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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 MARCH 31, 1997.
OR
/ / TRANSITION PERIOD REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _____________
COMMISSION FILE NUMBER: 1-7790
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LA QUINTA INNS, INC.
(Exact name of registrant as specified in its charter)
TEXAS #74-1724417
(State of Incorporation) (I.R.S. Employer Identification No.)
WESTON CENTRE
112 E. PECAN STREET
P.O. BOX 2636
SAN ANTONIO, TEXAS 78299-2636
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:(210) 302-6000
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, and (2) has been subject to such filing requirements
for the past 90 days. YES /X/ NO
----- -----
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Number of shares of Common Stock, $.10 par value outstanding at March 31, 1997:
77,615,694
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LA QUINTA INNS, INC.
CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
March 31, 1997 December 31, 1996
-------------- -----------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 885 $ 1,508
Receivables:
Trade and other (net of allowance of
$124 and $108)................................. 14,700 12,302
Income taxes.................................... - 3,835
Supplies and prepayments.......................... 11,118 10,811
Deferred income taxes............................. 9,228 9,277
---------- ----------
Total current assets.......................... 35,931 37,733
---------- ----------
Notes receivable, excluding current installments
(net of allowance of $1,069 and $1,793)............ 3,025 3,700
Property and equipment, net......................... 1,237,548 1,148,190
Deferred charges and other assets, at cost less
applicable amortization............................ 11,015 10,177
---------- ----------
Total assets.................................. $1,287,519 $1,199,800
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt............ $ 11,083 $ 33,299
Accounts payable.................................. 49,292 55,088
Accrued expenses.................................. 42,285 53,584
---------- ----------
Total current liabilities....................... 102,660 141,971
---------- ----------
Long-term debt, excluding current installments...... 768,372 659,369
Deferred income taxes, pension and other............ 32,474 29,591
Partners' capital................................... 2,548 3,293
Shareholders' equity:
Common stock ($.10 par value per share;
100,000 shares authorized;
84,320 and 84,274 shares issued)................. 8,432 8,427
Additional paid-in capital........................ 241,054 240,453
Retained earnings................................. 203,900 188,610
Treasury stock, at cost (6,704 and 6,704 shares).. (71,921) (71,914)
---------- ----------
Total shareholders' equity...................... 381,465 365,576
---------- ----------
Total liabilities and shareholders' equity...... $1,287,519 $1,199,800
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to condensed financial statements.
2
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ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended
March 31
-------------------
1997 1996
-------- --------
Revenues:
Inn................................................. $111,382 $100,834
Restaurant rental and other......................... 1,971 1,924
-------- --------
Total revenues.................................... 113,353 102,758
-------- --------
Operating costs and expenses:
Direct.............................................. 57,346 52,891
Corporate........................................... 4,282 4,650
Depreciation, amortization and asset retirements.... 13,693 10,725
Provision for premature retirement of assets........ - 6,635
-------- --------
Total operating costs and expenses................ 75,321 74,901
-------- --------
Operating income.................................. 38,032 27,857
-------- --------
Other (income) expense:
Interest, net....................................... 11,373 10,165
Partners' equity in earnings........................ 233 443
-------- --------
Earnings before income taxes...................... 26,426 17,249
Income taxes.......................................... 9,778 6,382
-------- --------
Net earnings...................................... $ 16,648 $ 10,867
-------- --------
-------- --------
Net earnings per common and common equivalent
share............................................ $ .21 $ .13
-------- --------
-------- --------
Weighted average number of common and common
equivalent shares outstanding........................ 80,297 80,659
-------- --------
-------- --------
See accompanying notes to condensed financial statements.
