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 June 28, 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 (IRS Employer
incorporation 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
PAGE
Item 1. Financial Statements
Consolidated Balance Sheets at June 28, 1996 (unaudited) and
December 29,1995 (audited) ..................................... 3
Consolidated Statements of Income for the three and six months
ended June 28, 1996 (unaudited) and June 30, 1995 (unaudited).... 5
Consolidated Statements of Changes in Equity for the period
December 29, 1995 to June 28, 1996 (unaudited) ................ 6
Consolidated Statements of Cash Flows for the six months ended
June 28, 1996 (unaudited) and June 30, 1995 (unaudited).......... 7
Notes to Consolidated Financial Statements ....................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ...................................... 10
PART II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings.......................................... 19
Item 6. Reports on Form 8-K......................................... 19
Signatures ........................................ 20
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
June 28, 1996 December 29, 1995
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 37,999 $41,777
Marketable securities 21,039 26,574
Receivables -
Trade, less allowance for doubtful
accounts of $157 5,731 4,852
Construction reimbursements and
management fees 98 2,762
Inventories 994 1,110
Prepaid expenses and other 524 1,124
---------- ----------
Total current assets 66,385 78,199
---------- ----------
PROPERTY AND EQUIPMENT, at cost
Land and improvements 28,009 27,974
Buildings and improvements 403,211 399,746
Furniture, fixtures and equipment 157,044 149,535
Construction in progress 67,045 27,395
---------- ---------
655,309 604,650
Less-Accumulated depreciation
and amortization (180,094) (169,811)
---------- ---------
475,215 434,839
DEFERRED FINANCING COSTS, FRANCHISE
FEES AND OTHER, net 28,251 29,333
-------- --------
$569,851 $542,371
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
June 28, 1996 December 29, 1995
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 10,371 $ 7,981
Accounts Payable 10,788 8,382
Accrued expenses:
Payroll and related benefits 3,542 3,800
Sales and property taxes 7,030 7,012
Insurance 9,174 8,446
Interest 12,119 12,171
Utilities, franchise fees,
and other 5,372 4,742
----------- -----------
Total current liabilities 58,396 52,534
LONG-TERM DEBT 465,655 450,113
OTHER OBLIGATIONS AND DEFERRED REVENUE 5,271 5,579
-------- ---------
Total liabilities 529,322 508,226
COMMITMENTS AND CONTINGENCIES
EQUITY
Contributed capital 96,436 96,436
Partners' and other deficits, net (55,907) (62,291)
---------- ----------
Total equity 40,529 34,145
---------- ----------
$569,851 $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 Six Months Ended
June 28,1996 June 30, 1995 June 28,1996 June 30, 1995
(unaudited) (unaudited) (unaudited) (unaudited)
REVENUES:
<S> <C> <C> <C> <C>
Rooms $44,126 $38,005 $84,357 $72,655
Food and beverage 19,435 16,648 39,196 32,953
Meeting room rental
and other 4,782 3,646 9,410 7,334
------- ------- ------- -------
Total revenues 68,343 58,299 132,963 112,942
OPERATING EXPENSES :
Direct operating costs and expenses
Rooms 10,826 9,521 21,120 18,302
Food and beverage 14,448 13,107 28,751 25,459
Other 734 593 1,450 1,155
General, administrative
and sales expenses 18,428 15,432 37,792 30,807
Repairs and maintenance 3,036 2,530 5,636 4,787
Depreciation and amortization 6,025 3,672 11,946 7,094
--------- -------- -------- ---------
Total operating expenses 53,497 44,855 106,695 87,604
--------- -------- -------- ---------
INCOME FROM OPERATIONS 14,846 13,444 26,268 25,338
OTHER INCOME (EXPENSE) :
Interest income 526 1,226 1,220 2,602
Interest expense and amortization
of deferred financing fees (9,470) (7,591) (19,429) (15,448)
------- ------- ------- -------
NET INCOME $5,902 $7,079 $8,059 $12,492
======= ======= ======= =======
</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)
General General Limited
Partner Partner Partner Total
<S> <C> <C> <C> <C>
BALANCE
December 29, 1995
(Audited) $96,436 ($85,373) $23,082 $34,145
Distributions (1,675) (1,675)
