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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-9320
Wyndham International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-2878485
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207
(Address of principal executive (Zip Code)
offices)
(214) 863-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock, par value New York Stock Exchange
$0.01 per share
Preferred Stock Purchase Rights New York Stock Exchange
(Title of each class) (Name of each exchange on which
registered)
Securities registered pursuant to Section 12(g) of the Act:
Series A Convertible
Preferred Stock, par value
$0.01 per share
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 [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of
Wyndham International, Inc. as of March 19, 2001 was approximately $266
million, based upon a price of $1.75 per share.
As of March 19, 2001, there were 167,887,723 shares of Wyndham class A
common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information called for by Part III is incorporated by reference to
the definitive proxy statement for the annual meetings of the stockholder of
Wyndham to be held on May 24, 2001, which will be filed with the Securities
and Exchange Commission not later than 120 days after December 31, 2000.
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WYNDHAM INTERNATIONAL, INC.
Form 10-K Annual Report
Index
Form 10-K
Item No. Report Page
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PART I
1. Business....................................................... 3
2. Properties..................................................... 3
3. Legal Proceedings ............................................. 17
4. Submission of Matters to a Vote of Security Holders............ 18
PART II
5. Market Price for Registrant's Common Equity and Related 19
Stockholder Matters..............................................
6. Selected Financial Information................................. 20
7. Management's Discussion and Analysis of Financial Condition and 22
Results of Operations............................................
7a. Qualitative and Quantitative Disclosures about Market Risks... 33
8. Financial Statements and Supplementary Data.................... 34
9. Changes in and Disagreements with Accountants on Accounting and 34
Financial Disclosure.............................................
PART III.......................................................... 34
PART IV
14. Exhibits, Financial Statements and Schedules, and Reports on 34
Form 8-K.........................................................
SIGNATURES........................................................ 38
2
PART I
ITEM 1 AND 2. BUSINESS AND PROPERTIES
General Development of Business
Wyndham International, Inc. (together with its consolidated subsidiaries,
"Wyndham" or the "Company") is a fully-integrated and multi-branded hotel
enterprise that operates primarily in the upscale and luxury segments. Through
a series of acquisitions, Wyndham has since 1995 grown from 20 hotels to
become one of the largest U.S. based hotel operators with a portfolio totaling
242 hotels with over 62,000 guestrooms.
Wyndham is a Delaware corporation and its principal executive offices are
located at 1950 Stemmons Freeway, Suite 6001, Dallas, Texas 75207. As
discussed more fully below, effective June 30, 1999, Wyndham completed a
restructuring in which it acquired Patriot American Hospitality, Inc.
(together with its subsidiaries, "Patriot"). Unless the context otherwise
requires, references herein to "Old Wyndham" refer to Wyndham prior to the
June 30, 1999 restructuring and when the term Wyndham is used relating to a
period prior to June 30, 1999, such term refers to the combined entity of Old
Wyndham and Patriot.
Patriot was formed in April 1995 as a self-administered real estate
investment trust ("REIT") for the purpose of acquiring equity interests in
hotel properties. On October 2, 1995, Patriot completed an initial public
offering of shares of common stock and commenced operations. Between October
1995 and July 1997, Patriot acquired interests in 56 hotel properties that it
leased to various third parties.
On July 1, 1997, Patriot merged with and into California Jockey Club ("Cal
Jockey"), with Cal Jockey being the surviving legal entity. Cal Jockey's
shares of common stock were paired and traded together with the shares of
common stock of Bay Meadows Operating Company ("Bay Meadows") as a single unit
pursuant to a stock pairing agreement. In connection with the Cal Jockey
merger, Cal Jockey changed its name to "Patriot American Hospitality, Inc.,"
referred to herein as Patriot, and Bay Meadows changed its name to "Patriot
American Hospitality Operating Company". In January 1998, Patriot acquired
Wyndham Hotel Corporation through a merger (the "Wyndham merger"). In
connection with the Wyndham merger, Patriot American Hospitality Operating
Company changed its name to "Wyndham International, Inc." and is referred to
herein, collectively with its subsidiaries, as "Old Wyndham".
The Cal Jockey merger was accounted for as a reverse acquisition in which
Cal Jockey was considered to be acquired by Patriot. For accounting purposes,
Old Wyndham commenced its operations concurrent with the closing of the Cal
Jockey merger on July 1, 1997.
During 1998, Patriot and Wyndham grew rapidly, investing over $4.5 billion
in the acquisition of hotels and other related businesses. These acquisitions
were financed primarily with funds drawn on the companies' revolving credit
facility as well as through the issuance of paired shares and units of limited
partnership interests ("OP Units") in two operating partnerships owned
principally by Wyndham and Patriot (the "Operating Partnerships").
In the Wyndham merger, Patriot acquired ownership of 10 Wyndham branded
hotels, 14 ClubHouse hotels, 52 management and franchise contracts, the
Wyndham and ClubHouse proprietary brand names and the Wyndham hotel management
company. Other major acquisitions during 1998 included (a) the acquisition of
three resort hotels in Puerto Rico and a majority interest in a related
management company, (b) the acquisition of Arcadian International Limited,
which owned 10 hotels in England, one hotel in Jersey, five owned and managed
Malmaison Hotels, two European resorts under development, the Malmaison
proprietary brand name and a 50% interest in a property being developed in
London, (c) the acquisition of Interstate Hotels Company ("Interstate"), which
owned or had controlling interests in 42 hotels representing over 12,000
rooms, leases for 84 hotels representing over 10,100 rooms, and management or
service agreements for 82 hotels representing over 20,400 rooms, (d) the
acquisition of SF Hotel Company, L.P., which owned four Summerfield Suites(R)
hotels, leasehold and management interests in 24 Summerfield Suites(R), Sierra
Suites(R) and Sunrise Suites hotels and management
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contracts and franchise interests for 12 additional hotels, and (e) the
acquisition of the hospitality related business of CHC International, Inc.,
including 17 leases and 16 of the associated management contracts related to
Patriot hotels, eight third-party management contracts, two third-party asset
management contracts, the Grand Bay proprietary brand name and certain other
assets.
During 1999, Wyndham completed an organizational restructuring. On June
30, 1999, a subsidiary of Old Wyndham was merged with and into Patriot and
Patriot became a wholly-owned subsidiary of Wyndham. The pairing arrangement
was terminated and each outstanding paired share was converted into a share of
Wyndham class A common stock. In addition, Patriot's status as a real estate
investment trust was terminated effective January 1, 1999, and Patriot became
a taxable corporation as of that date. The Company recorded a charge of
$675 million to establish a deferred tax liability resulting from Patriot's
change in tax status from a REIT to a C corporation and $285.3 million in
restructuring charges. See "Item 7. Management's Discussion and Analysis of
Financial Conditions and Results of Operations--Background--Restructuring."
During 1999, Wyndham also completed a $1 billion equity investment and
issued Wyndham series A and series B preferred stock, each of which pays a
quarterly dividend on a cumulative basis, at a rate of 9.75% per year, and is
convertible at the holders' option into shares of Wyndham common stock.
Concurrent with the closing of the $1 billion equity investment, Wyndham
closed on a new $2.45 billion credit facility and $581 million in additional
mortgage debt.
During 1999, the Company sold a racecourse, land adjacent to the racecourse
and 21 hotel properties. The Company received net cash proceeds of
approximately $123.4 million, after the repayment of mortgage debt of
$62.9 million and a mortgage note receivable in the amount of $6.0 million.
The Company recorded a net loss of $10.7 million in connection with these
transactions. In addition, Patriot distributed approximately 92% of the shares
of Interstate Hotel Corporation ("IHC") in the form of a dividend to
shareholders. The remaining 8% was owned equally by Wyndham and Marriott
International, Inc. ("Marriott"). This resulted in the Company owning an
approximate 55% non-controlling interest in Interstate Hotels, LLC ("IH LLC"),
an operating subsidiary of IHC.
2000 Asset Divestitures
During 2000, Wyndham agreed to the redemption of its aggregate 55% non-
voting economic interest in IH LLC (the "Wyndham Interest"). IH LLC
transferred to Wyndham a management agreement for one hotel owned by Wyndham
and amended management agreements with respect to six other hotels owned by
Wyndham to reduce the management fees and to permit termination by the owner
upon 30 days notice. In addition, approximately 9% of the Wyndham Interest was
redeemed by IH LLC and substantially all of the remainder was converted into a
preferred membership interest in IH LLC. At any time on or after July 1, 2001,
both IH LLC and Wyndham have the right to require that IH LLC redeem the
preferred membership interest for approximately $12.7 million to be paid with
a combination of cash and promissory notes. The portion of the Wyndham
Interest that was not converted into a preferred membership interest will
remain outstanding after the preferred membership interest is redeemed.
Thereafter, at any time on or after July 1, 2004, both IH LLC and Wyndham have
the right to require that IH LLC redeem the remaining common interest at an
amount that is the lesser of (a) the product of (i) five times IH LLC's EBITDA
as of December 31, 2003 and (ii) the percentage of total equity interest in
IH LLC which is represented by the remaining interest, or (b) approximately
$433,000. As additional consideration for the redemption and conversion of the
Wyndham Interest, Wyndham caused its representative on IHC's Board of
Directors to resign and relinquished its right to appoint a member to IHC's
Board of Directors in the future. In addition, Wyndham granted IHC an option
exercisable within 90 days of October 20, 2000, to acquire all of the IHC
stock owned by Wyndham at a weighted average trading price per share, provided
that the purchase price not be less than $3.00 per share nor more than
$4.00 per share. On December 3, 2000, the common stock was acquired for
approximately $597,000. As a result of this transaction, the Company
recognized an impairment charge on its investment in IH LLC of $16.5 million.
Effective March 31, 2000, the Company sold its Sierra Suites hotel brand,
properties and related assets (the "Sierra transaction") to Sierra Suites
Hotel Company, L.P., an entity affiliated with Mr. Rolf Ruhfus, a director
4
of Wyndham, for approximately $53 million. The transaction included the sale
by the Company of one owned and three leased properties, 17 franchise and
management contracts for Sierra Suites and nine management contracts for
Summerfield Suites. Pursuant to the purchase agreement, the Company received
net cash proceeds of $23.0 million and was relieved of $29.8 million of future
obligations due under the purchase and sale agreement of the acquisition of
SF Hotel Company L.P. in June of 1998 (the "Summerfield transaction"). As a
result of the transaction, the Company recorded a net loss of $157,000.
During 2000, the Company sold 26 other hotel properties, including the
Clubhouse Inn brand and received net cash proceeds of approximately
$175.0 million, after the repayment of mortgage debt of $70.4 million. The
Company also sold investments in three hotels, two parcels of land, retail
space and a garage and received net cash proceeds of $61.4 million after the
repayment of debt of $7.8 million and a note receivable of $4.3 million. The
Company recorded a net loss of $12.8 million, net of impairment of $66,821, as
a result of these transactions.
Two of the hotel properties sold in 2000 were leased back to the Company
under two long-term operating leases. The leases have an initial term of
15 years and three optional five-year renewal periods exercisable at the
Company's option. Under the terms of the leases, yearly base rent aggregates
$4.3 million plus a contingent rent paid based on a percentage of revenues
over certain thresholds as specified in the leases. The leases require the
Company to pay substantially all expenses associated with the operation of the
leased hotels, including real estate taxes and insurance.
At December 31, 2000, the Company has approximately $1.2 billion of assets
classified as held for sale, net of impairment. Management classifies certain
assets as held for sale based on management having the authority and intent of
entering into commitments for sale transactions expected to close in the next
twelve months. Based on estimated sale proceeds, the Company recorded a
provision for loss on assets held for sale of $361.6 million in operating
expenses for the year ended December 31, 2000. The assets held for sale had
combined earnings before interest, depreciation, and taxes of $148.1 million,
net of amounts owned by third party limited partners. At December 31, 2000,
the Company also recorded an impairment of $39.7 million in operating expenses
on real estate assets held for use where current facts, circumstances and
analysis indicate that the assets might be impaired.
Other Developments
On March 27, 2000, James D. Carreker resigned his position as Chief
Executive Officer. The Board elected Fred J. Kleisner to the position of Chief
Executive Officer in addition to his previous position as President. In
addition, the Board appointed Richard Smith to the position of Chief Financial
Officer in April 2000 and appointed Ted Teng to the position of Chief
Operating Officer in April 2000.
