FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to
_________________________________
Commission file number 033-73340-01
John Q. Hammons Hotels, Inc.
(Exact name of registrants as specified in their charters)
Delaware 43-1695093
(State or other jurisdiction of incorporation (IRS Employer
or organization) (Identification Nos.)
300 John Q. Hammons Parkway
Suite 900
Springfield, MO 65806
(Address of principal executive offices)
(417) 864-4300
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrants were required to file such reports, and (2) have been
subject to such filing requirements for the past 90 days.
Registrants have been required to file reports since November 23, 1994.
Yes __X__ No ______
JOHN Q. HAMMONS HOTELS, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Consolidated Balance Sheets at September 27, 1996 (unaudited)
and December 29, 1995 (audited) ................................ 3
Consolidated Statements of Income for the three and
nine months ended September 27, 1996 (unaudited)
and September 29, 1995 (unaudited............................... 5
Consolidated Statements of Changes in Minority Interest
and Stockholders Equity for the period December 29, 1995
to September 27, 1996 (unaudited)................................. 6
Consolidated Statements of Cash Flows for the nine
months ended September 27, 1996 (unaudited) and
September 29, 1995 (unaudited)..................................... 7
Notes to Consolidated Financial Statements ...... ................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 9
PART II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings............................................ 15
Item 6. Reports on Form 8-K........................................ 15
Signatures ......................................... 16
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
ASSETS
September 27, 1996 December 29,1995
(Unaudited) (Audited)
<S> <C> <C>
CASH AND EQUIVALENTS $28,043 $41,777
MARKETABLE SECURITIES 11,638 26,574
RECEIVABLES
Trade, less allowance for doubtful
accounts of $157 6,743 4,852
Construction reimbursements and
management fees 182 2,762
INVENTORIES 983 1,110
PREPAID EXPENSES AND OTHER 254 1,124
Total current assets 47,843 78,199
PROPERTY AND EQUIPMENT, at cost
Land and improvements 28,888 27,974
Buildings and improvements 410,979 399,746
Furniture, fixtures and equipment 147,490 149,535
Construction in progress 95,430 27,395
682,787 604,650
Less-accumulated depreciation and
and amortization (171,344) (169,811)
511,443 434,839
DEFERRED FINANCING COSTS,
FRANCHISE FEES AND
OTHER, net 27,636 29,333
$586,922 $542,371
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
LIABILITIES AND EQUITY
September 27, 1996 December 29,1995
LIABILITIES: (Unaudited) (Audited)
<S> <C> <C>
Current portion of long-term debt $11,876 $7,981
Accounts payable 11,741 8,382
Accrued expenses
Payroll and related benefits 4,633 3,800
Sales and property taxes 7,736 7,012
Insurance 9,304 8,446
Interest 7,651 12,171
Utilities, franchise fees, and other 5,883 4,849
Total current liabilities 58,824 52,641
Long-term debt 477,283 450,113
Other obligations and deferred revenue 5,117 5,579
Deferred income taxes 1 1
Total liabilities 541,225 508,334
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST OF HOLDERS OF LIMITED
PARTNER UNITS 30,741 23,082
STOCKHOLDERS EQUITY
Preferred stock, $.01 par value, 2,000,000 shares
authorized, none outstanding -- --
Class A common stock, $.01 par value, 40,000,000 shares
authorized, 6,042,000 shares issued and
outstanding 60 60
Class B common stock, $.01 par value, 1,000,000 shares
authorized, 294,100 shares issued and
outstanding 3 3
Paid-in capital 96,373 96,373
Retained deficit, net (81,480) (85,481)
Total equity 14,956 10,955
$586,922 $542,371
