<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996
/ / Transition period report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period from to
--------------- ---------------
Commission File Number: 34-0-25340
STUDIO PLUS HOTELS, INC.
(Exact name of registrant as specified in its charter)
Virginia 61-1273532
(State of Incorporation) (I.R.S. Employer
Identification No.)
1999 Richmond Road
Suite 4
Lexington, Kentucky 40502
(Address of principal executive offices)
606/269-1999
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /
Number of shares of Common Stock, $.01 par value outstanding as of July 30,
1996:
12,527,833
<PAGE> 2
Studio Plus Hotels, Inc.
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets at June 30, 1996
and December 31, 1995 3
Condensed Consolidated Statements of Operations for the three
month periods ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Operations for the six
month periods ended June 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1996 and 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION AND SIGNATURES
Item 2. Changes in Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Index to Exhibits 15
</TABLE>
Page 2
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements
Studio Plus Hotels, Inc.
Condensed Consolidated Balance Sheets
(Thousands)
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 22,332 $ 2,557
Investments available-for-sale 38,910
Accounts receivable, net of allowance of $90 and
$71, respectively 734 372
Refundable income taxes 162
Other current assets 477 164
Total current assets 62,453 3,255
-------- -------
Property and equipment, net 76,248 59,630
Deferred loan costs, net of accumulated amortization
of $120 and $48, respectively 406 245
Preopening costs, net of accumulated amortization
of $554 and $391, respectively 567 210
Other assets 8 36
-------- -------
$139,682 $63,376
-------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,505 $ 1,877
Property tax 411 322
Compensation 316 246
Income taxes payable 556
Accrued expenses 550 458
Total current liabilities 4,338 2,903
-------- -------
Long-term debt 4,000
Deferred income tax 4,831 4,827
Shareholders' equity:
Common stock 84 51
Additional paid-in capital 127,241 50,490
Net unrealized gains on investments 6
Retained earnings 3,182 1,105
Total shareholders' equity 130,513 51,646
-------- -------
$139,682 $63,376
-------- -------
</TABLE>
See accompanying notes to financial statements
Page 3
<PAGE> 4
Part I. Financial Information
Item 1. Financial Statements
Studio Plus Hotels, Inc.
Condensed Consolidated Statements of Operations
(Thousands, except earnings per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Month Periods
Ended June 30,
------------------------------
1996 1995
---------- ---------
<S> <C> <C>
Revenue:
Room revenue $ 5,534 $ 4,076
Other revenue 170 135
---------- ---------
Total revenue 5,704 4,211
---------- ---------
Costs and expenses:
Property operating expenses 2,454 1,633
Corporate operating expenses 866 432
Depreciation and amortization 762 435
Interest expense, net of interest income of $823 in 1996 (823) 770
---------- ---------
Total costs and expenses 3,259 3,270
Income before third party investors' interest and
---------- ---------
income taxes 2,445 941
Third party investors' interest (115)
---------- ---------
Income before income taxes 2,445 826
Provision for income taxes 953 575
---------- ---------
Income before extraordinary loss 1,492 251
Extraordinary loss (185)
---------- ---------
Net income $ 1,492 $ 66
---------- ---------
Pro forma income data: (Note 5)
Income before income taxes $ 826
Pro forma provision for income taxes (330)
---------
Pro forma income before extraordinary loss 496
Extraordinary loss (185)
---------
Pro forma net income $ 311
---------
Earnings per common and common equivalent shares,
primary and fully diluted (Note 5) $ 0.12
----------
Pro forma earnings per share: (Note 5)
Income before extraordinary loss $ 0.22
Extraordinary loss (0.08)
Net income $ 0.14
---------
Weighted average number of common and common
equivalent shares outstanding (Note 5) 12,744,785 2,242,875
</TABLE>
See accompanying notes to financial statements
Page 4
<PAGE> 5
Part 1. Financial Information
Item 1. Financial Statements
Studio Plus Hotels, Inc.
