FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to
__________________________________________
Commission file number 033-73340-01
John Q. Hammons Hotels, L.P.
John Q. Hammons Hotels Finance Corporation
John Q. Hammons Hotels Finance Corporation II
(Exact name of registrants as specified in their charters)
Delaware 43-1523951
Missouri 43-1680322
Missouri 43-1720400
(State or other jurisdiction of incorporation (IRS Employer
or organization) (Identification Nos.)
300 John Q. Hammons Parkway
Suite 900
Springfield, MO 65806
(Address of principal executive offices)
(417) 864-4300
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants (1) have 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 (or for such shorter period that the
registrants were required to file such reports, and (2) have been subject to
such filing requirements for the past 90 days.
Yes ___x__ No ______
JOHN Q. HAMMONS HOTELS, L.P.
John Q. Hammons Hotels Finance Corporation
John Q. Hammons Hotels Finance Corporation II
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Balance Sheets at September 27, 1996 (unaudited)
and December 29,1995 (audited) ................................... 3
Consolidated Statements of Income for the three and
nine months ended September 27, 1996 (unaudited)
and September 29, 1995 (unaudited)................................ 5
Consolidated Statements of Changes in Equity for the period
December 29, 1995 to September 27, 1996 (unaudited) .......... 6
Consolidated Statements of Cash Flows for the
nine months ended September 27, 1996 (unaudited)
and September 29, 1995 (unaudited)............................. 7
Notes to Consolidated Financial Statements ........................ 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................ 9
PART II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings........................................... 18
Item 6. Reports on Form 8-K.......................................... 18
Signatures ......................................... 19
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
ASSETS September 27, 1996 December 29,1995
(Unaudited) (Audited)
<S> <C> <C>
CASH AND EQUIVALENTS $28,043 $41,777
MARKETABLE SECURITIES 11,638 26,574
RECEIVABLES
Trade, less allowance for doubtful
accounts of $157 6,743 4,852
Construction reimbursements and
management fees 182 2,762
INVENTORIES 983 1,110
PREPAID EXPENSES AND OTHER 254 1,124
Total current assets 47,843 78,199
PROPERTY AND EQUIPMENT, at cost
Land and improvements 28,888 27,974
Buildings and improvements 410,979 399,746
Furniture, fixtures and equipment 147,490 149,535
Construction in progress 95,430 27,395
682,787 604,650
Less-accumulated depreciation and amortization (171,344) (169,811)
511,443 434,839
DEFERRED FINANCING COSTS,
FRANCHISE FEES AND OTHER, net 27,636 29,333
$586,922 $542,371
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED BALANCE SHEETS
(000's omitted)
LIABILITIES AND EQUITY
<TABLE>
<CAPTION>
September 27, 1996 December 29,1995
LIABILITIES: (Unaudited) (Audited)
<S> <C> <C>
Current portion of long-term debt $11,876 $7,981
Accounts payable 11,741 8,382
Accrued expenses
Payroll and related benefits 4,633 3,800
Sales and property taxes 7,736 7,012
Insurance 9,304 8,446
Interest 7,651 12,171
Utilities, franchise fees, and other 5,694 4,742
Total current liabilities 58,635 52,534
Long-term debt 477,283 450,113
Other obligations and deferred revenue 5,117 5,579
Total liabilities 541,035 508,226
COMMITMENTS AND CONTINGENCIES
EQUITY
Contributed capital 96,436 96,436
Partners' and other deficits, net (50,549) (62,291)
Total equity 45,887 34,145
$586,922 $542,371
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(000's omitted)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 27, 1996 Sept. 29, 1995 Sept. 27, 1996 Sept. 29, 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES:
<S> <C> <C> <C> <C>
Rooms $45,563 $40,116 $129,920 $112,771
Food and beverage 17,308 16,251 56,504 49,204
Meeting room rental
and other 4,458 3,869 13,868 11,203
Total revenues 67,329 60,236 200,292 173,178
OPERATING EXPENSES:
Direct operating costs and expenses-
Rooms 10,953 10,163 32,073 28,465
Food and beverage 13,107 13,103 41,858 38,562
Other 704 644 2,154 1,799
General, administrative
