UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):
November 8, 2006

DiamondRock Hospitality Company


(Exact name of registrant as specified in charter)


Maryland

 

001-32514

 

20-1180098


 


 


(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

6903 Rockledge Drive, Suite 800

Bethesda,  MD 20817


(Address of Principal Executive Offices)  (Zip Code)

 

(240) 744-1150


(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 



DiamondRock Hospitality Company had reported in a Form 8-K filed on November 8, 2006 (the “Original Form 8-K”) that it acquired the Conrad Hotel, located at 520 N. Michigan Avenue in Chicago, Illinois (the “Hotel”). Pursuant to the rules of the United States Securities Exchange Commission, we have 71 days after the date on which the Original Form 8-K was filed to amend such filing to include audited financial statements for the Hotel. This Form 8-K/A is being filed to provide our investors with such financial statements and pro forma financial information. No other change is effected by this Form 8-K/A.

ITEM 9.01.

Financial Statements and Exhibits.

          (a)    Financial Statements of Business Acquired.

Financial statements for LCP-WB Chicago, LLC with report of independent registered public accounting firm

Independent Auditors’ Report
Consolidated Balance Sheet
Consolidated Statement of Operations and Members’ Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements

          (b)    Pro Forma Financial Information.

Pro Forma Consolidated Balance Sheet as of September 8, 2006
Notes to Unaudited Pro Forma Consolidated Balance Sheet as of September 8, 2006
Pro Forma Consolidated Statement of Operations for the period from January 1, 2006 to September 8, 2006
Notes to Pro Forma Consolidated Statement of Operations for the Period from January 1, 2006 to September 8, 2006
Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2005
Notes to Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2005

          (c)          Not applicable.

          (d)          Exhibits

Exhibit No.

 

Description


 


23.1

 

Consent of BDO Seidman, LLP




Report of Independent Registered Public Accounting Firm

The Members
LCP - WB Chicago, LLC

We have audited the accompanying consolidated balance sheet of LCP – WB Chicago, LLC and subsidiaries as of September 30, 2006 and the related consolidated statement of operations and members’ equity, and cash flows for the nine months ended September 30, 2006.  These consolidated financial statements are the responsibility of management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  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 includes consideration of internal control over financial reporting as a basis for designing audit procedures  that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also 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 as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LCP – WB Chicago, LLC and subsidiaries as of September 30, 2006 and the results of their operations and their cash flows for the nine months then ended, in conformity with accounting principles generally accepted in the United States of America.

BDO Seidman, LLP

Chicago, Illinois

October 27, 2006, except for Note 7

          which is as of November 8, 2006




LCP – WB Chicago, LLC

Consolidated Balance Sheet

September 30,

 

2006

 


 



 

Assets

 

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

 

$

971,385

 

Accounts receivable, trade

 

 

1,840,713

 

Inventories

 

 

127,471

 

Prepaid expenses and other

 

 

339,216

 

 

 



 

Total Current Assets

 

 

3,278,785

 

 

 



 

Restricted Cash

 

 

2,296,654

 

 

 



 

Investment in Real Estate

 

 

 

 

Real property

 

 

20,841,042

 

Building and improvements

 

 

61,559,556

 

Furniture, fixtures and equipment

 

 

7,467,117

 

Operating equipment

 

 

1,129,353

 

 

 



 

 

 

 

90,997,068

 

Less accumulated depreciation

 

 

(2,821,963

)

 

 



 

Net Investment in Real Estate

 

 

88,175,105

 

 

 



 

Other Assets

 

 

 

 

Deferred financing costs, net of accumulated amortization of $153,085

 

 

680,913

 

Interest rate cap agreements, at fair value

 

 

34,416

 

 

 



 

Total Other Assets

 

 

715,329

 

 

 



 

 

 

$

94,465,873

 

 

 



 

See accompanying notes to consolidated financial statements



LCP – WB Chicago, LLC

Consolidated Balance Sheet

September 30,

 

2006

 


 



 

Liabilities and Members’ Equity

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable

 

$

550,568

 

Accrued expenses

 

 

3,522,717

 

Current portion of deferred Key Money

 

 

337,500

 

 

 



 

Total Current Liabilities

 

 

4,410,785

 

Deferred Key Money, net

 

 

3,790,155

 

Long-Term Debt

 

 

71,000,000

 

 

 



 

Total Liabilities

 

 

79,200,940

 

Commitments and Contingencies

 

 

 

 

Members’ Equity

 

 

15,264,933

 

 

 



 

 

 

$

94,465,873

 

 

 



 

See accompanying notes to consolidated financial statements



LCP – WB Chicago, LLC

Consolidated Statement of Operations and Members’ Equity

For the nine months ended September 30,

 

2006

 


 



 

Revenue

 

 

 

 

Rooms

 

$

11,719,124

 

Food and beverages

 

 

3,360,098

 

Other departments

 

 

172,602

 

Other income

 

 

136,911

 

 

 



 

Total revenue

 

 

15,388,735

 

 

 



 

Departmental Expenses

 

 

 

 

Rooms

 

 

3,205,111

 

Food and beverages

 

 

2,845,854

 

Other departments

 

 

128,793

 

 

 



 

Total departmental expenses

 

 

6,179,758

 

 

 



 

Income before undistributed operating expenses

 

 

9,208,977

 

 

 



 

Undistributed Operating Expenses

 

 

 

 

Property operation and maintenance

 

 

942,334

 

Sales and marketing

 

 

1,427,173

 

General and administrative

 

 

2,067,027

 

Energy costs

 

 

598,473

 

Property taxes and general insurance

 

 

1,155,034

 

