-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TuTkEpsm6A0kBSITxtQbizUIRMaNjxhEKqVxdzQhAeDsQrT9+ijwephSyAbIiGaO XSYWtiG4saw8wUQ39sYXAw== 0000950144-97-008108.txt : 19970804 0000950144-97-008108.hdr.sgml : 19970804 ACCESSION NUMBER: 0000950144-97-008108 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970102 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970214 DATE AS OF CHANGE: 19970801 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RFS HOTEL INVESTORS INC CENTRAL INDEX KEY: 0000906408 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 621534743 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12011 FILM NUMBER: 97644414 BUSINESS ADDRESS: STREET 1: 850 RIDGE LAKE BLVD STE 220 CITY: MEMPHIS STATE: TN ZIP: 38120 BUSINESS PHONE: 9017677005 MAIL ADDRESS: STREET 1: 850 RIDGE LAKE BLVD STE 220 CITY: MEMPHIS STATE: TN ZIP: 38120 8-K/A 1 RFS HOTEL FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K-A CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported) January 2, 1997 RFS HOTEL INVESTORS, INC. (Exact name of registrant as specified in its charter) Tennessee 0-22164 62-1534743 (State or other jurisdiction (Commission File No.) I.R.S. Employer of incorporation) (Identification No.)
(901) 767-7005 (Registrant's telephone number, including area code) 850 Ridge Lake Boulevard Suite 220 Memphis, Tennessee 38120 (Address of principal executive offices) (former name or former address, if changed since last report) 889 Ridge Lake Boulevard Suite 100 Memphis, Tennessee 38120 2 This Form 8-K/A replaces the Company's Form 8-K/A filed on February 14, 1997. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On January 2, 1997, RFS Partnership, L.P., a Tennessee limited partnership (the "Partnership") of which RFS Hotel Investors, Inc., a Tennessee corporation (the "Registrant") serves as general partner, consummated the acquisition of four hotel properties in California, three Sheraton Four Points hotels and one Sheraton hotel (the "Hotels") as follows: (1) a 174 room Sheraton Four Points hotel in Sunnyvale, California (the "Sunnyvale Hotel"), (2) a 197 room Sheraton Four Points hotel in Bakersfield, California (the "Bakersfield Hotel"), (3) a 214 room Sheraton Four Points hotel in Pleasanton, California (the "Pleasanton Hotel") and (4) a 229 room Sheraton hotel in San Jose, California (the "San Jose Hotel"). The four Hotels were acquired from a group of affiliated sellers. The Sunnyvale Hotel was purchased from Gus Enterprises-VIII, a California general partnership; the Bakersfield Hotel was purchased from Gus Enterprises-X, a California limited partnership; the Pleasanton Hotel was purchased from Gus Enterprises-XI, a California limited partnership, and the San Jose Hotel was purchased from Gus Enterprises-XII, a California limited partnership in negotiated transactions (Gus Enterprises-VIII, Gus Enterprises-X, Gus Enterprises-XI and Gus Enterprises-XIII are hereafter referred to as the "Selling Partnerships"). The Selling Partnerships are unrelated to the Registrant. The Hotels were acquired by the Partnership for an aggregate of 2,244,934 units of limited partnership interest in the Partnership ("Units") and $52,019,821 in cash, which sum includes closing costs, and of which $50,000,000 was obtained from the proceeds of the Partnership's line of credit with Boatmen's Bank of Tennessee. The Hotels will continue to be operated as hotel properties. The 2,244,934 Units issued in connection with the acquisition of the Hotels have redemption rights which enable the holders to redeem their Units in exchange for shares of Common Stock of the Registrant on the one-for-one basis or, at the election of the Registrant, for cash. Generally, the redemption rights for the Units issued in connection with the Hotels may not be exercised until July 1997. Annual distributions are payable on the Units generally equal to the distributions on shares of Common Stock. The Partnership has leased the Hotels to RFS, Inc., a wholly owned subsidiary of Doubletree Corporation (the "Lessee") pursuant to percentage leases which provide for rent equal to the greater of (i) fixed base rent or (ii) percentage rent based on room revenues of the hotels. The percentage leases for the Hotels have terms of fifteen years. The Lessee sub-leases the restaurant at each of the Hotels (the "Restaurants") to non-affiliated third-parties pursuant to subleases which provide for the payment of base rents and additional rent based on a percentage of the Restaurants' revenues exceeding defined thesholds. The Lessee pays rent for the Restaurants to the Partnership based upon 90% of the rent received by the Lessee under the subleases, subject to a minimum. The rent for each of the Hotels is as follows:
