EX-99 7 esmeraldavinoy8-kaexh995.htm

Exhibit 99.5

 

FelCor Lodging Trust Incorporated

Unaudited Pro Forma Financial Statements

 

On December 14, 2007, FelCor Lodging Trust Incorporated (FelCor) and FelCor Lodging Limited Partnership completed the acquisition of the Renaissance Esmeralda Resort and Spa (the Esmeralda) in Indian Wells, California and the Renaissance Vinoy Resort and Golf Club (the Vinoy) in St. Petersburg, Florida (collectively the Acquired Hotels). The Esmeralda was acquired from WSRH Indian Wells Mezz, LLC (WSRH Indian Wells) and the Vinoy was acquired from WSRH VSP Mezz, LP and WSRH Club VSP, LLC (collectively, WSRH VSP).

 

The following unaudited pro forma financial statements have been prepared based upon the audited consolidated financial statements of FelCor, the audited consolidated financial statements of WSRH Indian Wells, and the audited combined consolidated financial statements of WSRH VSP for the year ended December 31, 2006; the unaudited consolidated financial statements of FelCor, the unaudited consolidated financial statements of WSRH Indian Wells, the unaudited combined consolidated financial statements of WSRH VSP for the nine months ended September 30, 2007 and 2006; and based upon certain assumptions, as set forth in the notes to the unaudited pro forma financial statements, that we believe are reasonable under the circumstances.

 

The unaudited pro forma consolidated statements of operations of FelCor for the nine months ended September 30, 2007 and year ended December 31, 2006 reflect the acquisitions of the Esmeralda and the Vinoy as if they had been completed on January 1, 2006.

 

The unaudited pro forma consolidated balance sheet of FelCor as of September 30, 2007 reflects the acquisitions of the Esmeralda and the Vinoy as if they had been completed on September 30, 2007.

 

In accordance with the Statement of Financial Accounting Standards No. 141, “Business Combinations” (SFAS 141), we accounted for the acquisition of the Esmeralda and the Vinoy as a business combination. We allocate the acquisition cost among the assets acquired and liabilities assumed based on their respective values determined in accordance with SFAS 141.

 

The total acquisition costs for the Esmeralda and the Vinoy consist of the following (in millions):

 

 

 

 

 

Assumption of $177 million of mortgage debt

 

$

177

Cash (1)

 

 

48

 

 

 

 

Total consideration to previous owners of the Vinoy and Esmeralda

 

 

225

Costs and expenses (1)

 

 

4

 

 

 

 

Total transaction costs

 

$

229

 

(1)

These amounts were funded from available cash. Costs and expenses include approximately $2 million of working capital related to the Acquired Hotels.

 

 

1

 

For purposes of the preparation of the unaudited pro forma financial statements, we have presented the assets and liabilities at their book value except as follows:

 

 

•

 

Investment in hotels and other assets (related to memberships acquired at the Vinoy and a below market ground lease assumed at the Vinoy) are recorded at fair value allocated in accordance with SFAS 141 based on the purchase price noted above; and

 

 

 

 

 

•

 

Mortgage debt assumed is recorded at fair value based on the expected future debt service payments discounted at risk adjusted market interest rates as of September 30, 2007.

 

The pro forma adjustments as presented are based on estimates and certain information that are currently available and may change as additional information becomes available, as estimates are refined or as additional events occur. Management does not anticipate that there will be material changes in the total purchase price allocation as presented in these unaudited pro forma financial statements.

 

The unaudited pro forma financial statements are for illustrative purposes only and do not purport to be indicative of the financial position or results of operations that would actually have been achieved had the transactions occurred on the dates indicated or which may be achieved in the future. In the opinion of management, all material adjustments necessary to reflect the effects of the transactions that can be factually supported within the SEC regulations covering the preparation of unaudited pro forma financial statements have been made.

 

The unaudited pro forma financial statements should be read in conjunction with the separate historical consolidated financial statements and accompanying notes included in our previous reports filed with the Commission and the consolidated financial statements and accompanying notes of WSRH Indian Wells and the combined consolidated financial statements and accompanying notes of WSRH VSP which are included as Exhibits 99.1, 99.2, 99.3 and 99.4 to this Current Report on Form 8-K/A.