3
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
March 31
-------------------
1997 1996
---- ----
Cash flows from operating activities:
Net earnings.......................................... $ 16,648 $ 10,867
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Non-cash items:
Depreciation, amortization and asset retirements.. 13,693 10,725
Provision for premature retirement of assets...... - 6,635
Partners' equity in earnings...................... 233 443
Changes in operating assets and liabilities:
Receivables....................................... (2,513) (2,727)
Income taxes...................................... 9,003 7,260
Supplies and prepayments.......................... (597) (592)
Accounts payable and accrued expenses............. (5,152) (848)
Deferred charges and other assets................. (332) 406
Deferred credits and other........................ 2,883 (643)
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Net cash provided by operating activities....... 33,866 31,526
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Cash flows from investing activities:
Construction, purchase and conversion of inns......... (57,642) (20,519)
Other capital expenditures............................ (54,946) (41,593)
--------- ---------
Net cash used by investing activities............ (112,588) (62,112)
--------- ---------
Cash flows from financing activities:
Proceeds from line of credit and long-term
borrowings........................................... 516,347 279,746
Principal payments on line of credit and
long-term borrowings................................. (430,473) (234,370)
Capital distributions to partners..................... (214) (323)
Dividends to shareholders............................. (1,358) (1,288)
Purchase of treasury stock............................ (6,582) (14,447)
Net proceeds from stock transactions.................. 379 1,036
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Net cash provided by financing activities......... 78,099 30,354
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Decrease in cash and cash equivalents.................. (623) (232)
Cash and cash equivalents at beginning of period....... 1,508 2,590
--------- ---------
Cash and cash equivalents at end of period............. $ 885 $ 2,358
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information:
Interest paid.......................................... $ 14,323 $ 10,397
Income tax paid........................................ 221 729
Income tax refunds..................................... 2,567 5
Supplemental schedule of non-cash investing
and financing activities:
Note issued in purchase of partner's equity interest... $ 2,500 $ -
Tax benefit from stock options exercised............... 220 932
See accompanying notes to condensed financial statements.
4
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ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, which are necessary for a fair presentation of
financial position and results of operations have been made. The condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the December 31, 1996 Annual Report
on Form 10-K.
(2) Property and Equipment
At March 31, 1997 and December 31, 1996, property and equipment
consisted of the following:
<TABLE>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Buildings....................................... $1,043,471 $ 988,711
Furniture, fixtures and equipment............... 168,792 148,691
Land and leasehold improvements................. 192,857 183,207
Construction in progress........................ 131,279 120,286
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Total property and equipment................. 1,536,399 1,440,895
Less accumulated depreciation and amortization.. 298,851 292,705
---------- ----------
Net property and equipment $1,237,548 $1,148,190
---------- ----------
---------- ----------
</TABLE>
(3) Earnings per Common and Common Equivalent Share
Fully diluted earnings per share is not materially different from
primary earnings per share.
(4) Accounts Payable and Accrued Expenses
At March 31, 1997 and December 31, 1996, accounts payable and accrued
expenses consisted of the following:
March 31, 1997 December 31, 1996
-------------- -----------------
Accounts payable:
Construction............................$18,297 $30,920
Trade................................... 15,735 16,125
Other................................... 10,361 8,043
Income taxes............................ 4,899 -
------- -------
$49,292 $55,088
------- -------
------- -------
Accrued expenses:
Payroll and employee benefits...........$24,501 $25,570
Interest................................ 7,560 8,241
Property taxes.......................... 6,984 10,607
Other................................... 3,240 2,584
Treasury stock purchase................. - 6,582
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$42,285 $53,584
------- -------
------- -------
5
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(5) Long-Term Debt
On February 7, 1997, the Company completed negotiations to amend and
restate its existing credit facilities. The amended credit facility provides
the Company with a $325,000,000 Unsecured Line of Credit with a consortium of
banks which will mature in February 2002. Borrowings under the $325,000,000
Unsecured Line of Credit bear interest at the prime rate or LIBOR plus an
applicable margin, which is currently 33.75 basis points, as defined in the
related credit agreement. The applicable margin is determined quarterly
based upon predetermined levels of indebtedness to cash flows or ratings
received by specified credit rating agencies as defined in the related credit
agreement. The $325,000,000 Unsecured Line of Credit requires a facility fee
of 18.75 basis points on the average amount of the commitment.
On February 24, 1997, the Company issued $50,000,000 in 7.27%
Medium-Term Notes due 2007, with an effective interest rate of 7.33%. The
proceeds of the note issuance were used to repay indebtedness under the
Company's Unsecured Line of Credit.
(6) Provision for Premature Retirement of Assets
The Company launched its Gold Medal rooms program during the third
quarter of 1995. During this program, the Company replaced certain
furniture and fixtures before the end of their normal useful life and
therefore, made an adjustment to reflect shorter remaining lives. As a
result, the Company recorded a non-cash provision for premature retirement of
assets of approximately $6.6 million as a separate line item entitled
provision for premature retirement of assets on the Statement of Operations
for the first quarter of 1996.
