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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 QUARTER ENDED JUNE 20, 1997
OR
[_] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File Number: 0-16777
DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1508601
------------------------------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10400 FERNWOOD ROAD
BETHESDA, MARYLAND
20817
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(Address of principal executive offices)
Registrant's telephone number, including area code: 301-380-2070
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 ____ No ____ (Not Applicable)
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DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
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TABLE OF CONTENTS
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<TABLE>
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PAGE NO.
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PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Condensed Statement of Operations
Twelve and Twenty-Four Weeks Ended June 20, 1997 and June 14, 1996........... 1
Condensed Balance Sheet
June 20, 1997 and December 31, 1996.......................................... 2
Condensed Statement of Cash Flows
Twenty-Four Weeks Ended June 20, 1997 and June 14, 1996...................... 3
Notes to Condensed Financial Statements........................................ 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................................... 6
</TABLE>
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings.............................................................. 10
Item 4. Submission of Matters to a Vote of Security Holders............................ 10
Item 5. Other Information.............................................................. 10
Item 6. Exhibits and Reports on Form 8-k............................................... 10
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
June 20, June 14, June 20, June 14,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCOME
Rentals
Hotel................................ $6,224 $ 5,368 $12,488 $10,790
Airline equipment.................... -- 772 -- 1,248
Other................................. 160 221 213 452
------ ------- ------- -------
6,384 6,361 12,701 12,490
------ ------- ------- -------
EXPENSES
Interest.............................. 3,330 3,077 6,770 6,082
Depreciation and amortization......... 1,627 1,540 3,568 3,368
Property taxes........................ 489 438 977 876
Partnership administration and other.. 115 175 187 232
------ ------- ------- -------
5,561 5,230 11,502 10,558
------ ------- ------- -------
NET INCOME............................. $ 823 $ 1,131 $ 1,199 $ 1,932
====== ======= ======= =======
ALLOCATION OF NET INCOME
General Partner....................... $ 8 $ 11 $ 12 $ 19
Limited Partners...................... 815 1,120 1,187 1,913
------ ------- ------- -------
$ 823 $ 1,131 $ 1,199 $ 1,932
====== ======= ======= =======
NET INCOME PER LIMITED
PARTNER UNIT (900 Units).............. $ 906 $ 1,244 $ 1,319 $ 2,126
====== ======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
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DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 20, December 31,
1997 1996
----------- ------------
(unaudited)
ASSETS
<S> <C> <C>
Property and equipment, net.......................... $ 153,191 $ 155,441
Rent receivable from hotel lessee.................... 737 8
Other assets......................................... 3,799 3,678
Restricted cash...................................... 10,931 --
Cash and cash equivalents............................ 6,909 5,755
---------- ----------
$ 175,567 $ 164,882
========== ==========
</TABLE>
LIABILITIES AND PARTNERS' DEFICIT
<TABLE>
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<S> <C> <C>
LIABILITIES
Mortgage debt........................................ $ 160,000 $ 160,000
Additional rental paid by hotel lessee............... 27,136 25,013
Due to Marriott International, Inc. and affiliates... 1,784 1,022
Deferred hotel rental income......................... 6,487 --
Accounts payable and accrued expenses................ 598 484
---------- ----------
Total Liabilities.................................. 196,005 186,519
---------- ----------
PARTNERS' DEFICIT
General Partner...................................... (79) (91)
Limited Partners..................................... (20,359) (21,546)
---------- ----------
Total Partners' Deficit............................ (20,438) (21,637)
---------- ----------
$ 175,567 $ 164,882
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
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DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Twenty-Four Weeks Ended
June 20, June 14,
1997 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................. $ 1,199 $ 1,932
Noncash items.............................................. 4,006 2,182
Changes in operating accounts.............................. 7,534 6,830
-------- -------
Cash provided by operating activities.................... 12,739 10,944
-------- -------
INVESTING ACTIVITIES
Additions to property and equipment, net................... (1,318) (6,021)
Change in property improvement fund........................ (469) 3,284
Proceeds from the airline equipment lease.................. -- 2,509
-------- -------
Cash used in investing activities........................ (1,787) (228)
-------- -------
FINANCING ACTIVITIES
Change in restricted cash.................................. (10,931) --
Additional rental paid by hotel lessee..................... 2,123 3,408
Repayment of note payable to Marriott International, Inc... (900) --
Payment of refinancing costs............................... (90) --
Capital distributions to partners.......................... -- (1,545)
-------- -------
Cash (used in) provided by financing activities.......... (9,798) 1,863
-------- -------
INCREASE IN CASH AND CASH EQUIVALENTS....................... 1,154 12,579
CASH AND CASH EQUIVALENTS at beginning of period............ 5,755 10,213
-------- -------
CASH AND CASH EQUIVALENTS at end of period.................. $ 6,909 $22,792
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest..................................... $ 6,169 $ 6,600
======== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
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DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying condensed financial statements have been prepared by the
Desert Springs Marriott 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 filed on August 28, 1997 for the fiscal year ended December 31, 1996.