On October 16, 2000, the Company announced that James D. Carreker resigned
as Chairman of the Board of Directors. The Board elected the Company's Chief
Executive Officer, Fred J. Kleisner, to the additional title of Chairman. Ted
Teng, Chief Operating Officer, was elected to the additional title of
President. Mr. Carreker remained a Director.
Description of Business
The Company is a fully-integrated hotel enterprise that operates primarily
in the upscale and luxury segments. The Company's portfolio consists of
242 owned, leased, managed or franchised hotels with over 62,000 guestrooms.
The Company classifies its business into proprietary and non-proprietary brand
hotel divisions under which it manages the business.
The Company's principal proprietary branded assets, Wyndham Hotel &
Resorts(R) consist of 160 owned, leased, managed or franchised hotels with
over 38,600 rooms. The Company offers upscale, full-service accommodations to
business and leisure travelers, providing a quality and consistent product
through its Wyndham Hotels & Resorts brand and its Wyndham Garden Hotels(R)
brand. The Company is positioned in the luxury segment under the Wyndham
Luxury Resorts brand. Wyndham Luxury Resorts include five-star resort
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properties, such as the Boulders and Carmel Valley Ranch. Additionally, the
Company offers proprietary branded all-suite accommodations through its
upscale Summerfield Suites by Wyndham(TM) brand. The Company's primary growth
strategy is to develop its proprietary hotel brands through increasing
distribution, generating greater customer awareness, building brand loyalty,
offering cutting-edge amenities and services, and maintaining customer
satisfaction. The Company intends to continue to expand its Wyndham hotel
portfolio through the selective acquisition and development of hotels in major
metropolitan areas and resort destinations.
The Company's non-proprietary branded hotels consists of 82 owned, leased,
managed or franchised hotels with over 23,500 guestrooms. All but four of
these hotels are operated under franchise or brand affiliations with
nationally recognized hotel companies, including Crowne Plaza(R), Hilton(R),
Hyatt(R), Radisson(R), Holiday Inn(R), Doubletree(R), Embassy Suites(R),
Ramada(R), Four Points by Sheraton(R), Marriott(R), and Courtyard by
Marriott(R). The Company's non-proprietary branded hotels are primarily
operated by one of its management divisions, Performance Hospitality
Management ("PHM"). In addition to the Company's owned and leased assets, PHM
manages 14 non-proprietary hotels for third parties. The Company has and will
continue to review its portfolio to identify certain non-proprietary hotels
that can be converted into one of its Wyndham proprietary brands. The balance
of the Company's non-proprietary hotels will be systematically disposed of
through asset sales and exchanges to create a source of capital for further
expansion of the Wyndham proprietary brand.
Proprietary Brands
Wyndham is the brand umbrella under which all of its proprietary products
are marketed. It includes three four-star, upscale hotel brands that offer
full-service accommodations to business and leisure travelers, as well as the
five-star luxury resort brand. With hotels in major urban, suburban and resort
markets, the Wyndham brand offers products geared to the specific needs of
travelers based on their location, facilities and trip purpose.
Wyndham Hotels & Resorts includes Wyndham Hotels which are upscale, full-
service hotels that contain an average of 400 hotel rooms, generally between
15,000 and 250,000 square feet of meeting space and a full range of guest
services and amenities, for business and leisure travelers, as well as
conferences and conventions. The hotels are located primarily in the central
business districts and dominant suburbs of major metropolitan markets and are
targeted to business groups, meetings, and individual business and leisure
travelers. These hotels offer elegantly appointed facilities and high levels
of guest service. The Company implemented new brand standards throughout the
Wyndham Hotels portfolio in 2000. These brand standards are designed to
further strengthen Wyndham's position as a leader in product and service
standards in the upscale segment. New service offerings include the Wyndham
ByRequestSM guest recognition program which focuses on rewarding repeat guests
with on-site amenities and benefits during their stay, as well as rewards for
use during future travel. The Company has targeted a number of technology
initiatives designed to position Wyndham as a dominant brand for the future.
For example, all Wyndham Hotels offer wireless internet access to their guests
and travelers, the ability to make reservations for any Wyndham hotel or
obtain information about Wyndham ByRequestSM via any wireless internet device
such as personal digital assistants and mobile phones. Wyndham Resorts are
distinctive properties and represent the largest hotel chain in the Caribbean.
The full-service and destination resorts average 300 rooms and service leisure
travelers as well as business groups. Primary destinations include Orlando,
South Florida and the Caribbean.
Wyndham Luxury Resorts are five-star, luxury hotel properties featuring
between 150 and 300 rooms, numerous fine dining options, and other luxury and
recreational amenities. The resorts are distinguished by their focus on
incorporating the local environment into every aspect of the property, from
decor to cuisine to recreation. The luxury collection includes the Golden
Door(R), one of the world's preeminent spas based in Escondido, California.
Luxury Resorts are located in Arizona, California, Puerto Rico, and Mexico.
Wyndham Garden Hotels, which serve individual business travelers and small
business groups, are located principally near major airports and suburban
business districts. The full-service hotels feature between 150 and 225 guest
rooms, and include up to 5,000 square feet of meeting space. Amenities and
services generally include a three-meal restaurant, signature Wyndham
Garden(R) libraries and laundry and room service. Consistent with
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the Company's strategy to grow the Wyndham Hotels & Resorts brand, the Company
has also converted certain of the Wyndham Garden Hotels into Wyndham Hotels,
which is consistent with the Company's primary focus on expanding the core
Wyndham Hotels & Resorts brand.
Summerfield Suites by Wyndham(TM) hotel brand offers guests the highest
quality lodging in the upscale all- suites segment. Each suite has a fully
equipped kitchen, a spacious living room and a private bedroom. Many of the
suites feature two bedroom, two bath units. The hotels also have a swimming
pool, exercise room and other amenities to serve business and leisure
travelers. Each Summerfield Suites hotel contains 86 to 150 suites in either
interior or exterior corridor design. The Company plans to lead its growth of
this product through franchising.
Non-Proprietary Brands
Among its non-proprietary branded hotels, the Company owns and operates
82 hotels aggregating over 23,500 rooms under franchise or brand affiliations
with nationally recognized hotel companies, including Crowne Plaza(R),
Hilton(R), Hyatt(R), Radisson(R), Holiday Inn(R), Doubletree(R), Embassy
Suites(R), Ramada(R), Four Points by Sheraton(R), Marriott(R), and Courtyard
by Marriott(R). The majority of the Company's non-proprietary branded hotels
are full-service and operate in the luxury and upscale price points. Full-
service hotels generally offer a range of conference facilities and banquet
space, food and beverage accommodations, gift shops, and recreational areas,
including swimming pools. These hotels target both business and leisure
travelers, including meetings, groups and individuals.
LODGING
The following table sets forth the number of hotels, number of rooms, total
revenue, average daily rate ("ADR"), average occupancy rate, and revenue per
available room ("REVPAR"), for the Company's owned and leased hotels as of
December 31, 2000.
Number Total
Property Name City State of Rooms Revenue ADR Occupancy RevPAR
------------- ---------------- ------- -------- -------- ------- --------- -------
(Total Revenue in thousands)
Wyndham Hotels & Resorts
Wyndham Andover......... Andover MA 293 $ 14,149 $107.35 75.7% $ 81.23
Wyndham Arlington....... Arlington TX 310 $ 12,831 $ 91.17 72.2% $ 65.83
Wyndham Atlanta......... Atlanta GA 312 $ 13,570 $131.82 59.4% $ 78.28
Wyndham Baltimore--Inner
Harbor................. Baltimore MD 707 $ 34,393 $121.31 75.2% $ 91.23
Wyndham Bel Age......... Hollywood CA 200 $ 15,182 $167.19 74.9% $125.15
Wyndham Billerica....... Billerica MA 210 $ 9,652 $119.87 74.4% $ 89.16
Wyndham Bloomington..... Bloomington MN 209 $ 7,775 $ 83.74 81.4% $ 68.14
Wyndham Boston.......... Boston MA 362 $ 28,789 $199.56 82.5% $164.57
Wyndham Bristol Place--
Toronto Airport........ Toronto Ontario 287 $ 13,974 $ 87.18 81.0% $ 70.60
Wyndham Buttes Resort... Tempe AZ 353 $ 28,416 $137.46 75.7% $104.12
Wyndham Casa Marina
Resort & Beach House... Key West FL 311 $ 28,326 $190.67 83.6% $159.42
Wyndham Chicago......... Chicago IL 417 $ 25,987 $163.07 69.9% $113.96
Wyndham City Center..... Washington DC 352 $ 14,479 $112.15 72.4% $ 81.18
Wyndham Colorado
Springs................ Colorado Springs CO 311 $ 11,592 $ 86.73 69.1% $ 59.95
Wyndham Commerce........ Commerce CA 201 $ 7,795 $ 97.51 68.0% $ 66.26
Wyndham Dallas Market
Center................. Dallas TX 228 $ 7,011 $ 97.65 63.9% $ 62.35
Wyndham Denver Tech
Center................. Denver CO 180 $ 5,553 $ 91.39 62.6% $ 57.24
Wyndham El Conquistador
Resort & Country Club.. Fajardo PR 751 $104,873 $236.59 69.1% $163.42
Wyndham El San Juan
Hotel & Casino......... San Juan PR 382 $ 68,441 $224.90 84.3% $189.57
Wyndham Emerald Plaza... San Diego CA 436 $ 26,151 $133.66 82.7% $110.52
Wyndham Grand Bay--
Coconut Grove.......... Miami FL 177 $ 16,438 $224.49 70.4% $158.08
Wyndham Greenspoint..... Houston TX 472 $ 23,286 $ 95.64 74.5% $ 71.21
Wyndham Harbour Island.. Tampa FL 299 $ 14,812 $126.48 69.0% $ 87.28
Wyndham Indianapolis.... Indianapolis IN 171 $ 5,168 $ 87.32 63.5% $ 55.43
Wyndham Miami Airport... Miami FL 408 $ 12,121 $ 79.22 70.2% $ 55.64
Wyndham Miami Beach
Resort................. Miami FL 424 $ 26,329 $136.34 74.8% $101.94
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Number Total
Property Name City State of Rooms Revenue ADR Occupancy RevPAR
------------- ---------------- ------- -------- ------- ------- --------- -------
Wyndham Midtown
Atlanta................ Atlanta GA 191 $ 7,700 $109.41 75.8% $ 82.93
Wyndham Myrtle Beach
Resort and Arcadian
Shores Golf Club....... Myrtle Beach SC 385 $15,672 $100.92 62.9% $ 63.53
Wyndham Nashville....... Nashville TN 180 $ 4,686 $ 75.07 66.3% $ 49.76
Wyndham New Orleans..... New Orleans LA 438 $32,238 $175.58 79.8% $140.05
Wyndham Northwest
Chicago................ Itasca IL 408 $28,327 $113.47 72.5% $ 82.23
Wyndham Palace Resort &
