-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F8xm/+XAOsp7lqJpvpnyo4axwX5RxtSisAZY//oDM9idamnqVEabIRqDwDBIWF3C HTs/E22nzBdhqexYH1y8zQ== /in/edgar/work/0000930661-00-002904/0000930661-00-002904.txt : 20001114 0000930661-00-002904.hdr.sgml : 20001114 ACCESSION NUMBER: 0000930661-00-002904 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WYNDHAM INTERNATIONAL INC CENTRAL INDEX KEY: 0000715273 STANDARD INDUSTRIAL CLASSIFICATION: [7000 ] IRS NUMBER: 942878485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09320 FILM NUMBER: 761718 BUSINESS ADDRESS: STREET 1: 1950 STEMMONS FRWY STREET 2: STE 6001 CITY: DALLAS STATE: TX ZIP: 75207 BUSINESS PHONE: 2148631000 MAIL ADDRESS: STREET 1: 1950 STEMMONS FRWY STREET 2: STE 6001 CITY: DALLAS STATE: TX ZIP: 75207 FORMER COMPANY: FORMER CONFORMED NAME: PATRIOT AMERICAN HOSPITALITY OPERATING CO\DE DATE OF NAME CHANGE: 19970723 FORMER COMPANY: FORMER CONFORMED NAME: BAY MEADOWS OPERATING CO DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt FORM 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-Q (Mark One) [X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- Commission File Number 1-9320 WYNDHAM INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 94-2878485 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1950 Stemmons Freeway, Suite 6001 Dallas, Texas 75207 (Address of principal executive offices) (Zip Code) (214) 863-1000 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) ---------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The number of shares outstanding of the registrant's class of common stock, par value $.01 per share, as of the close of business on November 8, 2000, was 167,887,537. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- WYNDHAM INTERNATIONAL, INC. INDEX PART I--FINANCIAL INFORMATION
Page ---- Item 1. Financial Statements.............................................. 3 Wyndham International, Inc.: Condensed Consolidated Balance Sheets as of September 30, 2000 (unaudited) and December 31, 1999 ..................................... 3 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2000 and 1999 (unaudited)................... 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and 1999 (unaudited).......................... 5 Notes to Condensed Consolidated Financial Statements as of September 30, 2000 (unaudited)....................................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................. 19 Item 3. Qualitative and Quantitative Disclosures about Market Risks....... 29 PART II--OTHER INFORMATION Item 1. Legal Proceedings................................................. 30 Item 2. Changes in Securities and Use of Proceeds......................... 31 Item 3. Defaults Upon Senior Securities................................... 31 Item 4. Submission of Matters to Vote of Security Holders................. 32 Item 5. Other Information................................................. 32 Item 6. Exhibits and Reports on Form 8-K: Exhibits................................................................ 32 Reports on Form 8-K..................................................... 32 Signature................................................................. 33
2 PART I: FINANCIAL INFORMATION Item 1. Financial Statements WYNDHAM INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) (unaudited)
September 30, December 31, 2000 1999 ------------- ------------ ASSETS Current assets: Cash and cash equivalents......................... $ 102,178 $ 144,333 Restricted cash................................... 100,550 102,480 Accounts and lease revenue receivables............ 221,974 186,321 Inventories....................................... 20,965 23,304 Prepaid expenses and other assets................. 20,164 21,197 ----------- ----------- Total current assets.............................. 465,831 477,635 ----------- ----------- Investment in real estate and related improvements net of accumulated depreciation of $655,859 in 2000 and $478,494 in 1999......................... 5,039,237 5,413,178 Investment in unconsolidated subsidiaries.......... 106,979 165,663 Notes and other receivables........................ 45,845 42,653 Management contract costs, net of accumulated amortization of $31,637 in 2000 and $26,359 in 1999.............................................. 157,380 129,362 Leasehold costs, net of accumulated amortization of $21,930 in 2000 and $15,305 in 1999............... 124,112 133,102 Trade names and franchise costs, net of accumulated amortization of $15,864 in 2000 and $11,328 in 1999.............................................. 105,978 116,521 Deferred acquisition costs......................... 2,851 2,584 Goodwill, net of accumulated amortization of $41,369 in 2000 and $30,141 in 1999............... 362,455 378,916 Deferred expenses, net of accumulated amortization of $34,505 in 2000 and $46,614 in 1999............ 106,977 97,767 Other assets....................................... 47,905 46,109 ----------- ----------- Total assets...................................... $ 6,565,550 $ 7,003,490 =========== =========== LIABILITES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses............. $ 229,294 $ 322,195 Deposits.......................................... 43,961 39,452 Current portion of borrowings under the credit facility, term loans, mortgage notes and capital lease obligations................................ 154,268 130,177 ----------- ----------- Total current liabilities......................... 427,523 491,824 ----------- ----------- Borrowings under the credit facility, term loans, mortgage notes and capital lease obligations...... 3,398,043 3,513,379 Deferred income taxes.............................. 571,941 656,164 Deferred income.................................... 9,734 15,543 Minority interest in operating partnerships........ 22,146 22,435 Minority interest in other consolidated subsidiaries...................................... 167,170 166,483 Commitments and contingencies Shareholders' equity: Preferred stock, $0.01 par value; authorized: 150,000,000 shares; shares issued and outstanding: 10,894,960 in 2000 and 10,344,662 in 1999............................................. 109 103 Common stock, $0.01 par value; authorized: 750,000,000 shares; shares issued and outstanding: 167,415,229 in 2000 and 167,193,696 in 1999.......................................... 1,674 1,672 Additional paid in capital........................ 3,809,656 3,753,235 Receivable from shareholders and affiliates....... (16,913) (17,210) Unearned stock compensation, net of accumulated amortization of $19,552 in 2000 and $19,297 in 1999............................................. -- (255) Unrealized loss on securities available for sale.. (593) (1,000) Unrealized foreign exchange loss.................. (3,134) (7,576) Accumulated deficit............................... (1,821,806) (1,591,307) ----------- ----------- Total shareholders' equity........................ 1,968,993 2,137,662 ----------- ----------- Total liabilities and shareholders' equity........ $ 6,565,550 $ 7,003,490 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 3 WYNDHAM INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ---------------------- 2000 1999 2000 1999 --------- -------- ---------- ---------- Revenue: Hotel revenue................... $ 560,911 $562,720 $1,829,984 $1,829,882 Participating and land lease revenue........................ -- 341 -- 929 Racecourse facility............. -- -- -- 4,561 Management fee and service fee income......................... 9,215 13,968 34,237 57,186 Interest and other income....... 4,340 2,252 26,866 8,951 --------- -------- ---------- ---------- Total revenue................... 574,466 579,281 1,891,087 1,901,509 --------- -------- ---------- ---------- Expenses: Hotel expenses.................. 421,959 430,070 1,309,949 1,327,485 Racing facility operations...... -- -- -- 3,867 General and administrative...... 23,257 31,538 72,951 142,560 Restructuring costs............. -- 3,906 -- 189,288 Interest expense................ 95,333 85,478 280,623 266,678 Depreciation and amortization... 79,631 75,653 238,078 232,558 Impairment loss on assets held for sale....................... 134,016 -- 211,316 -- Net (gain) loss on sale of assets......................... (9,305) (1,104) 4,747 4,223 --------- -------- ---------- ---------- Total expenses.................. 744,891 625,541 2,117,664 2,166,659 --------- -------- ---------- ---------- Operating loss................... (170,425) (46,260) (226,577) (265,150) Equity in earnings (losses) of unconsolidated subsidiaries.... 1,518 (931) 5,487 3,000 --------- -------- ---------- ---------- Loss before income taxes, minority interests and extraordinary item.............. (168,907) (47,191) (221,090) (262,150) Income tax benefit (provision)... 51,952 3,386 72,649 (651,053) --------- -------- ---------- ---------- Loss before minority interests and extraordinary item.......... (116,955) (43,805) (148,441) (913,203) Minority interest in the operating partnerships.......... -- -- -- 6,642 Minority interest in other consolidated subsidiaries....... (2,384) (760) (5,818) (4,824) --------- -------- ---------- ---------- Loss before extraordinary item... (119,339) (44,565) (154,259) (911,385) Extraordinary loss from early extinguishment of debt, net of minority interest and income taxes........................... -- -- -- (9,838) --------- -------- ---------- ---------- Net loss......................... (119,339) $(44,565) $ (154,259) $ (921,223) ========= ======== ========== ========== Basic loss attributable to common shareholders: Net loss........................ $(119,339) $(44,565) $ (154,259) $ (921,223) Adjustment for equity forwards.. -- -- -- (19,372) Preferred stock dividends....... (26,099) (24,375) (76,968) (25,276) --------- -------- ---------- ---------- Basic net loss.................. $(145,438) $(68,940) $ (231,227) $ (965,871) ========= ======== ========== ========== Basic loss per common share: Loss before extraordinary item.. $ (0.87) $ (0.41) $ (1.38) $ (6.00) Extraordinary loss.............. -- -- -- (0.06) --------- -------- ---------- ---------- Net loss per common share....... $ (0.87) $ (0.41) $ (1.38) $ (6.06) ========= ======== ========== ========== Diluted loss attributable to common shareholders: Net loss........................ $(119,339) $(44,565) $ (154,259) $ (921,223) Adjustment for equity forwards.. -- -- -- (39,322) Preferred stock dividends....... (26,099) (24,375) (76,968) (25,276) --------- -------- ---------- ---------- Diluted net loss................ $(145,438) $(68,940) $ (231,227) $ (985,821) ========= ======== ========== ========== Diluted loss per common share: Loss before extraordinary item.. $ (0.87) $ (0.41) $ (1.38) $ (6.13) Extraordinary loss.............. -- -- -- (0.06) --------- -------- ---------- ---------- Net loss per common share....... $ (0.87) $ (0.41) $ (1.38) $ (6.19) ========= ======== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 WYNDHAM INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Nine Months Ended September 30, --------------------- 2000 1999 --------- ---------- Cash flows from operating activities: Net loss................................................ $(154,259) $ (921,223) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization.......................... 238,078 232,558 Amortization of unearned stock compensation............ 255 5,697 Amortization of deferred loan costs.................... 19,855 29,633 Net loss on sale of assets............................. 4,747 4,223 Equity in earnings of unconsolidated subsidiaries...... (5,487) (3,000) Minority interest in operating partnerships............ -- (6,642) Minority interest in other consolidated subsidiaries... 5,818 4,824 Deferred income taxes.................................. (84,223) 622,025 Recognition of deferred termination fee................ (14,746) -- Write-off of deferred acquisition costs................ 1,283 -- Impairment loss on assets held for sale................ 211,316 53,524 Write-off of intangible assets......................... -- 119,751 Bad debt expense....................................... 1,405 5,495 Extraordinary loss from early extinguishment of debt... -- 9,838 Other.................................................. -- 602 Changes in assets and liabilities: Accounts and lease revenue receivable and other assets................................................ (29,089) (14,207) Inventories............................................ 2,293 184 Accounts payable and accrued expenses.................. (43,576) (39,124) Deferred income........................................ 8,937 -- --------- ---------- Net cash provided by operating activities.............. 162,607 104,158 --------- ---------- Cash flows from investing activities: Acquisition of hotel properties and related working capital assets........................................ (20,626) (69,951) Cash received in acquisition of real estate and hotel leases................................................ 609 1,100 Improvements and additions to hotel properties......... (124,309) (146,542) Gross proceeds from asset sales........................ 227,814 70,108 Earnest deposit on assets held for sale................ 11,072 -- Payment of contingent liability........................ (32,825) -- Acquisition of management contracts.................... (67,008) (5,695) Investment in unconsolidated subsidiaries.............. (10,763) (13,720) Deferred acquisition costs............................. (1,550) (7,230) Increase (decrease) in restricted cash accounts........ 1,929 (62,973) Net payments collected from unconsolidated subsidiaries.......................................... 11,886 -- Proceeds from termination of management contracts...... -- 16,086 Advances on other notes receivable..................... (1,309) (11,229) Collections on mortgage and other notes receivable..... 457 4,654 Other.................................................. (22) 5,065 --------- ---------- Net cash used in investing activities.................. (4,645) (220,327) --------- ---------- Cash flows from financing activities: Borrowings under credit facility, term loans, mortgage notes and capital lease obligations................... 452,081 2,718,430 Repayments on credit facility, mortgage notes, and capital lease obligations............................. (597,237) (3,036,685) Payment of deferred loan costs......................... (3,174) (107,244) Premiums paid for financial derivatives................ (34,360) -- Proceeds received from financial derivatives........... 6,654 -- Settlement of forward equity contracts................. -- (329,481) Proceeds from issuance of preferred stock.............. -- 1,000,000 Cost to retire Patriot series B preferred stock........ -- (13,966) Cash settlement with Interstate upon spinoff........... -- (17,102) Payment of offering costs.............................. -- (76,942) Distribution to minority interest holders.............. (6,563) (23,168) Dividends and distributions paid....................... (21,936) (8,211) Other.................................................. -- 222 Foreign currency translation adjustment................ 4,418 994 --------- ---------- Net cash (used in) provided by financing activities.... (200,117) 106,847 --------- ---------- Net decrease in cash and cash equivalents............... (42,155) (9,322) --------- ---------- Cash and cash equivalents at beginning of period........ 144,333 123,085 --------- ---------- Cash and cash equivalents at end of period.............. $ 102,178 $ 113,763 ========= ==========
The accompanying notes are an integral part of these consolidated financial statements. 5 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share amounts) (unaudited) 1. Organization and Basis of Presentation Wyndham International, Inc., as currently constituted (the "Company"), was formed through the June 30, 1999 restructuring and reorganization of Patriot American Hospitality, Inc. (collectively with its subsidiaries, "Patriot") and Wyndham International, Inc. (collectively with its subsidiaries, "Old Wyndham"). Prior to June 30, 1999, the shares of common stock of Patriot were paired and traded together with the shares of Old Wyndham, on a one for one basis, as a single unit pursuant to a stock pairing arrangement, and were referred to as paired shares. Patriot was formed April 17, 1995 as a self-administered real estate investment trust ("REIT") for the purpose of acquiring equity interests in hotel properties. Old Wyndham was formed in connection with Patriot's merger with and into California Jockey Club and Bay Meadows Operating Company on July 1, 1997 (the "Cal Jockey Merger"). Effective June 30, 1999, a subsidiary of Old Wyndham merged with and into Patriot with Patriot being the surviving entity and becoming a subsidiary of Old Wyndham. In connection with this restructuring, the pairing agreement between Patriot and Old Wyndham was terminated, Patriot's status as a REIT terminated effective January 1, 1999, and Patriot became a taxable corporation as of that date. This merger converted each previously outstanding paired share into one share of Wyndham class A common stock. Old Wyndham and its subsidiaries, which now include Patriot, is hereafter referred to as Wyndham or the Company. The restructuring was reflected as a reorganization of two companies under common control and was accounted for in a manner similar to that used in pooling of interest accounting. As such, there was no revaluation of the assets and liabilities of Old Wyndham or Patriot. As of September 30, 2000, the Company owned interests in 144 hotels with an aggregate of over 40,300 guest rooms and leased 38 hotels from third parties with over 5,800 guest rooms. In addition, the Company managed 38 hotels for third party owners with over 12,300 guest rooms and franchised 29 hotels with over 5,400 guest rooms. Principles of consolidation and combination The unaudited consolidated financial statements for September 30, 2000 include the accounts of the Company, its wholly owned subsidiaries, and the partnerships, corporations and limited liability companies in which the Company owns a controlling interest, after the elimination of all significant intercompany accounts and transactions. Partnerships--The condition for control is the ownership of a majority voting interest and the ownership of the general partnership interest. Corporations and Limited Liability Companies--The condition for control is the ownership of a majority voting interest. These financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2000 are 6 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) not necessarily indicative of the results that may be expected for the year ended December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K, for the year ended December 31, 1999. Certain prior period amounts have been reclassified to conform to current period presentation with no effect to previously reported net income or retained earnings. Newly Issued Accounting Standards Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") requires that all derivative investments be recorded in the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or comprehensive income depending on where a derivative is designated as part of a hedge transaction, and the type of hedge transaction. The Company will adopt these standards effective January 1, 2001 and is currently assessing the initial effects of adoption. During 1999, Financial Accounting Standards Board Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities--deferral of the Effective Date of the Statement of Financial Accounting Standards No. 133" ("SFAS 137") was issued. This statement amended SFAS 133 by deferring the effective date to fiscal quarters of all fiscal years beginning after June 15, 2000. During 2000, Financial Accounting Standards Board Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging--an Amendment to the Statement of Financial Accounting Standards No. 133" ("SFAS 138") was issued. This statement amends the accounting and reporting standards of SFAS 133 for certain derivative instruments and certain hedging activities. In December 1999, the Staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). This SAB summarizes certain of the Staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. The Company does not expect the provisions of SAB 101 to have a material impact on its financial statements. In SAB 101B, the SEC delayed the implementation date of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. 2. Real Estate Acquisitions In January 2000, the Company acquired the remaining interests in Wyndham Chicago for approximately $20,626. Disposals During the first quarter of 2000, the Company sold a hotel, retail space and a garage for a gross sales price of $44,250 and received net cash proceeds of $43,867. The Company recorded a net loss of $1,682 net of impairment of $2,330. In addition, effective March 31, 2000, the Company sold its Sierra Suites hotel brand, properties and related assets (the "Sierra transaction") to Sierra Suites Hotel Company, L.P., an entity affiliated with Mr. Rolf Ruhfus, a director of Wyndham, for approximately $53,000. The transaction included the sale by the Company of one 7 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) owned and three leased properties, seventeen franchise and management contracts for Sierra Suites and nine management contracts for Summerfield Suites. Pursuant to the purchase agreement, the Company received net cash proceeds of $23,045 and relieved $29,770 of future obligations with respect to a related agreement. During the second quarter of 2000, the Company sold its interests in 17 hotels, including the Clubhouse Inn brand, and a parcel of land for a gross sales price of approximately $95,270. The Company received net proceeds of $55,859 and was relieved of approximately $34,649 of mortgage debt. The Company recorded a net loss of $5,686, net of impairment of $64,492. In addition, the Company sold two hotel properties for a gross sales price of $43,445. The Company repaid $16,547 of mortgage debt and received net proceeds of $23,272. The hotel properties were leased back to the Company under two long-term operating leases. The leases have an initial term of 15 years and three optional five-year renewal periods exercisable at the Company's option. Under the terms of the leases, yearly base rent aggregates $4,345 plus a contingent rent paid based on a percentage of revenues over certain thresholds as specified in the leases. The leases require the Company to pay substantially all expenses associated with the operation of the leased hotels, including real estate taxes and insurance. During the third quarter of 2000, the Company sold two hotel properties and two investments for a gross sales price of $32,769 and received net proceeds of $27,448 and a note receivable of $4,319. The note bears interest at LIBOR plus 2.75% per annum and matures March 31, 2001. Assets held for sale During the nine months ended September 30, 2000, the Company identified an additional 20 owned hotel assets to be held for sale based on management having the authority and intent of entering into commitments for sales transactions expected to close in the next twelve months. The Company recorded a provision for loss on eight of those assets held for sale of $157,775. The provision reduces the carrying value to the estimated net sales proceeds less estimated costs to sell. At September 30, 2000, the Company has approximately $723,299, net of impairment of $229,743, of assets held for sale which are included in investments in real estate and related improvements in the accompanying financial statements. In addition, the Company recorded an additional provision for loss of $53,541 as a result of changes in the estimated fair value of certain investments held for sale. The impairment is included in investments in unconsolidated subsidiaries in the accompanying financial statements. 3. Restructuring During 1999, the Company recorded a restructuring charge of $285,267 as a result of the termination of the paired share structure and management's decision to streamline its organization and focus on its core brands and strategic assets. The restructuring activities primarily related to (1) the termination of the paired share structure, (2) the exiting of the European market for its non-branded assets, (3) the exiting of limited service hotel sector, (4) the closure of the Phoenix division office, (5) the closure of the Wichita division office, and (6) the elimination of certain brands. These restructuring activities resulted in the write-down of assets held for sale to estimated fair value and the write-down of intangible assets. The Company also incurred costs to sever employees, lease abandonment costs, and other costs relating to exiting these activities. 8 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) During the first nine months of 2000, continuing cash payments were made against the accrued liability as shown in the table below. The remaining accrual will be relieved throughout fiscal 2000, as leases expire and severance payments are made. Detail of the 1999 restructuring charge is as follows:
Accrued Accrued Cash/ Restructuring Balance Balance Description Non-Cash Charge at 12/31/99 Activity at 9/30/00 - ----------- ------------- ------------- ----------- -------- ---------- Organizational Restructuring Write-down of intangible assets................. Non-cash $ (83,094) $ -- $ -- $ -- Severance packages...... Cash/non-cash (4,675) (500) 250 (250) Downsizing European division Write-down of assets held for sale.......... Non-cash (69,491) -- -- -- Write-down of intangible assets................. Non-cash (28,394) -- -- -- Severance packages...... Cash (3,578) (2,458) 2,314 (144) Lease cancellations and commitments............ Cash (1,907) (1,907) 1,807 (100) Other exit costs........ Cash (4,062) (2,408) 2,173 (235) Exiting limited service market sector Write-down of assets held for sale.......... Non-cash (63,328) -- -- -- Write-down of intangible assets................. Non-cash (8,834) -- -- -- Closing of the Phoenix division office Severance packages...... Cash (2,006) (312) 312 -- Lease cancellations and commitments............ Cash (492) (321) 214 (107) Closing of the Wichita division office Severance packages...... Cash (1,872) (1,872) 1,872 -- Elimination of certain hotel brands Write-down of intangible assets................. Non-cash (12,821) -- -- -- Other Other exit costs........ Cash (713) -- -- -- Effect of foreign currency translation... -- 8 (33) (25) --------- ------- ------ ----- Total................... $(285,267) $(9,770) $8,909 $(861) ========= ======= ====== =====
4. Credit Facility, Term Loans, Mortgage and Other Notes: Effective September 25, 2000, the Company amended certain terms of its credit agreement. As a part of the amendment, the applicable interest rate margins of the $1,300,000 term loan would be increased by .50% if the balance of the increasing rate term loans in the aggregate amount was greater than $325,000, or .25% should the balance be equal to or less than $325,000. As of September 30, 2000, the balance of the increasing rate loans was $650,000. In connection with the acquisition of the controlling interest in Wyndham Chicago, the Company now consolidates mortgage debt associated with the property of approximately $38,910; the loan bears interest at LIBOR plus 3.5% and matures August 20, 2001. Effective June 30, 2000, the Company completed a $116,000 first mortgage and mezzanine financing through Bear, Stearns Funding, Inc. on the Wyndham El Conquistador Resort & Country Club. The first mortgage in the amount of $106,000 bears interest at LIBOR plus 2.35%. Principal payments on the loan are due beginning October 1, 2004, with a final balloon payment due on July 1, 2005. The mezzanine financing in the amount of $10,000 also bears interest at LIBOR plus 2.35%. Principal payments on the loan are due monthly beginning August 1, 2000 through maturity October 1, 2004. Proceeds from these loans were used to retire existing indebtedness. 9 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) In addition, the Company refinanced a $15,000 loan with the Government Development Bank. The loan bears interest at LIBOR plus 1.5% and is secured by a first mortgage on approximately 150 acres of real property located in Fajardo, Puerto Rico, adjacent to the Wyndham El Conquistador resort. At September 30, 2000, the LIBOR rate was 6.62% and averaged 6.33% for the nine months ended September 30, 2000. 5. Financial Derivatives The Company enters into interest rate swap and cap agreements to modify the interest characteristics of its outstanding debt. These agreements involve the exchange of amounts based on a variable interest rate for amounts based on fixed interest rates over the life of the agreement without an exchange of the notional amount upon which the payments are based. The differential to be paid or received as interest rates change is accrued and recognized as an adjustment of interest expense related to the debt using a method which approximates the effective interest method (the accrual accounting method). The related amount payable to or receivable from counterparties is included in accrued expenses or other assets. The Company also enters into interest rate cap agreements that are designed to limit its exposure to increasing interest rates and are designated as hedges of its outstanding debt. An interest rate cap entitles the Company to receive a payment from the counterparty equal to the excess, if any, of the hypothetical interest expense (strike price) on a specified notional amount at a current market interest rate over an amount specified in the agreement. The only amount the Company is obligated to pay the counterparty is an initial premium. The cost of the agreements (the initial premium) is included in deferred expenses and amortized to interest expense ratably during the life of the agreement. On March 10, 2000, the Company entered into additional interest rate hedges for a total notional amount of $1,500,000. The interest rate swaps and caps are structured such that each hedge has a series of trigger levels in which the hedge can become ineffective for any reset period that the 1-month LIBOR rises above the trigger level; however, the Company has the option of choosing to increase the trigger levels prior to that occurrence. If LIBOR resets below the trigger level, the hedge becomes effective again. The Company paid approximately $34,360 in premiums to enter into these contracts. As of September 30, 2000, the Company has reflected a reduction of interest expense of approximately $6,450 from the effectiveness of these hedges.