(7) Contingencies
The Company is party to various lawsuits and claims generally incidental
to its business. The ultimate disposition of these lawsuits and claims are
not expected to have a material adverse effect on the Company's financial
position or results of operations.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion and analysis addresses the results of
operations for the three month periods ended March 31, 1997 (the "1997 Three
Months") and March 31, 1996 (the "1996 Three Months").
The Company's financial statements include the accounts of the Company's
wholly-owned subsidiaries and unincorporated partnerships and joint ventures
in which the Company has at least a 50% interest, and over which it exercises
substantial legal, financial and operational control.
The Company's growth program is based primarily on the construction of
new Inn & Suites hotels. During the first quarter of 1997, the Company
opened two new Inn & Suites hotels. The Company anticipates having a total
of 23 new Inn & Suites hotels open by the end of June 1997, including the 11
which were opened during 1996, and a total of 36 open by December 1997. At
March 31, 1997, the Company owned and operated 237 inns and 13 Inn & Suites
hotels with a combined total of over 32,000 rooms.
During 1995, the Company launched its Gold Medal rooms program designed
to strengthen the Company's ability to gain additional market share and
pricing advantage relative to its competitors. The program improved the
quality, functionality and value of guest rooms by enhancing the decor
package, including fresh, new colors, rich wood furniture, contemporary
bathrooms, built-in closets, oversized desks, 25 inch televisions and new
draperies and bedspreads. Service enhancements included movies-on-demand,
interactive video games from Nintendo, dataport telephones for computer
connections and greatly expanded free television channel choices. The
program required 20-30 rooms at a time to be taken out of available supply at
an inn during the typical 10-12 week construction period. The Company did not
adjust its available rooms or occupancy percentage for rooms unavailable due
to construction as a result of this program. The Company will have
completed the program during the second quarter of 1997.
During January 1997, the Company acquired the limited partner's interest
in one of its combined unincorporated partnerships, which owned one inn. As
a result, the Company has two remaining unincorporated partnerships and joint
ventures, each owning one inn.
6
<PAGE>
THE 1997 THREE MONTHS COMPARED TO THE 1996 THREE MONTHS
TOTAL REVENUES increased to $113,353,000 in the 1997 Three Months from
$102,758,000 in the 1996 Three Months, an increase of $10,595,000, or 10.3%.
Of the total revenues reported in the 1997 Three Months, 98.3% were revenues
from inns and 1.7% were revenues from restaurant rentals and other revenues.
INN REVENUES are derived from room rentals and other sources such as
charges to guests for long-distance telephone service, fax machine use,
vending and movie commissions, banquet revenues and laundry services. Inn
revenues improved to $111,382,000 in the 1997 Three Months from $100,834,000
in the 1996 Three Months, an increase of $10,548,000 or 10.5%. The
improvement in inn revenues reflects an increase in the average daily room
rate ("ADR") along with the revenues associated with the opening of new Inn &
Suites hotels. ADR increased to $56.65 in the 1997 Three Months from $53.41
in the 1996 Three Months, an increase of $3.24, or 6.1%. Occupancy
percentage decreased to 65.4% in the 1997 Three Months from 66.0% in the 1996
Three Months. The decrease in occupancy percentage primarily resulted from a
significant number of rooms that were unavailable to rent because of
construction related to the Gold Medal rooms program. Revenue per available
room ("REVPAR," which is the product of occupancy percentage and ADR)
increased to $37.06 in the 1997 Three Months from $35.22 in the 1996 Three
Months.
RESTAURANT RENTAL AND OTHER REVENUES primarily include rental payments
from restaurant buildings owned by La Quinta and leased to and operated by
third parties. Restaurant rental and other revenues increased to $1,971,000
in the 1997 Three Months from $1,924,000 in the 1996 Three Months, an
increase of $47,000.
DIRECT EXPENSES include costs directly associated with the operation of
inns. In the 1997 Three Months approximately 39.0% of direct expenses were
represented by salaries, wages and related costs. Other major categories of
direct expenses include utilities, property taxes, repairs and maintenance
and room supplies. Direct expenses increased to $57,346,000 ($30.45 per
occupied room) in the 1997 Three Months from $52,891,000 ($29.14 per occupied
room) in the 1996 Three Months, an increase of $4,455,000, or 8.4%. The
increase in direct expenses period over period is primarily attributable to
the growth in number of inns. As a percentage of total revenues, direct
expenses decreased to 50.6% in the 1997 Three Months from 51.5% in the 1996
Three Months.