Base Rent Participating Rent Formula --------- -------------------------- Sunnyvale Hotel $1,733,847 Rooms: 45.9% of first $2,585,969; 52.6% of next $2,475,928; 65% of excess over $5,061,897; Restaurant: minimum of $75,000; Food and Beverage: 5% Bakersfield Hotel $ 675,768 Rooms: 23.5% of first $1,513,792; 45.6% of next $1,449,385; 65% of excess over $2,963,167; Restaurant: minimum of $90,000
2 3 Pleasanton Hotel $1,585,783 Rooms: 48.1% of first $2,407,568; 57.0% of next $2,305,118; 65% of excess over $4,712,686; Restaurant: minimum of $180,000; Food and Beverage: 5% San Jose Hotel $2,199,601 Room: 47% of first $3,506,412; 54.3% of next $3,357,203; 65% of excess over $6,863,615; Restaurant: minimum of $150,000
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of the Hotels The audited combined balance sheet as of December 31, 1995 and the related combined statements of operations, partners' equity and cash flows for the year then ended and the unaudited combined balance sheet as of September 30, 1996 and the related unaudited combined statements of operations, partners' equity and cash flows for the nine months ended September 30, 1995 and 1996, are filed as Exhibit 99.1 to this Form 8-K-A. (b) Pro Forma Financial Information Unaudited pro forma financial information for RFS Hotel Investors, Inc. as of September 30, 1996 and for the year ended December 31, 1995 and for the nine months ended September 30, 1996 reflecting the acquisition of the Hotels is filed as Exhibit 99.2 to this Form 8-K-A. (c) Exhibits *10.1 Hotel Purchase Agreement by and between Gus Enterprises, VIII, a California general partnership, and RFS Partnership, L.P., a Tennessee limited partnership, dated December 3, 1996. The purchase agreements for the other three Hotels are substantially similar to this agreement. 23.1 Consent of Independent Accountants 99.1 Audited combined balance sheet as of December 31, 1995 and the related combined statements of operations, partners' equity and cash flows for the year then ended and the unaudited combined balance sheets as of September 30, 1996 and the related unaudited combined statements of operations, partners' equity and cash flows for the nine months ended September 30, 1995 and 1996. 99.2 Unaudited pro forma financial information for RFS Hotel Investors, Inc. as of September 30, 1996 and for the year ended December 31, 1995 and the nine months ended September 30, 1996. * Previously filed. 3 4 SIGNATURE 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. RFS HOTEL INVESTORS, INC. February 14, 1997 /s/ Michael J. Pascal - - - -------------------- ----------------------------- Date Michael J. Pascal Secretary and Treasurer (Principal Financial Officer) 4 5 EXHIBIT INDEX *10.1 Hotel Purchase Agreement by and between Gus Enterprises, VIII, a California general partnership, and RFS Partnership, L.P., a Tennessee limited partnership, dated December 3, 1996. The purchase agreements for the other three Hotels are substantially similar to this agreement. 23.1 Consent of Independent Accountants. 99.1 Audited combined balance sheets as of December 31, 1995 and the related combined statements of operations, partners' equity and cash flows for the year then ended and the unaudited combined balance sheet as of September 30, 1996 and the related unaudited combined statements of operations, partners' equity and cash flows for the nine months ended September 30, 1995 and 1996. 99.2 Unaudited pro forma financial information for RFS Hotel Investors, Inc. as of September 30, 1996 and for the year ended December 31, 1995 and the nine months ended September 30, 1996. * Previously filed. 5 EX-23.1 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of RFS Hotel Investors, Inc. on Form S-3 (file no. 333-03307) and on Form S-8 (file no. 333-19411) of our report dated October 30, 1996, on our audit of the combined financial statements of the GUS Hotels as of and for the year ended December 31, 1995, which report is included in this current report on Form 8-K-A. Coopers & Lybrand L.L.P. Memphis, Tennessee February 14, 1997 EX-99.1 3 AUDITED COMBINED BALANCE SHEETS 1 EXHIBIT 99.1 RFS HOTEL INVESTORS, INC. GUS HOTELS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of RFS Hotel Investors, Inc. We have audited the accompanying combined balance sheet for certain hotel properties (the "GUS Hotels") described in Note 1 to the financial statements as of December 31, 1995 and the related combined statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the management of the GUS 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. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the GUS Hotels as of December 31, 1995 and the 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. Memphis, Tennessee October 30, 1996 3 GUS HOTELS COMBINED BALANCE SHEETS (in thousands)