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(000's omitted)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 27, 1996 Sept. 29, 1995 Sept. 27, 1996 Sept. 29, 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES:
<S> <C> <C> <C> <C>
Rooms $45,563 $40,116 $129,920 $112,771
Food and beverage 17,308 16,251 56,504 49,204
Meeting room rental
and other 4,458 3,869 13,868 11,203
Total revenues 67,329 60,236 200,292 173,178
OPERATING EXPENSES:
Direct operating costs and expenses-
Rooms 10,953 10,163 32,073 28,465
Food and beverage 13,107 13,103 41,858 38,562
Other 704 644 2,154 1,799
General, administrative and
sales expense 18,463 16,533 56,255 47.340
Repairs and maintenance 2,890 2,555 8,526 7,342
Depreciation and
amortization 6,310 4,565 18,256 11,659
Total operating expenses 52,427 47,563 159,122 135,167
INCOME FROM
OPERATIONS 14,902 12,673 41,170 38,011
OTHER INCOME (EXPENSE)
Interest income 570 840 1,790 3,442
Interest expense and
amortization of deferred
financing fees (9,109) (7,124) (28,538) (22,572)
INCOME BEFORE MINORITY INTEREST
AND PROVISION FOR
INCOME TAXES 6,363 6,389 14,422 18,881
Minority interest in earnings
of partnership (4,562) (4,580) (10,339) (13,536)
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,801 1,809 4,083 5,345
Provision for income taxes (37) (37) (82) (107)
NET INCOME $1,764 $1,772 $4,001 $5,238
UNAUDITED EARNINGS PER SHARE
Per share net income allocable
to the Company $0.28 $0.28 $0.63 $0.83
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN MINORITY INTEREST
AND STOCKHOLDERS EQUITY
(000's omitted)
<TABLE>
<CAPTION>
STOCKHOLDERS EQUITY
Minority Class A Class B Paid-In Company
Interest Common Common Capital Retained Total
Stock Stock Deficit
BALANCE, December 29, 1995
<S> <C> <C> <C> <C> <C> <C>
(audited) $23,082 $60 $3 $96,373 ($85,481) $10,955
Distribution for
income taxes (2,680) -- -- -- -- --
Net income allocable to
the Company -- -- -- -- 4,001 4,001
Minority interest in earnings
of partnership 10,339 -- -- -- -- --
BALANCE, September 27, 1996
(unaudited) $30,741 $60 $3 $96,373 ($81,480) $14,956
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(000's omitted)
<TABLE>
<CAPTION>
Nine Months Ended
September 27, 1996 September 29,1995
CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) (Audited)
<S> <C> <C>
Net income $4,001 $5,238
Adjustments to reconcile net income to cash provided by
operating activities-
Depreciation, amortization, and
loan cost amortization 19,596 12,169
Minority interest in earnings of
the partnership 10,339 13,536
Changes in certain assets and liabilities
Receivables 689 (1,040)
Inventories 127 (29)
Prepaid expenses and other 870 909
Accounts payable 3,359 (2,592)
Accrued expenses (1,071) (3,302)
Other obligations and deferred revenue (462) 1,652
Net cash provided by operating activities 37,448 26,541
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment, net (92,742) (92,733)
Buy-out of minority interest -- (1,200)
Franchise fees and other (1,761) 2,220
Sale of marketable securities 14,936 64,608
Net cash used in investing activities (79,567) (27,105)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 32,133 10,690
Payments of notes payable to affiliates -- (547)
Repayments of debt (1,068) (3,037)
Distributions (2,680) (4,697)
Net cash provided by financing activities 28,385 2,409
Increase (decrease) in cash and equivalents (13,734) 1,845
CASH AND EQUIVALENTS, beginning of period 41,777 9,712
CASH AND EQUIVALENTS, end of period $28,043 $11,557
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID FOR INTEREST,
net of amounts capitalized $31,671 $28,365
</TABLE>
See Notes to Consolidated Financial Statements
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ENTITY MATTERS
The accompanying consolidated financial statements include the
accounts of John Q. Hammons Hotels, Inc. and John Q. Hammons
Hotels, L.P. and subsidiaries. (Collectively the Company or, as the
context may require John Q. Hammons Hotels, Inc. only.)
