<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K\A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): AUGUST 13, 1997 (June 30,
1997)
FELCOR SUITE HOTELS, INC.
(Exact name of registrant specified in its charter)
MARYLAND 0-24250 72-2541756
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 444-4900
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Audited financial statements are included for the Sheraton Acquisition
Hotels, including a combined balance sheet for the Sheraton Acquisition Hotels
as of December 31, 1996 and March 31, 1997 (unaudited) the related combined
statements of revenues over expenses, and combined statements of cash flows for
the year ended December 31, 1996 and three months ended March 31, 1997 and 1996
(unaudited) and the combined statements of equity for the year ended December
31, 1996 and the three months ended March 31, 1997 (unaudited).
(b) PRO FORMA FINANCIAL INFORMATION.
The unaudited pro forma statements of operations of the Company and the
Lessee are presented as if (i) the acquisitions of all hotels owned by the
Company at December 31, 1996, (ii) those hotels acquired in 1997 through July
31, 1997 (collectively the "Hotels"), (iii) the equity offerings consummated
during 1996 and 1997 and (iv) related transactions had occurred as of January
1, 1996 and all of the Hotels had been leased to the Lessee pursuant to the
Percentage Leases.
The unaudited consolidated balance sheet of the Company is presented as if
the acquisition of the hotels acquired subsequent to March 31, 1997 and the
consummation of the June 1997 equity offering and related transactions had
occurred on March 31, 1997.
(c) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C>
23.1 -- Consent of Coopers and Lybrand, L.L.P.
</TABLE>
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 13, 1997
FELCOR SUITE HOTELS, INC.
By: /s/ Lester C. Johnson
-----------------------------
Lester C. Johnson
Vice President/Controller
3
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SHERATON ACQUISITION HOTELS
Combined audits on five Sheraton hotels in which the Company acquired on June 30, 1997.
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Combined Balance Sheets as of December 31, 1996 and March 31, 1997 (unaudited) . . . . . . . . . . . . . 7
Combined Statements of Revenues Over Expenses for the Year Ended December 31, 1996
and Three Month Period Ended March 31, 1997 and 1996 (unaudited) . . . . . . . . . . . . . . . . . . . 8
Combined Statements of Equity for the Year Ended December 31, 1996
and the Three Months Ended March 31, 1997 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 9
Combined Statements of Cash Flows for the Year Ended December 31, 1996
and the Three Months Ended March 31, 1997 and 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . 10
Notes to Combined Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PRO FORMA INFORMATION
(unaudited)
FelCor Suite Hotels, Inc. Pro Forma Consolidated Statements of Operations
for the Three Months Ended March 31, 1997 and the Year Ended
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
FelCor Suite Hotels, Inc. Pro Forma Consolidated Balance Sheet --
March 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DJONT Operations, L.L.C. Pro Forma Condensed Consolidated Statements of
Operations for the Three Months Ended March 31, 1997 and the Year
Ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
4
<PAGE> 5
SHERATON ACQUISITION HOTELS
COMBINED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
5
<PAGE> 6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
FelCor Suite Hotels, Inc.
We have audited the accompanying combined balance sheet of the Sheraton
Acquisition Hotels (described in Note 1) as of December 31, 1996 and the
related combined statements of revenues over expenses, equity and cash flows
for the year then ended. These financial statements are the responsibility of
the management of the Sheraton Hotels. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion. The accompanying financial statements were prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission as described in Note 1 to the financial statements and are
not intended to be a complete presentation of the Sheraton Acquisition Hotels.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of the Sheraton
Acquisition Hotels as of December 31, 1996 and the combined results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 25, 1997
6
<PAGE> 7
SHERATON ACQUISITION HOTELS
COMBINED BALANCE SHEETS
December 31, 1996 and March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1996 1997
------------ -----------
(unaudited)
<S> <C> <C>
Investment in hotel properties:
Land $ 14,204,043 $ 14,204,043
Buildings 104,813,832 104,813,832
Furniture, fixtures and equipment 36,500,301 37,781,812
Construction in progress 1,253,760 914,692
------------------ ----------------
156,771,936 157,714,379
Accumulated depreciation (26,036,362) (28,056,900)
------------------ ----------------
Net investment in hotel properties 130,735,574 129,657,479
Cash and cash equivalents 2,085,720 2,134,703
Accounts receivable 3,468,670 4,549,611
Inventories 1,311,533 1,349,121
Deferred expenses, net 227,512 216,100
Prepaids and other 231,151 610,206
------------------ ----------------
$ 138,060,160 $ 138,517,220
================== ================
LIABILITIES AND PARTNERS' EQUITY
Book overdrafts 2,482,262 939,329
Notes payable 58,614,625 58,593,387
Accounts payable, trade 2,225,498 1,553,496
Accrued expenses 11,718,846 2,461,286
------------------ ----------------
Total liabilities 75,041,231 73,547,498
Partners' equity 63,018,929 64,969,722
------------------ ----------------
Total liabilities and partners' equity $ 138,060,160 $ 138,517,220
================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
SHERATON ACQUISITION HOTELS
COMBINED STATEMENTS OF REVENUES OVER EXPENSES
for the year ended December 31, 1996 and the three-months ended March 31, 1997
and 1996
(unaudited)
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, March 31,
1996 1997 1996
---------------- --------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Gross operating revenue:
Suite revenue $ 50,006,866 $ 12,738,260 $ 13,651,405
Food and beverage revenue 22,047,844 5,608,403 5,539,458
Other 3,355,113 764,299 800,923
---------------- --------------- --------------
Total revenue 75,409,823 19,110,962 19,991,786
---------------- --------------- --------------
Expenses:
Property and operating costs and expenses 18,031,160 3,986,668 4,478,691
General and administrative 7,732,418 1,638,561 1,877,982
Advertising and promotion 5,568,429 955,067 1,517,414
Utilities 2,551,498 616,165 595,372
Management fees 3,028,753 767,639
Food and beverage expenses 17,173,032 4,319,357 4,372,333
Depreciation and amortization 7,703,605 2,031,950 1,832,726
Real estate and personal property taxes
and property insurance 3,688,624 953,947 934,189
Interest expense 5,702,959 1,410,432 1,406,790
Other expenses 2,567,203 489,853 506,674
---------------- --------------- --------------
Total expenses 73,747,681 17,169,639 17,522,171
---------------- --------------- --------------
Revenues over expenses $ 1,662,142 $ 1,941,323 $ 2,469,615
================ =============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
SHERATON ACQUISITION HOTELS
COMBINED STATEMENTS OF EQUITY
for the year ended December 31, 1996 and the three months ended March 31, 1997
(unaudited)
<TABLE>
<S> <C>
Balance, December 31, 1995 $ 62,540,022
Revenues over expenses 1,662,142
Net distributions (1,183,235)
--------------
Balance, December 31, 1996 63,018,929
Revenues over expenses (unaudited) 1,941,323
Net contributions (unaudited) 9,470
--------------
Balance, March 31, 1997 (unaudited) $ 64,969,722
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
SHERATON ACQUISITION HOTELS
COMBINED STATEMENTS OF CASH FLOWS
for the year ended December 31, 1996 and the three months ended March 31, 1997
and 1996 (unaudited)
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, March 31,
1996 1997 1996
---------------- ----------------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Revenues over expenses $ 1,662,142 $ 1,941,323 $ 2,469,615
Adjustments to reconcile revenues over expenses to
net cash provided by operating activities:
Depreciation and amortization 7,703,605 2,031,950 1,832,726
Loss on disposal of furniture, fixtures, and
equipment 335,500
Changes in assets and liabilities:
Accounts receivable (268,019) (1,080,941) (1,335,332)
Inventories 143,731 (37,588) 10,707
Prepaid expenses and other assets 62,438 (379,055) (1,808,117)
Accounts payable, trade (1,180,350) (672,002) (1,243,485)
Accrued expenses 257,701 742,440 2,646,260
---------------- ----------------- -----------------
Net cash provided by operating activities 8,716,748 2,546,127 2,572,374
Cash flows from investing activities:
Additions to hotel properties (8,903,038) (942,443) (388,608)
---------------- ----------------- -----------------
Cash flows from financing activities:
Change in book overdrafts 1,081,005 (1,542,933) 1,092,179
Proceeds from issuance of notes payable 2,050,176 2,031,718
Payments on long-term notes payable (1,091,303) (21,238) (192,408)
Net contributions from (distributions to) affiliate (1,183,235) 9,470 (4,347,753)
---------------- ----------------- -----------------
Net cash provided by (used in) financing 856,643 (1,554,701) (1,416,264)
activities
---------------- ----------------- -----------------
Net increase in cash and cash equivalents 670,353 48,983 767,502
Cash and cash equivalents at beginning of periods 1,415,367 2,085,720 1,415,367
---------------- ----------------- -----------------
Cash and cash equivalents at end of periods $ 2,085,720 $ 2,134,703 $ 2,182,869
================ ================= =================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 6,477,565 $ 1,529,829 $ 1,587,012
================ ================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
SHERATON ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
The Sheraton Acquisition Hotels (collectively the "Hotels") consists of
the following hotels:
<TABLE>
<CAPTION>
Year
Property Hotel Brand Hotel Location Opened
<S> <C> <C> <C>
Dallas Park Central Sheraton Dallas, Texas 1983
Phoenix Crescent Sheraton Phoenix, Arizona 1986
Atlanta Gateway Sheraton Atlanta, Georgia 1986
Atlanta Galleria Sheraton Atlanta, Georgia 1990
Gateway O'Hare Sheraton Chicago, Illinois 1994
</TABLE>
The accompanying combined financial statements of the Hotels have been
presented on a combined basis because the Hotels are the subject of a
business combination with FelCor Suite Hotels, Inc. (the "Company"), a
Maryland corporation established to acquire equity interests in existing
hotel properties. The Hotels are owned by ITT Sheraton Corporation or
its wholly-owned subsidiaries (collectively "Sheraton" or "Management").