 

2

 

FelCor Lodging Trust Incorporated

Unaudited Pro Forma Balance Sheet

September 30, 2007

(in thousands)

 

 

Historical

 

 

 

FelCor

 

FelCor

 

Acquired Hotels(A)

 

Pro Forma Adjustments(B)

 

Pro Forma

Balance Sheet(H)

Assets

 

 

 

 

 

 

 

 

 

 

Investment in hotels

$

2,163,812

 

 

$

138,494

 

$

82,159

(C)

 

$

2,384,465

 

Investment in unconsolidated entities

 

123,924

 

 

 

-   

 

 

-   

 

 

 

123,924

 

Hotels held for sale

 

-   

 

 

 

-   

 

 

-   

 

 

 

-   

 

Cash and cash equivalents

 

155,583

 

 

 

9,464

 

 

(59,444

)(D)

 

 

105,603

 

Restricted cash

 

13,736

 

 

 

4,785

 

 

-   

 

 

 

18,521

 

Accounts receivable, net of allowance for doubtful accounts

 

46,953

 

 

 

4,317

 

 

-   

 

 

 

51,270

 

Deferred expenses

 

8,689

 

 

 

1,533

 

 

(1,533

)(E)

 

 

8,689

 

Condominium development project

 

2,245

 

 

 

-   

 

 

-   

 

 

 

2,245

 

Other assets

 

31,207

 

 

 

2,624

 

 

3,576

(F)

 

 

37,407

 

Total assets

 

2,546,149

 

 

 

161,217

 

 

24,758

 

 

 

2,732,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

1,294,550

 

 

 

177,225

 

 

(1,258

)(E)

 

 

1,470,517

 

Distribution payable

 

27,277

 

 

 

-   

 

 

-   

 

 

 

27,277

 

Accrued expenses and other liabilities

 

146,186

 

 

 

10,957

 

 

(949

)(F)

 

 

156,194

 

Total liabilities

 

1,468,013

 

 

 

188,182

 

 

(2,207

)

 

 

1,653,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest in FelCor LP

 

12,182

 

 

 

-   

 

 

-   

 

 

 

12,182

 

Minority interest in other partnerships

 

25,124

 

 

 

-   

 

 

-   

 

 

 

25,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A Cumulative Convertible Preferred Stock

 

309,362

 

 

 

-   

 

 

-   

 

 

 

309,362

 

Series C Cumulative Redeemable Preferred Stock

 

169,412

 

 

 

-   

 

 

-   

 

 

 

169,412

 

Common stock, $.01 par value

 

694

 

 

 

-   

 

 

-   

 

 

 

694

 

Additional paid-in capital

 

2,066,585

 

 

 

-   

 

 

-   

 

 

 

2,066,585

 

Accumulated other comprehensive income

 

27,897

 

 

 

-   

 

 

-   

 

 

 

27,897

 

Accumulated deficit

 

(1,399,490

)

 

 

(26,965

)

 

26,965

(G)

 

 

(1,399,490

)

Less: Common stock in treasury

 

(133,630

)

 

 

-   

 

 

-   

 

 

 

(133,630

)

Total stockholders' equity

 

1,040,830

 

 

 

(26,965

)

 

26,965

 

 

 

1,040,830

 

Total liabilities and stockholders' equity

$

2,546,149

 

 

$

161,217

 

$

24,758

 

 

$

2,732,124

 

 

 

See accompanying notes to consolidated financial statements.

 

3

 

FelCor Lodging Trust Incorporated

Notes for Unaudited Pro Forma Balance Sheet

 

 

A.

Represents the combined historical balance sheet for WSRH Indian Wells and WSRH VSP. The presentation of this historical financial information for WSRH Indian Wells and WSRH VSP has been reclassified to conform with the presentation of our financial statements with no effect to total assets, liabilities or owners’ equity.

 

 

B.

Represents pro forma adjustments that are necessary to reflect the purchase and adjustment in our cost basis of the Acquired Hotels.

 

 

C.

Increase historical investment in hotels by $82.0 million to reflect the fair value of the fixed assets acquired.

 

 

D.

Decrease cash by: (a) $53.0 million to fund the remaining portion of the purchase price, estimated transaction costs, and working capital and (b) $6.4 million for cash not acquired in the transaction.

 

 

E.

Decrease the historical note payable balance by $1.3 million to reflect the fair value of the notes assumed and remove $1.5 million related historical deferred financing costs.

 

 

F.

Changes in other assets and accrued expenses and other liabilities related to:

 

•

Increase other assets by $2.7 million for the fair value of the Vinoy club memberships acquired and $0.9 million for the below market ground lease assumed at the Vinoy;

 

•

Decrease accrued expenses and other liabilities for $0.9 million of deferred revenue not assumed in the transaction.