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 June 20, 1997 and December 31, 1996, and the results of
operations for the twelve and twenty-four weeks ended June 20, 1997 and June
14, 1996. Interim results are not necessarily indicative of fiscal year
performance because of seasonal and short-term variations.
2. For financial reporting purposes, net income (loss) of the Partnership is
allocated 99% to the Limited Partners and 1% to Marriott Desert Springs
Corporation (the "General Partner"). Significant differences exist between
the net loss for financial reporting purposes and the net loss for Federal
income tax purposes. These differences are due primarily to the use, for
income tax purposes, of accelerated depreciation methods, shorter depreciable
lives, no estimated salvage values for the assets and differences in the
timing of the recognition of rental income.
3. The following is a summary of Hotel Operating Profit, as defined in the Hotel
lease agreement for the twelve and twenty-four weeks ended (in thousands):
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
June 20, June 14, June 20, June 14,
1997 1996 1997 1996
--------- -------- --------- --------
<S> <C> <C> <C> <C>
REVENUES
Rooms...................... $10,353 $10,007 $23,065 $21,437
Food and beverage.......... 10,927 10,132 22,987 21,019
Other...................... 5,310 5,843 13,323 12,728
------- ------- ------- -------
26,590 25,982 59,375 55,184
------- ------- ------- -------
DEDUCTIONS
Departmental direct costs
Rooms..................... 2,275 2,088 4,534 4,127
Food and beverage......... 6,909 6,395 14,366 13,336
Other operating expenses... 7,351 7,656 15,765 15,220
------- ------- ------- -------
16,535 16,139 34,665 32,683
------- ------- ------- -------
OPERATING PROFIT............ $10,055 $ 9,843 $24,710 $22,501
======= ======= ======= =======
</TABLE>
The profits from Marriott's Desert Springs Resort & Spa (the "Hotel") are
seasonal and first and second quarter results are generally higher than the last
two quarters of the year. The Partnership recognizes estimated annual hotel
rental income on a straight-line basis throughout the year. Lease payments from
the Hotel lessee in excess of the income recognized by the Partnership are
deferred and, to the extent not subject to possible future repayment to the
Hotel lessee, are recognized as income during the remainder of the year.
4
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4. Pursuant to an agreement reached with Marriott International, Inc. ("MII")
for fiscal year 1997, the Owner's Priority, as defined in the Hotel Operating
Lease, has been increased to $20.5 million. MII will be entitled only to the
next $2 million of Operating Profit, as defined. Any Additional Operating
Profit in excess of $22.5 million, will be remitted entirely to the
Partnership as Additional Rent. As of June 20, 1997, a $1.6 million liability
to MII is included in Due to MII and Affiliates in the accompanying Condensed
Balance Sheet. This liability represents MII's portion of Operating Profit
remitted to the Partnership. In connection with and concurrently with the
consummation of the long-term financing in 1997, MII agreed to waive any and
all claims to Additional Rental that have accrued prior to the consummation
of such loan.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements within the
meaning of the Private Litigation Reform Act of 1995 and as such may involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of the Partnership to be different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Although the Partnership believes that the
expectations in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be attained.
These risks are detailed from time to time in the Partnership's filings with the
Securities and Exchange Commission. 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.
CAPITAL RESOURCES AND LIQUIDITY
Principal Sources and Uses of Cash
The Partnership reported an increase in cash and cash equivalents of $1.2
million and $12.6 million for the twenty-four weeks ended June 20, 1997 and June
14, 1996, respectively. Cash provided by operations for the twenty-four weeks
ended June 20, 1997 and June 14, 1996, was $12.7 million and $10.9 million,
respectively. This increase is primarily due to improved operations. The
Partnership's principal source of cash is from rent received from the Hotel
lessee.
Cash used in investing activities for the twenty-four weeks ended June 20, 1997
and June 14, 1996, was $1.7 million and $200,000, respectively. Cash used in
investing activities for the twenty-four weeks ended June 20, 1997 includes
capital expenditures of $1.3 million, related to various maintenance and repair
projects at the Hotel.