The Company was formed in September 1994 and had no
operations or assets prior to its initial public offering of 6,042,000
shares of Class A common stock at $16.50 per share
consummated on November 23, 1994. Immediately prior to the
initial public offering, Mr. John Q. Hammons (JQH) contributed
approximately $5 million in cash to the Company in exchange for
294,100 shares of Class B common stock (which represents
approximately 72% of the voting control of the Company). The
Company contributed the approximate $96 million of net proceeds
from the Class A and Class B common stock offerings to John Q.
Hammons Hotels, L.P. (the "Partnership") in exchange for a
28.31% general partnership interest.
All significant balances and transactions between the entities and
properties have been eliminated.
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 Company's Form 10-K for the year ended
December 29, 1995 which included financial statements for the
years ended December 29, 1995 and December 30, 1994.
The information contained herein reflects all normal and recurring
adjustments which, in the opinion of management, are necessary
for a fair presentation of the results of operations and financial
position for the interim periods.
The Company 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 which mature or will be available for use in operations
in 1996. These securities are valued at current market value,
which approximates cost.
The provision for income taxes was determined using an effective
income tax rate of 2%. The lower effective tax rate is due to
special allocations of tax depreciation to the Company in excess of
its proportionate share of the depreciation related to the book value
of the Partnership's net assets.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The following discussion and analysis addresses results of
operations for the three and nine months ended September 27,
1996 and September 29, 1995.
Total revenues increased to $67.3 million in the 1996 Three
Months from $60.2 million in the 1995 Three Months, an increase
of $7.1 million or 11.8%. Of the total revenues reported in the
1996 Three Months, 67.7% were revenues from rooms, 25.7%
were revenues from food and beverage, and 6.6% were revenues
from meeting room rental and other, compared with 66.6%, 27.0%,
and 6.4%, respectively, during the 1995 Three Months.
Rooms revenues increased to $45.6 million in the 1996 Three
Months from $40.1 million in the 1995 Three Months, an increase
of $5.5 million or 13.6% due to increases in the total number of
available rooms. Average room rates of Mature Hotels (open more
than one year) increased to $74.83 in the 1996 Three Months from
$72.11 in the 1995 Three Months, an increase of $2.72 or 3.8%.
Occupancy of Mature Hotels decreased to 70.3% in the 1996
Three Months from 73.8% in the 1995 Three Months, a decrease
of 3.5 percentage points. The lower occupancy was primarily due
to the increased number of limited service rooms opening in the
immediate market of some of the Company's owned hotels.
Food and beverage revenues increased to $17.3 million in the
1996 Three Months from $16.3 million in the 1995 Three Months,
an increase of $1.0 million or 6.5%. The increase in revenues was
attributable to the opening of additional full service hotels, opening
of new restaurant concepts in the existing hotels, and menu pricing
adjustments.
Meeting room rental and other revenues increased to $4.5 million
in the 1996 Three Months from $3.9 million in the 1995 Three
Months, an increase of $0.6 million or 15.2%. The increase was
attributable to increased group business requiring meeting space
as well as increased pricing.
Rooms operating expenses increased to $11.0 million in the 1996
Three Months from $10.2 million in the 1995 Three Months, an
increase of $0.8 million or 7.8%. This expense represented 24.0%
of rooms revenues in the 1996 Three Month period and 25.3% in
the 1995 Three Month period.
Food and beverage operating expenses were $13.1 million in the
1996 and 1995 Three Months. As a percentage of food revenue
these expenses decreased to 75.7% in the 1996 Three Months
from 80.6% in the 1995 Three Months.
Other operating expenses increased to $0.7 million in the 1996
Three Months from $0.6 million in the 1995 Three Months, an
increase of $0.1 million or 9.3%.
General, administrative and sales expenses increased to $18.5
million in the 1996 Three Months from $16.5 million in the 1995
Three Months, an increase of $2.0 million or 11.7%. The increased
expenses were a result of expenses incurred on the six hotels
opened during the second half of 1995.