and sales expense 18,463 16,533 56,255 47,340
Repairs and maintenance 2,890 2,555 8,526 7,342
Depreciation and
amortization 6,310 4,565 18,256 11,659
Total operating expenses52,427 47,563 159,122 135,167
INCOME FROM OPERATIONS 14,902 12,673 41,170 38,011
OTHER INCOME (EXPENSE)
Interest income 570 840 1,790 3,442
Interest expense and
amortization of deferred
financing fees (9,109) (7,124) (28,538) (22,572)
NET INCOME $6,363 $6,389 $14,422 $18,881
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(000's omitted)
<TABLE>
<CAPTION>
Contributed Capital Partners Equity (Deficit) Total
General Partner General Partner Limited Partner
BALANCE, December 29, 1995
<S> <C> <C> <C> <C>
(audited) $96,436 ($85,373) $23,082 $34,145
Distributions -- -- (2,680) (2,680)
Net income -- 4,083 10,339 14,422
BALANCE, September 27, 1996
(unaudited) $96,436 ($81,290) $30,741 $45,887
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOW
(000's omitted)
<TABLE>
<CAPTION>
Nine Months Ended
September 27, 1996 September 29,1995
CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) (Audited)
<S> <C> <C>
Net income $14,422 $18,881
Adjustments to reconcile net income to cash
provided by operating activities-
Depreciation, amortization, and loan
cost amortization 19,596 12,169
Changes in certain assets and liabilities-
Receivables 689 (1,040)
Inventories 127 (29)
Prepaid expenses and other 870 909
Accounts payable 3,359 (2,592)
Accrued expenses (1,153) (3,302)
Other obligations and deferred revenue (462) 1,652
Net cash provided by operating activities 37,448 26,648
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment, net (92,742) (92,733)
Buy-out of minority interest -- (1,200)
Franchise fees and other (1,761) 2,220
Sale of marketable securities 14,936 64,608
Net cash used in investing activities (79,567) (27,105)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 32,133 10,690
Payments of notes payable to affiliates -- (547)
Repayments of debt (1,068) (3,037)
Distributions (2,680) (4,804)
Net cash provided by financing activities 28,385 2,302
Increase (decrease) in cash and equivalents (13,734) 1,845
CASH AND EQUIVALENTS, beginning of period 41,777 9,712
CASH AND EQUIVALENTS, end of period $28,043 $11,557
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
CASH PAID FOR INTEREST,
net of amounts capitalized $31,671 $28,365
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ENTITY MATTERS
The accompanying consolidated financial statements include the
accounts of John Q. Hammons Hotels, L.P. and its wholly-owned
subsidiaries ("Partnership"), consisting of John Q. Hammons
Hotels Finance Corporation ("Finance Corp.") and John Q.
Hammons Hotels Finance Corporation II ("Finance Corp. II"), both
corporations with nominal assets and no operations, the catering
corporations (which are separate corporations for each hotel
location chartered to own the respective food and liquor licenses
and operate the related food and beverage facilities), and certain
other wholly-owned subsidiaries conducting certain hotel
operations.
In conjunction with a public offering of first mortgage notes in
February 1994 ("1994 Notes") and in November 1995 ("1995
Notes") by the Partnership and Finance Corp I and II, and a public
offering of common stock in November 1994 ("Common Stock
Offering") by its general partner, John Q. Hammons Hotels, Inc.,
("General Partner"), the Partnership, which owned and operated
ten hotels properties, obtained through transfers or contributions
from Mr. John Q. Hammons ("Mr. Hammons") or enterprises that
he controlled, 21 additional operating hotel properties, equity
interests in two hotels under construction, the stock of catering
corporations and management contracts relating to all of Mr.
Hammons' hotels.
The Partnership is directly or indirectly owned and controlled by Mr.
Hammons, as were all enterprises that transferred or contributed
net assets to the Partnership. Accordingly, the accompanying
financial statements present, as a combination of entities under
common control as if using the pooling method of accounting, the
financial position and related results of operations of all entities on
a consolidated basis for all periods presented. All significant
balances and transactions between the entities and properties
have been eliminated.