Net Income 2,282 5,777 8,059
--------- ---------- --------- -----------
BALANCE,
June 28, 1996
(Unaudited) $96,436 ($83,091) $27,184 $40,529
======= ======== ======== =======
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted)
<TABLE>
<CAPTION>
Six Months Ended
June 28,1996 June 30, 1995
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 8,059 $12,492
Adjustments to reconcile net income to cash
provided by operating activities-
Depreciation, amortization and loan
cost amortization 12,861 7,776
Changes in certain assets and liabilities-
Receivables 1,785 (313)
Inventories 116 79
Prepaid expenses and other 600 536
Accounts payable 2,406 (1,386)
Accrued expenses 1,066 956
Other obligations and
deferred revenue (308) (652)
--------- --------
Net cash provided by
operating activities 26,585 19,488
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net(50,659) (56,838)
Buyout of minority interest -- (1,200)
Franchise fees and other (1,496) 2,081
Sale of marketable securities, net 5,535 34,095
---------- ----------
Net cash used in investing activities (46,620) (21,862)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 19,000 9,162
Payments of notes payable to affiliates -- (547)
Repayments of debt (1,068) (1,831)
Distributions to partners (1,675) (3,227)
---------- ---------
Net cash provided by
financing activities 16,257 3,557
---------- ---------
Increase (decrease) in cash and equivalent (3,778) 1,183
CASH AND EQUIVALENTS, beginning of period 41,777 9,712
--------- ---------
CASH AND EQUIVALENTS, end of period $37,999 $10,895
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID FOR INTEREST,
net of amounts capitalized $18,567 $16,534
======= =======
</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 result of operations
for the three and six months ended June 28, 1996 and June 30, 1995.
Total revenues increased to $68.3 million in the 1996 Three Months
from $58.3 million in the 1995 Three Months, an increase of $10 million
or 17.2%. Of the total revenues reported in the 1996 Three Months,
64.6% were revenues from rooms, 28.4% were revenues from food and
beverage, and 7.0% were revenues from meeting room rental and
other, compared with 65.2%, 28.6%, and 6.2% respectively during the
1995 Three Months.
Rooms revenues increased to $44.1 million in the 1996 Three Months
from $38.0 million in the 1995 Three Months, an increase of $6.1
million or 16.1% because of increases in average room rates and total
number of available rooms. Average room rates of Mature Hotels
(open more than one year) increased to $74.65 in the 1996 Three
Months from $71.13 in the 1995 Three Months, an increase of $3.52 or
5.0%. Occupancy of Mature Hotels decreased to 69.5% in the 1996
Three Months from 72.8% in the 1995 Three Months, a decrease of 3.3
percentage points. The lower occupancy was primarily due to the
increased number of limited service rooms opening in the immediate
market of some Partnership hotels and the non-recurrence of certain
large group reservations in the second quarter compared to the prior
year second quarter.
Food and beverage revenues increased to $19.4 million in the 1996
Three Months from $16.6 million in the 1995 Three Months, an
increase of $2.8 million or 16.7%. 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 $4.8 million in the
1996 Three Months from $3.6 million in the 1995 Three Months, an
increase of $1.2 million or 31.2%.
Rooms operating expenses increased to $10.8 million in the 1996
Three Months from $9.5 million in the 1995 Three Months, an increase
of $1.3 million or 13.7%. This expense represented 24.5% of rooms
revenues in the 1996 Three Month period and 25.1% in the 1995 Three
Month period.
Food and beverage operating expenses increased to $14.4 million in
the 1996 Three Months from $13.1 million in the 1995 Three Months,
an increase of $1.3 million or 10.2%.
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 23.8%.
General, administrative and sales expenses increased to $18.4 million
in the 1996 Three Months from $15.4 million in the 1995 Three Months,
an increase of $3.0 million or 19.4%. The increased expenses were a
result of expenses incurred during the 1996 Three Months associated
with the opening of 16% more rooms during the last half of 1995.