Condensed Consolidated Statements of Operations
(Thousands, except earnings per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Month Periods
Ended June 30,
------------------------------
1996 1995
---------- ---------
<S> <C> <C>
Revenue:
Room revenue $ 9,784 $ 7,044
Other revenue 343 303
---------- ---------
Total revenue 10,127 7,347
---------- ---------
Costs and expenses:
Property operating expenses 4,385 2,975
Corporate operating expenses 1,756 745
Depreciation and amortization 1,436 843
Interest expense, net of interest income of $856 in 1996 (855) 1,521
---------- ---------
Total costs and expenses 6,722 6,084
---------- ---------
Income before third party investors' interest and
income taxes 3,405 1,263
Third party investors' interest (142)
---------- ---------
Income before income taxes 3,405 1,121
Provision for income taxes 1,328 575
---------- ---------
Income before extraordinary loss 2,077 546
Extraordinary loss (185)
---------
Net income $ 2,077 $ 361
---------- ---------
Pro forma income data: (Note 5)
Income before income taxes $ 1,121
Pro forma provision for income taxes (448)
---------
Pro forma income before extraordinary loss 673
Extraordinary loss (185)
---------
Pro forma net income $ 488
---------
Earnings per common and common equivalent shares,
primary and fully diluted (Note 5) $ 0.20
----------
Pro forma earnings per share: (Note 5)
Income before extraordinary loss $ 0.32
Extraordinary loss (0.09)
Net income $ 0.23
---------
Weighted average number of common and common
equivalent shares outstanding (Note 5) 10,362,392 2,085,909
</TABLE>
See accompanying notes to financial statements
Page 5
<PAGE> 6
Part I. Financial Information
Item 1. Financial Statements
Studio Plus Hotels, Inc.
Condensed Consolidated Statements of Cash Flows
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Month Periods
Ended June 30,
--------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 2,077 $ 361
Adjustments to reconcile net income to net cash provided
by operating activities:
Third party investors' interest 142
Depreciation and amortization 1,436 843
Gain on sale of assets (61)
Bad debt expense 62 16
Extraordinary loss 185
Deferred income tax liability 540
Change in:
Accounts receivable (423) (368)
Other current assets (166) (218)
Other assets 3 246
Accounts payable 127 547
Income taxes 718
Accrued expenses 325 (243)
------- --------
Net cash provided by operating activities 4,159 1,990
------- --------
Cash flows from investing activities:
Expenditures for land, buildings, improvements, furn (17,439) (4,708)
Sale of assets 141
Purchase of available-for-sale securities (10,088)
Purchase of held-to-maturity securities (28,812)
Additions to preopening costs (521) (49)
Purchase of third party investors' interest (1,500)
Net cash used in investing activities (56,860) (6,116)
------- --------
Cash flows from financing activities:
Proceeds from long-term debt 7,000 3,579
Proceeds from notes payable to shareholders and partners 1,728
Principal payments on long-term debt (11,075) (37,174)
Principal payments on notes to shareholders (3,111)
Cash dividends (2,295)
Proceeds from public offering, net of underwriting c 77,236 49,732
Additions to deferred loan costs (232) (318)
Public offering costs (453) (814)
Net cash provided by financing activities 72,476 11,327
------- --------
Net increase in cash and cash equivalents 19,775 7,201
Cash and cash equivalents, at beginning of periods 2,557 457
Cash and cash equivalents, at end of periods $22,332 $ 7,658
------- --------
</TABLE>
See accompanying notes to financial statements
Page 6
<PAGE> 7
Studio Plus Hotels, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated 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. In the opinion of
management, all adjustments, consisting of normal recurring adjustments, which
are necessary for a fair presentation of financial position and results of
operations have been made. These interim financial statements should be read
in conjunction with the Studio Plus Hotels, Inc. and its wholly owned
subsidiary, Studio Plus Properties, Inc. (together the "Company"), 1995 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
All significant intercompany balances and transactions have been
eliminated.
(2) Investments
The Company accounts for investments in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The statement requires that
certain investments be classified into three separate categories:
"held-to-maturity," "available-for-sale," and "trading," each with different
accounting treatment. The Company has classified its investment in a mutual
fund, investing primarily in municipal bonds, and its investment in United
States Government obligations as "available-for-sale." The available-for-sale
classification requires the Company to record these investments at fair market
value and record the gross unrealized holding gains and losses, after-tax, as a
separate component of shareholders' equity. The amortized cost of these
investments is approximately $38,900,000 at June 30, 1996. Investments with
maturities between three and twelve months are considered short-term
investments.
(3) Income Taxes
Net income for periods prior to the completion of the Company's initial
public offering on June 26, 1995 (the "IPO") excludes taxes on income. Prior
to the IPO, the Company was organized as S-corporations and partnerships (the
"Predecessor Entities"), and therefore, was not subject to income tax.