Mr. Hammons and entities directly or indirectly owned or controlled
by him are the only limited partners of the Partnership. Mr.
Hammons, through his voting control of the General Partner,
continues to be in control of the Partnership.
2. GENERAL
The accompanying unaudited interim financial statements have
been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission for reporting on Form 10-Q.
Accordingly, certain information and footnotes required by
generally accepted accounting principles for complete financial
statements have been omitted. These interim statements should
be read in conjunction with the financial statements and notes
thereto included in the Partnership's Form 10-K for the year ended
December 29, 1995, which included financial statements for the
year ended December 29, 1995 and December 30, 1994.
The information contained herein reflects all normal and recurring
adjustments that, in the opinion of management, are necessary for
a fair presentation of the results of operations and financial position
for the interim periods.
The Partnership considers all operating cash accounts and money
market investments with an original maturity of three months or
less to be cash equivalents. Marketable securities consist of
available-for-sale commercial paper and government agency
obligations that mature or will be available for use in operations in
1996. These securities are valued at current market value, which
approximates cost.
3. ALLOCATIONS OF INCOME, LOSSES AND DISTRIBUTIONS
Income, losses and distributions of the Partnership will generally be
allocated between the General Partner and the limited partners
based on their respective ownership interests of 28.31% and
71.69%.
In the event the Partnership has taxable income, distributions are
to be made to the partners in an aggregate amount equal to the
amount that the Partnership would have paid for income taxes had
it been a C Corporation during the applicable period. Aggregate
tax distributions will first be allocated to the general partner, if
applicable, with the remainder allocated to the limited partners.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The following discussion and analysis addresses results of
operations for the three and nine months ended September 27,
1996 and September 29, 1995.
Total revenues increased to $67.3 million in the 1996 Three
Months from $60.2 million in the 1995 Three Months, an increase
of $7.1 million or 11.8%. Of the total revenues reported in the
1996 Three Months, 67.7% were revenues from rooms, 25.7%
were revenues from food and beverage, and 6.6% were revenues
from meeting room rental and other, compared with 66.6%, 27.0%,
and 6.4%, respectively, during the 1995 Three Months.
Rooms revenues increased to $45.6 million in the 1996 Three
Months from $40.1 million in the 1995 Three Months, an increase
of $5.5 million or 13.6% due to increases in the total number of
available rooms. Average room rates of Mature Hotels (open more
than one year) increased to $74.83 in the 1996 Three Months from
$72.11 in the 1995 Three Months, an increase of $2.72 or 3.8%.
Occupancy of Mature Hotels decreased to 70.3% in the 1996
Three Months from 73.8% in the 1995 Three Months, a decrease
of 3.5 percentage points. The lower occupancy was primarily due
to the increased number of limited service rooms opening in the
immediate market of some of the Partnership's owned hotels.
Food and beverage revenues increased to $17.3 million in the
1996 Three Months from $16.3 million in the 1995 Three Months,
an increase of $1.0 million or 6.5%. The increase in revenues was
attributable to the opening of additional full service hotels, opening
of new restaurant concepts in the existing hotels, and menu pricing
adjustments.
Meeting room rental and other revenues increased to $4.5 million
in the 1996 Three Months from $3.9 million in the 1995 Three
Months, an increase of $0.6 million or 15.2%. The increase was
attributable to increased group business requiring meeting space
as well as increased pricing.
Rooms operating expenses increased to $11.0 million in the 1996
Three Months from $10.2 million in the 1995 Three Months, an
increase of $0.8 million or 7.8%. This expense represented 24.0%
of rooms revenues in the 1996 Three Month period and 25.3% in
the 1995 Three Month period.
Food and beverage operating expenses were $13.1 million in the
1996 and 1995 Three Months. As a percentage of food revenue
these expenses decreased to 75.7% in the 1996 Three Months
from 80.6% in the 1995 Three Months.
Other operating expenses increased to $0.7 million in the 1996
Three Months from $0.6 million in the 1995 Three Months, an
increase of $0.1 million or 9.3%.