Repairs and maintenance expenses increased to $3.0 million in the
1996 Three Months from $2.5 million in the 1995 Three Months, an
increase of $0.5 million or 20.0%. The increase was a result of the
Partnership's increased number of hotels open.
Depreciation and amortization expenses increased to $6.0 million in the
1996 Three Months from $3.7 million in the 1995 Three Months, an
increase of $2.3 million or 64.1%. These expenses represented 8.8%
of total revenues in the 1996 Three Months and 6.3% of total revenues
in the 1995 Three Months.
Income from Operations increased to $14.8 million in the 1996 Three
Months from $13.4 million in the 1995 Three Months, an increase of
$1.4 million or 10.4%. 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 $0.5 million in the 1996 Three Months
from $1.2 million in the 1995 Three Months, a decrease of $0.7 million
or 57.1%. The decrease was attributable to lower balances in cash
and equivalents and in marketable securities because of amounts
spent for new construction.
Interest expense and amortization of deferred financing fees increased
to $9.5 million in the 1996 Three Months from $7.6 million in the 1995
Three Months, an increase of $1.9 million or 24.8%. As a percentage
of total revenues, this expense increased to 13.9% in the 1996 Three
Months from 13.0% in the 1995 Three Months.
Net Income decreased to $5.9 million in the 1996 Three Months from
$7.1 million in the 1995 Three Months, a decrease of $1.2 million or
16.6%. As a percentage of total revenues, it decreased to 8.6% in the
1996 Three Months from 12.1% 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 mature occupancy levels.
Total revenues increased to $133.0 million in the 1996 Six Months from
$112.9 million in the 1995 Six Months, an increase of $20.1 million or
17.7%. Of the total revenues reported in the 1996 Six Months, 63.4%
were revenues from rooms, 29.5% were revenues from food and
beverage, and 7.1% were revenues from meeting room rental and
other, compared with 64.3%, 29.2%, and 6.5% respectively during the
1995 Three Months.
Rooms revenues increased to $84.4 million in the 1996 Six Months
from $72.7 million in the 1995 Six Months, an increase of $11.7 million
or 16.1% as a result of increases in average room rates and total
number of available rooms. Average room rates of Mature Hotels
increased to $74.45 in the 1996 Six Months from $70.99 in the 1995
Six Months, an increase of $3.46 or 4.9%. Occupancy of Mature Hotels
decreased to 67.3% in the 1996 Six Months from 69.8% in the 1995 Six
Months, a decrease of 2.5 percentage points. The lower occupancy
was primarily due to bad weather at some hotels during the first quarter
and the increased number of limited service hotels opening in the
immediate market area of some partnership hotels.
Food and beverage revenues increased to $39.2 million in the 1996 Six
Months from $33.0 million in the 1995 Six Months, an increase of $6.2
million or 18.9%. 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 $9.4 million in the
1996 Six Months from $7.3 million in the 1995 Six Months, an increase
of $2.1 million or 28.3%.
Rooms operating expenses increased to $21.1 million in the 1996 Six
Months from $18.3 million in the 1995 Six Months, an increase of $2.8
million or 15.4%. This expense represented 25.0% of rooms revenues
in the 1996 Six Month period and 25.2% in the 1995 Six Month period.
Food and beverage operating expenses increased to $28.8 million in
the 1996 Six Months from $25.5 million in the 1995 Six Months, an
increase of $3.3 million or 12.9%.
Other operating expenses increased to $1.5 million in the 1996 Six
Months from $1.2 million in the 1995 Six Months, an increase of $0.3
million or 25.5%.
General, administrative and sales expenses increased to $37.8 million
in the 1996 Six Months from $30.8 million in the 1995 Six Months, an
increase of $7.0 million or 22.7%. The increased expenses were a
result of expenses incurred during the 1996 Six Months associated with
the opening of 16% more rooms during the last half of 1995.
Repairs and maintenance expenses increased to $5.6 million in the
1996 Six Months from $4.8 million in the 1995 Six Months, an increase
of $0.8 million or 17.7%. The increase was a result of the Partnership's
increased number of hotels open.