Spa.................... Lake Buena Vista FL 1,013 $80,518 $163.16 79.9% $130.37
Wyndham Peachtree
Conference Center...... Peachtree City GA 250 $15,578 $118.63 59.8% $ 70.89
Wyndham Peaks Resort &
Golden
Door Spa............... Telluride CO 174 $23,680 $328.03 57.0% $187.05
Wyndham Philadelphia at
Franklin Plaza......... Philadelphia PA 758 $40,104 $126.51 68.8% $ 87.07
Wyndham Phoenix
Airport................ Phoenix AZ 210 $ 7,183 $ 92.40 72.3% $ 66.83
Wyndham Pickwick Hotel.. San Francisco CA 188 $ 7,375 $114.60 83.4% $ 95.62
Wyndham Reach Resort.... Key West FL 150 $10,879 $194.94 76.5% $149.07
Wyndham Resort & Spa.... Fort Lauderdale FL 496 $24,642 $122.23 53.9% $ 65.89
Wyndham Richmond
Airport................ Richmond VA 155 $ 4,281 $ 61.37 76.3% $ 46.84
Wyndham Riverfront...... New Orleans LA 202 $ 9,331 $139.45 72.6% $101.30
Wyndham Roanoke
Airport................ Roanoke VA 320 $ 8,965 $ 72.89 63.9% $ 46.54
Wyndham Rose Hall &
Resort
Country Club........... Montego Bay Jamaica 488 $25,756 $108.46 71.4% $ 77.39
Wyndham Salt Lake City.. Salt Lake City UT 381 $12,480 $ 79.78 73.6% $ 58.74
Wyndham San Diego....... San Diego CA 180 $ 8,081 $109.82 82.2% $ 90.29
Wyndham Santa Maria..... Key West FL 51 $ 498 $ 73.05 48.4% $ 35.37
Wyndham Seattle-Tacoma
Airport................ Seattle WA 204 $ 7,271 $ 86.84 80.6% $ 69.96
Wyndham Sunnyvale....... Sunnyvale CA 180 $ 9,458 $143.37 82.7% $118.63
Wyndham Syracuse........ Syracuse NY 250 $11,026 $ 86.12 69.5% $ 59.89
Wyndham Toledo.......... Toledo OH 241 $ 8,149 $ 79.64 68.1% $ 54.22
Wyndham Valley Forge.... Wayne PA 229 $10,833 $128.10 71.6% $ 91.67
Wyndham Vinings......... Atlanta GA 159 $ 5,058 $ 91.28 67.6% $ 61.66
Wyndham Washington,
D.C. .................. Washington DC 400 $21,046 $122.33 79.3% $ 96.97
Wyndham Westborough..... Westborough MA 223 $11,708 $100.04 79.7% $ 79.71
Wyndham Westshore--
Tampa.................. Tampa FL 324 $16,980 $ 96.81 70.5% $ 68.22
Wyndham Windwatch....... Haupauge NY 360 $22,438 $131.60 81.7% $107.51
Bourbon Orleans--A
Wyndham Historic
Hotel.................. New Orleans LA 216 $10,423 $145.32 77.8% $113.09
The Ambassador West--A
Wyndham Historic
Hotel.................. Chicago IL 219 $10,806 $127.43 71.6% $ 91.30
The Fairmount Hotel--A
Wyndham Historic
Hotel.................. San Antonio TX 37 $ 2,269 $127.40 73.7% $ 93.89
The Mayfair--A Wyndham
Historic Hotel......... St Louis MO 182 $ 5,147 $ 82.89 67.4% $ 55.85
The Tremont Boston--A
Wyndham Historic
Hotel.................. Boston MA 322 $19,997 $147.43 89.4% $131.86
The Tutwiler--A Wyndham
Historic Hotel......... Birmingham AL 147 $ 5,295 $103.68 60.5% $ 62.77
The Union Station--A
Wyndham Historic
Hotel.................. Nashville TN 124 $ 5,039 $103.12 68.6% $ 70.78
Wyndham Luxury Resorts
Carmel Valley Ranch--A
Wyndham Luxury Resort.. Carmel Valley CA 144 $24,659 $297.52 73.3% $218.15
The Boulders--A Wyndham
Luxury Resort.......... Carefree AZ 160 $49,100 $341.92 75.1% $256.78
The Lodge at Ventana
Canyon--A Wyndham
Luxury Resort.......... Tucson AZ 50 $14,217 $211.67 67.1% $141.99
Wyndham Garden Hotels
Wyndham Garden Hotel--
Bothell................ Bothell WA 166 $ 5,384 $ 94.45 66.9% $ 63.82
Wyndham Garden Hotel--
Brookfield............. Brookfield WI 178 $ 5,000 $ 76.34 66.8% $ 51.01
Wyndham Garden Hotel--
Chandler............... Chandler AZ 159 $ 4,369 $ 87.18 65.7% $ 57.24
8
Number Total
Property Name City State of Rooms Revenue ADR Occupancy RevPAR
------------- ------------- ----- -------- ------- ------- --------- -------
Wyndham Garden Hotel--
Charlotte.............. Charlotte NC 173 $ 4,222 $ 76.77 59.5% $ 45.71
Wyndham Garden Hotel--
Dallas Park Central.... Dallas TX 197 $ 4,294 $ 71.16 56.8% $ 40.43
Wyndham Garden Hotel--
LaGuardia.............. East Elmhurst NY 229 $10,866 $123.81 92.3% $114.27
Wyndham Garden Hotel--
Las Colinas............ Irving TX 168 $ 5,992 $105.42 70.0% $ 73.84
Wyndham Garden Hotel--
Naperville............. Naperville IL 143 $ 4,653 $ 87.36 74.0% $ 64.63
Wyndham Garden Hotel--
Novi................... Novi MI 148 $ 5,023 $ 92.57 72.0% $ 66.62
Wyndham Garden Hotel--
Overland Park.......... Overland Park KS 180 $ 3,948 $ 70.04 59.1% $ 41.39
Wyndham Garden Hotel--
Perimeter.............. Atlanta GA 143 $ 3,432 $ 85.94 57.1% $ 49.05
Wyndham Garden Hotel--
Pleasanton............. Pleasanton CA 171 $ 5,424 $ 93.19 76.6% $ 71.42
Wyndham Garden Hotel--
Schaumburg............. Schaumburg IL 188 $ 5,496 $ 96.21 65.2% $ 62.77
Wyndham Garden Hotel--
Wood Dale.............. Wood Dale IL 162 $ 5,942 $ 99.51 71.1% $ 70.75
Wyndham Garden Hotel--
North Phoenix.......... Phoenix AZ 166 $ 3,506 $ 73.65 57.4% $ 42.24
Summerfield Suites by
Wyndham
Summerfield by Wyndham--
Addison................ Addison TX 132 $ 4,073 $ 95.58 82.1% $ 78.45
Summerfield by Wyndham--
Belmont................ Belmont CA 132 $ 7,344 $155.15 91.6% $142.07
Summerfield by Wyndham--
Buckhead............... Atlanta GA 88 $ 2,787 $113.40 72.8% $ 82.55
Summerfield by Wyndham--
Chatsworth............. Chatsworth CA 114 $ 3,764 $107.09 81.2% $ 86.94
Summerfield by Wyndham--
Denver................. Englewood CO 136 $ 3,989 $ 95.76 79.1% $ 75.74
Summerfield by Wyndham--
Dulles................. Herndon VA 112 $ 4,509 $129.48 81.1% $104.99
Summerfield by Wyndham--
El Segundo............. El Segundo CA 122 $ 5,452 $126.34 89.5% $113.07
Summerfield by Wyndham--
Lake Buena Vista....... Orlando FL 150 $ 6,496 $129.81 84.6% $109.82
Summerfield by Wyndham--
Las Colinas............ Irving TX 148 $ 5,684 $114.84 86.4% $ 99.22
Summerfield by Wyndham--
Malvern................ Malvern PA 120 $ 4,786 $131.64 78.2% $103.00
Summerfield by Wyndham--
Miami.................. Miami FL 156 $ 5,137 $ 98.72 82.7% $ 81.60
Summerfield by Wyndham--
Morristown............. Morristown NJ 133 $ 7,059 $154.90 88.5% $137.01
Summerfield by Wyndham--
Mt. Laurel............. Mt Laurel NJ 116 $ 3,632 $ 99.15 79.2% $ 78.56
Summerfield by Wyndham--
Orlando................ Orlando FL 146 $ 6,141 $127.33 82.8% $105.40
Summerfield by Wyndham--
Parisppany/Whippany.... Whippany NJ 136 $ 5,933 $138.18 81.3% $112.33
Summerfield by Wyndham--
Perimeter.............. Atlanta GA 122 $ 3,225 $ 91.78 75.3% $ 69.08
Summerfield by Wyndham--
Princeton.............. Princeton NJ 124 $ 5,491 $137.25 83.1% $114.02
Summerfield by Wyndham--
San Francisco Airport.. San Bruno CA 92 $ 4,674 $143.92 92.4% $133.02
Summerfield by Wyndham--
San Jose............... San Jose CA 114 $ 6,214 $159.36 90.2% $143.74
Summerfield by Wyndham--
Schaumburg............. Schaumburg IL 112 $ 3,928 $118.10 76.4% $ 90.23
Summerfield by Wyndham--
Seattle................ Seattle WA 193 $ 6,209 $108.42 74.9% $ 81.16
Summerfield by Wyndham--
Somerset............... Somerset NJ 140 $ 6,257 $140.89 81.2% $114.37
Summerfield by Wyndham--
Sunnyvale.............. Sunnyvale CA 138 $ 7,532 $163.69 88.5% $144.83
Summerfield by Wyndham--
Sunrise Suites......... Tinton Falls NJ 96 $ 3,065 $102.93 79.5% $ 81.79
Summerfield by Wyndham--
Torrance............... Torrance CA 144 $ 4,658 $100.41 82.2% $ 82.52
Summerfield by Wyndham--
Waltham................ Waltham MA 136 $ 6,613 $149.60 84.0% $125.59
Summerfield by Wyndham--
West Hollywood......... Hollywood CA 109 $ 4,218 $126.95 74.7% $ 94.86
Summerfield by Wyndham--
Westport............... St Louis MO 106 $ 3,078 $ 89.98 83.9% $ 75.49
Non-Proprietary Brand
Properties
Condado Plaza........... San Juan PR 570 $69,437 $171.97 77.6% $133.43
Courtyard by Marriott--
Beachwood.............. Beachwood OH 113 $ 3,235 $ 93.60 75.4% $ 70.56
Crowne Plaza Ravinia.... Atlanta GA 495 $26,102 $123.77 66.2% $ 81.94
Doubletree--Allen
Center................. Houston TX 350 $19,273 $132.53 71.6% $ 94.92
Doubletree--Anaheim..... Orange CA 454 $16,535 $ 88.12 69.7% $ 61.40
Doubletree--Des
Plaines................ Des Plaines IL 246 $ 7,002 $ 94.68 65.9% $ 62.35
Doubletree--Glenview.... Glenview IL 252 $10,615 $105.92 72.6% $ 76.85
Doubletree--Miami....... Miami FL 266 $ 5,667 $ 72.32 64.3% $ 46.50
Doubletree--
Minneapolis............ Minneapolis MN 230 $ 7,317 $110.12 65.2% $ 71.78
Doubletree--Overland
Park................... Overland Park KS 356 $15,858 $ 98.72 70.4% $ 69.48
Doubletree-- Park
Place.................. Minneapolis MN 297 $11,689 $ 91.47 63.3% $ 57.92
Doubletree--Post Oak.... Houston TX 449 $24,306 $112.46 72.7% $ 81.73
Doubletree-- St. Louis.. Chesterfield MO 223 $12,223 $101.30 60.4% $ 61.20
Doubletree--
Tallahassee............ Tallahassee FL 244 $ 8,080 $ 88.74 69.3% $ 61.46
Doubletree--Tulsa....... Tulsa OK 417 $10,967 $ 72.56 60.2% $ 43.65
Doubletree--
Westminster............ Westminster CO 180 $ 6,408 $ 89.47 67.9% $ 60.72
9
Number Total
Property Name City State of Rooms Revenue ADR Occupancy RevPAR
------------- ----------------- ----- -------- ------- ------- --------- -------
Embassy Suites Chicago.. Chicago IL 358 $22,451 $183.31 82.4% $151.05
Embassy Suites Hunt
Valley................. Hunt Valley MD 223 $ 7,653 $106.85 68.4% $ 73.11
Embassy Suites Phoenix.. Phoenix AZ 314 $10,793 $ 84.15 77.6% $ 65.29
Embassy Suites
Schaumburg............. Schaumburg IL 209 $ 8,615 $125.43 69.6% $ 87.25
Hilton Cleveland........ Independence OH 191 $10,323 $ 90.27 69.8% $ 62.97
Hilton Columbus......... Columbus GA 177 $ 5,142 $ 82.38 67.1% $ 55.27
Hilton DelMar........... San Diego CA 245 $12,007 $110.92 80.6% $ 89.37
Hilton Denver........... Greenwood Village CO 305 $12,543 $ 97.78 64.8% $ 63.39
Hilton Ft. Lauderdale... Dania FL 383 $15,477 $ 79.89 88.2% $ 70.45
Hilton Huntington....... Melville NY 302 $23,572 $160.09 77.0% $123.35
Hilton Parsippany....... Parsippany NJ 510 $29,559 $136.49 71.9% $ 98.15
Hilton Melbourne........ Melbourne FL 240 $ 6,817 $ 76.69 61.7% $ 47.30
Hilton Newark........... Newark NJ 253 $15,685 $142.53 85.3% $121.59
Holiday Inn Aristocrat.. Dallas TX 172 $ 4,986 $107.78 59.3% $ 63.87
Holiday Inn Brentwood... Brentwood TN 246 $ 5,073 $ 65.52 62.1% $ 40.72
Holiday Inn Dallas...... Dallas TX 379 $10,361 $ 83.89 58.4% $ 49.02
Holiday Inn Houston..... Houston TX 193 $ 3,605 $ 70.13 54.3% $ 38.06
Holiday Inn San Angelo.. San Angelo TX 148 $ 3,092 $ 65.64 69.8% $ 45.80
Holiday Inn San
Francisco.............. San Francisco CA 224 $11,153 $126.52 85.3% $107.92
Holiday Inn Westlake.... Westlake OH 266 $ 6,722 $ 77.15 57.5% $ 44.35
Hyatt Lexington......... Lexington KY 365 $12,299 $ 92.76 54.8% $ 50.84
Hyatt Newporter......... Newport Beach CA 410 $27,194 $132.41 75.8% $100.37
Marriott Albany......... Albany NY 359 $21,723 $125.08 83.0% $103.88
Marriott Atlanta North
Central................ Atlanta GA 287 $12,095 $ 99.14 69.8% $ 69.25
Marriott Harrisburg..... Harrisburg PA 348 $15,298 $105.06 70.5% $ 74.11
Marriott Houston North
at Greenspoint......... Houston TX 391 $14,133 $ 97.65 71.0% $ 69.30
Marriott Indian River
Plantation Resort...... Stuart FL 297 $17,834 $119.49 66.1% $ 78.96
Marriott Minneapolis
Southwest.............. Minnetonka MN 320 $16,041 $117.74 71.0% $ 83.62
Marriott Philadelphia
West................... Conshohocken PA 286 $20,035 $160.83 78.5% $126.25
Marriott Pittsburgh
Airport................ Corapolis PA 314 $17,794 $117.02 79.4% $ 92.95