These financial statements have been prepared to show the operations and
financial position of the Hotels, substantially all of whose assets and
operations were sold to the Company as of June 30, 1997. The Hotels are
included in Sheraton's consolidated federal tax return. The Company has
qualified as a REIT and does not pay any federal income taxes.
Accordingly, the combined financial statements have been presented on a
pretax basis.
The accompanying unaudited interim combined financial statements as of
March 31, 1997 and 1996 have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Those financial
statements reflect, in the opinion of management, all adjustments
necessary for a fair presentation of the interim combined financial
statements. All such adjustments are of a normal and recurring nature.
11
<PAGE> 12
SHERATON ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT IN HOTEL PROPERTIES
Hotel properties are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets; 40
years for buildings, 15 years for building improvements and 5-15 years
for furniture, fixtures and equipment. Major renewals, betterments and
improvements are capitalized. For the Atlanta Galleria hotel, which was
developed by Sheraton, property and equipment includes cost and property
taxes incurred during the construction period, as well as closing and
certain other costs directly related to the development and construction
of the hotels. At each reporting period, management of the Sheraton
Acquisition Hotels reviews the carrying value of each hotel property to
determine if facts and circumstances exist which would suggest that the
investment in the hotel property may be impaired or that the depreciation
period should be modified.
Management does not believe that there are any current facts or
circumstances indicating impairment of any of its investments in hotel
properties at December 31, 1996.
Expenditures for maintenance and repairs are charged against operations
as incurred. Upon disposition, both the asset and accumulated
depreciation accounts are relieved and the related gain or loss is
credited or charged to the income statement.
CASH AND CASH EQUIVALENTS
All highly liquid debt investments with a maturity of three months or
less when purchased are considered to be cash equivalents.
REPLACEMENT RESERVE FUND
A replacement reserve fund is maintained by the Sheraton Gateway O'Hare
Hotel for the primary purpose of funding the replacement of, and
additions to furniture, fixtures, equipment, and other capital assets.
An amount equal to 3% of the gross revenues of the hotel, as defined by
the loan agreement, is required to be deposited into the replacement
reserve fund on a monthly basis. The balance as of December 31, 1996 was
$394,164.
INVENTORIES
Inventories, consisting predominately of room linens and foods and
beverages, are stated at the lower of cost (generally, first-in,
first-out) or market.
DEFERRED EXPENSES
Deferred expenses at December 31, 1996 consist of deferred financing fees
of the Sheraton Gateway O'Hare hotel of $292,112 net of accumulated
amortization of $64,600. Amortization of these fees is computed using the
interest method over the maturity of the loan.
REVENUE RECOGNITION
Revenue is recognized as earned. Ongoing credit evaluations are
performed and an allowance for potential credit losses is provided
against the portion of accounts receivable which is estimated to be
uncollectible. Such losses have been within management's expectations.
12
<PAGE> 13
SHERATON ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, trade receivables,
other assets, accounts payable and amounts included in accruals meeting
the definition of a financial instrument approximate fair value due to
the short maturity of these instruments. The carrying amount of the
Hotels' debt approximates fair value due to the Hotels' ability to obtain
such borrowings at comparable rates.
CONCENTRATION OF CREDIT RISK
The Hotels maintain cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Hotels have not experienced any
losses in such accounts.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. NOTES PAYABLE
<TABLE>
<S> <C>
Long-term debt consists of the following at December 31, 1996:
Note payable, collateralized by a mortgage on substantially all
property and equipment of the Sheraton Atlanta Gateway Hotel,
interest at 8.50%, principal due in annual payments of $750,000
beginning in 1996 and the remaining balance payable upon maturity in
April 2000. $ 16,250,000
Note payable, collateralized by a mortgage on substantially all
property and equipment of the Sheraton Dallas Park Central Hotel,
interest at 10%, principal due upon maturity in March 1998. 28,000,000
Note payable, collateralized by a mortgage on substantially all
property and equipment of the Sheraton Gateway O'Hare Hotel,
interest rate at 8.0625%, principal due upon maturity in August 14,343,387
2001.
21,238
--------------
Obligations under capital lease
$ 58,614,625
==============
</TABLE>
13
<PAGE> 14
SHERATON ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
3. NOTES PAYABLE, CONTINUED
Principal maturities of notes payable at December 31, 1996, are as
follows:
<TABLE>
<S> <C> <C>
1997 $ 771,238
1998 28,750,000
1999 750,000
2000 14,000,000
Thereafter 14,343,387
-------------------
$ 58,614,625
===================
</TABLE>
INTEREST RATE SWAP
In accordance with the Loan Agreement with Credit Lyonnais, the Sheraton
Gateway O'Hare Hotel ("Chicago") entered into an interest rate exchange
agreement. The purpose of the agreement is to limit the interest that
Chicago is required to pay under their mortgage note with Credit
Lyonnais.
<TABLE>
<CAPTION>
SWAP RATE
SWAP RATE RECEIVED (VARIABLE) SWAP
NOTATION AMOUNT PAID (FIXED) AT DECEMBER 31, 1996 MATURITY
<S> <C> <C> <C>
$14,343,387 7.64% 8.047% September 1, 2001
</TABLE>
The differences to be paid or received by Chicago under the terms of the
swap agreement are accrued as interest rate changes and recognized as an
adjustment to interest expense. Chicago does not hold this instrument
for trading purposes.
4. RELATED-PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
The Hotels have entered into management agreements with Sheraton to
manage and operate the Hotels. Management fee expense, which is
discretionary and is not based upon contracts, was $3,028,753 for the
year ended December 31, 1996.
