<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 8-K/A
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 31, 1996
----------------------------------
HOMEGATE HOSPITALITY, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-21509 75-0511313
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
111 CONGRESS AVENUE
SUITE 2600 78701
AUSTIN, TEXAS (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (512) 477-6400
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<PAGE>
Item 7 of the Form 8-K of Homegate Hospitality, Inc. ("Homegate") filed on
January 15, 1997 is hereby amended to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
HOMEGATE HOSPITALITY, INC.
PRO FORMA INCOME STATEMENT
FOR THE PERIOD FROM INCEPTION (FEBRUARY 9, 1996)
THROUGH DECEMBER 31, 1996
<TABLE>
<CAPTION> INNHOME
INNHOME INNHOME AUSTIN, LTD.
AUSTIN, LTD. AUSTIN, LTD. INCEPTION PRO FORMA
YEAR ENDED 1/1/96- (2/9/96) PRO FORMA INCOME
12/31/96 2/8/96(1) 12/31/96 HOMEGATE ADJUSTMENTS STATEMENT
----------- ----------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Room revenue................... $1,843,525 $160,573 $1,682,952 $2,233,391 $ 0 $3,916,343
Other revenue.................. 0 0 0 6,770 0 6,770
Interest income................ 2,282 0 2,282 450,536 (2,282)(2) 450,536
---------- ------- ---------- ---------- ----------- ----------
Total revenue..................... 1,845,807 160,573 1,685,234 2,690,697 (2,282) 4,373,649
---------- ------- ---------- ---------- ----------- ----------
EXPENSES:
Property operating expenses.... 829,789 73,742 756,047 1,675,936 15,796 (3) 2,447,779
Corporate operating expenses... 57,588 3,209 54,379 951,261 (54,379)(4) 951,261
Depreciation and amortization.. 243,302 23,362 219,940 344,459 23,227 (5) 587,626
Interest....................... 366,405 40,194 326,211 585,448 (326,211)(6) 585,448
---------- ------- ---------- ---------- ----------- ----------
Total expenses.................... 1,497,084 140,507 1,356,577 3,557,104 (341,567) 4,572,114
---------- ------- ---------- ---------- ----------- ----------
Income before gains (losses)...... 348,723 20,066 328,657 (866,407) 339,285 (198,465)
Gain (loss) on sale of assets..... 1,509,881 (0) 1,509,881 0 (1,509,881)(7) 0
---------- ------- ---------- ---------- ----------- ----------
NET INCOME (LOSS)................. $1,858,604 $20,066 $1,838,538 $ (866,407) $(1,170,596) $ (198,465)
========== ======= ========== ========== =========== ==========
Pro forma income (loss) per
share........................... (.02)
Pro forma weighted average number
of shares outstanding(8)........ 10,725,000
</TABLE>
(1) The results of operations for the period from January 1, 1996 through
February 8, 1996 for InnHome Austin, LTD. are not included in the Pro Forma
Income Statement amounts since ESLP, predecessor to Homegate Hospitality,
Inc., was not formed until February 9, 1996.
(2) Eliminate interest income on the InnHome Austin, LTD. partnership cash
accounts which were not acquired by Homegate Hospitality, Inc.
(3) Reflect management fee expense based on Homegate's Management Agreement
with Wyndham Hotel Corporation.
(4) Eliminate partnership costs incurred by InnHome Austin, LTD. which would
not be incurred by Homegate Hospitality, Inc.
(5) Reflect additional depreciation expense relating to purchase price
allocation of InnHome-Towne Lake due to Homegate's basis in the asset being
greater than the basis of the property for InnHome Austin, LTD.
(6) Eliminate interest expense incurred by InnHome Austin, LTD. on the mortgage
on the property. Homegate Hospitality, Inc. does not have a mortgage on
this property.
(7) Eliminate gain on sale of the property recognized by InnHome Austin, LTD.
(8) Excludes 511,250 shares that are issuable pursuant to options that have
been granted under Homegate's 1996 Long-Term Incentive Plan.