Marriott San Diego
Mission Valley......... San Diego CA 350 $19,107 $121.76 81.5% $ 99.21
Marriott St. Louis
West................... St Louis MO 300 $14,483 $108.66 69.7% $ 75.77
Marriott Troy........... Troy MI 350 $24,862 $145.88 77.0% $112.26
Marriott Tyson's
Corner................. Vienna VA 390 $25,368 $156.97 79.8% $125.28
Marriott Warner Center.. Woodland Hills CA 463 $28,178 $117.58 86.5% $101.70
Park Shore.............. Honolulu HI 227 $ 5,572 $ 72.80 72.2% $ 52.59
Radisson Akron.......... Akron OH 130 $ 2,318 $ 78.40 51.2% $ 40.13
Radisson Beachwood...... Beachwood OH 196 $ 4,857 $ 79.41 60.2% $ 47.84
Radisson Burlington..... Burlington VT 256 $12,838 $113.02 82.7% $ 93.44
Radisson Dallas......... Dallas TX 199 $ 5,335 $ 74.39 73.4% $ 54.61
Radisson Englewood...... Englewood NJ 194 $ 8,792 $114.41 81.0% $ 92.64
Radisson Ft. Magruder... Williamsburg VA 303 $ 9,421 $ 78.23 68.5% $ 53.59
Radisson Lisle.......... Lisle IL 242 $12,389 $102.25 69.7% $ 71.26
Radisson New Orleans.... New Orleans LA 759 $26,144 $105.16 68.6% $ 72.08
Radisson Riverwalk...... Jacksonville FL 322 $11,172 $ 78.52 78.4% $ 61.55
Radisson San Jose....... San Jose CA 185 $ 9,588 $143.22 79.1% $113.24
Radisson Town &
Country................ Houston TX 173 $ 4,327 $ 85.27 73.2% $ 62.41
Ramada Nashville
Downtown............... Nashville TN 285 $ 5,349 $ 70.13 62.0% $ 43.47
Ramada San Francisco.... San Francisco CA 323 $10,280 $ 88.15 79.8% $ 70.32
Regency................. San Juan PR 127 $ 4,057 $126.21 58.7% $ 74.04
Sheraton Saginaw........ Saginaw MI 156 $ 3,052 $ 61.75 76.3% $ 47.14
Valley River Inn........ Eugene OR 257 $11,554 $ 94.44 68.8% $ 64.99
10
Total Portfolio
Owned Leased Managed Franchised Total
----- ------ ------- ---------- -----
Wyndham Hotel & Resorts.................. 52 11 14 8 85
Wyndham Luxury Resorts................... 3 -- 2 -- 5
Wyndham Garden Hotels.................... 10 5 5 12 32
Summerfield Suites by Wyndham............ 6 22 -- 10 38
--- --- --- --- ---
Proprietary Brand Hotels--subtotal....... 71 38 21 30 160
Non-Proprietary Brand Hotels............. 68 -- 14 -- 82
--- --- --- --- ---
Total.................................... 139 38 35 30 242
=== === === === ===
Total Portfolio
Franchise and Brand Affiliations
As of December 31, 2000, all but four of the Company's owned hotels are
operated under franchise or brand affiliations with nationally recognized
hotel companies. Franchisors and brand operators provide a variety of benefits
for hotels which include national advertising, publicity and other marketing
programs designed to increase brand awareness, training of personnel,
continuous review of quality standards and centralized reservation systems.
The Company generally is the licensee under the franchise agreement related to
such hotel. The Company is responsible for making all payments under the
franchise agreements to the franchisors. Franchise royalties and fees
generally range up to approximately 10% of room revenue. The duration of the
franchise agreements are varied, but generally may be terminated upon prior
notice and/or upon payment of certain specified fees.
Management of the Hotels
As of December 31, 2000, the Company managed 35 hotels for third parties
pursuant to management contracts under which it is responsible for the day-to-
day operation of the hotels. Of the 35 managed hotels, 21 hotels were managed
under proprietary brands of the Company, while 14 hotels were managed under
non-proprietary brands of the Company. These operations include managing hotel
accommodations, meeting rooms and food and beverage services as well as hiring
and training each hotel's staff, planning and providing sales and marketing
services, purchasing operating supplies, inventories and furniture, fixtures
and equipment, providing routine repairs and maintenance and performing hotel
accounting functions, including the preparation of monthly financial
statements. Management fees generally range up to approximately 5% of total
revenue. The terms of the management contracts vary from hotel to hotel, but
range from 1 to 20 years. As of December 31, 2000, the average remaining term
for the management contracts was approximately 6.1 years.
Employees
As of December 31, 2000, Wyndham had approximately 28,000 employees, and
retains appropriate support personnel to manage its operations.
Certain Risk Factors
Set forth below are important risks and uncertainties that could cause
Wyndham's actual results to differ materially from those expressed in forward-
looking statements made by the management of Wyndham. In this section, the
words "we", "us", and "our" refer only to Wyndham and its subsidiaries and not
to any other person.
11
Hotel Industry Risks
Operating Risks. Our primary business is buying, selling, leasing and
managing hotels. This business is subject to operating risks common to the
hotel industry, including:
. competition for guests from other hotles, a number of which may have
greater marketing and financial resources and experienc than us and our
hotel management companies;
. increases in operating costs due to inflation and other factors, which
may not be offset by increased room rates;
. dependence on business and commercial travelers and tourism, which may
fluctuate amd be seasonal;
. increases in energy costs and other travel expenses, which may deter
travelers; and
. adverse effects of general and local economic conditions.
These factors could adversely affect our ability to generate revenues and
our financial condition and results of operations.
We may be unable to obtain or transfer necessary operating licenses in
hotel acquisitions. When we acquire hotels or hotel operating companies, we
may be unable to transfer certain operating licenses or obtain new licenses in
a timely manner, such as food and beverage licenses. Although hotels can sell
alcoholic beverages under interim licenses or licenses obtained before we
acquire them, there can be no assurance that these licenses will remain in
effect until we (or our hotel management companies) obtain new licenses. If a
hotel fails to have a food and beverage license or other operating licenses,
this failure would adversely affect the hotel's ability to generate revenues
and could adversely affect our financial condition and results of operations.
Internet Reservation Channels. A percentage of our hotel rooms are booked
through internet travel intermediaries such as Expedia.com, Travelocity.com,
Hotwire.com, Priceline.com and Click-It weekends. As this percentage
increases, these intermediaries may be able to obtain higher commissions,
reduced room rates or other significant contract concessions from us.
Moreover, some of these internet travel intermediaries are attempting to
commoditize hotel rooms by increasing the importance of price and general
indicators of quality at the expense of brand identification. These agencies
hope that consumers will eventually develop brand loyalties to their
reservation systems rather than to our lodging brands. If this occurs, it
could adversely affect our financial condition and results of operations.
Hotel Renovation Costs and Capital Expenditures. In general, hotels have an
ongoing need for renovations and other capital improvements, particularly in
older structures, including periodically replacing or refurbishing furniture,
fixtures and equipment. Under the terms of certain debt and lease agreements,
we must establish a reserve to pay for certain capital expenditures and for
periodically replacing or refurbishing furniture, fixtures and equipment. If
capital expenditures exceed our expectations, this excess would have an
adverse effect on our available cash. In addition, we may acquire hotels that
require significant renovation. When we renovate hotels, we incur risks,
including the risk of environmental problems, construction cost overruns and
delays, uncertainties as to market demand after we renovate, market demand
deterioration after we begin renovating, and unanticipated competition
emerging from other hotels.
Competition For Hotel Acquisition Opportunities. We may be competing for
hotel acquisition opportunities with entities that have substantially greater
financial resources. These entities may generally be able to accept more risk
than we can prudently manage, including risks of a hotel operator's
creditworthiness or a target hotel's geographic location. Competition may
generally reduce the number of hotel acquisition opportunities that we believe
suitable.
Seasonality. The hotel industry is seasonal in nature; however, the periods
during which the Company's hotel properties experience higher revenues vary
from property to property and depend predominantly on the property's location.
The Company's revenues typically have been higher in the first and second
quarters than in the third and fourth quarters.
12
Real Estate Risks
General Risks. Our ability to generate revenues from our hotels may be
adversely affected by risks common to the ownership, leasing or operation of
real property, including:
. changes in national economic conditions;
. changes in local market conditions due to changes in general or local
economic conditions and neighborhood characteristics;
. changes in interest rates;
. changes in the availability, cost and terms of mortgage funds;
. the impact of present or future environmental legislation and compliance
with environmental laws;
. the ongoing need for capital improvements, particularly in older
structures;
. changes in real estate tax rates and other operating expenses;
. adverse changes in governmental rules and fiscal policies;
. adverse changes in zoning laws;
. civil unrest;
. acts of God, including earthquakes and other natural disasters (which
may result in uninsured losses); and
. other factors that are beyond our control.
Value and Illiquidity of Real Estate. Real estate is a relatively illiquid
asset. Therefore, our ability to respond to changes in economic and other
conditions will be limited. If we must sell a property, there can be no
assurance that we will be able to dispose of it in the time period we desire
or that the sales price of any property will equal or exceed the amount of our
initial investment in the property.
Property Taxes. Our properties are subject to real property taxes. The real
property taxes on our properties may increase or decrease as property tax
rates change and as the value of the properties are assessed or reassessed by
taxing authorities. Increases in property taxes may adversely affect our
financial condition and results of operations.
Consents of Ground Lessors Required For Sale of Certain Hotels. Some of our
properties are subject to ground leases with third party lessors. In addition,
we may acquire properties in the future that are subject to ground leases. If
we wish to sell a property that is subject to a ground lease or wish to assign
our leasehold interest in the ground lease, we may need the consent of third
party lessors. As a result, we may not be able to sell or assign our interest
in these properties without the consent of these lessors.