DECEMBER 31, SEPTEMBER 30, 1995 1996 ASSETS (UNAUDITED) Investment in Hotel properties: Land $ 8,651 $ 8,651 Buildings and improvements 40,432 40,432 Furniture and equipment 11,728 13,396 ---------- ---------- 60,811 62,479 Accumulated depreciation (15,932) (17,568) ---------- ---------- Net investment in Hotel properties 44,879 44,911 Cash and cash 1,614 2,972 Accounts receivable, net 408 655 Prepaids and other assets 455 362 Deferred costs 62 58 ---------- ---------- $ 47,418 $ 48,958 ========== ========== LIABILITIES AND PARTNERS' EQUITY Accounts payable and accrued expenses $ 2,252 $ 2,501 Notes payable 38,215 32,697 Capitalized lease obligations 241 183 ---------- ---------- Total liabilities 40,708 35,381 Commitments and contingencies Partners' equity 6,710 13,577 ---------- ---------- $ 47,418 $ 48,958 ========== ==========
The accompanying notes are an integral part of these combined financial statements. 2 4 GUS HOTELS COMBINED STATEMENTS OF OPERATIONS (in thousands)
FOR THE YEAR ENDED FOR THE NINE MONTHS ENDED DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, 1995 1995 1996 (UNAUDITED) (UNAUDITED) Gross operating revenue: Room $ 17,274 $ 13,268 $ 15,074 Food and conference 4,543 3,494 1,461 Beverage 1,127 845 234 Telephone 889 697 697 Other 1,151 907 762 --------- --------- --------- Gross operating revenue 24,984 19,211 18,228 --------- --------- --------- Departmental expenses: Rooms 4,220 3,207 3,406 Food and conference 3,946 3,041 1,174 Beverage 763 584 163 Telephone 347 229 249 Other 392 302 303 --------- --------- --------- Departmental profit 15,316 11,848 12,933 --------- --------- --------- Unallocated operating expenses: General and administrative 2,915 2,032 2,136 Franchise fees 779 631 583 Advertising and promotions 1,088 798 925 Utilities 983 757 573 Repairs and maintenance 956 713 667 Real estate and personal property taxes and insurance 1,001 778 846 Management fees 1,451 877 865 Interest 3,897 2,848 2,285 Depreciation and amortization 1,982 1,467 1,636 --------- --------- --------- Total unallocated operating expenses 15,052 10,901 10,516 --------- --------- --------- Net income $ 264 $ 947 $ 2,417 ========= ========= =========
The accompanying notes are an integral part of these combined financial statements. 3 5 GUS HOTELS COMBINED STATEMENTS OF CHANGES IN PARTNERS' EQUITY for the year ended December 31, 1995 and the nine months ended September 30, 1996 (in thousands) Balance at December 31, 1994 $ 2,310 Contributions 5,010 Distributions (874) Net income 264 -------- Balance at December 31, 1995 6,710 Contributions (unaudited) 4,950 Distributions (unaudited) (500) Net income (unaudited) 2,417 -------- Balance at September 30, 1996 (unaudited) $ 13,577 ========
The accompanying notes are an integral part of these combined financial statements. 4 6 GUS HOTELS COMBINED STATEMENTS OF CASH FLOWS (in thousands)
FOR THE YEAR ENDED FOR THE NINE MONTHS ENDED DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, 1995 1995 1996 (UNAUDITED) (UNAUDITED) ------- ------- ------- Cash flows from operating activities: Net income $ 264 $ 947 $ 2,417 Adjustments to econcile net income to net cash provided by operating activities: Depreciation 1,863 1,421 1,590 Amortization 119 46 46 Changes in assets and liabilities: Accounts receivable (121) (314) (247) Prepaid and other assets 201 199 93 Accounts payable and accrued expenses 253 470 29 ------- ------- ------- Net cash provided by operating activities 2,579 2,769 4,148 ------- ------- ------- Cash flows from investing activities: Additional investments in hotel properties (2,074) (1,051) (1,662) ------- ------- ------- Net cash used by investing activities (2,074) (1,051) (1,662) ------- ------- ------- Cash flows from financing activities: Payment of loan fees (7) (2) Contributions from partners 5,010 2,809 4,950 Distributions to partners (874) (459) (500) Proceeds from issuance of debt 3,977 Principal payments on debt (8,173) (2,990) (5,518) Principal payments on capital lease obligations (143) (107) (58) ------- ------- ------- Net cash used by financing activities (210) (747) (1,128) ------- ------- ------- Net increase in cash and cash equivalents 295 971 1,358 Cash and cash equivalents: Beginning of periods 1,319 1,319 1,614 ------- ------- ------- End of periods $ 1,614 $ 2,290 $ 2,972 ======= ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest in 1995 was $3,774. No amounts were paid for income taxes in 1995.
