UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K/A
Amendment No. 1
(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2006
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number 1-14236
FelCor Lodging Trust Incorporated
(Exact name of registrant as specified in its charter)
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Maryland
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75-2541756
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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545 E. John Carpenter Frwy., Suite 1300, Irving, Texas
(Address of principal executive offices)
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75062
(Zip Code)
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(972) 444-4900
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange
on which registered
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Common Stock
$1.95 Series A Cumulative Convertible Preferred Stock
Depositary Shares representing 8% Series C Cumulative
Redeemable Preferred Stock
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New York Stock Exchange, Inc.
New York Stock Exchange, Inc.
New York Stock Exchange, Inc.
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Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
þ
Yes
o
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act.
o
Yes
þ
No
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.
þ
Yes
o
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 registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act.)
o
Yes
þ
No
The aggregate market value of the common stock of the registrant held by non-affiliates of the
registrant, computed by reference to the price at which registrants common stock was last sold at
February 22, 2007, was approximately $1.5 billion.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Check one:
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
As of February 22, 2007, the registrant had issued and outstanding 62,040,221 shares of common
stock.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrants definitive Proxy Statement pertaining to the 2007 Annual Meeting of
Stockholders (the Proxy Statement), filed or to be filed not later than 120 days after the end of
the fiscal year pursuant to Regulation 14A, is incorporated herein by reference into Part III.
Explanatory Note
FelCor Lodging Trust Incorporated is filing this Amendment No. 1 to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2006, originally filed with the Securities and
Exchange Commission on March 1, 2007, for the purpose of including the conformed signatures of
PricewaterhouseCoopers LLP, which were inadvertently omitted in the originally filed 10-K, on the
Report of Independent Registered Public Accounting Firm, in Part II, Item 8., and on the Consent of
PricewaterhouseCoopers LLP, filed as exhibit 23 in Part IV, Item 15.
Other than as set forth above, we have not modified in any way the information in our
Form 10-K for the fiscal year ended December 31, 2006.
2
FELCOR LODGING TRUST INCORPORATED
INDEX
3
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of FelCor Lodging Trust Incorporated:
We have completed integrated audits of FelCor Lodging Trust Incorporateds consolidated financial
statements and of its internal control over financial reporting as of December 31, 2006 in
accordance with the standards of the Public Company Accounting Oversight Board (United States).
Our opinions, based on our audits, are presented below.
Consolidated financial statements and financial statement schedule
In our opinion, the consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of FelCor Lodging Trust Incorporated and
its subsidiaries, or the Company, at December 31, 2006 and 2005, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2006
in conformity with accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit of financial statements includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Internal control over financial reporting
Also, in our opinion, managements assessment, included in Managements Report on Internal
Control Over Financial Reporting appearing in Item 9A, that the Company maintained effective
internal control over financial reporting as of December 31, 2006 based on criteria established
in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO), is fairly stated, in all material respects, based on those
criteria. Furthermore, in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2006, based on criteria
established in Internal Control Integrated Framework issued by the COSO. The Companys
management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on managements assessment and on the effectiveness of the
Companys internal control over financial reporting based on our audit. We conducted our audit of
internal control over financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. An audit of internal control over financial
reporting includes obtaining an understanding of internal control over financial reporting,
evaluating managements assessment, testing and evaluating the design and operating effectiveness
of internal control, and performing such other procedures as we consider necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinions.
4
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
March 1, 2007
5
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
(in thousands)
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2006
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2005
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ASSETS
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Investment in hotels, net of accumulated depreciation of $612,286 in 2006
and $1,019,123 in 2005
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$
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2,044,285
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$
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2,584,379
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Investment in unconsolidated entities
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111,716
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109,262
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Hotels held for sale
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133,801
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Cash and cash equivalents
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124,179
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94,564
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Restricted cash
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22,753
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18,298
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Accounts receivable, net of allowance for doubtful accounts of $962 in 2006 and $2,203 in 2005
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33,395
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54,815
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Deferred expenses, net of accumulated amortization of $8,841 in 2006 and $12,150 in 2005
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9,480
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12,423
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Condominium development project
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70,661
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16,051
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Other assets
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32,979
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30,471
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Total assets
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$
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2,583,249
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$
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2,920,263
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LIABILITIES AND STOCKHOLDERS EQUITY
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Debt, net of discount of $1,089 in 2006 and $2,982 in 2005
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$
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1,369,153
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$
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1,675,280
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Distributions payable
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24,078
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8,596
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Accrued expenses and other liabilities
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139,277
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139,187
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Total liabilities
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1,532,508
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1,823,063
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Commitments and contingencies
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Minority interest in FelCor LP 1,355 and 2,763 units issued and outstanding at December 31, 2006 and 2005, respectively
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11,638
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25,393
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Minority interest in other partnerships
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28,172
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40,014
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Stockholders equity:
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Preferred stock, $.01 par value, 20,000 shares authorized:
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Series A Cumulative Convertible Preferred Stock, 12,880 shares, liquidation value of $322,011 issued and outstanding at December 31, 2006 and December 31, 2005
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309,362
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309,362
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Series C Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,950 issued and outstanding at December 31, 2006
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169,412
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169,412
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Common stock, $.01 par value, 200,000 shares authorized and 69,438 and 69,440 shares issued, including shares in treasury, at December 31, 2006 and 2005, respectively
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694
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694
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Additional paid-in capital
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2,066,694
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2,081,869
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Accumulated other comprehensive income
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15,839
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19,602
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Accumulated deficit
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(1,409,790
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)
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(1,372,720
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)
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Less: Common stock in treasury, at cost, of 7,386 and 9,231 shares at December 31, 2006 and 2005, respectively
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(141,280
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)
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(176,426
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)
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Total stockholders equity
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1,010,931
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1,031,793
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Total liabilities and stockholders equity
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$
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2,583,249
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$
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2,920,263
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The accompanying notes are an integral part of these consolidated financial statements.
6
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2006, 2005 and 2004
(in thousands, except per share data)
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2006
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2005
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2004
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Revenues:
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Hotel operating revenue
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$
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990,959
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$
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913,149
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$
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840,416
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Retail space rental and other revenue
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79
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1,506
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2,196
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Total revenues
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991,038
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914,655
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842,612
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Expenses:
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Hotel departmental expenses
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319,731
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303,454
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290,619
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Other property operating costs
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270,301
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255,626
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235,204
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Management and franchise fees
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51,237
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45,215
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42,664
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Taxes, insurance and lease expense
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112,052
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104,852
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92,256
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Abandoned projects
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33
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265
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Corporate expenses
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23,308
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19,025
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17,033
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Depreciation
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94,579
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84,448
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78,116
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Total operating expenses
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871,241
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812,885
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755,892
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Operating income
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119,797
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101,770
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86,720
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Interest expense, net
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110,867
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121,668
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136,144
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Hurricane loss
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6,481
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2,125
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Charge-off of deferred financing costs
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3,562
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1,448
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6,960
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Loss on early extinguishment of debt
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12,471
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4,037
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44,216
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Gain on swap termination
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(1,715
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)
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(1,005
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)
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Loss before equity in income of unconsolidated entities, minority interests and gain on sale of assets
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(5,388
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)
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(31,864
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)
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(101,720
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)
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Equity in income from unconsolidated entities
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11,537
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10,169
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17,121
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Gain (loss) on sale of assets
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(92
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)
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469
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Minority interests
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2,508
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4,310
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6,223
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Income (loss) from continuing operations
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8,565
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(16,916
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)
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(78,376
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Discontinued operations
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42,480
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(234,699
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)
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(21,751
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)
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|
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|
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|
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Net income (loss)
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51,045
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(251,615
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)
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(100,127
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)
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Preferred dividends
|
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(38,713
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)
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(39,408
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)
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(35,130
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)
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Issuance costs of redeemed preferred stock
|
|
|
|
|
|
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(6,522
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss) applicable to common stockholders
|
|
$
|
12,332
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|
|
$
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(297,545
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)
|
|
$
|
(135,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income (loss) per common share data:
|
|
|
|
|
|
|
|
|
|
|
|
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Basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.50
|
)
|
|
$
|
(1.06
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)
|
|
$
|
(1.92
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.20
|
|
|
$
|
(5.01
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)
|
|
$
|
(2.29
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)
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
60,734
|
|
|
|
59,436
|
|
|
|
59,045
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared on common stock
|
|
$
|
0.80
|
|
|
$
|
0.15
|
|
|
$
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
7
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2006, 2005 and 2004
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Net income (loss)
|
|
$
|
51,045
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|
|
$
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(251,615
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)
|
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$
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(100,127
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)
|
Unrealized holding gains (loss) from interest rate swaps
|
|
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(507
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)
|
|
|
2,074
|
|
|
|
147
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|
Realized gain from interest rate swaps
|
|
|
(1,715
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)
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(1,541
|
)
|
|
|
1,748
|
|
|
|
6,155
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
47,282
|
|
|
$
|
(247,793
|
)
|
|
$
|
(93,825
|
)
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
8
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the years ended December 31, 2006, 2005, and 2004
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
of
|
|
|
|
|
|
|
of
|
|
|
|
|
|
|
Paid-in
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Treasury
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Deficit
|
|
|
Stock
|
|
|
Equity
|
|
Balance at December 31, 2003
|
|
|
6,048
|
|
|
$
|
318,907
|
|
|
|
69,429
|
|
|
$
|
694
|
|
|
$
|
2,095,356
|
|
|
$
|
9,478
|
|
|
$
|
(930,886
|
)
|
|
$
|
(197,277
|
)
|
|
$
|
1,296,272
|
|
Foreign exchange translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,155
|
|
|
|
|
|
|
|
|
|
|
|
6,155
|
|
Issuance of Series A preferred stock
|
|
|
6,900
|
|
|
|
159,850
|
|
|
|
|
|
|
|
|
|
|
|
(3,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,000
|
|
Issuance of stock awards
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
(9,067
|
)
|
|
|
|
|
|
|
|
|
|
|
9,092
|
|
|
|
25
|
|
Amortization of stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,179
|
|
Unrealized gain on hedging transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
147
|
|
|
|
|
|
|
|
|
|
|
|
147
|
|
Conversion of operating partnership units into common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,999
|
)
|
|
|
|
|
|
|
|
|
|
|
4,692
|
|
|
|
2,693
|
|
Allocation from minority units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,109
|
|
Forfeitures of stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
461
|
|
|
|
|
|
|
|
|
|
|
|
(461
|
)
|
|
|
|
|
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1.95 per Series A preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,884
|
)
|
|
|
|
|
|
|
(19,884
|
)
|
$2.25 per Series B depositary preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,246
|
)
|
|
|
|
|
|
|
(15,246
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,127
|
)
|
|
|
|
|
|
|
(100,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004
|
|
|
12,948
|
|
|
|
478,757
|
|
|
|
69,436
|
|
|
|
694
|
|
|
|
2,085,189
|
|
|
|
15,780
|
|
|
|
(1,066,143
|
)
|
|
|
(183,954
|
)
|
|
|
1,330,323
|
|
Foreign exchange translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,748
|
|
|
|
|
|
|
|
|
|
|
|
1,748
|
|
Issuance of Series C preferred stock
|
|
|
68
|
|
|
|
169,412
|
|
|
|
|
|
|
|
|
|
|
|
(5,492
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163,920
|
|
Retirement of Series B preferred stock
|
|
|
(68
|
)
|
|
|
(169,395
|
)
|
|
|
|
|
|
|
|
|
|
|
6,522
|
|
|
|
|
|
|
|
(6,522
|
)
|
|
|
|
|
|
|
(169,395
|
)
|
Issuance of stock awards
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
(7,285
|
)
|
|
|
|
|
|
|
|
|
|
|
7,022
|
|
|
|
(263
|
)
|
Amortization of stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,265
|
|
Unrealized gain on hedging transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,074
|
|
|
|
|
|
|
|
|
|
|
|
2,074
|
|
Conversion of operating partnership units into common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(118
|
)
|
|
|
|
|
|
|
|
|
|
|
506
|
|
|
|
388
|
|
Allocation from minority units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(212
|
)
|
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.15 per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,032
|
)
|
|
|
|
|
|
|
(9,032
|
)
|
$1.95 per Series A preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,117
|
)
|
|
|
|
|
|
|
(25,117
|
)
|
$1.125 per Series B depositary preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,432
|
)
|
|
|
|
|
|
|
(5,432
|
)
|
$1.63 per Series C depositary preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,859
|
)
|
|
|
|
|
|
|
(8,859
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(251,615
|
)
|
|
|
|
|
|
|
(251,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
12,948
|
|
|
|
478,774
|
|
|
|
69,440
|
|
|
|
694
|
|
|
|
2,081,869
|
|
|
|
19,602
|
|
|
|
(1,372,720
|
)
|
|
|
(176,426
|
)
|
|
|
1,031,793
|
|
Foreign exchange translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,541
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,541
|
)
|
Issuance of stock awards
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
(6,371
|
)
|
|
|
|
|
|
|
|
|
|
|
6,933
|
|
|
|
562
|
|
Exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(482
|
)
|
|
|
|
|
|
|
|
|
|
|
2,670
|
|
|
|
2,188
|
|
Amortization of stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,169
|
|
Forfeiture of stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
579
|
|
|
|
|
|
|
|
|
|
|
|
(866
|
)
|
|
|
(287
|
)
|
Repurchase of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(818
|
)
|
|
|
(818
|
)
|
Common stock exchanged for treasury shares
|
|
|
|
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
(357
|
)
|
|
|
|
|
|
|
|
|
|
|
357
|
|
|
|
|
|
Unrealized loss on hedging transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(507
|
)
|
|
|
|
|
|
|
|
|
|
|
(507
|
)
|
Realized gain on hedging transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,715
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,715
|
)
|
Conversion of operating partnership units into common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,870
|
)
|
|
|
|
|
|
|
|
|
|
|
26,870
|
|
|
|
|
|
Allocation from minority units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,157
|
|
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.80 per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,402
|
)
|
|
|
|
|
|
|
(49,402
|
)
|
$1.95 per Series A preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,117
|
)
|
|
|
|
|
|
|
(25,117
|
)
|
$2.00 per Series C depositary preferred share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,596
|
)
|
|
|
|
|
|
|
(13,596
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,045
|
|
|
|
|
|
|
|
51,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
12,948
|
|
|
$
|
478,774
|
|
|
|
69,438
|
|
|
$
|
694
|
|
|
$
|
2,066,694
|
|
|
$
|
15,839
|
|
|
$
|
(1,409,790
|
)
|
|
$
|
(141,280
|
)
|
|
$
|
1,010,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
9
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2006, 2005 and 2004
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
51,045
|
|
|
$
|
(251,615
|
)
|
|
$
|
(100,127
|
)
|
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
110,274
|
|
|
|
122,535
|
|
|
|
122,653
|
|
Gain on sale of assets
|
|
|
(48,802
|
)
|
|
|
(12,522
|
)
|
|
|
(20,589
|
)
|
Amortization of deferred financing fees
|
|
|
3,351
|
|
|
|
3,399
|
|
|
|
4,161
|
|
Accretion amortization of debt
|
|
|
1,105
|
|
|
|
1,167
|
|
|
|
510
|
|
Amortization of unearned officers and directors compensation
|
|
|
5,080
|
|
|
|
2,904
|
|
|
|
2,945
|
|
Equity in income from unconsolidated entities
|
|
|
(11,537
|
)
|
|
|
(10,169
|
)
|
|
|
(17,121
|
)
|
Distributions of income from unconsolidated entities
|
|
|
3,632
|
|
|
|
1,062
|
|
|
|
11,932
|
|
Charge-off of deferred financing costs
|
|
|
3,643
|
|
|
|
2,659
|
|
|
|
6,960
|
|
Loss on early extinguishment of debt
|
|
|
13,701
|
|
|
|
8,641
|
|
|
|
44,216
|
|
Impairment loss hotels
|
|
|
16,474
|
|
|
|
266,751
|
|
|
|
38,289
|
|
Minority interests
|
|
|
(789
|
)
|
|
|
(23,295
|
)
|
|
|
(7,375
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
12,571
|
|
|
|
(6,178
|
)
|
|
|
(2,213
|
)
|
Restricted cash-operations
|
|
|
(2,687
|
)
|
|
|
(6,941
|
)
|
|
|
(23,467
|
)
|
Other assets
|
|
|
(9,076
|
)
|
|
|
(6,057
|
)
|
|
|
(957
|
)
|
Accrued expenses and other liabilities
|
|
|
(285
|
)
|
|
|
19,141
|
|
|
|
(26,536
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by operating activities
|
|
|
147,700
|
|
|
|
111,482
|
|
|
|
33,281
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of hotels
|
|
|
|
|
|
|
|
|
|
|
(27,759
|
)
|
Improvements and additions to hotels
|
|
|
(168,525
|
)
|
|
|
(111,664
|
)
|
|
|
(95,599
|
)
|
Additions to condominium project
|
|
|
(51,200
|
)
|
|
|
(11,546
|
)
|
|
|
|
|
Acquisition of joint venture
|
|
|
|
|
|
|
(1,197
|
)
|
|
|
|
|
Cash from consolidation of venture
|
|
|
|
|
|
|
3,204
|
|
|
|
|
|
Proceeds from asset dispositions
|
|
|
346,332
|
|
|
|
73,502
|
|
|
|
152,686
|
|
Proceeds received from property damage insurance
|
|
|
7,535
|
|
|
|
3,131
|
|
|
|
|
|
Decrease in restricted cash-investing
|
|
|
1,008
|
|
|
|
10,804
|
|
|
|
8,155
|
|
Cash distributions from unconsolidated entities
|
|
|
5,700
|
|
|
|
6,578
|
|
|
|
10,899
|
|
Capital contributions to unconsolidated entities
|
|
|
(250
|
)
|
|
|
(1,350
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used in) investing activities
|
|
|
140,600
|
|
|
|
(28,538
|
)
|
|
|
48,382
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
|
540,494
|
|
|
|
233,911
|
|
|
|
523,802
|
|
Repayment of borrowings
|
|
|
(716,006
|
)
|
|
|
(292,990
|
)
|
|
|
(838,891
|
)
|
Payment of debt issuance costs
|
|
|
(3,985
|
)
|
|
|
(659
|
)
|
|
|
(5,517
|
)
|
Decrease in restricted cash-financing
|
|
|
2,825
|
|
|
|
4,401
|
|
|
|
|
|
Net proceeds from sale of preferred stock
|
|
|
|
|
|
|
164,147
|
|
|
|
158,990
|
|
Redemption of preferred stock
|
|
|
|
|
|
|
(169,395
|
)
|
|
|
|
|
Exercise of stock options
|
|
|
2,188
|
|
|
|
|
|
|
|
|
|
Distributions paid to other partnerships minority holders
|
|
|
(13,167
|
)
|
|
|
|
|
|
|
(4,000
|
)
|
Contribution from minority interest holders
|
|
|
2,519
|
|
|
|
2,200
|
|
|
|
3,247
|
|
Distributions paid to FelCor LP limited partners
|
|
|
(878
|
)
|
|
|
(414
|
)
|
|
|
|
|
Distributions paid to preferred stockholders
|
|
|
(38,713
|
)
|
|
|
(39,905
|
)
|
|
|
(34,757
|
)
|
Distributions paid to common stockholders
|
|
|
(33,951
|
)
|
|
|
(9,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow used in financing activities
|
|
|
(258,674
|
)
|
|
|
(107,736
|
)
|
|
|
(197,126
|
)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
(11
|
)
|
|
|
46
|
|
|
|
2,888
|
|
Net change in cash and cash equivalents
|
|
|
29,615
|
|
|
|
(24,746
|
)
|
|
|
(112,575
|
)
|
Cash and cash equivalents at beginning of periods
|
|
|
94,564
|
|
|
|
119,310
|
|
|
|
231,885
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of periods
|
|
$
|
124,179
|
|
|
$
|
94,564
|
|
|
$
|
119,310
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information Interest paid
|
|
$
|
118,502
|
|
|
$
|
132,091
|
|
|
$
|
162,324
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
10
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
In 1994, FelCor Lodging Trust Incorporated, or FelCor, went public as a real estate investment
trust, or REIT, with six hotels and a market capitalization of $120 million. At December 31, 2006,
we held ownership interests in 99 hotels and were the owner of the largest number of Embassy Suites
Hotels and independently owned Doubletree-branded hotels in North America.