Environmental Matters. Our operating costs may be affected by the cost of
complying with existing and future environmental laws, ordinances and
regulations. Under various federal, state and local environmental laws,
ordinances and regulations, we may be liable for the costs of removing or
remediating hazardous or toxic substances on, under, or in real property
currently or previously owned or operated by us. These laws often impose
liability whether or not we knew of, or were responsible for, the presence of
hazardous or toxic substances. In addition, our ability to borrow by using
real property as collateral may be adversely affected by the presence of
hazardous or toxic substances, or the failure to remediate the property
properly. By arranging for the transportation, disposal or treatment of
hazardous or toxic substances, we may also be liable for the costs of removing
or remediating these substances at the disposal or treatment facility, even if
we never owned or operated the disposal or treatment facility. We could be
held liable under environmental laws used to impose liability for releases of
hazardous materials, including asbestos-containing materials, into the
environment. Third parties may seek recovery from us for personal injuries
associated with exposure to hazardous materials on real property owned or
operated by us. Environmental laws may also impose restrictions on the manner
in which we
13
may use or transfer a property or in which we operate our business on a
property. In connection with our hotels, we may be potentially liable for any
environmental costs. The cost of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws could materially adversely affect our results of operations and financial
condition. Qualified independent environmental engineers have conducted Phase
I environmental site assessments on substantially all of our properties. The
purpose of these environmental assessments was to identify potential sources
of contamination for which any of our properties may be responsible and to
assess the status of environmental regulatory compliance. The environmental
assessments have not revealed any environmental liability or compliance
concerns that we believe would have a material adverse effect on our business,
assets, results of operations or liquidity, nor are we aware of any
environmental liability or compliance concerns. Nevertheless, these
environmental assessments may not have revealed all environmental liabilities
or compliance concerns. Also, there may be material environmental liabilities
or compliance concerns of which we are currently unaware. We have not been
notified by any governmental authority, and we have no other knowledge of, any
material noncompliance, liability or claim relating to hazardous or toxic
substances or other environmental substances in connection with any of our
properties.
Uninsured and Underinsured Losses. Each of the leases with third parties
specifies comprehensive insurance that must be maintained on each of the
applicable leased hotels, including liability, fire and extended coverage. We
believe this specified coverage is of the type and amount customarily obtained
for hotels. Leases for subsequently acquired hotels will contain similar
provisions. However, there are certain types of losses, generally of a
catastrophic nature such as earthquakes and floods that may be uninsurable or
not economically insurable. Our Board of Directors and management will use
their discretion in determining amounts, coverage limits and deductibility
provisions of insurance, with a view to maintaining appropriate insurance
coverage on our investments at a reasonable cost and on suitable terms. This
may result in insurance coverage that, in the event of a substantial loss,
would not be sufficient to pay the full current market value or current
replacement cost of the lost investment. Inflation, changes in building codes
and ordinances, environmental considerations, and other factors also might
make it impractical to use insurance proceeds to replace the property after it
has been damaged or destroyed. Under these circumstances, the insurance
proceeds received might not be adequate to restore our economic position with
respect to the damaged property.
Acquisition and development risks. We currently intend to pursue
acquisitions of additional hotels and hotel operating companies and, under
appropriate circumstances, may pursue development opportunities. Acquisitions
entail risks that the acquired hotels or hotel operating companies will fail
to perform according to our expectations or that our cost estimates to market,
acquire and operate properties will prove inaccurate. In addition, hotel
development is subject to other risks, including risks of construction delays
or cost overruns that may increase project costs, new project commencement
risks such as receiving zoning, occupancy and other required governmental
approvals and permits, and incurring development costs for projects that are
not pursued to completion.
We depend on management contracts. We manage hotels for third party owners
pursuant to management contracts. These contracts may be acquired, terminated,
renegotiated or converted to franchise agreements in the ordinary course of
our business. However, the hotel property owner may terminate these management
contracts if we fail to meet certain performance standards, if the property is
sold to a third party, if the owner defaults on indebtedness encumbering the
property, upon a foreclosure of the property, closing of the property and
certain business combinations involving us in which our name or current
management team does not survive.
There can be no assurance that we will be able to replace terminated
management contracts, or that the terms of renegotiated or converted contracts
will be as favorable as the terms that existed before such renegotiations or
conversion. We also will be subject to the risk that a hotel property owner
will be unable to pay management fees to us. In addition, in certain
circumstances, we may be required to make loans to or capital investments in
hotel properties in connection with management contracts. If any of these
hotel properties suffers poor operating results or if we lose our management
contract, we may not recover our loan or capital investment.
14
Risks of Operating Hotels under Franchise or Brand Affiliations
We operate some of our hotels under franchise or brand affiliations. In
addition, we may acquire hotels in the future that are operated under
franchise or brand affiliations. Each franchised hotel must meet specified
operating standards and other terms and conditions to continue its franchise
license. The continued use of a brand generally depends upon the continuation
of the management agreement related to that hotel with the hotel's management
entity. Franchisors typically inspect licensed properties periodically to
confirm adherence to operating standards. Actions by us, our affiliates or the
hotel management entities could cause a breach of these standards or other
terms and conditions of a franchise license or the loss or cancellation of a
franchise license. It is possible that a franchisor could condition the
continuation of a franchise license on the completion of capital improvements
which our Board of Directors determines are too expensive or otherwise
unwarranted in light of general economic conditions or the operating results
or prospects of the affected hotel. In that event, our Board of Directors may
elect to allow the franchise license to lapse which could result in our
incurring significant termination costs. If a franchise or brand affiliation
is terminated for any reason, we may try to obtain a suitable replacement
franchise or brand affiliation, or to operate the hotel independent of a
franchise or brand affiliation. If we lose a franchise or brand affiliation,
we will lose the associated name recognition, marketing support and
centralized reservation systems provided by the franchisor or brand owner.
This loss could adversely affect the value of the hotel and our results of
operations.
Risks Relating to Gaming Operations
Regulation of Gaming Operations. We own and operate several casino gaming
facilities at some of our hotels, including El San Juan, El Conquistador, and
Condado Plaza in Puerto Rico. Each of these gaming operations is subject to
extensive licensing, permitting and regulatory requirements administered by
various governmental entities.
Typically, gaming regulatory authorities have broad powers related to the
gaming operations licenses. They may revoke, suspend, condition or limit our
gaming approvals and licenses, impose substantial fines and take other
actions, any of which could have a material adverse effect on our business and
the value of our hotel/casinos. Our directors, officers and some key employees
are subject to licensing or suitability determinations by various gaming
authorities. If any of those gaming authorities were to find someone
unsuitable, we would have to sever our relationship with that person.
Risks Associated with High-End Gaming. The high-end gaming business is more
volatile than other forms of gaming. Fluctuations in customers' high-end
gaming activities could have an adverse impact on our financial condition and
results of operations. In addition, a significant portion of our table gaming
is attributable to a relatively small number of international customers. If
the most significant of these customers reduces or quits his or her gaming, it
could have an adverse effect on our financial condition and results of
operations.
Risks Relating to Our Indebtedness
As of December 31, 2000, our outstanding debt was approximately $3.4
billion and our ratio of debt to total stockholders' equity was approximately
1.89 to 1. Our aggregate outstanding debt includes the following:
. Senior Credit Facility. We have a senior credit facility comprised of
(1) term loans in an aggregate principal amount of $1.3 billion which
expire on June 30, 2006, and (2) a revolving credit facility in an
aggregate principal amount of up to $500 million which expires on June
30, 2004. As of December 31, 2000, we had borrowed $85 million under the
revolving credit facility. The senior credit facility is guaranteed by
our domestic subsidiaries and secured by pledges of our equity interests
and the equity interests of our subsidiaries.
. Increasing Rate Loans. We have an increasing rate loan facility in the
aggregate principal amount of $617 million which expires on June 30,
2004. The lenders under the increasing rate loans receive the benefit of
the same guarantees and pledges of security provided under the senior
credit facility.
15
. Mortgage Debt. As of December 31, 2000, we had outstanding $1.3 billion
of mortgage debt. The mortgage debt has a weighted average interest rate
of 8.71% and a weighted average remaining life of 3.9 years. This
mortgage debt is secured by 62 of our properties.
We also may borrow additional amounts from the same or other lenders in the
future, may assume debt in connection with acquisitions, or may issue
corporate debt securities in public or private offerings. Our organizational
documents do not limit the amount of indebtedness we may incur. However, our
ability to borrow under the revolving credit facility is subject to our
compliance with a number of customary financial and other covenants, including
total leverage and interest coverage ratios. Our inability to borrow under the
revolving credit facility could materially adversely affect our ability to
fund operations or expand our business. Further, substantially all of our debt
bears interest at a variable rate. Economic conditions could result in higher
interest rates, which could increase debt service requirements on variable
rate debt. Our debt service requirements will require the use of a substantial
portion of our operating cash flow to pay interest on our debt instead of for
other corporate purposes.
There can be no assurance that we will be able to meet our debt service
obligations and, to the extent that we cannot, we may lose some or all of our
assets, including hotel properties. Adverse economic conditions could cause
the terms on which we borrow to worsen. Those circumstances, if we are in need
of funds to repay indebtedness, could force us to liquidate one or more
investments in properties at times that may not permit realization of the
maximum return on those investments.
The foregoing risks associated with our debt obligations may inhibit our
ability to raise capital in both the public and private markets and may have a
negative impact on our credit rating.
Executive Officers of the Registrant
Set forth below are the names, ages and certain other information
concerning the executive officers of Wyndham:
Fred J. Kleisner is the Chairman of the Board and Chief Executive Officer
of Wyndham. He has served as Chairman of the Board of Wyndham since October
13, 2000 and as Chief Executive Officer of Wyndham since March 27, 2000. From
August 1999 to October 2000, Mr. Kleisner served as Wyndham's President. From
August 1999 to March 2000, Mr. Kleisner also served as the Company's Chief
Operating Officer. From March 1998 to August 1999, he was President and Chief
Operating Officer of The Americas for Starwood Hotels & Resorts Worldwide,
Inc. His experience in the industry also includes senior positions with Westin
Hotels and Resorts, where he was President and Chief Operating Officer from
1995 to 1998; Interstate Hotels, where he was Executive Vice President and
Group President of Operations from 1990 to 1995; The Sheraton Corporation,
where he was Senior Vice President, Director of Operations, North America
Division-East from 1985 to 1990; and Hilton Hotels, where for 16 years he
served as General Manager of several landmark hotels, including The Waldorf
Astoria and The Waldorf Towers in New York, The Capital Hilton in Washington,
D.C., and The Hilton Hawaiian Village in Honolulu. Mr. Kleisner, who holds a
B.A. degree in Hotel Management from Michigan State University, completed
advanced studies at the University of Virginia and Catholic University of
America. Mr. Kleisner is 56 years old.
Ted Teng joined Wyndham in May 2000 as Chief Operating Officer. He assumed
the additional title of President in October of 2000. He oversees the
Company's core branded hotel products--Wyndham Hotels & Resorts, Wyndham
Luxury Resorts and Summerfield Suites by Wyndham HotelsTM--as well as the
Performance Hospitality Management Division, the Asset Management Division and
procurement. He previously served as President, Asia Pacific, for Starwood
Hotels & Resorts Worldwide, Inc. from April 1998 to May 2000, where he oversaw
the integration of that company's branded hotel operations in the region, and
the operating and financial performance of over 70 hotels and resorts in 17
countries. From July 1996 to April 1998, Mr. Teng served as the President of
Asia-Pacific for Westin Hotels. Prior to this time, he served for 14 years in
a variety of senior and strategic capacities with ITT Sheraton. Mr. Teng
graduated from the Cornell University School of Hotel Administration and holds
an M.B.A. from the University of Hawaii. Mr. Teng is 45 years old.
16
Rick Smith was named Executive Vice President and Chief Financial Officer
in April 2000 and is responsible for the Company's finance strategy and
operations. Mr. Smith joined Wyndham in September 1999 as Senior Vice
President and Treasurer, overseeing capital market activity, corporate banking
relationships, cash management, risk management and debt compliance. He came
to the Company from Starwood Hotels & Resorts Worldwide, Inc., where he served
as Vice President, Corporate Finance from 1996 to 1999. He previously worked
for Atlantic Richfield Company and Coopers & Lybrand LLP. Mr. Smith is a
certified public accountant. He graduated from the University of Tennessee
where he received a B.S. in accounting and business law. Mr. Smith is 38 years
old.