Repairs and maintenance expenses increased to $2.9 million in the
1996 Three Months from $2.6 million in the 1995 Three Months, an
increase of $0.3 million or 13.1%. The increase was a result of the
Company's increased number of hotels open.
Depreciation and amortization expenses increased to $6.3 million
in the 1996 Three Months from $4.6 million in the 1995 Three
Months, an increase of $1.7 million or 38.2%. These expenses
represented 9.4% of total revenues in the 1996 Three Months and
7.6% of total revenues in the 1995 Three Months. The increase
was primarily due to the opening of six new hotels in the second
half of 1995.
Income from Operations increased to $14.9 million in the 1996
Three Months from $12.7 million in the 1995 Three Months, an
increase of $2.2 million or 17.6%. The increase was due primarily
to the higher amount of total revenue offset in part by higher
depreciation from new hotels open during the 1996 quarter.
Interest income decreased to $0.6 million in the 1996 Three
Months from $0.8 million in the 1995 Three Months, a decrease of
$0.2 million or 32.1%. The decrease was attributable to lower
balances in cash and equivalents and in marketable securities
because of amounts utilized for new construction.
Interest expense and amortization of deferred financing fees
increased to $9.1 million in the 1996 Three Months from $7.1
million in the 1995 Three Months, an increase of $2.0 million or
27.9%. As a percentage of total revenues, this expense increased
to 13.5% in the 1996 Three Months from 11.8% in the 1995 Three
Months.
Income before minority interest and provision for income taxes
was $6.4 million in the 1996 and 1995 Three Months. As a
percentage of total revenues, it decreased to 9.5% in the 1996
Three Months from 10.6% in the 1995 Three Months. The
decrease was due primarily to an increase in depreciation and
interest expense associated with the opening of six hotels in 1995
that have not reached normal occupancy levels.
NINE MONTHS
Total revenues increased to $200.3 million in the 1996 Nine
Months from $173.2 million in the 1995 Nine Months, an increase
of $27.1 million or 15.7%. Of the total revenues reported in the
1996 Nine Months, 64.9% were revenues from rooms, 28.2% were
revenues from food and beverage, and 6.9% were revenues from
meeting room rental and other, compared with 65.1%, 28.4%, and
6.5%, respectively, during the 1995 Nine Months.
Rooms revenues increased to $129.9 million in the 1996 Nine
Months from $112.8 million in the 1995 Nine Months, an increase
of $17.1 million or 15.2% as a result of increases in average room
rates and total number of available rooms. Average room rates of
Mature Hotels increased to $74.58 in the 1996 Nine Months from
$71.38 in the 1995 Nine Months, an increase of $3.20 or 4.5%.
Occupancy of Mature Hotels decreased to 68.3% in the 1996 Nine
Months from 71.1% in the 1995 Nine Months, a decrease of 2.8
percentage points. The lower occupancy was primarily due to the
increased number of limited service hotels open in the immediate
market area of some of the Company's owned hotels.
Food and beverage revenues increased to $56.5 million in the
1996 Nine Months from $49.2 million in the 1995 Nine Months, an
increase of $7.3 million or 14.8%. The increase in revenues was
attributable to the opening of additional full service hotels, opening
of new restaurant concepts in the existing hotels, and menu pricing
adjustments.
Meeting room rental and other revenues increased to $13.9 million
in the 1996 Nine Months from $11.2 million in the 1995 Nine
Months, an increase of $2.7 million or 23.8%. The increase was
attributable to increased group business requiring meeting space
as well as increased pricing.
Rooms operating expenses increased to $32.1 million in the 1996
Nine Months from $28.5 million in the 1995 Nine Months, an
increase of $3.6 million or 12.7%. This expense represented
24.7% of rooms revenues in the 1996 Nine Month period and
25.2% in the 1995 Nine Month period.
Food and beverage operating expenses increased to $41.9 million
in the 1996 Nine Months from $38.6 million in the 1995 Nine
Months, an increase of $3.3 million or 8.5%.