FelCor is the sole general partner of, and the owner of an approximately 98% limited
partnership interest in, FelCor Lodging Limited Partnership, or FelCor LP. All of our operations
are conducted solely through FelCor LP, or its subsidiaries.
At December 31, 2006, we owned a 100% real estate interest in 72 hotels, a 90% or greater
interest in entities owning five hotels, a 75% interest in an entity owning one hotel, a 60%
interest in an entity owning two hotels, and 50% interests in unconsolidated entities owning 19
hotels. As a result of our ownership interests in the operating lessees of 94 of these hotels, we
reflect their operating revenues and expenses in our consolidated statements of operations. The
operations of 83 of these consolidated hotels were included in continuing operations at
December 31, 2006, and 11 hotels were held for sale and included in discontinued operations. The
operating revenues and expenses of the remaining five hotels were reported on the equity method,
four hotels were operated by 50% owned lessees and one hotel, in which we had a 50% ownership
interest, was operated without a lease.
At December 31, 2006, we had an aggregate of 63,407,199 shares and unit outstanding,
consisting of 62,052,183 shares of FelCor common stock and 1,355,016 units of FelCor LP limited
partnership interest not owned by FelCor.
The following table reflects the distribution, by brand, of the 83 hotels included in our
consolidated hotel continuing operations at December 31, 2006:
|
|
|
|
|
|
|
|
|
Brand
|
|
Hotels
|
|
Rooms
|
Embassy Suites Hotels
|
|
|
47
|
|
|
|
12,130
|
|
Holiday Inn-branded
|
|
|
17
|
|
|
|
6,301
|
|
Starwood-branded
|
|
|
9
|
|
|
|
3,217
|
|
Doubletree-branded
|
|
|
7
|
|
|
|
1,471
|
|
Hilton-branded
|
|
|
2
|
|
|
|
559
|
|
Other brands
|
|
|
1
|
|
|
|
403
|
|
|
|
|
|
|
|
|
|
|
Total hotels
|
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The hotels shown in the above table are located in the United States (23 states) and Canada
(two hotels), with concentrations in California (14 hotels), Florida (13 hotels) and Texas
(11 hotels). Approximately 48% of our hotel room revenues were generated from hotels in these
three states during 2006.
At December 31, 2006, of the 83 consolidated hotels included in continuing operations,
(i) subsidiaries of Hilton Hotels Corporation, or Hilton, managed 54, (ii) subsidiaries of
InterContinental Hotels Group, or IHG, managed 18, (iii) subsidiaries of Starwood Hotels & Resorts
Worldwide Inc., or Starwood, managed nine, and
(iv) independent management companies managed two.
Certain reclassifications have been made to prior period financial information to conform to
the current periods presentation with no effect to previously reported net loss or stockholders
equity.
11
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies
Principles of Consolidation
Our accompanying consolidated financial statements include the
assets, liabilities, revenues and expenses of all majority-owned subsidiaries. Intercompany
transactions and balances are eliminated in consolidation. Investments in unconsolidated entities
(consisting entirely of 50 percent owned ventures) are accounted for by the equity method.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America, requires that management make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Investment in Hotels
Our hotels are stated at cost and are depreciated using the
straight-line method over estimated useful lives of 40 years for buildings, 15 to 20 years for
improvements and three to seven years for furniture, fixtures, and equipment.
We periodically review the carrying value of each of our hotels to determine if circumstances
exist indicating an impairment in the carrying value of the investment in the hotel or modification
of depreciation periods. If facts or circumstances support the possibility of impairment of a
hotel, we prepare a projection of the undiscounted future cash flows, without interest charges,
over the shorter of the hotels estimated useful life or the expected hold period, and determine if
the investment in such hotel is recoverable based on the undiscounted future cash flows. If
impairment is indicated, we make an adjustment to reduce carrying value of the hotel to its then
fair value. We use recent operating results and current market information to arrive at our
estimates of fair value.
Maintenance and repairs are expensed and major renewals and improvements are capitalized.
Upon the sale or disposition of a fixed asset, the asset and related accumulated depreciation are
removed from our accounts and the related gain or loss is included in operations.
Acquisition of Hotels
Our hotel acquisitions consist almost exclusively of land, building,
furniture, fixtures and equipment, and inventory. We allocate the purchase price among these asset
classes based upon their respective values determined in accordance with Statement of Financial
Accounting Standards, or SFAS, 141, Business Combinations. When we acquire properties, we
acquire them for use. The only intangible assets typically acquired consist of miscellaneous
operating agreements all of which are of short duration and at market rates. We do not generally
acquire any significant in-place leases or other intangible assets (e.g., management agreements,
franchise agreements or trademarks) when we acquire hotels. In conjunction with the acquisition of
a hotel, we typically enter into new franchise and management agreements with the selected brand
owner and manager.
Investment in Unconsolidated Entities
We own a 50% interest in various real estate ventures
in which the partners or members jointly make all material decisions concerning the business
affairs and operations. Additionally, we also own a preferred equity interest in one of these real
estate ventures. Because we do not control these entities, we carry our investment in
unconsolidated entities at cost, plus our equity in net earnings or losses, less distributions
received since the date of acquisition and any adjustment for impairment. Our equity in net
earnings or losses is adjusted for the straight-line depreciation, over the lower of 40 years or
the remaining life of the venture, of the difference between our cost and our proportionate share
of the underlying net assets at the date of acquisition. We periodically review our investment in
unconsolidated entities for other than temporary declines in fair value. Any decline that is not
expected to be recovered in the next 12 months is considered other than temporary and an impairment
is recorded as a reduction in the carrying value of the investment. Estimated fair values are
based on our projections of cash flows and market capitalization rates.
12
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
Hotels Held for Sale
We consider each individual hotel to be an identifiable component of
our business. In accordance with SFAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, we do not consider hotels as held for sale until it is probable that the sale
will be completed within one year. Once a hotel is held for sale the operations related to the
hotel are included in discontinued operations. In the last three years we have disposed of 68
non-strategic hotels. We had 11 remaining non-strategic hotels at December 31, 2006, that we
intend to sell within the next twelve months. Based on our recent experience in the hospitality
real estate market and the current contract and offer activity on these 11 non-strategic hotels, we
consider it probable that they will be sold prior to December 31, 2007. As such, these hotels have
been classified as held for sale as of December 31, 2006.
We do not depreciate hotel assets that are classified as held for sale. Upon designating a
hotel as held for sale, and quarterly thereafter, we review the carrying value of the hotel and,
as appropriate, adjust its carrying value to the lesser of depreciated cost or fair value, less
cost to sell, in accordance with SFAS 144. Any adjustment in the carrying value of a hotel
classified as held for sale is reflected in discontinued operations. We include in discontinued
operations the operating results of hotels classified as held for sale or that have been sold.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or
less when purchased are considered to be cash equivalents.
We place cash deposits at major banks. Our bank account balances may exceed the Federal
Depository Insurance Limits of $100,000; however, management believes the credit risk related to
these deposits is minimal.
Restricted Cash
Restricted cash includes reserves for capital expenditures, real estate
taxes, and insurance, as well as cash collateral deposits for mortgage debt agreement provisions
and capital expenditure obligations on sold hotels.
Deferred Expenses
Deferred expenses, consisting primarily of loan costs, are recorded at
cost. Amortization is computed using a method that approximates the interest method over the
maturity of the related debt.
Other Assets
Other assets consist primarily of hotel operating inventories, prepaid expenses
and deposits.
Revenue Recognition
Approximately 99.7% to 100.0% of our revenue is comprised of hotel
operating revenues, such as room revenue, food and beverage revenue, and revenue from other hotel
operating departments (such as telephone, parking and business centers). These revenues are
recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts
are recorded, when allowed, as a reduction in revenue, and there are no material contingent
obligations with respect to rebates or discounts offered by us. All revenues are recorded on an
accrual basis, as earned. Appropriate allowances are made for doubtful accounts and are recorded
as a bad debt expense. The remaining 0.1% to 0.3% of our revenue is from retail space rental
revenue and other sources.
13
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
We do not have any time-share arrangements and do not sponsor any frequent guest programs for
which we would have any contingent liability. We participate in frequent guest programs sponsored
by the brand owners of our hotels and we expense the charges associated with those programs
(typically consisting of a percentage of the total guest charges incurred by a participating
guest), as incurred. When a guest redeems accumulated frequent guest points at one of our hotels,
the hotel bills the sponsor for the services provided in redemption of such points and records
revenue in the amount of the charges billed to the sponsor. Associated with the frequent guest
programs, we have no loss contingencies or ongoing obligation beyond what is paid to the brand
owner at the time of the guests stay.
We recognize revenue from the sale of condominium units using the completed contract method.
Foreign Currency Translation
Results of operations for our Canadian hotels are maintained in
Canadian dollars and translated using the average exchange rates during the period. Assets and
liabilities are translated to U.S. dollars using the exchange rate in effect at the balance sheet
date. Resulting translation adjustments are reflected in accumulated other comprehensive income
and were $15.8 million and $17.4 million as of December 31, 2006 and 2005, respectively.
Capitalized Cost
We capitalize interest and certain other costs, such as property taxes,
land leases, and property insurance and employee costs relating to hotels undergoing major
renovations and redevelopments. Such costs capitalized in 2006, 2005, and 2004, were
$10.6 million, $8.4 million and $5.6 million, respectively.
Net Income (Loss) Per Common Share
We compute basic earnings per share by dividing net
income (loss) available to common stockholders by the weighted average number of common shares
outstanding. We compute diluted earnings per share by dividing net income (loss) available to
common stockholders by the weighted average number of common shares and equivalents outstanding.
Common stock equivalents represent shares issuable upon exercise of stock options and unvested
officers restricted stock grants.
For all years presented, our Series A Cumulative Preferred Stock, or Series A preferred stock,
if converted to common shares, would be antidilutive; accordingly we do not assume conversion of
the Series A preferred stock in the computation of diluted earnings per share.
Stock Compensation
¾
In December 2004, the Financial Accounting Standards Board, or
FASB, issued SFAS No. 123(R), Share-Based Payment. This statement replaces SFAS No. 123,
Accounting for Stock-Based Compensation and supersedes APB No. 25, Accounting for Stock Issued to
Employees. SFAS No. 123(R) requires companies to apply a fair-value-based measurement method in
accounting for share-based payment transactions with employees and to record compensation cost for
(i) all stock awards granted after the required date of adoption and to (ii) awards modified,
repurchased, or cancelled after that date. In addition, we are required to record compensation
expense for the unvested portion of previously granted awards that remain outstanding at the date
of adoption as such previous awards continue to vest. We adopted SFAS No. 123(R) on January 1,
2006 using the modified prospective application. The adoption of this standard did not have a
material impact on our consolidated financial statements.
14
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies
¾
(continued)
Prior to January 1, 2006, we applied Accounting Principles Board Opinion 25, or APB 25, and
related interpretations in accounting for our stock based compensation plans for stock based
compensation issued prior to January 1, 2003. Had the compensation cost for these stock-based
compensation plans been determined in accordance with SFAS No. 123 our net loss from continuing
operations and net loss from continuing operations per common share for the years ended
December 31, 2005 and 2004, would approximate the pro forma amounts below (in thousands, except per
share data):
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2004
|
|
Loss from continuing operations, as reported
|
|
$
|
(16,916
|
)
|
|
$
|
(78,376
|
)
|
Add stock based compensation included in the net loss, as reported
|
|
|
2,904
|
|
|
|
2,945
|
|
Less stock based compensation expense that would have been included in
the determination of net loss if the fair value method had been
applied to all awards
|
|
|
(2,914
|
)
|
|
|
(3,001
|
)
|
|
|
|
|
|
|
|
Loss from continuing operations, pro forma
|
|
$
|
(16,926
|
)
|
|
$
|
(78,432
|
)
|
|
|
|
|
|
|
|
|
Basic and diluted net loss from continuing operations per common share:
|
|
|
|
|
|
|
|
|
As reported
|
|
$
|
(1.06
|
)
|
|
$
|
(1.92
|
)
|
Pro forma
|
|
$
|
(1.06
|
)
|
|
$
|
(1.92
|
)
|
The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future
amounts.
Derivatives
¾
We record derivatives in accordance with SFAS 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities. SFAS 133, as amended, establishes
accounting and reporting standards for derivative instruments. Specifically, SFAS 133 requires an
entity to recognize all derivatives as either assets or liabilities on the balance sheet and to
measure those instruments at fair value. Additionally, the fair value adjustments will affect
either stockholders equity or net income, depending on whether the derivative instrument qualifies
as a hedge for accounting purposes and the nature of the hedging activity.
Segment Information
¾
SFAS 131, Disclosures about Segments of an Enterprise and Related
Information, requires the disclosure of selected information about operating segments. Based on
the guidance provided in the standard, we have determined that our business is conducted in one
operating segment.
Distributions and Dividends
We and FelCor LP resumed paying a common dividend with the
fourth quarter 2005 payment of $0.15 per share. In 2006, we declared common dividends of $0.80 per
share. Additionally, we have paid regular quarterly dividends on our preferred stock in
accordance with our preferred stock dividend requirements. Our ability to make distributions is
dependent on our receipt of quarterly distributions from FelCor LP, and FelCor LPs ability to make
distributions is dependent upon the results of operations of our hotels.
Minority Interests
Minority interests in FelCor LP and other consolidated subsidiaries
represent the proportionate share of the equity in FelCor LP and other consolidated subsidiaries
not owned by us. We allocate income and loss to minority interest based on the weighted average
percentage ownership throughout the year.
Income Taxes
We have elected to be treated as a REIT under Sections 856 to 860 of the
Internal Revenue Code. We generally lease our hotels to wholly-owned taxable REIT subsidiaries, or
TRSs, that are subject to federal and state income taxes. Through these lessees we record room
revenue, food and beverage revenue and other revenue related to the operations of our hotels. We
account for income taxes in accordance with the provisions of SFAS 109. Under SFAS 109, we account
for income taxes using the asset and liability method under which deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax
bases.
15
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Investment in Hotels
Investment in hotels at December 31, 2006 and 2005 consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
Building and improvements
|
|
$
|
2,058,563
|
|
|
$
|
2,710,465
|
|
Furniture, fixtures and equipment
|
|
|
308,838
|
|
|
|
567,330
|
|
Land
|
|
|
203,791
|
|
|
|
291,074
|
|
Construction in progress
|
|
|
85,379
|
|
|
|
34,633
|
|
|
|
|
|
|
|
|
|
|
|
2,656,571
|
|
|
|
3,603,502
|
|
Accumulated depreciation
|
|
|
(612,286
|
)
|
|
|
(1,019,123
|
)
|
|
|
|
|
|
|
|
|
|
$
|
2,044,285
|
|
|
$
|
2,584,379
|
|
|
|
|
|
|
|
|
In 2006, we wrote off fully depreciated furniture, fixtures and equipment aggregating
$264.6 million.
Discussions of hotel dispositions are included in our Discontinued Operations footnote.
We invested $169 million and $112 million in additions and improvements to our consolidated
hotels during the years ended December 31, 2006 and 2005, respectively.
4. Impairment Charges
Our hotels are comprised of operations and cash flows that can clearly be distinguished,
operationally and for financial reporting purposes, from the remainder of our operations.
Accordingly, we consider our hotels to be components as defined by SFAS 144 for purposes of
determining impairment charges and reporting discontinued operations.
A hotel held for investment is tested for impairment whenever changes in circumstances
indicate its carrying value may not be recoverable. The test is conducted using the undiscounted
cash flows for the shorter of the estimated remaining holding periods or the useful life of the
hotel. When testing for recoverability of hotels held for investment, we use projected cash flows
over the expected hold period. Those hotels held for investment that fail the impairment test
described in SFAS 144 were written down to their then current estimated fair value, before any
selling expenses. These hotels continue to be depreciated over their remaining useful lives.
Hotels held for sale are tested for impairment each reporting period and are recorded at the
lower of their carrying amounts or fair value less costs to sell. These hotels are not depreciated
after they have been designated as held for sale.
When determining fair value for purposes of determining impairment we use a combination of
historical and projected cash flows and other available market information, such as recent sales
prices for similar assets in specific markets. The cash flows used for determining fair values are
discounted using a reasonable capitalization rate, or as earlier noted based on the local market
conditions using recent sales of similar assets. In some cases we are able to establish fair value
based on credible offers received from prospective buyers.
16
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Impairment Charges (continued)
In 2006, we recorded impairment charges of $16.5 million under the provisions of SFAS 144. Of
the 2006 charges, $9.3 million were related to our decision to designate seven additional hotels
held for investment as non-strategic, $5.9 million related to a change in fair value estimates of
held for investment hotels previously designated as non-strategic, and $1.3 million related to
charges necessary to record two non- strategic hotels as of December 31, 2006 as held for sale at
the lower of their carrying amount or fair value less costs to sell. In February 2007, we sold two
non-strategic hotels for gross proceeds of $42.7 million.
In 2005, we recorded impairment charges, under the provisions of SFAS 144, of $266.8 million,
all of which was included in discontinued operations at December 31, 2006. The 2005 charges
primarily related to our decision to designate as non-strategic and sell 28 additional hotels, in
connection with the negotiation of the amendment to our IHG management agreements. Under the
management agreements entered into with IHG in 2001 and amended in 2004, we were obligated to
reinvest the net proceeds from the sale of IHG-managed hotels in other IHG-managed hotels or pay
substantial liquidated damages to IHG. This potential exposure to liquidated damages made it
impractical to sell IHG-managed hotels. In January 2006, we executed an agreement modifying our
management agreements covering our hotels managed by IHG. This agreement eliminated any potential
liquidated damages or reinvestment requirement with respect to hotels previously sold, certain
IHG-managed hotels identified for sale and one Crowne Plaza hotel to be converted to another brand.
We also recorded impairment charges with respect to 11 hotels previously designated as
non-strategic principally because of revised estimates of fair value resulting from changes in the
market and sales offers. In January 2006, we sold eight non-strategic hotels for gross proceeds of
approximately $160 million.
In 2004, we recorded impairment charges, under the provisions of SFAS 144, of $38.3 million,
all of which was included in discontinued operations at December 31, 2006. The 2004 charges were
related to 17 hotels. With respect to one hotel, we entered into an agreement that would permit
the option holder to purchase the hotel for substantially less than its carrying value. The
remaining hotels had revised estimates of fair value or reduced estimated holding periods.
We may be subject to additional impairment charges in the event that operating results of
individual hotels are materially different from our forecasts, the economy and lodging industry
weaken, or if we shorten our contemplated holding period for certain of our hotels.
Of the 51 hotels on which we recorded impairment in 2006, 2005 and 2004, 45 have been sold.
5. Discontinued Operations
The results of operations of the 31 hotels disposed of in 2006, 19 hotels disposed of in 2005
and 18 hotels disposed of in 2004, and 11 hotels held for sale at December 31, 2006 are presented
in discontinued operations for the periods presented.
17
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Discontinued Operations (continued)
Results of operations for the 79 hotels included in discontinued operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Hotel operating revenue
|
|
$
|
204,494
|
|
|
$
|
343,492
|
|
|
$
|
418,271
|
|
Operating expenses
|
|
|
(200,958
|
)
|
|
|
(593,211
|
)
|
|
|
(448,297
|
)
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
3,536
|
|
|
|
(249,719
|
)
|
|
|
(30,026
|
)
|
Direct interest costs, net
|
|
|
(1,206
|
)
|
|
|
(10,203
|
)
|
|
|
(13,466
|
)
|
Loss on the early extinguishment of debt
|
|
|
(1,311
|
)
|
|
|
(5,815
|
)
|
|
|
|
|
Gain on sale, net of tax
|
|
|
43,180
|
|
|
|
12,053
|
|
|
|
20,589
|
|
Minority interest
|
|
|
(1,719
|
)
|
|
|
18,985
|
|
|
|
1,152
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
42,480
|
|
|
$
|
(234,699
|
)
|
|
$
|
(21,751
|
)
|
|
|
|
|
|
|
|
|
|
|
Impairment losses of $16.5 million, $266.8 million and $38.3 million are included in the
operating expenses from discontinued operations for the years ending December 31, 2006, 2005 and
2004, respectively.