14
<PAGE> 15
SHERATON ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
5. COMMITMENTS AND CONTINGENCIES
Certain equipment is leased under noncancellable operating lease
agreements expiring at varying intervals through March 2000. Minimum
future rental payments required under these leases as of December 31,
1996 are as follows:
<TABLE>
<S> <C>
1997 $ 235,590
1998 98,127
1999 67,063
2000 9,541
----------------
$ 410,321
================
</TABLE>
15
<PAGE> 16
FELCOR SUITE HOTELS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
The following unaudited Pro Forma Consolidated Statements of Operations
of FelCor Suite Hotels, Inc. (the "Company") are presented as if the
acquisitions of all hotels owned by the Company at December 31, 1996, those
hotels acquired in 1997 through July 31, 1997 (collectively the "Hotels"), the
equity offerings consummated during 1996 and 1997, including the June 1997
equity offering and related transactions had occurred as of January 1, 1996 and
the Hotels had all been leased to DJONT Operations, L.L.C. or consolidated
subsidiaries (the "Lessee") pursuant to Percentage Leases. Such pro forma
information is based in part upon the Consolidated Statements of Operations of
the Company, Pro Forma Statements of Operations of DJONT Operations, L.L.C.
(the "Lessee") and the historical Statements of Operations of the acquired
hotels. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made.
The following unaudited Pro Forma Consolidated Statements of Operations
for the periods presented are not necessarily indicative of what actual results
of operations of the Company would have been assuming such transactions had
been completed on January 1, 1996, nor does it purport to represent the results
of operations for future periods.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
PRO FORMA ADJUSTMENTS
---------------------
1996 ACQUISITIONS 1997 ACQUISITIONS
HISTORICAL AND PREFERRED AND EQUITY
COMPANY STOCK OFFERING(A) OFFERINGS(B) TOTAL
------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Percentage lease revenue (C) . . . . $ 97,950 $ 12,127 $ 59,636 $169,713
Income from unconsolidated
partnerships (D) . . . . . . . . . 2,010 805 308 3,123
Other income (E) . . . . . . . . . . 984 (984)
---------- --------- --------- --------
Total revenues . . . . . . . . . . 100,944 11,948 59,944 172,836
---------- --------- --------- --------
Expenses:
General and administrative (F) . . . 1,819 76 1,408 3,303
Depreciation (G) . . . . . . . . . . 26,544 4,559 13,604 44,707
Taxes, insurance and other (H) . . . 13,897 1,292 8,767 23,956
Interest expense (I) . . . . . . . . 9,803 6,100 8,287 24,190
Minority interest in Operating
Partnership (J) . . . . . . . . . 5,590 (417) 820 5,993
Minority interest in other
partnerships (K) . . . . . . . . . 236 236
---------- --------- --------- --------
Total expenses . . . . . . . . . . 57,653 11,610 33,122 102,385
---------- --------- --------- --------
Net income . . . . . . . . . . . . . . . 43,291 338 26,822 70,451
Preferred dividends (L) . . . . . . . . . 7,734 4,064 11,798
---------- --------- --------- --------
Net income applicable to common
shareholders (M) . . . . . . . . . $ 35,557 $ (3,726) $ 26,822 $ 58,653
========== ========= ========= ========
Net income per common share (M) . . . . . $ 1.54 $ 1.62
---------- --------
Weighted average number of common shares
outstanding . . . . . . . . . . . 23,076 36,237
========== ========
</TABLE>
16
<PAGE> 17
FELCOR SUITE HOTELS, INC. PRO FORMA
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
---------------------------------
PRO FORMA 1997
HISTORICAL ACQUISITIONS AND
COMPANY EQUITY OFFERINGS TOTAL
------- ---------------- -----
<S> <C> <C> <C>
Statement of Operations Data:
Revenues:
Percentage lease revenue (C) . . . . . . . . . $35,370 $14,259 $49,629
Income from unconsolidated partnerships (D) . 1,127 (285) 842
Other income (E) . . . . . . . . . . . . . . . 95 (95)
------- -------- -------
Total revenues . . . . . . . . . . . . . . . 36,592 13,879 50,471
------- -------- -------
Expenses:
General and administrative (F) . . . . . . . . 972 100 1,072
Depreciation (G) . . . . . . . . . . . . . . . 10,417 2,755 13,172
Taxes, insurance and other (H) . . . . . . . . 5,207 2,188 7,395
Interest expense (I) . . . . . . . . . . . . . 5,601 1,421 7,022
Minority interest in Operating Partnership (J) 1,417 191 1,608
Minority interest in other partnerships (K) . 21 88 109
------- -------- -------
Total expenses . . . . . . . . . . . . . . . 23,635 6,743 30,378
------- -------- -------
Net income . . . . . . . . . . . . . . . . . . . . 12,957 7,136 20,093
Preferred dividends (L) . . . . . . . . . . . . . . 2,949 2,949
------- -------- -------
Net income applicable to common shareholders (M) . $10,008 $ 7,136 $17,144
======= ======== =======
Net income per common share (M) . . . . . . . . . . $ 0.39 $ 0.47
======= =======
Weighted average number of common shares
outstanding . . . . . . . . . . . . . . . . . 25,459 36,526
======= =======
</TABLE>
17
<PAGE> 18
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(A) Represents pro forma adjustments to reflect the historical results of
operations prior to the acquisition by the Company for those hotels
acquired by the Company in 1996 as adjusted to give effect to the
provisions of the Percentage Leases; the effect of the preferred stock
offering prior to the date issued in May 1996; and other pro forma
adjustments reflecting additional overhead expenses and interest
expenses. Those hotels acquired during 1996 and the dates of
acquisition are as follows:
<TABLE>
<S> <C>
Anaheim, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Baton Rouge, Louisiana, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Birmingham, Alabama, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Deerfield Beach, Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Ft. Lauderdale, Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Miami (Airport), Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Milpitas, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Phoenix (Camelback), Arizona, Embassy Suites . . . . . . . . . . . . . . . . . . . . January 3, 1996
South San Francisco, California, Embassy Suites . . . . . . . . . . . . . . . . . . . January 3, 1996
Lexington, Kentucky, Hilton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 10, 1996
Piscataway, New Jersey, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . January 10, 1996
Beaver Creek (Avon-Vail), Colorado, Embassy Suites . . . . . . . . . . . . . . . . . February 20, 1996
Boca Raton, Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . February 28, 1996
LAX (El Segundo), California, Embassy Suites . . . . . . . . . . . . . . . . . . . . March 27, 1996
Mandalay, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . May 8, 1996
Napa, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . . May 8, 1996
Deerfield, Illinois, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . June 20, 1996
San Rafael (Marin County), California, Embassy Suites . . . . . . . . . . . . . . . . July 18, 1996
Parsippany, New Jersey, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . August 1, 1996
Charlotte, North Carolina, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . August 1, 1996
Indianapolis, Indiana, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . August 1, 1996
Atlanta-Buckhead, Georgia, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . October 17, 1996
Kingston Plantation (Myrtle Beach), South Carolina, Embassy Suites . . . . . . . . . December 5, 1996
</TABLE>
(B) Represents pro forma adjustments to reflect the historical results of
operations prior to the acquisition by the Company for those hotels