Other operating expenses increased to $2.2 million in the 1996
Nine Months from $1.8 million in the 1995 Nine Months, an
increase of $0.4 million or 19.7%.
General, administrative and sales expenses increased to $56.3
million in the 1996 Nine Months from $47.3 million in the 1995 Nine
Months, an increase of $9.0 million or 18.8%. The increased
expenses were a result of expenses incurred on the six hotels
opened during the second half of 1995.
Repairs and maintenance expenses increased to $8.5 million in the
1996 Nine Months from $7.3 million in the 1995 Nine Months, an
increase of $1.2 million or 16.1%. The increase was a result of the
Company's increased number of hotels open.
Depreciation and amortization expenses increased to $18.3 million
in the 1996 Nine Months from $11.7 million in the 1995 Nine
Months, an increase of $6.6 million or 56.6%. These expenses
represented 9.1% of total revenues in the 1996 Nine Months and
6.7% of total revenues in the first Nine Months of 1995. The
increase was primarily due to the opening of six new hotels in the
second half of 1995.
Income from Operations increased to $41.2 million in the 1996
Nine Months from $38.0 million in the 1995 Nine Months, an
increase of $3.2 million or 8.3%. The increase was due primarily
to the higher amount of total revenue offset in part by higher
depreciation from new hotels open during the first Nine Months of
1996.
Interest income decreased to $1.8 million in the 1996 Nine Months
from $3.4 million in the 1995 Nine Months, a decrease of $1.6
million or 48.0%. The decrease was attributable to lower
balances in cash and equivalents and in marketable securities as
a result of amounts spent for new construction.
Interest expense and amortization of deferred financing fees
increased to $28.5 million in the 1996 Nine Months from $22.6
million in the 1995 Nine Months, an increase of $5.9 million or
26.4%. As a percentage of total revenues, this expense increased
to 14.2% in the 1996 Nine Months from 13.0% in the 1995 Nine
Months.
Income before minority interest and provision for income taxes
decreased to $14.4 million in the 1996 Nine Months from $18.9
million in the 1995 Nine Months, a decrease of $4.5 million or
23.6%. As a percentage of total revenues, it decreased to 7.2% in
the 1996 Nine Months from 10.9% in the 1995 Nine Months. The
decrease was due primarily to an increase in depreciation and
interest expense associated with the opening of six hotels in 1995
that have not reached normal occupancy levels.
Liquidity and Capital Resources
In general, the Company 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. The Company in the future may obtain mortgage
financing secured by unencumbered hotels and construction in
progress to provide additional liquidity, if necessary. The
Company's principal uses of cash are to pay operating expenses,
to service debt, to fund capital expenditures, to fund new hotel
development and to make partnership distributions.
At September 27, 1996, the Company had $28.0 million of cash
and equivalents and also had $11.6 million of marketable
securities, which represented investment of a portion of the
proceeds of the Note Offerings and Common Stock Offering. Such
investment is expected to be used for development of new hotels
and other working capital requirements of the Company.
Net cash provided by operating activities was $37.4 million for the
first Nine Months of 1996 compared to $ 26.5 million at the end
of the first Nine Months of 1995, an increase of $ 10.9 million. A
majority of the increase was due to among others, increases in
depreciation and amortization, fewer receivables due from
construction reimbursements and increases in construction
payables at September 27, 1996.
The Company incurred net capital expenditures of $92.7 million
during the first Nine Months of 1996 and 1995. Capital
expenditures include expenditures for development of new hotels
and capital improvements on existing hotel properties. During the
remainder of 1996 the Company expects capital expenditures to
total approximately $56 million, representing $ 6 million for capital
improvements on existing hotels and $50 million for continued new
hotel development.
The Company currently has eight hotels under construction. The
Company estimates that building and pre-opening costs of the
eight hotels will require aggregate funding of approximately $196
million from the Company (net of $84 million included in
construction in progress at September 27, 1996).