In 2006, we sold 31 hotels for gross proceeds of $514.4 million for a net gain of
$43.2 million, which is net of approximately $5.7 million in taxes related to the sale of these
hotels.
In 2005, we sold 11 hotels for gross proceeds of $79.2 million. Additionally, in 2005 we
relinquished title to the non-recourse mortgage holder of eight limited service hotels, owned by a
consolidated joint venture, in exchange for the extinguishment of $49.2 million of debt.
Associated with these eight hotels we recorded $1.3 million of asset disposition costs and
$3.3 million gain on early extinguishment of debt.
In 2004, we sold 17 hotels for gross proceeds of $157.0 million. We also transferred our
interest in a hotel that we leased to the lessor in 2004. In conjunction with the termination of
this lease we paid the lessor $5 million, which was recorded as asset disposition costs.
6. Investment in Unconsolidated Entities
We owned 50% interests in joint venture entities that owned 19 hotels at December 31, 2006 and
December 31, 2005. We also owned a 50% interest in entities that own real estate in Myrtle Beach,
South Carolina, provide condominium management services, and lease four hotels. We account for our
investments in these unconsolidated entities under the equity method. We do not have any
majority-owned subsidiaries that are not consolidated in our financial statements. We make
adjustments to our equity in income from unconsolidated entities related to the difference between
our basis in investment in unconsolidated entities compared to the historical basis of the assets
recorded by the joint ventures.
Summarized combined financial information for 100% of these unconsolidated entities is as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2006
|
|
2005
|
Balance sheet information:
|
|
|
|
|
|
|
|
|
Investment in hotels, net of accumulated depreciation
|
|
$
|
260,628
|
|
|
$
|
259,645
|
|
Total assets
|
|
$
|
297,712
|
|
|
$
|
295,065
|
|
Debt
|
|
$
|
197,462
|
|
|
$
|
203,880
|
|
Total liabilities
|
|
$
|
203,659
|
|
|
$
|
211,174
|
|
Equity
|
|
$
|
94,053
|
|
|
$
|
83,891
|
|
Debt of our unconsolidated entities at December 31, 2006, consisted entirely of non-recourse
mortgage debt.
18
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Investment in Unconsolidated Entities (continued)
Summarized combined statement of operations information for 100% of our unconsolidated
entities is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Total revenues
|
|
$
|
83,766
|
|
|
$
|
75,396
|
|
|
$
|
67,902
|
|
Net income
|
|
$
|
26,764
|
|
|
$
|
21,801
|
|
|
$
|
33,746
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to FelCor
|
|
$
|
13,382
|
|
|
$
|
11,348
|
|
|
$
|
18,483
|
|
Preferred return
|
|
|
|
|
|
|
516
|
|
|
|
516
|
|
Depreciation of cost in excess of book value.
|
|
|
(1,845
|
)
|
|
|
(1,695
|
)
|
|
|
(1,878
|
)
|
|
|
|
|
|
|
|
|
|
|
Equity in income from unconsolidated entities
|
|
$
|
11,537
|
|
|
$
|
10,169
|
|
|
$
|
17,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes $17.5 million from the gain on the sale of residential condominium development in
Myrtle Beach, South Carolina, which was realized in 2004. Our share of the gain was $8.8 million.
We also recorded additional gains of $1.9 million in our equity in income from unconsolidated
entities to reflect the differences between our historical basis in the assets sold and the basis
recorded by the condominium joint venture.
|
A summary of the components of our investment in unconsolidated entities as of December 31,
2006 and 2005 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
Hotel investments
|
|
$
|
48,641
|
|
|
$
|
43,117
|
|
Cost in excess of book value of hotel investments
|
|
|
61,253
|
|
|
|
63,098
|
|
Land and condominium investments
|
|
|
3,513
|
|
|
|
4,270
|
|
Hotel lessee investments
|
|
|
(1,691
|
)
|
|
|
(1,223
|
)
|
|
|
|
|
|
|
|
|
|
$
|
111,716
|
|
|
$
|
109,262
|
|
|
|
|
|
|
|
|
A summary of the components of our equity in income of unconsolidated entities for the years
ended December 31, 2006, 2005, and 2004, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Hotel investments
|
|
$
|
12,090
|
|
|
$
|
10,691
|
|
|
$
|
17,673
|
|
Hotel lessee operations
|
|
|
(553
|
)
|
|
|
(522
|
)
|
|
|
(552
|
)
|
|
|
|
|
|
|
|
|
|
|
Equity in income from unconsolidated entities
|
|
$
|
11,537
|
|
|
$
|
10,169
|
|
|
$
|
17,121
|
|
|
|
|
|
|
|
|
|
|
|
In 2005, we acquired, for $1.2 million, an additional 25% interest in a joint venture owning a
single hotel, bringing our interest in this previously unconsolidated venture to 75%. This venture
has been included in our consolidated financial statements from the date of acquisition of the
remaining interest.
19
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Debt
Debt at December 31, 2006 and 2005 consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Outstanding
|
|
|
|
Encumbered
|
|
|
Interest Rate at
|
|
|
Maturity
|
|
|
December 31,
|
|
|
|
Hotels
|
|
|
December 31, 2006
|
|
|
Date
|
|
|
2006
|
|
|
2005
|
|
Promissory note
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
650
|
|
Line of credit
(a)
|
|
none
|
|
|
|
L + 1.75
|
|
|
January 2009
|
|
|
|
|
|
|
|
|
Senior term notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,358
|
|
Senior term notes
|
|
none
|
|
|
|
8.50
|
|
|
June 2011
|
|
|
298,911
|
|
|
|
298,660
|
|
Term loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
Senior term notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
290,000
|
|
Senior term notes
|
|
none
|
|
|
|
L + 1.875
|
|
|
December 2011
|
|
|
215,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total line of credit and senior
debt
(d)
|
|
|
|
|
|
|
7.98
|
|
|
|
|
|
|
|
513,911
|
|
|
|
937,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage debt
(b)
|
|
12 hotels
|
|
|
|
L + 0.93
|
|
|
November 2008
|
|
|
250,000
|
|
|
|
|
|
Mortgage debt
|
|
8 hotels
|
|
|
|
6.56
|
|
|
July 2009-2014
|
|
|
97,553
|
|
|
|
104,282
|
|
Mortgage debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,913
|
|
Mortgage debt
|
|
7 hotels
|
|
|
|
7.32
|
|
|
March 2009
|
|
|
124,263
|
|
|
|
127,455
|
|
Mortgage debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,912
|
|
Mortgage debt
|
|
8 hotels
|
|
|
|
8.70
|
|
|
May 2010
|
|
|
169,438
|
|
|
|
172,604
|
|
Mortgage debt
|
|
6 hotels
|
|
|
|
8.73
|
|
|
May 2010
|
|
|
122,578
|
|
|
|
133,374
|
|
Mortgage debt
|
|
1 hotel
|
|
|
|
L + 2.85
|
|
|
August 2008
|
|
|
15,500
|
|
|
|
15,500
|
|
Mortgage debt
|
|
1 hotel
|
|
|
|
5.81
|
|
|
July 2016
|
|
|
12,861
|
|
|
|
10,457
|
|
Other
|
|
1 hotel
|
|
|
|
9.17
|
|
|
August 2011
|
|
|
4,452
|
|
|
|
5,204
|
|
Construction loan
(c)
|
|
|
|
|
|
|
L + 2.00
|
|
|
October 2007
|
|
|
58,597
|
|
|
|
8,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage debt
(d)
|
|
44 hotels
|
|
|
|
7.41
|
|
|
|
|
|
|
|
855,242
|
|
|
|
737,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(d)
|
|
|
|
|
|
|
7.62
|
%
|
|
|
|
|
|
$
|
1,369,153
|
|
|
$
|
1,675,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
We have a borrowing capacity of $125 million on our line of credit. The interest on this
line can range from 175 to 225 basis points over LIBOR based on our leverage ratio as defined
in our line of credit agreement.
|
|
(b)
|
|
This debt has three, one-year extension options.
|
|
(c)
|
|
We have a recourse construction loan facility for the development of a 184-unit condominium
project in Myrtle Beach, South Carolina. The interest on this facility is being capitalized
as part of the cost of the project. We have pre sold approximately 98% of these condominiums
and expect to start repaying the construction loan as the unit sales are finalized, beginning
in the second quarter of 2007.
|
|
(d)
|
|
Interest rates are calculated based on the weighted average outstanding debt at
December 31, 2006.
|
We reported interest income of $4.1 million, $4.1 million and $2.8 million for the years ended
December 31, 2006, 2005 and 2004, respectively. We capitalized interest of $4.9 million,
$1.9 million and $1.5 million, for the years ended December 31, 2006, 2005 and 2004, respectively.
In October 2006, FelCor LP sold $215 million of senior floating rate notes in a private
offering to qualified institutional buyers. These notes bear interest at LIBOR plus 1.875% and
mature in 2011. In addition, payment of amounts due under these notes is guaranteed by us and
certain of our subsidiaries who also guarantee payment of our line of credit and other senior debt
(other than mortgage debt) and payment of these notes is secured by a pledge of limited partnership
interest in FelCor Lodging LP. In November 2006, we also completed a $250 million non-recourse
mortgage facility secured by 12 hotels at LIBOR plus 0.93% maturing in two years with three one
year extensions at our option.
20
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Debt
¾
(continued)
During the fourth quarter of 2006, we redeemed all of our outstanding $290 million senior
floating rate notes due 2011 and all of our outstanding $125 million 7
5
/
2
% senior notes due 2007. In
addition, we repaid $137 million of outstanding debt secured by mortgages on certain of our hotels.
Proceeds from our October 2006 senior note offering and November 2006 mortgage debt facility,
together with cash proceeds from hotel sales were used to fund the redemption of senior notes and
the repayment of the mortgage debt.
In connection with the repayment of our $290 million senior floating rate notes, we unwound
the floating to fixed interest rate swaps associated with these notes. Termination of these
interest rate swaps resulted in gain of approximately $1.7 million, which was recorded in the
fourth quarter 2006.
The early retirement of certain indebtedness in 2006, resulted in net charges related to debt
extinguishment of approximately $15.6 million. As a result of the foregoing refinancing
transactions, our annual interest expense will be reduced by approximately $5 million, our weighted
average cost of debt will be reduced by approximately 50 basis points and our next significant debt
maturity will not be until 2009.
During 2006, we retired approximately $355.8 million of aggregate debt with proceeds of hotel
sales, new debt and cash and we borrowed $49.7 million on our Royale Palms condominium development
construction loan. In connection with the early debt retirement, we recorded $17.3 million of
expense during 2006.
In the fourth quarter of 2005, we retired $258 million of mortgage debt related to 25 hotels
and entered into a $225 million unsecured term loan. In connection with the early retirement of
$258 million of mortgage debt we recorded $15 million expense in the fourth quarter of 2005.
On June 9, 2004, we redeemed all $175 million in principal amount of our outstanding 7.375%
senior notes due 2004. The redemption price was $1,018 per $1,000 of the principal amount, plus
accrued interest. With the retirement of this debt, we recorded a loss on redemption of
$3.2 million and wrote off $0.3 million of debt issue costs. We also recorded a $1 million gain on
the unwinding of the interest rate swaps tied to this debt.
During 2004, we purchased all $600 million of our 9.5% senior notes due 2008 (which bore
interest at 10% as a result of the 2003 downgrade of the credit ratings on our senior notes)
through tender offers, redemptions and by purchases in the open market, at an average price of
$1,063.55 per $1,000 in principal amount. With the retirement of this debt, we recorded a loss on
early extinguishment of debt of $41 million of which $38.2 million related to the premium paid in
excess of par and $2.8 million related to the charge off of unamortized discount. We also wrote
off debt issue costs of $6.5 million.
In 2004, we also elected to terminate our then existing line of credit and wrote off debt
issue costs of $0.2 million.
21
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Debt
¾
(continued)
At December 31, 2006, we had aggregate mortgage indebtedness, of approximately $855.2 million
that was secured by 44 of our consolidated hotels with an aggregate book value of approximately
$1.0 billion and a $58.6 million construction loan related to our Royale Palms condominium
development. Our hotel mortgage debt is recourse solely to the specific assets securing the debt,
except in the case of fraud, misapplication of funds and other customary recourse carve-out
provisions. Loans secured by two hotels provide for lock-box arrangements under certain
circumstances. With respect to these loans, we are permitted to retain 115% of budgeted hotel
operating expenses, but the remaining revenues would become subject to a lock-box arrangement if a
specified debt service coverage ratio is not met. These hotels currently exceed the minimum debt
service coverage ratio, however, under the terms of the loan agreement, the lock-box provisions
remain in place until the loan is repaid. Neither of these hotels has ever fallen below the debt
service coverage ratio.
Our hotel mortgage debt is non-recourse to us and contains provisions allowing for the
substitution of collateral upon satisfaction of certain conditions. Most of our mortgage debt is
prepayable, subject to various prepayment, yield maintenance or defeasance obligations.
Our $125 million line of credit contains certain restrictive covenants, including a leverage
ratio, fixed charge coverage ratio, unencumbered leverage ratio and a maximum payout ratio. The
interest on our line can range from 175 to 225 basis points over LIBOR, based on our leverage ratio
as defined in our line of credit agreement. In addition to financial covenants, our line of credit
includes certain other affirmative and negative covenants, including restrictions on our ability to
create or acquire wholly-owned subsidiaries; restrictions on the operation/ownership of our hotels;
limitations on our ability to lease property or guarantee leases of other persons; limitations on
our ability to make restricted payments (such as distributions on common and preferred stock, share
repurchases and certain investments); limitations on our ability to merge or consolidate with other
persons, to issue stock of our subsidiaries and to sell all or substantially all of our assets;
restrictions on our ability to make investments in condominium developments; limitations on our
ability to change the nature of our business; limitations on our ability to modify certain
instruments, to create liens, to enter into transactions with affiliates; and limitations on our
ability to enter into joint ventures. At the date of this filing, we were in compliance with all
of these covenants. If operating results fall significantly below our current expectations, we may
not be able to meet some or all of these covenants in which case we may be unable to borrow under
our line of credit.
The breach of any of the covenants and limitations under our line of credit could result in
the acceleration of amounts outstanding. Our failure to satisfy any accelerated recourse
indebtedness, if in the amount of $10 million or more, could result in the acceleration of our
other unsecured recourse indebtedness. We may not be able to refinance or repay our debt in full
under those circumstances.
Our other borrowings contain affirmative and negative covenants that are generally equal to or
less restrictive than our line of credit. Payment of amounts due under our line of credit is
guaranteed by us and certain of our subsidiaries who also guarantee payment of our senior debt and
payment is secured by a pledge of our limited partnership interest in FelCor LP.
22
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Debt
¾
(continued)
At December 31, 2006, we had no borrowings under our line of credit. Our interest rate on our
line of credit has decreased from LIBOR plus 2.25% to LIBOR plus 1.75% during 2006 based on our
leverage ratio as defined in our line of credit agreement.
Future scheduled principal payments on debt obligations at December 31, 2006, are as follows
(in thousands):
|
|
|
|
|
Year
|
|
|
|
|
2007
|
|
$
|
71,336
|
|
2008
|
|
|
279,233
|
(a)
|
2009
|
|
|
142,240
|
|
2010
|
|
|
274,535
|
|
2011
|
|
|
518,030
|
|
2012 and thereafter
|
|
|
84,868
|
|
|
|
|
|
|
|
|
1,370,242
|
|
Discount accretion over term
|
|
|
(1,089
|
)
|
|
|
|
|
|
|
$
|
1,369,153
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes $250 million of mortgage debt that has three, one-year extension options.
|
8. Derivatives
On the date we enter into a derivative contract, we designate the derivative as a hedge to the
exposure to changes in the fair value of a recognized asset or liability or a firm commitment
(referred to as a fair value hedge), or the exposure to variable cash flows of a forecasted
transaction (referred to as a cash flow hedge). For a fair value hedge, the gain or loss is
recognized in earnings in the period of change, together with the offsetting loss or gain on the
hedged item attributable to the risk being hedged. The effect of that accounting is to reflect in
earnings the extent to which the hedge is not effective in achieving offsetting changes in fair
value. For a cash flow hedge, the effective portion of the derivatives gain or loss is initially
reported as a component of other comprehensive income (outside earnings) and subsequently
reclassified into earnings when the forecasted transaction affects earnings. The ineffective
portion of the gain or loss is reported in earnings immediately. At December 31, 2006, we did not
have any outstanding hedges.
We formally document all relationships between hedging instruments and hedged items, as well
as our risk-management objective and strategy, relating to our various hedge transactions. This
process includes linking all derivatives to specific assets and liabilities on the balance sheet or
specific firm commitments. We also formally assess (both at the hedges inception and on an
ongoing basis) whether the derivatives that are used in hedging transactions have been highly
effective in offsetting changes in the cash flows or fair values of hedged items and whether those
derivatives may be expected to remain highly effective in future periods. When we determine that a
derivative is not (or has ceased to be) highly effective as a hedge, we will discontinue hedge
accounting, prospectively.
In the normal course of business, we are exposed to the effect of interest rate changes. We
limit these risks by following established risk management policies and procedures including the
use of derivatives. It is our objective to use interest rate hedges to manage our fixed and
floating interest rate position and not to engage in speculation on interest rates. We manage
interest rate risk based on the varying circumstances of anticipated borrowings, and existing
floating and fixed rate debt. We will generally seek to pursue interest rate risk mitigation
strategies that will result in the least amount of reported earnings volatility under generally
accepted accounting principles, while still meeting strategic economic objectives and maintaining
adequate liquidity and flexibility. Instruments that meet these hedging criteria are formally
designated as hedges at the inception of the derivative contract.
23
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Derivatives (continued)
During 2006, we terminated three interest rate swaps with aggregate notional amount of
$100 million, maturing in December 2007. These interest rate swaps were designated as cash flow
hedges, and were marked to market through other comprehensive income. The unrealized net gain on
these interest rate swap agreements was approximately $1.7 million when terminated. Upon
termination this gain was realized and reclassified from accumulated other comprehensive income to
earnings. The interest rate received on these interest rate swaps was 4.25% plus LIBOR and the
interest rate paid was 7.80%. These swaps were 100% effective through this termination date.
In June 2004, we unwound six interest rate swap agreements, designated as fair value hedges,
with an aggregate notional amount of $175 million that were matched with the $175 million in senior
unsecured notes due 2004 that we redeemed. A $1 million gain was recorded, offsetting the loss on
the redemption of the debt. Also during June 2004, five additional swaps with an aggregate amount
of $125 million that were matched to the $125 million senior unsecured notes due 2007 were unwound
at a cost of $2.3 million. The $2.3 million was applied to the principal balance of these notes
and will be amortized to interest expense over the remaining life of the debt. During July 2004,
four interest rate swap agreements with a notional value of $100 million, that were matched to
mortgage debt maturing in November 2007, were unwound at a cost of $1.3 million.
To determine the fair values of our derivative instruments, we use a variety of methods and
assumptions that are based on market conditions and risks existing at each balance sheet date. All
methods of assessing fair value result in a general approximation of value, and such value may
never actually be realized.
The amounts paid or received by us under the terms of the interest rate swap agreements are
accrued as interest rates change, and we recognize them as an adjustment to interest expense, which
will have a corresponding effect on our future cash flows. Our interest rate swaps reduced
interest expense by $1.2 million and $4.1 million during the years ended December 31, 2006 and
2004, respectively, and increased interest expense by $0.3 million during the year ended December
31, 2005.