Management fees, net of amortization of deferred Key Money

 

 

61,015

 

Depreciation

 

 

2,422,310

 

 

 



 

Total undistributed operating expenses

 

 

8,673,366

 

 

 



 

Income before other income (expenses)

 

 

535,611

 

 

 



 

Other Income (Expenses)

 

 

 

 

Interest income

 

 

124,595

 

Interest expense

 

 

(3,589,727

)

 

 



 

Total other income (expenses)

 

 

(3,465,132

)

 

 



 

Net Loss

 

 

(2,929,521

)

Members’ equity, beginning of period

 

 

18,194,454

 

 

 



 

Members’ equity, end of period

 

$

15,264,933

 

 

 



 

See accompanying notes to consolidated financial statements



LCP – WB Chicago, LLC

Consolidated Statement of Cash Flows

For the nine months ended September 30,

 

2006

 


 



 

Cash Flows From Operating Activities

 

 

 

 

Net loss

 

$

(2,929,521

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

Depreciation

 

 

2,422,310

 

Amortization of deferred financing costs as interest

 

 

125,065

 

Amortization of deferred Key Money

 

 

(337,500

)

Market value adjustment to interest rate caps

 

 

44,193

 

Changes in assets and liabilities

 

 

 

 

Accounts receivable

 

 

(1,257,322

)

Inventories

 

 

(32,237

)

Prepaid expenses and other

 

 

(206,369

)

Accounts payable and accrued expenses

 

 

1,438,741

 

 

 



 

Net cash used in operating activities

 

 

(732,640

)

 

 



 

Cash Flows From Investing Activities

 

 

 

 

Receipt of deferred Key Money

 

 

2,177,000

 

Change in restricted cash

 

 

590,445

 

Capital expenditures

 

 

(2,647,760

)

 

 



 

Net cash provided by investing activities

 

 

119,685

 

 

 



 

Net Decrease in Cash and Cash Equivalents

 

 

(612,955

)

Cash and Cash Equivalents, at beginning of period

 

 

1,584,340

 

 

 



 

Cash and Cash Equivalents, at end of period

 

$

971,385

 

 

 



 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

Cash paid for interest

 

$

3,359,476

 

See accompanying notes to consolidated financial statements



LCP – WB Chicago, LLC

Notes to Consolidated Financial Statements

1.

Organization and Nature of Operations

 

 

 

LCP-WB Chicago, LLC (the “Company”), a Delaware limited liability company, was formed on September 7, 2005 for the purpose of acquiring, owning, managing, financing and disposing of Company property. On November 7, 2005 the Company, through its subsidiaries, purchased Le Meridien Chicago, a 311-room hotel in Chicago, Illinois, and rebranded the property as the Conrad Chicago.

 

 

 

LCP-WB Chicago Mezz, LLC and LCP-WB Chicago Operator, LLC, both Delaware limited liability companies, are wholly owned subsidiaries of the Company.  The Company will continue in effect until September 7, 2055 unless terminated earlier in accordance with the Company’s Limited Liability Agreement.

 

 

2.

Summary of Significant Accounting Policies

 

 

 

Basis of Presentation

 

 

 

The accompanying financial statements include the financial position and operating results of LCP-WB Chicago, LLC and its wholly owned subsidiaries. The effects of intercompany transactions have been eliminated in consolidation.

 

 

 

Revenue Recognition

 

 

 

Revenues from the operation of the hotel are recognized when the services are provided.  Revenues consist of room sales, food and beverage sales and other hotel department revenues, such as telephone and parking sales.

 

 

 

Cash and Cash Equivalents

 

 

 

The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents.

 

 

 

Accounts Receivable

 

 

 

An allowance for doubtful accounts is maintained at a level management believes is sufficient to cover potential losses based on historical trends and known current factors impacting the Company’s customers.  At September 30, 2006, the Company has determined that no allowance for doubtful accounts is necessary.




LCP – WB Chicago, LLC

Notes to Consolidated Financial Statements

 

Inventories

 

 

 

Inventories consist of food and beverages that are valued at the lower of cost, determined on a first-in, first-out basis, or market.

 

 

 

Restricted Cash

 

 

 

The loan and management agreements described in Notes 3 and 4 require that escrow accounts be maintained for future purchases and replacements of furniture, fixtures and equipment, as well as for the payment of real estate taxes and general insurance premiums. In addition, the Key Money described in Note 5 was required to be placed in a “Renovation Reserve” account to help fund a property improvement plan.

 

 

 

Investment in Real Estate

 

 

 

The original investment in real property, building and furniture, fixtures and equipment was recorded at fair value in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations” (“SFAS No. 141”).  Property and equipment purchased after the hotel acquisition date is recorded at cost.  Real property represents air rights with no expiration date that are stated at cost. Other property and equipment is stated at cost, less accumulated depreciation.

 

 

 

Depreciation is computed on a straight-line basis over estimated useful lives of 39 years for the building, five to 10 years for building improvements and furniture, fixtures and equipment and three years for operating equipment. Repairs and maintenance are expensed as incurred.

 

 

 

Impairment of Long-Lived Assets

 

 

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable pursuant to the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  As of September 30, 2006, management of the Company does not believe that the carrying amounts of its long-lived assets have been impaired.

 

 

 

Deferred Financing Costs

 

 

 

Costs incurred in obtaining the Company’s long term debt are being amortized over the term of the related debt.  Amortization expense of $125,065 is included in interest expense on the consolidated statement of operations.




