands such as Delano and Mondrian, today reported fourth quarter and full year 2005 financial results. Fourth quarter 2005 revenue per available room (RevPAR) for owned hotels, all of which are comparable, increased 12.6% over the same period in 2004. Total revenues, which include food and beverage, other hotel revenues and management fees, increased 7.9% to $70.1 million as compared to $65.0 million in the fourth quarter of 2004. Adjusted earnings before interest, taxes depreciation and amortization (Adjusted EBITDA) increased by 8.8% to $22.5 million as compared to $20.7 million in the fourth quarter of 2004. Included in Adjusted EBITDA in the fourth quarter of 2005 was $0.5 million in severance charges and $0.4 million in reserves for prior period payroll taxes at the Company's London joint venture. Included in the 2004 fourth quarter Adjusted EBITDA was $0.6 million in income due to settlements of prior period legal expenses. Excluding these items in both years' quarters, Adjusted EBITDA increased by 16%. Net loss for the fourth quarter of 2005 was $4.1 million compared to a net loss of $2.4 million in the fourth quarter of 2004. In addition to the items affecting Adjusted EBITDA above, the results were negatively impacted by $2.2 million for the Company's 50% share of a write-off of financing costs in connection with the refinancing of debt in the London joint venture. A reconciliation of operating income and net loss, calculated in accordance with U.S. generally accepted accounting principles, to Adjusted EBITDA is included in the accompanying tables. For the full year 2005, RevPAR for owned hotels was up 17.3% over the full year 2004. Total revenues increased 11.1% to $260.3 million as compared to $234.4 million in the full year 2004. Adjusted EBITDA improved 19.3% to $79.5 million as compared to $66.6 million in 2004. Net loss for the full year 2005 was $33.2 million compared to a net loss of $31.6 million for the full year 2004. In February 2006, the Company completed its initial public offering selling 18.0 million shares, including 3.0 million shares from existing stockholders. The Company received net proceeds of approximately $275.0 million. The proceeds were used to improve the Company's debt-to-equity ratio by repaying a portion of outstanding debt and preferred equity interests. Additionally, the Company will use the proceeds to finance a portion of the acquisition of the James Hotel Scottsdale and for general corporate purposes, including hotel renovations. Mr. W. Edward Scheetz, President and Chief Executive Officer stated, "We are pleased with our progress in 2005 and look forward to executing our growth plans for the remainder of 2006 and beyond. We are also confident that our recent IPO will give us the financial flexibility we need to expand the Morgans Hotel Group's brands and further establish our position as the leader in the fast growing boutique segment of the lodging industry." Fourth Quarter Operating Results RevPAR for the Company's owned hotels was $247.60 for the fourth quarter 2005, a 12.6% increase over the comparable period in 2004. The increase in RevPAR was driven by an increase of 18.4% for the Company's three New York hotels. The growth was partially offset by the impact from Hurricane Wilma in October which affected RevPAR at the Delano in Miami for the fourth quarter 2005. Excluding Miami, RevPAR at the Company's remaining five owned hotels increased approximately 15.0%. The RevPAR growth for the Company's owned hotels was derived solely from average daily rate (ADR) growth, which increased by 13.5%, or $38.72, to $326.22 for the fourth quarter of 2005 from $287.50 for the fourth quarter of 2004. Occupancy for the Company's owned portfolio was 75.9% in the fourth quarter 2005 as compared to 76.5% in the fourth quarter of 2004. Hotel operating margins, defined as hotel revenues less hotel operating expenses, as a percentage of hotel revenues increased to 36.4% in the fourth quarter of 2005 from 32.1% in the fourth quarter of 2004. The margin growth