In addition to the capital expenditures for the hotels under
construction, the Company is at various stages in other new hotel
development. Capital requirements for the new 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 Scheduled Hotels as
described above; and (iii) contributions from third parties.
On July 15, 1996, the Company received a commitment for a
secured line of credit. Borrowings under the secured line of credit
will mature three years from the date of closing and require
quarterly principal payments commencing September 30, 1997.
Borrowings bear interest at LIBOR plus an applicable margin as
defined in the credit agreement. The Company pays a
commitment fee of 0.375% per annum on the daily unused portion
of the credit facility.
Including the secured line of credit the Company has received loan
commitments for the projects planned and under construction in
excess of $170 million.
The Company expects to develop new hotels through limited
partnerships in which the Company will be the general partner and
an affiliate of the general partner will be the limited partner. As
permitted by the Indentures relating to the 1994 Notes and the
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 Company 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 Company. The Company believes that funding
permitted under the 1994 and 1995 Note Indentures will be
sufficient to meet its development plans.
Based upon current plans relating to the timing of new hotel
development, the Company 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.
The Company accrued distributions of approximately $ 2.7 million
during the first nine months of 1996 to its partners. Distributions by
the Company to its partners must be made in accordance with
provisions of the 1994 and 1995 Note Indentures.
Part II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings
A lawsuit has been filed in the U.S. District Court of Arizona, CV
96-356 TUC JMR, against John Q. Hammons Hotels Two, L.P., a
Delaware limited partnership, and John Q. and Juanita K.
Hammons, husband and wife. The Second Amended Complaint
was filed on August 5, 1996, by the Marshall Foundation, a not-for-profit
Arizona corporation. The lawsuit arises out of a Ground
Lease by the Marshall Foundation to John Q. Hammons Hotels
Two, L.P., the performance of which is guaranteed by John Q. and
Juanita K. Hammons. The Ground Lease requires Hammons to
construct a hotel on the subject land and maintain and operate the
hotel for a 99-year term.
The lawsuit alleges that the Hammons entities are guilty of bad
faith and misrepresentation, as well as fraud, and that the Marshall
Foundation is entitled to specific performance, declaratory relief on
certain issues and damages. The claim arises out of a dispute
over the course of construction of the hotel, with the Marshall
Foundation claiming that it has the right to approve all
modifications to the original plans developed for the hotel and the
Hammons entities contending that they have the right to build the
hotel in a manner that is consistent with the original plans and
drawings but subject only to the Ground lease requirement that the
hotel be First-class in quality and have a value of more than
$16,000,000.
Hammons has filed a counterclaim seeking declaratory relief with
regard to whether it is complying with the terms of the Ground
Lease between the parties and seeking monetary damages from
the Marshall Foundation for the Foundation's wrongful interference
with the rights of Hammons under the terms of the Ground Lease.
A partial settlement has been reached which postpones any further
litigation until the hotel is complete.
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 its behalf by the undersigned thereunto duly authorized.
John Q. Hammons Hotels, Inc.
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
Dated: November 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JAN-3-1997 JAN-3-1997
<PERIOD-END> SEP-27-1996 SEP-27-1997
<CASH> 0 28043
<SECURITIES> 0 11638
<RECEIVABLES> 0 6743
<ALLOWANCES> 0 0
<INVENTORY> 0 983
<CURRENT-ASSETS> 0 47843
<PP&E> 0 682787
<DEPRECIATION> 0 171344
<TOTAL-ASSETS> 0 569851
<CURRENT-LIABILITIES> 0 58824
<BONDS> 0 390000
0 0
0 0
<COMMON> 0 63
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 586922
<SALES> 67329 200292
<TOTAL-REVENUES> 67899 202082
<CGS> 24764 76085
<TOTAL-COSTS> 52427 159122
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 9109 28538
<INCOME-PRETAX> 1801 4083
<INCOME-TAX> 37 82
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1764 4001
<EPS-PRIMARY> .28 .63
<EPS-DILUTED> .28 .63
</TABLE>