Cash used in financing activities for the twenty-four weeks ended June 20, 1997
was $9.8 million which primarily related to $10.9 million which was deposited
into a debt service reserve account for future debt service, repayment of a note
payable to Marriott International, Inc. of $900,000 offset by $2.1 million of
additional rental paid by the Hotel lessee.
The General Partner believes that cash from Hotel operations and the property
improvement fund will provide adequate funds in the short-term and long-term to
meet the operational and capital needs of the Partnership.
Financing
The Partnership secured interim financing for its $168 million mortgage debt on
December 23, 1996 (the "Bridge Loan"). The Partnership utilized $8.2 million of
its refinancing reserve to reduce the mortgage loan balance to $160 million.
The Bridge Loan bears interest at LIBOR plus 2.75 percentage points. The
weighted average interest rate for the twelve weeks ended June 20, 1997 was
8.41% compared to 7.76% for the twelve weeks ended June 14, 1996 resulting in an
8% increase in interest expense of $253,000. The weighted average interest rate
for the twenty-four weeks ended June 20, 1997 was 8.31% compared to 7.76% for
the twenty-four weeks ended June 14, 1996 resulting in an 11% increase in
interest expense of $688,000. The interest rate at June 20, 1997 was 8.44%.
There will be no cash distributions from operations during the term of the
Bridge Loan as all excess cash from Hotel operations, if any, are held in a debt
service reserve with the lender for future debt service or to reduce the
outstanding principal balance upon maturity on October 31, 1997. The debt
service reserve balance as of June 20, 1997 is $10,931,000.
6
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The General Partner is currently pursuing two alternatives to refinance the
Bridge Loan. Each alternative would require that certain amendments (the
"Amendments") be made to the Partnership's Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement").
Loan Alternative A. One of the two alternatives to refinance the Bridge Loan
would involve a loan from Goldman Sachs Mortgage Company ("GSMC") consisting of
two tranches of debt: (i) a senior loan to a newly formed 100% owned subsidiary
of the Partnership that would own the Hotel (the "New Sub"), which senior loan
would be secured by a first mortgage lien on the Hotel in an amount up to $103
million (with the final amount to be determined based upon the net cash flow at
the Hotel and prevailing interest rates) and (ii) a junior loan to the
Partnership, which junior loan would be secured by the Partnership's 100% direct
and indirect ownership interests in the Partnership's newly formed subsidiary,
in an amount equal to $57 million or such greater amount that, when combined
with the principal amount of the senior loan, would total $160 million
("Alternative A"). Alternative A would enable the Partnership to refinance the
Bridge Loan. In connection with the closing of the Bridge Loan on December 23,
1996, the General Partner entered into a commitment letter with GSMC setting
forth the terms of Alternative A.
Loan Alternative B. The other alternative ("Alternative B") would involve a
refinancing consisting of the senior loan from GSMC as described in Alternative
A, a subordinate tranche of debt from GSMC to the Partnership in the amount of
$20 million (the "Mezzanine Loan") secured by the Partnership's 100% direct and
indirect ownership interests in the Partnership's newly formed subsidiary, and a
subordinate junior tranche to the Partnership (the "HM Junior Loan") from DSM
Finance LLC (the "Junior Lender"), a single member Maryland limited liability
company of which the General Partner is the sole member. The HM Junior Loan
would be in the amount of $59.7 million, and if consented by the lender of the
Mezzanine Loan would be secured by a subordinate pledge of the Partnership's
100% direct and indirect ownership interests in the New Sub. Alternative B is
expected to result in $22.7 million of proceeds in excess of that needed to
refinance the Bridge Loan, which would be distributed by the Partnership to its
partners resulting in a distribution to holders (the "Unitholders") of units of
limited partnership interest in the Partnership ("Units") of $25,000 per Unit.
The terms of the Senior Loan contemplate that, consistent with applicable rating
agency requirements, the Hotel would be contributed to the New Sub in exchange
for 100% of the direct and indirect interests in the New Sub. This structure
would create a bankruptcy remote entity (the New Sub) which would be the
borrower under the Senior Loan. The Partnership Agreement does not currently
permit this contribution and, accordingly, each of Alternative A and Alternative
B is contingent on the approval by the Limited Partners of an Amendment that
would permit such a contribution. On August 29, 1997, the General Partner
initiated the solicitation of consents of the limited partners of the
Partnership, pursuant to which the General Partner has sought approval of
Amendments to refinance the interim loan under either Alternative A or
Alternative B and proposed Alternative B to fund the DSM Junior Loan together
with other Amendments to the Partnership Agreement.
