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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
JULY 26, 1996
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LA QUINTA INNS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-7790 74-1724417
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or organization) Number) Identification Number)
WESTON CENTRE
112 E. PECAN STREET
P.O. BOX 2636
SAN ANTONIO, TEXAS 78299-2636
(Address of principal executive offices)
(210) 302-6000
(Registrant's telephone number)
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ITEM 5. OTHER EVENTS
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, La Quinta Inns, Inc. (the "Company") is hereby
filing cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those projected in forward
looking statements of the Company made by, or on behalf of, the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 99.1 Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995.
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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.
LA QUINTA INNS, INC.
By: /s/ WILLIAM C. HAMMETT, JR.
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William C. Hammett, Jr.
Senior Vice President --
Accounting & Administration
Date: July 26, 1996
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE
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99.1 Cautionary Statement For Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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EXHIBIT 99.1
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
La Quinta Inns, Inc. (the "Company") desires to take advantage of the new
"safe harbor" provisions of the Private Securities Litigation Reform Act of 1995
(the "Act") and is filing this Form 8-K in order to do so. Many of the
following important factors discussed below have been discussed in the Company's
prior filings with the Securities and Exchange Commission.
The Company wishes to caution readers that the following important factors,
among others, could in the future cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company.
COMPETITION
The profitability of inns operated by the Company is subject to general
economic conditions, competition, the desirability of particular locations, the
relationship between supply of and demand for hotel rooms and other factors.
The Company generally operates inns in markets that contain numerous
competitors, and the continued success of its inns will be dependent, in large
part, upon those facilities' ability to compete in such areas as reasonableness
of room rates, quality of accommodations, service level and convenience of
locations. There can be no assurance that demographic, geographic or other
changes in markets will not adversely affect the convenience or desirability of
the locations of the Company's inns. Furthermore, there can be no assurance
that, in the markets in which the Company's inns operate, competing hotels will
not provide greater competition for guests than currently exists, and that new
hotels will not enter such markets.
SEASONALITY
The lodging industry is seasonal in nature. Generally, the Company's inn
revenues are greater in the second and third quarters than in the first and
fourth quarters. This seasonality can be expected to cause quarterly
fluctuations in the revenue, profit margins and net earnings of the Company.
SUPPLY AND DEMAND
In prior years, construction of lodging facilities in the United States
resulted in an excess supply of available rooms, and the oversupply had an
adverse effect on occupancy levels and room rates in the industry. Although the
outlook for the industry has improved in recent years, the lodging industry may
be adversely affected in the future by (i) a future oversupply of available
rooms, (ii) national and regional economic conditions, (iii) changes in travel
patterns, (iv) taxes and government regulations which influence or determine
wages, prices, interest rates, construction procedures and costs, and (v) the
availability of credit.
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EMPLOYMENT AND OTHER GOVERNMENTAL REGULATION
The Company's business is subject to extensive federal, state and local
regulatory requirements, including building and zoning requirements, all of
which can prevent, delay, make uneconomic or significantly increase the cost of
developing additional lodging facilities. In addition, the Company is subject
to laws governing its relationship with employees, including minimum wage
requirements, overtime pay, working conditions, work permit requirements and
discrimination claims. An increase in the minimum wage rate, employee benefit
costs or other costs associated with employees, could adversely affect the
Company. Under the Americans with Disabilities Act of 1990 (the "ADA"), all
public accommodations are required to meet certain federal requirements related
to access and use by disabled persons. While the Company believes that its inns
are substantially in compliance with these requirements, a determination that
the Company is not in compliance with the ADA could result in the imposition of
fines or an award of damages to private litigants. These and other initiatives
could adversely affect the Company as well as the lodging industry in general.
ENVIRONMENTAL REGULATION
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. Certain environmental laws and common law
principles could be used to impose liability for release of asbestos-containing
materials ("ACMs") into the air, and third parties may seek recovery from owners
or operators of real property for personal injury associated with exposure to
released ACMs. Environmental laws also may impose restrictions on the manner in
which property may be used or businesses may be operated, and these restrictions
may require substantial expenditures. In connection with the ownership or
operation of its inns, the Company may be potentially liable for any such costs.
No assurance can be given that a material environmental claim will not be
asserted against the Company. The cost of defending against claims of liability
or of remediating a contaminated property could have a material adverse effect
on the results of operations of the Company.
EMPLOYEES
The Company's future success will depend, in part, on its continuing
ability to attract, retain and motivate highly qualified personnel, who are in
great demand.
LEGAL PROCEEDINGS
The Company is, and is likely in the future to be, subject to certain types
of litigation, including negligence and other tort claims. The costs and
effects of such legal and administrative cases and proceedings (whether civil or
criminal), settlements and investigations are indeterminate. There can be no
assurance that such costs and effects would not be material to the Company's
operations.
LODGING INDUSTRY OPERATING RISKS
The Company is subject to all operating risks common to the lodging
industry. These risks include, among other things, (i) competition for guests
from other hotels, a number of which may
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have greater marketing and financial resources than the Company, (ii) increases
in operating costs due to inflation and other factors, which increases may not
have been offset in recent years, and may not be offset in the future by
increased room rates, (iii) dependence on business and commercial travelers and
tourism, which business may fluctuate and be seasonal, (iv) increases in energy
costs and other expenses of travel, which may deter travelers, and (v) adverse
effects of general and local economic conditions. The Company is also subject
to the risk that in connection with the acquisition of inns, it may not be
possible to transfer certain operating licenses or to obtain new licenses in a
timely manner in the event such licenses cannot be transferred. The failure to
obtain these licenses could adversely affect the Company's operations.