has been driven by the company's ability to increase ADR due to the high occupancies in its markets. At the Company's unconsolidated hotels, the London hotels rebounded from the July terrorist bombings to post a RevPAR increase of 4.1%. RevPAR at the Shore Club in Miami declined due to Hurricane Wilma. Full Year 2005 Company Highlights RevPAR for owned hotels increased 17.3% to $224.19 for the full year 2005 over the full year 2004. The Company achieved RevPAR growth across all of its geographic markets. In particular, the Company's three New York City hotels had RevPAR growth of 22.9% for the full year 2005 as compared to the full year 2004. The RevPAR growth at the Company's owned hotels for the full year 2005 was due to strong ADR growth, which increased 11.0%, or $27.73, to $280.24 as compared to the full year 2004. Occupancy for the Company's owned portfolio increased to 80.0% for the full year 2005 from 75.7% in the full year 2004. All six of the Company's owned hotels experienced occupancy increases for the full year 2005 as compared to the full year 2004. Hotel operating margins, increased to 35.0% for the full year 2005 as compared 31.7% for the full year 2004. The margin growth was driven by the company's ability to increase ADR due to high occupancies in its markets. Mr. Scheetz continued, "2005 was a year of strong operational performance with double digit revenue and operating profit growth. Results for full year 2005 also demonstrate the strength of our locations with all U.S. markets significantly outperforming the industry average. The Company's RevPAR growth, led by a significant rise in rate across our total portfolio, is indicative of the favorable demand by consumers of the unique luxury experience we provide and our position in high barrier-to-entry markets." Balance Sheet and Financing After giving effect to the IPO, the Company's pro forma adjusted debt at December 31, 2005 was $472.6 million. Cash and cash equivalents were $58.9 million and additional cash reserves designated for renovation projects were $15.0 million, resulting in net debt of $398.7 million. The Company's weighted average debt maturity has increased to 4.4 years and its weighted average interest rate is now 5.7%. The Company also has an undrawn $125 million revolving credit facility. Development Activity In December 2005, the Company agreed to purchase the James Hotel, a 194-room boutique hotel in Scottsdale, Arizona for $47.5 million. At that time, the Company paid 10% of the purchase price to the seller. The purchase is expected to close by the end of April 2006 and the hotel will be re-branded as Mondrian Scottsdale. The Company intends to upgrade the hotel with the repositioning expected to be completed by the end of the fourth quarter of 2006. In January 2006, the Company entered into a 50/50 joint venture with Boyd Gaming Corporation (NYSE: BYD) to develop two flagship hotels in Las Vegas bearing the Company's Delano and Mondrian brands. The project is expected to be completed in 2010. In January 2006, Morgans Hotel Group completed the acquisition of the property across from Delano Miami for approximately $14.3 million. The Company expects to convert the property into additional guest rooms and additional guest facilities and have the property in operation by the end of 2007. Mr. Scheetz concluded, "We are committed to expanding our brands in new markets and are off to a strong start with Las Vegas and Scottsdale. We will continue to provide our guests an innovative, dynamic and exciting venue for their lodging, dining and relaxation experiences. Our improved results in 2005 reflect our customer's appreciation and loyalty to our product and we intend to build on this in every market where we operate. As we execute our plan, we believe we can profitably expand Morgans Hotels over time to many additional locations in major markets to achieve the highest possible return on invested capital for our shareholders." Guidance For 2006 The statements below are the Company's outlook or forecast for