CORPORATE EXPENSES include the costs of general management, office rent,
training and field supervision of inn managers and other marketing and
administrative expenses. Corporate expenses decreased to $4,282,000 ($1.49
per available room) in the 1997 Three Months from $4,650,000 ($1.69 per
available room) in the 1996 Three Months.
DEPRECIATION, AMORTIZATION AND ASSET RETIREMENTS increased to
$13,693,000 in the 1997 Three Months from $10,725,000 in the 1996 Three
Months, an increase of $2,968,000, or 27.7%. This increase is primarily
attributable to the opening of new Inn & Suites hotels and increased
depreciation for inns which have completed the Gold Medal rooms program.
A PROVISION FOR PREMATURE RETIREMENT OF ASSETS totaling $6,635,000 was
recorded during the 1996 Three Months. This non-cash charge is directly
attributable to the Company's Gold Medal rooms program. During the program,
the Company replaced certain furniture and fixtures before the end of their
normal useful lives and therefore made adjustments to reflect shorter
remaining lives.
As a result of the above, OPERATING INCOME increased to $38,032,000 in
the 1997 Three Months from $27,857,000 in the 1996 Three Months, an increase
of $10,175,000, or 36.5%.
INTEREST, NET increased to $11,373,000 in the 1997 Three Months compared
to $10,165,000 in the 1996 Three Months. The increase in interest, net is
primarily attributable to an increase in borrowings on long-term debt and is
partially offset by an increase in capitalized interest. Interest, net
reflects capitalized interest of $2,120,000 in the 1997 Three Months compared
to $815,000 in the 1996 Three Months. The increase in capitalized interest
period over period is primarily due to the construction of new Inn & Suites
hotels.
PARTNERS' EQUITY IN EARNINGS reflects the interest of partners in the
earnings of the combined unincorporated partnerships and joint ventures which
are owned at least 50% and controlled by the Company. Partners' equity in
earnings decreased to $233,000 in the 1997 Three Months from $443,000 in the
1996 Three Months, a decrease of $210,000. This decrease reflects the
Company's acquisition of the limited partners' interests in five of its
combined unincorporated partnerships and joint ventures since March 1996.
7
<PAGE>
INCOME TAXES for the 1997 and 1996 Three Months were calculated using an
effective income tax rate of 37.0%.
For the reasons discussed above, NET EARNINGS increased to $16,648,000
in the 1997 Three Months from $10,867,000 in the 1996 Three Months, an
increase of $5,781,000, or 53.2%.
ANALYSIS OF CASH FLOWS
On February 7, 1997, the Company completed negotiations to amend and
restate its existing credit facilities. The amended credit facility provides
the Company with a $325,000,000 Unsecured Line of Credit with a consortium of
banks which will mature in February 2002. At March 31, 1997, the Company had
$67,161,000 available on its Unsecured Line of Credit, net of $7,489,000 of
letters of credit collateralizing its insurance programs and certain
mortgages. The Unsecured Line of Credit bears interest at the prime rate or
LIBOR, adjusted for an applicable margin, as defined in the related credit
agreement. The applicable margin is determined quarterly based upon
predetermined levels of cash flow to indebtedness or credit ratings received
from specified credit rating agencies, as defined in the related credit
agreement. At March 31, 1997, borrowings under the Unsecured Line of Credit
bear interest at LIBOR plus 33.75 basis points on $245,000,000 of outstanding
borrowings and the prime rate less 50 basis points on $5,350,000 of
outstanding borrowings. The Unsecured Line of Credit requires a facility fee
of 18.75 basis points on the average amount of the commitment.
On February 24, 1997, the Company issued $50,000,000 in 7.27%
Medium-Term Notes due 2007, with an effective interest rate of 7.33%. The
proceeds of the note issuance were used to repay indebtedness under the
Company's Unsecured Line of Credit.
At March 31, 1997, the Company had $885,000 of cash and cash equivalents
compared with $2,358,000 at March 31, 1996.
Net cash provided by operating activities increased to $33,866,000 at
March 31, 1997 from $31,526,000 at March 31, 1996, an increase of $2,340,000,
or 7.4%. The increase is primarily the result of improved REVPAR which
increased 5.2% in the 1997 Three Months compared to the 1996 Three Months.