acquired by the Company in 1997 through July 31, to give effect to the
provisions of the Percentage Leases; the effect of the Company's
common stock offering in the first quarter of 1997; the common stock
offering in June 1997; and other pro forma adjustments reflecting
additional overhead expenses and interest expense. Those hotels
acquired during 1997 and dates of acquisition are as follows:
<TABLE>
<S> <C>
Omaha, Nebraska, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Bloomington, Minnesota, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Atlanta (Perimeter Center), Georgia, Embassy Suites . . . . . . . . . . . . . . . . . February 1, 1997
Kansas City (Country Club Plaza), Missouri, Embassy Suites . . . . . . . . . . . . . February 1, 1997
Overland Park, Kansas, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Raleigh, North Carolina, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
San Antonio (Northwest), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . . February 1, 1997
Austin (Airport North), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . . . February 1, 1997
Covina, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Secaucus, New Jersey, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Los Angeles (LAX Airport North), California, Embassy Suites . . . . . . . . . . . . . February 18, 1997
Dana Point, California, Hilton Inn . . . . . . . . . . . . . . . . . . . . . . . . . February 21, 1997
Troy, Michigan, Doubletree Guest Suites . . . . . . . . . . . . . . . . . . . . . . . March 20, 1997
Austin (Downtown), Texas, Doubletree Guest Suites . . . . . . . . . . . . . . . . . . March 20, 1997
Baltimore Washington International Airport (BWI), Maryland, Doubletree Guest Suites . March 20, 1997
San Antonio (Airport), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . . . May 16, 1997
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C>
Nashville (Airport), Tennessee, Doubletree Guest Suites . . . . . . . . . . . . . . June 5, 1997
Dallas (Market Center), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . . June 30, 1997
Syracuse, New York, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Atlanta (Gateway), Georgia, Sheraton . . . . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Atlanta (Galleria), Georgia , Sheraton Suites . . . . . . . . . . . . . . . . . . . . June 30, 1997
Chicago (O'Hare), Illinois, Sheraton Suites . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Dallas (Park Central), Texas, Sheraton . . . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Phoenix (Crescent), Arizona, Sheraton . . . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Lake Buena Vista (Disney World), Florida, Doubletree Guest Suites . . . . . . . . . July 31, 1997
Raleigh/Durham, North Carolina, Doubletree Guest Suites . . . . . . . . . . . . . . July 31, 1997
Tampa (Rocky Point), Florida, Doubletree Guest Suites . . . . . . . . . . . . . . . July 31, 1997
</TABLE>
(C) Represents historical or pro forma lease revenue from the Lessee to
the Company calculated by applying the contractual or anticipated rent
provisions of the Percentage Leases to the historical suite revenues,
food and beverage rents and food and beverage revenues of all the
Hotels which are consolidated for financial reporting purposes. The
income from unconsolidated partnerships is included as a separate line
item in the accompanying Pro Forma Statement of Operations as
described in Note D. Historical suite revenues for the time period
prior to the acquisition by the Company, the date of acquisition, the
contractual or anticipated pro forma Percentage Lease revenue for the
time period prior to acquisition by the Company and a summary of
contractual or anticipated Percentage Lease terms follows (in
thousands):
19
<PAGE> 20
<TABLE>
<CAPTION>
Suite Revenue for the Period
Prior to Acquisition
by the Company
--------------
Date of Three Months The Year Ended
Description of Property Acquisition 3-31-97 12-31-96
----------------------- ----------- ------- --------
<S> <C> <C> <C>
Consolidated Hotels:
Bloomington, MN, Doubletree Guest Suites February 1, 1997 $ 372 $ 6,342
Omaha, NE, Doubletree Guest Suites February 1, 1997 332 4,754
Los Angeles (LAX North), Doubletree Guest Suites February 18, 1997 830 6,263
Dana Point, CA, Doubletree Guest Suites February 21, 1997 832 3,716
Troy, MI, Doubletree Guest Suites March 20, 1997 1,489 6,342
Austin, TX, Doubletree Guests March 20, 1997 1,366 5,696
Baltimore (BWI), MD, Doubletree Guest Suites March 20, 1997 1,167 6,236
Nashville, TN, Doubletree Guest Suites June 5, 1997 691 3,164
Dallas Market Center, TX, Doubletree Guest Suites June 30, 1997 2,007 7,716
Syracuse, NY, Embassy Suites June 30, 1997 1,336 5,572
Dallas (Park Central), TX, Sheraton June 30, 1997 3,289 13,520
Phoenix (Crescent), AZ, Sheraton June 30, 1997 3,338 9,581
Chicago (O'Hare), IL, Sheraton Gateway Suites June 30, 1997 2,155 8,973
Atlanta (Airport), GA, Sheraton Gateway Hotel June 30, 1997 2,196 9,841
Atlanta (Galleria), GA, Sheraton Suites June 30, 1997 1,759 8,091
Lake Buena Vista, FL, Doubletree Guest Suites July 31, 1997 2,688 8,446
Raleigh, NC, Doubletree Guest Suites July 31, 1997 1,398 5,327
Tampa (Rocky Point), FL, Doubletree Guest Suites July 31, 1997 1,864 5,499
--------- -----------
Total consolidated hotels $29,109 $125,079
======= ========
Unconsolidated Partnership Hotels:
Atlanta (Perimeter Center), GA, Embassy Suites February 1, 1997 $ 600 $ 8,085
Austin (Airport North), TX, Embassy Suites February 1, 1997 528 7,542
Covina, CA, Embassy Suites February 1, 1997 417 4,053
Overland Park, KS, Embassy Suites February 1, 1997 403 5,624
Kansas City (Plaza), MO, Embassy Suites February 1, 1997 547 7,604
Raleigh, NC, Embassy Suites February 1, 1997 624 7,592
San Antonio (NW I-10), TX, Embassy Suites February 1, 1997 337 5,614
Secaucus, NJ, Embassy Suites February 1, 1997 722 9,816
San Antonio (Airport), TX, Embassy Suites May 16, 1997 1,882 7,235
--------- -----------
Total unconsolidated hotel partnerships $ 6,060 $ 63,165
======== =========
<CAPTION>
Percentage Lease Revenue
for the Period
Prior to Acquisition
by the Company
--------------
Date of Three Months The Year Ended
Description of Property Acquisition 3-31-97 12-31-96
----------------------- ----------- ------- --------
<S> <C> <C> <C>
Consolidated Hotels:
Bloomington, MN, Doubletree Guest Suites February 1, 1997 $ 146 $ 3,049
Omaha, NE, Doubletree Guest Suites February 1, 1997 145 2,285
Los Angeles (LAX North), Doubletree Guest Suites February 18, 1997 341 2,591
Dana Point, CA, Doubletree Guest Suites February 21, 1997 400 1,395
Troy, MI, Doubletree Guest Suites March 20, 1997 791 3,316
Austin, TX, Doubletree Guests March 20, 1997 710 2,828
Baltimore (BWI), MD, Doubletree Guest Suites March 20, 1997 516 2,943
Nashville, TN, Doubletree Guest Suites June 5, 1997 267 1,320
Dallas Market Center, TX, Doubletree Guest Suites June 30, 1997 952 3,583
Syracuse, NY, Embassy Suites June 30, 1997 499 2,130
Dallas (Park Central), TX, Sheraton June 30, 1997 1,631 6,748
Phoenix (Crescent), AZ, Sheraton June 30, 1997 1,634 4,025
Chicago (O'Hare), IL, Sheraton Gateway Suites June 30, 1997 1,263 5,265
Atlanta (Airport), GA, Sheraton Gateway Hotel June 30, 1997 979 4,548
Atlanta (Galleria), GA, Sheraton Suites June 30, 1997 783
3,817
Lake Buena Vista, FL, Doubletree Guest Suites July 31, 1997 1,499 4,467
Raleigh, NC, Doubletree Guest Suites July 31, 1997 704 2,623
Tampa (Rocky Point), FL, Doubletree Guest Suites July 31, 1997 999 2,703
---------- -----
Total consolidated hotels $14,259 $59,636
======= =======
Unconsolidated Partnership Hotels:
Atlanta (Perimeter Center), GA, Embassy Suites February 1, 1997 $ 271 $ 3,889
Austin (Airport North), TX, Embassy Suites February 1, 1997 245 3,792
Covina, CA, Embassy Suites February 1, 1997 154 1,293
Overland Park, KS, Embassy Suites February 1, 1997 173 2,641
Kansas City (Plaza), MO, Embassy Suites February 1, 1997 236 3,594
Raleigh, NC, Embassy Suites February 1, 1997 296 3,693
San Antonio (NW I-10), TX, Embassy Suites February 1, 1997 117 2,487
Secaucus, NJ, Embassy Suites February 1, 1997 268 4,082
San Antonio (Airport), TX, Embassy Suites May 16, 1997 831 3,113
------ ------
Total unconsolidated hotel partnerships $ 2,591 $28,584
======== =======
</TABLE>
<TABLE>
<CAPTION>
Annual Percentage
Lease Terms
---------------------------------------
Suite
First Second Revenue
Description of Property Tier Tier Breakpoint
----------------------- ---- ---- ----------
<S> <C> <C> <C>
Consolidated Hotels:
Bloomington, MN, Doubletree Guest Suites 17% 65% $2,468
Omaha, NE, Doubletree Guest Suites 17% 65% $1,703
Los Angeles (LAX North), Doubletree Guest Suites 17% 65% $3,176
Dana Point, CA, Doubletree Guest Suites 17% 65% $2,211
Troy, MI, Doubletree Guest Suites 17% 65% $1,935
Austin, TX, Doubletree Guests 17% 65% $1,961
Baltimore (BWI), MD, Doubletree Guest Suites 17% 65% $2,536
Nashville, TN, Doubletree Guest Suites 17% 65% $1,585
Dallas Market Center, TX, Doubletree Guest Suites 17% 65% $3,069
Syracuse, NY, Embassy Suites 17% 65% $3,227
Dallas (Park Central), TX, Sheraton 17% 65% $4,997
Phoenix (Crescent), AZ, Sheraton 17% 65% $5,175
Chicago (O'Hare), IL, Sheraton Gateway Suites 17% 65% $1,602
Atlanta (Airport), GA, Sheraton Gateway Hotel 17% 65% $4,215
Atlanta (Galleria), GA, Sheraton Suites 17% 65% $3,185
Lake Buena Vista, FL, Doubletree Guest Suites 17% 65% $2,272
Raleigh, NC, Doubletree Guest Suites 17% 65% $1,900
Tampa (Rocky Point), FL, Doubletree Guest Suites 17% 65% $1,939
Total consolidated hotels
Unconsolidated Partnership Hotels:
Atlanta (Perimeter Center), GA, Embassy Suites 17% 65% $2,949
Austin (Airport North), TX, Embassy Suites 17% 65% $2,378
Covina, CA, Embassy Suites 17% 65% $3,066
Overland Park, KS, Embassy Suites 17% 65% $2,114
Kansas City (Plaza), MO, Embassy Suites 17% 65% $2,976
Raleigh, NC, Embassy Suites 17% 65% $2,711
San Antonio (NW I-10), TX, Embassy Suites 17% 65% $2,474
Secaucus, NJ, Embassy Suites 17% 65% $4,788
San Antonio (Airport), TX, Embassy Suites 17% 65% $3,311
Total unconsolidated hotel partnerships
</TABLE>
20
<PAGE> 21
(D) Represents historical or pro forma income from unconsolidated
partnerships to the Company calculated by applying the Company's pro
rata ownership percentage to the net income of the unconsolidated
partnerships, computed using the contractual or anticipated rent
provisions of the Percentage Leases to the historical suite revenues,
food and beverage rents and food and beverage revenues of all the
hotels; historical taxes, insurance and other; historical depreciation
expense; and historical interest expenses. The Company's cost in
excess of net book value of the partnership assets deducted to arrive
at income from unconsolidated partnerships. This computation is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Statements of operations information:
Percentage lease revenue . . . . . . . . . . . . . . . . . $2,591 $28,584
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 1,190 12,536
Taxes, insurance and other . . . . . . . . . . . . . . . . 448 3,166
Interest expense . . . . . . . . . . . . . . . . . . . . . 986 9,725
------ -------
Net income (loss) . . . . . . . . . . . . . . . . . . . . (33) 3,157
50 % of income (loss) attributable to the Company . . . . (17) 1,579
Amortization of cost in excess of book value (See Note G) (268) (1,271)
------- --------
Income (loss) from unconsolidated partnerships . . . . . . $ (285) $ 308
======= ========
</TABLE>
(E) Represents elimination of historical interest income earned on
excess cash.
(F) Pro forma general and administrative expenses represent executive
compensation, legal, audit and other expenses. These amounts are
based on historical general and administrative expenses as well as
probable 1997 expenses.
(G) Represents depreciation on the Hotels. Depreciation is computed
based on estimated useful lives of 40 years for buildings and
improvements and five years for furniture, fixtures and equipment.
These estimated useful lives are based on management's knowledge
of the properties and the hotel industry in general.
The pro forma depreciation adjustment for the hotels acquired in
1997 and for the year ended December 31, 1996 is as follows:
21
<PAGE> 22
FelCor Suite Hotels, Inc.
Real Estate and Accumulated Depreciation
as of March 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Asset Cost
---------------------------------------------------
Date of Building and Furniture
Description of Property Acquisition Land Improvements and Fixtures Total
----------------------- ----------- ---- ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
Consolidated Hotels:
Bloomington, MN, Doubletree Guest Suites February 1, 1997 $ 2,038 $ 17,731 $ 612 $ 20,381
Omaha, NE, Doubletree Guest Suites February 1, 1997 1,876 16,328 563 18,767
Los Angeles (LAX North), Doubletree Guest Suites February 18, 1997 2,208 19,205 662 22,075
Dana Point, CA, Doubletree Guest Suites February 21, 1997 1,787 15,545 536 17,868
Troy, MI, Doubletree Guest Suites March 20, 1997 2,957 25,794 887 29,638
Austin, TX, Doubletree Guests March 20, 1997 2,506 21,858 752 25,116
Baltimore (BWI), MD, Doubletree Guest Suites March 20, 1997 2,566 22,381 770 25,717
Nashville, TN Doubletree Guest Suites June 5, 1997 1,080 9,396 324 10,800
Dallas (Market Center), TX Embassy Suites June 30, 1997 2,920 25,404 876 29,200
Syracuse, NY Embassy Suites June 30, 1997 1,750 15,225 525 17,500
Atlanta (Airport), GA Sheraton Suites hotel June 30, 1997 3,000 26,100 900 30,000
Atlanta (Galleria), GA Sheraton hotel June 30, 1997 3,600 31,320 1,080 36,000
Chicago (O'Hare), IL Sheraton Suite hotel June 30, 1997 4,800 41,760 1,440 48,000
Dallas (Park Central), TX Sheraton hotel June 30, 1997 5,000 43,500 1,500 50,000
Phoenix (Crescent), AZ Sheraton hotel June 30, 1997 3,600 31,320 1,080 36,000
Pickett Acquisition (3) Doubletree Guest Suites July 31, 1997 7,230 62,901 2,169 72,300
------- -------- ------- --------
Total consolidated hotels $48,918 $425,768 $14,676 $489,362
======= ======== ======= ========
<CAPTION>
Annual Depreciation Expense
----------------------------------------
Date of Building and Furniture
Description of Property Acquisition Improvements and Fixtures Total
----------------------- ----------- ------------ ------------ -----
<S> <C> <C> <C> <C>
Consolidated Hotels:
Bloomington, MN, Doubletree Guest Suites February 1, 1997 $ 443 $ 122 $ 565
Omaha, NE, Doubletree Guest Suites February 1, 1997 408 113 521
Los Angeles (LAX North), Doubletree Guest Suites February 18, 1997 480 132 612
Dana Point, CA, Doubletree Guest Suites February 21, 1997 389 107 496
Troy, MI, Doubletree Guest Suites March 20, 1997 645 177 822
Austin, TX, Doubletree Guests March 20, 1997 546 150 696
Baltimore (BWI), MD, Doubletree Guest Suites March 20, 1997 560 154 714
Nashville, TN Doubletree Guest Suites June 5, 1997 235 65 300
Dallas (Market Center), TX Embassy Suites June 30, 1997 633 180 813
Syracuse, NY Embassy Suites June 30, 1997 381 105 486
Atlanta (Airport), GA Sheraton Suites hotel June 30, 1997 653 180 833
Atlanta (Galleria), GA Sheraton hotel June 30, 1997 783 216 999
Chicago (O'Hare), IL Sheraton Suite hotel June 30, 1997 1,044 293 1,337
Dallas (Park Central), TX Sheraton hotel June 30, 1997 1,088 305 1,393
Phoenix (Crescent), AZ Sheraton hotel June 30, 1997 784 222 1,006