(4) Follow-on Offering and Stock Split
On April 2, 1996, the Company completed a follow-on offering of
3,236,898 shares of Common Stock, including 450,000 shares issued as a result of
the exercise of the underwriters' over-allotment option at $25.25 per share (the
"Offering"). Net proceeds to the Company from the Offering were approximately
$76.8 million. The Company used the net proceeds from the
Page 7
<PAGE> 8
Offering to repay approximately $11.0 million of indebtedness under its line
of credit (the "Line of Credit") and the balance to fund the development of
additional StudioPLUS hotels and for working capital and general corporate
purposes.
On July 9, 1996, a three-for-two split of the Company's Common Stock was
effected in the form of a stock dividend of three shares of Common Stock for
each two shares of Common Stock outstanding at the close of business on June
20, 1996. Effective with the stock split, Common Stock outstanding increased
from 8,351,898 to 12,527,833 shares. Accordingly, all applicable share and per
share data, except as discussed in the preceding paragraph, have been adjusted
for the stock split.
(5) Earnings Per Share
The weighted average number of common and common equivalent shares used
in the computation of earnings per share for the three months ended June 30,
1996, are as follows:
<TABLE>
<S> <C>
Weighted average common shares issued 8,280,758
Dilutive effect of stock options 215,765
Retroactive recognition for stock split 4,248,262
---------
Weighted average number of common and
common equivalent shares 12,744,785
</TABLE>
The weighted average number of common and common equivalent shares used in
the computation of earnings per share for the six months ended June 30, 1996,
are as follows:
<TABLE>
<S> <C>
Weighted average common shares issued 6,697,879
Dilutive effect of stock options 210,382
Retroactive recognition for stock split 3,454,131
---------
Weighted average number of common and
common equivalent shares 10,362,392
</TABLE>
The pro forma earnings per share for the three month and six month
periods ended June 30, 1995, have been calculated by dividing pro forma net
income by the weighted average number of shares of Common Stock deemed to be
outstanding. Net income has been adjusted to pro forma net income by reflecting
the tax that would have been paid by the Company if it had been subject to
income tax for the full period, assuming a 40.0% effective tax rate.
The Company believes that the earnings per share calculations discussed
above, required in accordance with Accounting Principles Board Opinion No. 15,
are not meaningful for periods prior to the IPO. Rather, if certain
adjustments are made to the combined historical operating results for the
Predecessor Entities and 7,672,500 shares are assumed outstanding on a
post-split basis, the adjusted net income per share for the six months ended
June 30, 1995 would be $0.19, compared to $0.20 for the six months ended June
30, 1996.
Page 8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
During the first six months of 1996, Studio Plus Hotels, Inc. (the
"Company") opened four new hotels: one in Montgomery, Alabama (February 24,
1996, 72 suites), one in Charlotte, North Carolina (March 29, 1996, 72 suites),
and two in Birmingham, Alabama (March 31, 1996, 72 suites; May 20, 1996, 72
suites). The addition of these four hotels brings the Company's total
portfolio to 26 StudioPLUS hotels in operation containing 1,858 suites, as of
June 30, 1996. As of July 30, 1996, the Company had 11 StudioPLUS hotels under
construction located in 7 states, all of which are expected to open by the end
of the first quarter of 1997. In addition, the Company has 19 sites under
contract, located in 9 states, and development efforts are under way or
negotiations are continuing on approximately 30 additional sites located in 15
states. The Company anticipates acquiring and beginning construction on many
of these additional sites by the end of 1996, with the goal of operating at
least 60 StudioPLUS hotels by the end of 1997 and at least 100 by the end of
1998. The Company will continue searching for other appropriate sites to
locate and construct StudioPLUS hotels as it expands its development pipeline.
During the second quarter of 1996 the Company continued to add to its
corporate infrastructure. This was evident especially in the area of corporate
operations support as the Company added staff to help prepare for opening and
operating approximately nine more StudioPLUS hotels this year and at least 25
StudioPLUS hotels in 1997. However, the most significant addition this year
came just following the conclusion of the second quarter when the Company
announced on July 17, 1996, that Michael J. Moriarty would join its senior
management team as President and Chief Operating Officer and as a member of the
Board of Directors. Moriarty is an experienced lodging professional whose
background includes national development and brand expansion, finance, and
hotel operations management. With several strategic personnel additions
completed during the second quarter concluding with the addition of Moriarty,
the pace of further increases in corporate support staff is expected to
decrease for the balance of 1996.