Michael A. Grossman has served as Executive Vice President of Wyndham and
divisional president of the management services division of the Company since
January 1998. From 1977 to 1993, Mr. Grossman owned and operated Grossman and
Associates, a hotel management company. Mr. Grossman joined Patriot American
Hospitality L.P. in August 1993 as a Senior Vice President heading up its
hotel division. Mr. Grossman was subsequently appointed Chief Operating
Officer of Gencom American Hospitality, which initially served as a third
party manager for Patriot and was subsequently acquired by Patriot. Mr.
Grossman holds a B.B.A. from the University of Texas and a J.D. from Southern
Methodist University. Mr. Grossman is 48 years old.
Dave Johnson became Executive Vice President, Sales and Marketing, in March
2000. He previously served as president of the Wyndham hotel division from
August 1999 to March 2000, and president of the Wyndham Garden division from
January 1998 to August 1999. Prior to these positions, Mr. Johnson was Senior
Vice President of Operations for the Eastern United States. His career began
with Wyndham Hotel and Resorts in 1987 as Director of Sales & Marketing. Dave
Johnson holds a B.A. and M.A. from Northeastern Illinois University. Mr.
Johnson is 39 years old.
ITEM 3. LEGAL PROCEEDINGS
On or about February 3, 1999, McNeill Investment Company, Inc. ("MIC")
commenced an action against Patriot in the United States District Court for
the Western District of Pennsylvania alleging a breach by Patriot of its
obligations under a Registration Rights and Shareholders Agreement dated
August 6, 1997, as amended July 15, 1998. Pursuant to a settlement agreement
between Patriot and MIC, dated May 17, 2000: (i) the action was dismissed with
prejudice; (ii) Patriot paid to MIC $3 million without any admission of
liability or acknowledgement of truth or validity of any claims asserted in
the action; (iii) Patriot and MIC exchanged mutual releases; and (iv)
depending upon the highest rolling 30-day average per share last sales price
for Patriot stock between May 9, 2000 and May 8, 2001, MIC may be required to
pay to Patriot up to $750,000.
On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the
Northern District of California against Patriot, Old Wyndham, their respective
operating partnerships and Paine Webber Group, Inc. This action, Johnson v.
Patriot American Hospitality, Inc., et al., No. C-99-2153, was commenced on
behalf of all former holders of Bay Meadows stock during a class period from
June 2, 1997 to the date of filing. The action asserts securities fraud claims
and alleges that the purported class members were wrongfully induced to tender
their shares as part of the Patriot/Bay Meadows merger based on a fraudulent
prospectus. The action further alleges that defendants continued to defraud
shareholders about their intentions to acquire numerous hotels and saddle
Patriot and Old Wyndham with massive debt during the class period. Three other
actions against the same defendants subsequently were filed in the Northern
District of California: (i) Ansell v. Patriot American Hospitality, Inc., et
al., No. C-99-2239 (filed May 14, 1999), (ii) Sola v. Paine Webber Group,
Inc., et al., No. C-99-2770 (filed June 11, 1999), and (iii) Gunderson v.
Patriot American Hospitality, Inc., et al., No. C 99-3040 (filed June 23,
1999). Another action with substantially identical allegations, Susnow v.
Patriot American Hospitality, Inc., et al., No. 3-99-CV1354-T (filed June
15,1999), also subsequently was filed in the Northern District of Texas. By
order of the Judicial Panel on Multidistrict Litigation, these actions along
with certain actions identified below have been consolidated in the Northern
District of California for consolidated pretrial purposes. On or about October
13, 2000, the defendants moved to dismiss the actions. The Court heard
arguments on motions to dismiss the actions on December 14, 2000 but has not
yet rendered a decision. Wyndham intends to defend the suits vigorously.
17
On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American
Hospitality, Inc., et al., No. 3-99-CV1416-D, was filed in the Northern
District of Texas against Patriot, Old Wyndham, James D. Carreker and Paul A.
Nussbaum. This action asserts securities fraud claims and alleges that, during
the period from January 5, 1998 to December 17, 1998, the defendants defrauded
shareholders by issuing false statements about Patriot and Old Wyndham. The
complaint was filed on behalf of all shareholders who purchased Patriot and
Old Wyndham stock during that period. Three other actions, Gallagher v.
Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June
23, 1999, David Lee Meisenburg, et al. v. Patriot American Hospitality, Inc.,
Wyndham International, Inc., James D. Carreker, and Paul A. Nussbaum Case No.
3-99-CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American
Hospitality, Inc., et al. No. 3-99-CV1866-D, filed on or about August 27,
1999, allege substantially the same allegations. By orders of the Judicial
Panel on Multidistrict Litigation, these actions have been consolidated with
certain other shareholder actions and transferred to the Northern District of
California for consolidated pre-trial purposes. On or about October 20, 2000,
the defendants moved to dismiss the actions. The Court heard arguments on
motions to dismiss the actions on December 14, 2000 but has not yet rendered a
decision. Wyndham intends to defend the suits vigorously.
Wyndham has received a draft complaint which threatens to assert claims on
behalf of Golden Door, LLC, Golden Springs, LLC, Golden Door, Inc., Deer
Springs Ranch, LLC, Deborah Szekely and Sarah Livia Brightwood. The potential
plaintiffs appear to be the same as the plaintiffs who filed the action
referenced above, Deborah Szekely v. Patriot American Hospitality, Inc.,
etal., No. 3-99-CV1866-D, however the allegations of the complaints are not
the same. The draft complaint purports to assert claims against Patriot,
Wyndham and their respective operating partnerships for securities fraud under
California securities code, common law fraud, breach of fiduciary duty and
deceit in connection with the purchase by Patriot of the Golden Door Spa in
February 1998. The draft complaint seeks compensatory damages for the alleged
lost value of the potential plaintiff's stock and other unspecified damages.
Although the Company has received a draft complaint, to date no complaint has
been filed.
Patriot and PAH Stanley Ranch ("PAH") are engaged in a dispute with
Carneros Valley Investors involving a contract which calls for a purchase
price of $14 million with an additional $5 million to be paid if PAH gets
approval for a development in the Napa Valley. PAH did not get approval for
this development. In September 1999, Carneros Valley Investors filed a
complaint in the Superior Court of California, San Francisco, which alleges
that Patriot owes Carneros Valley Investors $5 million and alleges that
Patriot acted negligently, fraudulently and in bad faith in attempting to get
the approval for the development. The complaint has been amended to allege
fraud, purportedly entitling the plaintiff to rescind the sale. Patriot has
answered the complaint, but to date, no discovery had been taken. The dispute
was settled with the assistance of, and in connection with the sale of the
subject property to, a third party. The sale was consummated, the dispute was
settled and mutual releases were exchanged on November 30, 2000, and the
above-referenced lawsuit was formally dismissed prior to December 31, 2000.
On or about October 26, 2000, a demand for arbitration was filed on behalf
of John W. Cullen, IV, William F. Burruss, Heritage Hotel Management &
Investment Ltd. And GH-Resco, L.L.C. naming Wyndham International, Inc. f/k/a
Patriot American Hospitality, Inc. as respondent. The Demand for Arbitration
claims that the claimants and Wyndham are parties to a Contribution Agreement
dated February 28, 1997 and that Wyndham is in breach of that agreement.
Claimants assert that Wyndham breached its agreement to pay respondents
additional consideration under the Contribution Agreement by, among other
things, allegedly denying claimants compensation due to them in connection
with various transactions initiated by claimants and provided to Wyndham,
which allegedly provided Wyndham with growth and added revenue. In addition,
claimants assert that Wyndham failed to provide claimants with various other
amounts due under the Contribution Agreement, failed to indemnify claimants
for certain expenses and intentionally and negligently mismanaged Wyndham's
business. Claimants do not specify the amount of damages sought. Wyndham has
moved to stay the arbitration. To date, Wyndham has not responded to the
Demand for Arbitration. Wyndham intends to defend the claims vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
18
PART II
ITEM 5. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
The following table sets forth the quarterly high and low sale prices per
share as reported on the New York Stock Exchange ("NYSE") of Wyndham class A
common stock (symbol "WYN") from June 30, 1999. Prior to June 30, 1999, the
paired shares were reported on the NYSE under the symbol "PAH".
Per Share
High Low Dividend
------- ------- ---------
1999:
First Quarter...................................... $ 7.00 $4.4375 $ --
Second Quarter..................................... $ 5.50 $ 4.00 $ -- (1)
Third Quarter...................................... $ 4.875 $ 2.625 $ --
Fourth Quarter..................................... $ 3.875 $2.4375 $ --
2000:
First Quarter...................................... $2.9375 $ 1.75 $ --
Second Quarter..................................... $ 2.625 $1.6875 $ --
Third Quarter...................................... $ 2.50 $1.6875 $ --
Fourth Quarter..................................... $2.0625 $1.3125 $ --
- --------
(1) On June 18, 1999 there was a spin-off of IHC. Each record holder as of
June 7, 1999 received one share of newly issued IHC stock for every 30
shares held of Patriot common stock, Patriot series A preferred stock, Old
Wyndham series A and B preferred stock, Patriot American Hospitality
Partnership L.P. common and preferred limited partnership units, and
Wyndham International L.P. class A and class C preferred limited
partnership units.
Holders
As of March 19, 2001, there were approximately 1,500 record holders of the
Company's shares of class A common stock, including shares held in "street
name" by nominees who are record holders, and approximately 19,000
shareholders.
Dividends
The Company does not anticipate paying a dividend to its common
shareholders and is prohibited under the terms of its credit facility and term
loans from paying dividends on its common stock. However, for the six year
period beginning September 30, 1999, dividends on Wyndham's series A and
series B convertible preferred stock are structured to ensure an aggregate
fixed cash dividend payment of $29.25 million per year, so long as there is no
redemption or conversion of the preferred stock; therefore, for that period,
dividends are payable partly in cash and partly in additional shares of
preferred stock. For the following four years, dividends are payable in cash
or additional shares of series A or series B convertible preferred stock, as
the case may be, as determined by the Board of Directors. After year ten,
dividends are payable solely in cash.
Recent Sales of Unregistered Securities
None
19
ITEM 6. SELECTED FINANCIAL INFORMATION
The following tables set forth selected consolidated historical financial
information for the Company. The following financial information should be
read in conjunction with, and is qualified in its entirety by, the historical
financial statements and notes thereto of the Company included elsewhere in
this Annual Report on Form 10-K. The selected financial and other data for the
Company for 2000 and 1999 has been derived from the consolidated financial
statements of the Company audited by PricewaterhouseCoopers LLP, independent
accountants.