To fulfill requirements under certain loans, we purchased interest rate caps with aggregate
notional amounts of $337.3 million and $225.7 million as of December 31, 2006 and December 31,
2005, respectively. We also sold interest rate caps on a portion of these notional amounts with
identical terms that had aggregate notional amounts of $225.7 million at December 31, 2005. The
purchased interest rate cap agreements as of December 31, 2006 and the purchased and sold interest
rate cap agreements at December 31, 2005 were not designated as hedges. The fair value of both the
purchased and sold interest rate caps were insignificant at both December 31, 2006 and 2005 and
resulted in no significant net earnings impact.
9. Fair Value of Financial Instruments
SFAS 107 requires disclosures about the fair value of all financial instruments, whether or
not recognized for financial statement purposes. Disclosures about fair value of financial
instruments are based on pertinent information available to management as of December 31, 2006.
Considerable judgment is necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we
could realize on disposition of the financial instruments. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated fair value amounts.
24
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Fair Value of Financial Instruments (continued)
Our estimates of the fair value of (i) accounts receivable, accounts payable and accrued
expenses approximate carrying value due to the relatively short maturity of these instruments; (ii)
debt is based upon
effective borrowing rates for issuance of debt with similar terms and remaining maturities;
and (iii) our interest rate swaps and the hedged debt are recorded at estimates of fair value,
which are based on the amount that we estimate we would currently receive upon termination of these
instruments at current market rates and with reasonable assumptions about relevant future market
conditions. The estimated fair value of our debt was $1.4 billion at December 31, 2006.
10. Income Taxes
We have elected to be taxed as a REIT under the Internal Revenue Code. To qualify as a REIT,
we must meet a number of organizational and operational requirements, including a requirement that
we distribute at least 90% of our taxable income to our stockholders. We currently intend to
adhere to these requirements and maintain our REIT status. As a REIT, we generally will not be
subject to corporate level federal income taxes on net income we distribute to our stockholders.
If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at
regular corporate rates (including any applicable alternative minimum tax) and may not qualify as a
REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be
subject to certain state and local taxes on our income and property and to federal income and
excise taxes on our undistributed taxable income. In addition, taxable income from non-REIT
activities managed through taxable REIT subsidiaries, or TRSs, is subject to federal, state and
local taxes.
We generally lease our hotels to wholly-owned TRSs that are subject to federal and state
income taxes. In 2005 and 2004, we also contributed certain hotels to our wholly-owned TRSs. We
account for income taxes in accordance with the provisions of SFAS 109, Accounting for Income
Taxes. Under SFAS 109, we account for income taxes using the asset and liability method, under
which deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.
Reconciliation between TRSs GAAP net loss and taxable loss:
The following table reconciles the TRS GAAP net loss to taxable loss for the years ended
December 31, 2006, 2005, and 2004 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
GAAP net income (loss)
|
|
$
|
51,045
|
|
|
$
|
(251,615
|
)
|
|
$
|
(100,127
|
)
|
GAAP net loss (income) from REIT operations
|
|
|
(54,894
|
)
|
|
|
(37,237
|
)
|
|
|
35,168
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss of taxable subsidiaries
|
|
|
(3,849
|
)
|
|
|
(288,852
|
)
|
|
|
(64,959
|
)
|
Impairment loss not deductible for tax
|
|
|
7,206
|
|
|
|
231,605
|
|
|
|
8,509
|
|
Tax gain (loss) in excess of book gains on sale of hotels
|
|
|
116,308
|
|
|
|
(39,842
|
)
|
|
|
(51,576
|
)
|
Depreciation and amortization
(a)
|
|
|
(3,379
|
)
|
|
|
(1,910
|
)
|
|
|
(4,948
|
)
|
Employee benefits not deductible for tax
|
|
|
(1,537
|
)
|
|
|
1,708
|
|
|
|
1,040
|
|
Other book/tax differences
|
|
|
(1,653
|
)
|
|
|
4,779
|
|
|
|
(3,216
|
)
|
|
|
|
|
|
|
|
|
|
|
Tax gain (loss) of taxable subsidiaries
|
|
$
|
113,096
|
|
|
$
|
(92,512
|
)
|
|
$
|
(115,150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The changes in book/tax differences in depreciation and amortization
principally result from book and tax basis differences, differences in depreciable
lives and accelerated depreciation methods.
|
25
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income Taxes (continued)
Summary of TRSs net deferred tax asset:
At December 31, 2006 and 2005, our TRS had a deferred tax asset, prior to any valuation
allowance, primarily comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
Accumulated net operating losses of our TRS
|
|
$
|
119,850
|
|
|
$
|
162,827
|
|
Tax property basis in excess of book
|
|
|
1,128
|
|
|
|
|
|
Accrued employee benefits not deductible for tax
|
|
|
9,111
|
|
|
|
9,695
|
|
Bad debt allowance not deductible for tax
|
|
|
367
|
|
|
|
837
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
130,456
|
|
|
|
173,359
|
|
Valuation allowance
|
|
|
(130,456
|
)
|
|
|
(133,138
|
)
|
|
|
|
|
|
|
|
Deferred tax asset after valuation allowance
|
|
|
|
|
|
|
40,221
|
|
|
|
|
|
|
|
|
Gross deferred tax liability book property basis in excess of tax
|
|
|
|
|
|
|
(40,221
|
)
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
We have provided a valuation allowance against our deferred tax asset at December 31, 2006 and
2005, that results in no net deferred tax asset at December 31, 2006 and 2005 due to the
uncertainty of realization (because of historical operating losses). Accordingly, no provision or
benefit for income taxes is reflected in the accompanying Consolidated Statements of Operations.
At December 31, 2006, the TRS had net operating loss carryforwards for federal income tax purposes
of $315.4 million, which are available to offset future taxable income, if any, through 2025.
Reconciliation between REIT GAAP net loss and taxable income loss:
The following table reconciles REIT GAAP net income (loss) to taxable income (loss) for the
years ended December 31, 2006, 2005 and 2004 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
GAAP net income (loss) from REIT operations
|
|
$
|
54,894
|
|
|
$
|
37,237
|
|
|
$
|
(35,168
|
)
|
Book/tax differences, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
(a)
|
|
|
(2,995
|
)
|
|
|
4,797
|
|
|
|
2,386
|
|
Minority interests
|
|
|
(19,869
|
)
|
|
|
(24,204
|
)
|
|
|
(2,724
|
)
|
Tax loss in excess of book gains on sale of hotels
|
|
|
9,268
|
|
|
|
(21,547
|
)
|
|
|
(10,893
|
)
|
Impairment loss not deductible for tax
|
|
|
(445
|
)
|
|
|
35,146
|
|
|
|
29,779
|
|
Other
|
|
|
(1,444
|
)
|
|
|
4,045
|
|
|
|
1,314
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income (loss) subject to distribution requirement
(b)
|
|
$
|
39,409
|
|
|
$
|
35,474
|
|
|
$
|
(15,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Book/tax differences in depreciation and amortization principally result from
differences in depreciable lives and accelerated depreciation methods.
|
|
(b)
|
|
The dividend distribution requirement is 90%.
|
If we sell any asset acquired from Bristol Hotel Company, or Bristol, within 10 years after
our merger with Bristol in 1998, and we recognize a taxable gain on the sale, we will be taxed at
the highest corporate rate on an amount equal to the lesser of the amount of gain that we recognize
at the time of the sale, or the amount of gain that we would have recognized if we had sold the
asset at the time of the Bristol merger for its then fair market value. Many of the hotels sold in
our disposition program were originally acquired at the time of the Bristol merger. In 2006, we
recorded $0.9 million of built in gain tax with respect to the sale of one hotel, but have been
able to avoid any other substantial built in gain tax on these sales by offsetting built in losses
or other tax planning strategies. We believe that we will be able to avoid any additional
substantial built in gain tax on future sales through offsetting built in losses, like kind
exchanges and other tax planning strategies.
26
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income Taxes (continued)
Characterization of distributions:
For income tax purposes, distributions paid consist of ordinary income, capital gains, return
of capital or a combination thereof. For the years ended December 31, 2006, 2005 and 2004,
distributions paid per share were characterized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
0.188
|
|
|
|
23.45
|
|
|
$
|
0.028
|
|
|
|
18.76
|
|
|
$
|
|
|
|
|
|
|
Return of capital
|
|
|
0.612
|
|
|
|
76.55
|
|
|
|
0.122
|
|
|
|
81.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.800
|
|
|
|
100.00
|
|
|
$
|
0.150
|
|
|
|
100.00
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Series A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
1.95
|
|
|
|
100.00
|
|
|
$
|
1.95
|
|
|
|
100.00
|
|
|
$
|
0.0425
|
|
|
|
2.18
|
|
Return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.9075
|
|
|
|
97.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.95
|
|
|
|
100.00
|
|
|
$
|
1.95
|
|
|
|
100.00
|
|
|
$
|
1.9500
|
|
|
|
100.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Series B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
|
|
|
|
|
|
|
$
|
1.125
|
|
|
|
100.00
|
|
|
$
|
0.0491
|
|
|
|
2.18
|
|
Return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2009
|
|
|
|
97.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
1.125
|
|
|
|
100.00
|
|
|
$
|
2.2500
|
|
|
|
100.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Series C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
2.00
|
|
|
|
100.00
|
|
|
$
|
1.633
|
|
|
|
100.00
|
|
|
$
|
|
|
|
|
|
|
Return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.00
|
|
|
|
100.00
|
|
|
$
|
1.633
|
|
|
|
100.00
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11. Capital Stock
At December 31, 2006, we had $600 million of common stock, preferred stock, debt securities,
and/or common stock warrants available for offerings under a shelf registration statement
previously declared effective.
Preferred Stock
Our board of directors is authorized to provide for the issuance of up to 20 million shares of
preferred stock in one or more series, to establish the number of shares in each series, to fix the
designation, powers, preferences and rights of each such series, and the qualifications,
limitations or restrictions thereof.
In 1996, we issued 6.1 million shares of our Series A preferred stock at $25 per share. In
April 2004, we completed the sale of 4.6 million additional shares of our Series A preferred stock.
The shares were sold at a price of $23.79 per share, which included accrued dividends of $0.51 per
share through April 5, 2004, resulting in net proceeds of $104 million. In August 2004, we
completed the sale of an additional 2.3 million shares of our Series A preferred stock. The shares
were sold at a price of $23.22 per share, which included accrued dividends of $0.28 per share
through August 22, 2004, resulting in net proceeds of $52 million.
27
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Capital Stock (continued)
Our Series A preferred stock bears an annual cumulative dividend payable in arrears equal to
the greater of $1.95 per share or the cash distributions declared or paid for the corresponding
period on the number of shares of common stock into which the Series A preferred stock is then
convertible. Each share of the Series A preferred stock is convertible at the stockholders option
to 0.7752 shares of common stock, subject to certain adjustments. During 2000, holders of 69,400
shares of Series A preferred stock converted their shares to 53,798 common shares, which were
issued from treasury shares.
In 1998, we issued 5.75 million depositary shares, representing 57,500 shares of our 9%
Series B preferred stock at $25 per depositary share. In 2002, we issued 1,025,800 additional
depositary shares, representing 10,258 shares of our Series B preferred stock at $24.37 per
depositary share to yield 9.4%. In 2005, we redeemed all of the outstanding Series B preferred
stock. The redemption of the Series B preferred shares resulted in a reduction in income available
to common shareholders of $6.5 million representing the original issuance cost of the Series B
preferred shares redeemed.
On April 8, 2005, we completed the issuance of 5.4 million depositary shares of our 8% Series
C Cumulative Redeemable preferred stock, or Series C preferred stock, and an additional 1.4 million
depositary shares on August 30, 2005, each representing 1/100 of a share of our Series C preferred
stock with gross proceeds of $135 million and $34.4 million, respectively. The gross proceeds were
used to redeem all of our 9% Series B preferred stock. We may call the Series C preferred stock
and the corresponding depositary shares at $25 per depositary share. These shares have no stated
maturity, sinking fund or mandatory redemption, and are not convertible into any of our other
securities. The Series C preferred stock has a liquidation preference of $2,500 per share
(equivalent to $25 per depositary share) and is entitled to annual cumulative dividends at the rate
of 8% of the liquidation preference (equivalent to $2.00 annually per depositary share).
Accrued dividends payable on our common stock, Series A and Series C preferred stock
aggregating $24.1 million at December 31, 2006, were paid in January 2007.
FelCor LP Units
We are the sole general partner of FelCor LP and are obligated to contribute the net proceeds
from any issuance of our equity securities to FelCor LP in exchange for units of partnership
interest, or Units, corresponding in number and terms to the equity securities issued by us. Units
of limited partner interest may also be issued by FelCor LP to third parties in exchange for cash
or property, and Units so issued to third parties are redeemable at the option of the holders
thereof for a like number of shares of our common stock or, at our option, for the cash equivalent
thereof. During 2006, 2005 and 2004, 1,407,524 Units, 25,595 Units and 245,398 Units,
respectively, were exchanged for a like number of common shares issued from treasury stock.
12. Hotel Operating Revenue, Departmental Expenses, and Other Property Operating Costs
Hotel operating revenue from continuing operations was comprised of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Room revenue
|
|
$
|
809,466
|
|
|
$
|
742,882
|
|
|
$
|
677,169
|
|
Food and beverage revenue
|
|
|
129,200
|
|
|
|
121,836
|
|
|
|
116,829
|
|
Other operating departments
|
|
|
52,293
|
|
|
|
48,431
|
|
|
|
46,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hotel operating revenues
|
|
$
|
990,959
|
|
|
$
|
913,149
|
|
|
$
|
840,416
|
|
|
|
|
|
|
|
|
|
|
|
28
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
12.
|
|
Hotel Operating Revenue, Departmental Expenses and Other Property Operating Costs
(continued)
|
Approximately 99.7% to 100.0% of our revenue in 2006, 2005 and 2004 was comprised of hotel
operating revenues, which includes room revenue, food and beverage revenue, and revenue from other
operating departments (such as telephone, parking and business centers). These revenues are
recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts
are recorded, when allowed, as a reduction in revenue, and there are no material contingent
obligations with respect to rebates or discounts offered by us. All revenues are recorded on an
accrual basis, as earned. Appropriate allowances are made for doubtful accounts and are recorded
as a bad debt expense. The remainder of our revenue was from retail space rental revenue and other
sources. During 2004, we recorded $1 million of other revenue that we received in development fees
from the successful completion of a condominium project.
We do not have any time-share arrangements and do not sponsor any guest frequency programs for
which we would have any contingent liability. We participate in guest frequency programs sponsored
by the brand owners of our hotels, and we expense the charges associated with those programs
(typically consisting of a percentage of the total guest charges incurred by a participating
guest), as incurred. When a guest redeems accumulated guest frequency points at one of our hotels,
the hotel bills the sponsor for the services provided in redemption of such points and records
revenue in the amount of the charges billed to the sponsor. Associated with the guest frequency
programs, we have no loss contingencies or ongoing obligation beyond what is paid to the brand
owner at the time of the guests stay.
Hotel departmental expenses from continuing operations were comprised of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Room
|
|
$
|
199,283
|
|
|
$
|
187,872
|
|
|
$
|
178,146
|
|
Food and beverage
|
|
|
97,012
|
|
|
|
93,136
|
|
|
|
90,715
|
|
Other operating departments
|
|
|
23,436
|
|
|
|
22,446
|
|
|
|
21,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hotel departmental expenses
|
|
$
|
319,731
|
|
|
$
|
303,454
|
|
|
$
|
290,619
|
|
|
|
|
|
|
|
|
|
|
|
Other property operating costs from continuing operations were comprised of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Hotel general and administrative expense
|
|
$
|
87,451
|
|
|
$
|
82,607
|
|
|
$
|
76,898
|
|
Marketing
|
|
|
81,113
|
|
|
|
76,151
|
|
|
|
71,099
|
|
Repair and maintenance
|
|
|
52,710
|
|
|
|
50,011
|
|
|
|
46,063
|
|
Utilities
|
|
|
49,027
|
|
|
|
46,857
|
|
|
|
41,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other property operating costs
|
|
$
|
270,301
|
|
|
$
|
255,626
|
|
|
$
|
235,204
|
|
|
|
|
|
|
|
|
|
|
|
Included in hotel departmental expenses and other property operating costs were hotel
compensation and benefit expenses of $281.7 million, $273.5 million and $259.6 million for the year
ended December 31, 2006, 2005 and 2004, respectively.
29
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Taxes, Insurance and Lease Expense
Taxes, insurance and lease expense from continuing operations were comprised of the following
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Operating lease expense
(a)
|
|
$
|
69,221
|
|
|
$
|
62,176
|
|
|
$
|
56,716
|
|
Real estate and other taxes
|
|
|
32,790
|
|
|
|
32,175
|
|
|
|
26,998
|
|
Property, general liability insurance and other
|
|
|
10,041
|
|
|
|
10,501
|
|
|
|
8,542
|
|
|
|
|
|
|
|
|
|
|
|
Total taxes, insurance and lease expense
|
|
$
|
112,052
|
|
|
$
|
104,852
|
|
|
$
|
92,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes hotel lease expense of $61.1 million, $54.7 million and $49.4 million,
respectively, associated with 13 hotels in 2006 and 2005 and 14 hotels in 2004 owned by
unconsolidated entities and leased to our consolidated lessees. Included in lease
expense is $36.1 million, $28.4 million and $21.9 million in percentage rent for the
year ended December 31, 2006, 2005 and 2004, respectively.
|
14. Land Leases and Hotel Rent
We lease land occupied by certain hotels from third parties under various operating leases
that expire through 2073. Certain land leases contain contingent rent features based on gross
revenue at the respective hotels. In addition, we recognize rent expense for 14 hotels that are
owned by unconsolidated entities and are leased to our consolidated lessees. These leases expire
through 2015 and require the payment of base rents and contingent rent based on revenues at the
respective hotels. Future minimum lease payments under our land lease obligations and hotel leases
at December 31, 2006, were as follows (in thousands):
|
|
|
|
|
Year
|
|
|
|
|
2007
|
|
$
|
22,449
|
|
2008
|
|
|
14,386
|
|
2009
|
|
|
14,361
|
|
2010
|
|
|
13,522
|
|
2011
|
|
|
11,574
|
|
2012 and thereafter
|
|
|
94,115
|
|
|
|
|
|
|
|
$
|
170,407
|
|
|
|
|
|
30
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings (loss) per share
for the years ended December 31, 2006, 2005 and 2004 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
8,565
|
|
|
$
|
(16,916
|
)
|
|
$
|
(78,376
|
)
|
Less: Preferred dividends
|
|
|
(38,713
|
)
|
|
|
(39,408
|
)
|
|
|
(35,130
|
)
|
Issuance costs of redeemed preferred stock
|
|
|
|
|
|
|
(6,522
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations and applicable to
common stockholders
|
|
|
(30,148
|
)
|
|
|
(62,846
|
)
|
|
|
(113,506
|
)
|
Discontinued operations
|
|
|
42,480
|
|
|
|
(234,699
|
)
|
|
|
(21,751
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common stockholders
|
|
$
|
12,332
|
|
|
$
|
(297,545
|
)
|
|
$
|
(135,257
|
)
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic and diluted earnings (loss) per share
|
|
|
60,734
|
|
|
|
59,436
|
|
|
|
59,045
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.50
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(1.92
|
)
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
$
|
0.70
|
|
|
$
|
(3.95
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.20
|
|
|
$
|
(5.01
|
)
|
|
$
|
(2.29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.50
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(1.92
|
)
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
$
|
0.70
|
|
|
$
|
(3.95
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.20
|
|
|
$
|
(5.01
|
)
|
|
$
|
(2.29
|
)
|
|
|
|
|
|
|
|
|
|
|
Securities that could potentially dilute basic earnings per share in the future that were not
included in computation of diluted earnings per share, because they would have been antidilutive
for the periods presented, are as follows (unaudited, in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
2005
|
|
2004
|
Restricted shares granted but not vested
|
|
|
327
|
|
|
|
648
|
|
|
|
395
|
|
Series A convertible preferred shares
|
|
|
9,985
|
|
|
|
9,985
|
|
|
|
9,985
|
|
Series A preferred dividends that would be excluded from net income (loss) applicable to
common stockholders, if the Series A preferred shares were dilutive, were $25.1 million for both
2006 and 2005, and $19.9 million in 2004.