LCP – WB Chicago, LLC

Notes to Consolidated Financial Statements

 

Deferred Key Money

 

 

 

Key Money received in conjunction with entering into the hotel management agreement described in Note 4 is being deferred and amortized over the term of the hotel management agreement.  Deferred Key Money of $4,127,655 that appears on the accompanying consolidated balance sheet is being amortized against management fees on the accompanying consolidated statement of operations and members’ equity.

 

 

 

Advertising Costs

 

 

 

Advertising costs are charged to operations when incurred and approximated $232,000 for the nine months ended September 30, 2006.

 

 

 

Interest Rate Cap Agreements

 

 

 

Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), as amended by SFAS No. 138, requires an entity to recognize all derivatives as assets or liabilities measured at fair value.  The Company is party to interest rate cap agreements which qualify as derivatives under SFAS No. 133.  The agreements, in notional amounts totaling $71,000,000, cap the LIBOR rate at 5.5%.  The fair value of the agreements was $34,416 at September 30, 2006.

 

 

 

Income Taxes

 

 

 

No provision has been made for federal or state income taxes since such taxes, if any, are the liability of the Members rather than the Company.

 

 

 

Limited Liability Agreement

 

 

 

Profits and losses from operations and distribution of net cash flows, as defined, are allocated to the Members in accordance with the limited liability agreement.

 

 

 

Except as provided in the Delaware Limited Liability Company Act and Limited Liability Agreement, no member shall be personally liable for any debt, obligation or liability of the Company solely by reason of being a member of a limited liability company.

 

 

 

Fair Value of Financial Instruments

 

 

 

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and the note payable approximate fair value based on the short-term maturity of these instruments.




LCP – WB Chicago, LLC

Notes to Consolidated Financial Statements

 

Use of Estimates

 

 

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of the assets, liabilities and the amount of any contingent assets or liabilities disclosed in the financial statements at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

 

 

3.

Long-Term Debt

 

 

 

On November 7, 2005, the Company entered into a first mortgage note agreement with a third party in the amount of $41,000,000 to help finance the acquisition. The note bears interest at LIBOR plus 0.42% per annum (effective rate was 5.83% at September 30, 2006) and requires monthly payments of interest only from December 6, 2005 through maturity on November 7, 2007.

 

 

 

On November 7, 2005, the Company also executed a mezzanine loan agreement with a third party in the amount of $30,000,000 to help finance the acquisition.  The note bears interest at LIBOR plus 2.62% per annum (effective rate was 8.03% at September 30, 2006) and requires monthly payments of interest only from December 6, 2005 through maturity on November 7, 2007.

 

 

 

The Company has three successive options to extend the loans for a one-year period.  In order to exercise each option, the Company must maintain, perform or provide certain extensions, reimbursements and notifications, including an extension of the interest rate cap agreements.

 

 

 

The Company is able to prepay the loans without penalty or premium, except during the first 12 months during which time prepayment is prohibited.

 

 

 

The loans are collateralized by substantially all the Company’s assets.  A member was also required to supply an irrevocable standby letter of credit for $1,677,000, any draw downs and expense for which the Company is required to reimburse.

 

 

 

The Company has entered into interest rate cap agreements with a third party in notional amounts equal to $41,000,000 and $30,000,000.  The agreements cap the LIBOR rate at 5.5% through the initial terms of the loans.

 

 

 

Under terms of the mortgage loan agreement, the Company is required to deposit monthly into a “FF&E Reserve” escrow account an amount equal to 2% of monthly gross revenues during the initial loan term and 3% during the extension terms. Disbursements from the escrow account for eligible replacements and capital improvements are subject to lender approval.  The Company is currently putting 4% of monthly gross revenues into such an escrow account due to a requirement in the management agreement described in Note 4.




LCP – WB Chicago, LLC

Notes to Consolidated Financial Statements

 

The Company must also maintain a real estate tax and general insurance escrow account that requires monthly deposits of an amount sufficient to accumulate payments by the 30th day prior to the date they come due.

 

 

4.

Management Agreements and Key Money

 

 

 

The Company has entered into an agreement with Conrad Hotels USA, Inc. (“Property Manager”) to manage the property.  The agreement expires on the earlier of November 7, 2015 or the occurrence of certain events, as defined.

 

 

 

The property management agreement provides for a management fee equal to the sum of the base fee of 1.5% of gross revenues (increasing annually in 0.5% increments to 3.0% by the fifth year of the agreement) and an incentive fee of 15% of cash flow, as defined.  Property management fees totaled $231,510 for the nine months ended September 30, 2006.

 

 

 

The property management agreement requires that the Company deposit 4% of monthly gross revenues, as defined, into a “Capital Renewals Reserve” to fund future capital expenditures.  In the event of a default on the loan described in Note 3, the lender may freeze and obtain sole control of this cash account.

 

 

 

In connection with the property management agreement, the Property Manager agreed to advance the Company $4,500,000 in Key Money to help fund a property improvement plan. The Company received $2,323,000 as of December 31, 2005. The remaining $2,177,000 was received on January 2, 2006.

 

 

 

The agreement can be terminated by the Company beginning in the third full operating year if certain operating performance standards pertaining to net cash flow and a yield index, as defined, are not met. If terminated, some of the Key Money referred to above is required to be repaid in the year of termination as follows: year 3 - $2.2 million; year 4 - $1.7 million; year 5 - $1.0 million. The Property Manager has a one-time right to prevent the termination of the agreement through a cure payment.

 

 

 

The Company also had a management agreement with a third party to manage the food and beverage operations which expired in May 2006. The management fee was equal to 3.0% of gross receipts generated in the food and beverage service areas each fiscal year. The agreement also provided for an incentive fee equal to 50% of the amount by which net annual receipts exceed 15% of gross receipts for the same period. Included in food and beverage expenses are management fees associated with the agreement that totaled $52,000 for the nine months ended September 30, 2006.