At the conclusion of the first quarter, the Company sold 3,236,898 shares
of Common Stock in a follow-on offering (the "Offering") that was completed on
April 2, 1996, at a price of $25.25 per share. This Offering increased the
number of outstanding shares of Common Stock to 8,351,898 shares prior to the
split.
On May 28, 1996, the Company's Board of Directors declared a three-for-two
split of the Company's Common Stock. This stock split was effected in the form
of a stock dividend paid on July 9, 1996 to shareholders of record on June 20,
1996. As a result, the number of shares of Common Stock outstanding increased
to 12,527,833 shares.
The Company's disclosures regarding its development schedule and plans for
the opening of new StudioPLUS hotels constitute "forward looking statements"
which are subject to various risks and uncertainties. For the Company's
assessment of the relevant factors relating to such risks and uncertainties in
connection with the "safe harbor" provisions of the Private Securities
Page 9
<PAGE> 10
Litigation Reform Act of 1995, readers of this Quarterly Report on Form 10-Q
are advised to review the Company's disclosures contained in the Company's
Current Report on Form 8-K dated August 13, 1996 and filed with the Commission
on August 13, 1996.
The following discusses historical results for the Company from the date
of the IPO and combined historical results for the Predecessor Entities prior
to the IPO.
RESULTS OF OPERATIONS
Comparison of three months ended June 30, 1996, to three months ended June 30,
1995.
Total revenue for the three months ended June 30, 1996, was $5,704,000, an
increase of $1,493,000, or approximately 35.5% over the corresponding three
months during 1995. Room revenue for this period increased by approximately
$1,458,000, of which (i) approximately $146,000 is attributable to the 18
hotels open throughout both periods and (ii) approximately $1,312,000 is
attributable to the eight new hotels that have opened since December 31, 1994
(the "New Hotels"). The increase in room revenue from the 18 hotels open
throughout both periods resulted from a 4.0% increase in weekly revenue per
available room from $222.93 to $231.85, which reflects a 7.8% increase in
average weekly rates from $249.67 to $269.06 and a decrease in occupancy from
89.3% to 86.2%. The net increase in other revenue was approximately $35,000,
due primarily to telephone, laundry and vending income from the New Hotels.
Property operating expenses for the three months ended June 30, 1996 were
$2,454,000, an increase of $821,000, or approximately 50.3% over the three
months ended June 30, 1995 of which (i) approximately $191,000 is attributable
to the 18 hotels open throughout both periods and (ii) approximately $630,000
is attributable to the New Hotels. The increase in property operating expenses
for the 18 hotels open throughout both periods resulted primarily from higher
labor, marketing and administrative expenses. Corporate operating expenses
increased approximately $434,000, resulting from expanding the Company's
corporate infrastructure to support its national expansion program, in addition
to various expenses associated with operating as a public company which were
not applicable for the corresponding period during the prior year.
Depreciation and amortization expense increased $327,000, or approximately
75.2%, resulting primarily from operating the New Hotels and the associated
amortization of their preopening costs. The reduction of $1,593,000 in net
interest expense for the three months ended June 30, 1996, over the
corresponding period in 1995 is attributable to a decrease of approximately
$770,000 in interest expense, resulting from the payoff of debt from the IPO
and Offering proceeds, and an increase in interest income of approximately
$823,000 due primarily to the investment of proceeds from the Offering. The
provision for income taxes for the three months ended June 30, 1996, was
approximately $953,000, for an effective tax rate of 39.0%. Prior to the IPO,
the Predecessor Entities were not subject to income taxes. The income tax
expense for the three months ended June 30, 1995, consists primarily of charges
relating to the termination of the S-corporation and partnership status of the
Predecessor Entities.
Page 10
<PAGE> 11
Comparison of six months ended June 30, 1996, to six months ended June 30,
1995.
Total revenue for the six months ended June 30, 1996, was $10,127,000, an
increase of $2,780,000 or approximately 37.8% over the corresponding six months
during 1995. Room revenue for this period increased by approximately
$2,740,000, of which (i) approximately $593,000 is attributable to the 18
hotels open throughout both periods, and (ii) approximately $2,147,000 is
attributable to the New Hotels. The increase in room revenue from the 18
hotels open throughout both periods resulted from an 8.5% increase in weekly
revenue per available room from $199.02 to $215.97, which reflects an 8.5%
increase in average weekly rates from $239.98 to $260.39, with occupancy
remaining the same for both periods at 82.9%. The net increase in other
revenue was approximately $40,000; however, excluding a one-time gain on sale
of assets of approximately $67,000 that occurred during the three months ended
March 31, 1995, other revenue increased approximately $107,000 due primarily to
higher telephone, laundry and vending income.