Page 2 of 12
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INDEPENDENT AUDITOR'S REPORT
To the Partners
INNHOME AUSTIN, LTD.
Dallas, Texas
We have audited the accompanying balance sheets of INNHOME AUSTIN, LTD. (a Texas
Limited Partnership) as of December 31, 1996 and 1995, and the related
statements of income, changes in partners' capital and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of INNHOME AUSTIN, LTD. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
In December, 1996, substantially all of the partnership's operating assets were
sold.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
January 29, 1997
Page 3 of 12
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INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash........................................ $1,810,670 $ 121,425
Accounts receivable
Credit card............................. 796 6,864
City ledger............................. 54,395 26,073
Guest ledger............................ 5,192
Miscellaneous........................... 1,762
Inventory, at the lower of cost (first-in,
first-out) or market....................... 4,717
Prepaid expenses............................ 4,403 4,032
---------- ----------
Total current assets.................... 1,872,026 168,303
---------- ----------
PROPERTY AND EQUIPMENT, at cost net of
accumulated depreciation (Notes 2 and 3)...... 5,517,032
----------
OTHER ASSETS
Organization costs, net of amortization
of $8,424 in 1996 and $5,764 in 1995....... 4,877 7,537
Loan fees, net of amortization of
$17,883 in 1995............................ 39,356
Deposits.................................... 20,280 18,500
---------- ----------
25,157 65,393
---------- ----------
TOTAL ASSETS................................... $1,897,183 $5,750,728
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Current maturities of long-term
debt (Note 3).............................. $ $ 125,220
Accounts payable - trade.................... 79,735 30,696
Hotel tax payable........................... 18,430 31,612
Accrued expenses and other
payables................................... 10,071 79,402
Accrued partner distributions............... 1,587,249
Due to related parties (Note 5)............. 21 138,592
---------- ----------
Total current liabilities............... 1,695,506 405,522
LONG-TERM DEBT (Note 3)........................ 3,643,475
PARTNERS' CAPITAL.............................. 201,677 1,701,731
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL........ $1,897,183 $5,750,728
========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
Page 4 of 12
<PAGE>
INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Operating revenue.......................... $1,843,525 $1,356,843
---------- ----------
Operating expenses
Personnel expense....................... 293,147 205,539
Contract services....................... 57,060 48,069
Utilities............................... 143,299 108,377
Cleaning and room expense............... 17,425 13,527
Maintenance and repairs................. 36,921 12,820
Administrative expense.................. 44,346 27,572
Marketing expense....................... 51,946 44,075
Insurance expense....................... 33,266 20,566
Real estate taxes....................... 60,203 38,304
Management fees......................... 92,176 67,842
---------- ----------
Total operating expenses............ 829,789 586,691
---------- ----------
Gross profit........................ 1,013,736 770,152
---------- ----------
Other general and administrative expenses.. 57,588 54,759
Depreciation and amortization.............. 243,302 140,208
---------- ----------
300,890 194,967
---------- ----------
Income from operations.............. 712,846 575,185
---------- ----------
Other income (expense)
Interest income......................... 2,282 149
Interest expense........................ (366,405) (275,273)
Gain (loss) on sale of assets........... 1,509,881 (1,348)
---------- ----------
1,145,758 (276,472)
---------- ----------
Net income.......................... $1,858,604 $ 298,713
========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
Page 5 of 12
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INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
GREAGOR C.