 

 

 

The LLC agreement provides for an administrative fee of 1% of monthly gross revenues be paid to LCP Chicago Investors, LLC, a member, for the performance of management and administrative duties set forth in the agreement.  The administrative fee totaled $167,005 for the nine months ended September 30, 2006.




LCP – WB Chicago, LLC

Notes to Consolidated Financial Statements

5.

Concentration of Credit Risk

 

 

 

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and an overnight investment account.  The Company places its cash and cash equivalents with a high-quality financial institution.  At times, cash balances may be in excess of the $100,000 FDIC insurance limit.

 

 

6.

Contingencies

 

 

 

The nature of the operations of the Company exposes it to the risk of claims and litigation in the normal course of business.  Although the outcome of any potential matters cannot be determined, management believes the ultimate resolution of these matters would not have a material adverse effect on the financial position or operations of the Company.

 

 

7.

Subsequent Event

 

 

 

On November 8, 2006, the Company sold the Conrad Chicago to DiamondRock Hospitality Company.




UNAUDITED PRO FORMA FINANCIAL INFORMATION

          The Company’s historical financial information for the year ended December 31, 2005 has been derived from our historical financial statements audited by KPMG LLP, independent registered public accounting firm. The Company’s historical financial information as of and for the period ended September 8, 2006 has been derived from our unaudited historical financial statements.  The following unaudited pro forma financial information gives effect to the following:

 

Our acquisitions of the Torrance Marriott, the Vail Marriott Mountain Resort & Spa, a portfolio of hotels consisting of the Marriott Los Angeles Airport, Marriott’s Frenchman’s Reef and Morning Star Beach Resort, Renaissance Worthington Hotel and Marriott Atlanta Alpharetta (the “Capital Hotel Investment Portfolio”), the Oak Brook Hills Marriott Resort, the Orlando Airport Marriott, the Chicago Marriott, the Westin Atlanta North and the Conrad Chicago;

 

 

 

 

Our borrowings under (i) the $62.5 million mortgage debt on the Frenchman’s Reef & Morning Star Marriott Beach Resort, (ii) the $82.6 million mortgage debt on the Marriott Los Angeles Airport, (iii) the $57.4 million mortgage debt on the Renaissance Worthington Hotel, (iv) the $59 million mortgage debt on the Orlando Airport Marriott, and (v) the $220 million mortgage debt on the Chicago Marriott;

 

 

 

 

Repayment of approximately $44 million of mortgage debt related to the Torrance Marriott and $20 million of mortgage debt relating to the Lodge at Sonoma, a Renaissance Resort & Spa.

 

 

 

 

The refinancing of the $23 million variable-rate mortgage debt on the Courtyard Manhattan / Fifth Avenue with $51 million of fixed-rate mortgage debt; and

 

 

 

 

Follow-on offering of 5,750,000 shares of common stock of the Company at $16.90 per share, with approximately $96.9 million of net proceeds to the Company.

          The pro forma statement of operations for the year ended December 31, 2005 excludes the pre-acquisition operating results of the SpringHill Suites Atlanta Buckhead since it was opened on July 1, 2005 and has no historical operating results. The accompanying pro forma financial information reflects the preliminary application of purchase accounting to the acquisitions of the Vail Marriott, the Capital Hotel Investment Portfolio, the Oak Brook Hills Marriott Resort, the Orlando Airport Marriott, the Chicago Marriott, the Westin Atlanta North, and the Conrad Chicago. The preliminary purchase accounting may be adjusted if any of the assumptions underlying the purchase accounting change. The unaudited pro forma financial information as of and for the period ended September 8, 2006 is presented as if these transactions had occurred on January 1, 2006.  The unaudited pro forma consolidated statement of operations for the year ended December 31, 2005 is presented as if these transactions had occurred on January 1, 2005.

          The unaudited pro forma financial information and related notes are presented for informational purposes only and do not purport to represent what our results of operations would actually have been if the transactions had in fact occurred on the date discussed above. They also do not project or forecast our results of operations for any future date or period.

          The unaudited pro forma financial information should be read together with our historical financial statements and related notes and with the information set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our previous reports filed with the Commission. The pro forma adjustments are based on available information and upon assumptions that we believe are reasonable. However, we cannot assure you that actual results will not differ from the pro forma information and perhaps in material and adverse ways.



DIAMONDROCK HOSPITALITY COMPANY

Pro Forma Consolidated Balance Sheet
September 8, 2006

 

 

Historical

 

A
Conrad
Chicago

 

B
Follow-on
Offering

 

Pro Forma

 

 

 



 



 



 



 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

$

1,324,903,207

 

$

116,600,000

 

$

—  

 

$

1,441,503,207

 

Deferred financing costs, net

 

 

3,450,127

 

 

—  

 

 

—  

 

 

3,450,127

 

Restricted cash

 

 

27,070,515

 

 

1,741,648

 

 

—  

 

 

28,812,163

 

Due from hotel managers

 

 

42,828,456

 

 

(307,927

)

 

—  

 

 

42,520,529

 

Favorable lease asset, net

 

 

10,226,673

 

 

—  

 

 

—  

 

 

10,226,673

 

Prepaids and other assets

 

 

20,608,389

 

 

(10,000,000

)

 

—  

 

 

10,608,389

 

Cash and cash equivalents

 

 

93,082,205

 

 

(108,033,721

)

 

96,925,000

 

 

81,973,484

 

 

 



 



 



 



 

Total assets

 

$

1,522,169,572

 

$

—  

 

$

96,925,000

 

