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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 26, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 033-20022
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 52-1558094
- ------------------------------------ ---------------------------------------
(State of Organization) (I.R.S. Employer Identification Number)
10400 Fernwood Road, Bethesda, MD 20817-1109
----------------------------------- ---------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 380-2070
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of
the Act:
Units of Limited Partnership Interest
(Title of Class)
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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<PAGE>
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MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
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TABLE OF CONTENTS
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Statement of Operations
Twelve Weeks Ended March 26, 1999 and March 27, 1998 (Unaudited)..1
Condensed Balance Sheet
March 26, 1999 (Unaudited) and December 31, 1998..................2
Condensed Statement of Cash Flows
Twelve Weeks Ended March 26, 1999 and March 27, 1998 (Unaudited)..3
Notes to Condensed Financial Statements (Unaudited)..................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................5
Item 3. Quantitative and Qualitative Disclosures About Market Risk...........9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................10
Item 6. Exhibits and Reports on Form 8-K....................................10
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except Unit and per Unit amounts)
<TABLE>
<CAPTION>
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Twelve Weeks Ended
March 26, March 27,
1999 1998
------------- ---------
REVENUES
Inn revenues
Suites.........................................................................$ 14,341 $ 13,956
Other.......................................................................... 694 696
------------- --------------
Total Inn revenues........................................................... 15,035 14,652
------------- --------------
OPERATING COSTS AND EXPENSES
Inn property-level costs and expenses
Suites......................................................................... 3,177 2,890
Other department costs and expenses............................................ 382 335
Selling, administrative and other.............................................. 3,532 3,870
------------- --------------
Total Inn property-level costs and expenses.................................. 7,091 7,095
Depreciation..................................................................... 1,271 1,190
Incentive management fee......................................................... 1,068 808
Residence Inn system fee......................................................... 574 558
Property taxes................................................................... 529 499
Base management fee.............................................................. 301 293
Equipment rent and other......................................................... 448 168
------------- --------------
11,282 10,611
------------- --------------
OPERATING PROFIT.................................................................... 3,753 4,041
Interest expense................................................................. (2,750) (3,009)
Interest income.................................................................. 34 56
------------- --------------
NET INCOME..........................................................................$ 1,037 $ 1,088
============= ==============
ALLOCATION OF NET INCOME
General Partner..................................................................$ 10 $ 11
Limited Partners................................................................. 1,027 1,077
------------- --------------
$ 1,037 $ 1,088
============= ==============
NET INCOME PER LIMITED PARTNER UNIT
(65,600 Units)...................................................................$ 16 $ 16
============= ==============
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
CONDENSED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
March 26, December 31,
1999 1998
(Unaudited)
ASSETS
Property and equipment, net....................................................$ 140,074 $140,283
Due from Residence Inn by Marriott, Inc........................................ 2,564 2,041
Deferred financing costs, net of accumulated amortization...................... 1,670 1,779
Property improvement fund...................................................... 1,446 223
Cash and cash equivalents...................................................... 3,419 4,027
------------- ----------------
$ 149,173 $ 148,353
============= ================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Mortgage debt..................................................................$ 109,032 $ 110,084
Incentive management fee due to Residence Inn by Marriott, Inc................. 27,957 27,029
Accounts payable and accrued expenses.......................................... 1,013 1,106
------------- ----------------
Total Liabilities........................................................ 138,002 138,219
------------- ----------------
PARTNERS' CAPITAL
General Partner................................................................ 188 178
Limited Partners............................................................... 10,983 9,956
------------- ----------------
Total Partners' Capital.................................................. 11,171 10,134
------------- ----------------
$ 149,173 $ 148,353
============= ================
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
Twelve Weeks Ended
March 26, March 27,
1999 1998
------------- ---------
OPERATING ACTIVITIES
