-----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, PA8b8MMbJDUzYBL/OSXDW/wBJ7xKwRYWNnsIsJO9VOvYI6RF7QAAOcxR2pILUNFJ Im3A3KZm81Tty8i3myQkzw== 0000928385-95-000512.txt : 19951107 0000928385-95-000512.hdr.sgml : 19951107 ACCESSION NUMBER: 0000928385-95-000512 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951106 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951106 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOST MARRIOTT CORP/MD CENTRAL INDEX KEY: 0000314733 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 530085950 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05664 FILM NUMBER: 95587636 BUSINESS ADDRESS: STREET 1: 10400 FERNWOOD RD CITY: BETHESDA STATE: MD ZIP: 20817 BUSINESS PHONE: 3013809000 MAIL ADDRESS: STREET 1: 10400 FERNWOOD RD CITY: BETHESDA STATE: MD ZIP: 20817 FORMER COMPANY: FORMER CONFORMED NAME: HOST MARRIOTT CORP DATE OF NAME CHANGE: 19931108 FORMER COMPANY: FORMER CONFORMED NAME: MARRIOTT CORP DATE OF NAME CHANGE: 19920703 8-K/A 1 FORM 8-K/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) NOVEMBER 6, 1995 ---------------- HOST MARRIOTT CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-5664 53-0085950 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NUMBER) ---------------- 10400 FERNWOOD ROAD, BETHESDA, MARYLAND 20817 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) ---------------- REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (301) 380-9000 (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FORM 8-K/A ITEM 5. OTHER EVENTS The Registrant hereby amends its Current Report on Form 8-K dated August 22, 1995 by filing financial statements of an acquired business, the Dallas/Fort Worth Airport Marriott (the "Hotel"). Pro Forma financial information of the Registrant incorporating the acquisition of the Hotel was previously filed in the Registrant's Form 8-K/A dated August 29, 1995. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS PAGE Financial statements of Dallas/Fort Worth Airport Marriott . As of and for the Year Ended December 30, 1994. 3 - 11 . As of and for the Thirty-two Weeks Ended August 11, 1995. 12 - 15 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. Host Marriott Corporation By: /s/ Jeffrey P. Mayer --------------------------------- Jeffrey P. Mayer Senior Vice President Finance and Corporate Controller (Chief Accounting Officer) Date: November 6, 1995 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO THE OWNERS OF THE DALLAS/FORT WORTH AIRPORT MARRIOTT: We have audited the accompanying statement of assets, liabilities and net advances from PHLP of the Dallas/Fort Worth Airport Marriott, as defined in Note 1, as of December 30, 1994, and the related statements of operations and cash flows for the year ended December 30, 1994. These financial statements are the responsibility of the management of the PHLP, as defined in Note 1. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Dallas/Fort Worth Airport Marriott (as defined in Note 1) as of December 30, 1994, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Washington, D.C., November 3, 1995 3 DALLAS/FORT WORTH AIRPORT MARRIOTT STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 1994 (IN THOUSANDS) REVENUE................................................................ $ 8,163 ------- OPERATING COSTS AND EXPENSES Depreciation and amortization........................................ 740 Base and incentive management fees................................... 3,455 Property taxes....................................................... 1,008 Insurance and other.................................................. 54 ------- Total operating costs and expenses................................. 5,257 ------- OPERATING PROFIT BEFORE INTEREST....................................... 2,906 Interest expense....................................................... 5,310 ------- NET LOSS............................................................... $(2,404) =======
The accompanying notes are an integral part of these financial statements. 4 DALLAS/FORT WORTH AIRPORT MARRIOTT STATEMENT OF ASSETS, LIABILITIES AND NET ADVANCES FROM PHLP AS OF DECEMBER 30, 1994 (IN THOUSANDS)
ASSETS ------ Property and equipment, net........................................... $ 19,164 Due from Marriott International....................................... 1,601 Property improvement fund............................................. 3 -------- $ 20,768 ======== LIABILITIES AND NET ADVANCES FROM PHLP -------------------------------------- Mortgage debt......................................................... $ 51,462 Due to Host Marriott Corporation...................................... 897 Due to Marriott International, Inc.................................... 26,941 Accrued interest...................................................... 104 -------- Total liabilities................................................... 79,404 Net advances from PHLP................................................ (58,636) -------- $ 20,768 ========