The proposed Amendments also would allow the Partnership to reorganize the
ownership structure of the Hotel to provide additional tiers of structured
financing. GSMC has indicated that it would prefer a structured financing under
Alternative B whereby (i) the New Sub would own the Hotel and would be the
Debtor on the Senior Loan, (ii) a new bankruptcy remote subsidiary of the
Partnership (the "Tier 2 Sub") would be formed to own the New Sub and be the
debtor on the Mezzanine Loan, and (iii) the Partnership would own the Tier 2 Sub
(and indirectly own the New Sub and the Hotel) and would be the debtor on the HM
Junior Loan. As of the date of the consent solicitation statement, no
determination has been made as to whether a tiered subsidiary structure would be
utilized under Alternative B. However, under the proposed terms of the
Mezzanine Loan, would be increased by one percentage point if a tiered
subsidiary structure has not been implemented on or before March 31, 1998. The
effect of the refinancing to the Limited Partners would be the same under either
structure. If these proposed Amendments are approved, the General Partner would
be able to create a new wholly owned subsidiary such as the Tier 2 Sub to
provide for the current or future restructuring of the Partnership's mortgage
debt.
7
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In conjunction with the refinancing completed December 23, 1996, MII agreed to
certain amendments to the operating lease under which an MII subsidiary leases
the Hotel. Pursuant to the agreement reached with MII, for fiscal year 1997,
the $20 million Owner's Priority, as defined, will be increased to $20.5
million. MII will be entitled only to the next $2.0 million of Operating
Profit, as defined. Any additional Operating Profit in excess of $22.5 million
will be remitted entirely to the Partnership. In connection with and
concurrently with the consummation of the long-term financing in 1997, MII
agreed to waive any and all claims to Additional Rental that have accrued prior
to the consummation of such loan. Negotiations with MII continue as additional
changes to the operating lease will be needed to consummate the long term debt
refinancing.
The Hotel's $9.1 million rooms refurbishment project was completed in September,
1996. The refurbishment was financed by the Hotel's property improvement fund
and a $1.7 million short-term loan from MII. The loan was fully repaid from the
property improvement fund in the first quarter of 1997.
RESULTS OF OPERATIONS
The operating results of Marriott's Desert Springs Resort and Spa are seasonal
and the first and second quarter results are generally higher than the third and
fourth quarter results. For quarterly reporting purposes, the Partnership
recognizes estimated annual Hotel rental income on a straight-line basis
throughout the year. Each quarter, the estimated annual Hotel rental income is
revised to more accurately forecast full year results. Based on current
forecasts, 1997 full-year Hotel operations are expected to improve over 1996 due
to a strong transient leisure market which allows greater rate flexibility. As
a result, Hotel rental income for 1997 second quarter improved 16% over prior
year's results from $5,368,000 to $6,224,000.
For the second quarter, Hotel operating results (hotel revenue net of hotel
operating expenses) increased 2% when compared to the same period in 1996 due to
increased rooms and food and beverage sales. REVPAR, or revenue per available
room, represents the combination of the average daily room rate charged and the
average daily occupancy achieved and is a commonly used indicator of hotel
performance (although it is not a GAAP measure of revenue). REVPAR does not
include food and beverage or other ancillary revenues generated by the Hotel.
For the second quarter, REVPAR increased 3% over the same period in 1996 to $139
due to a 7% increase in the average room rate to approximately $184 partially
offset by a 3.0 percentage point decrease in average occupancy to approximately
76%. Room sales increased 3% from $10,007,000 to $10,353,000 in the second
quarter primarily due to strong demand in the leisure transient segment. Food
and beverage sales increased from $10,132,000 to $10,927,000 or 8% over the same
period in 1996 due primarily to increased catering sales.
On a year-to-date basis, operating results increased 10% over the same period of
the prior year due primarily to profit increases in rooms, food and beverage,
and golf. For the year, REVPAR increased 7% over the same period of the prior
year to $155 due primarily to a 5% increase in the average room rate to
approximately $198 and a 1.4 percentage point increase in average occupancy to
approximately 79%. Room sales and profit increased 7% due to strong demand in
the leisure transient segment. Transient business increased by 2,400 roomnights
from 32,000 to 34,400 or 8% over last year combined with a 1% increase in group
business over the prior year. Food and beverage sales increased 9% from
$21,019,000 to $22,987,000 and golf sales increased 7% from $5,405,000 to
$5,791,000 over the same period in 1996.
On April 24, 1996, TWA exercised its early termination option under the airline
equipment lease and paid the rent due on that date of $847,000 along with the
termination value of $780,000 plus the $1 purchase option. Rental income of
$772,000 was generated by the equipment lease during the second quarter of 1996
and $1.2 million on a year-to-date basis in 1996.