the Company's business for the fiscal year ending December 31, 2006. Based upon the Company's expectations for continued improvement of the U.S. economy, moderate supply growth, further rate improvement in the Luxury lodging and consumer service sectors, recent joint-venture announcements, along with planned expense increases, the Company is issuing the following guidance for the full year 2006: RevPAR Growth: 8.0% to 10.0% Total Revenues: $280 million to $290 million Adjusted EBITDA: $85 million to $90 million The first quarter is typically the Company's slowest quarter, while the fourth quarter is the typically the strongest. Adjusted EBITDA for 2006 includes costs of approximately $2.0 million related to public company's expenses and excludes stock compensation expense. The Company expects its first quarter results to be below the prior year as the first quarter in 2005 was positively influenced by "The Gates" exhibition in New York City and the first quarter of 2006 will include public company costs and a special promotional initiative. The Company anticipates spending approximately $20 to $25 million for upgrades of hotels and the re-branding of Mondrian Scottsdale. In addition, maintenance capital expenditures for 2006 are estimated to be approximately $10 to $12 million. Conference Call The Company will host a conference call to discuss the financial results for the fourth quarter and year ended December 31, 2005, today at 5:00 PM Eastern time. Hosting the call will be Mr. W. Edward Scheetz, President and Chief Executive Officer, and Mr. Richard Szymanski, Chief Financial Officer. The call will be webcast live over the Internet at www.morganshotelgroup.com under the About Us, Investor Relations section. Participants should follow the instructions provided on the website for the download and installation of audio applications necessary to join the webcast. The call can also be accessed live over the phone by dialing (800) 289-0572 or (913) 981-5543 for international callers. A replay of the call will be available one hour after the call and can be accessed by dialing (888) 203-1112 or (719) 457-0820 for international callers; the password is 4447806. The replay will be available from March 27, 2006 through April 3, 2006. Forward-Looking and Cautionary Statements Statements contained in this press release which are not historical facts are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; the completion of transactions and the integration of properties with our existing business; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in Morgans Hotel Group Co.'s Annual Report on Form 10-K and other documents filed by the Company with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of today, based upon information known to management as of the date hereof, and the Company assumes no obligations to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized. About Morgans Hotel Group Based in New York City, Morgans Hotel Group Co. (Nasdaq: MHGC) operates hotels such as the Hudson, Morgans and the Royalton in New York, the Delano in Miami, the Mondrian in Los Angeles, Clift in San Francisco, and the Sanderson and St Martins Lane in London, and the Shore Club in Miami. From its founding in 1984, Morgans Hotel Group has defined the boutique hotel sector and continues to be an innovator and leader in the sector. Morgans Hotel Group, Co. Income Statement Three Months Ended % Full Year Ended % Dec-05 Dec-04 Change Dec-05 Dec-04 Change ------ ------ ------ ------ ------ ------ Revenues: Rooms 42,822 37,988 13% 153,675 131,367 17% Food & beverage 21,536 20,992 85,573 82,475 Other hotel 3,064 3,517 11,622 11,725 ------ ------ ------- ------- Total hotel revenues 67,422 62,497 8% 250,870 225,567 11% Management fees 2,681 2,495 9,479 8,831 ------ ------ ------- ------- Total revenues 70,103 64,992 8% 260,349 234,398 11% Operating Costs and Expenses: Rooms 10,298 10,371 39,666 37,070 Food & beverage 14,023 13,619 54,294 51,876 Other departmental 1,529 841 4,546 3,452 Hotel, selling, general and