Property operating expenses for the six months ended June 30, 1996 were
$4,385,000, an increase of $1,410,000, or approximately 47.4% over the six
months ended June 30, 1995, of which (i) approximately $418,000 is attributable
to the 18 hotels open throughout both periods, and (ii) approximately $992,000
is attributable to the New Hotels. The increase in property operating expenses
for the 18 hotels open throughout both periods resulted primarily from higher
labor, marketing, and administrative expenses. Corporate operating expenses
increased approximately $1,011,000, resulting from corporate infrastructure
expansion in addition to various expenses associated with operating as public
company which were not applicable for the corresponding period during the prior
year.
Depreciation and amortization expense increased $593,000, or approximately
70.3%, resulting primarily from operating the New Hotels and the associated
amortization of their preopening costs. The reduction of $2,376,000 in
interest expense for the six months ended June 30, 1996, over the corresponding
period 1995 can be attributed to a decrease of approximately $1,521,000 in
interest expense, resulting from the payoff of debt with proceeds from the
Company's IPO in 1995 and the Offering in April, 1996 and an increase in
interest income of approximately $855,000 due to the investment proceeds from
the follow-on offering. The provision for income taxes for the six months
ended June 30, 1996 was approximately $1,328,000, for an effective tax rate of
39.0%. Prior to the IPO, the Predecessor Entities were not subject to income
taxes. The income tax expense for the six months ended June 30, 1995, consists
primarily of charges relating to the termination of the S-corporation and
partnership status of the Predecessor Entities.
LIQUIDITY AND CAPITAL RESOURCES
On April 2, 1996, the Company completed its follow-on Offering of Common
Stock, raising net proceeds and increasing paid-in capital by approximately
$76.8 million. The Company applied a portion of the net proceeds from the
Offering to repay approximately $11.0 million of indebtedness under its line of
credit (the "Line of Credit"), the balance to fund the development
Page 11
<PAGE> 12
of additional StudioPLUS hotels and for working capital and general corporate
purposes. Excess net proceeds have been invested in interest-bearing,
short-term, investment grade securities or money market accounts.
During the six months ended June 30, 1996, the Company generated
$4,159,000 in cash provided by operating activities, an increase of $2,169,000
over the six months ended June 30, 1995. This 109% increase can be attributed
primarily to an improvement in net income resulting from operating the New
Hotels.
In February, the Company amended its existing Line of Credit with Bank
One, Lexington, NA (the "Bank") to increase its borrowing capacity from $30
million to $50 million. Subsequent to the increase to $50 million, the Company
received a commitment from the Bank to increase the principal amount available
under the Line of Credit to approximately $163 million. The increase in the
Line of Credit is subject to the Bank obtaining commitments from participating
lenders and other customary closing conditions. Under the commitment for the
increased Line of Credit, the financial covenants and terms and conditions of
the existing Line of Credit will continue to apply, and the Company has agreed
to certain additional financial covenants and restrictions which the Company
does not believe will adversely affect the Company. There can be no assurance
that the Bank will be successful in obtaining commitments from participating
lenders or that all the conditions to the increase in the Line of Credit will
be met or that the Company will be able to obtain the increase in the Line of
Credit.
Of the 11 StudioPLUS hotels currently under construction, the Company
expects to open nine by the end of 1996. The Company estimates that these nine
additional StudioPLUS hotels to be completed during 1996 should have a total
development cost of approximately $28.0 million which the Company intends to
fund with proceeds from the Offering, borrowings under the Line of Credit and
cash flow from operations. However, there can be no assurance that the Company
will complete the development of such additional StudioPLUS hotels during 1996
in a timely manner or within budget.
The Company in the future may seek to further increase the amount of its
credit facilities, negotiate additional or modify existing credit facilities,
or issue corporate debt instruments. Any debt incurred or issued by the
Company may be secured or unsecured at fixed or variable interest rates and may
be subject to such terms as the Board of Directors of the Company deems
prudent.
The Company believes that the proceeds from the Offering, borrowings under
the Line of Credit and cash generated from operations will be sufficient to
meet the Company's working capital and capital expenditure needs for the
foreseeable future.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 121 "Accounting for the Impairment of Long-Lived Assets", and SFAS No. 123
"Accounting for
Page 12
<PAGE> 13
Stock-Based Compensation", both of which are effective for fiscal years
beginning after December 31, 1995.