Other Income. For the twenty-four weeks ended June 20, 1997, other income
decreased 53% or $239,000 from $452,000 to $213,000. Interest income on the
Partnership's operating cash account and debt service reserve account decreased
$124,000 from $310,000 to $186,000 or 40% from last year primarily due to the
decrease in the
8
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Partnership's operating cash balance resulting from the $8.2 million paydown of
the mortgage loan. Interest income on the Partnership's property improvement
fund decreased $115,000 from $142,000 to $27,000 or 81% below last year due
primarily to the Hotel's utilizing funds for the $9.1 million rooms
refurbishment project which was completed in September, 1996. For the second
quarter, other income decreased 28% from $221,000 to $160,000.
Property Taxes. Property taxes increased $101,000 from $876,000 to $977,000 or
12% over last year due to an increase in tax assessments at the Hotel. For
second quarter, property taxes increased $51,000 from $438,000 to $489,000 or
12% over second quarter last year.
9
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership and the Partnership Hotel 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
conditions or results of operations of the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the limited partners in 1996 or in prior
years. The Partnership instituted a Consent Solicitation Statement on August 29,
1997. Pursuant to the Consent Solicitation Statement, the General Partner is
asking Limited Partners to consider and vote upon (i) incurrence of the HM
Junior Loan, (ii) an amendment to the Partnership Agreement to authorize the
General Partner to form or organize one or more subsidiaries of the
Partnership, to contribute assets of the Partnership to any such subsidiary in
exchange for the equity interests in such subsidiary, and to delegate its
authority to manage any such subsidiary to a governing entity or other body in
order to effect a structured refinancing such as the proposed refinancing in
each of Alternative A and Alternative B, (iii) an amendment to the Partnership
Agreement to amend the definition of "Affiliate" to make clear that a publicly-
traded entity will not be deemed an affiliate of the General Partner or any of
its Affiliates unless a person or group of persons directly or indirectly owns
twenty percent or more of the outstanding common stock of both the General
Partner and such other entity, (iv) an amendment to the Partnership Agreement to
revise the provisions relating to the authority of the General Partner to permit
the General Partner, without obtaining the consent of the Limited Partners, to
sell or otherwise transfer the Hotel to an independent third party, (v) an
amendment to the Partnership Agreement that would allow the General Partner to
incur indebtedness in order to capitalize the Junior Lender (vi) amendments to
the Partnership Agreement to revise the provisions limiting the voting rights of
the General Partner and its Affiliates to permit the General Partner and its
Affiliates to have full voting rights with respect to all Units acquired by the
General Partner and its Affiliates except on matters where the General Partner
and its Affiliates have an actual economic interest other than as a Unitholder
or general partner, (vii) amendments to the Partnership Agreement to amend
certain terms and sections of the Partnership Agreement in order to reflect the
fact that after the division of Marriott Corporation's operations into two
separate public companies in 1993, Host Marriott (formerly known as Marriott
Corporation) no longer owns the management business conducted by Marriott
International, Inc., delete certain obsolete references to entities and
agreements that are no longer in existence and update the Partnership Agreement
to reflect the passage of time since the formation of the Partnership, and
(viii) an amendment to the Partnership Agreement to permit the General Partner,
without the consent of the Limited Partners, to make any amendment to the
Partnership Agreement as is necessary to clarify or update the provisions
thereof so long as such amendment does not adversely affect the rights of
Unitholders under the Partnership Agreement in any material respect.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
10
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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.
DESERT SPRINGS MARRIOTT
LIMITED PARTNERSHIP
By: MARRIOTT DESERT SPRINGS CORPORATION
General Partner
August 28, 1997 By: /s/ Patricia K. Brady
- --------------- -------------------------------------------
Patricia K. Brady
Vice President and Chief Accounting Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000832345
<NAME> DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-20-1997
<CASH> 17,840
<SECURITIES> 3,799<F1>
<RECEIVABLES> 737
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,376
<PP&E> 218,378
<DEPRECIATION> (65,187)
<TOTAL-ASSETS> 175,567
<CURRENT-LIABILITIES> 598
<BONDS> 195,407
0
0
<COMMON> 0
<OTHER-SE> (20,438)
<TOTAL-LIABILITY-AND-EQUITY> 175,567
<SALES> 0
<TOTAL-REVENUES> 12,701
<CGS> 0
<TOTAL-COSTS> 4,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,770
<INCOME-PRETAX> 1,199
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,199
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<FN>
<F1>THIS IS OTHER ASSETS
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