WYNDHAM INTERNATIONAL
Selected Condensed Consolidated Historical Financial Data
Year Ended December 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ----------- ----------- ----------- ---------
(in thousands, except per share data)
Operating Data:
Total revenue........... $2,498,595 $ 2,495,335 $ 2,056,341 $ 335,035 $ 76,493
(Loss) income before
income tax provision,
minority interests and
extraordinary item..... (523,014) (491,335) (112,508) 4,142 44,813
(Loss) income before
extraordinary item..... (324,671) (1,062,131) (126,406) 362 37,991
Net (loss) income....... $ (324,671) $(1,071,969) $ (158,223) $ (2,172) $ 37,991
Per Share Data (1):
Basic earnings per
share:
(Loss) income before
extraordinary item.... $ (2.56) $ (7.02) $ (1.13) $ 0.01 $ 0.84
Extraordinary item,
net of minority
interest.............. -- (0.06) (0.23) (0.04) --
---------- ----------- ----------- ----------- ---------
Net (loss) income per
share................. $ (2.56) $ (7.08) $ (1.36) $ (0.03) $ 0.84
========== =========== =========== =========== =========
Diluted (loss) earnings
per share (2), (3).... $ (2.56) $ (7.20) $ (2.57) $ (0.03) $ 0.83
========== =========== =========== =========== =========
Dividends per share
(4)................... $ -- $ -- $ 1.0362 $ 1.0878 $ 0.9154
========== =========== =========== =========== =========
Cash Flow Data:
Cash provided by
operating activities... $ 246,838 $ 202,302 $ 244,493 $ 108,110 $ 61,196
Cash provided by (used
in) investing
activities............. 37,272 (356,564) (2,107,223) (1,202,124) (419,685)
Cash (used in) provided
by financing
activities............. (383,397) 181,889 1,940,635 1,134,846 360,324
As of December 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ----------- ----------- ----------- ---------
(in thousands)
Balance Sheet Data:
Investment in real
estate and
assets held for sale at
cost, net.............. $4,711,495 $ 5,413,178 $ 5,585,616 $ 2,044,649 $ 641,825
Total assets............ 6,066,899 7,003,490 7,415,670 2,507,853 760,931
Total debt.............. 3,398,950 3,643,556 3,857,521 1,112,709 214,339
Minority interest in the
Operating
Partnerships........... 21,416 22,435 253,970 220,177 68,562
Minority interest in
consolidated
subsidiaries........... 164,906 166,483 229,537 49,694 11,711
Shareholders' equity.... 1,794,187 2,137,662 2,603,037 989,892 437,039
Year Ended December 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ----------- ----------- ----------- ---------
(in thousands)
Other Data:
Weighted average number
of
shares outstanding..... 167,308 161,255 137,764 64,260 45,997
Ratio of (losses)
earnings to fixed
charges................ (0.39) (0.36) 0.59 1.08 7.00
Deficiency of earnings
to fixed charges....... 523,014 491,335 112,508 -- --
20
Notes to Selected Financial Information
(1) On January 30, 1997, the Patriot Board of Directors declared a 2-for-1
stock split effected in the form of a stock dividend on March 18, 1997 to
stockholders of record on March 7, 1997. On July 1, 1997, by operation of
the Cal Jockey Merger, each issued and outstanding share of Patriot common
stock was converted into 0.51895 paired shares. In addition, on July 10,
1997, the respective Boards of Directors of Patriot and Old Wyndham
declared a 1.927-for-1 stock split on their shares of common stock
effected in the form of a stock dividend distributed on July 25, 1997 to
stockholders of record on July 15, 1997. All references herein to the
number of shares, per share amounts and market prices of the paired shares
and options to purchase paired shares have been restated to reflect the
impact of the Cal Jockey Merger and the above-described stock splits, as
applicable.
In addition, in February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" ("Statement 128"). Statement 128 specifies the computation,
presentation and disclosure requirements for basic earnings per share and
diluted earnings per share. The earnings per share amounts presented herein
have been restated to reflect the impact of Statement 128.
On December 22, 1998, Patriot declared a stock dividend of $0.44 per share
of common stock for the fourth quarter of 1998. The dividend was paid on
January 25, 1999 to shareholders of record on December 30, 1998. Each
shareholder had the option to receive the dividend in the form of
additional paired shares or shares of Series B Cumulative Perpetual
Preferred Stock, par value $0.01 per share, of Patriot. Earnings per common
share, weighted average shares outstanding and all stock option activity
have been restated to reflect the stock dividend.
On June 30, 1999, a subsidiary of Old Wyndham was merged with and into
Patriot and Patriot became a wholly-owned subsidiary of Wyndham. The
pairing arrangement was terminated and each outstanding paired share was
converted into a share of Wyndham class A common stock.
(2) For 2000, the dilutive effect of unvested stock grants of 645,000, the
option to purchase 104,000 shares of common stock and 129,073,000 shares
of preferred stock were not included in the computation of diluted
earnings per share for the year ended December 31, 2000 because they are
anti-dilutive. For 1999, the dilutive effect of unvested stock grants of
803,000, the option to purchase 59,000 shares of common stock and
64,367,000 shares of preferred stock were not included in the computation
of diluted earnings per share for the year ended December 31, 1999 because
they are anti-dilutive. For 1998, the dilutive effect of unvested stock
grants of 880,000, the option to purchase 753,000 shares of common stock
and shares issued in connection with forward equity contracts of 2,507,000
and 6,613,000 of preferred shares were not included in the computation of
diluted earnings per share for the year ended December 31, 1998 because
they are anti-dilutive.
(3) For 2000, options to purchase 12,157,000 shares of common stock at prices
ranging from $2.0625 to $30.40 were outstanding but not included in the
computation because the options' exercise prices were greater than the
average market price of the common shares and, therefore, the effect would
be anti-dilutive. For 1999, options to purchase 9,702,000 shares of common
stock at prices ranging from $4.75 to $30.40 were outstanding but not
included in the computation because the options' exercise prices were
greater than the average market price of the common shares and therefore
the effect would be anti dilutive. For 1998, options to purchase 4,650,000
shares of common stock at prices ranging from $19.45 to $33.58 were
outstanding but not included in the computation because the options'
exercise price was greater than the average market price of the common
shares and therefore the effect would be anti-dilutive.
(4) Dividends for the year ended 1998 include a $0.44 stock dividend.
Dividends paid for the year ended December 31, 1997 include a special
dividend of $0.06 per share paid by Patriot's predecessor on June 30,
1997. To maintain its qualification as a REIT prior to consummation of the
Cal Jockey Merger, Patriot was required to distribute to its stockholders
any undistributed "real estate investment trust taxable income" for its
short taxable year ending with the consummation of the Cal Jockey Merger.
Old Wyndham did not pay any dividends for the six months ended December
31, 1997.
21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements in this Form 10-K constitute "forward-looking
statements" as that term is defined under (S)21E of the Securities Exchange
Act of 1934, as amended, and the Private Securities Litigation Reform Act of
1995. The words "believe", "expect", "anticipate", "intend", "estimate", and
other expressions which are predictions of or indicate future events and
trends and which do not relate to historical matters identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements. Although forward-looking statements reflect
management's good faith beliefs, reliance should not be placed on forward-
looking statements because they involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or
achievement of the Company to differ materially from anticipated future
results, performance or achievements expressed or implied by such forward-
looking statements. The Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise. Certain factors that might have an adverse effect
include, but are not limited to, risks associated with the availability of
equity or debt financing at terms and conditions favorable to the Company, the
Company's ability to effect sales of assets on favorable terms and conditions,
risks associated with the hotel industry and real estate markets in general;
risks associated with debt financing and the risks discussed above in Part I--
Business and Properties--Certain Risk Factors.
Background
Organization
Patriot was formed April 17, 1995 as a self-administered REIT for the
purpose of acquiring equity interests in hotel properties. On October 2, 1995,
Patriot completed an initial public offering of shares of common stock and
commenced operations. Between October 2, 1995 and July 1, 1997, Patriot
acquired interests in 56 hotel properties. These hotels were leased to various
third party lessees.
On July 1, 1997, Patriot merged with and into Cal Jockey, with Cal Jockey
being the surviving legal entity, hereinafter referred to as the "Cal Jockey
merger". Cal Jockey's shares of common stock were paired and traded together
with the shares of common stock of Bay Meadows as a single unit pursuant to a
stock pairing agreement. In connection with the Cal Jockey merger, Cal Jockey
changed its name to "Patriot American Hospitality, Inc." and Bay Meadows
changed its name to "Patriot American Hospitality Operating Company".
Subsequent to December 31, 1997, as a result of the merger of Wyndham Hotel
Corporation with and into Patriot as discussed below (the "Wyndham merger"),
Patriot American Hospitality Operating Company changed its name to "Wyndham
International, Inc." and is referred to herein, collectively with its
subsidiaries, as "Old Wyndham".
Subsequent to the Cal Jockey merger through December 31, 1998, the Company
went through a series of mergers and acquisitions including the Wyndham
merger, the merger with WHG Casinos & Resorts Inc. ("WHG") and the acquisition
of partners' interests, the merger with Arcadian International ("Arcadian"),
the Summerfield acquisition, the merger with CHCI International Inc. ("CHCI")
and the merger with Interstate.
Effective June 30, 1999, a subsidiary of Old Wyndham merged with and into
Patriot with Patriot being the surviving entity and becoming a subsidiary of
Old Wyndham. In connection with this restructuring, the pairing agreement
between Patriot and Old Wyndham was terminated, Patriot's status as a REIT
terminated effective January 1, 1999, and Patriot became a taxable corporation
as of that date. This merger converted each previously outstanding paired
share into one share of Wyndham class A common stock. Old Wyndham and its
subsidiaries, which now include Patriot, is hereafter referred to as Wyndham
or the Company.
The restructuring was reflected as a reorganization of two companies under
common control and was accounted for in a manner similar to that used in
pooling of interest accounting. As such, there was no revaluation of the
assets and liabilities of Old Wyndham or Patriot. The financial statements
prior to the reorganization are presented on a combined basis and include the
combined accounts of Patriot and its subsidiaries with Old Wyndham and its
subsidiaries.
22
Restructuring
During 1999, the Company recorded a restructuring charge of $285.3 million
as a result of the termination of the paired share structure and management's
decision to streamline its organization and focus on its core brands and
strategic assets. The restructuring activities (shown below in tabular format)
primarily relate to: (1) the termination of the paired share structure,
resulting in the write-down of the unamortized intangible asset, and
elimination of job responsibilities, resulting in the costs to sever employees
in New York and Dallas, (2) the exiting of the European market for its non-
branded assets, resulting in the write-down of assets held for sale to
estimated fair value, the write-down of goodwill, the reduction in the
European workforce, lease abandonments, and other costs necessary to reduce
the infrastructure in Arcadian International, (3) the exiting of the limited
service hotel sector, resulting in a write-down of those assets held for sale
and the write-off of management contracts, (4) the closure of the Phoenix
division office, resulting in the costs to sever employees and lease
abandonments, (5) the closure of the Wichita division office, resulting in the
costs to sever employees, and (6) the elimination of certain brands, resulting
in the write-down of those tradename intangible assets. During 2000,
continuing cash payments were made against the accrued liability as shown in
the table below. The remaining accruals will be relieved throughout fiscal
2001, as leases expire and severance payments are made.
Accrued Accrued
Balance Balance
Restructuring at at
Description Cash/Non-Cash Charge 12/31/99 Activity 12/31/00
----------- ------------- ------------- -------- -------- --------
(in thousands)
Organizational
Restructuring
Write-down of intangible
assets................. Non-cash $ (83,094) -- -- --
Severance packages...... Cash/non-cash (4,675) (500) 250 (250)
Downsizing European
division
Write-down of assets
held for sale.......... Non-cash (69,491) -- -- --
Write-down of intangible
assets................. Non-cash (28,394) -- -- --
Severance packages...... Cash (3,578) (2,458) 2,396 (62)
Lease cancellations and
commitments............ Cash (1,907) (1,907) 1,818 (89)
Other exit costs........ Cash (4,062) (2,408) 2,287 (121)
Exiting limited service
market sector
Write-down of assets
held for sale.......... Non-cash (63,328) -- -- --
Write-down of intangible
assets................. Non-cash (8,834) -- -- --
Closing the Phoenix
division office
Severance packages...... Cash (2,006) (312) 312 --
Lease cancellations and
other commitments...... Cash (492) (321) 321 --
Closing of the Wichita
division office
Severance packages...... Cash (1,872) (1,872) 1,872 --
Elimination of certain
hotel brands
Write-down of intangible
assets................. Non-cash (12,821) -- -- --
Other
Other Exit Costs........ Cash (713) -- -- --
Effect of foreign
currency translation... -- 8 10 18
--------- ------- ------ -----
Total................. $(285,267) $(9,770) $9,266 $(504)
========= ======= ====== =====
During 2000, the Company continued with its plan to dispose of non-
strategic and non-proprietary branded hotels. During 2000, the Company sold
26 hotel properties, including the Clubhouse Inn brand, and received net cash
proceeds of approximately $175.0 million, after the repayment of mortgage debt
of $70.4 million. The Company also sold investments in three hotels, two
parcels of land, retail space and a garage and received net cash proceeds of
$61.4 million after the repayment of debt of $7.8 million and a note
receivable of $4.3 million.
The Company also sold the Sierra Suites hotel brand, one owned and three
leased properties, 17 franchise and management contracts for Sierra Suites and
nine management contracts for Summerfield Suites for
23
approximately $53 million. The Company received net cash proceeds of $23.0
million and was relieved of $29.8 million of future obligations. In addition
Wyndham agreed to the redemption of its aggregate 55% non-voting economic
interest in IH LLC. Approximately 9% of the Wyndham Interest was redeemed by
IH LLC and substantially all of the remainder was converted into a preferred
membership interest in IH LLC.