SFAS No. 121 requires that long-lived assets and certain intangibles held
and used by entities be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company has concluded that adoption of this standard has no
material impact on its financial condition or results of operation.
SFAS No. 123 requires either the recognition or the pro forma disclosure
of compensation expense for stock options and other equity instruments
determined by a fair value based method of accounting. The Company intends to
disclose pro forma net income and earnings per share in the 1996 Annual Report,
which will have no effect on the consolidated financial statements.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
See Note 2, Part 1 of this Form 10-Q.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the Company's shareholders (the "1996 Annual
Meeting") was held on May 28, 1996. The issues submitted for vote and results
of shareholders' votes have been previously reported in the Company's Current
Report on Form 8-K dated June 13, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT
NUMBER
10.1 Letter from Bank One extending March 6, 1996 commitment letter closing
date to November 15, 1996.
15 Filed herewith; Report from Coopers & Lybrand L.L.P., dated August 5,
1996.
27 Financial Data Schedules (filed only electronically with The Securities
and Exchange Commission).
(B) REPORTS OF FORM 8-K
A Current Report on Form 8-K dated June 13, 1996 was filed during the
period covered by this Quarterly Report on Form 10-Q, reporting the results of
the Company's 1996 Annual Meeting.
Page 13
<PAGE> 14
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 thereunto duly authorized.
Studio Plus Hotels, Inc.
Date: August 13, 1996 By: /s/ Norwood Cowgill, Jr.
--------------- --------------------------------
Norwood Cowgill, Jr.
Chairman of the Board
and Chief Executive Officer
Date: August 13, 1996 By: /s/ James C. Baughman, Jr.
--------------- --------------------------------
James C. Baughman, Jr.
Chief Financial Officer and Treasurer
Page 14
<PAGE> 15
INDEX TO EXHIBITS
Exhibit
Number
- -------
10.1 Letter from Bank One extending March 6, 1996 commitment letter closing
date to November 15, 1996.
15 Filed herewith; Report from Coopers & Lybrand L.L.P., dated August 5,
1996.
27 Financial Data Schedules (filed only electronically with The Securities
and Exchange Commission).
Page 15
<PAGE> 1
Exhibit 10.1 Bank One, Lexington, NA Tel 606 231 1000
201 East Main Street
Lexington, KY 40502 2002
[BANK 1 ONE LETTERHEAD]
August 12, 1996
Mr. James C. Baughman, Jr.
Chief Financial Officer and Treasurer
Studio Plus Hotels, Inc.
1999 Richmond Road, Suite 4
Lexington, KY 40502
Re: Bank One, Lexington, NA (the "Bank") commitment letter to Studio Plus
Hotels, Inc. and Studio Plus Properties, Inc. (collectively the
"Borrowers") dated March 6, 1996
Dear Jay,
Pursuant to the terms in the above referenced commitment letter, this letter
will serve to provide written notification to extend the Closing Date to
November 15, 1996.
Thank you very much for the opportunity to work with you in providing the
financing for Studio Plus exciting expansion plans.
Sincerely,
/s/ James D. Taylor
- ---------------------
James D. Taylor
Vice President
Page 16
<PAGE> 1
EXHIBIT 15
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Studio Plus Hotels, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet and
related condensed consolidated statements of operations and cash flows of
Studio Plus Hotels, Inc. and Subsidiary as of June 30, 1996, and for the three
month and six month periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
- -----------------------------
Coopers & Lybrand L.L.P.
Cincinnati, Ohio
August 5, 1996
Page 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STUDIO PLUS
HOTELS, INC.'S JUNE 30, 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH JUNE 30, 1996 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 22,332
<SECURITIES> 38,910
<RECEIVABLES> 734
<ALLOWANCES> 90
<INVENTORY> 0
<CURRENT-ASSETS> 62,453
<PP&E> 76,248
<DEPRECIATION> 8,012
<TOTAL-ASSETS> 139,682
<CURRENT-LIABILITIES> 4,338
<BONDS> 0
0
0
<COMMON> 84
<OTHER-SE> 130
<TOTAL-LIABILITY-AND-EQUITY> 139,682
<SALES> 0
<TOTAL-REVENUES> 10,982
<CGS> 0
<TOTAL-COSTS> 4,323
<OTHER-EXPENSES> 3,192
<LOSS-PROVISION> 62
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,405
<INCOME-TAX> 1,328
<INCOME-CONTINUING> 2,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,077
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