Net income.......................................................................$ 1,037 $ 1,088
Noncash items.................................................................... 2,308 1,780
Changes in operating accounts.................................................... (616) (170)
-------------- --------------
Cash provided by operating activities...................................... 2,729 2,698
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INVESTING ACTIVITIES
Change in property improvement fund.............................................. (1,223) (407)
Additions to property and equipment.............................................. (1,062) (346)
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Cash used in investing activities.......................................... (2,285) (753)
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FINANCING ACTIVITIES
Principal payments on mortgage debt.............................................. (1,052) (818)
Capital distributions to partners................................................ -- (3,313)
------------- --------------
Cash used in financing activities.......................................... (1,052) (4,131)
------------- --------------
DECREASE IN CASH AND CASH EQUIVALENTS............................................... (608) (2,186)
CASH AND CASH EQUIVALENTS, at beginning of period................................... 4,027 5,650
------------- --------------
CASH AND CASH EQUIVALENTS, at end of period.........................................$ 3,419 $ 3,464
============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for mortgage interest............................................$ 2,772 $ 3,006
============= ==============
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying condensed financial statements have been prepared by
Marriott Residence Inn Limited Partnership (the "Partnership") without
audit. Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted from the
accompanying statements. The Partnership believes the disclosures made
are adequate to make the information presented not misleading. However,
the condensed financial statements should be read in conjunction with the
Partnership's financial statements and notes thereto included in the
Partnership's Form 10-K for the year ended December 31, 1998.
In the opinion of the Partnership, the accompanying condensed financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position of the
Partnership as of March 26, 1999, and the results of operations and cash
flows for the twelve weeks ended March 26, 1999 and March 27, 1998.
Interim results are not necessarily indicative of fiscal year performance
because of seasonal and short-term variations.
For financial reporting purposes, the net income of the Partnership is
allocated 99% to the limited partners and 1% to RIBM One LLC (the
"General Partner"). Significant differences exist between the net income
for financial reporting purposes and the net income for Federal income
tax purposes. These differences are due primarily to the use, for Federal
income tax purposes, of accelerated depreciation methods and shorter
depreciable lives of the assets and differences in the timing of the
recognition of incentive management fee expense.
2. Revenues represent the gross sales generated by the Partnership's Inns.
On November 20, 1997, the Emerging Issues Task Force ("EITF") of the
Financial Accounting Standards Board reached a consensus on EITF 97-2,
"Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician
Practice Management Entities and Certain Other Entities with Contractual
Management Arrangements." EITF 97-2 addresses the circumstances in which
a management entity may include the revenues and expenses of a managed
entity in its financial statements.
The Partnership considered the impact of EITF 97-2 on its condensed
financial statements and determined that EITF 97-2 requires the
Partnership to include property-level sales and operating expenses of its
Inns in its condensed statement of operations. The Partnership has given
retroactive effect to the adoption of EITF 97-2 in the accompanying
condensed statement of operations. Application of EITF 97-2 to the
condensed financial statements for the twelve weeks ended March 26, 1999
and March 27, 1998, increased both revenues and operating expenses by
$7.1 million and had no impact on operating profit or net income.
3. Certain reclassifications were made to prior year financial statements
to conform to the 1999 presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this form 10-Q include forward-looking statements
and as such may involve known and unknown risks, uncertainties and other factors
which may cause the actual transactions, results, performance or achievements to
be materially different from any future transactions, results, performance or
achievements expressed or implied by such forward-looking statements. The
cautionary statements set forth in reports filed under the Securities Exchange
Act of 1934 contain important factors with respect to such forward-looking
statements, including: (i) national and local economic and business conditions
what will, among other things, affect demand for hotels and other properties,
the level of rates and occupancy that can be achieved by such properties and the
availability and terms of financing; (ii) the ability to compete effectively;
(iii) changes in travel patterns, taxes and government regulations; (iv)
governmental approvals, actions and initiatives; and (v) the effects of tax
legislative action. Although the Partnership believes the expectations reflected
in such forward-looking statements are based upon reasonable assumptions, it can
give no assurance that its expectations will be attained or that any deviations
will not be material. The Partnership undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that may
be made to reflect any future events or circumstances.