The accompanying notes are an integral part of these financial statements. 5 DALLAS/FORT WORTH AIRPORT MARRIOTT STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 30, 1994 (IN THOUSANDS) OPERATING ACTIVITIES Net loss............................................................. $(2,404) Depreciation and amortization........................................ 740 Deferred incentive and base management fees.......................... 2,263 Loss on fixed asset disposition...................................... 6 Changes in other operating accounts: Due from Marriott International, Inc. ............................. 302 Accrued interest................................................... (28) ------- Cash provided by operations.......................................... 879 ------- FINANCING ACTIVITIES Change in net investment and advances from PHLP...................... (1,338) Decrease in amounts due from Marriott International, Inc. ........... 499 Repayments to Host Marriott Corporation.............................. (105) Change in escrow fund cash........................................... 65 ------- Cash used in financing activities.................................... (879) ------- CHANGE IN CASH AND CASH EQUIVALENTS.................................... -- CASH AND CASH EQUIVALENTS, beginning of year........................... -- ------- CASH AND CASH EQUIVALENTS, end of year................................. $ -- ======= SUPPLEMENTAL INFORMATION Cash paid for interest............................................... $ 5,451 =======
The accompanying notes are an integral part of these financial statements. 6 DALLAS/FORT WORTH AIRPORT MARRIOTT NOTES TO FINANCIAL STATEMENTS NOTE 1. THE HOTEL Basis of Presentation On August 22, 1995 ("Sale Date"), HMC Acquisitions Properties, Inc., a wholly- owned indirect subsidiary of Host Marriott Corporation, purchased the building, leasehold improvements and furniture, fixtures and equipment related to the Dallas/Fort Worth Airport Marriott located in Irving, Texas (the "Hotel") from Potomac Hotel Limited Partnership ("PHLP"), a Delaware limited partnership, for approximately $45 million. The Hotel was part of a portfolio of properties owned by PHLP. The Hotel, with approximately 500 rooms, is operated by Marriott International, Inc. as part of the Marriott Hotels, Resorts and Suites full- service hotel system. The Hotel's purchase price at the Sale Date was in excess of its carrying value. No adjustments related to the resultant sale are reflected in the accompanying statements. These financial statements present the assets, liabilities and net advances to PHLP, results of operations and cash flows related to the business of the Dallas/Fort Worth Airport Marriott which is a lesser component of PHLP for all periods presented. PHLP's historical basis in assets and liabilities of the Hotel have been carried over. Changes in Net Advances from PHLP represent the operating results of the Hotel adjusted for net cash transferred between PHLP and the Hotel. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Hotel's records are maintained on the accrual basis of accounting and its fiscal year ends on the Friday nearest to December 31. Revenues Revenues represent house profit, which is the Hotel's sales less property- level expenses excluding depreciation, management fees, real and personal property taxes, insurance and certain other costs which are classified as operating costs and expenses. Property and Equipment Property and equipment is recorded at cost. Replacements and improvements are capitalized as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 30 years for buildings and five to six years for furniture and equipment. Working Capital and Supplies Pursuant to the terms of the Hotel's management agreement discussed in Note 6, the Hotel is required to provide the respective manager with working capital and supplies to meet its operating needs. The manager converts cash advanced by PHLP into other forms of working capital consisting primarily of operating cash, inventories, and trade receivables and payables which are maintained and controlled by the manager. Upon the termination of the agreements, it is expected that the working capital and supplies will be partially reconverted into cash and returned to PHLP or transferred to a subsequent owner or operator for consideration. Such working capital and supplies are also pledged as security for the Hotel's share of PHLP's debt as described in Note 5. As a result of these conditions, the individual components of working capital and supplies controlled by the manager is not reflected in the accompanying statement of assets, liabilities and net advances from PHLP. 7 DALLAS/FORT WORTH AIRPORT MARRIOTT NOTES TO FINANCIAL STATEMENTS--(CONTINUED) Income Taxes Provision for Federal or state income taxes has not been made in the accompanying financial statements since PHLP does not pay income taxes but, rather, allocates its profits and losses to individual partners. NOTE 3. REVENUES House profit for the year ended December 30, 1994 consists of (in thousands): HOTEL SALES Rooms............................................................ $14,516 Food & Beverage.................................................. 7,029 Other............................................................ 1,383 ------- Total Hotel Sales.............................................. 22,928 ------- DEPARTMENT COSTS Rooms............................................................ 3,648 Food & Beverage.................................................. 5,066 Other............................................................ 799 ------- Total Department Costs......................................... 9,513 ------- DEPARTMENT PROFIT.................................................. 13,415 Other Deductions................................................. (5,252) ------- HOUSE PROFIT....................................................... $ 8,163 =======
NOTE 4. PROPERTY AND EQUIPMENT Property and equipment consists of the following at December 30, 1994 (in thousands): Land............................................................. $ 1,407 Building and improvements........................................ 25,576 Furniture and equipment.......................................... 4,527 -------- 31,510 Less accumulated depreciation and amortization................... (12,346) -------- Property and equipment, net...................................... $ 19,164 ========
All property and equipment is pledged as security against the Hotel's portion of PHLP's indebtedness and in the case of rental payments from the Hotel's portion of FF&E leases the loans related to FF&E of the Hotel. The amounts above reflect PHLP's historical basis in the Hotel's property and equipment and do not reflect the impact of the Sale to HMC Acquisition Properties Inc. on August 22, 1995. NOTE 5. DEBT Bank Loan On December 22, 1987, PHLP borrowed $245 million (the "Bank Loan") from The Mitsui Trust and Banking Company (the "Bank Lender") secured by seven of PHLP hotels (the "Bank Hotels"). The Bank Loan bore interest at an effective fixed rate of 10.37% and required monthly, interest-only payments. The Bank Loan matured on December 22, 1994, and was not repaid because PHLP had insufficient funds to do so. At December 22, 1994, the principal balance of the Bank Loan was $245 million. 8 DALLAS/FORT WORTH AIRPORT MARRIOTT NOTES TO FINANCIAL STATEMENTS--(CONTINUED) PHLP entered into a forbearance agreement with the Bank Lender under which the Lender agreed not to exercise its rights and remedies for nonpayment of the Bank Loan. PHLP subsequently refinanced (the "Refinancing") the Bank Loan. Under the Refinancing, PHLP was required to repay $44 million in principal and Host Marriott Corporation advanced $10 million under an existing Bank Loan guaranty. In exchange for the lender's agreement to forbear, PHLP agreed to continue to make monthly interest payments at a rate equal to the one-month LIBOR plus two percentage points for the period December 22, 1994 through June 21, 1995 and the one-month LIBOR plus two and one quarter percentage points for the period June 22, 1995 through the end of the extended forebearance period. Approximately $51.4 million of the $245 million Bank Loan principal has been allocated to the Hotel based on the relative amounts of title insurance specified by the lender to be required for the Hotel as compared to the total title insurance for the seven hotels when the Bank Loan originated in 1987. Other Loans As of December 30, 1994, $897,000 was outstanding to Host Marriott for an FF&E loan related to the Hotel. The FF&E loan is nonrecourse to the Parent and is effectively secured by payments from Marriott International, Inc. under the FF&E Lease, as defined in Note 6 below. As of December 30, 1994, Marriott International, Inc. owed $980,000, including related interest costs, for the Hotel FF&E capital lease. NOTE 6. MANAGEMENT AGREEMENT Marriott International, Inc. (the "Manager") operates the Hotel pursuant to a long-term management agreement (the "Management Agreement") for a term of 25 years from the opening of the Hotel with renewal terms, at the option of the Manager, of up to an additional 50 years. The Management Agreement provides for payment