Net cash used by investing activities increased by $50,476,000 from
March 31,1996 to March 31, 1997, as a result of capital expenditures for the
Company's Gold Medal rooms program and expenditures for the Company's new Inn
& Suites hotel construction projects.
Net cash provided by financing activities increased by $47,745,000 to
$78,099,000 at March 31, 1997. Net borrowings increased to $85,874,000 for
the quarter ended March 31, 1997 compared to $45,376,000 for the quarter
ended March 31, 1996. The net increase is primarily the result of borrowings
used for capital expenditures related to the Gold Medal rooms program and new
Inn & Suites hotel construction. Net cash provided by financing activities
also includes $6,582,000 in the 1997 Three Months and $14,447,000, in the
1996 Three Months of cash used for the purchase of treasury stock.
EBITDA increased to $51,725,000 during the first quarter of 1997, an
increase of 14.4% over the first quarter of 1996. EBITDA is defined as
earnings before net interest expense, income taxes, depreciation,
amortization and asset retirements, provision for premature retirement of
assets and partners' equity in earnings. The Company believes this
definition of EBITDA provides a meaningful measure of its ability to service
debt.
In the third quarter of 1995, the Company began its Gold Medal rooms
program. The capital requirements of the program are being funded from
internally generated cash flows and amounts available on the Company's
Unsecured Line of Credit and are not anticipated to have an adverse effect on
the Company's ability to fund its operations. At March 31, 1997, the Company
had made commitments of approximately $22.3 million for properties currently
undergoing construction related to this program.
Additional capital expenditures planned by La Quinta for the remainder
of 1997 focus on the construction of new Inn & Suites hotels. The estimated
cost to complete these projects for which commitments have been made is
approximately $108.4 million at March 31, 1997.
Funds on hand, internally generated future cash flows and funds
available on the Company's Unsecured Line of Credit are expected to be
sufficient to meet capital requirements, as well as operating expenses and
debt service requirements through at least the first quarter of 1998. From
time to time, the Company will continue to evaluate the necessity of other
financing alternatives.
8
<PAGE>
ACCOUNTING PRONOUNCEMENT
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (Statement 128), "Earnings per
Share," which is effective for periods ending after December 15, 1997,
including interim periods. Statement 128 establishes new standards for
computing and presenting earnings per share and applies to all entities with
publicly held common stock or potential common stock. The Company will
implement the statement in the required period. Adoption of the statement is
not expected to have a material effect on the Company's reported earnings per
share.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Quarterly Report on Form 10-Q contains information that is forward-looking,
such as the timing and cost of the inn construction and Gold Medal rooms
construction programs, anticipated capital requirements and the results of
legal proceedings. Such forward-looking information involves risks and
uncertainties that could significantly affect expected results. These risks
and uncertainties include, but are not limited to, uncertainties relating to
economic conditions, the pricing and availability of construction materials,
and changes in the competitive environment in which the Company operates.
Further discussions of these and additional factors which may cause expected
results to differ from actual results are included in the Company's Current
Annual Report on Form 10-K filed with the Securities and Exchange Commission
dated February 28, 1997.
9
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INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
La Quinta Inns, Inc.:
We have reviewed the condensed balance sheet of La Quinta Inns, Inc. as of March
31, 1997, and the related condensed statements of operations and cash flows for
the three-month periods ended March 31, 1997 and 1996. These condensed
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of La Quinta Inns, Inc. as of December 31, 1996 and
the related statements of operations, shareholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated January 31,
1997, except for note 16, which is as of February 26, 1997 we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of December
31, 1996, is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
KPMG Peat Marwick LLP
San Antonio, Texas
May 13, 1997
10
<PAGE>
Part II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Actions for negligence or other tort claims occur routinely as an ordinary
incident to the Company's business. Several lawsuits are pending against the
Company which have arisen in the ordinary course of the business, but none of
these proceedings involves a claim for damages (in excess of applicable excess
umbrella insurance coverages) involving more than 10% of current assets of the
Company. The Company does not anticipate any amounts which it may be required
to pay as a result of an adverse determination of such legal proceedings,
individually or in the aggregate, or any other relief granted by reason thereof,
will have a material adverse effect on the Company's financial position or
results of operations.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
A list of all exhibits filed or included as part of this Quarterly
Report on Form 10-Q is as follows:
Exhibits Descriptions
12 Computation of Ratio of Earnings to Fixed Charges
filed herewith.
