Host Marriott 2004 Annual Report - Host Hotels & Resorts, Inc

FINANCIAL HIGHLIGHTS
(unaudited, in millions, except per share data, hotel data, and stock price) 2004 2003 2002
OPERATING DATA
Revenues $ 3,640 $ 3,288 $ 3,345
Operating profit 407 299 417
Net income (loss) — 14 (16)
DILUTED LOSS PER COMMON SHARE
Loss from continuing operations $ (.31) $ (.97) $ (.39)
Diluted loss (1) $ (.12) $ (.07) $ (.19)
Diluted weighted average shares outstanding 337.3 281.0 263.0
BALANCE SHEET DATA
Total assets $ 8,421 $ 8,592 $ 8,316
Debt (2) 5,523 5,486 5,638
Convertible preferred securities (2) — 475 475
Equity 2,395 2,136 1,610
OTHER DATA
Funds from operations per diluted share (1) $ .77 $ .99 $ 1.09
Stock price on December 31st 17.30 12.32 8.85
COMPARABLE HOTEL DATA (3)
Number of properties 103 103
Number of rooms 52,063 52,183
Average daily rate $149.64 $145.42
Occupancy percentage 71.9% 69.0%
RevPAR (4) $107.66 $100.35
(1)
Certain transactions in 2004 and 2003 significantly affected Funds From Operations (FFO) per diluted share and loss per share. FFO per diluted share is a
non-GAAP financial measure within the meaning of the rules of the Securities & Exchange Commission and, accordingly, has been reconciled to the comparable
GAAP measure. For further discussion of FFO per diluted share, see Management’s Discussion and Analysis of Results of Operations and Financial Condition.
(2)
Effective January 1, 2004, we adopted a revision to Financial Interpretation No. 46 “Consolidation of Variable Interest Entities” (FIN 46R). As a result, we deconsolidated
a wholly-owned limited purpose trust subsidiary (the “Trust”) and recorded the $492 million Convertible Subordinated Debentures issued by the Trust
as debt and eliminated the $475 million of Convertible Preferred Securities that were previously classified in the mezzanine section of our consolidated balance
sheet prior to January 1, 2004. For further discussion see Management’s Discussion and Analysis of Results of Operations and Financial Condition.
(3)
We define our comparable hotels as full-service properties that are owned or leased by us and the operations of which are included in our consolidated results,
whether as continuing operations or discontinued operations, for the entirety of the reporting periods being compared, and that have not sustained substantial
property damage or undergone large-scale capital projects during the reporting periods being compared.
(4)
Room revenue per available room (“RevPAR”) represents the combination of average daily room rate charged and the average daily occupancy achieved, and
is a commonly used indicator of hotel performance. RevPAR does not include food and beverage or other ancillary revenues generated by the property.
CONTENTS
TO OUR STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
BOARD OF DIRECTORS AND MANAGEMENT TEAM . . . . . . . . . . . . . . . . . . . . . . . . . 16
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
MANAGEMENT CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
MANAGEMENT’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND MANAGEMENT’S ASSESSMENT
AND ON THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . 66
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
HOST MARRIOTT PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
DIRECTORS, OFFICERS AND MANAGEMENT TEAM . . . . . . INSIDE BACK COVER
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . INSIDE BACK COVER