$

1,619,094,572

 

 

 



 



 



 



 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage debt, at face amount

 

$

662,148,395

 

$

—  

 

$

—  

 

$

662,148,395

 

Debt premium

 

 

2,670,227

 

 

—  

 

 

—  

 

 

2,670,227

 

 

 



 



 



 



 

Total debt

 

 

664,818,622

 

 

—  

 

 

—  

 

 

664,818,622

 

 

 



 



 



 



 

Deferred income related to key money

 

 

11,604,401

 

 

—  

 

 

—  

 

 

11,604,401

 

Unfavorable contract liabilities, net

 

 

88,371,703

 

 

—  

 

 

—  

 

 

88,371,703

 

Due to hotel managers

 

 

22,888,703

 

 

—  

 

 

—  

 

 

22,888,703

 

Dividends declared and unpaid

 

 

12,835,514

 

 

—  

 

 

—  

 

 

12,835,514

 

Accounts payable and accrued liabilities

 

 

31,437,386

 

 

—  

 

 

—  

 

 

31,437,386

 

 

 



 



 



 



 

Total other liabilities

 

 

167,137,707

 

 

—  

 

 

—  

 

 

167,137,707

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

704,416

 

 

—  

 

 

57,500

 

 

761,916

 

Additional paid-in capital

 

 

728,867,133

 

 

—  

 

 

96,867,500

 

 

825,734,633

 

Accumulated deficit

 

 

(39,358,306

)

 

—  

 

 

—  

 

 

(39,358,306

)

 

 



 



 



 



 

Total shareholders’ equity

 

 

690,213,243

 

 

—  

 

 

96,925,000

 

 

787,138,243

 

 

 



 



 



 



 

Total liabilities and shareholders’ equity

 

$

1,522,169,572

 

$

—  

 

$

96,925,000

 

$

1,619,094,572

 

 

 



 



 



 



 




NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 8, 2006

          The accompanying unaudited Pro Forma Consolidated Balance Sheet as of September 8, 2006 is based on the Historical Consolidated Balance Sheet as of September 8, 2006, as adjusted to assume that the following occurred on September 8, 2006:

 

Follow-on offering of 5,750,000 shares of common stock of the Company at $16.90 per share, with approximately $96.9 million of net proceeds to the Company after deduction of $250,000 of offering costs.

 

 

 

 

The acquisition of the Conrad Chicago for total consideration of $118.0 million.

          In the opinion of the Company’s management, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited Pro Forma Consolidated Balance Sheet as of September 8, 2006 is presented for illustrative purposes only and is not necessarily indicative of what the actual financial position would have been had the transactions described above occurred as of September 8, 2006 nor does it purport to represent the future financial position of the Company.

          Notes and Management Assumptions:

 

A

Represents the adjustment to record the acquisition accounting of the Conrad Chicago as follows:

 

 

 

 

 

 

Record property and equipment at fair value of $116,600,000

 

 

Record restricted cash paid for of $1,741,648

 

 

Record reduction of due from hotel managers of $307,927

 

 

Record reduction of other assets of $10,000,000

 

 

Record cash paid for the acquisition of $108,033,721

 

 

 

 

 

B

Represents the adjustment to record the follow-on offering of 5,750,000 shares of common stock of the Company at $16.90 per share.




DIAMONDROCK HOSPITALITY COMPANY

Pro Forma Consolidated Statement of Operations
Period from January 1, 2006 to September 8, 2006

 

 

Historical

 

C
Chicago Marriott

 

C
Westin Atlanta North

 

C
Conrad Chicago

 

D
Depreciation Adjustment

 

E
TRS Income Taxes

 

F
Debt Interest Expense

 

G
Repaid / Refinanced Debt Interest Expense

 

Pro Forma

 

 

 



 



 



 



 



 



 



 



 



 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

212,593,189

 

$

10,622,479

 

$

4,254,929

 

$

11,719,124

 

$

—  

 

$

—  

 

$

—  

 

$

—  

 

$

239,189,721

 

Food and beverage

 

 

92,065,252

 

 

5,092,530

 

 

2,130,622

 

 

3,360,098

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

102,648,502

 

Other

 

 

18,329,885

 

 

485,749

 

 

222,236

 

 

309,513

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

19,347,383

 

 

 



 



 



 



 



 



 



 



 



 

Total revenues

 

 

322,988,326

 

 

16,200,758

 

 

6,607,787

 

 

15,388,735

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

361,185,606

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

49,292,789

 

 

3,190,630

 

 

1,007,425

 

 

3,205,111

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

56,695,955

 

Food and beverage

 

 

62,141,105

 

 

3,312,180

 

 

1,314,500

 

 

2,845,854

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

69,613,639

 

Management fees and other hotel expenses

 

 

121,397,755

 

 

7,013,658

 

 

2,207,360

 

 

6,379,849

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

136,998,622

 

Depreciation and amortization

 

 

33,922,175

 

 

—  

 

 

—  

 

 

—  

 

 

5,923,625

 

 

—  

 

 

—  

 

 

—  

 

 

39,845,800

 

Corporate expenses

 

 

8,025,371

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

8,025,371

 

 

 



 



 



 



 



 



 



 



 



 

Total operating expenses

 

 

274,779,195

 

 

13,516,468

 

 

4,529,285

 

 

12,430,814

 

 

5,923,625

 

 

—  

 

 

—  

 

 

—  

 

 

311,179,387

 

 

 



 



 



 



 



 



 



 



 



 

OPERATING PROFIT

 

 

48,209,131

 

 

2,684,290

 

 

2,078,502

 

 

2,957,921

 

 

(5,923,625

)