Notional Hedge Amount Terms Rate Trigger Level ----- -------- ------- ------------ ------------- Interest Rate Swaps............ $700,000 5 years 6.10% - 6.75% 7.00% - 8.50% Interest Rate Caps............. $250,000 3 years 4.75% 7.50% Interest Corridor.............. $550,000 3 years 5.25% 7.50%
The Company also shortened the terms of three existing hedges and received net proceeds of approximately $6,654. The proceeds received were capitalized and are included in deferred expenses in the accompanying condensed consolidated balance sheet. The proceeds will be amortized over the remaining terms of the contracts as a reduction to interest expense. The hedges were as follows:
Notional Original Revised Hedge Amount Maturity Maturity Rate ----- -------- -------- -------- ---- Interest Rate Swap.......................... $375,000 11/01/02 03/01/02 6.26% Interest Rate Swap.......................... $125,000 11/01/02 03/01/02 5.56% Interest Rate Swap.......................... $250,000 06/01/03 03/01/02 5.84%
10 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) In connection with the refinancing of El Conquistador, in July 2000, the Company entered into two additional amortizing interest rate caps for notional amounts of $106,000 and $10,000. The interest rate caps have an interest rate of 9.75% and mature on July 1, 2005 and October 1, 2004, respectively. The fair value of interest rate swap and cap agreements and changes in the fair value as a result of changes in market interest rates are not recognized in the financial statements. The unrealized loss on the Company's interest rate swaps was approximately $822 at September 30, 2000, which represents the amount the Company would pay if the interest rate swaps were terminated. The fair value of the interest rate caps are based upon quoted market prices and approximated $19,476 at September 30, 2000. 6. Comprehensive Loss Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" establishes standards for reporting and displaying comprehensive income and its components. Total comprehensive loss for the periods is as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2000 1999 2000 1999 --------- -------- --------- --------- Net loss........................ $(119,339) $(44,565) $(154,259) $(921,223) Unrealized (loss) gain on securities available for sale.. (73) (676) 407 185 Unrealized foreign exchange gain (loss)......................... 8,667 9,935 4,442 (2,455) --------- -------- --------- --------- Total comprehensive loss...... $(110,745) $(35,306) $(149,410) $(923,493) ========= ======== ========= =========
7. Computation of Earnings Per Share Earnings per share have been computed as follows:
Three Months Ended Three Month Ended September 30, 2000 September 30, 1999 --------------------- -------------------- Basic Diluted(1) Basic Diluted(1) --------- ---------- -------- ---------- (in thousands) Net loss.......................... $(119,339) $(119,339) $(44,565) $(44,565) Preferred stock dividends......... (26,099) (26,099) (24,375) (24,375) --------- --------- -------- -------- Net loss attributable to common shareholders..................... $(145,438) $(145,438) $(68,940) $(68,940) ========= ========= ======== ======== Weighted average number of common shares outstanding............... 167,361 167,361 166,954 166,954 ========= ========= ======== ======== Net loss per share................ $ (0.87) $ (0.87) $ (0.41) $ (0.41) ========= ========= ======== ========
- -------- (1) For the three months ended September 30, 2000, the dilutive effect of unvested stock grants of 563, the option to purchase common stock of 460 and preferred stock of 126,833 were not included in the computation of diluted earnings per share because they are anti-dilutive. For the three months ended September 30, 1999, the dilutive effect of unvested stock grants of 733, the option to purchase common stock of 19, and 116,414 of preferred shares were not included in the computation of diluted earnings per share because they are anti-dilutive. 11 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited)
Nine Months Ended Nine Months Ended September 30, 2000 September 30, 1999 --------------------- --------------------- Basic Diluted(1) Basic Diluted(1) --------- ---------- --------- ---------- (in thousands) Net loss......................... $(154,259) $(154,259) $(911,385) $(911,385) Adjustment for equity forwards(2)..................... -- -- (19,372) (39,322) Preferred stock dividends........ (76,968) (76,968) (25,276) (25,276) --------- --------- --------- --------- Loss attributable to common shareholders before extraordinary item.............. (231,227) (231,227) (956,033) (975,983) Extraordinary loss............... -- -- (9,838) (9,838) --------- --------- --------- --------- Net loss attributable to common shareholders.................... $(231,227) $(231,227) $(965,871) $(985,821) ========= ========= ========= ========= Weighted average number of common shareholders outstanding........ 167,272 167,272 159,254 159,254 ========= ========= ========= ========= Loss per share: Loss before extraordinary item.......................... $ (1.38) $ (1.38) $ (6.00) $ (6.13) Extraordinary loss............. -- -- (0.06) (0.06) ========= ========= ========= ========= Net loss per share............... $ (1.38) $ (1.38) $ (6.06) $ (6.19) ========= ========= ========= =========
- -------- (1) For the nine months ended September 30, 2000, the dilutive effect of unvested stock grants of 706, the option to purchase common stock of 288 and preferred stock of 126,833 were not included in the computation of diluted earnings per share because they are anti-dilutive. For the nine months ended September 30, 1999, the dilutive effect of unvested stock grants of 795, the option to purchase common stock of 32, and 44,785 of preferred shares were not included in the computation of diluted earnings per share because they are anti-dilutive. (2) The adjustment relates to the mark-to-market and yield adjustment for the forward equity contracts, which could be settled in cash or stock, at the Company's option. 8. Commitments and Contingencies Interstate Hotels, LLC Wyndham has agreed to the redemption of its aggregate 55% non-voting economic interest in Interstate Hotels, LLC ("IH, LLC"), a principal operating subsidiary of Interstate Hotel Corporation ("IHC"). At the closing of the transaction, IH, LLC will cause certain management agreement assets to be transferred to Wyndham in partial redemption of Wyndham's interest in IH, LLC. Additionally, at the closing, a portion of the remainder of Wyndham's interest will be converted into a preferred membership interest in IH, LLC. At any time on or after July 1, 2001, both IH, LLC and Wyndham will have the right to require that IH, LLC redeem the preferred membership interest for $12,682 to be paid with a combination of cash and notes. The portion of Wyndham's interest that is not redeemed at the closing or converted into a preferred membership interest at the closing will remain outstanding after the preferred membership interest is redeemed. At any time on or after July 1, 2004, both IH, LLC and Wyndham will have the right to require that IH, LLC redeem the remaining interest at an amount that is the lesser of (a) the product of (i) five times IH, LLC's EBITDA as of December 31, 2003 and (ii) the percentage of total equity interest in IH, LLC which is represented by the remaining interest or (b) $433. As additional consideration for the redemption and conversion of Wyndham's interest, Wyndham has agreed to cause its current representative on IHC's Board of Directors to resign, to relinquish all of its right to appoint a member to IHC's Board of Directors in the future, and to grant IHC an option, exercisable within 90 days of closing, to acquire all of Wyndham's stock in IHC. As a result, the Company recorded an impairment loss of $29,285 on its investment in IH, LLC. (see note 12) 12 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) Earn-out Obligations In connection with the acquisition of the partnership interest in SF Hotel Company, L.P., the Company was subject to future purchase price adjustments. The obligations related to the purchase price adjustments were payable in 2000 and 2001. Effective February 8, 2000, the Company paid an additional $32,825 to SF Hotel Company, L.P., an entity affiliated with Mr. Rolf Ruhfus, a director of Wyndham, as additional consideration pursuant to the purchase agreement. In addition, as a result of the Sierra transaction, the Company will not be liable for any additional amounts due in 2000 or 2001. As part of the merger with Wyndham Hotel Corporation, Patriot entered into an Omnibus Purchase and Sale Agreement with various descendants of Mr. and Mrs. Trammell Crow, and various corporations, partnerships, trusts and other entities beneficially owned or controlled by such persons (collectively, the "Crow Family Members"). As part of the agreement, Crow Family members and certain Wyndham senior executives retained the right to receive additional consideration on April 30, 2000 based on a formula pertaining to the performance of Wyndham Riverfront New Orleans and Wyndham Garden LaGuardia as set forth in the Omnibus Purchase and Sale Agreement. In April 2000, the Company paid $9,556 and $7,156 respectively, as additional consideration. Contingencies On February 3, 1999, McNeill Investment Company, Inc. filed a lawsuit against Patriot in the United States District Court for the Western District of Pennsylvania. In the lawsuit, captioned McNeill Investment Company, Inc. v. Patriot American Hospitality, Inc., No. 99-165, the plaintiff alleges that Patriot breached its obligations under a registration rights agreement that Patriot became obligated under through its merger transaction with Interstate Hotels Corporation. The plaintiff claims approximately $9 million in damages. On or about May 8, 2000, the parties to the litigation participated in a voluntary mediation in which they agreed to settle the dispute. The settlement provides for a payment by Wyndham of $3 million, subject to a refund of up to approximately $750,000, due May 25, 2001, depending on the amount by which Wyndham's stock price increases between now and May 8, 2001. On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the Northern District of California against Patriot, Old Wyndham, their respective operating partnerships and Paine Webber Group, Inc. This action, Johnson v. Patriot American Hospitality, Inc., et al., No. C-99-2153, was commenced on behalf of all former holders of Bay Meadows stock during a class period from June 2, 1997 to the date of filing. The action asserts securities fraud claims and alleges that the purported class members were wrongfully induced to tender their shares as part of the Patriot/Bay Meadows merger based on a fraudulent prospectus. The action further alleges that defendants continued to defraud shareholders about their intentions to acquire numerous hotels and saddle Patriot and Old Wyndham with massive debt during the class period. Three other actions against the same defendants subsequently were filed in the Northern District of California: (i) Ansell v. Patriot American Hospitality, Inc., et al., No. C-99-2239 (filed May 14, 1999), (ii) Sola v. Paine Webber Group, Inc., et al., No. C-99-2770 (filed June 11, 1999), and (iii) Gunderson v. Patriot American Hospitality, Inc., et al., No. C 99-3040 (filed June 23, 1999). Another action with substantially identical allegations, Susnow v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1354-T (filed June 15, 1999), also subsequently was filed in the Northern District of Texas. By order of the Judicial Panel on Multidistrict Litigation, these actions along with certain actions identified below have been consolidated in the Northern District of California for consolidated pretrial purposes. On or about October 13, 2000, the defendants moved to dismiss the actions. The Court has scheduled a hearing on motions to dismiss the actions for December 14, 2000. Wyndham intends to defend the suits vigorously. 13 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1416-D, was filed in the Northern District of Texas against Patriot, Old Wyndham, James D. Carreker and Paul A. Nussbaum. This action asserts securities fraud claims and alleges that, during the period from January 5, 1998 to December 17, 1998, the defendants defrauded shareholders by issuing false statements about Patriot and Old Wyndham. The complaint was filed on behalf of all shareholders who purchased Patriot and Old Wyndham stock during that period. Three other actions, Gallagher v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June 23, 1999, David Lee Meisenburg, et al. v. Patriot American Hospitality, Inc., Wyndham International, Inc., James D. Carreker, and Paul A. Nussbaum Case No. 3-99-CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American Hospitality, Inc., et al. No. 3-99-CV1866-D, filed on or about August 27, 1999, allege substantially the same allegations. By orders of the Judicial Panel on Multidistrict Litigation, these actions have been consolidated with certain other shareholder actions and transferred to the Northern District of California for consolidated pre-trial purposes. On or about October 20, 2000, the defendants moved to dismiss the actions. The Court has scheduled a hearing on motions to dismiss the actions for December 14, 2000. Wyndham intends to defend the suits vigorously. Wyndham has received a draft complaint which threatens to assert claims on behalf of Golden Door, LLC, Golden Springs, LLC, Golden Door, Inc., Deer Springs Ranch, LLC, Deborah Szekely and Sarah Livia Brightwood. The potential plaintiffs appear to be the same as the plaintiffs who filed the action referenced above, Deborah Szekely v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1866-D, however the allegations of the complaints are not the same. The draft complaint purports to assert claims against Patriot, Wyndham and their respective operating partnerships for securities fraud under California securities code, common law fraud, breach of fiduciary duty and deceit in connection with the purchase by Patriot of the Golden Door Spa in February 1998. The draft complaint seeks compensatory damages for the alleged lost value of the potential plaintiff's stock and other unspecified damages. Although the Company has received a draft complaint, to date no complaint has been filed. Patriot and PAH Stanley Ranch ("PAH") are engaged in a dispute with Carneros Valley Investors involving a contract which calls for a purchase price of $14 million with an additional $5 million to be paid if PAH gets approval for a development in the Napa Valley. PAH did not get approval for this development. In September 1999, Carneros Valley Investors filed a complaint in the Superior Court of California, San Francisco, which alleges that Patriot owes Carneros Valley Investors $5 million and alleges that Patriot acted negligently, fraudulently and in bad faith in attempting to get the approval for the development. The complaint has been amended to allege fraud, purportedly entitling the plaintiff to rescind the sale. Patriot has answered the complaint, but to date, no discovery had been taken. A conditional settlement of the case was reached on or about August 9, 2000, conditioned upon the sale of the subject property to a third party to occur in December 2000. Further prosecution of the case (by either party) is at a standstill pending the closing of the sale. Wyndham intends to defend the suit vigorously should the sale not occur or should the settlement otherwise not occur. Patriot, IHC/Jacksonville Corporation and IHC Realty Partnership were parties to a dispute with another limited partner of a partnership relating to a proposed hotel development in Jacksonville, Florida. The case was captioned C&M Investors Limited v. Patriot American Hospitality, Inc. et al., and was originally filed in the Florida Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida, but was later removed to the United States District Court, Middle District of Florida, Jacksonville Division, Civil Action No. 98- 1236-Civ.-J- 20B. Patriot, IHC/Jacksonville Corporation, and IHC Realty Partnership, L.P. (the "Defendants") vigorously defended the suit and on May 25, 2000, the Defendants entered into a settlement agreement with the plaintiff C&M Investors Limited ("C&M") to settle and resolve all issues in the suit. Pursuant to the settlement agreement, the suit was dismissed with prejudice on May 31, 2000 and the Defendants received full and complete 14 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) releases from C&M. Pursuant to the settlement agreement, the Defendants also received an option to purchase certain property in downtown Jacksonville, Florida for an aggregate purchase price of $4 million less a $1.425 million option payment made by the Defendants to C&M at the time of the settlement agreement. On or about October 26, 2000, a demand for arbitration was filed on behalf of John W. Cullen, IV, William F. Burruss, Heritage Hotel Management & Investment Ltd. And GH-Resco, L.L.C. naming Wyndham International, Inc. f/k/a Patriot American Hospitality, Inc. as respondent. The Demand for Arbitration claims that the claimants and Wyndham are parties to a Contribution Agreement dated February 28, 1997 and that Wyndham is in breach of that agreement. Claimants assert that Wyndham breached its agreement to pay respondents additional consideration under the Contribution Agreement by, among other things, allegedly denying claimants compensation due to them in connection with various transactions initiated by claimants and provided to Wyndham, which allegedly provided Wyndham with growth and added revenue. In addition, claimants assert that Wyndham failed to provide claimants with various other amounts due under the Contribution Agreement, failed to indemnify claimants for certain expenses and intentionally and negligently mismanaged Wyndham's business. Claimants do not specify the amount of damages sought. To date, Wyndham has not responded to the Demand for Arbitration. Wyndham intends to defend the claims vigorously. 9. Related Party Transactions In July 2000, the Company amended its management agreement for the Wyndham Anatole hotel. In consideration for the amendment, the Company paid $67,000 to the Crow Family members, owners of the hotel, to include among other things, the extension of the term for an additional 20 years. In partial consideration for the amended management agreement, the Company has also agreed to contribute $4,000 to convert a portion of the Verandah Club to a Golden Door City Spa and make a new loan in the principal amount of $10,000 to be applied to the costs of expanding a certain ballroom. The loan shall bear interest at a rate of 12% per annum and will mature upon the expiration or termination of the amended management agreement. In addition, the Company has extended the term of an existing $10,000 loan to the expiration or termination of the amended management agreement. 10. Dividends On September 30, 2000, the Company paid a quarterly dividend, at an annual rate of 9.75%, on its series A and B preferred stock. The dividend was paid partly in cash and partly in additional shares of preferred stock. The Company paid a total of $7,312 in cash and issued approximately 1,020 shares of series A preferred stock and 186,846 shares of series B preferred stock. On June 30, 2000, the Company paid a quarterly dividend, at an annual rate of 9.75%, on its series A and B preferred stock. The dividend was paid partly in cash and partly in additional shares of preferred stock. The Company paid a total of $7,312 in cash and issued approximately 996 shares of series A preferred stock and 182,400 shares of series B preferred stock. On March 31, 2000, the Company paid a quarterly dividend, at an annual rate of 9.75%, on its series A and B preferred stock. The dividend was paid partly in cash and partly in additional shares of preferred stock. The Company paid a total of $7,312 in cash and issued approximately 972 shares of series A preferred stock and 178,062 shares of series B preferred stock. 15 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) 11. Segment Reporting The Company classifies its business into proprietary owned brands and non- proprietary brand hotel divisions, under which it manages the business. Wyndham is the brand umbrella under which all of its proprietary products are marketed. It includes three four-star, upscale hotel brands that offer full-service accommodations to business and leisure travelers, as well as the five-star luxury resort brand. Description of reportable segments The Company has seven reportable segments: Wyndham Hotel & Resorts(R), Wyndham Luxury Resorts, Summerfield Suites by Wyndham(TM), Wyndham Gardens(R), other proprietary branded hotel properties, non-proprietary branded hotel properties and other. . Wyndham Hotels & Resorts(R) are upscale, full-service hotel properties that contain an average of 400 hotel rooms, generally between 15,000 and 250,000 square feet of meeting space and a full range of guest services and amenities for business and leisure travelers, as well as conferences and conventions. The hotels are located primarily in the central business districts and dominant suburbs of major metropolitan markets and are targeted to business groups, meetings, and individual business and leisure travelers. These hotels offer elegantly appointed facilities and high levels of guest service. . Wyndham Luxury Resorts are five-star hotel properties that are distinguished by their focus on incorporating the local environment into every aspect of the property, from decor to cuisine to recreation. The luxury collection includes the Golden Door Spa, one of the world's preeminent spas. . Wyndham Gardens(R) are full-service properties, which serve individual business travelers and are located principally near major airports and suburban business districts. Amenities and services generally include a three-meal restaurant, signature Wyndham Garden(R) libraries and laundry and room service. . Summerfield Suites by Wyndham(TM) offers guests the highest quality lodging in the upscale all suites segment. Each suite has a fully equipped kitchen, a spacious living room and a private bedroom. Many suites feature two bedroom, two bath units. The hotels also have a swimming pool, exercise room and other amenities to serve business and leisure travelers. . Other proprietary branded hotel properties include Malmaison, Sierra Suites, Clubhouse and hotels acquired in the Arcadian acquisition. As of September 30, 2000, the Company has sold its interests in Sierra Suite, Clubhouse, and the hotels acquired in the Arcadian acquisition. In addition, subsequent to September 30, 2000, the properties included in Malmaison were sold. . Non-proprietary branded properties include all properties which are not Wyndham branded hotel properties or other proprietary branded properties. The properties consist of non-Wyndham branded assets, such as Crowne Plaza(R), Embassy Suites(R), Marriott(R), Courtyard by Marriott(R), Sheraton(R) and independents. . Other includes management fee and service fee income, participating lease revenues, racecourse facility revenue and expenses, interest and other income, general and administrative costs, interest expense, depreciation and amortization and other charges. General and administrative costs, interest expense and depreciation and amortization are not allocated to each reportable segment; therefore, they are reported in the aggregate within this segment. Factors management used to identify the reportable segments The Company's reportable segments are determined by brand affiliation and type of property. The reportable segments are each managed separately due to the specified characteristics of each segment. 16 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) Measurement of segment profit or loss The Company evaluates performance based on the operating income or loss from each business segment. The accounting policies of the reportable segments are the same as those described in Note 1. The total revenue and operating income (loss) for each segment for the three and nine months ended September 30, 2000 and 1999, respectively, are as follows:
Wyndham Wyndham Summerfield Other Non Hotels & Luxury Wyndham Suites by Proprietary Proprietary Resorts Resorts Gardens Wyndham Branded Branded Other Total -------- ------- ------- ----------- ----------- ----------- --------- ---------- Three Months Ended September 30, 2000 Total revenue........... $254,009 $19,749 $19,287 $ 38,716 $ 8,227 $220,923 $ 13,555 $ 574,466 Operating income (loss)................. $ 54,425 $ 2,107 $ 3,543 $ 8,234 $ 2,479 $ 55,265 $(296,478) $ (170,425) Three Months Ended September 30, 1999 Total revenue........... $223,597 $20,142 $23,030 $ 35,166 $29,112 $231,673 $ 16,561 $ 579,281 Operating income (loss)................. $ 39,172 $ 1,700 $ 5,924 $ 7,974 $ 8,284 $ 58,591 $(167,905) $ (46,260) Nine Months Ended September 30, 2000 Total revenue........... $861,280 $77,244 $66,421 $108,460 $32,301 $684,278 $ 61,103 $1,891,087 Operating income (loss)................. $236,142 $19,944 $12,388 $ 24,091 $ 8,660 $187,443 $(715,245) $ (226,577) Nine Months Ended September 30, 1999 Total Revenues.......... $745,295 $71,422 $70,673 $100,189 $79,104 $763,199 $ 71,627 $1,901,509 Operating income (loss)................. $195,282 $14,123 $17,928 $ 22,067 $22,078 $184,536 $(721,164) $ (265,150)
The following table represents revenue information by geographic area for the three and nine months ended September 30, 2000 and 1999. Revenues are attributed to the United States and its territories and Europe based on the location of hotel properties.