INNHOME NORMANDY CRESCENT PETERSON CHRISTOPHER ERIC
AMERICA, INC. INC. TRUST #1 TRUST PETERSON PETERSON TOTAL
------------- --------- --------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994........... $ 12,031 $ 357,297 $ 238,198 $ 595,492 $ $ $ 1,203,018
Capital contributions............. 150,000 100,000 250,000 500,000
Capital distributions............. (45,000) (60,000) (105,000) (45,000) (45,000) (300,000)
Transfer of partnership interest.. (255,000) (255,000) 255,000 255,000
Net income.................... 44,807 59,742 104,550 44,807 44,807 298,713
--------- --------- --------- --------- --------- -----------
Balance, December 31, 1995........... 12,031 252,104 337,940 590,042 254,807 254,807 1,701,731
Capital distributions............. (506,736) (427,788) (570,385) (998,173) (427,788) (427,788) (3,358,658)
Net income........................ 575,573 193,805 256,607 450,415 191,102 191,102 1,858,604
--------- --------- --------- --------- --------- --------- -----------
Balance, December 31, 1996 $ 80,868 $ 18,121 $ 24,162 $ 42,284 $ 18,121 $ 18,121 $ 201,677
========= ========= ========= ========= ========= ========= ===========
</TABLE>
The Notes to Financial Statements are integral part of this statement.
Page 6 of 12
<PAGE>
INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 1,858,604 $ 298,713
Adjustment to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization................... 243,302 140,208
(Gain) loss on sale of assets................... (1,509,881) 1,348
(Increase) decrease in assets:
Accounts receivable............................. (18,825) (38,129)
Inventory....................................... 4,717 (4,717)
Prepaid expense................................. (371) (4,032)
Deposits........................................ (1,780) (500)
Increase (decrease) in liabilities:
Accounts payable - trade........................ 49,039 (176,168)
Hotel tax payable............................... (13,182) 31,612
Accrued expenses and other payables............. (69,331) 4,574
----------- -----------
Net cash provided by operating
activities.................................... 542,292 252,909
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................ (18,192) (1,513,707)
Proceeds from sale of assets........................ 6,843,819 1,200
----------- -----------
Net cash provided by (used in) investing
activities.................................... 6,825,627 (1,512,507)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on long-term debt.......................... 2,035,864
Principal paid on long-term debt.................... (3,768,695) (31,305)
Loan fees........................................... (24,239)
Net decrease in related party payables.............. (138,571) (307,223)
Distributions to partners........................... (1,771,408) (300,000)
----------- -----------
Net cash provided by (used in) financing
activities.................................... (5,678,674) 1,373,097
----------- -----------
Net increase in cash................................... 1,689,245 113,499
Cash at beginning of year.............................. 121,425 7,926
----------- -----------
Cash at end of year.................................... $ 1,810,670 $ 121,425
=========== ===========
Cash paid for interest................................. $ 366,405 $ 316,837
=========== ===========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
In 1995, the partnership recorded $500,000 of capital contributions by
reducing notes payable to partners.
The Notes to Financial Statements are an integral part of this statement.
Page 7 of 12
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INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The accounting policy relative to the carrying value of inventory and
property and equipment is indicated in the captions on the balance sheets.
Other significant accounting policies are as follows:
BUSINESS ACTIVITY AND CONCENTRATION OF CREDIT RISK
InnHome Austin, Ltd. (the "Partnership") is a Texas limited partnership
formed on October 27, 1993 whose purpose is to construct, own, and operate an
extended stay rental facility located in Austin, Texas. The construction of the
facility was completed and operations began in March of 1995. In December 1996,
the facility was sold. Prior to 1995, the Partnership was considered a
development stage enterprise. The term of the Partnership will expire on
December 31, 2050, unless otherwise terminated pursuant to the partnership
agreement.
RECEIVABLES
In the opinion of management, no material receivables are doubtful of
collection. Therefore, no allowance for doubtful accounts is provided.
PROPERTY AND EQUIPMENT
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which range from three to forty years. Gains and
losses on sales and dispositions of fixed assets are included in income in the
year realized. Maintenance and repair expenditures which do not enhance the
value or increase the productive capacity of the assets are changed to expense
as incurred.
ORGANIZATION COSTS
Certain costs, aggregating $13,301, relating to the organization of the
Partnership have been capitalized. Amortization is computed using the straight-
line method over five years. Amortization expense for the years ended December
31, 1996 and 1995 was $2,660.
LOAN FEES
Loan origination fees of $57,239 have been capitalized and subsequently
amortized over the life of the loan using the straight-line method.
Amortization expense for the years ended December 31, 1996 and 1995 was $39,356
and $11,883, respectively.