of base management fees equal to 8% of gross hotel sales and incentive management fees equal to 20% of hotel operating profits (as defined, calculated before debt service on total Parent debt), and additional incentive fees, after certain returns to the Parent, ranging from 10% to 70% depending on the level of returns made to the partners. Payment of the incentive management fees is dependent upon the availability of cash flow after debt service, and payable only after repayment of certain debt service guaranty advances and certain priority returns to the Parent expressed as a percentage of limited partner invested equity. Through December 30, 1994, no incentive fees have been paid since inception. Deferred base fees were $7,360,000 as of December 30, 1994. Deferred incentive management fees were $19,523,000 as of December 30, 1994. In the event of early termination of the Management Agreement, the Manager will be owed additional fees based on the unexpired term and expected future base and incentive management fees. In accordance with the Management Agreement, the Manager is required to lease all FF&E replacements from the Hotel (the "FF&E Lease") for terms of up to six years. Lease payments represent an amount approximately equal to the principal amortization, interest and fees associated with indebtedness incurred by the Hotel to finance the FF&E replacements and any sales and use taxes, personal property taxes, insurance premiums and additional costs incurred by the Parent in connection with the acquisition and use of such replacements. As of December 30, 1994, the Manager was obligated to pay $980,000 (including related interest costs) to the Hotel during the term of this agreement. On February 24, 1995, the Parent, Bank Lender and the Manager entered into a cash collateral agreement with terms effective January 1, 1995. Effective January 1, 1995, 4% of gross hotel sales must be deposited in a 9 DALLAS/FORT WORTH AIRPORT MARRIOTT NOTES TO FINANCIAL STATEMENTS--(CONTINUED) property improvement fund for the future furniture, fixtures and equipment needs of the Hotel. Additionally, 1% of gross hotel sales must be deposited in a restricted cash account and are subordinated to the payment of debt service on the Bank Loan. The cash collateral agreement also adjusted the base management fee earned by the Manager under the management agreement from 8% to 3% of gross hotel sales effective January 1, 1995. The payment of 1% of the 3% base fee earned is subordinated to the payment of debt service on the Bank Loan. As a result, the subordinated base management fees are set aside in a restricted cash account where it will be held and made available for the payment of debt service. In conjunction with the acquisition of the Hotel by HMC Acquisition Properties, Inc., a new management agreement was entered into with the Manager. The new agreement provides for payment of base management fees equal to three percent of sales and a formula based incentive management fee limited to 20% of fiscal year Hotel operating profit (as defined). Had these terms been in effect for the year ended December 30, 1994, pro forma base and incentive management fees would have been $688,000. In connection with the Refinancing approximately $27 million of deferred management fees related to the Hotel were forgiven by the Manager on August 22, 1995. Additionally, the Parent has advanced $946,000 to the manager for working capital and supplies related to the Hotel which is included in Due from Marriott International, Inc. 10 DALLAS/FORT WORTH AIRPORT MARRIOTT STATEMENT OF OPERATIONS FOR THE THIRTY-TWO WEEKS ENDED AUGUST 12, 1994 AND AUGUST 11, 1995 (UNAUDITED, IN THOUSANDS)
1994 1995 ------- ------ REVENUE........................................................ $ 5,317 $6,192 ------- ------ OPERATING COSTS AND EXPENSES Depreciation and amortization................................ 395 396 Base and incentive management fees........................... 2,234 1,742 Property taxes............................................... 672 685 Insurance and other.......................................... (10) 114 ------- ------ Total operating costs and expenses......................... 3,291 2,937 ------- ------ OPERATING PROFIT BEFORE INTEREST............................... 2,026 3,255 Interest expense............................................... 3,276 2,597 ------- ------ NET INCOME (LOSS).............................................. $(1,250) $ 658 ======= ======
The accompanying notes are an integral part of these financial statements. 11 DALLAS/FORT WORTH AIRPORT MARRIOTT STATEMENT OF ASSETS, LIABILITIES AND NET ADVANCES FROM PHLP (SEE NOTE 1) AS OF AUGUST 11, 1995 (UNAUDITED, IN THOUSANDS)