Three Months Ended Nine months ended September 30, 2000 September 30, 2000 ------------------------- ----------------------------- United United States Europe Total States Europe Total -------- ------- -------- ---------- ------- ---------- Revenues............... $566,238 $ 8,228 $574,466 $1,866,351 $24,736 $1,891,087 Three Months Ended Nine months ended September 30, 1999 September 30, 1999 ------------------------- ----------------------------- United United States Europe Total States Europe Total -------- ------- -------- ---------- ------- ---------- Revenues............... $556,918 $22,363 $579,281 $1,841,991 $59,518 $1,901,509
17 WYNDHAM INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (in thousands, except share amounts) (unaudited) 12. Subsequent Events On October 20, 2000, Wyndham announced it had agreed to the redemption of its aggregate 55% non-voting economic interest in Interstate Hotels, LLC ("IH, LLC"), a principal operating subsidiary of Interstate Hotel Corporation ("IHC"). At the closing of the transaction, IH, LLC will cause certain management agreement assets to be transferred to Wyndham in partial redemption of Wyndham's interest in IH, LLC. Additionally, at the closing, a portion of the remainder of Wyndham's interest will be converted into a preferred membership interest in IH, LLC. At any time on or after July 1, 2001, both IH, LLC and Wyndham will have the right to require that IH, LLC redeem the preferred membership interest for $12,682 to be paid with a combination of cash and notes. The portion of Wyndham's interest that is not redeemed at the closing or converted into a preferred membership interest at the closing will remain outstanding after the preferred membership interest is redeemed. At any time on or after July 1, 2004, both IH, LLC and Wyndham will have the right to require that IH, LLC redeem the remaining interest at an amount that is the lesser of (a) the product of (i) five times IH, LLC's EBITDA as of December 31, 2003 and (ii) the percentage of total equity interest in IH, LLC which is represented by the remaining interest or (b) $433. As additional consideration for the redemption and conversion of Wyndham's interest, Wyndham has agreed to cause its current representative on IHC's Board of Directors to resign, to relinquish all of its right to appoint a member to IHC's Board of Directors in the future, and to grant IHC an option, exercisable within 90 days of closing, to acquire all of Wyndham's stock in IHC. As a result, the Company recorded an impairment loss of $29,285 on its investment in IH, LLC. On November 6, 2000, Wyndham announced it completed the sale of the Malmaison brand and hotel properties for gross proceeds of approximately $111,000. 18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Certain statements in this Form 10-Q constitute "forward-looking statements" as that term is defined under (S)21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Although forward-looking statements reflect management's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events or otherwise. Certain factors that might cause a difference include, but are not limited to, risks associated with the availability of equity or debt financing on terms and conditions favorable to the Company, the Company's ability to effect sales of assets on favorable terms and conditions, and risks associated with the hotel industry and real estate markets in general and other risks set forth under "Certain Risk Factors" in the Company's 1999 Annual Report on Form 10-K. 19 Results of operations: General As of September 30, 2000, the Company had 182 owned and leased hotels with 46,100 guest rooms as compared to 214 owned and leased hotels with over 48,700 guest rooms at September 30, 1999. This reduction results from the sale of 36 hotels during the twelve-month period, partially offset by the acquisition and development of 4 hotels during the period. Quarter ended September 30, 2000 compared with the quarter ended September 30, 1999 Hotel revenues were $560,911,000 and $562,720,000 for the quarters ended September 30, 2000 and 1999, respectively. Although hotel revenues remained relatively stable between periods, hotel revenues associated with assets sales have been in part offset by assets acquired and developed. Included in the quarter ended September 30, 1999 were revenues of $35,247,000 associated with assets that have subsequently been sold. Adjusted for the asset sales, revenues actually increased by $33,438,000. This increase in revenue can be attributed to revenues of $16,913,000 associated with four assets that were developed and acquired subsequent to September 30, 1999. In addition, revenues at two flagship hotels which opened in 1999 increased by $6,745,000 as occupancy stabilized in 2000. The remainder of the increase in hotel revenues can be attributed primarily to increases in revenues per available room ("RevPAR") throughout the Company's portfolio. Hotel expenses were $421,959,000 and $430,070,000 for the quarters ended September 30, 2000 and 1999, respectively. As with revenues, hotel expenses remained relatively stable between periods, with the decline in expenses related to asset sales offset in part by hotels acquired and developed during the period. Included in the quarter ended September 30, 2000 were expenses of $24,889,000 associated with assets that have been sold. Adjusted for asset sales, expenses actually increased by $16,778,000. This increase in expenses can be attributed primarily to expenses associated with four assets that were developed and acquired subsequent to September 30, 1999. Management fee and service fee income was $9,215,000 and $13,968,000 for the quarters ended September 30, 2000 and 1999, respectively. The decrease is primarily a result of the management contracts sold in the Sierra transaction and the loss of a portfolio of 17 management contracts. For the quarter ended September 30, 1999, fees earned from these contracts were $3,283,000 and 1,318,000, respectively. General and administrative expenses were $23,257,000 and $31,538,000 for the quarters ended September 30, 2000 and 1999, respectively. In the quarter ended September 30, 1999, the Company incurred $2,028,000 of expenses associated with becoming Year 2000 compliant, $2,000,000 of additional professional fees related to the reorganization of the Company and $1,391,000 of costs related to the Interstate spin-off transaction. In addition, included in the quarter ended September 30, 1999 are $3,020,000 of general and administrative expenses for divisional offices located in Wichita and Phoenix which have been subsequently closed. Management has also made efforts to streamline the organization such as consolidating the Company's sales offices in Dallas and eliminating certain layers of management in an effort to reduce general and administrative expenses. Depreciation and amortization expense was $79,631,000 and $75,653,000 for the quarters ended September 30, 2000 and 1999, respectively. The increase in depreciation was primarily due to the placement in service of additional assets that were previously under development and the capital improvements made during the period, offset in part by the asset sales that have occurred during the period. During the quarter ended September 30, 1999, the Company recorded a restructuring charge of $3,906,000 for the third quarter of 1999. Wyndham recorded these costs primarily due to realignment of the luxury division. This resulted in the closure of the Phoenix division office and costs associated with severance payments for staffing reductions, and office lease cancellation costs. Interest expense was $95,333,000 and $85,478,000 for the quarters ended September 30, 2000 and 1999, respectively. The increase in interest expense is in part attributed to increase in LIBOR rates. The average LIBOR rates were 6.62% and 5.28% for the quarters ended September 30, 2000 and 1999, respectively. The Company's 20 derivative financial instruments in part negated the Company's exposure to the rise in interest rates. However, the Company also had increases in the amortization of loan costs associated with the amortization of the premiums for the $1.5 billion in new derivatives acquired in March. The Company's share of equity in earnings (losses) from unconsolidated subsidiaries was $1,518,000 and $(931,000) for the quarters ended September 30, 2000 and 1999, respectively. The increase is due primarily from the allocation of income from one of its investments which was in development in 1999 but in operation in 2000. The benefit for income taxes was $51,952,000 and 3,386,000 for the quarters ended September 30, 2000 and 1999, respectively. The change is due in part to the charge taken in the third quarter of 2000 for the impairment of certain assets held for sale. During the quarter ended September 30, 2000, the Company realized gains on the sale of assets of $9,305,000. During the quarter ended September 30, 1999, the Company recognized gains of $1,104,000 on the sale of one hotel asset and a parcel of land. During the quarter ended September 30, 2000, the Company classified an additional 15 assets as held for sale based on management having the authority and intent of entering into commitments for sale transactions expected to close in the next twelve months. Based on the estimated net sales proceeds, the Company recorded a reserve for impairment for loss on real estate assets held for sale of $82,163,000. The provision reduces the carrying value of six owned hotels to the estimated net sales proceeds less estimated costs to sell. In addition, the Company recorded a reserve for impairment for certain investments held for sale of $51,853,000. The resulting net loss for the quarter ended September 30, 2000, was $119,339,000 compared to net loss of $44,565,000 for the quarter ended September 30, 1999. Results of operations: Nine months ended September 30, 2000 compared with the nine months ended September 30, 1999 Hotel revenues were $1,829,984,000 and $1,829,882,000 for the nine months ended September 30, 2000 and 1999, respectively. Although hotel revenues remained relatively stable between periods, increases during the nine months ended September 30, 2000 from acquisitions, assets placed in service, and increases in RevPAR throughout the Company's portfolio were offset by the assets sales that have occurred during the last twelve-month period and the spin-off of Interstate Hotel Corporation (the "Interstate spin-off") on June 18, 1999. Hotel expenses were $1,309,949,000 and $1,327,485,000 for the nine months ended September 30, 2000 and 1999, respectively. As with revenues, expenses remained relatively stable between periods. The decrease in expenses resulting from assets sales were offset by acquisitions and new assets placed in service during the previous twelve months. Management fee and service fee income was $34,237,000 and $57,186,000 for the nine months ended September 30, 2000 and 1999, respectively. The decrease is primarily the result of the loss of management contracts associated with the Interstate spin-off, the sale of the third party management contracts in the Sierra transaction in the first quarter of 2000, and the loss of a portfolio of 17 management contracts during 2000. Interest and other income was $26,866,000 and $8,951,000 for the nine months ended September 30, 2000 and 1999, respectively. This increase was primarily due to the recognition of a termination fee of $14,746,000 related to the termination of 17 management contracts. General and administrative expenses were $72,951,000 and $142,560,000 for the nine months ended September 30, 2000 and 1999, respectively. The decrease of expenses was primarily a result of expenditures incurred in 1999, in part associated with the restructuring of the organization, but not incurred in 2000. Those costs were as follows: . $6,737,000 due to the acceleration of vesting of employees' stock awards 21 . $3,818,000 reviewing different strategic alternatives . $4,681,000 in legal and unwind fees to settle the forward equity contracts . $3,710,000 associated with the write off of bond offering costs . $5,095,000 of costs associated with the Interstate spin-off . $5,228,000 of abandoned transaction costs . $5,703,000 of costs associated with conversion costs and becoming year 2000 compliant . $4,695,000 associated with the write-off of receivables from a managed hotel in which Wyndham terminated the management contract In addition, in 1999 the Company incurred approximately $28,068,000 of general and administrative expenses for divisional offices located in Pittsburgh, Wichita, and Phoenix. As those offices were closed during the past twelve months, minimal costs were incurred during 2000. Management also made efforts to streamline the organization such as consolidating the Company's sales offices in Dallas and eliminating certain layers of management. During the nine months ended September 30, 1999, Wyndham recorded $189,288,000 of costs associated with the restructuring. The costs primarily consisted of the following: $83,094,000 for the write off of an intangible asset associated with the paired share structure which was abandoned on June 30, 1999, and $4,675,000 associated with severance payments due to the elimination of job responsibilities. In addition, Wyndham reflected $82,957,000 in costs to write-down assets to estimated fair values, including goodwill of $28,394,000 as a result of management's strategy to exit from the European market for non-branded assets which will be sold, and $7,226,000 in staffing reductions and other exit costs, primarily lease cancellations, necessary to reduce Wyndham's infrastructure in Arcadian International, Wyndham's management division in Europe. Wyndham also recorded a charge of $8,263,000 for the write-off of the Carefree trade name. In the third quarter, Wyndham decided to close its Phoenix division office and recorded $2,500,000 of costs associated with severance, lease cancellations, and other exit costs, and $573,000 of additional professional fees. Depreciation and amortization expense was $238,078,000 and $232,558,000 for the nine months ended September 30, 2000 and 1999, respectively. The increase in depreciation was primarily due to the increase in capital renovations during the year, as well as the placement in service of additional assets that were previously under development, offset in part by the asset sales that occurred during the twelve-month period. Interest expense was $280,623,000 and $266,678,000 for the nine months ended September 30, 2000 and 1999, respectively. The increase in interest expense is primarily related to higher interest rate spreads on the current credit facility as compared to the old credit facility and higher interest rates during the first nine months of 2000 as compared to 1999. The Company's derivative financial instruments in part negated the impact of these higher rates. However, the Company also had increases in the amortization of loan costs associated with the amortization of the premiums for the $1.5 billion in new derivatives acquired in March. The benefit (provision) for income taxes was $72,649,000 and ($651,053,000) for the nine months ended September 30, 2000 and 1999, respectively. The change in the provision is due to a 1999 charge of $675,000,000 due to Patriot converting from a REIT to a C corporation, the restructuring of certain special purpose controlled subsidiaries, which previously could not be consolidated with Wyndham's taxable income or loss, and charges taken in 2000 for the impairment of certain assets held for sale. Minority interest's share of loss associated with the operating partnerships was $6,642,000 for the nine months ended September 30, 1999. There was no minority interest's share of the income (loss) associated with the operating partnerships for the nine months ended September 30, 2000 due to amendments in the partnership agreements at June 30, 1999 which amended the allocation of profit and loss to the limited partners. During the nine months ended September 30, 2000, the Company realized losses on the sale of assets of $4,747,000. During the nine months ended September 30, 1999, the Company recognized losses of $4,223,000 on the sale of assets. 22 During the nine months ended September 30, 2000, the Company classified an additional 20 assets as held for sale based on management having the authority and intent of entering into commitments for sale transactions expected to close in the next twelve months. Based on the estimated net sales proceeds, the Company recorded a reserve for impairment for loss on real estate assets held for sale of $157,775,000. The provision reduces the carrying value of the eight owned hotels to the estimated net sales proceeds less estimated costs to sell. In addition, the Company recorded a reserve for impairment on six investments held for sale of $53,541,000. In connection with the debt financing in 1999, the Company wrote off the remaining balance of unamortized deferred financing costs associated with the old credit facility resulting in an extraordinary loss of $9,838,000, net of minority interest and income taxes. As a result, the net loss was $154,259,000 and $921,223,000 for the nine months ended September 30, 2000 and 1999, respectively. Results of reporting segments: Quarter ended September 30, 2000 compared with the quarter ended September 30, 1999 The Company's results of operations are classified into seven reportable segments. Those segments include Wyndham Hotel & Resorts(R), Wyndham Luxury Resorts, Wyndham Gardens(R), Summerfield Suites by Wyndham(TM), other proprietary branded hotel properties, non-proprietary branded properties and other. Wyndham Hotels & Resorts(R) represent approximately 44.2% and 38.6% of total revenue for the quarters ended September 30, 2000 and 1999, respectively. Total revenue was $254,009,000 compared to $223,597,000 for the quarters ended September 30, 2000 and 1999, respectively. Operating income was $54,425,000 compared to $39,172,000 for the quarters ended September 30, 2000 and 1999, respectively. The increases in revenues and operating income can be primarily attributed to the acquisition of three hotels that became Wyndham branded hotels and the stabilization of revenues in 2000 for an additional two flagship hotels which opened during 1999. The revenue increase attributed to these five hotels was $22,393,000 for the quarter. The remaining increase can be attributed to growth in the average daily rate ("ADR") and occupancy in this segment during the quarter ended September 30, 2000. Wyndham Luxury Resorts represent approximately 3.4% and 3.5% of total revenue for the quarters ended September 30, 2000 and 1999, respectively. Total revenue was $19,749,000 compared to $20,142,000 for the quarters ended September 30, 2000 and 1999, respectively. The decrease in revenue between quarters was in part a result of $1,650,000 of rollover membership fee revenue and expense recorded in the third quarter of 1999 at the club of one of the Wyndham Luxury Resorts. This resulted in an increase to both hotel revenues and expenses in the third quarter 1999, with no impact to operating income. Operating income was $2,107,000 compared to $1,700,000 for the same period, respectively. Wyndham Gardens(R) represents approximately 3.4% and 4.0% of total revenue for the quarters September 30, 2000 and 1999, respectively. Total revenue was $19,287,000 compared to $23,030,000 for the quarters ended September 30, 2000 and 1999, respectively. Operating income was $3,543,000 compared to $5,924,000 for the same period respectively. Decreases in both revenue and operating income were primarily due to the sale of six Wyndham Garden hotels in June of 2000. Hotel revenue and operating income included in the quarter ended September 30, 1999 for those assets sold were approximately $4,589,000 and $1,426,000, respectively. Summerfield Suites by Wyndham(TM) represents approximately 6.7% as compared to 6.1% of total revenue for the quarters ended September 30, 2000 and 1999, respectively. Total revenue was $38,716,000 compared to $35,166,000 for the quarters ended September 30, 2000 and 1999, respectively. Operating income was $8,234,000 compared to $7,974,000 for the same period, respectively. Revenues and operating results remained relatively consistent, increasing slightly between periods, as this segment experienced growth in occupancy of 7.2% with only a slight decrease in ADR of 1.3%. 23 Other proprietary branded properties, including Malmaison, Sierra Suites, Clubhouse and hotels acquired in the Arcadian acquisition, represent approximately 1.4% and 5.0% of total revenue for the quarters ended September 30, 2000 and 1999, respectively. Total revenue was $8,227,000 compared to $29,112,000 for the quarters ended September 30, 2000 and 1999, respectively. Operating income for these properties was $2,479,000 and $8,284,000 for the quarters ended September 30, 2000 and 1999, respectively. The decrease in both revenues and operating income was primarily a result of the sale of 11 hotels in December 1999 acquired in the Arcadian acquisition, the sale of the Sierra branded hotels in March of 2000, and the sale of the Clubhouse branded hotels in June of 2000. Hotel revenue and operating income included in the quarter ended September 30, 1999 for those assets sold were approximately $20,590,000 and $6,429,000, respectively. Subsequent to September 30, 2000, the Malmaison properties were sold. Non-proprietary branded properties, including Hilton(R), Holiday Inn(R), Marriott(R), Ramada(R), Radisson(R), and other major hotel franchises, represent approximately 38.5% and 40.0% of total revenue for the quarters ended September 30, 2000 and 1999, respectively. Total revenue was $220,923,000 compared to $231,673,000 for the quarters ended September 30, 2000 and 1999, respectively. Operating income for these properties was $55,265,000 and $58,591,000 for the quarter ended September 30, 2000 and 1999, respectively. The decrease in both revenue and operating income is due primarily to the sale of non-proprietary branded assets throughout the year. Hotel revenue and operating income included in the quarter ended September 30, 1999 for those assets sold were approximately $10,067,000 and $3,493,000, respectively. Other represents revenue from various operating businesses including management and other service companies, and participating lease revenue for one hotel and a parcel of land. Expenses in this segment are primarily interest, depreciation, amortization and corporate general and administrative expenses. Total revenue for the other segment was $13,555,000 and $16,561,000 for the quarters ended September 30, 2000, and 1999, respectively. The $3,006,000 decrease was primarily the result of lost management fees from the Sierra transaction. Operating losses for the segment were $296,478,000 and $167,905,000 for the quarters ended September 30, 2000, and 1999, respectively. In 2000, the operating loss was impacted by the impairment reserve recognized of $134,016,000 in the third quarter of 2000. Results of reporting segments: Nine months ended September 30, 2000 compared with the nine months ended September 30, 1999 The Company's results of operations are classified into seven reportable segments. Those segments include Wyndham Hotel & Resorts(R), Wyndham Luxury Resorts, Wyndham Gardens(R), Summerfield Suites by Wyndham(TM), other proprietary branded hotel properties, non-proprietary branded properties and other. Wyndham Hotels & Resorts(R) represent approximately 45.5% and 39.2% of total revenue for the nine months ended September 30, 2000 and 1999, respectively. Total revenue was $861,280,000 compared to $745,295,000 for the nine months ended September 30, 2000 and 1999, respectively. Operating income was $236,142,000 compared to $195,282,000 for the nine months ended September 30, 2000 and 1999, respectively. The increases in revenues and operating income can be primarily attributed to the acquisition of three hotels which were branded Wyndham hotels and the stabilization of revenues in 2000 for an additional two flagship hotels which opened during 1999. The revenue increase attributed to these five hotels was $74,313,000. This segment also had strong improvement in both occupancy and ADR for the nine months ended September 30, 2000 as compared to the same period in 1999. Wyndham Luxury Resorts represent approximately 4.1% and 3.8% of total revenue for the nine months ended September 30, 2000 and 1999, respectively. Total revenue was $77,244,000 compared to $71,422,000 for the nine months ended September 30, 2000 and 1999, respectively. Operating income was $19,944,000 compared to $14,123,000 for the same period, respectively. The increases in revenues and operating income can be attributed in large part to increases in ADR of 3.7% and occupancy of 1.2%. 24 Wyndham Gardens(R) represent approximately 3.5% and 3.7% of total revenue for the nine months ended September 30, 2000 and 1999, respectively. Total revenue was $66,421,000 compared to $70,673,000 for the nine months ended September 30, 2000 and 1999, respectively. Operating income was $12,388,000 compared to $17,928,000 for the same period respectively. Decreases in both revenue and operating income were impacted by the sale of six Wyndham Garden hotels in June of 2000. Total revenue included in the nine months ended September 30, 2000 and 1999 for those assets sold was $7,444,000 and $12,486,000, respectively. Operating income included in the nine months ended September 30, 2000 and 1999 for those assets sold was $1,368,000 and $3,541,000, respectively. Summerfield Suites by Wyndham(TM) represent approximately 5.7% as compared to 5.3% of total revenue for the nine months ended September 30, 2000 and 1999, respectively. Total revenue was $108,460,000 compared to $100,189,000 for the nine months ended September 30, 2000 and 1999, respectively. Operating income was $24,091,000 compared to $22,067,000 for the same period, respectively. Revenues and operating results increased slightly as there were increases in ADR of 1.2% and occupancy of 2.2%. Other proprietary branded properties, including Malmaison, Sierra Suites, Clubhouse and hotels acquired in the Arcadian acquisition, represent approximately 1.7% and 4.2% of total revenue for the nine months ended September 30, 2000 and 1999, respectively. Total revenue was $32,301,000 compared to $79,104,000 for the nine months ended September 30, 2000 and 1999, respectively. Operating income for these properties was $8,660,000 and $22,078,000 for the nine months ended September 30, 2000 and 1999, respectively. The decrease in both revenues and operating income was primarily as a result of the sale of 11 hotels in December 1999 acquired in the Arcadian acquisition, the sale of the Sierra branded leaseholds, in March of 2000, and the sale of the Clubhouse branded hotels in June of 2000. Total revenue included in the nine months ended September 30, 2000 and 1999 for those assets sold was $7,564,000 and $56,456,000, respectively. Operating income included in the nine months ended September 30, 2000 and 1999 for those assets sold was $1,780,000 and $16,311,000, respectively. Non-proprietary branded properties, including Hilton(R), Holiday Inn(R), Marriott(R), Ramada(R), Radisson(R), and other major hotel franchises, represent approximately 36.2% and 40.1% of total revenue for the nine months ended September 30, 2000 and 1999, respectively. Total revenue was $684,278,000 compared to $763,199,000 for the nine months ended September 30, 2000 and 1999, respectively. Operating income for these properties was $187,443,000 and $184,536,000 for the nine months ended September 30, 2000 and 1999, respectively. The decrease in both revenue and operating income is due primarily to the spin-off of several leases in connection with the Interstate spin-off on June 18, 1999, as well as the sale of non-proprietary branded assets throughout the year. Total revenue included in the nine months ended September 30, 2000 and 1999 for those assets sold was $13,977,000 and $121,924,000, respectively. Operating income included in the nine months ended September 30, 2000 and 1999 for those assets sold was $2,927,000 and $12,315,000, respectively. This decrease resulting from the sale of these assets was in part offset due to increases in ADR of 3.7% and occupancy by 1.2%. Other represents revenue from various operating businesses including management and other service companies, and participating lease revenue for one hotel and a parcel of land. Expenses in this segment are primarily interest, depreciation, amortization and corporate general and administrative expenses. Total revenue for the other segment was $61,103,000 and $71,627,000 for the nine months ended September 30, 2000, and 1999, respectively. The $10,524,000 decrease in this segment's revenue was caused primarily by decreases in management and service fee income from the Interstate spin-off and the sale of third party management contracts in the Sierra transaction. This was partially offset by the recognition of a $14,746,000 termination fee. Operating losses for the segment were $715,245,000 and $721,164,000 for the nine months ended September 30, 2000, and 1999, respectively. In 1999, the operating loss was impacted by the restructuring charges of $189,288,000 which were a result of the termination of the paired share structure and management's decision to streamline its organization and focus on its core brands and strategic assets. In addition, the loss was impacted by reductions in general and administrative expenses as management made efforts to streamline the organization such as consolidating the Company's divisional and sales offices in Dallas and eliminating layers of management. In 2000, however, the operating loss was impacted by $238,078,000 impairment reserve recognized for certain assets held for sale. 25 Statistical information During 2000, the Company's portfolio of owned and leased hotels experienced growth in both ADR and REVPAR of approximately 3.2% and 7.0% for the three months ended September 30, 2000 and 2.5% and 4.6% for the nine months ended September 30, 2000 as compared to the same periods in 1999, respectively. Occupancy also increased during the periods by 3.7% and 1.9% for the three and nine months ended September 30, 2000 as compared to the same period in 1999. Management attributes this to continued marketing efforts throughout the portfolio on hotels that have been newly renovated, and repositioned in certain cases, as well as to the current market conditions in the U.S. lodging industry. The following table sets forth certain statistical information for the Company's owned and leased hotels for the three and nine months ended September 30, 2000 and 1999 as if the hotels were owned at the beginning of the periods presented.