16. Commitments, Contingencies and Related Party Transactions
We shared the executive offices and certain employees with FelCor, Inc. (controlled by Thomas
J. Corcoran, Jr., Chairman of the Board of Directors), and it paid its share of the costs thereof,
including an allocated portion of the rent, compensation of certain personnel, office supplies,
telephones, and depreciation of office furniture, fixtures, and equipment. Any such allocation of
shared expenses must be approved by a majority of our independent directors. FelCor, Inc. had a
10% ownership interest in one hotel and limited other investments. FelCor, Inc. paid approximately
$50,000 for shared office costs in 2006, 2005 and 2004.
31
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Commitments, Contingencies and Related Party Transactions (continued)
In an effort to keep our cost of insurance within reasonable limits, we have only purchased
terrorism insurance for those hotels that are secured by mortgage debt, as required by our lenders.
Our terrorism insurance has per occurrence and aggregate limits of $50 million. We have
established a self-insured retention of $250,000 per occurrence for general liability insurance
with regard to 67 of our hotels; the remainder of our hotels participate in general liability
programs of our managers, with no deductible. Because of our general liability deductible for the
67 hotels, we maintain reserves to cover the estimated ultimate uninsured liability for losses with
respect to reported and unreported claims incurred as of the end of each accounting period. At
December 31, 2006 and 2005, our reserve for this self-insured portion of general liability claims
was $4.3 million and $5.6 million, respectively. Our property program has a $100,000 all risk
deductible, a deductible of 5% of insured value for named windstorm and California quake. Should
uninsured or not fully insured losses be substantial, they could have a material adverse impact on
our operating results and cash flows.
There is no litigation pending or known to be threatened against us or affecting any of our
hotels, other than claims arising in the ordinary course of business or which are not considered to
be material. Furthermore, most of these claims are substantially covered by insurance. We do not
believe that any claims known to us, individually or in the aggregate, will have a material adverse
effect on us
.
Our hotels are operated under various management agreements that call for base management
fees, which range from 2% to 7% of hotel room revenue and generally have an incentive provision
related to the hotels profitability. In addition, the management agreements generally require us
to invest approximately 3% to 5% of revenues in capital maintenance. The management agreements
have terms from 5 to 20 years and generally have renewal options.
With the exception of 35 hotels whose rights to use a brand name are contained in the
management agreement governing their operations, each of our hotels operates under a franchise or
license agreement. Typically, our franchise or license agreements provide for a royalty fee of 4%
of room revenues to be paid to the franchisor.
In the event we breach one of our Embassy Suites Hotels franchise license agreements, in
addition to losing the right to use the Embassy Suites Hotels name for the operation of the
applicable hotel, we may be liable, under certain circumstances, for liquidated damages equal to
the fees paid to the franchisor with respect to that hotel during the three preceding years.
As a part of the amendment to the IHG management agreements, we have agreed to spend, by
June 30, 2007, approximately $50.6 million with regard to special capital plans on 11 hotels. We
have agreed to spend an additional $17.2 million on capital plans by June 30, 2008, on four hotels,
and $5.5 million on capital plans for two hotels that are then to be substantially redeveloped by
December 31, 2010.
32
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Supplemental Cash Flow Disclosure
Accrued dividends payable on our common stock, Series A and Series C preferred stock
aggregating $24.1 million and $8.6 million at December 31, 2006 and 2005 were paid in January of
the following year.
We allocated $26.9 million and $0.1 million of minority interest to additional paid in capital
due to the exchange of 1,407,524 units and 25,595 units for common stock in 2006 and 2005,
respectively.
Depreciation expense is comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Depreciation from continuing operations
|
|
$
|
94,579
|
|
|
$
|
84,448
|
|
|
$
|
78,116
|
|
Depreciation from discontinued operations
|
|
|
15,695
|
|
|
|
38,087
|
|
|
|
44,537
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation expense
|
|
$
|
110,274
|
|
|
$
|
122,535
|
|
|
$
|
122,653
|
|
|
|
|
|
|
|
|
|
|
|
In 2006, we sold 31 hotels for gross proceeds of $514 million. These proceeds were used to
pay down debt of approximately $356 million ($150 million of which related to sales proceeds paid
directly from purchaser to our lender at closing) and invested in capital improvements at many of
our core hotels.
In 2006, we borrowed $215 million of debt, that was paid directly to a lender, repaying
$215 million of debt.
For the year ended December 31, 2006, repayment of borrowings consisted of early retirement of
debt of $687.2 million and normal recurring principal payments of $15.9 million.
For the year ended December 31, 2005, repayment of borrowings of $293.0 million consisted of
early retirement of secured debt of $262.0 million and $31.0 million of normal recurring principal
payments.
For the year ended December 31, 2004, repayment of borrowings of $838.9 million consisted of
$775.0 million in early retirement of senior notes, $18.9 million of normal recurring principal
payments, $41.3 million of premium paid in excess of par on the retirement of the senior notes and
$3.7 million to retire interest rate swaps.
18. Stock Based Compensation Plans
We sponsor four restricted stock and stock option plans, or the FelCor Plans. In addition,
upon completion of the merger with Bristol in 1998, we assumed two stock option plans previously
sponsored by Bristol, or the Bristol Plans. We were initially obligated to issue up to 1,237,309
shares of our common stock pursuant to the Bristol Plans. No additional options may be awarded
under the Bristol Plans. The FelCor Plans and the Bristol Plans are referred to collectively as
the Plans.
We are authorized to issue 4,700,000 shares of common stock under the FelCor Plans pursuant to
awards granted in the form of incentive stock options, non-qualified stock options, and restricted
stock. All options have 10-year contractual terms and vest either over five equal annual
installments (20% per year), beginning in the year following the date of grant or 100% at the end
of a four-year vesting term. Stock grants vest either over five equal annual installments or over
a four year schedule including time based vesting and performance based vesting. Under the FelCor
Plans, there were 797,114 shares remaining available for grant at December 31, 2006.
There were options covering 53,704 shares outstanding under the Bristol Plans at December 31,
2006. These options are fully vested.
33
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Stock Based Compensation Plans (continued)
Stock Options
A summary of the status of our non-qualified stock options under the Plans as of December 31,
2006, 2005 and 2004, and the changes during these years are presented in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
No. Shares of
|
|
|
Average
|
|
|
No. Shares of
|
|
|
Average
|
|
|
No. Shares of
|
|
|
Average
|
|
|
|
Underlying
|
|
|
Exercise
|
|
|
Underlying
|
|
|
Exercise
|
|
|
Underlying
|
|
|
Exercise
|
|
|
|
Options
|
|
|
Prices
|
|
|
Options
|
|
|
Prices
|
|
|
Options
|
|
|
Prices
|
|
Outstanding at beginning of the year
|
|
|
1,465,257
|
|
|
$
|
23.41
|
|
|
|
1,478,760
|
|
|
$
|
24.72
|
|
|
|
1,911,544
|
|
|
$
|
22.72
|
|
Forfeited
|
|
|
(726,891
|
)
|
|
$
|
25.56
|
|
|
|
(13,503
|
)
|
|
$
|
22.30
|
|
|
|
(432,784
|
)
|
|
$
|
15.91
|
|
Exercised
|
|
|
(140,000
|
)
|
|
$
|
15.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year
|
|
|
598,366
|
|
|
$
|
22.62
|
|
|
|
1,465,257
|
|
|
$
|
23.41
|
|
|
|
1,478,760
|
|
|
$
|
24.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year
|
|
|
598,366
|
|
|
$
|
22.62
|
|
|
|
1,455,257
|
|
|
$
|
23.46
|
|
|
|
1,333,760
|
|
|
$
|
24.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Exercisable and Outstanding_
|
|
|
Number
|
|
Wgtd. Avg.
|
|
|
Range of
|
|
Outstanding
|
|
Remaining
|
|
Wgtd Avg.
|
Exercise Prices
|
|
at 12/31/06
|
|
Life
|
|
Exercise Price
|
$15.62 to $22.56
|
|
|
534,912
|
|
|
|
1.01
|
|
|
$
|
21.58
|
|
$24.18 to $36.12
|
|
|
63,454
|
|
|
|
0.88
|
|
|
$
|
31.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$15.62 to $36.12
|
|
|
598,366
|
|
|
|
0.99
|
|
|
$
|
22.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of each stock option granted is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average assumptions for 2001 and
2000 when options were granted: dividend yield of 12.44% to 11.28%; risk free interest rates are
different for each grant and range from 4.33% to 6.58%; the expected lives of options were six
years; and volatility of 21.04% for 2001 grants and 18.22% for 2000 grants. The weighted average
fair value of options granted during 2001, was $0.85 per share. We have issued no stock options
since 2001.
Restricted Stock
A summary of the status of our restricted stock grants as of December 31, 2006, 2005, and
2004, and the changes during these years are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Fair Market
|
|
|
|
|
|
|
Fair Market
|
|
|
|
|
|
|
Fair Market
|
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
Value
|
|
|
|
No. Shares
|
|
|
at Grant
|
|
|
No. Shares
|
|
|
at Grant
|
|
|
No. Shares
|
|
|
at Grant
|
|
Outstanding at beginning of the year
|
|
|
1,549,206
|
|
|
$
|
13.35
|
|
|
|
1,187,606
|
|
|
$
|
17.54
|
|
|
|
731,431
|
|
|
$
|
22.03
|
|
Granted
(a)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With immediate vesting
(b)
|
|
|
28,500
|
|
|
$
|
19.78
|
|
|
|
22,300
|
|
|
$
|
13.73
|
|
|
|
26,500
|
|
|
$
|
10.00
|
|
With 4-year pro rata vesting
|
|
|
293,800
|
|
|
$
|
18.71
|
|
|
|
319,300
|
|
|
$
|
12.52
|
|
|
|
295,040
|
|
|
$
|
10.00
|
|
Vesting within 12 months of grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
12.47
|
|
With 5-year pro rata vesting
|
|
|
60,000
|
|
|
$
|
21.64
|
|
|
|
20,000
|
|
|
$
|
13.85
|
|
|
|
110,000
|
|
|
$
|
12.25
|
|
Forfeited
|
|
|
(51,377
|
)
|
|
$
|
13.23
|
|
|
|
|
|
|
|
|
|
|
|
(25,365
|
)
|
|
$
|
18.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year
|
|
|
1,880,129
|
|
|
$
|
14.56
|
|
|
|
1,549,206
|
|
|
$
|
13.35
|
|
|
|
1,187,606
|
|
|
$
|
17.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested at end of year
|
|
|
1,108,866
|
|
|
$
|
17.30
|
|
|
|
795,738
|
|
|
$
|
18.49
|
|
|
|
558,151
|
|
|
$
|
20.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
All shares granted are issued out of treasury except for 19,200, 5,200 and
6,300 of the restricted shares issued to directors during the years ended December 31,
2006, 2005 and 2004, respectively.
|
|
(b)
|
|
Shares awarded to directors.
|
The unearned compensation cost of granted but unvested restricted stock as of December 31,
2006 was $8.4 million. The weighted average period over which this cost is to be amortized is
approximately three years.
34
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Employee Benefits
We offer a 401(k) plan and health insurance benefits to our employees. Our matching
contribution to our 401(k) plan aggregated $0.9 million for 2006, $0.7 million for 2005, and
$0.6 million for 2004. The cost of health insurance benefits were $1.2 million during 2006,
$0.7 million during 2005 and $0.6 million during 2004.
The employees at our hotels are employees of the respective management companies. Under the
management agreements, we reimburse the management companies for the compensation and benefits
related to the employees who work at our hotels. We are not, however, the sponsors of their
employee benefit plans and have no obligation to fund these plans.
20. Segment Information
SFAS 131, Disclosures about Segments of an Enterprise and Related Information, requires the
disclosure of selected information about operating segments. Based on the guidance provided in the
standard, we have determined that our business is conducted in one operating segment because of the
similar economic characteristics of our hotels.
The following table sets forth revenues for continuing operations, and investment in hotel
assets represented by, the following geographical areas as of and for the years ended December 31,
2006, 2005 and 2004 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
Investment in Hotel Assets
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
California
|
|
$
|
195,056
|
|
|
$
|
178,688
|
|
|
$
|
161,594
|
|
|
$
|
413,899
|
|
|
$
|
517,250
|
|
|
$
|
546,762
|
|
Texas
|
|
|
110,384
|
|
|
|
98,870
|
|
|
|
91,046
|
|
|
|
207,921
|
|
|
|
363,221
|
|
|
|
517,933
|
|
Florida
|
|
|
150,339
|
|
|
|
136,882
|
|
|
|
123,816
|
|
|
|
344,812
|
|
|
|
370,863
|
|
|
|
373,468
|
|
Georgia
|
|
|
58,745
|
|
|
|
54,993
|
|
|
|
50,138
|
|
|
|
122,227
|
|
|
|
208,665
|
|
|
|
272,010
|
|
Other states
|
|
|
447,081
|
|
|
|
418,445
|
|
|
|
391,238
|
|
|
|
905,352
|
|
|
|
1,072,222
|
|
|
|
1,197,952
|
|
Canada
|
|
|
29,433
|
|
|
|
26,777
|
|
|
|
24,780
|
|
|
|
50,074
|
|
|
|
52,158
|
|
|
|
47,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
991,038
|
|
|
$
|
914,655
|
|
|
$
|
842,612
|
|
|
$
|
2,044,285
|
|
|
$
|
2,584,379
|
|
|
$
|
2,955,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21. Recently Issued Statements of Financial Accounting Standards
In July 2006, the FASB issued FASB Interpretation Number 48,
Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No. 109
(FIN 48). FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken in a tax return. The Company must determine whether it is
more-likely-than-not that a tax position will be sustained upon examination, including resolution
of any related appeals or litigation processes, based on the technical merits of the position.
Once it is determined that a position meets the more-likely-than-not recognition threshold, the
position is measured to determine the amount of benefit to recognize in the financial statements.
FIN 48 applies to all tax positions related to income taxes subject to FASB Statement No. 109,
Accounting for Income Taxes
. The interpretation clearly scopes out income tax positions related to
FASB Statement No. 5,
Accounting for Contingencies
. We will adopt the provisions of this statement
beginning in the first quarter of 2007. We do not expect the cumulative effect of applying the
provisions of FIN 48, if any, to be material.
In September 2006, the FASB issued Statement No. 157,
Fair Value Measurements
(SFAS No.
157). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This
statement clarifies the principle that fair value should be based on the assumptions that market
participants would use when pricing the asset or liability. SFAS No. 157 establishes a fair value
hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority
to unobservable data. SFAS No. 157 applies
35
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Recently Issued Statements of Financial Accounting Standards (continued)
whenever other standards require assets or liabilities to be measured at fair value. This statement
is effective in fiscal years beginning after November 15, 2007. We believe that the adoption of
this standard on January 1, 2008 will not have a material effect on our consolidated financial
statements.
22. Quarterly Operating Results (unaudited)
Our unaudited consolidated quarterly operating data for the years ended December 31, 2006 and
2005, follows (in thousands, except per share data). In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of quarterly results
have been reflected in the data. It is also managements opinion, however, that quarterly
operating data for hotel enterprises are not indicative of results to be achieved in succeeding
quarters or years. In order to obtain a more accurate indication of performance, there should be a
review of operating results, changes in stockholders equity and cash flows for a period of several
years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
2006
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
Total revenues
|
|
$
|
251,407
|
|
|
$
|
259,265
|
|
|
$
|
247,464
|
|
|
$
|
232,902
|
|
Net income (loss) from continuing operations
|
|
$
|
6,859
|
|
|
$
|
12,478
|
|
|
$
|
4,272
|
|
|
$
|
(15,044
|
)
|
Discontinued operations
|
|
$
|
2,993
|
|
|
$
|
(2,333
|
)
|
|
$
|
15,790
|
|
|
$
|
26,030
|
|
Net income
|
|
$
|
9,852
|
|
|
$
|
10,145
|
|
|
$
|
20,062
|
|
|
$
|
10,986
|
|
Net income (loss) applicable to common stockholders
|
|
$
|
174
|
|
|
$
|
467
|
|
|
$
|
10,396
|
|
|
$
|
1,295
|
|
Comprehensive income
|
|
$
|
9,560
|
|
|
$
|
12,305
|
|
|
$
|
19,266
|
|
|
$
|
6,151
|
|
Basic and diluted per common share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
$
|
(0.05
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.10
|
)
|
|
$
|
(0.40
|
)
|
Discontinued operations
|
|
$
|
0.05
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.27
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
|
|
|
$
|
0.01
|
|
|
$
|
0.17
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
59,660
|
|
|
|
60,355
|
|
|
|
61,148
|
|
|
|
61,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding
|
|
|
59,660
|
|
|
|
60,626
|
|
|
|
61,148
|
|
|
|
61,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
2005
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
Total revenues
|
|
$
|
216,900
|
|
|
$
|
240,777
|
|
|
$
|
234,323
|
|
|
$
|
222,655
|
|
Net income (loss) from continuing operations
|
|
$
|
(4,284
|
)
|
|
$
|
6,208
|
|
|
$
|
(797
|
)
|
|
$
|
(18,043
|
)
|
Discontinued operations
|
|
$
|
(3,730
|
)
|
|
$
|
4,143
|
|
|
$
|
12,055
|
|
|
$
|
(247,167
|
)
|
Net income (loss)
(a)
|
|
$
|
(8,014
|
)
|
|
$
|
10,351
|
|
|
$
|
11,258
|
|
|
$
|
(265,210
|
)
|
Net loss applicable to common stockholders
|
|
$
|
(18,105
|
)
|
|
$
|
(4,656
|
)
|
|
$
|
105
|
|
|
$
|
(274,889
|
)
|
Comprehensive income (loss)
|
|
$
|
(6,631
|
)
|
|
$
|
8,722
|
|
|
$
|
15,169
|
|
|
$
|
(265,053
|
)
|
Basic and diluted per common share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
$
|
(0.24
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.47
|
)
|
Discontinued operations
|
|
$
|
(0.06
|
)
|
|
$
|
0.07
|
|
|
$
|
0.20
|
|
|
$
|
(4.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(0.30
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
|
|
|
$
|
(4.62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
59,416
|
|
|
|
59,404
|
|
|
|
59,442
|
|
|
|
59,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding
|
|
|
59,416
|
|
|
|
59,404
|
|
|
|
59,442
|
|
|
|
59,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The fourth quarter net loss in 2005 includes an impairment charge of
$263 million.
|
In accordance with SFAS 144, amounts
previously reported in continuing
operations have been reclassified to
discontinued operations upon sale of
hotels or the designation of hotels as
held for sale in subsequent periods.