General, administrative and sales expenses increased to $18.5
million in the 1996 Three Months from $16.5 million in the 1995
Three Months, an increase of $2.0 million or 11.7%. The increased
expenses were a result of expenses incurred on the six hotels
opened during the second half of 1995.
Repairs and maintenance expenses increased to $2.9 million in the
1996 Three Months from $2.6 million in the 1995 Three Months, an
increase of $0.3 million or 13.1%. The increase was a result of the
Partnership's increased number of hotels open.
Depreciation and amortization expenses increased to $6.3 million
in the 1996 Three Months from $4.6 million in the 1995 Three
Months, an increase of $1.7 million or 38.2%. These expenses
represented 9.4% of total revenues in the 1996 Three Months and
7.6% of total revenues in the 1995 Three Months. The increase
was primarily due to the opening of six new hotels in the second
half of 1995.
Income from Operations increased to $14.9 million in the 1996
Three Months from $12.7 million in the 1995 Three Months, an
increase of $2.2 million or 17.6%. The increase was due primarily
to the higher amount of total revenue offset in part by higher
depreciation from new hotels open during the 1996 quarter.
Interest income decreased to $0.6 million in the 1996 Three
Months from $0.8 million in the 1995 Three Months, a decrease of
$0.2 million or 32.1%. The decrease was attributable to lower
balances in cash and equivalents and in marketable securities
because of amounts utilized for new construction.
Interest expense and amortization of deferred financing fees
increased to $9.1 million in the 1996 Three Months from $7.1
million in the 1995 Three Months, an increase of $2.0 million or
27.9%. As a percentage of total revenues, this expense increased
to 13.5% in the 1996 Three Months from 11.8% in the 1995 Three
Months.
Net Income was $6.4 million in the 1996 and 1995 Three Months.
As a percentage of total revenues, it decreased to 9.5% in the
1996 Three Months from 10.6% in the 1995 Three Months. The
decrease was due primarily to an increase in depreciation and
interest expense associated with the opening of six hotels in 1995
that have not reached normal occupancy levels.
NINE MONTHS
Total revenues increased to $200.3 million in the 1996 Nine
Months from $173.2 million in the 1995 Nine Months, an increase
of $27.1 million or 15.7%. Of the total revenues reported in the
1996 Nine Months, 64.9% were revenues from rooms, 28.2% were
revenues from food and beverage, and 6.9% were revenues from
meeting room rental and other, compared with 65.1%, 28.4%, and
6.5%, respectively, during the 1995 Nine Months.
Rooms revenues increased to $129.9 million in the 1996 Nine
Months from $112.8 million in the 1995 Nine Months, an increase
of $17.1 million or 15.2% as a result of increases in average room
rates and total number of available rooms. Average room rates of
Mature Hotels increased to $74.58 in the 1996 Nine Months from
$71.38 in the 1995 Nine Months, an increase of $3.20 or 4.5%.
Occupancy of Mature Hotels decreased to 68.3% in the 1996 Nine
Months from 71.1% in the 1995 Nine Months, a decrease of 2.8
percentage points. The lower occupancy was primarily due to the
increased number of limited service hotels open in the immediate
market area of some of the Partnership's owned hotels.
Food and beverage revenues increased to $56.5 million in the
1996 Nine Months from $49.2 million in the 1995 Nine Months, an
increase of $7.3 million or 14.8%. The increase in revenues was
attributable to the opening of additional full service hotels, opening
of new restaurant concepts in the existing hotels, and menu pricing
adjustments.
Meeting room rental and other revenues increased to $13.9 million
in the 1996 Nine Months from $11.2 million in the 1995 Nine
Months, an increase of $2.7 million or 23.8%. The increase was
attributable to increased group business requiring meeting space
as well as increased pricing.
Rooms operating expenses increased to $32.1 million in the 1996
Nine Months from $28.5 million in the 1995 Nine Months, an
increase of $3.6 million or 12.7%. This expense represented
24.7% of rooms revenues in the 1996 Nine Month period and
25.2% in the 1995 Nine Month period.
Food and beverage operating expenses increased to $41.9 million
in the 1996 Nine Months from $38.6 million in the 1995 Nine
Months, an increase of $3.3 million or 8.5%.