CONSTRUCTION
The Company may from time to time experience shortages of materials or
qualified tradespeople or volatile increases in the cost of certain construction
materials, resulting in longer than normal construction and remodeling periods,
loss of revenue and increased costs. The Company relies heavily on local
contractors, who may be inadequately capitalized or understaffed. The inability
or failure of one or more local contractors to perform may result in
construction or remodeling delays, increased cost and loss of revenue.
CAPITAL REQUIREMENTS AND AVAILABILITY OF FINANCING
The Company's business is capital intensive, and it will have significant
capital requirements in the future. The Company's leverage could affect its
ability to obtain financing in the future or to undertake refinancings on terms
and subject to conditions deemed acceptable by the Company. In the event that
the Company's cash flow and working capital are not sufficient to fund the
Company's expenditures or to service its indebtedness, it would be required to
raise additional funds through the sale of additional equity securities, the
refinancing of all or part of its indebtedness, the incurrence of additional
permitted indebtedness or the sale of assets. There can be no assurance that
any of these sources of funds would be available in amounts sufficient for the
Company to meet its obligations. Moreover, even if the Company were able to
meet its obligations, its leveraged capital structure could significantly limit
its ability to finance its expansion program and other capital expenditures,
to compete effectively or to operate successfully under adverse economic
conditions. Additionally, financial and operating restrictions contained in the
Company's existing indebtedness may limit the Company's ability to secure
additional financing, and may prevent the Company from engaging in transactions
that might otherwise be beneficial to the Company and to holders of the
Company's common stock. The Company's ability to satisfy its obligations will
also be dependent upon its future performance, which is subject to prevailing
economic conditions and financial, business and other factors beyond the
Company's control.
GENERAL REAL ESTATE INVESTMENT RISKS
The Company's ownership of real property, including inns, is substantial.
The Company's investments are subject to varying degrees of risk generally
incident to the ownership of real property. Real estate values and income from
the Company's inns may be adversely affected by changes in national economic
conditions, changes in local market conditions due to changes in general or
local economic conditions and neighborhood characteristics, changes in interest
rates and in the availability, cost and terms of mortgage funds, the impact of
present or future environmental legislation and compliance with environmental
laws, the ongoing need for capital improvements, changes in real estate tax
rates and other operating expenses, adverse changes in governmental rules
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and fiscal policies, civil unrest, acts of God, including earthquakes and other
natural disasters (which may result in uninsured losses), acts of war, adverse
changes in zoning laws and other factors which are beyond the control of the
Company.
VALUE AND ILLIQUIDITY OF REAL ESTATE
Real estate investments are relatively illiquid. The ability of the
Company to vary its portfolio in response to changes in economic and other
conditions is limited. If the Company must sell an investment, there can be no
assurance that the Company will be able to dispose of it in the time period it
desires or that the sales price of any investment will recoup or exceed the
amount of the Company's investment.
PROPERTY TAXES
Each of the Company's inns is subject to real property taxes. The real
property taxes on the Company's inns may increase or decrease as property tax
rates change and as the properties are assessed or reassessed by taxing
authorities. If property taxes increase, the Company's operations could be
adversely affected.
RENOVATION PROGRAM
Hotels in general, including the Company's inns, have an ongoing need for
renovations and other capital improvements, particularly in older structures,
including periodic replacement or refurbishment of furniture, fixtures and
equipment. The Company is in the process of renovating and upgrading guest
rooms through its Gold Medal-TM- rooms program. This program is designed to
strengthen the Company's ability to gain market share and pricing advantage
relative to its competitors through decor and service enhancements. There can
be no assurance that the program will be successful in generating revenues
commensurate with the significant costs required for such enhancements.
Additionally, implementation of the program results in a significant disruption
of business as 20-30 rooms are taken out of available supply at an inn on any
given night during the construction period. Construction activities at each inn
are essentially completed in ten to twelve weeks. This disruption of business
may continue for an indeterminate period of time after completion of the program
at an inn.
RISKS OF EXPANSION STRATEGY
The Company intends to pursue a strategy of growth through both the
construction of new lodging facilities and the opportunistic acquisition of
existing lodging facilities. There can be no assurance that the Company will
find suitable sites for construction or suitable properties for acquisition or
that these sites and properties will not be acquired by competitors of the
Company. The Company incurs certain costs in connection with the acquisition
of new properties and may be required to provide significant capital
expenditures for conversions and upgrades when acquiring a property operating as
other than a La Quinta-Registered Trademark--brand property. There can be no
assurance that any of the properties the Company may construct or acquire will
be profitable following such construction or acquisition. The construction or
acquisition of a property that is not profitable, or the acquisition of a
property that results in significant unanticipated conversion costs, could
adversely affect the Company's profitability. The Company may in the future
require additional financing in order to continue to make acquisitions. There
is no assurance that such additional financing, if any, will be available to the
Company on acceptable terms.
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INVESTMENT IN SINGLE INDUSTRY
The Company is subject to risks inherent in investments in a single
industry. The effects on the Company's revenues resulting from a downturn in
the lodging industry would be more pronounced than if the Company had
diversified its investments outside of the hotel industry.
POSSIBLE VOLATILITY OF COMMON STOCK PRICE
The trading price of the Company's common stock may be influenced by the
performance of, and investor expectations for, the Company, the trading volume
of the Company's common stock and general economic and market conditions.
Accordingly, there can be no assurance as to the price at which the Company's
common stock will trade in the future.
Additional information on factors which could affect the Company's
financial results may be included in subsequent reports filed with the
Securities and Exchange Commission.
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