Three Months Ended September 30, Nine months ended September 30, ------------------------------------------- ------------------------------------------- Occupancy ADR REVPAR Occupancy ADR REVPAR ---------- --------------- --------------- ---------- --------------- --------------- 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999 ---- ---- ------- ------- ------- ------- ---- ---- ------- ------- ------- ------- Wyndham Hotels & Resorts................ 74.6% 71.1% $118.56 $114.56 $ 88.43 $ 81.47 74.9% 73.0% $130.47 $128.56 $ 97.69 $ 93.85 Wyndham Luxury Resorts.. 71.4% 70.6% $250.41 $240.56 $178.70 $169.72 73.5% 72.6% $308.83 $297.77 $226.88 $216.17 Wyndham Garden Hotels... 71.2% 69.0% $ 90.64 $ 90.35 $ 64.56 $ 62.34 69.8% 67.7% $ 90.76 $ 93.26 $ 63.38 $ 63.15 Summerfield Suites by Wyndham................ 88.8% 82.8% $125.33 $126.92 $111.33 $105.14 83.9% 82.1% $124.30 $122.83 $104.25 $100.81 Other Proprietary Branded Hotels......... 86.2% 84.7% $124.92 $121.65 $107.74 $103.14 81.6% 83.9% $126.33 $124.23 $103.13 $104.30 Non-Proprietary Branded Hotels................. 74.2% 72.8% $107.18 $103.21 $ 79.53 $ 75.11 72.9% 72.0% $108.99 $105.09 $ 79.46 $ 75.70 ---- ---- ------- ------- ------- ------- ---- ---- ------- ------- ------- ------- Weighted average....... 75.4% 72.7% $113.92 $110.37 $ 85.93 $ 80.29 74.5% 73.1% $120.11 $117.15 $ 89.48 $ 85.58 ==== ==== ======= ======= ======= ======= ==== ==== ======= ======= ======= =======
Restructuring Charges During 1999, the Company recorded a restructuring charge of $285.3 million as a result of the termination of the paired share structure and management's decision to streamline its organization and focus on its core brands and strategic assets. The restructuring activities primarily related to (1) the termination of the paired share structure, (2) the exiting of the European market for its non-branded assets, (3) the exiting of limited service hotel sector, (4) the closure of the Phoenix division office, (5) the closure of the Wichita division office, and (6) the elimination of certain brands. These restructuring activities resulted in the write-down of assets held for sale to estimated fair value and the write-down of intangible assets. The Company also incurred costs to sever employees, lease abandonment costs, and other costs relating to exiting these activities. 26 During the first nine months of 2000, continuing cash payments were made against the accrued liability as shown in the table below. The remaining accrual will be relieved throughout fiscal 2000, as leases expire and severance payments are made. Detail of the 1999 restructuring charge is as follows:
Accrued Accrued Restructuring Balance Balance Description Cash/Non-Cash Charge at 12/31/99 Activity at 9/30/00 - ----------- ------------- ------------- ----------- -------- ---------- (in thousands) Organizational Restruc- turing Write-down of intangible assets................. Non-cash $ (83,094) $ -- $ -- $ -- Severance packages...... Cash/non-cash (4,675) (500) 250 (250) Downsizing European di- vision Write-down of assets held for sale.......... Non-cash (69,491) -- -- -- Write-down of intangible assets................. Non-cash (28,394) -- -- -- Severance packages...... Cash (3,578) (2,458) 2,314 (144) Lease cancellations and commitments............ Cash (1,907) (1,907) 1,807 (100) Other exit costs........ Cash (4,062) (2,408) 2,173 (235) Exiting limited service market sector Write-down of assets held for sale.......... Non-cash (63,328) -- -- -- Write-down of intangible assets................. Non-cash (8,834) -- -- -- Closing of the Phoenix division office Severance packages...... Cash (2,006) (312) 312 -- Lease cancellations and commitments............ Cash (492) (321) 214 (107) Closing of the Wichita division office Severance packages...... Cash (1,872) (1,872) 1,872 -- Elimination of certain hotel brands Write-down of intangible assets................. Non-cash (12,821) -- -- -- Other Other exit costs........ Cash (713) -- -- -- Effect of foreign currency translation... -- 8 (33) (25) --------- ------- ------ ----- Total................... $(285,267) $(9,770) $8,909 $(861) ========= ======= ====== =====
Liquidity and Capital Resources Cash and cash equivalents as of September 30, 2000 was $102.2 million and restricted cash was $100.6 million. Cash and cash equivalents as of September 30, 1999 was $113.8 million and restricted cash was $102.3 million. Cash flows provided by operating activities The Company's principal source of cash to fund operating expenses and pay dividends on its preferred stock is cash flow provided by operating activities. Cash flows from operating activities were $162.6 million for the nine months ended September 30, 2000 and $104.2 million for the nine months ended September 30, 1999. Cash flows from investing and financing activities Cash flows used in investing activities were $4.6 million for the nine months ended September 30, 2000. Sources of cash resulting from the proceeds of asset sales during the year were offset by uses of cash for the amendment of the Wyndham Anatole management contract, payment of additional purchase consideration in connection with the acquisition of SF Hotel Company, L.P. (see Note 8), and capital improvements and renovations at the hotel properties. Cash flows used by financing activities were $200.1 million for the nine months ended September 30, 2000. This primarily was a result of the repayment of debt and dividend payments made on preferred stock. In addition, the Company paid $34.4 million in premiums to enter into financial derivatives with a total notional amount of $1.5 billion to limit its exposure to rising interest rates. Cash flows used in investing activities of Wyndham were $220.3 million for the nine months ended September 30, 1999, resulting primarily from the acquisition of hotel properties, property renovations and improvements, and cash deposited as escrows and property improvement reserves. Cash flows provided by financing activities of $106.8 million for the nine months ended September 30, 1999 were primarily related to 27 the net proceeds from the sale of the series B preferred stock, the net proceeds from the new credit facility and the net proceeds from the new mortgage debt, partially offset by the repayment of the old credit facility, term loans, and the settlement of the forward equity contracts. The Company does not anticipate paying a dividend to its common shareholders. However, for the first six years, beginning September 30, 1999, dividends on the preferred stock are structured to ensure an aggregate fixed cash dividend payment of $29.25 million per year, so long as there is no redemption or conversion of the preferred stock; therefore, for that period, dividends are payable partly in cash and partly in additional shares of preferred stock. For the following four years, dividends are payable in cash or additional shares of convertible preferred stock as determined by the Board of Directors. After year ten, dividends are payable solely in cash. As of September 30, 2000, the Company had approximately $1.3 billion outstanding under the term loan, $650 million outstanding under the increasing rate loan facility, and $184 million outstanding under the revolving credit facility. Additionally, the Company had outstanding letters of credit totaling $23.3 million. As of September 30, 2000, the Company also had approximately $1.4 billion of mortgage debt outstanding that encumbered 67 hotels and approximately $43.8 million in other debt and capital lease obligations, resulting in total indebtedness of approximately $3.6 billion. As of September 30, 2000, the Company had $292.7 million of additional availability under the revolving credit facility. Renovations and capital improvements During the first nine months of 2000, the Company invested approximately $124.3 million in capital improvements and renovations. During 2000, the capital expenditures include (i) costs related to converting hotels to one of the Company's proprietary brands, (ii) costs related to converting certain Wyndham Garden hotels to Wyndham hotels, (iii) costs related to enhancing the revenue-producing capabilities of the Company's hotels, and (iv) costs related to recurring maintenance reserves capital expenditures. In addition, in April 2000, the Company paid an additional $16.7 million as additional purchase consideration. (See Note 8). The Company attempts to schedule renovations and improvements during traditionally lower occupancy periods in an effort to minimize disruption to the hotel's operations. Therefore, management does not believe such renovations and capital improvements will have a material effect on the results of operations of the hotels. Capital expenditures will be financed through capital expenditure reserves or with working capital. Inflation Operators of hotels in general possess the ability to adjust room rates quickly. However, competitive pressures may limit the Company's ability to raise room rates in the face of inflation. Seasonality The hotel industry is seasonal in nature; however, the periods during which the Company's hotel properties experience higher revenues vary from property to property and depend predominantly on the property's location. The Company's revenues typically have been higher in the first and second quarters than in the third or fourth quarters. Newly Issued Accounting Standards Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") requires that all derivative investments be recorded in the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or comprehensive income depending on where a derivative is designated as part of a hedge transaction, and the type of hedge transaction. The Company will adopt these standards effective January 1, 2001 and is currently assessing the initial effects of adoption. During 1999, Financial Accounting Standards Board Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities--deferral of the Effective Date of the Statement of Financial Accounting 28 Standards No. 133" ("SFAS 137") was issued. This statement amended SFAS 133 by deferring the effective date to fiscal quarters of all fiscal years beginning after June 15, 2000. During 2000, Financial Accounting Standards Board Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging--an Amendment to the Statement of Financial Accounting Standards No. 133" ("SFAS 138") was issued. This statement amends the accounting and reporting standards of SFAS 133 for certain derivative instruments and certain hedging activities. In December 1999, the Staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). This SAB summarizes certain of the Staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. The Company does not expect the provisions of SAB 101 to have a material impact on its financial statements. In SAB 101B, the SEC delayed the implementation date of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. Item 3. Qualitative and Quantitative Disclosures About Market Risks The Company's primary market risk exposure is to future changes in interest rates related to its derivative financial instruments and other financial instruments including debt obligations, interest rate swaps, interest rate caps, and future debt commitments. The Company manages its debt portfolio by periodically entering into interest rate swaps and caps to achieve an overall desired position of fixed and floating rates or to limit its exposure to rising interest rates. The following table provides information about the Company's derivative and other financial instruments that are sensitive to changes in interest rates. . For fixed rate debt obligations, the table presents principal cash flows and related weighted-average interest rates by expected maturity date and contracted interest rates at September 30, 2000. For variable rate debt obligations, the table presents principal cash flows by expected maturity date and contracted interest rates at September 30, 2000. . For interest rate swaps and caps, the table presents notional amounts and weighted-average interest rates or strike rates by expected (contractual) maturity dates. Notional amounts are used to calculate the contractual cash flows to be exchanged under the contract. Weighted average variable rates are based on implied forward rates in the yield curve at September 30, 2000.