Pickett Acquisition (3) Doubletree Guest Suites July 31, 1997 1,572 439 2,011
------- ------ -------
Total consolidated hotels $10,644 $2,960 $13,604
======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
Acquisition Cost Annual
Acquisition Acquisition in Excess of Net Amortization
Date Cost Book Value of Excess Cost
---- ---- ---------- --------------
<S> <C> <C> <C> <C>
Unconsolidated Partnership Hotels:
Atlanta (Perimeter Center), GA, Embassy Suites February 1, 1997 $ 9,620 $ 9,199 $ 230
Austin (Airport North), TX, Embassy Suites February 1, 1997 8,965 6,486 162
Covina, CA, Embassy Suites February 1, 1997 2,229 (3,329) (83)
Overland Park, KS, Embassy Suites February 1, 1997 5,673 4,928 123
Kansas City (Plaza), MO, Embassy Suites February 1, 1997 8,224 7,161 179
Raleigh, NC, Embassy Suites February 1, 1997 9,739 8,764 219
San Antonio (NW I-10), TX, Embassy Suites February 1, 1997 4,768 3,445 86
Secaucus, NJ, Embassy Suites February 1, 1997 9,001 7,103 178
San Antonio (Airport), TX, Embassy Suites May 16, 1997 6,500 7,085 177
------- ------- -------
Total unconsolidated hotel partnerships $64,719 $50,842 $1,271
======= ======= ======
</TABLE>
22
<PAGE> 23
(H) Pro forma real estate, personal property tax, franchise taxes,
property insurance, ground lease and other expenses for the year
ended December 31, 1996 represent expenses to be paid by the
Partnership. Such amounts were primarily derived from historical
amounts paid with respect to the Hotels. The three months ended
March 31, 1997 real estate, personal property and franchise taxes,
property insurance, and ground lease expenses are computed in a
similar manner as the year ended December 31, 1996 pro forma
adjustments. A schedule of property taxes and insurance derived
from the historical amounts paid for the hotels acquired in 1997
follows:
<TABLE>
<CAPTION>
PROPERTY TAXES PROPERTY INSURANCE
-------------- ------------------
3/31/97 12/31/96 3/31/97 12/31/96
------- -------- ------- --------
(IN THOUSANDS)
DESCRIPTION OF PROPERTY
-----------------------
<S> <C> <C> <C> <C>
Consolidated Hotels:
Bloomington, MN, Doubletree Guest Suites $ 59 $ 707 $ 1 $ 17
Omaha, NE, Doubletree Guest Suites 14 170 1 13
Los Angeles (LAX North), Doubletree Guest Suites 44 320 20 91
Dana Point, CA, Doubletree Guest Suites 16 62 25 13
Troy, MI, Doubletree Guest Suites 91 354 5 21
Austin, TX, Doubletree Guests 97 466 3 13
Baltimore (BWI), MD, Doubletree Guest Suites 38 223 2 7
Lake Buena Vista, FL, Doubletree Guest Suites 99 399 4 16
Raleigh, NC, Doubletree Guest Suites 40 149 4 14
Tampa (Rocky Point), FL, Doubletree Guest Suites 59 237 10 39
Nashville, TN, Doubletree Guest Suites 21 75 2 8
Dallas Market Center, TX, Doubletree Guest Suites 139 505 5 19
Syracuse, NY, Embassy Suites 84 329 5 16
Dallas (Park Central), TX Sheraton 169 595 15 70
Phoenix, AZ, Sheraton Crescent 206 748 7 24
Chicago (O'Hare), IL, Sheraton Gateway Suites 323 1,366 5 20
Atlanta (Airport), GA, Sheraton Gateway Hotel 123 443 6 25
Atlanta (Galleria), GA, Sheraton Suites 96 369 4 16
------ ------ ---- ----
Total consolidated hotels $1,718 $7,517 $124 $442
====== ====== ==== ====
Unconsolidated Partnership Hotels:
Atlanta (Perimeter Center), GA, Embassy Suites $ 22 $ 172 $ 2 $ 17
Austin (Airport North), TX, Embassy Suites 41 435 2 17
Covina, CA, Embassy Suites 14 (810) 8 96
Overland Park, KS, Embassy Suites 34 370 1 14
Kansas City (Plaza), MO, Embassy Suites 35 359 3 29
Raleigh, NC, Embassy Suites 17 171 1 16
San Antonio (NW I-10), TX, Embassy Suites 35 385 1 15
Secaucus, NJ, Embassy Suites 47 560 2 22
San Antonio (Airport), TX, Embassy Suites 116 418 5 18
------ ------ ---- ----
Total unconsolidated hotel partnerships $ 361 $2,060 $ 25 $244
====== ====== ==== ====
</TABLE>
(I) Represents both historical and pro forma interest expense computed
based on borrowings outstanding for the respective periods multiplied
by the applicable fixed or variable interest rate as stated in the
applicable debt instruments. The pro forma adjustment assumes
additional borrowings against the Chase Line of Credit in the amount
of $92.7 million were required in order to finance the 1997
Acquisition Hotel purchases and includes additional interest expense
incurred prior to the acquisition date by the Company. The increase
in the pro forma debt balance from December 31, 1996 to March 31, 1997
primarily relates to borrowings associated with the renovation of the
Company's hotels. The variable interest rates used to calculate the
pro forma adjustment to interest expense were the same as the
historical rates used to calculate the outstanding borrowings on the
Line of Credit for the same respective periods ended December 31, 1996
and March 31, 1997. The period end pro forma debt balances, average
interest rates and pro forma interest expense for the year end
December 31, 1996 and March 31, 1997 follow:
23
<PAGE> 24
<TABLE>
<CAPTION>
DECEMBER 31, 1996
(IN THOUSANDS)
--------------
DEBT INTEREST INTEREST
BALANCE RATE EXPENSE(1)
------- ---- ----------
<S> <C> <C> <C>
Line of Credit . . . . . . . . . . . . . . . . . . . . . $235,396 7.30% $16,419
Term Loan . . . . . . . . . . . . . . . . . . . . . . . . 85,000 7.41% 1,693
Renovation loan . . . . . . . . . . . . . . . . . . . . . 25,000 7.27% 852
Other debt payable . . . . . . . . . . . . . . . . . . . 1,550 6.75% 3,520
Capital leases . . . . . . . . . . . . . . . . . . . . . 12,875 12.50% 1,706
-------- -------
$359,821 $24,190
======== =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
(IN THOUSANDS)
--------------
DEBT INTEREST INTEREST
BALANCE RATE EXPENSE(1)
------- ---- -----------
<S> <C> <C> <C>
Line of Credit . . . . . . . . . . . . . . . . . . . . . $225,260 7.30% $4,232
Term Loan . . . . . . . . . . . . . . . . . . . . . . . . 85,000 7.97% 1,693
Renovation loan . . . . . . . . . . . . . . . . . . . . . 25,000 6.24% 390
Other debt payable . . . . . . . . . . . . . . . . . . . 650 6.00% 320
Capital leases . . . . . . . . . . . . . . . . . . . . . 12,577 12.50% 387
-------- ------
$348,487 $7,022
======== ======
</TABLE>
(1) Pro forma interest expense represents interest expense
applicable to the pro forma weighted average borrowings
outstanding during the periods presented which at times
exceeds the pro forma borrowings outstanding at the end of the
periods.
(J) Calculated as approximately 7.41% and 7.84% of income before minority
interest for pro forma results of operations for the three months
ended March 31, 1997 and the year ended December 31, 1996,
respectively.
(K) Represents historical and pro forma minority interest expense related
to 3 hotels in which Doubletree has a 10% limited partnership
interest. Minority interest is calculated as 10% of net income
computed using the rent provisions of the Percentage Leases to the
historical suite revenues; historical taxes, insurance and other;
historical depreciation expense; and historical interest expenses.
This computation is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Statement of operations information:
Percentage lease revenue . . . . . . . . . . . $ 2,017 $9,087
Depreciation . . . . . . . . . . . . . . . . . 671 3,521
Taxes, insurance and other . . . . . . . . . . 251 1,123
Interest expense . . . . . . . . . . . . . . . 217 2,081
------ ------
Net income (loss) before minority interest . . $ 878 $2,362
====== ======
Minority interest expense - 10% of Net income $ 88 $ 236
====== ======
</TABLE>
(L) The 1996 pro forma adjustment to preferred dividends assumes the
Series A Preferred Stock was issued on January 1, 1996. The
adjustment reflects the additional dividends that would have been paid
in 1996 and prior to May 6, 1996, the actual date of issuance.