Other operating expenses increased to $2.2 million in the 1996
Nine Months from $1.8 million in the 1995 Nine Months, an
increase of $0.4 million or 19.7%.
General, administrative and sales expenses increased to $56.3
million in the 1996 Nine Months from $47.3 million in the 1995 Nine
Months, an increase of $9.0 million or 18.8%. The increased
expenses were a result of expenses incurred on the six hotels
opened during the second half of 1995.
Repairs and maintenance expenses increased to $8.5 million in the
1996 Nine Months from $7.3 million in the 1995 Nine Months, an
increase of $1.2 million or 16.1%. The increase was a result of the
Partnership's increased number of hotels open.
Depreciation and amortization expenses increased to $18.3 million
in the 1996 Nine Months from $11.7 million in the 1995 Nine
Months, an increase of $6.6 million or 56.6%. These expenses
represented 9.1% of total revenues in the 1996 Nine Months and
6.7% of total revenues in the first Nine Months of 1995. The
increase was primarily due to the opening of six new hotels in the
second half of 1995.
Income from Operations increased to $41.2 million in the 1996
Nine Months from $38.0 million in the 1995 Nine Months, an
increase of $3.2 million or 8.3%. The increase was due primarily
to the higher amount of total revenue offset in part by higher
depreciation from new hotels open during the first Nine Months of
1996.
Interest income decreased to $1.8 million in the 1996 Nine Months
from $3.4 million in the 1995 Nine Months, a decrease of $1.6
million or 48.0%. The decrease was attributable to lower
balances in cash and equivalents and in marketable securities as
a result of amounts spent for new construction.
Interest expense and amortization of deferred financing fees
increased to $28.5 million in the 1996 Nine Months from $22.6
million in the 1995 Nine Months, an increase of $5.9 million or
26.4%. As a percentage of total revenues, this expense increased
to 14.2% in the 1996 Nine Months from 13.0% in the 1995 Nine
Months.
Net Income decreased to $14.4 million in the 1996 Nine Months
from $18.9 million in the 1995 Nine Months, a decrease of $4.5
million or 23.6%. As a percentage of total revenues, it decreased
to 7.2% in the 1996 Nine Months from 10.9% in the 1995 Nine
Months. The decrease was due primarily to an increase in
depreciation and interest expense associated with the opening of
six hotels in 1995 that have not reached normal occupancy level.
Liquidity and Capital Resources
In general, the Partnership has financed its operations through
internal cash flow, loans from financial institutions, the issuance of
public debt and equity and the issuance of industrial revenue
bonds. Twenty of the Partnership's hotels are pledged to secure
the 1994 Notes (the "1994 Collateral Hotels"). Eight of the
Partnership's hotels are pledged to secure the 1995 Notes (the
"1995 Collateral Hotels"). The Partnership in the future may
obtain mortgage financing secured by unencumbered hotels and
construction in progress to provide additional liquidity, if necessary.
The Partnership's principal uses of cash are to pay operating
expenses, to service debt, and to fund capital expenditures, new
hotel development and partnership distributions.
At September 27, 1996 the Partnership had $28.0 million of cash
and equivalents, and also had $11.6 million of marketable
securities, which represented a portion of the proceeds of the Note
Offerings and Common Stock Offering of the General Partner.
Net cash provided by operating activities was $37.4 million for the
first Nine Months of 1996 compared to $26.6 million at the end of
the first Nine Months of 1995, an increase of $10.8 million. A
majority of the increase was due to among others, increases in
depreciation and amortization, fewer receivables due from
construction reimbursements, and increases in construction
payables at September 27, 1996.
The Partnership incurred net capital expenditures of $ 92.7 million
during the first nine months of 1996 and 1995. Capital
expenditures include expenditures for development of new hotels
and capital improvements on existing hotel properties. During the
remainder of 1996 the Partnership expects capital expenditures to
total approximately $56 million, representing $6 million for capital
improvements on existing hotels and $50 million for continued new
hotel development.
The Partnership currently has eight hotels under construction.