2000 2001 2002 2003 2004 Thereafter Face Value Fair Value ------- -------- -------- -------- ---------- ---------- ---------- ---------- (in thousands, except for percentages) Debt Long-term debt obligations including Current Portion Fixed Rate............. $ 2,181 $ 18,617 $ 46,693 $ 7,113 $ 52,638 $ 289,203 $ 416,445 $ 396,543 Average Interest Rate.. 8.92% 8.02% 8.92% 8.71% 8.23% 8.37% 8.40% Variable Rate.......... $ 2,252 $188,563 $280,787 $ 41,189 $1,241,098 $1,381,977 $3,135,866 $3,135,866 Average Interest Rate.. 9.53% 9.53% 10.07% 9.04% 10.17% 10.86% 10.33% Interest Rate Derivative Financial Instruments Related to Debt Interest Rate Swaps Notional Amount........ $72,000 $ 29,905 $750,000 $ -- $ -- $ 700,000 $1,551,905 ($822) Pay Fixed/Receive Variable............... Average Pay Rate....... 6.25% 6.27% 6.29% 6.60% 6.60% 6.60% Average Receive Rate... 6.46% 6.43% 6.40% 6.56% 6.70% 6.85% Interest Rate Caps Notional Amount........ -- $ 57,219 $550,000 $250,000 $ 340,090 $ 115,648 $1,312,957 $ 19,476 Strike Rate............ 5.78% 5.78% 5.70% 6.12% 7.12% 9.75% Forward Rate........... 6.46% 6.43% 6.40% 6.56% 6.70% 6.85%
29 PART II: OTHER INFORMATION Item 1. Legal Proceedings On February 3, 1999, McNeill Investment Company, Inc. filed a lawsuit against Patriot in the United States District Court for the Western District of Pennsylvania. In the lawsuit, captioned McNeill Investment Company, Inc. v. Patriot American Hospitality, Inc., No. 99-165, the plaintiff alleges that Patriot breached its obligations under a registration rights agreement that Patriot became obligated under through its merger transaction with Interstate Hotels Corporation. The plaintiff claims approximately $9 million in damages. On or about May 8, 2000, the parties to the litigation participated in a voluntary mediation in which they agreed to settle the dispute. The settlement provides for a payment by Wyndham of $3 million, subject to a refund of up to approximately $750,000, due May 25, 2001, depending on the amount by which Wyndham's stock price increases between now and May 8, 2001. On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the Northern District of California against Patriot, Old Wyndham, their respective operating partnerships and Paine Webber Group, Inc. This action, Johnson v. Patriot American Hospitality, Inc., et al., No. C-99-2153, was commenced on behalf of all former holders of Bay Meadows stock during a class period from June 2, 1997 to the date of filing. The action asserts securities fraud claims and alleges that the purported class members were wrongfully induced to tender their shares as part of the Patriot/Bay Meadows merger based on a fraudulent prospectus. The action further alleges that defendants continued to defraud shareholders about their intentions to acquire numerous hotels and saddle Patriot and Old Wyndham with massive debt during the class period. Three other actions against the same defendants subsequently were filed in the Northern District of California: (i) Ansell v. Patriot American Hospitality, Inc., et al., No. C-99-2239 (filed May 14, 1999), (ii) Sola v. Paine Webber Group, Inc., et al., No. C-99-2770 (filed June 11, 1999), and (iii) Gunderson v. Patriot American Hospitality, Inc., et al., No. C 99-3040 (filed June 23, 1999). Another action with substantially identical allegations, Susnow v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1354-T (filed June 15, 1999), also subsequently was filed in the Northern District of Texas. By order of the Judicial Panel on Multidistrict Litigation, these actions along with certain actions identified below have been consolidated in Northern District of California for consolidated pretrial purposes. On or about October 13, 2000, the defendants moved to dismiss the actions. The Court has scheduled a hearing on motions to dismiss the actions for December 14, 2000. Wyndham intends to defend the suits vigorously. On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1416-D, was filed in the Northern District of Texas against Patriot, Old Wyndham, James D. Carreker and Paul A. Nussbaum. This action asserts securities fraud claims and alleges that, during the period from January 5, 1998 to December 17, 1998, the defendants defrauded shareholders by issuing false statements about the Company. The complaint was filed on behalf of all shareholders who purchased Patriot and Old Wyndham stock during that period. Three other actions, Gallagher v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June 23, 1999, David Lee Meisenburg, et al. v. Patriot American Hospitality, Inc., Wyndham International, Inc., James D. Carreker, and Paul A. Nussbaum Case No. 3-99- CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1866-D, filed on or about August 27, 1999, allege substantially the same allegations. By orders of the Judicial Panel on Multidistrict Litigation, these actions have been consolidated with certain other shareholder actions and transferred to the Northern District of California for consolidated pre-trial purposes. On or about October 20, 2000, the defendants moved to dismiss the actions. The Court has scheduled a hearing on motions to dismiss the actions for December 14, 2000. Wyndham intends to defend the suits vigorously. Wyndham has received a draft complaint which threatens to assert claims on behalf of Golden Door, LLC, Golden Springs, LLC, Golden Door, Inc., Deer Springs Ranch, LLC, Deborah Szekely and Sarah Livia Brightwood. The potential plaintiffs appear to be the same as the plaintiffs who filed the action referenced above, 30 Deborah Szekely v. Patriot American Hospitality, Inc., et al., No. 3-99- CV1866-D, however the allegations of the complaints are not the same. The draft complaint purports to assert claims against Patriot, Wyndham and their respective operating partnerships for securities fraud under California securities code, common law fraud, breach of fiduciary duty and deceit in connection with the purchase by Patriot of the Golden Door Spa in February 1998. The draft complaint seeks compensatory damages for the alleged lost value of the potential plaintiff's stock and other unspecified damages. Although the Company has received a draft complaint, to date no complaint has been filed. Patriot and PAH Stanley Ranch ("PAH") are engaged in a dispute with Carneros Valley Investors involving a contract which calls for a purchase price of $14 million with an additional $5 million to be paid if PAH gets approval for a development in the Napa Valley. PAH did not get approval for this development. In September 1999, Carneros Valley Investors filed a complaint in the Superior Court of California, San Francisco, which alleges that Patriot owes Carneros Valley Investors $5 million and alleges that Patriot acted negligently, fraudulently and in bad faith in attempting to get the approval for the development. The complaint has been amended to allege fraud, purportedly entitling the plaintiff to rescind the sale. Patriot has answered the complaint, but to date, no discovery had been taken. A conditional settlement of the case was reached on or about August 9, 2000, conditioned upon the sale of the subject property to a third party to occur in December 2000. Further prosecution of the case (by either party) is at a standstill pending the closing of the sale. Wyndham intends to defend the suit vigorously should the sale not occur or should the settlement otherwise not occur. Patriot, IHC/Jacksonville Corporation and IHC Realty Partnership were parties to a dispute with another limited partner of a partnership relating to a proposed hotel development in Jacksonville, Florida. The case was captioned C&M Investors Limited v. Patriot American Hospitality, Inc. et al., and was originally filed in the Florida Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida, but was later removed to the United States District Court, Middle District of Florida, Jacksonville Division, Civil Action No. 98- 1236-Civ.-J- 20B. Patriot, IHC/Jacksonville Corporation, and IHC Realty Partnership, L.P. (the "Defendants") vigorously defended the suit and on May 25, 2000, the Defendants entered into a settlement agreement with the plaintiff C&M Investors Limited ("C&M") to settle and resolve all issues in the suit. Pursuant to the settlement agreement, the suit was dismissed with prejudice on May 31, 2000 and the Defendants received full and complete releases from C&M. Pursuant to the settlement agreement, the Defendants also received an option to purchase certain property in downtown Jacksonville, Florida for an aggregate purchase price of $4 million less a $1.425 million option payment made by the Defendants to C&M at the time of the settlement agreement. On or about October 26, 2000, a demand for arbitration was filed on behalf of John W. Cullen, IV, William F. Burruss, Heritage Hotel Management & Investment Ltd. And GH-Resco, L.L.C. naming Wyndham International, Inc. f/k/a Patriot American Hospitality, Inc. as respondent. The Demand for Arbitration claims that the claimants and Wyndham are parties to a Contribution Agreement dated February 28, 1997 and that Wyndham is in breach of that agreement. Claimants assert that Wyndham breached its agreement to pay respondents additional consideration under the Contribution Agreement by, among other things, allegedly denying claimants compensation due to them in connection with various transactions initiated by claimants and provided to Wyndham, which allegedly provided Wyndham with growth and added revenue. In addition, claimants assert that Wyndham failed to provide claimants with various other amounts due under the Contribution Agreement, failed to indemnify claimants for certain expenses and intentionally and negligently mismanaged Wyndham's business. Claimants do not specify the amount of damages sought. To date, Wyndham has not responded to the Demand for Arbitration. Wyndham intends to defend the claims vigorously. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. 31 Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits:
Item No. Description -------- ----------- 10.1* Amendment and Restatement to the Credit Agreement, dated September 25, 2000, by Wyndham and the Lenders named therein 10.2* Letter Agreement, dated July 19, 2000, between Leslie V. Bentley and Wyndham 27.1* Financial Data Schedule
- -------- *Filed herewith (b) Reports on Form 8-K for the quarter ended September 30, 2000. (1) Current Report on Form 8-K of Wyndham International, Inc. dated October 16, 2000 (01-9320) reporting under Item 5, the resignation of the Chairman of its Board of Directors and the appointment of a new Chairman of its Board of Directors. 32 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 their behalf by the undersigned, thereunto duly authorized. Wyndham International, Inc. /s/ Richard A. Smith By __________________________________ Richard A. Smith Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer) DATED: November 13, 2000 33 EX-10.1 2 0002.txt AMENDMENT & RESTATEMENT TO THE CREDIT AGREEMENT Exhibit 10.1 AMENDMENT AND RESTATEMENT ------------------------- AMENDMENT AND RESTATEMENT (this "Amendment and Restatement"), dated as of September 25, 2000, among WYNDHAM INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), the Lenders from time to time party to the Credit Agreement referred to below (the "Lenders"), CHASE SECURITIES INC. ("CSI"), as Lead Arranger and Book Manager, NATIONSBANK, N.A. and BANKERS TRUST COMPANY as Syndication Agents (each a "Syndication Agent", together the "Syndication Agents"), CREDIT LYONNAIS NEW YORK BRANCH, as Documentation Agent, BEAR STEARNS CORPORATE LENDING INC., as Co-Documentation Agent (each a "Documentation Agent", together the "Documentation Agents") and THE CHASE MANHATTAN BANK, as Administrative Agent (the "Administrative Agent"). All capitalized terms used herein and not otherwise defined shall have the respective meanings provided such terms in the Credit Agreement referred to below. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, the Lenders, CSI, the Syndication Agents, the Documentation Agents and the Administrative Agent are parties to a Credit Agreement, dated as of June 30, 1999 (as amended, modified or supplemented to, but not including, the date hereof, the "Credit Agreement"); WHEREAS, the parties hereto wish to amend the Credit Agreement as herein provided; and WHEREAS, subject to the terms and conditions of this Amendment and Restatement, the parties hereto agree as follows: 1. The definitions of "Allocation Percentage," "EBITDA," "Equity Ownership Interest," "Core Assets," "Indebtedness," "Joint Venture," "New Hotel," "New Hotel Indebtedness," "Reinvestment Deferred Amount," "Reinvestment Notice," Reinvestment Prepayment Amount," "Reinvestment Prepayment Date," "Responsible Officer," "Subsidiary," "Total Adjusted EBITDA" and "Total Cash Interest Expense" contained in Section 1 of the Credit Agreement are hereby amended to read in their entirety as follows: "Allocation Percentage" means (i) with respect to the Borrower or any --------------------- Wholly-Owned Subsidiary of any Borrower, 100% and (ii) for any other Person, the percentage that the Equity Ownership Interest of such Person held directly or indirectly by the Borrower represents of the entire Equity Ownership Interest of such Person; provided, however, that for purposes of ----------------- the calculation of compliance with the Total Leverage Ratio, Senior Secured Leverage Ratio or Interest Coverage Ratio, the Allocation Percentage with respect to the Total Indebtedness or Total Cash Interest Expense of Joint Ventures created or acquired after the First Amendment and Restatement Effective Date shall be zero (so long as neither the Borrower nor any of its Subsidiaries makes any Investment in any such Joint Venture other than (a) the initial Investment in such Joint Venture, (b) any Investment in a Joint Venture after giving effect to which the Borrower's Equity Ownership Interest in such Joint Venture (direct and indirect) represents 20% or less of the entire Equity Ownership Interest of such Joint Venture and (c) Investments in a Joint Venture made pro rata with the other owners of such Joint Venture the sole purpose of which is to fund Capital Expenditures and operating maintenance expenses of such Joint Venture). "Core Assets" means Hotels (or Equity Ownership Interests in Persons ----------- owning such Hotels) branded as Wyndham Hotels, Wyndham Resorts, Wyndham Grand Heritage Hotels, Wyndham Luxury Resorts, Summerfield Hotels or Hotels which will be branded as such within one year after acquisition thereof (so long as such Hotels are so branded within such time period); provided, that -------- notwithstanding anything to the contrary, the Hotels described in Schedule II and Unrestricted Assets shall not be included in this definition of Core Assets. "EBITDA" means for any Person for any period, the net income of such ------ Person for such period, plus (a) the sum of the following amounts of such Person for such period determined in conformity with GAAP to the extent included in the determination of such net income: (i) depreciation expense, (ii) amortization expense and all other non-cash expenses and charges, (iii) interest expense, (iv) income tax expense, (v) extraordinary losses (and other losses on sales or other dispositions of assets not otherwise included in extraordinary losses determined in conformity with GAAP), (vi) all minority interests, including minority interests attributable to the OP Units and (vii) commencing with the first Fiscal Quarter in 1999, Non- Recurring Identified Charges, plus (b) cash Dividends actually received by the Borrower or any Subsidiary of the Borrower (other than Unrestricted Subsidiaries) from any Unrestricted Subsidiary, less (c) extraordinary gains of such Person determined in conformity with GAAP to the extent included in the determination of such net income (and other gains on sales or other dispositions of assets not otherwise included in extraordinary gains determined in conformity with GAAP) and equity earnings attributable to all minority interests, including equity earnings attributable to minority interests in the OP Units. "Equity Ownership Interest" means any and all shares, interests, ------------------------- participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interest and limited liability company membership interest, and any and all warrants, rights or options to purchase any of the foregoing (excluding Buy/Sell Arrangements so long as the obligations to purchase the interests in respect thereof are contingent); provided, that for purposes of the definitions of "Allocation -------- Percentage" and "Subsidiary" only, preferred or similar equity or ownership interests in a Person shall not constitute Equity Ownership Interests to the extent such interests (A) do not have voting power with respect to such Person (other than voting power obtained because of an event of default of a Joint Venture formed in connection with a Permitted Portfolio Transaction), (B) whether by law, contract or otherwise, do not permit the creditors of such Person to have recourse against the holders of such interests with respect to the 2 obligations and liabilities of such Person, (C) provide for redemption either (i) at the option of the holder, whether contingent or otherwise, (ii) at the option of the issuer, whether contingent or otherwise, or (iii) upon the occurrence of a certain event or condition (including, without limitation, the passage of time) and (D) are not exchangeable for or convertible into other equity interests except those which also satisfy the criteria set forth in clauses (A), (B) and (C) above. "Indebtedness" means as to any Person, without duplication, (i) all ------------ indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of any asset (including Forward Purchase Obligations but excluding Contingent Purchase Obligations) or services; (ii) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any asset owned by such Person, whether or not such Indebtedness has been assumed by such Person (it being understood and agreed that (x) the amount of such Indebtedness under this clause (iii) shall be deemed to be the lesser of the fair market value (as determined in the reasonable judgment of the Borrower) of such asset and the principal amount of such Indebtedness and (y) any Indebtedness of a Joint venture created or acquired in connection with a Permitted Portfolio Transaction, whose equity or other ownership interests are pledged by the Borrower or any of its Subsidiaries, shall not be included as Indebtedness under this clause (iii) so long as such Indebtedness is not recourse to the Borrower or any of its Subsidiaries), (iv) Capital Lease Obligations, (v) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted i.e., take-or-pay and ----- similar obligations, (vi) all Guarantee Obligations of such Person, (vii) solely for purposes of Sections 6.03 and 7.04, all net exposure of Derivative Obligations, including obligations under any Interest Rate Protection Agreement, Other Hedging Agreements or under any similar type of agreement or arrangement calculated in accordance with GAAP and (viii) Net Rental Payments; provided, that Indebtedness shall not include (a) trade -------- payables incurred in the ordinary course of business, (b) except to the extent covered by clause (viii) above, operating lease obligations (including, without limitation, the lessee's obligations under (i) the Existing Operating Leases and the Permitted Sale/Leaseback Transactions and (ii) any other operating lease pursuant to which the Borrower, or any of its Subsidiaries or Joint Ventures, as lessee, leases all or any portion of a Hotel from the holder of an ownership or leasehold interest in such Hotel, as lessor), (c) short term notes evidencing earnest money deposits until delivered to the payee and (d) at the time of determination of outstanding Indebtedness at any time, the aggregate amount of Forward Purchase Obligations not in excess of $400,000,000 then outstanding. "Joint Venture" means with respect to any Person, at any date, any ------------- other Person in whom such Person directly or indirectly holds an Investment, and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person, if such statements were prepared as of such date; provided that -------- (a) any Joint Venture of a Person which is an Unrestricted Subsidiary shall not be treated as a Joint Venture hereunder for so long as such Person is 3 an Unrestricted Subsidiary and (b) no Person shall be considered a Joint Venture solely because such Person is characterized as a partnership for tax ------ purposes. "New Hotel" means any Hotel owned by the Borrower, its Subsidiaries or --------- Joint Ventures which (i) is being or has been newly constructed, or substantially refurbished or rebuilt (so long as any such Hotel is or was substantially closed while being refurbished or rebuilt) or (ii) has been acquired by the Borrower or any of its Subsidiaries and will be converted to a Core Asset; provided that any New Hotel shall cease to be treated as a New Hotel from and after the earlier of (x) the first day of the Fiscal Quarter occurring after 18 months from the date (a) such New Hotel opened or re- opened for business (in the case of clause (i) above) or (b) the conversion process begins (in the case of clause (ii) above) and (y) the Fiscal Quarter in which the ratio of Total Adjusted EBITDA to Total Cash Interest Expense attributable to such New Hotel equals or exceeds the Interest Coverage Ratio required to be exceeded by the Borrower under Section 6.01(c) for the most recent Fiscal Quarter. "New Hotel Indebtedness" means, with respect to any New Hotel, the sum ---------------------- of (a) all Indebtedness either secured by such New Hotel or incurred to finance the construction, acquisition, refurbishment, conversion to a Core Asset or rebuilding of such New Hotel and (b) all other cash outlays in respect of the construction, acquisition, refurbishment, conversion to a Core Assets or rebuilding of such New Hotel; provided, that the interest -------- rate associated with any amounts under this clause (b) shall be deemed to be the interest rate which would have been applicable to Revolving Loans which are Eurodollar Loans having an Interest Period of three months determined on the first day of the then most recently ended Fiscal Quarter. "Reinvestment Deferred Amount" means with respect to any Reinvestment ---------------------------- Event, the aggregate Net Cash Proceeds received by the Borrower or any of its Subsidiaries in connection therewith that (i) if a Reinvestment Notice as described in clause (i) of the definition thereof has been given, are not applied pursuant to Section 2.11 as a result of the delivery of a Reinvestment Notice, and (ii) if a Reinvestment Notice as described in clause (ii) of the definition thereof has been given, are intended to be applied pursuant to Section 2.11 (d)(i) as a result of the delivery of a Reinvestment Notice. "Reinvestment Notice" means a written notice executed by a Responsible ------------------- Officer stating that (i) no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary or a Joint Venture) intends and expects to use all or a specified portion of the Net Cash Proceeds of a Reinvestment Event to acquire assets useful in its business, (ii) the Borrower intends to use all or a specified portion of the Net Cash Proceeds of a Reinvestment Event to repay outstanding Indebtedness in accordance with the priorities set forth in Section 2.11(d), and/or (iii) with respect to any Exchange described in Section 6.05(c)(iii), after repayment of any Indebtedness (other than Indebtedness of the Lenders pursuant to this Agreement) which is secured by any of the respective assets which were the subject of such Exchange, including any premium, make-whole or breakage amount related thereto, the Net Cash Proceeds thereof will be zero; provided that any Reinvestment Notice stating the intention described -------- in clause (i) 4 above may be rescinded at any time prior to the Reinvestment Prepayment Date if it is replaced with a Reinvestment Notice stating the intention described in clause (ii) above. "Reinvestment Prepayment Amount" means with respect to any Reinvestment ------------------------------ Event, the Reinvestment Deferred Amount relating thereto less any amount expended or irrevocably committed pursuant to a binding agreement, prior to the relevant Reinvestment Prepayment Date, to acquire assets useful in the Borrower's business, provided that such acquisition made with the Net Cash Proceeds of Dispositions of Core Assets shall be made in Hotels constituting Core Assets or to acquire the Equity Ownership Interest of a Subsidiary which owns a Hotel or Hotels constituting Core Assets. "Reinvestment Prepayment Date" means with respect to any Reinvestment ---------------------------- Event, (i) if a Reinvestment Notice as described in clause (i) of the definition thereof has been given, the date occurring twelve months after such Reinvestment Event (plus an additional six months in the case of an Asset Disposition or an Exchange of Non-Core Assets for Net Cash Proceeds of $50,000,000 or greater), and (ii) if a Reinvestment Notice as described in clause (ii) of the definition thereof has been given, the date occurring five Business Days after the later of (x) the date of such Reinvestment Event, and (y) the date on which such Reinvestment Notice as described in clause (ii) of the definition thereof was given. "Responsible Officer" means the chief executive officer, president, ------------------- chief financial officer or treasurer of the Borrower, but in any event, with respect to financial matters, the chief financial officer, president or the treasurer of the Borrower. "Subsidiary" means as to any person, (i) any corporation more than 50% ---------- of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% Equity Ownership Interest at the time. Notwithstanding the foregoing, no Unrestricted Subsidiary shall be considered a Subsidiary of the Borrower or its Subsidiaries for purposes of this Agreement. "Total Adjusted EBITDA" means, for any period without duplication, (i) --------------------- the product of (a) EBITDA of the Borrower and its Subsidiaries and Joint Ventures all on a combined basis in accordance with GAAP for such period (b) multiplied, in the case of each such Person, by the Allocation Percentage applicable to such Person, plus (ii) the amount of Approved Procurement Savings set forth on Schedule I for the Test Period ended on the date set forth thereon; provided that for the purposes of the calculation of -------- ---- compliance with the Total Leverage Ratio, Senior Secured Leverage Ratio and Interest Coverage Ratio, (x) EBITDA of the Borrower and its Subsidiaries in clause (i)(a) above for the Test Period ending September 30, 2000 shall also include the difference (whether negative or positive) between (I) any selling, general and administrative expenses for such 5 Test Period and (II) any selling, general and administrative expenses incurred during the last three Fiscal Quarters of such Test Period multiplied by 4/3, in each case as such selling, general and administrative expenses are determined in accordance with GAAP and (y) EBITDA of Joint Ventures created or acquired after the First Amendment and Restatement Effective Date included in clause (i)(a) above shall be reduced (but not to an amount less than zero) by the Allocation Percentage of any permanent principal payment of Indebtedness and payments of cash interest made during the period for which EBITDA was calculated; provided further that for the purposes of the calculation of the Interest Coverage Ratio, EBITDA of Joint Ventures created or acquired after the First Amendment and Restatement Effective Date included in clause (i)(a) above shall be reduced by the Allocation Percentage of cash interest income received by such Person during the period of calculation thereof. "Total Cash Interest Expense" means the sum of the total cash interest --------------------------- expense in respect of Total Indebtedness for such period determined in conformity with GAAP (excluding interest capitalized in accordance with GAAP, amortization of deferred financing costs and other non-cash charges and expenses) minus cash interest income; provided there shall be excluded -------- from Total Cash Interest Expense the cash interest expense (not to exceed $20 million for any applicable period of calculation) attributable to New Hotel Indebtedness. 