 

 

G.

Eliminate the Acquired Hotels historical deficit.

 

 

H.

Represents our pro forma balance sheet as adjusted to reflect the acquisition of the Esmeralda and the Vinoy.

 

 

 

4

 

FelCor Lodging Trust Incorporated

Unaudited Pro Forma Statement of Operations

Nine Months Ended September 30, 2007

(in thousands, except per share amounts)

 

 

 

 

 

 

 

FelCor

 

Historical

 

 

 

Pro Forma

 

FelCor

 

Acquired Hotels(A)

 

Pro Forma Adjustments(B)

 

Statement of Operations(H)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel operating revenue

$

770,766

 

 

$

66,122

 

 

$

-   

 

 

 

$

836,888

 

Other revenue

 

921

 

 

 

8,981

 

 

 

-   

 

 

 

 

9,902

 

Total revenues

 

771,687

 

 

 

75,103

 

 

 

-   

 

 

 

 

846,790

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel departmental expenses

 

246,134

 

 

 

37,425

 

 

 

-   

 

 

 

 

283,559

 

Other property related costs

 

207,260

 

 

 

19,775

 

 

 

-   

 

 

 

 

227,035

 

Management and franchise fees

 

40,718

 

 

 

2,396

 

 

 

(150

)

(C)

 

 

42,964

 

Taxes, insurance and lease expense

 

92,387

 

 

 

4,188

 

 

 

9

 

(D)

 

 

96,584

 

Abandoned projects

 

22

 

 

 

-   

 

 

 

-   

 

 

 

 

22

 

Corporate expenses

 

15,732

 

 

 

-   

 

 

 

-   

 

 

 

 

15,732

 

Amortization of membership dues

 

-   

 

 

 

-   

 

 

 

660

 

(E)

 

 

660

 

Depreciation

 

80,729

 

 

 

6,707

 

 

 

(654

)

(F)

 

 

86,782

 

Total operating expenses

 

682,982

 

 

 

70,491

 

 

 

(135

)

 

 

 

753,338

 

Operating income

 

88,705

 

 

 

4,612

 

 

 

135

 

 

 

 

93,452

 

Interest expense, net

 

(68,734

)

 

 

(8,330

)

 

 

(1,001

)

(G)

 

 

(78,065

)

Charge-off of deferred financing costs

 

-   

 

 

 

-   

 

 

 

-   

 

 

 

 

-   

 

Early extinguishment of debt

 

-   

 

 

 

-   

 

 

 

-   

 

 

 

 

-   

 

Income (loss) before equity in income from unconsolidated entities, minority interests and sale of assets

 

19,971

 

 

 

(3,718

)

 

 

(866

)

 

 

 

15,387

 

Equity in income from unconsolidated entities

 

19,511

 

 

 

-   

 

 

 

-   

 

 

 

 

19,511

 

Minority interests

 

463

 

 

 

-   

 

 

 

-   

 

 

 

 

463

 

Loss on sale of other assets

 

-   

 

 

 

-   

 

 

 

-   

 

 

 

 

-   

 

Gain on sale of condominiums

 

18,493

 

 

 

-   

 

 

 

-   

 

 

 

 

18,493

 

Income (loss) from continuing operations

$

58,438

 

 

$

(3,718

)

 

$

(866

)

 

 

$

53,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income from continuing operations per common share

$

0.48

 

 

 

 

 

 

 

 

 

 

 

$

0.40

 

Basic weighted average common shares outstanding

 

61,582

 

 

 

 

 

 

 

 

 

 

 

 

61,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income from continuing operations per common share

$

0.47

 

 

 

 

 

 

 

 

 

 

 

$

0.40

 

Diluted weighted average common shares outstanding

 

61,908

 

 

 

 

 

 

 

 

 

 

 

 

61,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

5

 

FelCor Lodging Trust Incorporated

Unaudited Pro Forma Statement of Operations

Year Ended December 31, 2006

(in thousands, except per share amounts)

 

 

 

 

 

 

 

FelCor

 

Historical

 

 

 

Pro Forma

 

FelCor

 

Acquired Hotels(A)

 

Pro Forma Adjustments(B)

 

Statement of Operations(H)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel operating revenue

$

990,959

 

 

$

84,280

 

 

$

-   

 

 

 

$

1,075,239

 

Other revenue

 

79

 

 

 

10,091

 

 

 

-   

 

 

 

 

10,170

 

Total revenues

 

991,038

 