administrative 13,250 14,407 51,346 48,944 Property taxes, insurance and other 3,806 3,171 13,331 12,619 ------ ------ ------- ------- Total hotel operating expenses 42,906 42,409 1% 163,183 153,961 6% Corporate expenses 5,603 2,780 17,982 15,375 Depreciation 5,920 6,740 26,215 27,348 ------ ------ ------- ------- Total operating costs and expenses 54,429 51,929 5% 207,380 196,684 5% Operating income 15,674 13,063 20% 52,969 37,714 40% Interest expense, net 15,799 15,393 75,257 67,173 Equity in loss of unconsolidated joint ventures 3,024 451 7,593 2,958 Minority interest 949 889 4,087 3,833 Other non-operating (income) loss (276)(1,497) (1,574) (5,482) ------ ------ ------- ------- Pre tax loss (3,822)(2,173) -76% (32,394)(30,768) -5% Income taxes 248 224 822 827 ------ ------ ------- ------- Net loss (4,070)(2,397) -70% (33,216)(31,595) -5% Morgans Hotel Group, Co. Hotel Operating Statistics Three Months Ended % Full Year Ended % Dec-05 Dec-04 Change Dec-05 Dec-04 Change ------ ------ ------ ------ ------ ------ Morgans Occupancy 81.7% 88.1% -7.3% 83.4% 82.0% 1.7% ADR 367.04 306.43 19.8% 295.41 253.73 16.4% RevPAR 299.87 269.96 11.1% 246.37 208.06 18.4% Royalton Occupancy 83.9% 87.5% -4.1% 86.2% 82.3% 4.7% ADR 397.38 333.93 19.0% 315.74 279.53 13.0% RevPAR 333.40 292.19 14.1% 272.17 230.05 18.3% Hudson Occupancy 83.9% 82.8% 1.3% 85.3% 80.0% 6.6% ADR 313.70 262.81 19.4% 246.79 210.54 17.2% RevPAR 263.19 217.61 20.9% 210.51 168.43 25.0% Delano Occupancy 64.7% 60.8% 6.3% 72.1% 66.2% 8.9% ADR 473.48 506.17 -6.5% 474.47 473.23 0.3% RevPAR 306.25 307.95 -0.6% 342.09 313.28 9.2% Mondrian Occupancy 71.2% 70.2% 1.4% 79.5% 75.3% 5.6% ADR 298.04 278.05 7.2% 300.79 277.85 8.3% RevPAR 212.20 195.19 8.7% 239.13 209.22 14.3% Clift Occupancy 61.8% 66.2% -6.6% 68.7% 66.5% 3.3% ADR 240.93 218.05 10.5% 220.72 211.30 4.5% RevPAR 148.89 144.35 3.1% 151.63 140.51 7.9% Total Owned Occupancy 75.9% 76.5% -0.8% 80.0% 75.7% 5.7% ADR 326.22 287.50 13.5% 280.24 252.51 11.0% RevPAR 247.60 219.94 12.6% 224.19 191.15 17.3% St. Martins Lane Occupancy 80.3% 78.5% 2.3% 73.6% 75.4% -2.4% ADR 354.41 345.68 2.5% 359.03 349.80 2.6% RevPAR 284.59 271.36 4.9% 264.25 263.75 0.2% Sanderson Occupancy 76.0% 78.9% -3.7% 69.6% 73.0% -4.7% ADR 433.54 404.92 7.1% 437.80 410.75 6.6% RevPAR 329.49 319.48 3.1% 304.71 299.85 1.6% Shore Club Occupancy 52.3% 60.7%-13.8% 63.6% 61.6% 3.2% ADR 370.86 349.30 6.2% 348.90 326.77 6.8% RevPAR 193.96 212.03 -8.5% 221.90 201.29 10.2% Total Joint Venture Occupancy 66.3% 70.1% -5.4% 68.0% 68.3% -0.4% ADR 381.01 361.99 5.3% 372.86 354.15 5.3% RevPAR 252.61 253.75 -0.5% 253.54 241.88 4.8% Total Company Occupancy 73.4% 74.8% -1.9% 76.9% 73.7% 4.3% ADR 339.10 305.94 10.8% 301.60 277.42 8.7% RevPAR 248.90 228.84 8.8% 231.93 204.46 13.4% Morgans Hotel Group, Co. Hotel Operating Margins Three Months Ended % Full Year Ended % Dec-05 Dec-04 Change Dec-05 Dec-04 Change ------ ------ ------ ------ ------ ------ Total hotel revenues 67,422 62,497 8% 250,870 225,567 11% Total hotel operating expenses 42,906 42,409 1% 163,183 153,961 6% Hotel operating margins 24,516 20,088 22% 87,687 71,606 22% Margin - % of Total hotel revenues 36.4% 32.1% 35.0% 31.7% EBITDA and Adjusted EBITDA We believe that earnings before interest, income taxes, depreciation and amortization (EBITDA) is a useful financial metric to assess our operating performance before the impact of investing and financing transactions and income taxes. It also facilitates comparison between us and our competitors. Given the significant investments that we have made in the past in property, plant and equipment, depreciation and amortization expense comprises a meaningful portion of our cost structure. We believe that EBITDA will provide investors with a useful tool for assessing the comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. We disclose Adjusted EBITDA because we believe it provides a meaningful comparison to our EBITDA as it excludes other non-operating (income) expenses that do not relate to the on-going performance of our assets and excludes