2. Section 1 of the Credit Agreement is hereby further amended by inserting therein the following new defined terms in appropriate alphabetical order: "Cash Consideration" means, with respect to any Exchange or Asset ------------------ Disposition, cash, Cash Equivalents, the assumption or retirement of Indebtedness with respect to the asset or property subject to such Exchange or Asset Disposition, or any combination of the foregoing. "Designated Joint Venture Assets" means any assets, property or Equity ------------------------------- Ownership Interest purchased or acquired by the Borrower or any of its Subsidiaries and designated as "Designated Joint Venture Assets" by the Borrower by providing a Notice of Designation to the Administrative Agent at the time of the purchase or acquisition stating the Borrower (i) intends to convey, sell, convert or otherwise transfer such asset, property or Equity Ownership Interest to a Joint Venture within six months of such purchase or acquisition and (ii) the estimated percentage Equity Ownership Interest the Borrower will hold directly or indirectly in the Joint Venture after giving effect to such conveyance, sale, conversion or transfer of such assets, property or Equity Ownership Interest to such Joint Venture. "Developmental Lease Property" means any property consisting of land ---------------------------- and improvements thereon in the Hospitality/Leisure Related Businesses owned and developed by a Person other than the Borrower or any of its Subsidiaries or Joint Ventures for use by the Borrower and/or its Subsidiaries. 6 "Developmental Lease Subsidiary" means a Subsidiary of the Borrower ------------------------------ (created on or after the First Amendment and Restatement Effective Date) which is not a Subsidiary Guarantor and whose assets shall consist solely of leasehold interests and personal property in connection with the operation of such leasehold interests. "Developmental Lease Transaction" means any transaction in which a ------------------------------- Developmental Lease Subsidiary, as a lessee, enters into a lease agreement to manage and/or operate a Developmental Lease Property. "Existing Operating Leases" means the operating leases set forth on ------------------------- Schedule A attached to the First Amendment and Restatement. "First Amendment and Restatement" means the Amendment and Restatement ------------------------------- to this Agreement, dated as of September 25, 2000. "First Amendment and Restatement Effective Date" means the First ---------------------------------------------- Amendment and Restatement Effective Date as defined in the First Amendment and Restatement. "Net Rental Payments" means the difference between (A) Rental Payments ------------------- and (B) any cash deposits or interest reserve made (or letter of credit support provided or caused to be provided) by the Borrower or any of its Subsidiaries, in each case in connection with any lease agreement entered into with respect to any Specified Developmental Lease Transactions; provided that in no event shall Net Rental Payments in connection with any -------- lease agreement entered into in connection with any Specified Developmental Lease Transaction be less than, on any date, the scheduled payments to be made by the Borrower and its Subsidiaries in the one year period following such date under such lease agreement. "Notice of Designation" shall mean a notice duly executed by a --------------------- Responsible Officer of the Borrower listing the requirements set forth in the definition of Designated Joint Venture Assets. "Permitted Mezzanine Investment Entity" shall mean any Person (other ------------------------------------- than any Unrestricted Subsidiary) in which the Borrower or any of its Subsidiaries makes an Investment in the form of a loan, so long as the Borrower or its Subsidiary is (or will be immediately after the making of such liNestment) party to a Management Agreement or Franchise Agreement with respect to an asset owned by such entity on market terms as reasonably determined by the Borrower. "Permitted Portfolio Transaction" means a transaction or series of ------------------------------- related transactions between the Borrower and/or its Subsidiaries, on the one hand, and one other Person and/or any affiliates or group of parties related to such Person, on the other hand, designated in writing by the Borrower to the Administrative Agent as the "Permitted Portfolio Transaction," in connection with any Asset Dispositions, contributions by the Borrower or any of its Subsidiaries to Joint Ventures of the Borrower or any of its Subsidiaries (whether existing or created as a result of such contributions), or Exchanges described in Section 6.05(c) or any combination thereof with respect to no more than the 45 7 properties (including any Equity Ownership Interests in Subsidiaries or Joint Ventures owning such properties); provided, however, that (i) the --------- ------- "Permitted Portfolio Transaction" shall consist primarily of Non-Core Assets (it being understood and agreed that in no event shall the Permitted Portfolio Transaction include more than eight Core Assets), (ii) the Borrower and its Subsidiaries shall be in compliance with the covenants contained in Section 6.01 on a Pro Forma Basis, (iii) the Net Cash Proceeds of any portion of the "Permitted Portfolio Transaction" constituting an Asset Disposition or contributions by the Borrower or any of its Subsidiaries to any Joint Ventures of the Borrower or any of its Subsidiaries (whether existing or created as a result of such contributions) shall be applied within ten Business Days of each closing to repay outstanding Increasing Rate Term Loans (which on the initial closing of the Permitted Portfolio Transaction shall be so repaid by an amount at least equal to $125,000,000), (iv) the aggregate fair market value of the assets disposed of by the Borrower and its Subsidiaries pursuant to the Permitted Portfolio Transaction (as determined by the senior management of the Borrower) shall not exceed $1,500,000,000, (v) the consideration (taken as a whole for the entire Permitted Portfolio Transaction) received by the Borrower and its Subsidiaries in respect of the Permitted Portfolio Transaction (excluding the portion thereof consisting of like-kind exchanges pursuant to and in compliance with Section 1031 of the Code) shall consist of at least 70% Cash Consideration, (vi) except as otherwise permitted in the Agreement, as to assets which are not disposed of pursuant to the Permitted Portfolio Transaction, the status of such assets (e.g., Core Asset ---- v. Non-Core Asset) shall not be changed in connection therewith or as a result thereof, and the location of such asset within the Borrower's capital structure (e.g., whether such asset is owned by the Borrower or one of its ---- Subsidiaries, and in the case of a Subsidiary whether such Subsidiary is a Subsidiary Guarantor) shall not be changed in connection therewith or as a result thereof, (vii) all or substantially all of the assets received in connection with like-kind exchanges pursuant to and in compliance with Section 1031 of the Code shall be used only for hotel and hotel-related purposes (which term, for this purpose, shall exclude free-standing retail, golf, tennis, spa and other resort amenities), (viii) the aggregate Investments (net of Investment Returns) in Joint Ventures made or retained by the Borrower and its Subsidiaries pursuant to the Permitted Portfolio Transaction shall not exceed $250,000,000 (it being understood and agreed that Investments in Joint Ventures in excess of $250,000,000 shall be permitted to the extent permitted by Section 6.06(g), with any excess Investments over $250,000,000 to count against the baskets set forth in such Section 6.06(g)), (ix) no Change of Control shall arise as a result of such transaction, (x) except as otherwise provided in Agreement, no Dividends shall be paid in connection with such transaction, and in connection with such transaction neither the Borrower nor any of its Subsidiaries shall become obligated to pay any Dividends in the future, in each case except for Dividends expressly permitted to be paid under Section 6.07, (xi) no Unrestricted Subsidiaries shall be created, acquired or invested in connection with such transaction, and (xii) neither the definition of "Permitted Sale/Leaseback Transactions" nor Section 6.05(i) shall be deemed modified by this definition or by Section 6.17. "Permitted Sale/Leaseback Transactions" means any sale and leaseback ------------------------------------- transaction in respect of properties set forth on Schedule B attached to the First Amendment and 8 Restatement, together with any improvements, fixtures or personal property related to and located in or on such properties. "Rental Payments" means, on any date, the sum of the budgeted rental --------------- payments (not to include reimbursement for taxes, operating expenses or indemnification or other similar third party expenses) to be made by the Borrower and its Subsidiaries in the two year period following such date under lease agreements in connection with the Developmental Lease Transactions. "Sale/Leaseback Subsidiary" means a Subsidiary of the Borrower (whether ------------------------- existing on or after the First Amendment and Restatement Effective Date) whose assets consists solely of the assets held in connection with the Permitted Sale/Leaseback Transactions. "Sliver Equity Investment" shall mean any Person in which the Borrower ------------------------ owns, directly or indirectly, an Equity Ownership Interest, equal to 20% or less of the aggregate Equity Ownership Interest of such Person. "Specified Developmental Lease Transaction" means any Developmental ----------------------------------------- Lease Transaction in which the Borrower or any Subsidiary Guarantor has guaranteed the obligations of a Developmental Lease Subsidiary in connection with such Developmental Lease Transaction. "Timeshare Development Transaction" means any sale by the Borrower or --------------------------------- any of its Subsidiaries or Joint Ventures of Unimproved Land which will be developed by the purchaser thereof (in which the Borrower may have or make an Investment, to the extent permitted hereunder) as a timeshare project. "Unimproved Land" means any land which does not contain any --------------- improvements other than infrastructure improvements. 3. Section 2.02(c) of the Credit Agreement is hereby amended to read in its entirety as follows: (c) The aggregate principal amount of each Borrowing under a Facility shall not be less than the Minimum Borrowing Amount for such Facility. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of -------- twenty Eurodollar Borrowings outstanding. 4. Section 2.04(a) of the Credit Agreement is hereby amended to read in its entirety as follows: (a) Subject to the terms and conditions set forth herein, the Swingline Lender in its individual capacity agrees to make a revolving loan or revolving loans (each a "Swingline Loan and collectively, the "Swingline Loans") to the Borrower at any time and from time to time on and after the Effective Date and prior to the Swingline Expiry Date, in an aggregate principal amount at any time outstanding that will not result in (i) 9 the aggregate principal amount of outstanding Swingline Loans exceeding $20,000,000 or (ii) the sum of the total Revolving Extensions of Credit exceeding the total Revolving Commitments; provided that the Swingline -------- Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans. 5. Section 2.05(b) of the Credit Agreement is hereby amended to read in its entirety as follows: (b) Notice of Issuance. Amendment, Renewal, Extension. Certain ---------------------------------------------------------- Conditions. To request the issuance of a Letter of Credit (or the amendment, ---------- renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and each request for the issuance, amendment, renewal or extension of each Letter of Credit by Borrower shall be deemed to be a representation and warranty that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Obligations shall not exceed $75,000,000 and (ii) the sum of the Total Revolving Extensions of Credit shall not exceed the Total Revolving Commitment. 6. Section 2.09(d) of the Credit Agreement is hereby amended to read in its entirety as follows: (d) The Borrower may on one occasion at any time not later than twelve months prior to the Revolving Loan Maturity Date, by written notice to the Administrative Agent (which shall promptly deliver a copy to each of the Revolving Lenders), request that the Total Revolving Commitment be increased by an amount not in excess of $300,000,000. Such notice shall set forth the amount of the requested increase in the Total Revolving Commitment and the date on which such increase is requested to become effective (which shall be not less than 30 days or more than 90 days after the date of such notice), and shall offer each Revolving Lender the opportunity to increase its Revolving Commitment by its Applicable Percentage of the proposed increased amount. Each Revolving Lender shall, by notice to the Borrower and the Administrative Agent given not more than 30 days after the date of the Borrower's request, either agree to increase its Revolving Commitment by all or a portion of the offered amount (each Lender so agreeing 10 being an "Increasing Lender") or decline to increase its Revolving Commitment (and any Revolving Lender that does not deliver such a notice within such period of 30 days shall be deemed to have declined to increase its Revolving Commitment) (each Revolving Lender so declining or deemed to have declined being a "Non-Increasing Lender"). In the event that, on the 30th day after the Borrower shall have delivered a request pursuant to the first sentence of this paragraph, the Revolving Lenders shall have agreed pursuant to the preceding sentence to increase their Revolving Commitments by an aggregate amount less than the increase in the Total Revolving Commitment requested by the Borrower, the Administrative Agent may arrange for one or more banks or other financial institutions (any such bank or other financial institution being called an "Augmenting Lender"), which may include any Revolving Lender or Term Lender, to extend a Revolving Commitment or increase its existing Revolving Commitment in an aggregate amount equal to the unsubscribed amount, provided that each Augmenting -------- Lender, if not already a Lender hereunder, shall be subject to the approval of the Borrower and the Administrative Agent (which approvals shall not be unreasonably withheld) and each Augmenting Lender shall execute all such documentation as the Administrative Agent shall specify to evidence its Commitment and its status as a Lender hereunder provided further that if the -------- ------- aggregate amount of the increase in Total Revolving Commitments, after giving effect to the additional commitments of Increasing Lenders and Augmenting Lenders, is less than the increase in Total Revolving Commitments requested by the Borrower, the Borrower may accept such lesser increase. Increased and new Revolving Commitments created pursuant to this clause (d) shall become effective on the date specified in the request delivered by the Borrower pursuant to the first sentence of this paragraph. Notwithstanding the foregoing, no increase in the Total Revolving Commitment (or in the Revolving Commitment of any Revolving Lender) shall become effective under this paragraph unless, (i) on the date of such increase, the conditions set forth in paragraph (a) and (b) of Section 4.02 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to such increase) and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a member of senior management of the Borrower and (ii) the Administrative Agent shall have received (with sufficient copies for each of the Revolving Lenders) documents consistent with those delivered on the Effective Date under clause (1) of Section 4.01 as to the Company's power to borrow hereunder after giving effect to such increase; and 7. Section 2.11(d) of the Credit Agreement is hereby amended by inserting the following new paragraph at the end thereof: Notwithstanding the above, if any Increasing Rate Term Loans remain outstanding at the time of the receipt of Net Cash Proceeds from an Asset Disposition or a contribution by the Borrower or any of its Subsidiaries to a Joint Venture of the Borrower or any of its Subsidiaries (other than a Disposition of less than 100% of the Borrower's or any of its Subsidiaries Equity Ownership Interest or other interest in a Designated Joint Venture Asset) of (A) Non-Core Assets or (B) Core Assets to a Joint Venture of the Borrower or any of its Subsidiaries, a prepayment in an amount equal to (i) in the case of clause (A) above, (I) 50% of the first $400,000,000 per fiscal year of the Borrower of such Net Cash Proceeds from such Asset Dispositions and contributions (which shall only 11 include Asset Dispositions and contributions consummated after the First Amendment and Restatement Effective Date), and (II) 100% of any Net Cash Proceeds above $400,000,000 in any fiscal year of the Borrower from such Asset Dispositions and contributions (which shall only include Asset Dispositions and contributions consummated after the First Amendment and Restatement Effective Date), and (ii) in the case of clause (B) above, 100% of such Net Cash Proceeds from such Asset Dispositions and contributions shall be applied within five Business Days after receipt thereof to repay the Increasing Rate Term Loans. Notwithstanding the foregoing, (a) the $400,000,000 in clause (i) of the immediately preceding sentence shall be reduced by the Net Cash Proceeds, if any, of any Exchanges made during the period of determination and (b) the Net Cash Proceeds not subject to clause (I) of such sentence shall be subject to a Reinvestment Notice and related requirements. 8. Section 5.02(b) of the Credit Agreement is hereby amended to read in its entirety as follows: (b) as soon as available, but in any event not later than 55 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower and 100 days after the end of each fiscal year of the Borrower, (i) a certificate of a Responsible Officer stating that, to the best of each such Responsible Officer's knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, (x) beginning with the Compliance Certificate for the Fiscal Quarter ending September 30, 1999, a Compliance Certificate containing all information and calculations necessary for determining compliance by the Borrower and its Subsidiaries with the provisions of this Agreement referred to therein as of the last day of the Fiscal Quarter or fiscal year of the Borrower, as the case may be and (y) to the extent not previously disclosed to the Administrative Agent pursuant to this clause (b), a listing of each new Subsidiary of any Loan Party acquired or created by any Loan Party since the date of the most recent list delivered pursuant to this clause (b) (or, in the case of the first such list so delivered, since the Effective Date); 9. Section 5.02(e) of the Credit Agreement is hereby amended to read in its entirety as follows : (e) within 10 days after the receipt thereof by the Borrower, a copy of any "management letter" addressed to the board of directors of the Borrower or any of its Subsidiaries from its certified public accountants and any internal control memoranda relating thereto; 10. Section 5.10(b) of the Credit Agreement is hereby amended to read in its entirety as follows: 12 (b) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or acquired after the Effective Date by the Borrower or its Subsidiaries (which, for the purposes of this paragraph (b), shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), shall promptly (and in any event within 45 days) (unless the Administrative Agent otherwise consents, in its reasonable discretion, based on the economic or other burdens of effecting the following) (i) execute and deliver to the Administrative Agent such amendments to the Security Documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Equity Ownership Interest of such new Subsidiary that is owned by the Borrower or any of its Subsidiaries, (ii) to the extent such ownership interest is evidenced by certificated capital stock, deliver to the Administrative Agent the certificates representing such together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the Borrower or such Subsidiary, as the case may be and (iii) cause such new Subsidiary (A) to become a party to the Guaranty and Collateral Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest in the Collateral described in the Guaranty and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guaranty and Collateral Agreement or by law or as may be requested by the Administrative Agent and (C) to deliver to the Collateral Agent a certificate of such Subsidiary, substantially in the form of Exhibit H to the Guaranty and Collateral Agreement, with appropriate insertions and attachments. With respect to any new Joint Venture created or acquired after the Effective Date by the Borrower or any Subsidiary Guarantor, the actions described in clauses (i) and (ii) above shall be taken as if such Joint Venture were a Subsidiary and none of the actions described in clause (iii) above shall be required to be taken. Notwithstanding the foregoing provisions of this paragraph (b), none of the actions described in clauses (i), (ii) and (iii) above shall be required to be taken with respect to any Subsidiaries and Joint Ventures financed pursuant to Section 6.02(e) or with respect to Special Purpose Subsidiaries, Developmental Lease Subsidiaries or Sale/Leaseback Subsidiaries. 11. Section 6.01(c) of the Credit Agreement is hereby amended to read in its entirety as follows: (c) Interest Coverage Ratio. Permit the Interest Coverage Ratio to be ----------------------- less than (w) for any Test Period ending after June 30, 2000 and on or prior to December 31, 2002, 1.75 to 1.00, (x) for any Test Period ending after December 31, 2002 and on or prior to December 31, 2003, 1.85 to 1.00, (y) for any Test Period ending after December 31, 2003 and on or prior to December 31, 2004, 1.95 to 1.00 and (z) for any Test Period ending after December 31, 2004, 2.10 to 1.00. 12. Section 6.05(c) of the Credit Agreement is hereby amended to read in its entirety as follows: 13 (c) the following Dispositions (collectively "Exchanges") shall be permitted: (i) like-kind exchanges pursuant to and in compliance with Section 1031 of the Code (with any Net Cash Proceeds received in connection therewith not subject to a Reinvestment Notice to be applied as required under Section 2.11), (ii) a simultaneous exchange of assets for assets (with any Net Cash Proceeds received in connection therewith not subject to a Reinvestment Notice to be applied as required under Section 2.11) and (iii) Dispositions of Non-Core Assets and Core Assets, for an amount equal to at least the fair market value thereof (determined in good faith by the senior management of the Borrower), for at least 75% Cash Consideration (other than in connection with a Timeshare Development Transaction, the Disposition of which shall not be subject to such limitation), provided that (A) within 10 -------- ---- days after the date of consummation of any Exchange, the Borrower shall deliver a Reinvestment Notice with respect thereto and any Reinvestment Prepayment Amount in respect thereof is applied as required under Section 2.11 and (B) all Net Cash Proceeds of Exchanges resulting from Dispositions of Core Assets shall be reinvested in Core Assets; 13. Section 6.05(d) of the Credit Agreement is hereby amended by (i) deleting the phrase "cash consideration" appearing therein and (ii) inserting in lieu thereof the phrase "Cash Consideration (other than in connection with a Timeshare Development Transaction, the Disposition of which shall not be subject to such limitation)". 14. Section 6.05 of the Credit Agreement is hereby further amended by (i) deleting the word "and" contained at the end of clause (g) thereof, (ii) deleting the period appearing at the end of clause (h) thereof and inserting "; and" in lieu thereof and (iii) inserting therein immediately following clause (h) thereof the following new clause (i): "(i) the Permitted Sale/Leaseback Transactions." 15. Section 6.06(g) of the Credit Agreement is hereby amended to read in its entirety as follows: (g) Investments (net of Investment Returns) by the Borrower and its Subsidiaries in any Person that, prior to, or after giving effect to, such Investment, is a Joint Venture or a Permitted Mezzanine Investment, (i) existing on the First Amendment and Restatement Effective Date and (ii) from and after the First Amendment and Restatement Effective Date in an aggregate amount, when added to the amount of Designated Joint Venture Assets (which for the purposes of calculating the value of any Equity Ownership Interest in such assets owned by the Borrower or any of its Subsidiaries shall be the estimated percentage Equity Ownership Interest for such asset referred to in the applicable Notice of Designation; provided that on the earlier of (A) the closing of the conveyance, sale, conversion or transfer of such assets referred to in such Notice of Designation or (B) six months after the date of such Notice of Designation, the Equity Ownership Interest in such assets shall be the actual Equity Ownership Interest owned in such assets at the time thereof) acquired, not to exceed (x) so long as Increasing Rate Term Loans remain outstanding, $200,000,000 at any time outstanding (of which $60,000,000 may be in Joint Ventures other than Sliver Equity Investments) and (y) on 14 the first day of the Fiscal Quarter in which the Increasing Rate Terms Loans are repaid in full, $300,000,000 at any time outstanding (of which $90,000,000 may be in Joint Ventures other than Sliver Equity Investments), which amounts shall be increased to $400,000,000 and $120,000,000, respectively on the first anniversary of the first day of the Fiscal Quarter in which the Increasing Rate Returns Loans were repaid in full and $500,000,000 and $150,000,000 respectively, on the second anniversary of the first day of the Fiscal Quarter in which the Increasing Rate Terms Loans were repaid in full and thereafter; provided that in the case of Joint -------- ---- Ventures acquired with Indebtedness described in Section 6.02(e), the net amount (net of Investment Returns relating to Investments made or acquired pursuant to this Clause (g)) of such Investments (when added to the Investments in Subsidiaries described in the proviso in (f) above) shall not exceed $150,000,000 at any time; 16. Section 6.08(a) of the Credit Agreement is hereby amended by (i) deleting the phrase "or Indebtedness under the Increasing Rate Term Loan Facility" appearing therein and (ii) deleting the phrase "and pursuant to mandatory prepayment provisions contained in the Increasing Rate Term Loan Facility (and as expressly permitted in this Agreement)" appearing therein. 