(M) Pro forma income applicable to common shareholders excludes the
extraordinary charge from write off of deferred financing fees in the
amount of approximately $2,354,000 from the "Historical Company"
for the year ended December 31, 1996.
24
<PAGE> 25
FELCOR SUITE HOTELS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS)
The following unaudited Pro Forma Consolidated Balance Sheet of FelCor
Suite Hotels, Inc. (the "Company") is presented as if the acquisition of the
hotels acquired subsequent to March 31, 1997 and the consummation of the June
1997 equity offering and related transactions had occurred on March 31, 1997.
Such pro forma information is based in part upon the consolidated balance sheet
of the Company. In management's opinion, all adjustments necessary to reflect
the effects of these transactions have been made.
The following unaudited Pro Forma Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position of the Company
would have been assuming such transactions had been completed as of March 31,
1997, nor does it purport to represent the future financial position of the
Company.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
ASSETS
<S> <C> <C>
Investment in hotels . . . . . . . . . . . . . . . . . . . . $1,061,340 $329,800 (A) 1,391,140
Investment in unconsolidated partnerships . . . . . . . . . . 118,320 6,500 (B) 124,820
Cash and cash equivalents . . . . . . . . . . . . . . . . . . 10,957 (1,625)(C) 9,332
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 1,616 1,616
Due from Lessee . . . . . . . . . . . . . . . . . . . . . . . 15,630 15,630
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . 3,702 3,702
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 793 793
---------- --------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . $1,212,358 $334,675 $1,547,033
========== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Distributions payable . . . . . . . . . . . . . . . . . . . . $ 17,610 $ 17,610
Accrued expenses and other liabilities . . . . . . . . . . . 4,740 4,740
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353,650 $(17,740)(D) 335,910
Capital lease obligations . . . . . . . . . . . . . . . . . . 12,577 12,577
Minority interest in Operating Partnership . . . . . . . . . 62,661 11,682 (E) 74,343
Minority interest in other partnerships . . . . . . . . . . . 8,043 8,043
---------- -------- ----------
Total liabilities . . . . . . . . . . . . . . . . . 459,281 (6,058) 453,223
---------- -------- ----------
Shareholders' Equity:
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . 151,250 151,250
Common stock . . . . . . . . . . . . . . . . . . . . . . . . 266 112 (F) 378
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . (41,106)(G) (41,106)
Additional paid in capital . . . . . . . . . . . . . . . . . 620,465 381,727 (H) 1,002,192
Unearned officers' and directors' compensation . . . . . . . (2,448) (2,448)
Distributions in excess of earnings . . . . . . . . . . . . . (16,456) (16,456)
---------- -------- ----------
Total shareholders' equity . . . . . . . . . . . . . 753,077 340,733 1,093,810
---------- -------- ----------
Total liabilities and shareholders' equity . . . . . $1,212,358 $334,675 $1,547,033
========== ======== ==========
</TABLE>
25
<PAGE> 26
FELCOR SUITE HOTELS, INC.
NOTES TO PRO FORMA BALANCE SHEET
(A) Increase represents the following hotel purchase transactions:
<TABLE>
<S> <C>
Five Sheraton hotels (purchased June 30, 1997) $200,000
Four Doubletree Guest Suites hotels (purchased June 5, 1997 (1) and July 31, 1997 (3) 83,100
Two Embassy Suites hotels (purchased June 30, 1997) 46,700
--------
$329,800
========
</TABLE>
(B) Increase represents the unconsolidated 50% hotel partnership interest
in the San Antonio (Airport) Embassy Suites hotel purchased for $6.5
million on May 16, 1997.
(C) Decrease represents cash portion of purchase price of San Antonio
(Airport) Embassy Suites Hotel.
(D) Decrease represents payments against outstandings on the Company's line
of credit from funds received from the June 1997 equity offering.
(E) Increase represents $4.9 million in Partnership Units issued for
acquisition of 50% partnership interest in the San Antonio (Airport)
Embassy Suites hotel and the adjustment necessary to reflect a pro
forma 7.4% minority interest in the Operating Partnership at March 31,
1997.
(F) Increase reflects the par value of common stock in the June 1997 equity
offering.
(G) Represents 1.2 million shares of common stock repurchased from Promus
at $36.625 per share net of underwriters' discount and offering
expenses.
(H) Net increase reflects the proceeds from the June 1997 offering less the
par value of the common stock issued and offering expenses less an
allocation to minority interest as follows (in thousands):
<TABLE>
<S> <C>
Gross proceeds from June 1997 offering(1) . . . . . . . . . . . . . . . . $410,200
(11.2 million shares at $36.625 per share)
Offering expenses including underwriters' discount . . . . . . . . . . . (21,554)
Par value of common stock . . . . . . . . . . . . . . . . . . . . . . . . (112)
Allocation to minority interest . . . . . . . . . . . . . . . . . . . . . (6,807)
--------
Net change in additional paid in capital . . . . . . . . . . . . . . . . $381,727
=========
</TABLE>
(1) Includes 1.2 million shares of common stock repurchased from Promus.
26
<PAGE> 27
DJONT OPERATIONS, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
The following unaudited Pro Forma Consolidated Statements of Operations
of DJONT Operations, L.L.C. (the "Lessee") are presented as if the acquisitions
of all hotels owned by FelCor Suite Hotels, Inc. (the "Company") at December
31, 1996 and those hotels acquired in 1997, through July 31, 1997, and related
transactions had occurred as of January 1, 1996 and the Hotels had all been
leased to the Lessee pursuant to Percentage Leases. Such pro forma information
is based in part upon the Pro Forma Consolidated Statements of Operations of
the Company, and the historical Statements of Operations of the 1997
Acquisitions. In management's opinion, all adjustments necessary to reflect
the effects of these transactions have been made.