36
FELCOR LODGING TRUST INCORPORATED
Schedule III Real Estate and Accumulated Depreciation
as of December 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Capitalized
|
|
Gross Amounts at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
Subsequent to Acquisition
|
|
Carried at Close of Period
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Life Upon
|
|
|
|
|
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
Which
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
Buildings &
|
|
Year
|
|
Date
|
|
Depreciation
|
Location
|
|
Encumbrances
|
|
Land
|
|
Improvements
|
|
Land
|
|
Improvements
|
|
Land
|
|
Improvements
|
|
Total
|
|
Improvements
|
|
Opened
|
|
Acquired
|
|
is Computed
|
Birmingham, AL (1)
|
|
$
|
15,657
|
|
|
$
|
2,843
|
|
|
$
|
29,286
|
|
|
$
|
0
|
|
|
$
|
1,210
|
|
|
$
|
2,843
|
|
|
$
|
30,496
|
|
|
$
|
33,339
|
|
|
$
|
8,176
|
|
|
|
1987
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
Phoenix Biltmore, AZ (1)
|
|
|
19,517
|
|
|
|
0
|
|
|
|
38,998
|
|
|
|
4,694
|
|
|
|
1,973
|
|
|
|
4,694
|
|
|
|
40,971
|
|
|
|
45,665
|
|
|
|
10,964
|
|
|
|
1985
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
Phoenix Crescent Hotel, AZ (3)
|
|
|
22,825
|
|
|
|
3,608
|
|
|
|
29,583
|
|
|
|
0
|
|
|
|
1,490
|
|
|
|
3,608
|
|
|
|
31,073
|
|
|
|
34,681
|
|
|
|
7,274
|
|
|
|
1986
|
|
|
|
6/30/1997
|
|
|
15 - 40 Yrs
|
Phoenix Tempe, AZ (1)
|
|
|
22,944
|
|
|
|
3,951
|
|
|
|
34,371
|
|
|
|
0
|
|
|
|
1,048
|
|
|
|
3,951
|
|
|
|
35,419
|
|
|
|
39,370
|
|
|
|
7,657
|
|
|
|
1986
|
|
|
|
5/4/1998
|
|
|
15 - 40 Yrs
|
Dana Point Doheny Beach, CA (4)
|
|
|
0
|
|
|
|
1,787
|
|
|
|
15,545
|
|
|
|
0
|
|
|
|
2,019
|
|
|
|
1,787
|
|
|
|
17,564
|
|
|
|
19,351
|
|
|
|
4,150
|
|
|
|
1992
|
|
|
|
2/21/1997
|
|
|
15 - 40 Yrs
|
Los Angeles Anaheim (Located near Disneyland
Park), CA (1)
|
|
|
23,595
|
|
|
|
2,548
|
|
|
|
14,832
|
|
|
|
0
|
|
|
|
1,308
|
|
|
|
2,548
|
|
|
|
16,140
|
|
|
|
18,688
|
|
|
|
4,297
|
|
|
|
1987
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
Los Angeles International Airport South, CA (1)
|
|
|
0
|
|
|
|
2,660
|
|
|
|
17,997
|
|
|
|
0
|
|
|
|
1,307
|
|
|
|
2,660
|
|
|
|
19,304
|
|
|
|
21,964
|
|
|
|
5,702
|
|
|
|
1985
|
|
|
|
3/27/1996
|
|
|
15 - 40 Yrs
|
Milpitas Silicon Valley, CA (1)
|
|
|
26,965
|
|
|
|
4,021
|
|
|
|
23,677
|
|
|
|
0
|
|
|
|
2,063
|
|
|
|
4,021
|
|
|
|
25,740
|
|
|
|
29,761
|
|
|
|
6,847
|
|
|
|
1987
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
Napa Valley, CA (1)
|
|
|
14,166
|
|
|
|
3,287
|
|
|
|
14,205
|
|
|
|
0
|
|
|
|
1,726
|
|
|
|
3,287
|
|
|
|
15,931
|
|
|
|
19,218
|
|
|
|
4,103
|
|
|
|
1985
|
|
|
|
5/8/1996
|
|
|
15 - 40 Yrs
|
Oxnard Mandalay Beach Resort & Conference
Center, CA (1)
|
|
|
0
|
|
|
|
2,930
|
|
|
|
22,125
|
|
|
|
1
|
|
|
|
3,921
|
|
|
|
2,931
|
|
|
|
26,046
|
|
|
|
28,977
|
|
|
|
6,500
|
|
|
|
1986
|
|
|
|
5/8/1996
|
|
|
15 - 40 Yrs
|
San Diego On the Bay, CA (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
68,229
|
|
|
|
0
|
|
|
|
4,688
|
|
|
|
0
|
|
|
|
72,917
|
|
|
|
72,917
|
|
|
|
17,060
|
|
|
|
1965
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
San Francisco Airport Burlingame, CA (1)
|
|
|
0
|
|
|
|
0
|
|
|
|
39,929
|
|
|
|
0
|
|
|
|
967
|
|
|
|
0
|
|
|
|
40,896
|
|
|
|
40,896
|
|
|
|
11,111
|
|
|
|
1986
|
|
|
|
11/6/1995
|
|
|
15 - 40 Yrs
|
San Francisco Airport South San Francisco, CA
(1)
|
|
|
23,943
|
|
|
|
3,418
|
|
|
|
31,737
|
|
|
|
0
|
|
|
|
2,156
|
|
|
|
3,418
|
|
|
|
33,893
|
|
|
|
37,311
|
|
|
|
8,995
|
|
|
|
1988
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
San Francisco Fishermans Wharf, CA (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
61,883
|
|
|
|
0
|
|
|
|
1,847
|
|
|
|
0
|
|
|
|
63,730
|
|
|
|
63,730
|
|
|
|
20,292
|
|
|
|
1970
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
San Francisco Union Square, CA (5)
|
|
|
0
|
|
|
|
8,466
|
|
|
|
73,684
|
|
|
|
(434
|
)
|
|
|
4,282
|
|
|
|
8,032
|
|
|
|
77,966
|
|
|
|
85,998
|
|
|
|
16,344
|
|
|
|
1970
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Santa Barbara, CA (2)
|
|
|
0
|
|
|
|
1,683
|
|
|
|
14,647
|
|
|
|
4
|
|
|
|
791
|
|
|
|
1,687
|
|
|
|
15,438
|
|
|
|
17,125
|
|
|
|
3,157
|
|
|
|
1969
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Santa Monica, CA (2)
|
|
|
0
|
|
|
|
10,200
|
|
|
|
16,580
|
|
|
|
0
|
|
|
|
376
|
|
|
|
10,200
|
|
|
|
16,956
|
|
|
|
27,156
|
|
|
|
1,199
|
|
|
|
1967
|
|
|
|
3/11/2004
|
|
|
15 - 40 Yrs
|
Toronto Airport, Canada (7)
|
|
|
0
|
|
|
|
0
|
|
|
|
21,041
|
|
|
|
0
|
|
|
|
11,140
|
|
|
|
0
|
|
|
|
32,181
|
|
|
|
32,181
|
|
|
|
7,496
|
|
|
|
1970
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Toronto Yorkdale, Canada (2)
|
|
|
0
|
|
|
|
1,566
|
|
|
|
13,633
|
|
|
|
477
|
|
|
|
9,933
|
|
|
|
2,043
|
|
|
|
23,566
|
|
|
|
25,609
|
|
|
|
6,004
|
|
|
|
1970
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Wilmington, DE (6)
|
|
|
10,047
|
|
|
|
1,379
|
|
|
|
12,487
|
|
|
|
0
|
|
|
|
10,061
|
|
|
|
1,379
|
|
|
|
22,548
|
|
|
|
23,927
|
|
|
|
4,825
|
|
|
|
1972
|
|
|
|
3/20/1998
|
|
|
15 - 40 Yrs
|
Boca Raton, FL (1)
|
|
|
5,024
|
|
|
|
1,868
|
|
|
|
16,253
|
|
|
|
0
|
|
|
|
896
|
|
|
|
1,868
|
|
|
|
17,149
|
|
|
|
19,017
|
|
|
|
4,538
|
|
|
|
1989
|
|
|
|
2/28/1996
|
|
|
15 - 40 Yrs
|
Cocoa Beach Oceanfront, FL (2)
|
|
|
0
|
|
|
|
2,285
|
|
|
|
19,892
|
|
|
|
7
|
|
|
|
13,216
|
|
|
|
2,292
|
|
|
|
33,108
|
|
|
|
35,400
|
|
|
|
8,259
|
|
|
|
1960
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Deerfield Beach, FL (1)
|
|
|
28,420
|
|
|
|
4,523
|
|
|
|
29,443
|
|
|
|
68
|
|
|
|
1,479
|
|
|
|
4,591
|
|
|
|
30,922
|
|
|
|
35,513
|
|
|
|
8,359
|
|
|
|
1987
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
Ft. Lauderdale 17th Street, FL (1)
|
|
|
20,752
|
|
|
|
5,329
|
|
|
|
47,850
|
|
|
|
(163
|
)
|
|
|
1,919
|
|
|
|
5,166
|
|
|
|
49,769
|
|
|
|
54,935
|
|
|
|
13,645
|
|
|
|
1986
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
Ft. Lauderdale (Cypress Creek), FL (8)
|
|
|
10,990
|
|
|
|
3,009
|
|
|
|
26,177
|
|
|
|
0
|
|
|
|
968
|
|
|
|
3,009
|
|
|
|
27,145
|
|
|
|
30,154
|
|
|
|
5,985
|
|
|
|
1986
|
|
|
|
5/4/1998
|
|
|
15 - 40 Yrs
|
Jacksonville Baymeadows, FL (1)
|
|
|
23,590
|
|
|
|
1,130
|
|
|
|
9,608
|
|
|
|
0
|
|
|
|
6,528
|
|
|
|
1,130
|
|
|
|
16,136
|
|
|
|
17,266
|
|
|
|
4,390
|
|
|
|
1986
|
|
|
|
7/28/1994
|
|
|
15 - 40 Yrs
|
Miami International Airport, FL (1)
|
|
|
16,775
|
|
|
|
4,135
|
|
|
|
24,950
|
|
|
|
0
|
|
|
|
1,620
|
|
|
|
4,135
|
|
|
|
26,570
|
|
|
|
30,705
|
|
|
|
7,099
|
|
|
|
1983
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Orlando International Airport, FL (7)
|
|
|
8,949
|
|
|
|
2,549
|
|
|
|
22,188
|
|
|
|
6
|
|
|
|
2,081
|
|
|
|
2,555
|
|
|
|
24,269
|
|
|
|
26,824
|
|
|
|
5,337
|
|
|
|
1984
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Orlando International Drive Resort, FL (2)
|
|
|
0
|
|
|
|
5,108
|
|
|
|
44,460
|
|
|
|
13
|
|
|
|
9,629
|
|
|
|
5,121
|
|
|
|
54,089
|
|
|
|
59,210
|
|
|
|
12,147
|
|
|
|
1972
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Orlando International Drive/Convention Center,
FL (1)
|
|
|
23,319
|
|
|
|
1,632
|
|
|
|
13,870
|
|
|
|
0
|
|
|
|
1,864
|
|
|
|
1,632
|
|
|
|
15,734
|
|
|
|
17,366
|
|
|
|
4,743
|
|
|
|
1985
|
|
|
|
7/28/1994
|
|
|
15 - 40 Yrs
|
Orlando (North), FL (1)
|
|
|
0
|
|
|
|
1,673
|
|
|
|
14,218
|
|
|
|
6
|
|
|
|
7,202
|
|
|
|
1,679
|
|
|
|
21,420
|
|
|
|
23,099
|
|
|
|
6,185
|
|
|
|
1985
|
|
|
|
7/28/1994
|
|
|
15 - 40 Yrs
|
Orlando- Walt Disney World
Resort, FL (4)
|
|
|
0
|
|
|
|
0
|
|
|
|
28,092
|
|
|
|
0
|
|
|
|
665
|
|
|
|
0
|
|
|
|
28,757
|
|
|
|
28,757
|
|
|
|
6,313
|
|
|
|
1987
|
|
|
|
7/28/1997
|
|
|
15 - 40 Yrs
|
Tampa On Tampa Bay, FL (4)
|
|
|
12,950
|
|
|
|
2,142
|
|
|
|
18,639
|
|
|
|
1
|
|
|
|
2,132
|
|
|
|
2,143
|
|
|
|
20,771
|
|
|
|
22,914
|
|
|
|
4,917
|
|
|
|
1986
|
|
|
|
7/28/1997
|
|
|
15 - 40 Yrs
|
Atlanta Airport, GA (1)
|
|
|
12,331
|
|
|
|
0
|
|
|
|
22,342
|
|
|
|
2,568
|
|
|
|
1,854
|
|
|
|
2,568
|
|
|
|
24,196
|
|
|
|
26,764
|
|
|
|
5,047
|
|
|
|
1989
|
|
|
|
5/4/1998
|
|
|
15 - 40 Yrs
|
37
FELCOR LODGING TRUST INCORPORATED
Schedule III Real Estate and Accumulated Depreciation
as of December 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Capitalized
|
|
Gross Amounts at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
Subsequent to Acquisition
|
|
Carried at Close of Period
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Life Upon
|
|
|
|
|
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
Which
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
Buildings &
|
|
Year
|
|
Date
|
|
Depreciation
|
Location
|
|
Encumbrances
|
|
Land
|
|
Improvements
|
|
Land
|
|
Improvements
|
|
Land
|
|
Improvements
|
|
Total
|
|
Improvements
|
|
Opened
|
|
Acquired
|
|
is Computed
|
Atlanta Buckhead, GA (1)
|
|
|
34,864
|
|
|
|
7,303
|
|
|
|
38,996
|
|
|
|
(300
|
)
|
|
|
1,907
|
|
|
|
7,003
|
|
|
|
40,903
|
|
|
|
47,906
|
|
|
|
10,236
|
|
|
|
1988
|
|
|
|
10/17/1996
|
|
|
15 - 40 Yrs
|
Atlanta Galleria, GA (8)
|
|
|
15,217
|
|
|
|
5,052
|
|
|
|
28,507
|
|
|
|
0
|
|
|
|
1,505
|
|
|
|
5,052
|
|
|
|
30,012
|
|
|
|
35,064
|
|
|
|
7,045
|
|
|
|
1990
|
|
|
|
6/30/1997
|
|
|
15 - 40 Yrs
|
Atlanta Gateway-Atlanta Airport, GA (3)
|
|
|
0
|
|
|
|
5,113
|
|
|
|
22,857
|
|
|
|
1
|
|
|
|
266
|
|
|
|
5,114
|
|
|
|
23,123
|
|
|
|
28,237
|
|
|
|
5,491
|
|
|
|
1986
|
|
|
|
6/30/1997
|
|
|
15 - 40 Yrs
|
Chicago Northshore/Deerfield (Northbrook), IL (1)
|
|
|
15,108
|
|
|
|
2,305
|
|
|
|
20,054
|
|
|
|
0
|
|
|
|
967
|
|
|
|
2,305
|
|
|
|
21,021
|
|
|
|
23,326
|
|
|
|
5,418
|
|
|
|
1987
|
|
|
|
6/20/1996
|
|
|
15 - 40 Yrs
|
Chicago OHare Airport, IL (3)
|
|
|
21,134
|
|
|
|
8,178
|
|
|
|
37,043
|
|
|
|
0
|
|
|
|
2,297
|
|
|
|
8,178
|
|
|
|
39,340
|
|
|
|
47,518
|
|
|
|
9,137
|
|
|
|
1994
|
|
|
|
6/30/1997
|
|
|
15 - 40 Yrs
|
Indianapolis North, IN (1)
|
|
|
12,861
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,125
|
|
|
|
14,124
|
|
|
|
5,125
|
|
|
|
14,124
|
|
|
|
19,249
|
|
|
|
6,990
|
|
|
|
1986
|
|
|
|
8/1/1996
|
|
|
15 - 40 Yrs
|
Lexington Lexington Green, KY (9)
|
|
|
17,721
|
|
|
|
1,955
|
|
|
|
13,604
|
|
|
|
0
|
|
|
|
431
|
|
|
|
1,955
|
|
|
|
14,035
|
|
|
|
15,990
|
|
|
|
3,756
|
|
|
|
1987
|
|
|
|
1/10/1996
|
|
|
15 - 40 Yrs
|
Baton Rouge, LA (1)
|
|
|
10,065
|
|
|
|
2,350
|
|
|
|
19,092
|
|
|
|
0
|
|
|
|
1,202
|
|
|
|
2,350
|
|
|
|
20,294
|
|
|
|
22,644
|
|
|
|
5,449
|
|
|
|
1985
|
|
|
|
1/3/1996
|
|
|
15 - 40 Yrs
|
New Orleans, LA (1)
|
|
|
29,760
|
|
|
|
3,647
|
|
|
|
31,993
|
|
|
|
0
|
|
|
|
7,283
|
|
|
|
3,647
|
|
|
|
39,276
|
|
|
|
42,923
|
|
|
|
12,295
|
|
|
|
1984
|
|
|
|
12/1/1994
|
|
|
15 - 40 Yrs
|
New Orleans French Quarter, LA (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
50,732
|
|
|
|
14
|
|
|
|
8,526
|
|
|
|
14
|
|
|
|
59,258
|
|
|
|
59,272
|
|
|
|
12,173
|
|
|
|
1969
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Boston Government Center, MA (7)
|
|
|
0
|
|
|
|
0
|
|
|
|
45,192
|
|
|
|
0
|
|
|
|
6,166
|
|
|
|
0
|
|
|
|
51,358
|
|
|
|
51,358
|
|
|
|
12,929
|
|
|
|
1968
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Boston Marlborough, MA (1)
|
|
|
18,685
|
|
|
|
948
|
|
|
|
8,143
|
|
|
|
761
|
|
|
|
13,440
|
|
|
|
1,709
|
|
|
|
21,583
|
|
|
|
23,292
|
|
|
|
5,414
|
|
|
|
1988
|
|
|
|
6/30/1995
|
|
|
15 - 40 Yrs
|
Baltimore BWI Airport, MD (1)
|
|
|
22,031
|
|
|
|
2,568
|
|
|
|
22,433
|
|
|
|
0
|
|
|
|
1,842
|
|
|
|
2,568
|
|
|
|
24,275
|
|
|
|
26,843
|
|
|
|
5,933
|
|
|
|
1987
|
|
|
|
3/20/1997
|
|
|
15 - 40 Yrs
|
Minneapolis Airport, MN (1)
|
|
|
19,882
|
|
|
|
5,417
|
|
|
|
36,508
|
|
|
|
24
|
|
|
|
1,652
|
|
|
|
5,441
|
|
|
|
38,160
|
|
|
|
43,601
|
|
|
|
10,122
|
|
|
|
1986
|
|
|
|
11/6/1995
|
|
|
15 - 40 Yrs
|
Minneapolis Bloomington, MN (1)
|
|
|
18,350
|
|
|
|
2,038
|
|
|
|
17,731
|
|
|
|
0
|
|
|
|
982
|
|
|
|
2,038
|
|
|
|
18,713
|
|
|
|
20,751
|
|
|
|
4,545
|
|
|
|
1980
|
|
|
|
2/1/1997
|
|
|
15 - 40 Yrs
|
St Paul- Downtown, MN (1)
|
|
|
4,452
|
|
|
|
1,156
|
|
|
|
17,315
|
|
|
|
0
|
|
|
|
934
|
|
|
|
1,156
|
|
|
|
18,249
|
|
|
|
19,405
|
|
|
|
4,802
|
|
|
|
1983
|
|
|
|
11/15/1995
|
|
|
15 - 40 Yrs
|
Charlotte SouthPark, NC (4)
|
|
|
0
|
|
|
|
1,458
|
|
|
|
12,681
|
|
|
|
0
|
|
|
|
2,264
|
|
|
|
1,458
|
|
|
|
14,945
|
|
|
|
16,403
|
|
|
|
1,806
|
|
|
|
N/A
|
|
|
|
7/12/2002
|
|
|
15 - 40 Yrs
|
Raleigh, NC (4)
|
|
|
17,290
|
|
|
|
2,124
|
|
|
|
18,476
|
|
|
|
0
|
|
|
|
1,410
|
|
|
|
2,124
|
|
|
|
19,886
|
|
|
|
22,010
|
|
|
|
4,612
|
|
|
|
1987
|
|
|
|
7/28/1997
|
|
|
15 - 40 Yrs
|
Piscataway-Somerset, NJ (1)
|
|
|
18,893
|
|
|
|
1,755
|
|
|
|
17,563
|
|
|
|
0
|
|
|
|
1,590
|
|
|
|
1,755
|
|
|
|
19,153
|
|
|
|
20,908
|
|
|
|
5,061
|
|
|
|
1988
|
|
|
|
1/10/1996
|
|
|
15 - 40 Yrs
|
Philadelphia Historic District, PA (2)
|
|
|
0
|
|
|
|
3,164
|
|
|
|
27,535
|
|
|
|
7
|
|
|
|
6,978
|
|
|
|
3,171
|
|
|
|
34,513
|
|
|
|
37,684
|
|
|
|
8,120
|
|
|
|
1972
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Philadelphia Society Hill, PA (3)
|
|
|
28,742
|
|
|
|
4,542
|
|
|
|
45,121
|
|
|
|
0
|
|
|
|
2,568
|
|
|
|
4,542
|
|
|
|
47,689
|
|
|
|
52,231
|
|
|
|
11,008
|
|
|
|
1986
|
|
|
|
10/1/1997
|
|
|
15 - 40 Yrs
|
Pittsburgh at University Center (Oakland), PA (7)
|
|
|
15,500
|
|
|
|
0
|
|
|
|
25,031
|
|
|
|
0
|
|
|
|
2,504
|
|
|
|
0
|
|
|
|
27,535
|
|
|
|
27,535
|
|
|
|
5,934
|
|
|
|
1988
|
|
|
|
11/1/1998
|
|
|
15 - 40 Yrs
|
Charleston -Mills House (Historic Downtown), SC (2)
|
|
|
25,538
|
|
|
|
3,251
|
|
|
|
28,295
|
|
|
|
7
|
|
|
|
2,145
|
|
|
|
3,258
|
|
|
|
30,440
|
|
|
|
33,698
|
|
|
|
5,992
|
|
|
|
1982
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Myrtle Beach At Kingston Plantation, SC (1)
|
|
|
0
|
|
|
|
2,940
|
|
|
|
24,988
|
|
|
|
0
|
|
|
|
2,479
|
|
|
|
2,940
|
|
|
|
27,467
|
|
|
|
30,407
|
|
|
|
6,719
|
|
|
|
1987
|
|
|
|
12/5/1996
|
|
|
15 - 40 Yrs
|
Myrtle Beach Resort (12)
|
|
|
0
|
|
|
|
9,000
|
|
|
|
17,689
|
|
|
|
5
|
|
|
|
6,223
|
|
|
|
9,005
|
|
|
|
23,912
|
|
|
|
32,917
|
|
|
|
5,846
|
|
|
|
1974
|
|
|
|
7/23/2002
|
|
|
15 - 40 Yrs
|
Nashville- Airport/Opryland Area, TN (1)
|
|
|
0
|
|
|
|
1,118
|
|
|
|
9,506
|
|
|
|
0
|
|
|
|
774
|
|
|
|
1,118
|
|
|
|
10,280
|
|
|
|
11,398
|
|
|
|
3,747
|
|
|
|
1985
|
|
|
|
7/28/1994
|
|
|
15 - 40 Yrs
|
Nashville Opryland/Airport (Briley Parkway),
TN (7)
|
|
|
0
|
|
|
|
0
|
|
|
|
27,734
|
|
|
|
0
|
|
|
|
2,945
|
|
|
|
0
|
|
|
|
30,679
|
|
|
|
30,679
|
|
|
|
7,591
|
|
|
|
1981
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Austin, TX (4)
|
|
|
8,783
|
|
|
|
2,508
|
|
|
|
21,908
|
|
|
|
0
|
|
|
|
2,486
|
|
|
|
2,508
|
|
|
|
24,394
|
|
|
|
26,902
|
|
|
|
5,877
|
|
|
|
1987
|
|
|
|
3/20/1997
|
|
|
15 - 40 Yrs
|
Corpus Christi, TX (1)
|
|
|
4,866
|
|
|
|
1,113
|
|
|
|
9,618
|
|
|
|
51
|
|
|
|
3,336
|
|
|
|
1,164
|
|
|
|
12,954
|
|
|
|
14,118
|
|
|
|
3,266
|
|
|
|
1984
|
|
|
|
7/19/1995
|
|
|
15 - 40 Yrs
|
Dallas DFW International Airport South, TX (1)
|
|
|
19,302
|
|
|
|
0
|
|
|
|
35,156
|
|
|
|
4,041
|
|
|
|
843
|
|
|
|
4,041
|
|
|
|
35,999
|
|
|
|
40,040
|
|
|
|
7,721
|
|
|
|
1985