 

—  

 

 

—  

 

 

—  

 

 

50,006,219

 

OTHER EXPENSES (INCOME)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(2,686,501

)

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

(2,686,501

)

Interest expense

 

 

24,189,649

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

3,330,419

 

 

(268,242

)

 

27,251,826

 

 

 



 



 



 



 



 



 



 



 



 

Total other expenses (income)

 

 

21,503,148

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

3,330,419

 

 

(268,242

)

 

24,565,325

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

26,705,983

 

 

2,684,290

 

 

2,078,502

 

 

2,957,921

 

 

(5,923,625

)

 

—  

 

 

(3,330,419

)

 

268,242

 

 

25,440,894

 

Income tax (benefit) provision

 

 

1,972,491

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

164,693

 

 

—  

 

 

—  

 

 

2,137,184

 

 

 



 



 



 



 



 



 



 



 



 

NET INCOME (LOSS)

 

$

24,733,492

 

$

2,684,290

 

$

2,078,502

 

 

2,957,921

 

$

(5,923,625

)

$

(164,693

)

$

(3,330,419

)

$

268,242

 

$

23,303,710

 

 

 



 



 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Basic and Diluted EPS (H)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

23,303,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Shares

 

 

77,058,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Earnings per Share

 

 

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 




Notes to Pro Forma Consolidated Statement of Operations
for the Period from January 1, 2006 to September 8, 2006

          The accompanying unaudited Pro Forma Consolidated Statement of Operations for the period ended September 8, 2006 is based on our Historical Consolidated Statement of Operations for the year to date period ended September 8, 2006, adjusted to assume that the following occurred on January 1, 2006:

 

The acquisition of the following hotels for total consideration of:


Hotel

 

 

 

 


 

 

 

 

Chicago Marriott

 

$

310,416,000

 

Westin Atlanta North

 

 

61,506,000

 

Conrad Chicago

 

 

118,034,000

 

 

 



 

Total

 

$

489,956,000

 

 

 



 


 

The refinancing of the $23 million variable-rate mortgage debt on the Courtyard Manhattan / Fifth Avenue with $51 million of fixed-rate mortgage debt.

          In the opinion of our management, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited Pro Forma Consolidated Statement of Operations for the period ended September 8, 2006 is presented for illustrative purposes only and is not necessarily indicative of what the actual results of operations would have been had the transactions described above occurred on January 1, 2006, nor does it purport to represent our future results of operations.

          Notes and Management Assumptions:

 

C

Represents the adjustment to record historical revenues and operating expenses associated with the 2006 acquisitions of the following hotels:

 

 

 

 

 

Chicago Marriott

 

 

 

 

 

 

Westin Atlanta North

 

 

 

 

 

 

Conrad Chicago

 

 

 

 

 

D

Reflects the adjustment to include the depreciation and amortization resulting from the 2006 hotel acquisitions as follows:


Hotel

 

 

 

 


 

 

 

 

Chicago Marriott

 

$

2,337,866

 

Westin Atlanta North

 

 

805,904

 

Conrad Chicago

 

 

2,779,855

 

 

 



 

Total

 

$

5,923,625

 

 

 



 


 

E

Reflects the adjustment to our historical income tax provision to reflect the pro forma tax provision of our Taxable REIT Subsidiary assuming the TRS leases were in place as of January 1, 2006

 

 

 

 

F

Reflects the adjustment to include interest expense incurred for mortgage debt relating to the Chicago Marriott and the unused facility fee under the $75 million senior secured credit facility.

 

 

 

 

G

Reflects the adjustment to reduce interest expense by $705,301 for interest of the senior secured credit facility that was repaid with the proceeds from the follow-on offering, by $165,873 for interest of the bridge loan for Chicago Marriott that was repaid with the proceeds form the follow-on offering and by $591,842 for interest and deferred financing cost amortization of the $23 million variable rate Courtyard Manhattan / Fifth Avenue mortgage debt which was repaid in conjunction with the Courtyard Manhattan / Fifth Avenue refinancing. The adjustment was offset by $1,194,774 of interest expense on the $51 million fixed rate Courtyard Manhattan / Fifth Avenue mortgage debt which was entered in conjunction with the Courtyard Manhattan / Fifth Avenue refinancing.




 

H

The shares used in the basic and diluted earning per share calculation include the following:


Common shares outstanding at September 8, 2006

 

 

70,441,632

 

Unvested restricted shares held by management and employees

 

 

461,527

 

IPO share grants held by corporate officers

 

 

405,252

 

Shares issued in follow on offering

 

 

5,750,000

 

 

 



 

Total basic and diluted

 

 

77,058,411

 

 

 



 




DIAMONDROCK HOSPITALITY COMPANY

Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2005

 

 

Historical

 

I
Torrance

 

I
Vail
Marriott

 

I
Capital
Hotel
Investment
Portfolio

 

I
Oak Brook

 

I
Orlando
Airport
Marriott

 

I
Chicago
Marriott

 

 

 



 



 



 



 



 



 



 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

151,755,924

 

$

164,260

 

$

8,598,220

 

$

44,861,450

 

$

4,979,713

 

$

13,896,815

 

$

57,347,529

 

Food and beverage

 

 

63,261,282

 

 

79,212

 

 

2,826,256

 

 

24,759,444

 

 

6,778,277

 

 

7,327,578

 

 

24,673,633

 

Other

 

 

14,433,057

 

 

6,092

 

 

1,314,107

 

 

4,535,714

 

 

1,951,152

 

 

652,722

 

 

2,823,771

 

 

 



 



 



 



 



 



 



 

Total revenues

 

 

229,450,263

 

 