15 Letter from KPMG Peat Marwick LLP dated May 14, 1997
filed herewith.
27 Financial Data Schedule filed herewith.
(b) REPORTS ON FORM 8-K
No Current Reports on Form 8-K have been filed during the period for
which this Quarterly Report on Form 10-Q is filed.
11
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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 thereunto duly authorized.
LA QUINTA INNS, INC.
(Registrant)
May 14, 1997 By: /S/ William C. Hammett, Jr.
--------------------------------
William C. Hammett, Jr.
Senior Vice President
Chief Financial Officer
May 14, 1997 By: /S/ Irene C. Primera
--------------------------------
Irene C. Primera
Vice President - Controller
12
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Exhibit 12
LA QUINTA INNS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands, except ratios)
<TABLE>
Three Months
Ended March 31 Years Ended December 31
--------------------- -------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income
taxes, extraordinary items and
cumulative effect of
accounting change (1) ............ $26,426 $17,249 $ 96,379 $ 82,994 $ 61,991 $31,836 $(7,270)
Partners' equity in earnings....... 233 443 1,499 10,227 11,406 12,965 15,081
Partners' equity in earnings
of combined unincorporated
ventures that do not have
fixed charges..................... - (318) (770) (1,854) (1,577) (1,652) (1,504)
Fixed charges...................... 13,925 11,405 48,983 42,797 40,814 32,477 34,270
Interest capitalized............... (2,120) (815) (5,429) (1,313) (889) - (50)
Amortization of capitalized
interest.......................... 240 210 893 803 772 799 799
------- ------- -------- -------- -------- ------- -------
Earnings as adjusted............ $38,704 $28,174 $141,555 $133,654 $112,517 $76,425 $41,326
------- ------- -------- -------- -------- ------- -------
------- ------- -------- -------- -------- ------- -------
Fixed charges:
Interest on long-term debt
(before capitalized interest).. $13,642 $11,135 $ 47,897 $ 41,734 $ 39,749 $31,366 $33,137
Portion of rental expense
allocated to interest.......... 283 270 1,086 1,063 1,065 1,111 1,133
------- ------- -------- -------- -------- ------- -------
Total fixed charges.......... $13,925 $11,405 $ 48,983 $ 42,797 $ 40,814 $32,477 $34,270
------- ------- -------- -------- -------- ------- -------
------- ------- -------- -------- -------- ------- -------
Ratio of earnings to fixed
charges........................... 2.8x 2.5x 2.9x 3.1x 2.8x 2.4x 1.2x
------- ------- -------- -------- -------- ------- -------
------- ------- -------- -------- -------- ------- -------
</TABLE>
(1) The Three Months Ended March 31, 1996 and Years Ended December 31, 1996 and
1995, include a non-cash provision for premature retirement of assets
totaling $6,635, $18,076 and $12,630, respectively.
13
<PAGE>
Exhibit 15
La Quinta Inns, Inc.
San Antonio, Texas
Gentlemen:
Re: Registration Statements Nos. 33-26470, 2-97266, 2-67606, 33-55102, 33-58866
and 333-00309.
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated May 13, 1997, related to our
review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
KPMG Peat Marwick LLP
San Antonio, Texas
May 14, 1997
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 885
<SECURITIES> 0
<RECEIVABLES> 18,918
<ALLOWANCES> 1,193
<INVENTORY> 0
<CURRENT-ASSETS> 35,931
<PP&E> 1,536,399
<DEPRECIATION> 298,851
<TOTAL-ASSETS> 1,287,519
<CURRENT-LIABILITIES> 102,660
<BONDS> 768,372
0
0
<COMMON> 8,432
<OTHER-SE> 373,033
<TOTAL-LIABILITY-AND-EQUITY> 1,287,519
<SALES> 0
<TOTAL-REVENUES> 113,353
<CGS> 0
<TOTAL-COSTS> 57,346
<OTHER-EXPENSES> 13,693
<LOSS-PROVISION> (286)
<INTEREST-EXPENSE> 11,373
<INCOME-PRETAX> 26,426
<INCOME-TAX> 9,778
<INCOME-CONTINUING> 16,648
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,648
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