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Dallas Love Field, TX (1)
|
|
|
16,500
|
|
|
|
1,934
|
|
|
|
16,674
|
|
|
|
0
|
|
|
|
1,647
|
|
|
|
1,934
|
|
|
|
18,321
|
|
|
|
20,255
|
|
|
|
5,029
|
|
|
|
1986
|
|
|
|
3/29/1995
|
|
|
15 - 40 Yrs
|
Dallas Market Center, TX (1)
|
|
|
0
|
|
|
|
2,560
|
|
|
|
23,751
|
|
|
|
0
|
|
|
|
744
|
|
|
|
2,560
|
|
|
|
24,495
|
|
|
|
27,055
|
|
|
|
5,801
|
|
|
|
1980
|
|
|
|
6/30/1997
|
|
|
15 - 40 Yrs
|
Dallas Park Central, TX (11)
|
|
|
0
|
|
|
|
4,513
|
|
|
|
43,125
|
|
|
|
762
|
|
|
|
5,282
|
|
|
|
5,275
|
|
|
|
48,407
|
|
|
|
53,682
|
|
|
|
9,821
|
|
|
|
1983
|
|
|
|
6/30/1997
|
|
|
15 - 40 Yrs
|
38
FELCOR LODGING TRUST INCORPORATED
Schedule III Real Estate and Accumulated Depreciation (continued)
as of December 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Capitalized
|
|
|
Gross Amounts at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
|
Subsequent to Acquisition
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Life Upon
|
|
|
|
|
|
|
|
|
|
|
|
Buildings
|
|
|
|
|
|
|
Buildings
|
|
|
Depreciation
|
|
|
Buildings
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
Which
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
Buildings &
|
|
|
Year
|
|
|
Date
|
|
|
Depreciation
|
|
Location
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Land
|
|
|
Improvements
|
|
|
Land
|
|
|
Improvements
|
|
|
Total
|
|
|
Improvements
|
|
|
Opened
|
|
|
Acquired
|
|
|
is Computed
|
|
Houston Medical Center, TX (10)
|
|
|
0
|
|
|
|
0
|
|
|
|
22,027
|
|
|
|
5
|
|
|
|
2,491
|
|
|
|
5
|
|
|
|
24,518
|
|
|
|
24,523
|
|
|
|
4,980
|
|
|
|
1984
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
San Antonio International Airport, TX (7)
|
|
|
23,800
|
|
|
|
3,351
|
|
|
|
29,168
|
|
|
|
(185
|
)
|
|
|
2,740
|
|
|
|
3,166
|
|
|
|
31,908
|
|
|
|
35,074
|
|
|
|
6,950
|
|
|
|
1981
|
|
|
|
7/28/1998
|
|
|
15 - 40 Yrs
|
Burlington Hotel & Conference Center, VT (3)
|
|
|
17,753
|
|
|
|
3,136
|
|
|
|
27,283
|
|
|
|
(2
|
)
|
|
|
1,251
|
|
|
|
3,134
|
|
|
|
28,534
|
|
|
|
31,668
|
|
|
|
6,412
|
|
|
|
1967
|
|
|
|
12/4/1997
|
|
|
15 - 40 Yrs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
779,856
|
|
|
$
|
186,227
|
|
|
$
|
1,825,980
|
|
|
$
|
17,564
|
|
|
$
|
232,583
|
|
|
$
|
203,791
|
|
|
$
|
2,058,563
|
|
|
$
|
2,262,354
|
|
|
$
|
503,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Embassy Suites
|
|
(2)
|
|
Holiday Inn
|
|
(3)
|
|
Sheraton
|
|
(4)
|
|
Doubletree Guest
Suites
|
|
(5)
|
|
Crowne Plaza
|
|
(6)
|
|
Doubletree
|
|
(7)
|
|
Holiday Inn Select
|
|
(8)
|
|
Sheraton Suites
|
|
(9)
|
|
Hilton Suites
|
|
(10)
|
|
Holiday Inn Hotel &
Suites
|
|
(11)
|
|
Westin
|
|
(12)
|
|
Hilton
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
Reconciliation of Land and Buildings and Improvements
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
3,331,708
|
|
|
$
|
3,513,950
|
|
Additions during period:
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
|
|
|
|
18,949
|
|
Improvements
|
|
|
18,434
|
|
|
|
21,735
|
|
Deductions during period:
|
|
|
|
|
|
|
|
|
Sale of properties
|
|
|
(812,222
|
)
|
|
|
(140,071
|
)
|
Hotels held for sale
|
|
|
(275,566
|
)
|
|
|
|
|
Foreclosures
|
|
|
|
|
|
|
(82,855
|
)
|
|
|
|
|
|
|
|
Balance at end of period before impairment charges
|
|
|
2,262,354
|
|
|
|
3,331,708
|
|
|
Cumulative impairment charges on real estate
assets owned at end of period
|
|
|
|
|
|
|
(327,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
2,262,354
|
|
|
$
|
3,004,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Accumulated Depreciation
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
646,484
|
|
|
$
|
590,065
|
|
Additions during period:
|
|
|
|
|
|
|
|
|
Depreciation for the period
|
|
|
51,318
|
|
|
|
79,231
|
|
Deductions during period:
|
|
|
|
|
|
|
|
|
Sale of properties
|
|
|
(144,686
|
)
|
|
|
(22,812
|
)
|
Hotels held for sale
|
|
|
(49,971
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
503,145
|
|
|
$
|
646,484
|
|
|
|
|
|
|
|
|
39
PART IV
|
|
|
Item 15.
|
|
Exhibits and Financial Statement Schedules
|
|
(a)
|
|
The following is a list of documents filed as a part of this report:
|
|
(1)
|
|
Financial Statements.
|
Included herein at pages 4 through 36.
|
(2)
|
|
Financial Statement Schedules.
|
The following financial statement schedule is included herein at pages 37 through 39.
Schedule III Real Estate and Accumulated Depreciation for FelCor Lodging Trust Incorporated
All other schedules for which provision is made in Regulation S-X are either not required to
be included herein under the related instructions, are inapplicable or the related information is
included in the footnotes to the applicable financial statement and, therefore, have been omitted.
The following exhibits are provided pursuant to the provisions of Item 601 of Regulation S-K:
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
4.1
|
|
Articles of Amendment and Restatement dated June 22, 1995, amending and restating the Charter
of FelCor Lodging Trust Incorporated (FelCor), as amended or supplemented by Articles of
Merger dated June 23, 1995, Articles Supplementary dated April 30, 1996, Articles of Amendment
dated August 8, 1996, Articles of Amendment dated June 16, 1997, Articles of Amendment dated
October 30, 1997, Articles Supplementary filed May 6, 1998, Articles of Merger and Articles of
Amendment dated July 27, 1998, Certificate of Correction dated March 11, 1999, Certificate of
Correction to the Articles of Merger between FelCor and Bristol Hotel Company, dated
August 30, 1999, Articles Supplementary, dated April 1, 2002, Certificate of Correction, dated
March 29, 2004, to Articles Supplementary filed May 2, 1996, Articles Supplementary filed
April 2, 2004, Articles Supplementary filed August 20, 2004, Articles Supplementary filed
April 6, 2005, and Articles Supplementary filed August 29, 2005 (filed as Exhibit 4.1 to
FelCors Registration Statement on Form S-3 (Registration No. 333-128862) and incorporated
herein by reference).
|
|
|
|
4.2
|
|
Bylaws of FelCor, as amended (filed as Exhibit 4.2 to FelCors Registration Statement on Form
S-3 (Registration File No. 333-128862) and incorporated herein by reference).
|
|
|
|
4.3
|
|
Form of Share Certificate for Common Stock (filed as Exhibit 4.1 to FelCors Form 10-Q for
the quarter ended June 30, 1996, and incorporated herein by reference).
|
|
|
|
4.4
|
|
Form of Share Certificate for $1.95 Series A Cumulative Convertible Preferred Stock (filed as
Exhibit 4.4 to FelCors Form 8-K, dated May 1, 1996, and incorporated herein by reference).
|
|
|
|
4.5
|
|
Form of Share Certificate for 8% Series C Cumulative Redeemable Preferred Stock (filed as
Exhibit 4.10.1 to FelCors Form 8-K, dated April 6, 2005, and filed on April 11, 2005, and
incorporated herein by reference).
|
40
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
4.6
|
|
Deposit Agreement, dated April 7, 2005, between FelCor and SunTrust Bank, as preferred share
depositary (filed as Exhibit 4.11.1 to FelCors Current Report on Form 8-K dated April 6,
2005, and filed on April 11, 2005, and incorporated herein by reference).
|
|
|
|
4.6.1
|
|
Supplement and Amendment to Deposit Agreement, dated August 30, 2005, between the Company
and SunTrust Bank, as depositary (filed as Exhibit 4.11.2 to FelCors Current Report on
Form 8-K dated April 6, 2005, and filed on April 11, 2005, and incorporated herein by
reference).
|
|
|
|
4.7
|
|
Form of Depositary Receipt evidencing the Depositary Shares, which represent the 8% Series C
Cumulative Redeemable Preferred Stock (filed as Exhibit 4.12.1 to FelCors Form 8-K, dated
April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).
|
|
|
|
4.8
|
|
Indenture, dated as of June 4, 2001, by and among FelCor LP, FelCor, the Subsidiary
Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9 to FelCors
Form 8-K dated as of June 4, 2001, and filed June 14, 2001, and incorporated herein by
reference).
|
|
|
|
4.8.1
|
|
First Supplemental Indenture, dated as of July 26, 2001, by and among FelCor LP, FelCor, the
Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.4.1 to
the Registration Statement on Form S-4 (Registration File No. 333-63092) of FelCor LP and the
other co-registrants named therein and incorporated herein by reference).
|
|
|
|
4.8.2
|
|
Second Supplemental Indenture, dated October 1, 2002, by and among FelCor LP, FelCor, the
Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9.2 to
the 2002 Form 10-K and incorporated herein by reference).
|
|
|
|
4.8.3
|
|
Third Supplemental Indenture, dated as of January 25, 2006, by and among FelCor LP, FelCor,
the Subsidiary Guarantors named therein, the New Subsidiary Guarantors named therein and
SunTrust Bank, as trustee (filed as Exhibit 4.9.3 to the 2005 Form 10-K and incorporated
herein by reference).
|
|
|
|
4.8.4
|
|
Fourth Supplemental Indenture, dated as of December 31, 2006, by and among FelCor LP,
FelCor, the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein
and U.S. Bank National Association, as successor to SunTrust Bank, as trustee (filed as
Exhibit 4.8.4 to FelCors Annual Report on Form 10-K for the fiscal year ended December 31,
2006 (the 2006 Form 10-K) and incorporated herein by reference).
|
|
|
|
4.9
|
|
Indenture dated October 31, 2006 by and among FelCor LP, FelCor, certain subsidiary
guarantors named therein, FelCor Holdings Trust, as pledgor, and U.S. Bank National
Association, as trustee (filed as Exhibit 4.1 to FelCors Form 8-K dated October 26, 2006, and
filed on November 1, 2006, and incorporated herein by reference).
|
|
|
|
4.9.1
|
|
First Supplemental Indenture, dated as of December 31, 2006, by and among FelCor LP, FelCor,
the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein and U.S.
Bank National Association, as trustee (filed as Exhibit 4.9.1 to FelCors 2006 Form 10-K and
incorporated herein by reference).
|
|
|
|
10.1
|
|
Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of
December 31, 2001 (filed as Exhibit 10.1 to FelCors Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 (the 2001 Form 10-K), and incorporated herein by reference.)
|
|
|
|
10.1.1
|
|
First Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated April 1, 2002 (filed as Exhibit 10.1.1 to FelCors Form 8-K dated April 1, 2002, and
filed on April 4, 2002, and incorporated herein by reference).
|
41
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.1.2
|
|
Second Amendment to Second Amended and Restated Agreement of Limited Partnership of
FelCor LP, dated August 31, 2002 (filed as Exhibit 10.1.2 to the 2002 Form 10-K and
incorporated herein by reference).
|
|
|
|
10.1.3
|
|
Third Amendment to Second Amended and Restated Agreement of Limited Partnership of
FelCor LP, dated October 1, 2002 (filed as Exhibit 10.1.3 to the 2002 Form 10-K and
incorporated herein by reference).
|
|
|
|
10.1.4
|
|
Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of
FelCor LP, dated as of July 1, 2003 (filed as Exhibit 10.1.4 to FelCors Form 10-Q for the
quarter ended March 31, 2004, and incorporated herein by reference).
|
|
|
|
10.1.5
|
|
Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of
FelCor LP, dated as of April 2, 2004 (filed as Exhibit 10.1.5 to FelCors Form 10-Q for the
quarter ended March 31, 2004, and incorporated herein by reference).
|
|
|
|
10.1.6
|
|
Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of August 23, 2004 (filed as Exhibit 10.1.6 to FelCors Form 8-K dated as of, and
filed on, August 26, 2004, and incorporated herein by reference).
|
|
|
|
10.1.7
|
|
Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of April 7, 2005, which contains Addendum No. 4 to the Second Amended and
Restated Agreement of Limited Partnership of FelCor Lodging Limited Partnership (filed as
Exhibit 10.1.8 to FelCors Form 8-K, dated April 6, 2006, and filed on April 11, 2005, and
incorporated herein by reference).
|
|
|
|
10.1.8
|
|
Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of August 30, 2005 (filed as Exhibit 10.1.9 to FelCors Form 8-K, dated August
29, 2005, and filed September 2, 2005, and incorporated herein by reference).
|
|
|
|
10.2.1
|
|
Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
InterContinental Hotels, as manager, with respect to FelCors InterContinental Hotels branded
hotels (included as an exhibit to the Leasehold Acquisition Agreement, which was filed as
Exhibit 10.28 to FelCors Form 10-Q for the quarter ended March 31, 2001, and incorporated
herein by reference).
|
|
|
|
10.2.2
|
|
Omnibus Agreement between FelCor and all its various subsidiaries, controlled entities and
affiliates, and Six Continents Hotels, Inc. and all its various subsidiaries, controlled
entities and affiliates, with respect to FelCors InterContinental Hotels branded hotels
(filed as Exhibit 10.2.2 to the 2005 Form 10-K and incorporated herein by reference).
|
|
|
|
10.3.1
|
|
Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Embassy Suites Hotels branded
hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit
thereto, effective prior to July 28, 2004 (filed as Exhibit 10.5 to the 2001 Form 10-K and
incorporated herein by reference).
|
|
|
|
10.3.2
|
|
Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Embassy Suites Hotels branded
hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit
thereto, effective July 28, 2004 (filed as Exhibit 10.3.2 to FelCors Form 10-K for the fiscal
year ended December 31, 2004 (the 2004 Form 10-K) and incorporated herein by reference).
|
|
|
|
10.4
|
|
Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Doubletree and Doubletree
Guest Suites branded hotels (filed as Exhibit 10.6 to the 2001 Form 10-K and incorporated
herein by reference).
|
42
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.5
|
|
Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Starwood Hotels & Resorts, Inc., as manager, with respect to FelCors Sheraton and Westin
branded hotels (filed as Exhibit 10.7 to the 2001 Form 10-K and incorporated herein by
reference).
|
|
|
|
10.6
|
|
Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and
Thomas J. Corcoran, Jr. (filed as Exhibit 10.36 to FelCors Form 8-K, dated February 7, 2006,
and filed on February 13, 2006 and incorporated herein by reference).
|
|
|
|
10.7
|
|
Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and
Richard A. Smith (filed as Exhibit 10.37 to FelCors Form 8-K, dated February 7, 2006, and
filed on February 13, 2006 and incorporated herein by reference).
|
|
|
|
10.8
|
|
Form of Amended and Restated Change in Control and Severance Agreement for executive officers
of FelCor (filed as Exhibit 10.8 to FelCors 2006 Form 10-K and incorporated herein by
reference).
|
|
|
|
10.9
|
|
Savings and Investment Plan of FelCor (filed as Exhibit 10.10 to the 2001 Form 10-K and
incorporated herein by reference).
|
|
|
|
10.10
|
|
1995 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.9.2 to FelCors
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, and incorporated
herein by reference).