INCOME TAXES
The Partnership is not a taxpaying entity for Federal income tax purposes,
and therefore no income tax expense has been recorded in the financial
statements. The partners include their share of the Partnership income or
losses in their respective tax returns.
STATEMENT OF CASH FLOWS
For purposes of presenting the statement of cash flows, the Partnership
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Page 8 of 12
<PAGE>
INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. PROPERTY AND EQUIPMENT
----------------------
Property and equipment at December 31, 1996 and 1995 is summarized as
follows:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Land and improvements....................... $ $1,143,144
Building and improvements................... 3,577,384
Furniture, fixtures and equipment........... 909,188
Computer equipment and software............. 12,981
----------
5,642,697
Less accumulated depreciation............... 125,665
----------
$ $5,517,032
=========== ==========
</TABLE>
NOTE 3. LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Note payable to bank in monthly installments
of $10,435 plus interest at prime plus 12%,
due June 1998, secured by the extended
stay rental facility........................ $ $3,768,695
Less current maturities................ 125,220
----------
Long-term portion...................... $ $3,643,475
========== ==========
</TABLE>
NOTE 4. PARTNERSHIP AGREEMENT
---------------------
Significant terms of the Partnership agreement, as amended May 19, 1995,
are as follows:
ALLOCATION OF PROFITS
The profits of the Partnership shall be allocated to the partners accounts
as follows:
1. To the partners in proportion to the losses allocated to each partner
as described below until the sum of the profits for the current and all
previous years is equal to the cumulative losses allocated as described
below.
Page 9 of 12
<PAGE>
INNHOME AUSTIN, LTD.
(A TEXAS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
2. 100% to the limited partners in proportion to their interest in the
Partnership until the limited partners have been allocated profits for
the current and previous years equal to the amounts credited to the
limited partners preferred return accounts (as defined) for the current
and previous years.
3. 40% to the general partner and 60% to the limited partners in
proportion to the limited partners interests in the Partnership.
ALLOCATION OF LOSSES
The losses of the Partnership shall be allocated to the partners accounts
as follows:
1. To the partners in an amount necessary to cause their positive capital
account balances in excess of the sum of their contribution accounts
and preferred return accounts to be in the ratio of 40% to the general
partner and 60% to the limited partners, with the limited partners'
capital accounts to be in proportion to their interest in the
Partnership, and thereafter in such ratio until their positive capital
accounts equal their respective preferred return accounts.
2. To the partners in amounts necessary to cause their positive capital
accounts to be in the ratio of their respective preferred return
accounts, and thereafter in that ratio until their positive capital
account balances have been reduced to zero.
3. 40% to the general partner and 60% to the limited partners in
proportion to their interests in the Partnership.
A partner shall not be allocated losses as described above to the extent
such allocation would cause such partner to have an adjusted capital account
deficit at the end of any year.
NOTE 5. RELATED PARTY TRANSACTIONS
--------------------------
At December 31, 1996 and 1995, the Partnership had amounts due to
affiliated companies to $21 and $138,592, respectively. Management fees for
1996 and 1995 of $92,176 and $67,842, respectively, were paid to a limited
partner.
Page 10 of 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOMEGATE HOSPITALITY, INC.
(Registrant)
By: /s/ ROBERT A. FAITH
----------------------------------
Robert A. Faith
President and Chief Executive Officer
Date: March 14, 1997
Page 11 of 12
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Index to Exhibits
-----------------
Exhibit No. Page
- ---------- ----
*2.0 Purchase and Sale Agreement
**23.0 Consent of Weaver and Tidwell, L.L.P.
*Previously filed.
**Filed herewith.
Page 12 of 12
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EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-20453) pertaining to the Homegate Hospitality, Inc. 1996 Long-Term
Incentive Plan of our report dated January 29, 1997, with respect to the
financial statements of InnHome Austin, Ltd. included in the Current Report on
Form 8-K/A of Homegate Hospitality, Inc. dated December 31, 1996.
/s/ WEAVER AND TIDWELL, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
March 13, 1997