The Partnership estimates that building and pre-opening costs of
the these eight hotels will require aggregate funding of
approximately $196 million from the Partnership (net of $84 million
included in construction in progress at September 27, 1996).
In addition to the capital expenditures for the hotels under
construction, the Partnership is at various stages in other new
hotel development. Capital requirements for the hotels under
development are expected to be provided by (I) mortgage
financing secured by the Owned Hotels which are unencumbered;
(ii) mortgage financing secured by the Hotels as described above;
and (iii) contributions from third parties.
On July 15, 1996 the Partnership received a commitment for a
secured line of credit. Borrowings under the secured line of credit
will mature three years from the date of closing and require
quarterly principal payments commencing September 30, 1997.
Borrowings bear interest at LIBOR plus an applicable margin as
defined in the credit agreement. The partnership pays a
commitment fee of 0.375% per annum on the daily unused portion
of the credit facility.
Including the secured line of credit the Partnership has received
loan commitments for the projects planned and under construction
in excess of $170 million.
The Partnership expects to fund development of new hotels
through limited partnerships in which the Partnership will be the
general partner and a wholly owned corporate subsidiary of the
Partnership will be the limited partner. As permitted by the
Indentures related to the 1994 Notes and 1995 Notes (the "1994
and 1995 Note Indentures"), each of these entities will be an
"Unrestricted Subsidiary" for purposes thereof, and accordingly,
the ability of the Partnership to fund these entities is subject to
certain limitations contained in the 1994 and 1995 Note
Indentures. All of the indebtedness of these entities will be
non-recourse to the Partnership. The Partnership believes that funding
permitted under the 1994 and 1995 Note Indentures will be
sufficient to meet its current development plans.
Based upon current plans relating to the timing of new hotel
development, the Partnership anticipates that its capital resources
will be adequate to satisfy its 1996 capital requirements for the
currently planned projects and normal recurring capital
improvement projects through the end of 1996 for hotels currently
under construction and normal recurring capital improvement
projects.
The Partnership accrued distributions of approximately $ 2.7 million
during the first Nine Months of 1996 to its partners. Distributions
by the Partnership to its partners must be made in accordance with
provisions of the 1994 and 1995 Note Indentures.
Supplemental Financial Information Relating to the 1994 and 1995
Collateral Hotels
The following tables set forth, as of September 27, 1996,
unaudited selected financial information with respect to the 20 hotels
collateralizing the 1994 Notes (the "1994 Collateral Hotels") and the eight
hotels collateralizing the 1995 Notes ("the 1995 Collateral Hotels") and
the Partnership, excluding Unrestricted Subsidiaries (as defined in the
indentures relating to the 1994 Notes and the 1995 Indentures) (the
"Restricted Group"). Under the heading "Management Operations,"
information with respect to revenues and expenses generated by the
Company as manager of the 1994 Collateral Hotels, the 1995 Collateral
Hotels, the other Owned Hotels owned by John Q. Hammons Hotels Two,
L.P. ("L.P. Two"), and the Managed Hotels is provided.