17. Section 6.10 of the Credit Agreement is hereby amended by (i) deleting in its entirety clause (v) contained therein and (ii) inserting the following new clause (v) in lieu thereof: "(v) any restrictions with respect to (I) a Special Purpose Subsidiary imposed pursuant to the documents governing the related securitization or financing, (II) a Developmental Lease Subsidiary imposed pursuant to the documents governing such Developmental Lease Transaction (Ill) a Sale/Leaseback Subsidiary imposed pursuant to the documents governing such Permitted Sale/Leaseback Transaction and (IV) the lessee or tenant under Existing Operating Leases." 18. Section 6.12 of the Credit Agreement is hereby amended by (i) deleting in its entirety clause (f) contained therein and (ii) inserting the following new clause (f) in lieu thereof: "(f) any restrictions with respect to (I) a Special Purpose Subsidiary imposed pursuant to the documents governing the related securitization or financing, (II) a Developmental Lease Subsidiary imposed pursuant to the documents governing such Developmental Lease Transaction, (III) a Sale/Leaseback Subsidiary imposed pursuant to the documents governing such Permitted Sale/Leaseback Transaction and (IV) the lessee or tenant under the Existing Operating Leases." 19. Section 6 of the Credit Agreement is hereby further amended by inserting at the end thereof the following new Section 6.16 and Section 6.17: "Section 6.16 Developmental Lease Transactions. Enter into any --------------------------------------------- Developmental Lease Transaction, provided, that any Developmental Lease -------- Transaction may be entered 15 into if, at the time of the entering into such transaction (and after giving effect thereto), the aggregate amount of budgeted rental payments (not to include reimbursement for taxes, operating expenses or indemnification or other similar third party expenses) under all Developmental Lease Transactions then in effect for the twelve month period commencing on the first day of the immediately following month shall not exceed (i) $15,000,000 at all times during the fiscal year ending December 31, 2001 and (ii) $20,000,000 at all times during any fiscal year thereafter. Section 6.17 Permitted Portfolio Transaction. Notwithstanding anything ------------------------------- to the contrary in this Agreement (but subject to the terms and conditions set forth below and in the definition of "Permitted Portfolio Transaction"), the Borrower and its Subsidiaries shall be permitted to enter into the Permitted Portfolio Transaction so long as (a) the Net Cash Proceeds of any portion of the Permitted Portfolio Transaction constituting an Asset Disposition or contributions by the Borrower or any of its Subsidiaries to Joint Ventures of the Borrower or any of its Subsidiaries (whether existing or created as a result of such contributions) shall be applied within ten Business Days of each closing to repay the outstanding Indebtedness of the Borrower in the following manner: (i) first, to repay Increasing Rate Term ----- Loans (which on the initial closing date of the Permitted Portfolio Transaction shall be so repaid by an amount at least equal to $125,000,000) and (ii) second, to the extent that the Increasing Rate Loans are all repaid ------ in full, in accordance with the priorities set forth in Section 2.11(d); and (b) the consideration therefor shall be equal to at least the fair market value thereof as determined by the senior management of the Borrower. It is understood and agreed that, with respect to Investments in connection with the Permitted Portfolio Transaction, such Investments shall be permitted under Section 6.06(g), except that any Dollar limitations, thresholds or restrictions or similar baskets set forth in Section 6.06(g) shall, after the consummation of such Permitted Portfolio Transaction, be calculated without giving effect to such Investments as if such Permitted Portfolio Transaction had not occurred." 20. Section 9.01(a) of the Credit Agreement is hereby amended to read in its entirety as follows: (a) if to the Borrower, to it at 1950 Stemmons Freeway, Suite 6001, Dallas, Texas 75207, Attention Chief Financial Officer (Telecopy No. (214)- 863-1527) and Treasurer (Telecopy (214) 863-1669); 21. Annex A to the Credit Agreement is hereby amended by inserting the following new paragraph at the end thereof: In addition to the foregoing, (i) as long as Increasing Rate Term Loans in an aggregate amount of less than or equal to $325,000,000 are outstanding, the above Applicable Margin for Term Loans shall be increased by .25% and (ii) as long as Increasing Rate Term Loans in an aggregate amount greater than $325,000,000 are outstanding, the above Applicable Margin for Term Loans shall be increased by .50%. 16 22. Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: SCHEDULE I -------- - APPROVED PROCUREMENT SAVINGS ---------------------------- ________________________________________ Test Period Ending ------------------ ======================================= September 30, 1999 $40,000,000 ________________________________________ December 31, 1999 $34,300,000 ________________________________________ March 31, 2000 $28,600,000 ________________________________________ June 30, 2000 $22,900,000 ________________________________________ September 30, 2000 $19,800,000 ________________________________________ December 31, 2000 $16,500,000 ________________________________________ March31, 2001 $13,200,000 ________________________________________ June 30, 2001 $ 9,900,000 ________________________________________ September 30, 2001 $ 6,600,000 ________________________________________ December 31, 2001 $ 3,300,000 ________________________________________ 23. In order to induce the undersigned Lenders to enter into this Amendment and Restatement, the Borrower hereby represents and warrants that (x) no Default or Event of Default exists on the First Amendment and Restatement Effective Date after giving effect to this Amendment and Restatement and (y) all of the representations and warranties contained in the Credit Agreement shall be true and correct in all material respects as of the Amendment and Restatement Effective Date after giving effect to this Amendment, with the same effect as though such representations and warranties had been made on and as of the Amendment and Restatement Effective Date (it being understood that any representation or warranty made as of a specified date shall be required to be true and correct in all material respects only as of such specific date). 24. This Amendment and Restatement is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document. 25. This Amendment and Restatement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which 17 counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the borrower and the Administrative Agent. 26. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. 27. This Amendment and Restatement shall become effective on the date (the "First Amendment and Restatement Effective Date") when (i) the Borrower and the Required Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of telecopier) the same to the Administrative Agent at the Notice Office, and (ii) the Required Obligees have consented to the Consent to the Increasing Rate Term Loan Facility dated as of September 25, 2000. 28. From and after the First Amendment and Restatement Effective Date all references in the Credit Agreement and the other Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as modified hereby. * * * * * 18 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment and Restatement to be duly executed and delivered as of the date first above written. WYNDHAM INTERNATIONAL, INC., By /s/ Rick A. Smith ------------------------- Title: THE CHASE MANHATTAN BANK, Individually and as Administrative Agent, By /s/ Thomas H. Kozlark ------------------------- Title: Vice President CHASE SECURITIES INC., as Lead Arranger and Book Manager By /s/ James G. Rolison ------------------------ Title: Managing Director BANKERS TRUST COMPANY, Individually and as Syndication Agent By /s/ [ILLEGIBLE] ------------------------- Title: Director BEAR STEARNS CORPORATE LENDING INC., Individually and as Co-Documentation Agent By /s/ [ILLEGIBLE] ------------------------- Title: Managing Director 19 CREDIT LYONNAIS NEW YORK BRANCH, Individually and as Documentation Agent By /s/ Joseph A. Asciolla ----------------------------- Title: First Vice President BANK OF AMERICA, N.A. Individually and as Syndication Agent By /s/ Lisa J. Butler ----------------------------- Title: Principal AG CAPITAL FUNDING PARTNERS, L.P. By: Angelo, Gordon & Co., L.P. as Investment Advisor By: /s/ [ILLEGIBLE]^^ ---------------------------- Name: Title: AMMC CDO I, LIMITED By: American Money Management Corp. as Collateral Manager By: /s/ David P. Meyer ---------------------------- Name: David P. Meyer Title: Vice President AERIES FINANCE-II LIMITED By: Invesco Senior Secured Management, Inc. as Sub-Managing Agent By: /s/ Anne M. McCarthy ---------------------------- Name: Anne M. McCarthy Title: Authorized Signatory ALLIANCE CAPITAL FUNDING, L.L.C. By: /s/ Kenneth G. Ostmann ---------------------------- Name: Kenneth G. Ostmann Title: Vice President ALLSTATE LIFE INSURANCE COMPANY By: /s/ Jerry Zinkula ---------------------------- Name: Jerry D. Zinkula Title: Authorized Signatory By: /s/ David Walsh ---------------------------- Name: David Walsh Title: Authorized Signatory AMARA-l FINANCE, LTD. By: INVESCO Senior Secured Management, Inc. as Sub-Advisor By: /s/ Anne M. McCarthy ---------------------------- Name: Anne M. McCarthy Title: Authorized Signatory AMARA-2 FINANCE, LTD. By: 1NVESCO Senior Secured Management, Inc. as Sub-Advisor By: /s/ Anne M. McCarthy ---------------------------- Name: Anne M. McCarthy Title: Authorized Signatory ARAB AMERICAN BANK By: /s/ Carmelo L. Foti ---------------------------- Name: Carmelo L. Foti Title: Vice President By: /s/ Rami El-Rifai ---------------------------- Name: Rami El-Rifai Title: Assistant Vice President ARCHIMEDES FUNDING, L.L.C. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Wade T. Winter ---------------------------- Name: Wade T. Winter, CFA Title: Vice President ARCHIMEDES FUNDING II, LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Wade T. Winter ---------------------------- Name: Wade T. Winter, CFA Title: Vice President ARES Leveraged Investment Fund, L.P. By: ARES Management, L.P. Its: General Partner By: /s/ David A. Sachs ---------------------------- Name: David A. Sachs Title: Vice President ARES Leveraged Investment Fund II, L.P. By: ARES Management II, L.P. Its: General Partner By: /s/ David A. Sachs ---------------------------- Name: David A. Sachs Title: Vice President AVALON CAPITAL LTD. By: INVESCO Senior Secured Management Inc. as Portfolio Advisor By: /s/ Anne M. McCarthy ---------------------------- Name: Anne M. McCarthy Title: Authorized Signatory AVALON CAPITAL II LTD. By: 1NVESCO Senior Secured Management Inc. as Portfolio Advisor By: /s/ Anne M. McCarthy ---------------------------- Name: Anne M. McCarthy Title: Authorized Signatory BANK LEUMI USA By: /s/ Joung Hee Hong --------------------------- Name: Joung Hee Hong Title: Vice President BANK OF HAWAII By: /s/ Donna R. Parker ---------------------------- Name: Donna R. Parker Title: Vice President THE BANK OF NOVA SCOTIA NEW YORK AGENCY By: /s/ Melvin Mandelbaum ---------------------------- Name: Melvin J. Mandelbaum Title: Managing Director BANKBOSTON, N.A. By:____________________________ Name: Title: BRANT POINT CBO 1999-1, LTD. By: /s/ Diane J. Exter ---------------------------- Name: Diane J. Exter Title: Executive Vice President Portfolio Manager CAPTIVA FINANCE LTD. By: /s/ David Dyer ---------------------------- Name: David Dyer Title: Director CAPTIVA II FINANCE LTD. By: /s/ David Dyer ---------------------------- Name: David Dyer Title: Director CARLYLE HIGH YIELD PARTNERS, L.P. By: TCG High Yield, L.L.C. as General Partner By: /s/ Linda M. Pace ---------------------------- Name: Linda M. Pace Title: Vice President CARLYLE HIGH YIELD PARTNERS IJ,LTD. By: TCG High Yield, L.L.C. as General Partner By: /s/ Linda M. Pace ---------------------------- Name: Linda M. Pace Title: Vice President CERES FINANCE, LTD. By: INVESCO Senior Secured Management, Inc. as Sub-Managing Agent By: /s/ Ann M. McCarthy ---------------------------- Name: Ann M. McCarthy Title: Authorized Signatory CONTINENTAL ASSURANCE COMPANY By: Highland Capital Management, L.P. As Collateral Manager By: /s/ Mark K. Okada CFA ---------------------------- Name: Mark K. Okada CFA Title: Executive Vice President By:____________________________ Name: Title: CONTINENTAL ASSURANCE COMPANY By: TCW Asset Management Company, Its Investment Advisor By: /s/ Mark Gold ---------------------------- Name: Mark Gold Title: Managing Director By: /s/ Jonathan Berg ---------------------------- Name: Jonathan Berg Title: Assistant Vice President CRESCENT/MACH 1 PARTNERS, L.P. By: TCW Asset Management Company, Its Investment Manager Sequils I, LTD By:____________________________ Name: Title: CypressTree Investment Partners I, Ltd. By: CypressTree Investment Management Company, Inc. as Portfolio Advisor By: /s/ Jeffrey W. Heuer ---------------------------- Name: Jeffrey W. Heuer Title: Principal CypressTree Investment Partners II, Ltd. By: CypressTree Investment Management Company, Inc. as Portfolio Advisor By: /s/ Jeffrey W. Heuer ---------------------------- Name: Jeffrey W. Heuer Title: Principal CypressTree Focused Investment Fund, LLC By: CypressTree Investment Management Company, Inc. its Managing Member By: /s/ Jeffrey W. Heuer ---------------------------- Name: Jeffrey W. Heuer Title: Principal CypressTree Senior Floating Rate Fund By: CypressTree Investment Management Company, Inc. as Portfolio Manager By: /s/ Jeffrey W. Heuer ---------------------------- Name: Jeffrey W. Heuer Title: Principal DLJ CAPITAL FUNDING, INC. By: Name: Title: DEBT STRATEGIES FUND II, INC. By: /s/ Gilles Marchand, CFA ---------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory DEBT STRATEGIES FUND III, INC. By: /s/ Gilles Marchand, CFA ---------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory ELC (CAYMAN) LTD. 1999-II By: /s/ John W. Stelwagon ---------------------------- Name: John W. Stelwagon Title: Director ELC (CAYMAN) LTD. 1999-III By: /s/ John W. Stelwagon ---------------------------- Name: John W. Stelwagon Title: Director ELC (CAYMAN) LTD. CDO Series 1999-1 By: /s/ John W. Stelwagon ---------------------------- Name: John W. Stelwagon Title: Director ELF FUNDING TRUST 1 By: Highland Capital Management, L.P. As Collateral Manager By: /s/ Mark K Okada CFA ---------------------------- Name: Mark K. Okada Title: Executive Vice President EATON VANCE SENIOR INCOME TRUST By: Eaton Vance Management, as Investment Advisor By: Name: Title: ELT LTD. By: /s/ Ann E. Morris ---------------------------- Name: Ann E. Morris Title: Authorized Agent First Allmerica Financial Life Insurance Company By: CypressTree Investment Management Company, Inc. as Attorney-in-Fact and on behalf of First Allmerica Financial Life Insurance Company as Portfolio Manager By: /s/ Jeffrey W. Heuer ---------------------------- Name: Jeffrey W. Heuer Title: Principal FIRST DOMINION FUNDING I By: /s/ Andrew Marshak ------------------ Name: Andrew Marshak Title: Authorized Signatory FIRST DOMINION FUNDING II By: /s/ Andrew Marshak ------------------ Name: Andrew Marshak Title: Authorized Signatory FIRST DOMINION FUNDING III By: /s/ Andrew Marshak ------------------ Name: Andrew Marshak Title: Authorized Signatory FLOATING RATE PORTFOLIO By: INVESCO Senior Secured Management, Inc. as Attorney-in-Fact By: /s/ Anne M. McCarthy ---------------------------- Name: Ann. M. McCarthy Title: Authorized Signatory FRANKLIN FLOATING RATE TRUST By: /s/ Chauncey Lufkin ---------------------------- Name: Chauncey Lufkin Title: FRANKLIN CLO I, LIMITED By: /s/ Chauncey Lufkin ---------------------------- Name: Chauncey Lufkin Title: GENERAL MOTORS WELFARE BENEFITS TRUST By: Name: Title: GENERAL MOTORS EMPLOYEES GLOBAL GROUP PENSION TRUST By: Name: Title: GLENEAGLES TRADING By: /s/ Ann E. Morris ---------------------------- Name: Ann E. Morris Title: Asst. Vice President GREAT POINT CLO 1999-1 LTD. By: /s/ Diane J. Exter ---------------------------- Name: Diane J. Exter Title: Executive Vice President HARBOURVIEW CDO II By: Name: Title: HIGHLAND LEGACY LIMITED By: /s/ Mark Okada CFA ------------------------ Name: Mark Okada CFA Title: Executive Vice President HIGHLAND OFFSHORE PARTNERS, L.P. By: /s/ Mark Okada CFA ---------------------------- Name: Mark Okada CFA Title: Executive Vice President The ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P. By: ING Capital Advisors LLC, as Investment Advisor By: /s/ Wade T. Winter, CFA ---------------------------- Name: Wade T. Winter, CFA Title: Vice President ING HIGH INCOME PRINCIPAL PRESERVATION FUND HOLDINGS, LDC. By: ING Capital Advisors LLC As Investment Advisor By: Name: Title: INDOSUEZ CAPITAL FUNDING IIA, LIMITED By: Indosuez Capital as Portfolio Advisor By: /s/ Lee M. Shaiman ---------------------------- Name: Lee M. Sahiman Title: First Vice President INDOSUEZ CAPITAL FUNDING IV, L.P. By: Indosuez Capital as Portfolio Advisor By: /s/ Lee M. Shaiman ---------------------------- Name: Lee M. Shaiman Title: First Vice President KZH CNC LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH Crescent-2 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH CRESCENT-3 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH CRESCENT By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH CYPRESSTREE-1 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH HIGHLAND-2 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH ING-1 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH ING-2 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH ING-3 LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH PAMCO LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH STERLING LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KZH WATERSLDE LLC By: /s/ Kimberly Rowe ---------------------------- Name: Kimberly Rowe Title: Authorized Agent KEYPORT LIFE INSURANCE COMPANY By: /s/ James R. Fellows ---------------------------- Name: James R. Fellows Title: Sr. Vice President & Portfolio Manager ML CBO IV (CAYMAN) LTD. By: /s/ Mark K. Okada ---------------------------- Name: Mark K. Okada Title: Executive Vice President ML CLO XV PILGRIM AMERICA (CAYMAN) LTD. By: Pilgrim Investments, Inc. as its investment manager By: /s/ Jason Groom ---------------------------- Name: Jason Groom Title: Vice President ML CLO XX PILGRIM AMERICA (CAYMAN) LTD. By: Pilgrim Investments, Inc. as its investment manager By: /s/ Jason Groom ---------------------------- Name: Jason Groom Title: Vice President ML INCOME STRATEGIES PORTFOLIO By: Merrill Lynch Asset Management, L.P., as Investment Advisor By: /s/ Gilles Marchand, CFA ---------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory ML SENIOR FLOATING RATE FUND II, INC. By: Merrill Lynch Asset Management, L.P., as Investment Advisor By: /s/ Gilles Marchand, CFA ---------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory MSDW PRIME INCOME TRUST By: Name: Title: MAGNETITE ASSET INVESTORS LLC By: Name: Title: MASS MUTUAL HIGH YIELD PARTNERS II LLC By: HYP Management, Inc. as Managing Member By: /s/ Mary Ann McCarthy ---------------------------- Name: Mary Ann McCarthy Title: Managing Director MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Steven J. Katz ---------------------------- Name: Steven J. Katz Title: Second Vice President and Associate General Counsel MERRILL LYNCH DEBT STRATEGIES PORTFOLIO By: Merrill Lynch Asset Management, L.P., as Investment Advisor By Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO By: Merrill Lynch Asset Management, L.P., as Investment Advisor By: /s/ Gilles Marchand, CFA Name: Gilles Marchand, CFA Title: Authorized Signatory MERRILL LYNCH SENIOR FLOATING RATE FUND By: Merrill Lynch Asset Management, L.P., as Investment Advisor By: /s/ Gilles Marchand, CFA ------------------------ Name: Gilles Marchand, CFA Title: Authorized Signatory MERRILL LYNCH PIERCE, FENNER & SMITH By: Merrill Lynch Asset Management, L.P., as Investment Advisor By: /s/ Neil Brisson ---------------- Name: Neil Brisson Title: Director MONUMENT CAPITAL LTD. as Assignee By: Alliance Capital Management LP as Investment Manager By: Alliance Capital Management Corporation as General Partner By: /s/ Kenneth G. Ostmann ----------------------- Name: Kenneth G. Ostmann Title: Vice President MORGAN STANLEY SENIOR FUNDING, INC. By: Name: Title: NATIONAL WESTMINSTER BANK PLC By: Netwest Capital Markets Limited, its Agent By: Greenwich Capital Markets, Inc. its Agent By: /s/ Harry Paschalidis ---------------------- Name: Harry Paschalidis Title: Assistant Vice President NEW YORK LIFE INSURANCE COMPANY By: Name: Title: NEW YORK LIFE INSURANCE & ANNUITY CORPORATION By: Name: Title: NORTH AMERICAN SENIOR FLOATING RATE FUND By: CypressTree Investment Management Company, Inc. as Portfolio Manager By: /s/ Jeffrey W. Heuer -------------------- Name: Jeffrey W. Heuer Title: Principal NORTHWOODS CAPITAL, LIMITED By: Angelo, Gordon & Co., L.P. as Collateral Manager By: /s/ Signature Illegible ^^ ---------------------------- Name: Title: NORTHWOODS CAPITAL II, LIMITED By: Angelo, Gordon & Co., L.P. as Collateral Manager By: /s/ Signature Illegible ^^ ---------------------------- Name: Title: NUVEEN SENIOR INCOME FUND By: /s/ Lisa M. Mincheski -------------------- Name: Lisa M. Mincheski Title: Managing Director OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P. its General Partner By: Oak Hill Securities MGP, Inc. its General Partner By: /s/ Scott D. Krase ----------------------- Name: Scott D. Krase Title: Vice President OAK HILL SECURITIES FUNDS II L.P. By : Oakhill Securities Gen Part II LP, its general partner By: Oak Hill Securities MGP, Inc. its General Partner By: /s/ Scott D. Krase ----------------------- Name: Scott D. Krase Title: Vice President OAK MOUNTAIN LIMITED By: Alliance Capital Management L.P. as Investment Manager By: Alliance Capital Management Corporation, as General Partner By: Name: Title: OASIS COLLATERALIZED HIGH INCOME PORTFOLIOS-1, LTD. By: /s/ Anne McCarthy ----------------- Name: Anne M. McCarthy Title: Authorized Signatory OCTAGON PARTNERS II, LLC By: Octagon Credit Investors, LLC as sub- investment manager By: /s/ Michael B. Nechamkin ------------------------ Name: Michael B. Nechamkin Title: Portfolio Manager OCTAGON PARTNERS III, LTD. By: /s/ Michael B. Nechamkin ------------------------ Name: Michael B. Nechamkin Title: Portfolio Manager PAM CAPITAL FUNDING, L.P. By: /s/ Mark K. Okada ----------------- Name: Mark K. Okada Title: Executive Vice President PACIFICA PARTNERS I, L.P. By: Name: Title: PAMCO CAYMAN LTD. By: /s/ Mark K. Okada ----------------- Name: Mark K. Okada Title: Executive Vice President PERSEUS CDO I, LIMITED By: /s/ Steven J. Katz ------------------ Name: Steven J. Katz Title: Second Vice President and Associate General Counsel PILGRIM AMERICA HIGH INCOME INVESTMENTS, INC. By: /s/ Jason Groom --------------- Name: Jason Groom Title: Vice President PILGRIM CLO 1999-i LTD. By: Pilgrim Investments, Inc., as its Investment Manager By: /s/ Jason Groom --------------- Name: Jason Groom Title: Vice President State Street Bank & Trust Company as Trustee For General Motors Welfare Benefits Trust By: /s/ Michael Connors ------------------- Name: Michael Connors Assistant Vice President BLACK DIAMOND CLO 2000-1 By: /s/ David Dyer -------------- Name: David Dyer Title: Director SRF 2000, LLC By: /s/ Ann E. Morris ----------------- Name: Ann E. Morris Title: Assistant Vice President PILGRIM PRIME RATE TRUST By: Pilgrim Investments Inc. as its Investment Manager By: /s/ Jason Groom --------------- Name: Jason Groom Title: Vice President PROSPECT STREET INTERNATIONAL FUND PCC LIMITED- PROSPECT INTERNATIONAL DEBT STRATEGY FUND By: Prospect Street Strategic Debt Management Co. Inc. as Investment Advisor By: /s/ Preston I. Carnes, Jr. -------------------------- Name: Preston I. Carnes, Jr Title: Vice President SEQUILS-PILGRIM I, LTD. By: Pilgrim Investments Inc. as its investment manager By: /s/ Jason Groom --------------- Name: Jason Groom Title: Vice President SEQUILS I, LTD. By: TCW Advisors Inc. as its Collateral Manager By: /s/ Jonathan Berg ----------------- Name: Jonathan Berg Title: Assistant Vice President UNITED OF OMAHA LIFE INSURANCE COMPANY By: TCW Asset Management Company, Its Investment Advisor By: /s/ Jonathan Berg ----------------- Name: Jonathan Berg Title: Assistant Vice President VAN KAMPEN PRIME RATE INCOME TRUST By: Van Kampen Investment Advisory Corp. By: /s/ Darvin D. Pierce --------------------- Name: Darvin D. Pierce Title: Vice President VAN KAMPEN SENIOR INCOME TRUST By: /s/ Darvin D. Pierce --------------------- Name: Darvin D. Pierce Title: Vice President STANFIELD/RMF TRANSATLANTIC CDO, LTD. By: Stanfield Capital Partners LLC As Its Collateral Manager By: /s/ Christopher A. Bondy --------------------------- Name: Christopher Bondy Title: Partner STANFIELD CLO, LTD. By: Stanfield Capital Partners LLC As Its Collateral Manager By: /s/ Christopher A. Bondy ------------------------ Name: Christopher Bondy Title: Partner STEIN ROE & FARNHAM CLO I LTD. By: Stein Roe & Farnham Incorporated, as Portfolio Manager By: /s/ James R. Fellows -------------------- Name: James R. Fellows Title: Sr. Vice President & Portfolio Manager STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY By: /s/ James R. Fellows -------------------- Name: James R. Fellows Title: Senior Vice President Stein Roe & Farnham Incorporated, As Advisor to the Stein Roe Floating Limited Liability Company STRATA FUNDING LTD. By: INVESCO Senior Secured Management, Inc., As Sub-Management Agent By: /s/ Anne M. McCarthy -------------------- Name: Anne M. McCarthy Title: Authorized Signatory