|
|
|
|
10.11
|
|
Non-Qualified Deferred Compensation Plan, as amended and restated effective January 1, 2005
(filed as Exhibit 10.11 to FelCors 2006 Form 10-K and incorporated herein by reference).
|
|
|
|
10.12
|
|
1998 Restricted Stock and Stock Option Plan (filed as Exhibit 4.2 to FelCors Registration
Statement on Form S-8 (Registration File No. 333-66041) and incorporated herein by reference).
|
|
|
|
10.13
|
|
2001 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.14 to the 2002
Form 10-K and incorporated herein by reference).
|
|
|
|
10.14
|
|
Second Amended and Restated 1995 Equity Incentive Plan (filed as Exhibit 99.1 to FelCors
Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration File
No. 333-50509) and incorporated herein by reference).
|
|
|
|
10.15
|
|
Amended and Restated Stock Option Plan for Non-Employee Directors (filed as Exhibit 99.2 to
FelCors Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration
File No. 333-50509) and incorporated herein by reference).
|
|
|
|
10.16
|
|
Form of Nonstatutory Stock Option Contract under Restricted Stock and Stock Option Plans of
FelCor (filed as Exhibit 10.16 to the 2004 Form 10-K and incorporated herein by reference).
|
|
|
|
10.17
|
|
Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of
FelCor (filed as Exhibit 10.17 to the 2004 Form 10-K and incorporated herein by reference).
|
|
|
|
10.18
|
|
FelCor Lodging Trust Incorporated 2005 Restricted Stock and Stock Option Plan (filed as
Exhibit 4.4 to FelCors Registration Statement on Form S-8 (Registration File No. 333-126228)
and incorporated herein by reference).
|
|
|
|
10.19
|
|
Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of
FelCor applicable to grants in 2005 and thereafter (filed as Exhibit 10.33 to FelCors Form
8-K dated April 26, 2005, and filed on May 2, 2005, and incorporated herein by reference).
|
43
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.20
|
|
Summary of Annual Compensation Program for Directors of FelCor (filed as Exhibit 10.18 to
the 2004 Form 10-K and incorporated herein by reference).
|
|
|
|
10.21
|
|
Summary of 2006 Performance Criteria for Annual Incentive Bonus Award Program (filed as
Exhibit 10.38 to FelCors Form 8-K, dated February 17, 2006, and filed on February 22, 2006
and incorporated herein by reference).
|
|
|
|
10.22
|
|
Employment Separation, Consulting and Release Agreement between FelCor and June C. McCutchen
dated as of September 7, 2006 (filed as Exhibit 99.1 to FelCors Form 8-K, dated November 13,
2006, and filed on November 17, 2006 and incorporated herein by reference).
|
|
|
|
10.23
|
|
Summary of verbal arrangement for retirement benefits for Lawrence D. Robinson (filed as
Exhibit 99.1 to FelCors Form 8-K, dated January 1, 2007, and filed on January 5, 2007 and
incorporated herein by reference).
|
|
|
|
10.24.1
|
|
Form of Mortgage, Security Agreement and Fixture Filing by and between FelCor/CSS Holdings,
L.P., as Mortgagor, and The Prudential Insurance Company of America, as Mortgagee (filed as
Exhibit 10.23 to the March 1999 10-Q and incorporated herein by reference).
|
|
|
|
10.24.2
|
|
Promissory Note, dated April 1, 1999, in the original principal amount of $100,000,000,
made by FelCor/CSS Holdings, Ltd., payable to the order of The Prudential Insurance Company of
America (filed as Exhibit 10.23.1 to FelCors Form 10-Q for the quarter ended June 30, 1999
(the June 1999 10-Q) and incorporated herein by reference).
|
|
|
|
10.25.1
|
|
Form Deed of Trust and Security Agreement and Fixture Filing with Assignment of Leases and
Rents, each dated as of April 20, 2000, from FelCor/MM S-7 Holdings, L.P., as Mortgagor, in
favor of Massachusetts Mutual Life Insurance Company and Teachers Insurance and Annuity
Association of America, as Mortgagee, each covering a separate hotel and securing one of the
separate Promissory Notes described in Exhibit 10.22.3 (filed as Exhibit 10.24 to FelCors
Form 10-Q for the quarter ended June 30, 2000 (the June 2000 10-Q) and incorporated herein
by reference).
|
|
|
|
10.25.2
|
|
Form of Accommodation Cross-Collateralization Mortgage and Security Agreement, each dated
as of April 20, 2000, executed by FelCor/MM S-7 Holdings, L.P., in favor of Massachusetts
Mutual Life Insurance Company and Teachers Insurance and Annuity Association of America (filed
as Exhibit 10.24.1 to the June 2000 10-Q and incorporated herein by reference).
|
|
|
|
10.25.3
|
|
Form of fourteen separate Promissory Notes, each dated April 20, 2000, each made by
FelCor/MM S-7 Holdings, L.P., each separately payable to the order of Massachusetts Mutual
Life Insurance Company and Teachers Insurance and Annuity Association of America,
respectively, in the respective original principal amounts of $13,500,000 (Phoenix (Crescent),
Arizona), $13,500,000 (Phoenix (Crescent), Arizona), $6,500,000 (Cypress Creek/Ft. Lauderdale,
Florida), $6,500,000 (Cypress Creek/Ft. Lauderdale, Florida), $9,000,000 (Atlanta Galleria,
Georgia), $9,000,000 (Atlanta Galleria, Georgia), $12,500,000 (Chicago OHare Airport,
Illinois), $12,500,000 (Chicago OHare Airport, Illinois), $3,500,000 (Lexington, Kentucky),
$3,500,000 (Lexington, Kentucky), $17,000,000 (Philadelphia Society Hill, Philadelphia),
$17,000,000 (Philadelphia Society Hill, Philadelphia), $10,500,000 (South Burlington, Vermont)
and $10,500,000 (South Burlington, Vermont) (filed as Exhibit 10.24.2 to the June 2000 10-Q
and incorporated herein by reference).
|
|
|
|
10.26.1
|
|
Form Deed of Trust and Security Agreement, each dated as of May 2, 2000, from each of
FelCor/CMB Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield
Hotel, L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB
New Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C., and FelCor/CMB SSF Holdings,
L.P., each as Borrower, in favor of The Chase Manhattan Bank, as
|
44
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
|
|
Beneficiary, each covering a separate hotel and securing one of the separate
Promissory Notes described in Exhibit 10.23.2 (filed as Exhibit 10.25 to the June
2000 10-Q and incorporated herein by reference).
|
|
|
|
10.26.2
|
|
Form of eight separate Promissory Notes, each dated May 2, 2000, made by FelCor/CMB
Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield Hotel,
L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB New
Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C. and FelCor/CMB SSF Holdings, L.P.,
each separately payable to the order of The Chase Manhattan Bank in the respective original
principal amounts of $38,250,000 (Atlanta Buckhead, Georgia), $20,500,000 (Boston Marlborough,
Massachusetts), $16,575,000 (Chicago Deerfield, Illinois), $5,338,000 (Corpus Christi, Texas),
$25,583,000 (Orlando South, Florida), $32,650,000 (New Orleans, Louisiana), $20,728,000
(Piscataway, New Jersey) and $26,268,000 (South San Francisco, California) (filed as Exhibit
10.25.1 to the June 2000 10-Q and incorporated herein by reference).
|
|
|
|
10.27.1
|
|
Form of Loan Agreement, each dated either May 26, 2004, June 10, 2004 or July 19, 2004,
between JPMorgan Chase Bank, as lender, and each of FelCor/JPM Boca Raton Hotel, L.L.C.,
FelCor/JPM Phoenix Hotel, L.L.C., FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Atlanta ES
Hotel, L.L.C., FelCor/JPM Austin Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., and
FelCor/JPM BWI Hotel, L.L.C. and FCH/DT BWI Hotel, L.L.C., as borrowers, and acknowledged and
agreed by FelCor LP (filed as Exhibit 10.34 to FelCors Form 10-Q for the quarter ended June
30, 2004, and incorporated herein by reference).
|
|
|
|
10.27.2
|
|
Form of Mortgage, Renewal Mortgage, Deed of Trust, Deed to Secure Debt, Indemnity Deed of
Trust and Assignment of Leases and Rents, Security Agreement and Fixture Filing, each dated
either May 26, 2004, June 10, 2004 or July 19, 2004, from FelCor/JPM Wilmington Hotel, L.L.C.,
DJONT/JPM Wilmington Leasing, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., DJONT/JPM Phoenix
Leasing, L.L.C., FelCor/JPM Boca Raton Hotel, L.L.C., DJONT/JPM Boca Raton Leasing, L.L.C.,
FelCor/JPM Atlanta ES Hotel, L.L.C., DJONT/JPM Atlanta ES Leasing, L.L.C., FelCor/JPM Austin
Holdings, L.P., DJONT/JPM Austin Leasing, L.P., FelCor/JPM Orlando Hotel, L.L.C., DJONT/JPM
Orlando Leasing, L.L.C., FCH/DT BWI Holdings, L.P., FCH/DT BWI Hotel, L.L.C. and DJONT/JPM BWI
Leasing, L.L.C., to, and for the benefit of, JPMorgan Chase Bank, as mortgagee or beneficiary
(filed as Exhibit 10.34.1 to FelCors Form 10-Q for the quarter ended June 30, 2004, and
incorporated herein by reference).
|
|
|
|
10.27.3
|
|
Form of seven separate Promissory Notes, each dated either May 26, 2004, June 10, 2004 or
July 19, 2004, made by FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C.,
FelCor/JPM Boca Raton Hotel, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., FelCor/JPM Austin
Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., and FelCor/JPM BWI Hotel, L.L.C., each
separately payable to the order of JPMorgan Chase Bank in the respective original principal
amounts of $11,000,000 (Wilmington, Delaware), $21,368,000 (Phoenix, Arizona), $5,500,000
(Boca Raton, Florida), $13,500,000 (Atlanta, Georgia), $9,616,000 (Austin, Texas), $9,798,000
(Orlando, Florida), and $24,120,000 (Linthicum, Maryland) (filed as Exhibit 10.34.2 to
FelCors Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).
|
|
|
|
10.27.4
|
|
Form of Guaranty of Recourse Obligations of Borrower, each dated either May 26, 2004,
June 10, 2004 or July 19, 2004, made by FelCor LP in favor of JPMorgan Chase Bank (filed as
Exhibit 10.34.3 to FelCors Form 10-Q for the quarter ended June 30, 2004, and incorporated
herein by reference).
|
|
|
|
10.28.1
|
|
Construction Loan Agreement, dated April 27, 2005, among Grande Palms, L.L.C. and Bank of
America, N.A., as Administrative Agent, and the other financial institutions party thereto,
and Bank of America Securities, as Lead Arranger, for a maximum principal loan amount of $69.8
million (filed as Exhibit 10.34.1 of FelCors Form 10-Q for the quarter ended June 30, 2005,
and incorporated herein by reference).
|
45
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.28.2
|
|
Guaranty Agreement, dated April 27, 2005, by FelCor Lodging Limited Partnership in favor of
Bank of America, N.A. on behalf of the lenders(filed as Exhibit 10.34.2 of FelCors Form 10-Q
for the quarter ended June 30, 2005, and incorporated herein by reference).
|
|
|
|
10.28.3
|
|
Form of Promissory Note, each dated April 27, 2005, made by Grande Palms, L.L.C., each
separately payable to the order of Bank of America, N.A. ($25 million), Bank of Montreal ($20
million) and The Bank of Nova Scotia ($24.8 million)(filed as Exhibit 10.34.3 of FelCors Form
10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).
|
|
|
|
10.28.4
|
|
Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated
April 27, 2005, made by Grande Palms, L.L.C. for the benefit of Bank of America, N.A., as
Administrative Agent under the Construction Loan Agreement referenced in Exhibit 10.34.1
(filed as Exhibit 10.34.4 of FelCors Form 10-Q for the quarter ended June 30, 2005, and
incorporated herein by reference).
|
|
|
|
10.29.1
|
|
Term Credit Agreement, dated as of October 18, 2005, among FelCor TRS Borrower 1, L.P., as
Initial Borrower; FelCor TRS Guarantor, L.P., FelCor LP and the other guarantors named therein
as Guarantors; Citigroup North America, Inc., as Initial Lender, as Administrative Agent, and
as Collateral Agent, and Citigroup Global Markets, Inc., as Sole Lead Arranger and Sole Book
Running Manager, for a maximum principal loan amount of $175 million (filed as Exhibit 10.35
to FelCors Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by
reference).
|
|
|
|
10.29.2
|
|
First Amendment to Term Credit Agreement, dated as of December 9, 2005, among FelCor TRS
Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers; FelCor TRS Guarantor, L.P.,
FelCor LP, FelCor Lodging Company, L.L.C., FelCor Philadelphia Center, L.L.C., FelCor Marshall
Motels, L.L.C. and Center City Hotel Associates, as guarantors; Citicorp North America, Inc.,
as the initial Lender, the administrative agent for the lenders and the collateral agent for
the secured parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book
running manager (filed as Exhibit 10.33.1 to the 2005 Form 10-K and incorporated herein by
reference).
|
|
|
|
10.29.3
|
|
Second Amendment to Term Credit Agreement, dated as of January 9, 2006, among FelCor TRS
Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers and certain other borrowers
named therein; FelCor TRS Guarantor, L.P., FelCor LP, FelCor Lodging Company, L.L.C., FelCor
Philadelphia Center, L.L.C., FelCor Marshall Motels, L.L.C. and Center City Hotel Associates,
as guarantors; Citicorp North America, Inc., as the initial Lender, the administrative agent
for the lenders and the collateral agent for the secured parties; and Citigroup Global Markets
Inc., as sole lead arranger and sole book running manager (filed as Exhibit 10.33.2 to the
2005 Form 10-K and incorporated herein by reference).
|
|
|
|
10.30.1
|
|
Credit Agreement, dated as of December 12, 2005, by and among FelCor, FelCor LP, the
lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and J.P. Morgan
Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint lead arrangers
for an initial aggregate amount of $125,000,000 (filed as Exhibit 10.34.1 to the 2005 Form
10-K and incorporated herein by reference).
|
|
|
|
10.30.1.1
|
|
First Amendment to Credit Agreement, dated as of January 12, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint
lead arrangers (filed as Exhibit 10.34.1.1 to the 2005 Form 10-K and incorporated herein by
reference).
|
46
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.30.1.2
|
|
Second Amendment to Credit Agreement, dated as of January 27, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint
lead arrangers (filed as Exhibit 10.34.1.2 to the 2005 Form 10-K and incorporated herein by
reference).
|
|
|
|
10.30.1.3
|
|
Amendment No. 3 to Credit Agreement, dated as of March 31, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
(filed as Exhibit 10.34.1.3 to FelCors Form 10-Q for the quarter ended March 31, 2006, and
incorporated herein by reference).
|
|
|
|
10.30.1.4
|
|
Amendment No. 4 to Credit Agreement, dated October 26, 2006, by and among FelCor, FelCor
LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (filed as
Exhibit 10.3 to FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and
incorporated herein by reference).
|
|
|
|
10.30.2
|
|
Subsidiary Guaranty, dated as of January 27, 2006, made by FelCor/CSS Holdings, L.P.,
FelCor Hotel Asset Company, L.L.C., FelCor Pennsylvania Company, L.L.C., FelCor Lodging
Holding Company, L.L.C., FHAC Texas Holdings, L.P., FelCor Canada Co., FelCor Omaha Hotel
Company, L.L.C., FelCor TRS Holdings, L.P., Myrtle Beach Hotels, L.L.C., FelCor TRS
Borrower I, L.P., FelCor TRS Guarantor, L.P., Center City Hotel Associates, FelCor Lodging
Company, L.L.C., FelCor TRS Borrower 3, L.P. and FelCor TRS Borrower 4, L.L.C. (filed as
Exhibit 10.34.2 to the 2005 Form 10-K and incorporated herein by reference).
|
|
|
|
10.30.3
|
|
Joinder Agreement to Subsidiary Guaranty, dated as of December 31, 2006, made by FelCor/St.
Paul Holdings, L.P (filed as Exhibit 10.30.3 to FelCors 2006 Form 10-K and incorporated
herein by reference).
|
|
|
|
10.31
|
|
Purchase and Sale Agreement, dated effective as of January 20, 2006, by and between FelCor
and Hospitality Properties Trust (filed as Exhibit 10.35 to the 2005 Form 10-K and
incorporated herein by reference).
|
|
|
|
10.32.1
|
|
Pledge Agreement dated October 31, 2006 by FelCor Holdings Trust in favor of JPMorgan Chase
Bank, N.A., as Collateral Agent (filed as Exhibit 10.1 to FelCors Form 8-K dated October 26,
2006, and filed on November 1, 2006, and incorporated herein by reference).
|
|
|
|
10.32.2
|
|
Collateral Agency Agreement dated October 31, 2006 by and among FelCor, FelCor LP, JPMorgan
Chase Bank, N.A., as Collateral Agent and/or Administrative Agent, FelCor Holdings Trust and
U.S. Bank National Association, as trustee under several indentures (filed as Exhibit 10.2 to
FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and incorporated
herein by reference).
|
|
|
|
10.33
|
|
Registration Rights Agreement dated October 31, 2006 by and among FelCor, FelCor LP, Merrill
Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (filed as Exhibit 4.4 to
FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and incorporated
herein by reference).
|
|
|
|
10.34
|
|
Form of Indemnification Agreement (filed as Exhibit 10.1 to FelCors Form 8-K dated November
9, 2006, and filed on November 13, 2006, and incorporated herein by reference).
|
|
|
|
10.35.1
|
|
Loan Agreement, dated as of November 10, 2006, by and among FelCor/JPM Hotels, L.L.C. and
DJONT/JPM Leasing, L.L.C., as borrowers, and Bank of America, N.A., as lender, relating to a
$250 million loan from lender to borrower (filed as Exhibit 10.35.1 to FelCors 2006 Form 10-K
and incorporated herein by reference).
|
|
|
|
10.35.1.1
|
|
First Amendment to Loan Agreement and Other Loan Documents, dated as of January 31, 2007,
by and among FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C., as
|
47
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
|
|
borrowers, and Bank of America, N.A., as lender (filed as Exhibit 10.35.1.1 to
FelCors 2006 Form 10-K and incorporated herein by reference).
|
|
|
|
10.35.2
|
|
Form of Mortgage, Deed of Trust and Security Agreement, each dated as of November 10, 2006,
from FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C., as borrowers, in favor of Bank
of America, N.A., as lender, each covering a separate hotel and securing the Mortgage Loan
(filed as Exhibit 10.35.2 to FelCors 2006 Form 10-K and incorporated herein by reference).
|
|
|
|
10.35.3
|
|
Form of Amended and Restated Promissory Note, each dated as of January 31, 2007, made by
FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C. payable to the order of either Bank of
America, N.A. or JPMorgan Chase Bank, N.A., as lender, in the original aggregate principal
amount of $250 million (filed as Exhibit 10.35.3 to FelCors 2006 Form 10-K and incorporated
herein by reference).
|
|
|
|
10.35.4
|
|
Guaranty of Recourse Obligations of Borrower, dated as of November 10, 2006, made by FelCor
LP in favor of Bank of America, N.A (filed as Exhibit 10.35.4 to FelCors 2006 Form 10-K and
incorporated herein by reference).
|
|
|
|
21
|
|
List of Subsidiaries of FelCor (filed as Exhibit 21 to FelCors 2006 Form 10-K and
incorporated herein by reference).
|
|
|
|
23*
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
|
|
31.1*
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
|
31.2*
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
|
32.1*
|
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).
|
|
|
|
32.2*
|
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).
|
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
|
|
|
|
|
FELCOR LODGING TRUST INCORPORATED
|
|
|
By:
|
/s/ Lester C. Johnson
|
|
|
|
Lester C. Johnson
|
|
|
|
Senior Vice President
(Duly Authorized Officer and
Principal Accounting Officer)
|
|
|
Date: January 8, 2008
49
INDEX TO EXHIBITS
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
23
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
32.1
|
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350)
|
|
|
|
32.2
|
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350)
|
50
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