RESULTS OF OPERATIONS
Revenues. Partnership revenues for first quarter 1999 increased $383,000 to
$15.0 million from $14.7 million for first quarter 1998. This increase was
achieved primarily through an increase in Inn revenue per available room
("REVPAR"), which represents the combination of the combined average daily suite
rate charged and the combined average daily occupancy achieved, and is a
commonly used indicator of Inn performance. REVPAR does not include other
ancillary revenues generated by the Inns. REVPAR increased slightly for first
quarter 1999 primarily due to a slight increase in combined average room rate
from $95.40 for first quarter 1998 to $96.01 for first quarter 1999 along with
an increase in combined average occupancy of one percentage point from 81.8% for
the first quarter 1998 to 82.8% for the first quarter 1999. As a result,
combined average suite sales for first quarter 1999 increased 2% to $14.3
million from $14.0 million in first quarter 1998.
Operating Costs and Expenses. Operating costs and expenses increased to $11.3
million for first quarter 1999 from $10.6 million for first quarter 1998
primarily due to an increase in incentive management fee. As a percentage of Inn
revenues, operating costs and expenses were 75% and 72% of revenues for first
quarter 1999 and 1998, respectively.
Operating Profit. As a result of the changes in revenues and operating costs and
expenses discussed above, operating profit decreased $288,000 to $3.8 million,
or 25% of revenues, for first quarter 1999 from $4.0 million, or 28% of
revenues, for first quarter 1998.
Interest Expense. Interest expense decreased $259,000 to $2.8 million for first
quarter 1999 from $3.0 million for first quarter 1998 due to principal
amortization of the Senior and Second Mortgages.
Net Income. Net income for first quarter 1999 decreased $51,000 to $1.0
million, or 6.9% of revenues, from $1.1 million, or 7.4% of revenues, for first
quarter 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's financing needs have been historically funded through loan
agreements with independent financial institutions. Beginning in 1998, the
Partnership's property improvement fund was insufficient to meet current needs.
The shortfall is primarily due to the need to complete total suite
refurbishments at a majority of the Partnership's Inns. The General Partner
believes that cash from Inn operations and Partnership reserves will be adequate
in the short term and is working with the Manager to address long term
operational and capital needs of the Partnership.
Principal Sources and Uses of Cash
The Partnership's principal source of cash is cash from operations. Its
principal uses of cash are to make debt service payments, fund the property
improvement fund and to make distributions to the limited partners. Cash
provided by operating activities remained stable at $2.7 million for first
quarter 1999 and first quarter 1998.
Cash used in investing activities was $2.3 million and $753,000 for first
quarter 1999 and 1998, respectively. The Partnership's cash used in investing
activities primarily consists of contributions to the property improvement fund
and capital expenditures for improvements to the Inns. Contributions to the
property improvement fund were $828,000 and $733,000 for the first quarter 1999
and first quarter 1998 respectively, while capital expenditures were $1.1
million and $346,000, respectively, during these same periods. The Partnership
advanced $1.5 million to the property improvement fund during first quarter 1999
to cover the 1998 shortfall.
Cash used in financing activities was $1.1 million and $4.1 million for first
quarter 1999 and first quarter 1998, respectively. The Partnership's cash used
in financing activities primarily consists of capital distributions to partners
and the repayment of mortgage debt. In the first quarter 1998, the Partnership
distributed $3.3 million to the partners from 1997 operations. There were no
distributions to the partners in first quarter 1999.
Strategy for Liquidity
The General Partner is continuing to explore alternatives to provide liquidity
for the Partnership and maximize the value of the limited partners' investment.
While the General Partner can make no assurances as to the outcome of their
efforts, the General Partner continues to work with Merrill Lynch who is acting
as an advisor in this regard.
Year 2000 Issues
Year 2000 issues have arisen because many existing computer programs and
chip-based embedded technology systems use only the last two digits to refer to
a year, and therefore do not properly recognize a year that begins with "20"
instead of the familiar "19." If not corrected, many computer applications could
fail or create erroneous results. The following disclosure provides information
regarding the current status of the Partnership's Year 2000 compliance program.