the operating performance of assets in which we do not have a fee simple ownership interest. The use of EBITDA and Adjusted EBITDA has certain limitations. Our presentation of EBITDA and Adjusted EBITDA may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation expense for various long-term assets, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation, interest and income tax expense, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance. The term EBITDA is not defined under accounting principles generally accepted in the United States, or U.S. GAAP, and EBITDA is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. In addition, EBITDA is impacted by reorganization of businesses and other restructuring-related charges. When assessing our operating performance, you should not consider this data in isolation, or as a substitute for, our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as we do. A reconciliation of net income (loss) and operating income (loss), the most directly comparable U.S. GAAP measures, to EBITDA and Adjusted EBITDA for each of the respective periods indicated is as follows: Morgans Hotel Group, Co. EBITDA Reconciliation Three Months Ended % Full Year Ended % Dec-05 Dec-04 Change Dec-05 Dec-04 Change ------ ------ ------ ------ ------ ------ Net income (loss) (4,070) (2,397) (33,216)(31,595) Interest expense,net 15,799 15,393 75,257 67,173 Income tax expense 248 224 822 827 Depreciation and amortization expense 5,920 6,740 26,215 27,348 Proportionate share of interest expense from unconsolidated joint ventures 4,191 1,836 10,669 7,694 Proportionate share of depreciation expense from unconsolidated joint ventures 1,605 1,632 6,390 5,754 Proportionate share of depreciation expense of minority interests in consolidated joint ventures (115) (115) (482) (610) ------ ------ ------ ------ EBITDA (1) 23,578 23,313 85,655 76,591 Other non operating expense (income) (276) (1,497) (1,574) (5,482) Less : Clift (809) (1,139) (4,629) (4,530) ------ ------ ------ ------ Adjusted EBITDA (1) 22,493 20,677 8.8% 79,452 66,579 19.3% (1) EBITDA and Adjusted EBITDA do not include intercompany fees or cost allocation to the hotels Morgans Hotel Group, Co. Reconciliation of Operating Income to Adjusted EBITDA Three Months Ended Full Year Ended Dec-05 Dec-04 Dec-05 Dec-04 ------ ------ ------ ------ Operating Income 15,674 13,063 52,969 37,714 Depreciation 5,920 6,740 26,215 27,348 EBITDA from joint ventures 2,774 3,023 9,466 10,495 Minority interest (1,066) (1,010) (4,569) (4,448) Other non-operating income (loss) 276 1,497 1,574 5,482 ------- ------- ------- ------- EBITDA 23,578 23,313 85,655 76,591 Other non-operating (income) loss (276) (1,497) (1,574) (5,482) Less : Clift (809) (1,139) (4,629) (4,530) ------- ------- ------- ------- Adjusted EBITDA 22,493 20,677 79,452 66,579 Morgans Hotel Group, Co. EBITDA Analysis Three Months Ended % Full Year Ended % Dec-05 Dec-04 Change Dec-05 Dec-04 Change ------ ------ ------ ------ ------ ------ Morgans 1,788 1,509 18% 4,918 3,921 25% Royalton 2,579 1,876 37% 6,692 4,605 45% Hudson 11,544 8,845 31% 34,171 24,844 38% Delano 3,425 3,277 5% 16,852 15,650 8% Mondrian 3,305 2,432 36% 15,856 13,608 17% Clift 809 1,139 -29% 4,629 4,530 2% ------- ------- ----- ------- -------- ------ Total Owned 23,450 19,078 23% 83,118 67,158 24% St Martins Lane 1,725 1,756 -2% 5,459 5,773 -5% Sanderson 908 1,080 -16% 3,272 4,053 -19% Shore Club 141 187 -25% 735 669 10% ------- ------- ----- ------- -------- ------ Total Joint Venture 2,774 3,023 -8% 9,466 10,495 -10% Management Fees 2,681 2,495 7% 9,479 8,831 7% Corporate Expenses (5,603) (2,780) 102% (17,982) (15,375) 17% ------- ------- ----- ------- -------- ------ Total Company 23,302 21,816 7% 84,081 71,109 18% Less Clift (809) (1,139) -29% (4,629) (4,530) 2% ------- ------- ----- ------- -------- ------ Adjusted EBITDA 22,493 20,677 9% 79,452 66,579 19% CONTACT: Investor Relations: ICR Brad Cohen, 888-277-4158 or Media: Rubenstein Rick Matthews, 212-843-8267 -----END PRIVACY-ENHANCED MESSAGE-----