ASSETS ------ Property and equipment, net........................................... $ 18,872 Due from Marriott International, Inc.................................. 2,312 Property improvement fund............................................. 515 Restricted cash....................................................... 155 -------- $ 21,854 ======== LIABILITIES AND NET ADVANCES FROM PHLP -------------------------------------- Mortgage debt......................................................... $ 51,462 Due to Host Marriott Corporation...................................... 1,692 Due to Marriott International, Inc.................................... 28,374 Accrued interest...................................................... 219 -------- Total liabilities................................................... 81,747 Net advances from PHLP................................................ (59,893) -------- $ 21,854 ========
The accompanying notes are an integral part of these financial statements. 12 DALLAS/FORT WORTH AIRPORT MARRIOTT STATEMENT OF CASH FLOWS FOR THE THIRTY-TWO WEEKS ENDED AUGUST 12, 1994 AND AUGUST 11, 1995 (UNAUDITED, IN THOUSANDS)
1994 1995 ------- ------- OPERATING ACTIVITIES Net income (loss)........................................... $(1,250) $ 658 Noncash items: Depreciation and amortization............................. 395 396 Deferred incentive and base management fees............... 1,738 1,433 Working capital changes: Due from/to Marriott International, Inc. ................. (504) 58 Accrued interest.......................................... 175 115 ------- ------- Cash provided by operations................................. 554 2,660 ------- ------- INVESTING ACTIVITIES Additions to property and equipment....................... -- (515) Change in property improvement fund....................... (5) (104) ------- ------- Cash used in investing activities......................... (5) (619) ------- ------- FINANCING ACTIVITIES Change in net advances from PHLP.......................... (2,011) (1,889) Deposit in restricted cash account........................ -- (155) Advances from Host Marriott Corporation................... 1,409 -- Change in escrow fund cash................................ 53 3 ------- ------- Cash used in financing activities......................... (549) (2,041) ------- ------- INCREASE IN CASH AND CASH EQUIVALENTS......................... -- -- CASH AND CASH EQUIVALENTS, beginning of period................ -- -- ------- ------- CASH AND CASH EQUIVALENTS, end of period...................... $ -- $ -- ======= =======
The accompanying notes are an integral part of these financial statements. 13 DALLAS/FORT WORTH AIRPORT MARRIOTT NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying financial statements of the Dallas/Fort Worth Airport Marriott (the "Hotel") have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been omitted. The Hotel believes the disclosures made are adequate to make the information presented not misleading. However, the financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 30, 1994 included elsewhere in this Form 8-K. In the opinion of the Hotel, the accompanying unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Hotel as of August 11, 1995 and the results of operations and cash flows for the thirty-two weeks ended August 12, 1994 and August 11, 1995. Interim results are not necessarily indicative of fiscal year performance because of the impact of seasonal and short-term variations. 2. House profit represents hotel operating results less property-level expenses excluding depreciation, management fees, real and personal property taxes, insurance and certain other costs which are classified as operating costs and expenses. House profit generated by the Hotel for the thirty-two weeks ended August 12, 1994 and August 11, 1995 consists of:
1994 1995 ------- ------- (IN THOUSANDS) SALES Rooms................................................... $ 9,213 $ 9,983 Food & Beverage......................................... 4,331 4,706 Other................................................... 837 776 ------- ------- Total Hotel Sales..................................... 14,381 15,465 ------- ------- DEPARTMENT COSTS Rooms................................................... 2,225 2,364 Food & Beverage......................................... 3,102 3,168 Other................................................... 469 511 ------- ------- Total Department Costs................................ 5,796 6,043 ------- ------- DEPARTMENT PROFIT......................................... 8,585 9,422 Other Deductions........................................ (3,268) (3,230) ------- ------- HOUSE PROFIT.............................................. $ 5,317 $ 6,192 ======= =======
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