<TABLE>
<CAPTION>
Trailing 12 Months Ended September 27, 1996
_______ ________ __________ ______
1994 1995 Management Total
Collateral Collateral Operations Restricted
Hotels Hotels Group
----------- ----------- ------------ ----------
(Dollars in thousands, except operating data)
Statement of Operations Data:
<S> <C> <C> <C> <C>
Operating Revenues $150,530 $ 60,540 $ 3,413(a) $214,483
Operating Expenses:
Direct operating costs and
expenses 58,577 23,951 -- 82,528
General, administrative,
sales and management
expenses (b) 41,348 18,111 (2,441)(c) 57,018
Repairs and maintenance 6,309 2,864 -- 9,173
Depreciation and amortization10,012 4,721 106 14,839
Total operating expenses 116,246 49,647 (2,335) 163,558
Income from operations $ 34,284 $ 10,893 $ 5,748 $ 50,925
======= ======= ======= ======
Operating Data:
Occupancy 67.1% 68.2%
Average daily room rate $76.44 $70.87
RevPAR $51.32 $48.31
</TABLE>
<TABLE>
<CAPTION>
12 Months Ended December 29, 1995
_______ ________ __________ ______
1994 1995 Management Total
Collateral Collateral Operations Restricted
Hotels Hotels Group
-------- --------- ---------- --------
(Dollars in thousands, except operating data)
Statement of Operations Data:
<S> <C> <C> <C> <C>
Operating Revenues $149,486 $ 60,001 $ 1,733(a) $211,220
Operating Expenses:
Direct operating costs
and expenses 60,431 23,973 -- 84,404
General, administrative,
sales and management
expenses (b) 40,767 17,933 (3,096)(c) 55,604
Repairs and maintenance 6,194 2,745 -- 8,939
Depreciation and
amortization 8,771 4,711 99 13,581
Total operating expenses 116,163 49,362 (2,997) 162,528
Income from operations $ 33,323 $ 10,639 $ 4,730 $ 48,692
======= ======= ======= ======
Operating Data:
Occupancy 69.1% 70.1%
Average daily room rate $73.94 $68.80
RevPAR $51.10 $48.26
</TABLE>
- ---------------------------------------------------------
(a)Represents management revenues derived from the Owned Hotels owned by
Two L.P. and the Managed Hotels.
(b)General, administrative, sales and management expenses for the 1994
and 1995 Collateral Hotels includes management expenses allocated to the
respective hotels.
(c)General, administrative, sales and management expenses applicable to
management operations is net of management revenues allocated to the 1994
and 1995 Collateral Hotels.
Part II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings
A lawsuit has been filed in the U.S. District Court of Arizona, CV
96-356 TUC JMR, against John Q. Hammons Hotels Two, L.P., a
Delaware limited partnership, and John Q. and Juanita K.
Hammons, husband and wife. The Second Amended Complaint
was filed on August 5, 1996, by the Marshall Foundation, a not-for-profit
Arizona corporation. The lawsuit arises out of a Ground
Lease by the Marshall Foundation to John Q. Hammons Hotels
Two, L.P., the performance of which is guaranteed by John Q. and
Juanita K. Hammons. The Ground Lease requires Hammons to
construct a hotel on the subject land and maintain and operate the
hotel for a 99-year term.
The lawsuit alleges that the Hammons entities are guilty of bad
faith and misrepresentation, as well as fraud, and that the Marshall
Foundation is entitled to specific performance, declaratory relief on
certain issues and damages. The claim arises out of a dispute
over the course of construction of the hotel, with the Marshall
Foundation claiming that it has the right to approve all
modifications to the original plans developed for the hotel and the
Hammons entities contending that they have the right to build the
hotel in a manner that is consistent with the original plans and
drawings but subject only to the Ground lease requirement that the
hotel be First-class in quality and have a value of more than
$16,000,000.
Hammons has filed a counterclaim seeking declaratory relief with
regard to whether it is complying with the terms of the Ground
Lease between the parties and seeking monetary damages from
the Marshall Foundation for the Foundation's wrongful interference
with the rights of Hammons under the terms of the Ground Lease.
A partial settlement has been reached which postpones any further
litigation until the hotel is completed.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized, in
the City of Springfield, Missouri on the 8th day of November, 1996.
JOHN Q. HAMMONS HOTELS, L.P.
By: John Q. Hammons Hotels, Inc., its
General Partner
By: /s/ John Q. Hammons
John Q. Hammons
Chairman, Founder,
and Chief Executive Officer
By: /s/ Mel J. Volmert
Mel J. Volmert
Executive Vice President and
Chief Financial Officer
JOHN Q. HAMMONS HOTELS JOHN Q. HAMMONS HOTELS
FINANCE FINANCE
CORPORATION CORPORATION II
By: /s/ John Q. Hammons By: /s/ John Q. Hammons
John Q. Hammons John Q. Hammons
Chairman, Founder, Chairman, Founder,
and Chief Executive Officer and Chief Executive Officer
By: /s/ Mel J. Volmert By: /s/ Mel J. Volmert
Mel J. Volmert Mel J. Volmert
Executive Vice President and Executive Vice President
Chief Financial Officer and Chief Financial Officer
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