Host Marriott Corporation ("Host Marriott") has adopted the compliance
program because it recognizes the importance of minimizing the number and
seriousness of any disruptions that may occur as a result of the Year 2000
issue. Host Marriott's compliance program includes an assessment of Host
Marriott's hardware and software computer systems and embedded systems, as well
as an assessment of the Year 2000 issues relating to third parties with which
Host Marriott has a material relationship or whose systems are material to the
operations of the Partnership's Inns. Host Marriott's efforts to ensure that its
computer systems are Year 2000 compliant have been segregated into two separate
phases: in-house systems and third-party systems.
In-House Systems. Host Marriott has invested in the implementation and
maintenance of accounting and reporting systems and equipment that are intended
to enable the Partnership to provide adequately for its information and
reporting needs and which are also Year 2000 compliant. Substantially all of
Host Marriott's in-house systems have already been certified as Year 2000
compliant through testing and other mechanisms, and Host Marriott has not
delayed any systems projects due to the Year 2000 issue. Host Marriott is in the
process of engaging a third party to review its Year 2000 in-house compliance.
Host Marriott believes that future costs associated with Year 2000 issues for
its in-house systems will be insignificant and, therefore, not impact the
Partnership's business, financial condition and results of operations. Host
Marriott has not developed, and does not plan to develop, a separate contingency
plan for its in-house systems due to their current Year 2000 compliance.
Third-Party Systems. The Partnership relies upon operational and accounting
systems provided by third parties, primarily the Manager of its Inns, to provide
the appropriate property-specific operating systems (including reservation,
phone, elevator, security, HVAC and other systems) and to provide it with
financial information. Based on discussions with the third parties that are
critical to the Partnership's business, including the Manager of its Inns, Host
Marriott believes that these parties are in the process of studying their
systems and the systems of their respective vendors and service providers and,
in many cases, have begun to implement changes, to ensure that they are Year
2000 compliant. However, Host Marriott has not received any oral or written
assurances that these third parties will be Year 2000 compliant on time. To the
extent these changes impact property-level systems, the Partnership may be
required to fund capital expenditures for upgraded equipment and software. The
Partnership does not expect these charges to be material, but is committed to
making these investments as required. To the extent that these changes relate to
the Manager's centralized systems (including reservations, accounting,
purchasing, inventory, personnel and other systems), the Partnership's
management agreement generally provides for these costs to be charged to the
Partnership's properties. Host Marriott expects that the Manager will incur Year
2000 costs for its centralized systems in lieu of costs related to system
projects that otherwise would have been pursued and therefore, its overall level
of centralized systems charges allocated to the Inns will not materially
increase as a result of the Year 2000 compliance effort. Host Marriott believes
that this deferral of certain system projects will not have a material impact on
its future results of operations, although it may delay certain productivity
enhancements at the Partnership's Inns. Host Marriott will continue to monitor
the efforts of these third parties to become Year 2000 compliant and will take
appropriate steps to address any non-compliance issues. The Partnership believes
that in the event of material Year 2000 non-compliance, the Partnership will
have the right to seek recourse against the Manager under its management
agreement. The management agreement, however, generally does not specifically
address the Year 2000 compliance issue. Therefore, the amount of any recovery in
the event of Year 2000 non-compliance at a property, if any, is not determinable
at this time.
Host Marriott will work with the third parties to ensure that appropriate
contingency plans will be developed to address the most reasonably likely worst
case Year 2000 scenarios, which may not have been identified fully. In
particular, Host Marriott has had extensive discussions regarding the Year 2000
problem with Marriott International, Inc. ("MII"), the parent of the Manager of
the Partnership's Inns. Due to the significance of MII to the Partnership's
business, a detailed description of MII's state of readiness follows.