249,564

 

 

12,738,583

 

 

74,156,608

 

 

13,709,142

 

 

21,877,115

 

 

84,844,933

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

37,432,635

 

 

41,899

 

 

1,688,374

 

 

10,003,296

 

 

1,428,403

 

 

3,254,493

 

 

13,726,458

 

Food and beverage

 

 

47,281,237

 

 

54,368

 

 

2,260,744

 

 

17,308,279

 

 

3,561,517

 

 

4,476,504

 

 

15,179,962

 

Management fees and other hotel expenses

 

 

96,555,386

 

 

90,156

 

 

4,252,765

 

 

25,446,651

 

 

6,510,083

 

 

7,049,898

 

 

34,969,034

 

Depreciation and amortization

 

 

27,590,234

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Corporate expenses

 

 

13,461,528

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

 



 



 



 



 



 



 



 

Total operating expenses

 

 

222,321,020

 

 

186,423

 

 

8,201,883

 

 

52,758,226

 

 

11,500,003

 

 

14,780,895

 

 

63,875,454

 

 

 



 



 



 



 



 



 



 

OPERATING PROFIT

 

 

7,129,243

 

 

63,141

 

 

4,536,700

 

 

21,398,382

 

 

2,209,139

 

 

7,096,220

 

 

20,969,479

 

OTHER EXPENSES (INCOME)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1,548,635

)

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Interest expense.

 

 

17,367,079

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

 



 



 



 



 



 



 



 

Total other expenses (income)

 

 

15,818,444

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

(8,689,201

)

 

63,141

 

 

4,536,700

 

 

21,398,382

 

 

2,209,139

 

 

7,096,220

 

 

20,969,479

 

Income tax benefit

 

 

(1,353,261

)

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

 



 



 



 



 



 



 



 

NET INCOME (LOSS)

 

$

(7,335,940

)

$

63,141

 

$

4,536,700

 

$

21,398,382

 

$

2,209,139

 

$

7,096,220

 

$

20,969,479

 

 

 



 



 



 



 



 



 



 



DIAMONDROCK HOSPITALITY COMPANY

Pro Forma Consolidated Statement of Operations (Continued)
For the Year Ended December 31, 2005


 

 

I
Westin
Atlanta
North

 

I
Conrad
Chicago

 

J
Depreciation
Adjustment

 

K
TRS
Income
Taxes

 

L
Mortgage 
Debt
Interest
Expense

 

M
Repaid /
Refinanced
Mortgage
Debt Interest
Expense

 

Pro Forma

 

 

 



 



 



 



 



 



 



 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

11,262,134

 

$

15,977,000

 

$

—  

 

$

—  

 

$

—  

 

$

—  

 

$

308,843,045

 

Food and beverage

 

 

6,655,719

 

 

5,112,000

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

141,473,401

 

Other

 

 

736,579

 

 

967,000

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

27,420,194

 

 

 



 



 



 



 



 



 



 

Total revenues

 

 

18,654,432

 

 

22,056,000

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

477,736,640

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

2,767,190

 

 

3,894,000

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

74,236,748

 

Food and beverage

 

 

4,186,295

 

 

4,173,000

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

98,481,906

 

Management fees and other hotel expenses

 

 

6,817,000

 

 

7,465,000

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

189,155,973

 

Depreciation and amortization

 

 

—  

 

 

—  

 

 

28,491,777

 

 

—  

 

 

—  

 

 

—  

 

 

56,082,011

 

Corporate expenses

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

13,461,528

 

 

 



 



 



 



 



 



 



 

Total operating expenses

 

 

13,770,485

 

 

15,532,000

 

 

28,491,777

 

 

—  

 

 

—  

 

 

—  

 

 

431,418,166

 

 

 



 



 



 



 



 



 



 

OPERATING PROFIT

 

 

4,883,947

 

 

6,524,000

 

 

(28,491,777

)

 

—  

 

 

—  

 

 

—  

 

 

46,318,474

 

OTHER EXPENSES (INCOME)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

(1,548,635

)

Interest expense.

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

22,357,240

 

 

(550,233

)

 

39,174,086

 

 

 



 



 



 



 



 



 



 

Total other expenses (income)

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

22,357,240

 

 

(550,233

)

 

37,625,451

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

4,883,947

 

 

6,524,000

 

 

(28,491,777

)

 

—  

 

 

(22,357,240

)

 

550,233

 

 

8,693,023

 

Income tax benefit

 

 

—  

 

 

—  

 

 

—  

 

 

1,101,293

 

 

—  

 

 

—  

 

 

(251,968

)

 

 



 



 



 



 



 



 



 

NET INCOME (LOSS)

 

$

4,883,947

 

$

6,524,000

 

$

(28,491,777

)

$

(1,101,293

)

$

(22,357,240

)

$

550,233

 

$

8,944,991

 

 

 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Basic and Diluted EPS (N)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

8,944,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Shares

 

 

77,058,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Earnings per Share

 

 

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 




Notes to Unaudited Pro Forma Consolidated Statement of Operations
For The Year Ended December 31, 2005

          The accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2005 is based on our Historical Consolidated Statement of Operations for the year ended December 31, 2005, adjusted to assume that the following occurred on January 1, 2005:

 

The acquisition of the following hotels for total consideration of:


Hotel

 

 

 

 


 

 

 

 

Torrance Marriott

 

$

72,015,000

 

Vail Marriott

 

 

64,930,000

 

Capital Hotel Investment Portfolio

 

 

314,866,000

 

Oak Brook Hills Marriott Resort

 

 

65,747,000

 

Orlando Airport Marriott

 

 

71,604,000

 

Chicago Marriott

 

 

310,416,000

 

Westin Atlanta North

 

 

61,506,000

 

Conrad Chicago

 

 

118,034,000

 

 

 



 

Total

 

$

1,079,118,000

 

 

 



 


 

Repayment of approximately $44 million of mortgage debt related to the Torrance Marriott and $20 million of mortgage debt relating to the Lodge at Sonoma, a Renaissance Resort & Spa.