As of December 31, 2000, the Company had 177 owned and leased hotels with
45,700 guestrooms as compared to 204 owned and leased hotels with over
49,600 guestrooms at December 31, 1999. This reduction primarily results from
the sale of 27 owned hotels and three leased hotels offset by the acquisition
of one owned hotel and two leased properties. As of December 31, 2000, the
Company managed 35 and franchised 30 hotels as compared to 88 managed and
11 franchised hotels at December 31, 1999.
Results of Operations: Year Ended December 31, 2000 Compared with Year Ended
December 31, 1999
Hotel revenues were $2,421,603,000 and $2,409,046,000 for the years ended
December 31, 2000 and 1999, respectively. Although hotel revenues remained
relatively stable between periods, increases during the year ended
December 31, 2000 from acquisitions, assets placed in service, and increases
in RevPAR throughout the Company's portfolio were offset by the asset sales
during the year and the spin-off of Interstate Hotel Corporation (the
"Interstate spin-off") on June 18, 1999.
Hotel expenses were $1,747,601,000 and $1,772,724,000 for the years ended
December 31, 2000 and 1999, respectively. As with revenues, expenses remained
relatively stable between periods. The decrease in expenses resulting from
assets sales was partially offset by increases in expenses resulting from
acquisitions and new assets placed in service during the previous year.
Management fee and service fee income was $46,028,000 and $69,278,000 for
the years ended December 31, 2000 and 1999, respectively. The decrease is
primarily the result of the loss of management contracts associated with the
Interstate spin-off, the sale of the third party management contracts in the
Sierra transaction in the first quarter of 2000, and the loss of a portfolio
of 17 management contracts during 2000. This resulted in a decrease of
management and service fee revenue of approximately $24,504,000 between years.
Interest and other income was $30,964,000 and $11,256,000 for the years
ended December 31, 2000 and 1999, respectively. This increase was primarily
due to the recognition of a termination fee of $14,746,000 related to the
termination of 17 management contracts. In addition, the increase can also be
attributed to increases in interest income from funds held in escrow. In 1999,
certain of the funds were escrowed for only six months as the debt was not
obtained until June of 1999.
General and administrative expenses were $97,766,000 and $178,039,000 for
the years ended December 31, 2000 and 1999, respectively. The decrease was
primarily a result of expenditures incurred in 1999, in part associated with
the reorganization, but not incurred in 2000. Those costs were as follows:
. $13,047,000 of strategic reorganization costs, including fees to settle
forward equity contracts and vesting of employees' stock awards;
. $3,917,000 associated with the write off of bond offering costs;
. $5,435,000 of costs associated with the Interstate spin-off;
. $13,530,000 of abandoned transaction costs;
. $21,131,000 of costs associated with conversion costs and becoming year
2000 compliant; and
. $4,695,000 associated with the write-off of receivables from a managed
hotel in which Wyndham terminated the management contract
24
In addition, in 1999 the Company incurred approximately $29,829,000 of
general and administrative expenses for divisional offices located in
Pittsburgh, Wichita, and Phoenix. As those offices were closed during 1999 and
the first quarter of 2000, minimal costs were incurred during 2000. However,
in 2000, the Company incurred approximately $12,085,000 in severance related
expenses for certain executive officers who resigned their positions in 2000.
In addition, during 2000, the Company incurred approximately $7,439,000 in
costs associated with the settlement of certain lawsuits and legal fees
related to those lawsuits.
As discussed in Note 4 to the financial statements, the Company recorded
$285,267,000 of costs associated with the restructuring. These costs primarily
relate to the non-cash write down of assets of approximately $265,962,000 as
the Company exited from certain business sectors, and focused on its core
brands and products. In management's attempt to streamline its organization,
it closed offices in New York, London, Phoenix, and Wichita. Severance, lease
cancellation costs, legal costs and other costs to exit resulted in the
Company recording costs of $19,305,000.
Interest expense was $371,855,000 and $353,227,000 for the years ended
December 31, 2000 and 1999, respectively. The increase in interest expense is
primarily related to higher interest rate spreads on the current credit
facility as compared to the old credit facility and higher interest rates
during 2000 as compared to 1999. The Company's derivative financial
instruments in part negated the impact of these higher rates. However, the
Company also had increases in the amortization of loan costs associated with
the amortization of the premiums for $1.5 billion in new derivatives acquired
in March 2000.
During the year ended December 31, 2000, the Company recognized losses on
the sale of assets of $12,987,000. During the year ended December 31, 1999,
the Company recognized losses of $10,702,000 on the sale of assets.
At December 31, 2000, the Company had classified 50 assets as held for sale
based on management having the authority and intent of entering into
commitments for sale transactions expected to close in the next twelve months.
Based on the estimated net sales proceeds, the Company recorded a reserve for
impairment for loss on real estate assets held for sale of $361,571,000. In
addition, the Company recorded a write-down for impairment of $39,654,000 on
assets held for use, $45,174,000 on management contract costs, and a reserve
for impairment of $40,259,000 on investments in unconsolidated subsidiaries
which were held for sale.
Depreciation and amortization expense was $304,785,000 and $302,890,000 for
the years ended December 31, 2000 and 1999, respectively. The increase in
depreciation was primarily due to the increase in capital renovations during
the year, as well as the placement in service of additional assets that were
previously under development, offset in part by the asset sales that occurred
during the twelve-month period, and the placement of certain assets held for
sale.
The Company's share of equity in earnings (losses) from unconsolidated
subsidiaries was $2,491,000 and $(7,746,000) for the years ended December 31,
2000 and 1999, respectively. The increase is due primarily from the allocation
of income from one of its investments which was in development in 1999 but in
operation in 2000. In addition, 1999 was impacted by loss allocations from one
subsidiary which resulted in the write-down of certain leaseholds.
The benefit (provision) for income taxes was $205,912,000 and
($571,421,000) for the years ended December 31, 2000 and 1999, respectively.
The change in the provision is due to a 1999 charge of $675,000,000 due to
Patriot's conversion from a REIT to a C corporation, the restructuring of
certain special purpose controlled subsidiaries, which previously could not be
consolidated with Wyndham's taxable income or loss, and charges taken in 2000
for the impairment of certain assets held for sale.
Minority interest's share of loss associated with the operating
partnerships was $6,642,000 for the year ended December 31, 1999. There was no
minority interest's share of the income (loss) associated with the operating
partnerships for the year ended December 31, 2000 due to amendments in the
partnership agreements at June 30, 1999 which amended the allocation of profit
and loss to the limited partners.
25
In connection with the debt financing in 1999, the Company wrote off the
remaining balance of unamortized deferred financing costs associated with the
old credit facility resulting in an extraordinary loss of $9,838,000, net of
minority interest and income taxes.
As a result, the net loss was $324.7 million and $1.07 billion for the
years ended December 31, 2000 and 1999, respectively.
Results of Operations: Year Ended December 31, 1999 Compared with Year Ended
December 31, 1998
For the year ended December 31, 1999, hotel revenues were $2,409,046,000 as
compared to $1,842,682,000 during 1998. Of the approximate $566,364,000
increase, approximately $337,377,000 was attributable to the 1998 acquisitions
including Interstate, Summerfield, Arcadian and WHG, net of leases which were
included in the Interstate spin-off. In addition, the purchase of the
remaining third party leasehold interests, primarily CHC Lease Partners,
NorthCoast Hotels L.L.C. ("NorthCoast"), and the DTR North Canton Inc (the
"Doubletree Lessee"), in June 1998, December 1998 and January 1999 led to
increases in hotel revenue of $124,712,000 as the operations of the hotels
during 1999 were consolidated in the statement of operations, whereas in 1998,
the Company was receiving a participating rent payment. Additionally,
$25,072,000 can be attributed to the consolidation of two hotels that were
previously accounted as an equity investment.
Hotel expenses increased from $1,360,213,000 in 1998 to $1,772,724,000 in
1999. As with revenues, the vast majority of this increase is a result of
acquisitions and the acquisition of third party leaseholds.
The contributing factor in the decline in participating revenue from
$58,440,000 during the year ended December 31, 1998 to $1,194,000 for the same
period in 1999 was the acquisition of the third party leaseholds discussed
above.
Management fee and service fee income was $69,278,000 in 1999 compared to
$89,067,000 in 1998. The decrease is primarily the result of a decrease in
incentive fee income associated with 17 management contracts which were
renewed in 1998 with no provision to earn incentives fees, and management
contracts lost during the period. This was partially offset by the acquisition
of third party management contracts acquired in June 1998 and the Interstate
management contracts also acquired in June 1998, but were included in the
Interstate spin-off on June 18, 1999.
Interest and other income was $11,256,000 in 1999 as compared to
$14,893,000 in 1998. The decrease resulted from a management termination fee
of $2,950,000 in 1998.
Total revenues from the racecourse facility operations (including interest
and other income) were $4,561,000 for 1999 compared to $51,259,000 in 1998.
Total costs and expenses associated with the racecourse operations (included
marketing costs, and general and administrative expenses) were $3,867,000 for
1999 compared to $43,198,000 for 1998. These decreases are due to the sale of
Bay Meadows racecourse effective February 1999.
General and administrative expenses were $178,039,000 for 1999 compared to
$109,325,000 for 1998. In part, the increase is due to the overhead required
due to the growth in the portfolio of owned, managed and leased hotels during
1998. However, the significant portion of the increase was due to the
following factors:
As a result of the $1 billion equity investment, the Company incurred
$13,047,000 of strategic reorganization costs, including fees to settle the
forward equity contracts, and the acceleration of vesting of certain
employees' stock awards. The reorganization resulted in work associated with a
high yield bond offering and a bond offering in Puerto Rico to cease,
resulting in a write-off of costs associated with the offerings totaling
$3,917,000 and $13,530,000 in other abandoned transaction costs.
The Company also incurred $5,435,000 of costs associated with the spin-off
of Interstate's third-party management business, $21,131,000 with costs
associated with becoming Year 2000 compliant and conversion costs, and
$4,695,000 in bad debt expense for the write-off of receivables from a hotel
that Wyndham no longer manages.
26
Interest expense for 1999 was $353,227,000 as compared to $260,103,000 for
1998. The increase is due in part to the closing of $1.45 billion in debt in
June of 1998 for the merger with Interstate. Secondly, as a result of
extending certain maturities of the credit facilities, Wyndham paid
$11,700,000 in fees, which were amortized and included in interest expense.
Finally, Wyndham assumed and incurred additional debt in order to finance the
Summerfield, Interstate and Arcadian transactions during 1998.
Cost of acquiring license agreements and leaseholds was $1,296,000 for 1999
as compared to $64,407,000 for 1998. This decrease is primarily due to the
prior year amount including the purchase of 17 leasehold interest acquired in
connection with the CHCI merger.
The Company recognized a loss on the sale of assets of $10,702,000 based on
the excess book value over the cash proceeds received in the sale as compared
to $9,453,000 in the prior year.
For the year ended December 31, 1999, the Company recognized approximately
$70,912,000 of impairment losses related to assets held for sale. In 1998, the
Company recognized approximately $51,081,000 of impairment losses. In
accordance with SFAS No. 121, when management identifies an asset held for
sale a fair value is estimated. If the fair value of the asset is less than
the carrying value amount, a reserve for impairment is established.
As discussed in Note 4 to the financial statements, the Company recorded
$285,267,000 of costs associated with the restructuring. These costs primarily
relate to the non-cash write down of assets of approximately $265,962,000 as
the Company exited from certain business sectors, and focused on its core
brands and products. In management's attempt to streamline its organization,
it closed offices in New York, London, Phoenix, and Wichita. Severance, lease
cancellation costs, legal costs and other costs to close these offices
resulted in the Company recording costs of $19,305,000.
Depreciation and amortization expense was $302,890,000 for the year ended
December 31, 1999 compared to $231,233,000 for the year ended December 31,
1998. A significant number of assets were acquired in 1998 as a result of the
mergers and acquisition as discussed, and therefore twelve months of
depreciation is not reflected in 1998 as compared to 1999. Of the $71,657,000
increase, $34,817,000 of depreciation was attributable to the significant
transactions which occurred during 1998, which included Arcadian in April
1998, and Summerfield, CHCI and Interstate in June 1998. The remaining
increase is due to depreciation on renovations at the hotels which were under
construction in 1998, but in service in 1999 as well as full year amortization
of goodwill and