MII has adopted an eight-step process toward Year 2000 readiness, consisting of
the following: (i) Awareness: fostering understanding of, and commitment to, the
problem and its potential risks; (ii) Inventory: identifying and locating
systems and technology components that may be affected; (iii) Assessment:
reviewing these components for Year 2000 compliance, and assessing the scope of
Year 2000 issues; (iv) Planning: defining the technical solutions and labor and
work plans necessary for each affected system; (v) Remediation/Replacement:
completing the programming to renovate or replace the problem software or
hardware; (vi) Testing and Compliance Validation: conducting testing, followed
by independent validation by a separate internal verification team; (vii)
Implementation: placing the corrected systems and technology back into the
business environment; and (viii) Quality Assurance: utilizing an internal audit
team to review significant projects for adherence to quality standards and
program methodology.
MII has grouped its systems and technology into three categories for
purposes of Year 2000 compliance: (i) information resource applications and
technology ("IT Applications") -- enterprise-wide systems supported by MII's
centralized information technology organization ("IR"); (ii) Business-initiated
Systems ("BIS") - systems that have been initiated by an individual business
unit, and that are not supported by MII's IR organization; and (iii) Building
Systems - non-IT equipment at properties that use embedded computer chips, such
as elevators, automated room key systems and HVAC equipment. MII is prioritizing
its efforts based on how severe an effect noncompliance would have on customer
service, core business processes or revenues, and whether there are viable,
non-automated fallback procedures ("System Criticality").
MII measures the completion of each phase based on documented and
quantified results, weighted for System Criticality. As of March 26, 1999, the
Awareness and Inventory phases were complete for IT Applications, BIS, and
Building Systems. For IT Applications, the Assessment and Planning phases were
complete and Remediation/Replacement and Testing phases were 95% complete.
Compliance Validation has been completed for approximately 75% of key systems,
with most of the remaining work in its final stage. For BIS and Building
Systems, Assessment and Planning are substantially complete. For BIS,
Remediation/Replacement is substantially complete and Testing is in progress.
MII is on track for completion of Remediation/Replacement and Testing of
Building Systems for September of 1999. Compliance Validation is in progress for
both BIS and Building Systems. Implementation and Quality Assurance is in
progress for IT Applications, BIS and Building Systems.
Year 2000 compliance communications with MII's significant third party
suppliers, vendors and business partners, including its franchisees are ongoing.
MII's efforts are focused on the connections most critical to customer service,
core business processes and revenues, including those third parties that support
the most critical enterprise-wide IT Applications, franchisees generating the
most revenues, suppliers of the most widely used Building Systems and BIS, the
top 100 suppliers, by dollar volume, of non-IT products, and financial
institutions providing the most critical payment processing functions. Responses
have been received from a majority of the firms in this group. A majority of
these respondents have either given assurances of timely Year 2000 compliance or
have identified the necessary actions to be taken by them or MII to achieve
timely Year 2000 compliance for their products.
MII has established a common approach for testing and addressing Year 2000
compliance issues for its managed and franchised properties. This includes a
guidance protocol for operated properties, and a Year 2000 "Toolkit" for
franchisees containing relevant Year 2000 compliance information. MII is also
utilizing a Year 2000 best-practices sharing system.
Risks. There can be no assurances that Year 2000 remediation by the
Partnership or third parties will be properly and timely completed, and failure
to do so could have a material adverse effect on the Partnership, its business
and its financial condition. The Partnership cannot predict the actual effects
to it of the Year 2000 issue, which depends on numerous uncertainties such as:
(i) whether significant third parties, properly and timely address the Year 2000
issue; and (ii) whether broad-based or systemic economic failures may occur.