 

 

94,371

 

 

 

-   

 

 

 

 

1,085,409

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel departmental expenses

 

319,731

 

 

 

47,970

 

 

 

-   

 

 

 

 

367,701

 

Other property related costs

 

270,301

 

 

 

24,258

 

 

 

-   

 

 

 

 

294,559

 

Management and franchise fees

 

51,237

 

 

 

3,025

 

 

 

(200

)

(C)

 

 

54,062

 

Taxes, insurance and lease expense

 

112,052

 

 

 

6,130

 

 

 

12

 

(D)

 

 

118,194

 

Abandoned projects

 

33

 

 

 

-   

 

 

 

-   

 

 

 

 

33

 

Corporate expenses

 

23,308

 

 

 

-   

 

 

 

-   

 

 

 

 

23,308

 

Amortization of membership dues

 

-   

 

 

 

-   

 

 

 

879

 

(E)

 

 

879

 

Depreciation

 

94,579

 

 

 

6,806

 

 

 

1,265

 

(F)

 

 

102,650

 

Total operating expenses

 

871,241

 

 

 

88,189

 

 

 

1,956

 

 

 

 

961,386

 

Operating income

 

119,797

 

 

 

6,182

 

 

 

(1,956

)

 

 

 

124,023

 

Interest expense, net

 

(110,867

)

 

 

(8,039

)

 

 

(3,932

)

(G)

 

 

(122,838

)

Charge-off of deferred financing costs

 

(3,562

)

 

 

-   

 

 

 

-   

 

 

 

 

(3,562

)

Early extinguishment of debt

 

(12,471

)

 

 

-   

 

 

 

-   

 

 

 

 

(12,471

)

Gain on swap termination

 

1,715

 

 

 

-   

 

 

 

-   

 

 

 

 

1,715

 

Loss before equity in income from unconsolidated entities, minority interests and sale of assets

 

(5,388

)

 

 

(1,857

)

 

 

(5,888

)

 

 

 

(13,133

)

Equity in income from unconsolidated entities

 

11,537

 

 

 

-   

 

 

 

-   

 

 

 

 

11,537

 

Minority interests

 

2,508

 

 

 

-   

 

 

 

-   

 

 

 

 

2,508

 

Loss on sale of other assets

 

(92

)

 

 

-   

 

 

 

-   

 

 

 

 

(92

)

Gain on sale of condominiums

 

-   

 

 

 

-   

 

 

 

-   

 

 

 

 

-   

 

Income (loss) from continuing operations

$

8,565

 

 

$

(1,857

)

 

$

(5,888

)

 

 

$

820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss from continuing operations per common share

$

(0.50

)

 

 

 

 

 

 

 

 

 

 

$

(0.62

)

Weighted average common shares outstanding

 

60,734

 

 

 

 

 

 

 

 

 

 

 

 

60,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

6

 

FelCor Lodging Trust Incorporated

Notes for Unaudited Pro Forma Statement of Operations

 

 

A.

Represents the combined historical results of operations for WSRH Indian Wells and WSRH VSP. Reclassifications have been made to conform to our presentation with no effect to previously reported net loss.

 

 

B.

Represents certain adjustments to the historical results of operations for WSRH Indian Wells and WSRH VSP.

 

 

C.

Reduction of management fee expense related to the Acquired Hotels to reflect costs associated with oversight agreements that were in place but were not assumed in the transaction.

 

 

D.

Adjustment to the taxes, insurance and lease expense to reflect the increase in rent expense related to the fair value of the Vinoy ground lease acquired over 80 years, the remaining term of the ground lease.

 

 

E.

Adjustment to reflect the amortization of the fair value of the Vinoy club memberships acquired over their estimated remaining life of three years.

 

 

F.

Adjustment to depreciation expense for investment in hotels to reflect expected depreciation based on FelCor’s purchase price allocations using a weighted-average depreciable life for the acquired investment in hotels of approximately 33 years.

 

 

G.

Adjustment to reflect interest on the assumed notes for the entire period presented and to eliminate historical amortization of deferred financing costs related to the Acquired Hotels. The assumed notes have a variable interest rate based on LIBOR. If LIBOR were to increase by 12.5 basis points, our annual interest expense would increase by approximately $222,000. If LIBOR were to decrease by 12.5 basis points our annual interest expense would decrease by the same amount.

 

 

H.

Represents our pro forma statement of operations as adjusted to reflect the acquisition of the Esmeralda and the Vinoy.

 

 

7