Depreciation and amortization expenses increased to $11.9 million in
the 1996 Six Months from $7.1 million in the 1995 Six Months, an
increase of $4.8 million or 68.4%. These expenses represented 9.0%
of total revenues in the 1996 first half and 6.3% of total revenues in the
first half of 1995.
Income from Operations increased to $26.3 million in the 1996 Six
Months from $25.3 million in the 1995 Six Months, an increase of $1.0
million or 3.7%. 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 half.
Interest income decreased to $1.2 million in the 1996 Six Months from
$2.6 million in the 1995 Six Months, a decrease of $1.4 million or
53.1%. 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 $19.4 million in the 1996 Six Months from $15.4 million in the 1995
Six Months, an increase of $4.0 million or 25.8%. As a percentage of
total revenues, this expense increased to 14.6% in the 1996 Six
Months from 13.7% in the 1995 Six Months.
Net Income decreased to $8.1 million in the 1996 Six Months from
$12.5 million in the 1995 Six Months, a decrease of $4.4 million or
35.5%. As a percentage of total revenues, it decreased to 6.1% in the
1996 Six Months from 11.1% in the 1995 Six 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
mature occupancy levels.
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 June 28, 1996 the Partnership had $38.0 million of cash and
equivalents, and also had $21.0 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 from operating activities was $26.6 million for the
first Six months of 1996 compared to $19.5 million at the end of the
first Six months of 1995, an increase of $7.1 million. A majority of the
increase was due to fewer receivables due from construction
reimbursements and increases in construction payables at June 28,
1996.
The Partnership incurred net capital expenditures of $ 50.7 million
during the first six months of 1996 and $ 56.8 million during the first six
months of 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 $95 million, representing
$10 million for capital improvements on existing hotels and $85 million
for continued new hotel development.
The Partnership currently has seven hotels under construction. The
Partnership estimates that building and pre-opening costs of the these
seven hotels will require aggregate funding of approximately $167
million from the Partnership (net of $44 million included in construction
in progress at June 28, 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 $33.0
million 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 of
$0.3 million. 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.
In addition to the secured line of credit the Partnership has received
various loan commitments for the projects planned and under
construction in the amount of $134 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 $ 1.7 million
during the first six 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 June 28, 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.
Trailing 12 Months Ended June 28, 1996
<TABLE>
<CAPTION>
___________ __________ __________ __________
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 Revenu es $150,964 $ 61,047 $ 2,991(a) $215,002
Operating Expenses:
Direct operating costs
and expenses 59,676 24,246 -- 83,922
General, administrative,
sales and management
expenses (b) 40,946 18,243 (2,415)(c) 56,774
Repairs and maintenance 6,254 2,846 -- 9,100
Depreciation and amortization 9,446 4,710 101 14,257
Total operating expenses 116,322 50,045 (2,314) 164,053
Income from operations $ 34,642 $ 11,002 $ 5,305 $ 50,949
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Operating Data:
<S> <C> <C>
Occupancy 67.9% 69.5%
Average daily room rate $75.70 $70.20
RevPAR $51.42 $48.78
</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
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
Operating Data:
<S> <C> <C>
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.
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 12th day of August, 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 and
Chief Financial Officer Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-3-1997 JAN-3-1997
<PERIOD-END> JUN-28-1996 JUN-28-1996
<CASH> 0 37999
<SECURITIES> 0 21039
<RECEIVABLES> 0 5731
<ALLOWANCES> 0 0
<INVENTORY> 0 994
<CURRENT-ASSETS> 0 66385
<PP&E> 0 655309
<DEPRECIATION> 0 180094
<TOTAL-ASSETS> 0 569851
<CURRENT-LIABILITIES> 0 58396
<BONDS> 0 390000
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 569851
<SALES> 68343 132963
<TOTAL-REVENUES> 68869 134183
<CGS> 26008 51321
<TOTAL-COSTS> 53497 106695
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 9470 19429
<INCOME-PRETAX> 5902 8059
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5902 8059
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