Host Marriott is also unable to predict the severity and duration of any such
failures, which could include disruptions in passenger transportation or
transportation systems generally, loss of utility and/or telecommunications
services, the loss or distortion of hotel and inn reservations made on
centralized reservations systems and errors or failures in financial
transactions or payment processing systems such as credit cards. Due to the
general uncertainty inherent in the Year 2000 issue and the Partnership's
dependence on third parties, the Partnership is unable to determine at this time
whether the consequences of Year 2000 failures will have a material impact on
the Partnership. Host Marriott's Year 2000 compliance program is expected to
significantly reduce the level of uncertainty about the Year 2000 issue and Host
Marriott believes that the possibility of significant interruptions of normal
operations should be reduced.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership does not have significant market risk with respect to interest
rates, foreign currency exchanges or other market rate or price risks, and the
Partnership does not hold any financial instruments for trading purposes. As of
March 26, 1999, all of the Partnership's debt is fixed rate.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership and the Inns are involved in routine litigation and
administrative proceedings arising in the ordinary course of business, some of
which are expected to be covered by liability insurance and which collectively
are not expected to have a material adverse effect on the business, financial
condition or results of operations of the Partnership.
On March 16, 1998, limited partners in several partnerships sponsored by Host
Marriott, filed a lawsuit, styled Robert M. Haas, Sr. and Irwin Randolph Joint
Tenants, et al. v. Marriott International, Inc., et al., Case No. 98-CI-04092,
in the 57th Judicial District Court of Bexar County, Texas against Marriott
International, Inc., Host Marriott, various of their subsidiaries, J.W.
Marriott, Jr., Stephen Rushmore, and Hospitality Valuation Services, Inc.
(collectively, the "Defendants"). The lawsuit relates to the following limited
partnerships: Courtyard by Marriott Limited Partnership, Courtyard by Marriott
II Limited Partnership, Marriott Residence Inn Limited Partnership, Marriott
Residence Inn II Limited Partnership, Fairfield Inn by Marriott Limited
Partnership, Desert Springs Marriott Limited Partnership and Atlanta Marriott
Marquis Limited Partnership (collectively, the "Seven Partnerships"). The
plaintiffs allege that the Defendants conspired to sell hotels to the Seven
Partnerships for inflated prices and that they charged the Seven Partnerships
excessive management fees to operate the Seven Partnerships' hotels. The
plaintiffs further allege, among other things, that the Defendants committed
fraud, breached fiduciary duties and violated the provisions of various
contracts. The plaintiffs are seeking unspecified damages. The Defendants, which
do not include the Seven Partnerships, believe that there is no truth to the
plaintiffs' allegations and that the lawsuit is totally devoid of merit. The
Defendants intend to vigorously defend against the claims asserted in the
lawsuit. They have filed an answer to the plaintiffs' petition and asserted a
number of defenses. A related case concerning Courtyard by Marriott II Limited
Partnership filed by the plaintiff's lawyers in the same court involves similar
allegations against the defendants, and has been certified as a class action. On
March 18, 1999, two of the Partnership's limited partners filed a class action
petition in intervention seeking to convert that portion of the lawsuit relating
to the Partnership into a class action. The court has not yet ruled on this
petition. Although the Seven Partnerships have not been named as Defendants in
the lawsuit, the partnership agreements relating to the Seven Partnerships
include an indemnity provision which requires the Seven Partnerships, under
certain circumstances, to indemnify the general partners against losses,
expenses and fees.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None.
b. Reports on Form 8-K:
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-Q to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARRIOTT RESIDENCE INN
LIMITED PARTNERSHIP
By: RIBM ONE LLC
General Partner
May 6, 1999 By: /s/ Earla L. Stowe
------------------
Earla L. Stowe
Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FOR THE
QUARTERLY REPORT 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000829092
<NAME> MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-26-1999
<EXCHANGE-RATE> 1.00
<CASH> 3,419
<SECURITIES> 0
<RECEIVABLES> 2,564
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,116
<PP&E> 207,039
<DEPRECIATION> (66,965)
<TOTAL-ASSETS> 149,173
<CURRENT-LIABILITIES> 28,970
<BONDS> 109,032
0
0
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<OTHER-SE> 11,171
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<TOTAL-REVENUES> 15,035
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<OTHER-EXPENSES> 11,248
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<INCOME-PRETAX> 1,037
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