 

 

 

 

Interest on the $62.5 million mortgage debt related to the Frenchman’s Reef & Morning Star Marriott Beach Resort.

 

 

 

 

Interest on the $82.6 million mortgage debt related to the Marriott Los Angeles Airport and $57.4 million mortgage debt on the Renaissance Worthington Hotel.

 

 

 

 

Interest on the $59 million mortgage debt on the Orlando Airport Marriott.

 

 

 

 

Repayment of the $12.0 million outstanding as of December 31, 2005 on the senior secured credit facility with proceeds from the follow-on offering.

 

 

 

 

Interest on the $220 million mortgage debt related to the acquisition of the Chicago Marriott.

 

 

 

 

The refinancing of the $23 million variable-rate mortgage debt on the Courtyard Manhattan / Fifth Avenue with $51 million of fixed-rate mortgage debt.

          In the opinion of our management, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2005 is presented for illustrative purposes only and is not necessarily indicative of what the actual results of operations would have been had the transactions described above occurred on January 1, 2005, nor does it purport to represent our future results of operations. The accompanying pro forma statement of operations for the year ended December 31, 2005 excludes the pre-acquisition operating results of the SpringHill Suites Atlanta Buckhead since it was opened on July 1, 2005 and has no historical operating results.



Notes and Management Assumptions:

          I

Represents the adjustment to record historical revenues and operating expenses associated with the 2006 and 2005 acquisitions of the following hotels:


 

Torrance Marriott

 

 

 

 

Vail Marriott

 

 

 

 

Capital Hotel Investment Portfolio

 

 

 

 

Oak Brook Hills Marriott Resort

 

 

 

 

Orlando Airport Marriott

 

 

 

 

Chicago Marriott

 

 

 

 

Westin Atlanta North

 

 

 

 

Conrad Chicago


          J

Reflects the adjustment to include the depreciation and amortization resulting from the 2006 and 2005 hotel acquisitions as follows:


Hotel

 

 

 

 


 

 

 

 

Torrance Marriott

 

$

51,663

 

Vail Marriott

 

 

1,108,399

 

Capital Hotel Investment Portfolio

 

 

4,979,981

 

Oak Brook Hills Marriott Resort

 

 

1,934,359

 

Orlando Airport Marriott

 

 

4,170,057

 

Chicago Marriott

 

 

10,129,400

 

Westin Atlanta North

 

 

2,411,444

 

Conrad Chicago

 

 

3,706,474

 

 

 



 

Total

 

$

28,491,777

 

 

 



 


          K

Reflects the adjustment to our historical income tax provision to reflect the pro forma tax provision of our Taxable REIT Subsidiary assuming we had elected REIT status and the TRS leases were in place as of January 1, 2005. Our Taxable REIT Subsidiary’s pro forma pre-tax loss was $4.9 million for the year ended December 31, 2005. The pro forma income tax provision was calculated using our Taxable REIT Subsidiary’s historical effective income tax rate. The pro forma income tax provision includes the $1.4 million income tax charge as a result of our REIT election in 2005 that is reflected in the historical financial statements.

 

 

          L

Reflects the adjustment to include interest expense incurred for mortgage debt relating to the Capital Hotel Investment Portfolio, the Frenchman’s Reef & Morning Star Marriott Beach Resort, the Orlando Airport Marriott, and the Chicago Marriott.  The adjustment also includes the unused facility fee on the $75 million senior secured credit facility.

 

 

          M

Reflects the adjustment to reduce interest expense by $1,594,190 for interest and deferred financing cost amortization of the mortgage debt related to the Torrance Marriott, which was repaid with the proceeds of our initial public offering, by $691,837 for interest and deferred financing cost amortization of the mortgage debt related to the Lodge at Sonoma, a Renaissance Resort & Spa which was repaid with the proceeds of our initial public offering, offset by an increase of interest expense by $1,872,795 relating to the refinancing of the Courtyard Fifth Avenue mortgage debt. The Courtyard Manhattan / Fifth Avenue adjustment consists of (a) $3,421,183 of interest expense and deferred financing cost amortization on the $51 million fixed rate mortgage debt, less (b) $1,548,388 of interest expense and deferred financing cost amortization recorded in the historical financial statements related to the $23 million variable rate mortgage debt. Adjustment also reflects the $137,000 reduction of interest expense included in the historical financial statements related to the $12 million draws under the senior secured credit facility that were repaid with proceeds from the follow-on offering.

 

 

          N

The shares used in the basic and diluted earning per share calculation include the following:


Common shares outstanding at September 8, 2006

 

 

70,441,632

 

Shares issued in follow-on offering

 

 

5,750,000

 

Unvested restricted shares held by management and employees

 

 

461,527

 

IPO share grants held by corporate officers

 

 

405,252

 

 

 



 

Total basic and diluted

 

 

77,058,411

 

 

 



 




SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

DIAMONDROCK HOSPITALITY COMPANY

 

 

 

 

 

 

Date:  November 21, 2006

By:

/s/ Michael D. Schecter

 

 


 

 

Michael D. Schecter

 

 

General Counsel and Secretary




EXHIBIT INDEX

Exhibit No.

 

Description


 


23.1

 

Consent of BDO Seidman, LLP