SYNDICATED LOAN FUNDING TRUST By: /s/ Michele Swanson ------------------- Name: Michele Swanson Title: Authorized Signatory TRITON CBO III, LIMITED By: /s/ Anne M. McCarthy -------------------- Name: Anne M. McCarthy Title: Authorized Signatory TYLER TRADING, INC. By: /s/ David W. Nabors ------------------- Name: David W. Nabors Title: SEQUILS-ING I (HBDGM), LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Wade T. Winter, CFA ----------------------- Name: Wade T. Winter, CFA Title: Vice President SRF TRADING, INC. By: /s/ Ann E. Morris ----------------- Name: Ann E. Morris Title: Asst. Vice President SRV-HIGHLAND, INC. By: /s/ Ann E. Morris ----------------- Name: Ann E. Morris Title: Asst. Vice President SANKATY HIGH YIELD ASSET PARTNERS By: /s/ Diane J. Exter ------------------ Name: Diane J. Exter Title: Executive Vice President SIAM COMMERCIAL BANK PUBLIC COMPANY LIMITED, NEW YORK AGENCY By: Name: Title: SIMSBURY CLO, LIMITED By: Massachusetts Mutual Life Insurance Company as Collateral Manager By: /s/ Steven J. Katz ------------------ Name: Steven J. Katz Title: Second Vice President and Associate General Counsel SOCIETE GENERALE, SOUTHWEST AGENCY By: /s/ Carina T. Huynh ------------------- Name: Carina T. Huynh Title: Vice President SPS HIGH YIELD LOAN TRADING By: Name: Title: CYPRESSTREE INVESTMENT MANGAGEMENT COMPANY, INC. As: Attorney in-Fact and on behalf of First Allmerica Financial Life Insurance Company as Portfolio Manager By: /s/ Jeffrey W. Heuer ------------------- Name: Jeffrey W. Heuer Title: Principal FIRST DOMINION FUNDING I By: Name: Title: FIRST DOMINION FUNDING II By: Name: Title: FIRST DOMINION FUNDING III By: Name: Title: BLACK DIAMOND CLO 2000-1 By: Black Diamond Capital Management, LLC, as Collateral Manager By: /s/ David Dyer ---------------------------------- Name: David Dyer Title: Director BAVARIA TRR CORPORATION By: /s/ Lori Rezza ---------------------------------- Name: LORI REZZA Title: VICE PRESIDENT BEAR STEARNS INVESTMENT PRODUCTS, INC. By /s/ [SIGNATURE ILLEGIBLE]^^ ----------------------------- Title: Managing Director MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By: /s/ Peter Gewirtz ------------------------- Name: Peter Gewirtz Title: Vice President REFERENCE: AMENDMENT AND RESTATEMENT dated as of September 25, 2000 to the Credit Agreement dated as of June 30, 1999 among WYNDHAM INTERNATIONAL, INC., a Delaware corporation and the leaders from time to time party thereto. SRF 2000, LLC By: /s/ Ann E. Morris ------------------------------- Name: ANN E. MORRIS Title: ASST. VICE PRESIDENT SANKATY HIGH YIELD ASSET PARTNERS II By: /s/ Diane J. Exter ------------------------------- Name: Diane J. Exter Title: Executive Vice President SENIOR DEBT PORTFOLIO By: Boston Management and Research as Investment Advisor By: _______________________________ Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC. By: /s/ Gilles Marchand ------------------------------- Name: GILLES MARCHAND, CFA Title: AUTHORIZED SIGNATORY SENIOR LOAN FUND By: _______________________________ Name: Title: EX-10.2 3 0003.txt LETTER AGREEMENT EXHIBIT 10.2 July 19, 2000 Mr. Leslie V. Bentley c/o Wyndham International, Inc. 1950 Stemmons Parkway, Suite 6001 Dallas, Texas 75207 Dear Les: This letter agreement (the "Agreement") confirms the agreement that we have reached regarding the termination of your employment with Wyndham International, Inc. ("WII") and its respective related and affiliated entities (collectively, the "Companies"). The purpose of this Agreement is to establish a mutually agreeable arrangement for ending your employment. This Agreement does not constitute and should not be construed as an admission by the Companies that they have in any way violated any legal obligation that they owe to you or to any other person or as an admission by you that you have in any way violated any legal obligation that you owe to the Companies or to any other person. To the contrary, the parties' willingness to enter into this Agreement demonstrates that they are continuing to deal with each other fairly and in good faith. With those understandings and in exchange for the promises set forth below, you and the Companies agree as follows: Termination ----------- You hereby acknowledge that your employment with WII will terminate effective as of July 31, 2000 (the "Date of Termination"). Any offices or affiliations that you hold with any of the Companies will also terminate as of the Date of Termination. You and WII acknowledge that your termination from employment is a termination for Good Reason as defined by Subparagraph 6(e) of the April 19, 1999 (Amended and Restated) Executive Employment Agreement between you and WII (the "Employment Agreement"). Subject to earlier termination in accordance with Paragraph 6 of the Employment Agreement, (other than Termination Without Cause pursuant to paragraph 6(d) of the Employment Agreement at anytime between the date of the Agreement and the Date of Termination, which rights WII herewith agrees not to exercise), WII will continue your salary and benefits through the Date of Termination pursuant to Paragraph 7(d) of the Employment Agreement. In lieu of the pro rata bonus as specified by paragraph 7(d) of the Employment Agreement, WII shall award you a bonus in respect of 2000 in the amount of One Hundred Sixty-Nine Thousand Six Hundred Thirty-Five Dollars and Twenty-Eight Cents ($169,635.28) and shall apply the amount of such bonus remaining net of applicable withholding taxes to satisfy the $100,000 you owe WII on a prior loan. 2. Compensation and Benefits. ------------------------- (a) Effect of Termination on Equity Grants. You understand and -------------------------------------- acknowledge that the Option (as defined in the Employment Agreement) granted to you on April 19, 1999 will continue to vest for 24 months following the Date of Termination and remain exercisable thereafter in accordance with and subject to the terms and conditions of Paragraph 3(c) of the Wyndham International, Inc. Non-Qualified Stock Option Agreement, dated as of April 19, 1999, by and between you and WII; all other remaining unvested portions of the Option then will lapse. Your rights to any previously vested stock options and other stock-based awards granted to you by the Companies shall survive the Date of Termination in accordance and upon the terms provided in the employee stock option or incentive plan or any agreement or other instrument attendant thereto pursuant to which such options or awards were granted. (b) Severance. In recognition of your service to WII, and in full --------- satisfaction of any and all claims you may have against the Companies, as more fully set forth in Paragraph 3 below, the Companies will pay you One Million Forty Nine Thousand Three Hundred and Thirty Four Dollars ($1,049,334.00) (the "Severance Payment") subject to the conditions set forth in Paragraph 7(d)(i) of the Employment Agreement (as modified by this Agreement), including but not limited, your continuing strict adherence to the restrictions set forth in Paragraphs 4 and 5 of the Employment Agreement as incorporated and modified herein below. You acknowledge and agree that this Severance Payment fully and completely satisfies the Companies' obligation to pay your severance under Paragraph (7)(d)(i) of the Employment Agreement and the Companies agree that you have satisfied the requirements of the last sentence of Paragraph 7(d)(i) of the Employment Agreement in respect of timely delivery of Notice of Termination. The Severance Payment shall be reduced by applicable withholdings and shall be payable in equal bi-weekly installments over a period of twenty-four (24) months commencing on the regular payroll date next following the Date of Termination (the "Severance Period"). In the event that you commence any employment, whether as an employee or through self-employment, during the Severance Period, the Companies shall be entitled to set-off against the remaining installments of the Severance Payment fifty percent (50%) of the amount of any cash compensation received by you during the severance period from the new employment. You shall provide the Companies notice of any new employment and cash compensation received during the Severance Period after the Date of Termination. (c) Health/Dental/Vision Benefits. You and your eligible dependents ----------------------------- will be eligible to receive continuation coverage under WII's group health, dental and vision plans to the extent authorized by and consistent with 29 U.S.C. (S) 1161 et seq. (commonly known as "COBRA") and applicable group health, dental and vision plan terms. To the extent you and your eligible dependents elect to continue coverage in one or more plans under COBRA, the Company will pay the costs of such coverage(s) on your and their behalf until the earlier of (A) twelve (12) months after the Date of Termination Date or (B) the date you become eligible for similar coverage provided by another employer. WII will permit you to continue coverage in one or more plans under COBRA at your own cost until the earlier of (A) eighteen (18) months after the Termination Date or (B) the date you become eligible for similar coverage provided by another employer. (d) Tax Preparation. The Companies shall provide reasonable assistance --------------- in connection with preparation of tax returns, among other support, for a period of five (5) years beginning on the Date of Termination, in accordance with Paragraph 7(f) of the Employment Agreement. (e) Outplacement. WII shall pay for the reasonable costs (not to exceed ------------ $27,000) of executive outplacement services selected by you for use in connection with obtaining other employment for up to six (6) months from the Date of Termination or through the date you secure new employment, whichever occurs first. (f) Promissory Notes. The No Personal Liability Nonrecourse Promissory ---------------- Note, dated April 19, 1999, made by you and attached to the Employment Agreement as Exhibit B and the two (2) Recourse Notes made by you in favor of WII (in original principal amounts of $430,000 and $350,000, respectively) (collectively, the "Notes"), are hereby amended to provide that so long as you continue to adhere strictly to your continuing obligations under Paragraphs 4 and 4 of the Employment Agreement, as incorporated and modified herein below, WII agrees that the principal balance and accrued interest on the Notes shall not become due and payable until July 31, 2002. In the event you breach any of our continuing obligations under Paragraphs 4 and 5 of the Employment Agreement, as incorporated and modified hereinbelow, the principal balance and accrued interest on the Notes shall become due and payable immediately, in accordance with their respective terms. (g) Gross Up Payment. You remain eligible for a Gross Up Payment, if ---------------- necessary, as provided for in Paragraph 8(b) of the Employment Agreement. (h) Other Benefits. Except as expressly provided above, your -------------- eligibility to participate in any of the Companies' respective employee benefit plans and programs ceases on or after the Date of Termination in accordance with the terms and conditions of each of those benefit plans and programs and your rights to benefits under any of the employee benefit plans and programs, if any, are governed by the terms and conditions of each of those employee benefit plans and programs. 3. Release of Claims. ----------------- (a) Your Release. Other than claims arising under the Agreement or as otherwise specifically provided herein, you voluntarily and irrevocably release and discharge the Companies, their related or affiliated entities, and their respective predecessors, successors, and assigns, (including but not limited to Patriot American Hospitality, Inc.), and the current and former officers, directors, shareholders, employees, and agents of each of the foregoing (any and all of which are referred to as "Releasees") generally from all charges, complaints, claims, promises, agreements, causes of action, damages, and debts that relate in any manner to your employment with or services for the Companies, known or unknown ("Claims"), which you have, claim to have, ever had, or ever claimed to have had against any of the Releasees through the date on which you execute this Agreement. This general release of Claims includes, without implication of limitation, all Claims for or related to: the Employment Agreement; the compensation provided to you by the Companies; your termination as described in Paragraph 1; wrongful or constructive discharge; breach of contract; breach of any implied covenant of good faith and fair dealing; tortious interference with advantageous relations; intentional or negligent misrepresentation, fraud or deceit; infliction of emotional distress, and unlawful retaliation or discrimination under the common law or any federal, state or local statute or law (including, without implication of limitation, the Employee Retirement Income Security Act, Title VII of the Civil Rights Act of 1964, the American with Disabilities Act, the Age Discrimination in Employment Act, Tex. Lab. Code (S)(S)21.001, et seq., Tex. Hum. Res. Code (S)(S)121.001, et seq.). You also waive any Claim for reinstatement, severance, incentive or retention pay (except as expressly provided in this Agreement), attorney's fees, or costs, relating to the above waived claims. Other than claims arising under this Agreement or as otherwise specifically noted herein, you agree that you will not hereafter pursue any Claim against any Releasee by filing a lawsuit in any local, state or federal court for or on account of anything which has occurred up to the present time as a result of your employment, and you shall not seek reinstatement with, or damages of any nature, severance, incentive or retention pay, attorney's fees, or costs from the Companies or any of the other Releasees. (b) The Companies' Release. Other than claims arising under this Agreement under the continuing obligations of the Employment Agreement, the Notes or as otherwise specifically provided herein or thereto, the Companies voluntarily and irrevocably release and discharge you, your heirs, personal representatives, and assigns (any and all of which are referred to as "Releasees") generally from all charges, complaints, claims, promises, agreements, causes of action, damages, and debts that relate in any manner to your employment with or services for the Companies, known or unknown which relate to good faith acts or omissions by you during the course of your employment undertaken or not undertaken in the reasonable belief that such acts or omissions were in the best interest of the Companies which the Companies have, claim to have, ever had, or ever claimed to have had against any of the Releasees through the date on which you execute this Agreement ("Companies' Claims"). This general release of Companies' Claims includes, without implication of limitation, all Companies' Claims for or related to: the Employment Agreement; breach of contract; breach of any implied covenant of good faith and fair dealing; tortious interference with advantageous relations; intentional or negligent misrepresentation, fraud or deceit. The Companies; further represent that they do not have any knowledge at this time of any acts or omissions by you that would give rise to claims not otherwise released in the previous paragraph. Other than claims arising under this Agreement under the continuing obligations of the Employment Agreement, the Notes, or as otherwise specifically provided herein or thereto, the Companies agree that they will not hereafter pursue any Companies' Claim against any Releasee by filing a lawsuit in any local, state or federal court for or on account of anything which has occurred up to the present time as a result of your employment. (c) Liquor Licenses. The Companies will remove your name from any liquor licenses (or similar licenses) as soon as reasonably practicable following the Date of Termination and herewith agrees to hold you harmless, indemnify and defend you from any liability, loss or expense including, without limitation, the payment of defense costs including attorneys; fees (which will be advanced as they are incurred) as a result of your name being named on any such liquor license (or like license). 4. Employment Agreement -------------------- This Agreement supersedes all provisions of the Employment Agreement other than Paragraphs 4 (Unauthorized Disclosure), 5 (Covenant Not to Compete), 6 (Termination), 7 (Compensation Upon Termination or During Disability), 8(b) (Gross Up Payment), 13 (Arbitration; Other Disputes) and 15 (Litigation and Regulatory Cooperation) thereof, which provisions as specifically modified by this Agreement are incorporated herein by reference and shall continue to bind you in accordance with their respective terms as so modified. The Companies further agree that any indemnification obligations owed to you by the Companies or your coverage under any insurance insuring you as to actions taken by you as an officer, director, or employee of the Companies are not voided or superseded by this Agreement. WII recognizes that you own, directly or indirectly, an ownership interest in the following hotel properties: Wyndham Bristol, Wyndham Garden Hotel Orange County, and Wyndham Old San Juan. WII agrees that Paragraph 4 (Confidential Information) and Paragraph 5 (Covenant Not To Compete) of the Employment Agreement will not apply to your ownership interest in such properties or any activities you hereafter undertake of the type, scope and nature you have historically undertaken with regard to such properties, including, without limitation, action that may be required in the future as a result of any alleged defaults against WII with regard to such properties. 5. Return of Property ------------------ All documents, records, material and all copies of any of the foregoing pertaining to Confidential Information (as defined in Paragraph 4(a) of the Employment Agreement), and all software, equipment, and other supplies, whether or not pertaining to Confidential Information, that have come into your possession or been produced by you in connection with your employment ("Property") have been and remain the sole property of the Companies. You shall return all Property to the Companies on or before the Date of Termination. In no event should this provision be construed to require you to return to the Company any document or other materials concerning your remuneration and benefits during your employment with the Companies. 6. Nondisparagement ---------------- You agree not to take any action or make any statement, written or oral, which disparages or criticizes the Companies or their respective officers, directors, agents, or management and business practices, or which disrupts or impairs the Companies' normal operations. The Companies, on behalf of themselves, agree (a) not to take any action or make any statement, written or oral, which disparages or criticizes you or your management and business practices, and (b) to instruct their respective directors and officers not to take any action or make any statement, written or oral, which disparages or criticizes you or your management and business practices. The provisions of this Paragraph 6 shall not apply to any truthful statement required to be made by you or the Companies, as the case may be, in any legal proceeding or governmental or regulatory investigation. 7. Additional Representations, Warranties and Covenants. As a material ---------------------------------------------------- inducement to the Companies to enter into this Agreement, you represent, warrant and covenant as follows: (a) You have not assigned to any third party any Claim released by this Agreement. (b) You have not heretofore filed with any agency or court any Claim released by this Agreement. 8. Further Assurances ------------------ Upon the terms and subject to the conditions herein provided, each of the parties hereto agrees to use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, subject, in the case of the Companies, to the provisions of any credit agreement or financing agreement or other contract or agreement by which any of the Companies may be bound. 9. Exclusivity ----------- This Agreement sets forth all the consideration to which you are entitled from the Companies by reason of your termination and your duties for the Companies while employed, and you agree that you shall not be entitled to or eligible for any payments or benefits under any other Company severance, bonus, retention or incentive policy, arrangement or plan. 10. Tax Matters ----------- All payments and other consideration provided to you pursuant to this Agreement shall be subject to any deductions, withholding or tax reporting that the Companies reasonably determine to be required for tax purposes. 11. Arbitration of Disputes ----------------------- Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the fullest extent permitted by law, be settled by arbitration in accordance with Paragraph 13 of the Employment Agreement. This Paragraph 11 shall be specifically enforceable. Notwithstanding the foregoing, this Paragraph 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that -------- any other relief shall be pursued through an arbitration proceeding pursuant to this Paragraph 11. 12. Consent to Jurisdiction ----------------------- To the extent that any court action is permitted consistent with or to enforce Paragraph 11 of this Agreement, the parties hereby consent to the jurisdiction of the state and federal courts in or for Dallas, Texas. Accordingly, with respect to any such court action, you and the Companies (a) submit to the personal jurisdiction of such courts; (b) consent to service of process; and (c) waive any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process. 13. Notices, Acknowledgments and Other Terms ---------------------------------------- (a) You are advised to consult with an attorney before signing this Agreement. (b) You acknowledge and agree that the Companies' promises in this Agreement constitute consideration in addition to anything of value to which you are otherwise entitled by reason of the termination of your employment. (c) By signing this Agreement, you acknowledge that you are doing so voluntarily and knowingly, fully intending to be bound by this Agreement. You also acknowledge that you are not relying on any representations by us or any other representative of the Companies concerning the meaning of any aspect of this Agreement. You understand that this Agreement shall not in any way be construed as an admission by the Companies of any liability or any act of wrongdoing whatsoever by the Companies against you and that the Companies specifically disclaim any liability or wrongdoing whatsoever against you on the part of themselves and their respective officers, directors, shareholders, employees and agents. You understand that if you do not enter into this Agreement and bring any claims against the Companies, the Companies will dispute the merits of those claims and contend that they acted lawfully and for good business reasons with respect to you. (d) You acknowledge that you have been given the opportunity, if you so desired, to consider this Agreement for twenty-one (21) days before executing it. If not signed by you and returned to the General Counsel of WII so that it is received by close of business on the twenty-second (22nd) day after your receipt of this Agreement, this Agreement will not be valid. In addition, if you breach any of the conditions of this Agreement within the twenty-one (21) day period, the offer of this Agreement will be withdrawn and your execution of this Agreement will not be valid. In the event that you execute and return this Agreement within twenty-one (21) days or less of the date of its delivery to you, you acknowledge that such decision was entirely voluntary and that you had the opportunity to consider this Agreement for the entire twenty-one (21) day period. The Companies acknowledge that for a period of seven (7) days from the date of the execution of this Agreement, you shall retain the right to revoke this Agreement by written notice delivered to the General Counsel of WII before the end of such period, and that this Agreement shall not become effective or enforceable until the expiration of such revocation period (the "Effective Date"). (e) In the event of any dispute, this Agreement will be construed as a whole, will be interpreted in accordance with its fair meaning, and will not be construed strictly for or against either you or the Companies. (f) The law of the State of Texas will govern any dispute about this Agreement, including any interpretation or enforcement of this Agreement. (g) In the event that any provision or portion of a provision of this Agreement shall be determined to be illegal, invalid or unenforceable, the remainder of this Agreement shall be enforced to the fullest extent possible and the illegal, invalid or unenforceable provision or portion of a provision will be amended by a court of competent jurisdiction to reflect the parties' intent if possible. If such amendment is not possible, the illegal, invalid or unenforceable provision or portion of a provision will be severed from the remainder of this Agreement and the remainder of this Agreement shall be enforced to the fullest extent possible as if such illegal, invalid or unenforceable provision or portion of a provision was not included. (h) This Agreement may be modified only by a written agreement signed by you and authorized representatives of the Companies. (i) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to any related subject matter, except as provided in Paragraph 4 hereof and except for the Non Recourse Promissory Note between the parties dated April 19, 1999, which remains in effect in accordance with its terms. (j) This Agreement shall be binding upon each of the parties and upon their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of each party and to their heirs, administrators, representatives, executors, successors, and assigns. If you agree to these terms, please sign and date below and return this Agreement to the General Counsel of WII within 22 days. Sincerely, WYNDHAM INTERNATIONAL, INC. By: /s/ Fred J. Kleisner -------------------------- Fred J. Kleisner President and Chief Executive Officer Accepted and agreed to: /s/ Leslie V. Bentely - --------------------- ______________________________ Leslie V. Bentley Date EX-27.1 4 0004.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 OF WYNDHAM INTERNATIONAL, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS 9-MOS DEC-31-2000 DEC-31-1999 JAN-01-2000 JAN-01-1999 SEP-30-2000 SEP-30-1999 102,178 144,333 0 0 221,974 186,321 0 0 20,965 23,304 465,831 477,635 5,676,076 5,891,672 (655,859) (478,494) 6,565,550 7,003,490 427,523 491,824 0 0 0 0 109 103 1,674 1,672 1,967,210 2,135,887 6,565,550 7,003,490 0 0 1,891,087 1,901,509 0 0 0 0 1,837,041 1,889,981 0 0 280,623 266,678 (221,090) (262,150) 72,649 (651,053) 0 0 0 0 0 (9,838) 0 0 (154,259) (921,223) (1.38) (6.06) (1.38) (6.19)
-----END PRIVACY-ENHANCED MESSAGE-----