The following unaudited Pro Forma Consolidated Statements of Operations
for the periods presented are not necessarily indicative of what actual results
of operations of the Lessee would have been assuming such transactions had been
completed on January 1, 1996, nor does it purport to represent the results of
operations for future periods.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------
1996 ACQUISITIONS 1997 ACQUISITIONS
HISTORICAL AND PREFERRED AND EQUITY PRO FORMA
COMPANY STOCK OFFERING(A) OFFERINGS (B) ADJUSTMENTS TOTAL
------- ----------------- ------------- ----------- -----
<S> <C> <C> <C> <C> <C>
Revenues:
Suite revenue . . . . . . . . $ 234,451 $46,393 188,243 $469,087
Food and beverage revenue . . 15,119 8,194 35,569 58,882
Food and beverage rent . . . . 2,334 408 538 3,280
Other revenue . . . . . . . . 17,340 2,802 13,291 $ (316) (C) 33,117
--------- ------- -------- ------- --------
Total revenues . . . . . 269,244 57,797 237,641 (316) 564,366
--------- ------- -------- ------- --------
Expenses:
Property operating costs
and expenses . . . . . . . 66,236 12,417 57,131 135,784
Other operating expenses . . . 81,045 20,182 81,268 182,495
Management and franchise fees 11,770 5,491 10,754 (3,604) (D) 24,411
Taxes, insurance and other . . 5,912 (862) 18,155 (12,522) (E) 10,683
Interest expense . . . . . . . 30,545 (30,545) (F)
Depreciation and amortization 32,179 (32,179) (G)
Percentage lease payments . . 107,935 20,248 88,220 (H) 216,403
Lessee overhead expenses . . . 1,776 (236) 1,540
--------- ------- -------- ------- --------
Income before minority interest . (5,430) 557 7,609 (9,686) (6,950)
Minority interest . . . . . . (92) (I) (92)
--------- ------- -------- ------- --------
Net loss . . . . . . . . . . . . $ (5,430) $ 557 $ 7,609 $(9,594) $(6,858)
========= ======= ======== ======= ========
</TABLE>
27
<PAGE> 28
DJONT OPERATIONS, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
---------------------------------------
1997
HISTORICAL ACQUISITIONS AND PRO FORMA
COMPANY EQUITY OFFERING(B) ADJUSTMENTS TOTAL
------------- ------------------ ----------- -----
<S> <C> <C> <C> <C>
Revenues:
Suite revenue . . . . . . . . . $ 93,153 $35,169 $128,322
Food and beverage revenue . . . 4,028 8,881 12,909
Food and beverage rent . . . . . 965 51 1,016
Other revenue . . . . . . . . . 7,069 2,536 $ (73) (C) 9,532
-------- ------- ------- --------
Total revenues . . . . . . . . 105,215 46,637 (73) 151,779
-------- ------- ------- --------
Expenses:
Property operating costs
and expenses . . . . . . . . . 25,182 10,630 35,812
Other operating costs . . . . . 26,911 16,662 43,573
Management and franchise fees . 4,987 2,728 (1,196) (D) 6,519
Taxes, insurance and other . . . 1,588 3,591 (2,553) (E) 2,626
Interest expense . . . . . . . . 4,591 (4,591) (F)
Depreciation and amortization . 5,546 (5,546) (G)
Percentage lease expenses . . . 44,615 16,850 (H) 61,465
Lessee overhead expenses . . . . 518 518
-------- ------- ------- --------
Income before minority interest . . . 1,414 2,889 (3,037) 1,266
-------- ------- ------- --------
Minority interest . . . . . . . 300 (213) (I) 87
-------- ------- ------- --------
Net income . . . . . . . . . . . . . $ 1,114 $ 2,889 $(2,824) $ 1,179
======== ======= ======= ========
</TABLE>
28
<PAGE> 29
DJONT OPERATIONS, L.L.C.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(A) Represents the historical results of operations and pro forma
adjustments, for the period prior to the acquisition by the Company,
of the hotels acquired by the Company in 1996. Those hotels acquired
in 1996 and dates of acquisition are as follows:
<TABLE>
<S> <C>
Anaheim, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Baton Rouge, Louisiana, Embassy Suites . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Birmingham, Alabama, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Deerfield Beach, Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . January 3, 1996
Ft. Lauderdale, Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Miami (Airport), Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . January 3, 1996
Milpitas, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . January 3, 1996
Phoenix (Camelback), Arizona, Embassy Suites . . . . . . . . . . . . . . . . . . January 3, 1996
South San Francisco, California, Embassy Suites . . . . . . . . . . . . . . . . . January 3, 1996
Lexington, Kentucky, Hilton . . . . . . . . . . . . . . . . . . . . . . . . . . . January 10, 1996
Piscataway, New Jersey, Embassy Suites . . . . . . . . . . . . . . . . . . . . . January 10, 1996
Beaver Creek (Avon-Vail), Colorado, Embassy Suites . . . . . . . . . . . . . . . February 20, 1996
Boca Raton, Florida, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . February 28, 1996
LAX (El Segundo), California, Embassy Suites . . . . . . . . . . . . . . . . . . March 27, 1996
Mandalay, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . May 8, 1996
Napa, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . May 8, 1996
Deerfield, Illinois, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . June 20, 1996
San Rafael (Marin County), California, Embassy Suites . . . . . . . . . . . . . . July 18, 1996
Parsippany, New Jersey, Embassy Suites . . . . . . . . . . . . . . . . . . . . . August 1, 1996
Charlotte, North Carolina, Embassy Suites . . . . . . . . . . . . . . . . . . . . August 1, 1996
Indianapolis, Indiana, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . August 1, 1996
Atlanta-Buckhead, Georgia, Embassy Suites . . . . . . . . . . . . . . . . . . . . October 17, 1996
Kingston (Myrtle Beach), South Carolina, Embassy Suites . . . . . . . . . . . . . December 5, 1996
</TABLE>
(B) Represents the historical results of operations for the period prior
to the acquisition by the Company, for those hotels acquired by the
Company in 1997. Those hotels acquired during 1997 and dates of
acquisition are as follows:
<TABLE>
<S> <C>
Omaha, Nebraska, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Bloomington, Minnesota, Embassy Suites . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Atlanta (Perimeter Center), Georgia, Embassy Suites . . . . . . . . . . . . . . . February 1, 1997
Kansas City (Country Club Plaza), Missouri, Embassy Suites . . . . . . . . . . . February 1, 1997
Overland Park, Kansas, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Raleigh, North Carolina, Embassy Suites . . . . . . . . . . . . . . . . . . . . . February 1, 1997
San Antonio (I-10), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . . . February 1, 1997
Austin (Downtown), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . . . February 1, 1997
Covina, California, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Secaucus, New Jersey, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
Los Angeles (LAX Airport North), California, Embassy Suites . . . . . . . . . . . February 18, 1997
Dana Point, California, Hilton Inn . . . . . . . . . . . . . . . . . . . . . . . February 21, 1997
Troy, Michigan, Doubletree Guest Suites . . . . . . . . . . . . . . . . . . . . . March 20, 1997
Austin, Texas, Doubletree Guest Suites . . . . . . . . . . . . . . . . . . . . . March 20, 1997
Baltimore (Washington International Airport), Maryland, Doubletree Guest Suites . March 20, 1997
San Antonio (Airport), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . May 16, 1997
</TABLE>
29
<PAGE> 30
<TABLE>
<S> <C>
Nashville (Airport), Tennessee, Doubletree Guest Suites . . . . . . . . . . . . June 5, 1997
Dallas (Market Center), Texas, Embassy Suites . . . . . . . . . . . . . . . . . . June 30, 1997
Syracuse, New York, Embassy Suites . . . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Atlanta (Gateway), Georgia, Sheraton . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Atlanta (Galleria), Georgia, Sheraton Suites . . . . . . . . . . . . . . . . . . June 30, 1997
Chicago (O'Hare), Illinois, Sheraton Suites . . . . . . . . . . . . . . . . . . June 30, 1997
Dallas (Park Central), Texas, Sheraton . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Phoenix (Crescent), Arizona, Sheraton . . . . . . . . . . . . . . . . . . . . . June 30, 1997
Lake Buena Vista (Disney World), Florida, Doubletree Guest Suites . . . . . . . July 31, 1997
Raleigh/Durham, North Carolina, Doubletree Guest Suites . . . . . . . . . . . . July 31, 1997
Tampa (Rocky Point), Florida, Doubletree Guest Suites . . . . . . . . . . . . . July 31, 1997
</TABLE>
(C) Reflects the elimination of historical interest income earned on
excess cash.
(D) Represents the elimination of historical management and franchise
fees, and the addition of
management and franchise fees to be incurred under the new management
agreements for the 1997 Acquisitions. The management fees were
calculated based on the terms of the management agreements. Also
included in the pro forma adjustment are computations for the
incentive management fee which varies according to the management
agreement.
(E) Reflects the elimination of historical real estate and personal
property taxes and property insurance which is to be paid by the
Partnership for the 1997 Acquisitions.
(F) Reflects the elimination of historical interest expense for the 1997
Acquisitions. Any future interest expense related to debt will be paid
by the Partnership.
(G) Reflects the elimination of historical depreciation and amortization
for the 1997 Acquisitions.
(H) Represents lease expenses calculated on a pro forma basis by applying
the contractual or anticipated rent provisions of the Percentage
Leases to the historical suite revenues, pro forma restaurant rent and
historical food and beverage revenues of the Hotels.
(I) Represents minority interest from preferred equity positions in
subsidiaries of DJONT.
30
<PAGE> 31
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
23.1 Consent of Coopers and Lybrand, L.L.P.
</TABLE>
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
FelCor Suite Hotels, Inc.
We consent to the incorporation by reference in the registration statement of
FelCor Suite Hotels, Inc. on Form S-3 (File Nos. 333-25717, 333-04947 and
333-3170) and Form S-8 (File No. 333-32579) of our report dated July 25, 1997
on our audit of the combined financial statements of the Sheraton Acquisition
Hotels as of December 31, 1996 and for the year then ended, which report is
included in this Form 8/K-A.
COOPERS & LYBRAND, L.L.P.
Dallas, Texas
August 13, 1997