The accompanying notes are an integral part of these combined financial statements. 5 7 GUS HOTELS NOTES TO COMBINED FINANCIAL STATEMENTS 1. ORGANIZATION The GUS Hotels (the "Company") consist of the following full service hotels designed for the business or leisure traveler:
NUMBER OF OWNING PARTNERSHIP HOTEL LOCATION ROOMS GUS Enterprises VIII d.b.a. Sheraton Inn Sunnyvale Sunnyvale, California 174 GUS Enterprises X d.b.a. Sheraton Inn Bakersfield Bakersfield, California 197 GUS Enterprises XI d.b.a. Sheraton Inn Pleasanton Pleasanton, California 214 GUS Enterprises XII d.b.a. Sheraton San Jose Hotel San Jose, California 229
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF COMBINATION The accompanying financial statements include the accounts of the aforementioned limited partnerships. The limited partnerships are under common control and substantially all of the net investment in hotel properties and related assets are anticipated to be sold to RFS Hotel Investors, Inc. 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 of 40 years for buildings and improvements and 5 years for furniture, fixtures and equipment. Major renewals, betterments and improvements are capitalized. At each reporting period, the Company 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. If facts or circumstances exist which indicate impairment is possible, the Company will prepare a projection of the undiscounted future cash flows, without interest charges, of the specific hotel property and determine if the investment in hotel property is recoverable based on the undiscounted future cash flows. If impairment is indicated, an adjustment will be made to the carrying value of the hotel property based on the discounted future cash flows. The Company does not believe that there are any current facts or circumstances indicating impairment of any of its investments in hotel properties at December 31, 1995 or September 30, 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. 6 8 GUS HOTELS NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 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. DEFERRED COSTS Deferred costs consist primarily of loan costs which are recorded at cost. Amortization of loan costs is computed using the interest method over the life of the related note payable. Accumulated amortization on the deferred costs is $109,000 at December 31, 1995. 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. ADVERTISING COSTS Advertising costs are expensed as incurred. PROVISION FOR INCOME TAXES The Company (which is comprised of four individual partnerships) is not a taxable entity for income tax purposes, and thus, no income tax expense has been recorded in the financial statements. Income from the Company is taxed to the partners in their individual returns. CONCENTRATION OF CREDIT RISK The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has 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. 7 9 GUS HOTELS NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED INTERIM FINANCIAL INFORMATION The accompanying unaudited interim financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature. 3. NOTES PAYABLE At December 31, 1995 and September 30, 1996, notes payable consist of the following:
1995 1996 (IN THOUSANDS) (IN THOUSANDS, UNAUDITED) Mortgage note payable (San Jose) - monthly installments of $162 due through August 15, 2011, including interest based on a variable rate (which was 9% at December 31, 1995) $ 19,441 $ 14,653 Mortgage note payable (Pleasanton) - monthly installments of $68 due through June 30, 2011, including interest based on a variable rate (which was 10.5% at December 31, 1995) (the variable rate is limited to a maximum of 10.5%) 6,262 6,277 Mortgage note payable (Sunnyvale) - monthly installments of $55 due through July 1, 2014, including interest based on a variable rate (which was 9% at December 31, 1995) 6,678 5,966 Mortgage note payable (Bakersfield) - monthly installments of $41 on a principal balance (as of December 31, 1995) of $4,483 due through July 20, 2000, including interest at a fixed rate of 10.0%; monthly installments of $11 represent interest only on a balance of $1,351 due through July 20, 2000 at which time the principal balance outstanding is due in full 5,834 5,801 -------------------- ------------------- $ 38,215 $ 32,697 ==================== ===================
Substantially all assets of the Company are pledged as collateral on the notes payable. Aggregate principal payments for the Company's notes payable as of December 31, 1995 are as follows:
YEAR AMOUNT (IN THOUSANDS) 1996 $ 548 1997 647 1998 708 1999 774 2000 2,198 Thereafter 33,340 ---------------- $ 38,215 ================
8 10 GUS HOTELS NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED 3. NOTES PAYABLE, CONTINUED The Company made a payment of approximately $4,500,000 on the outstanding San Jose mortgage note payable during 1996. This payment was not required under the provisions of the debt agreement. 4. COMMITMENTS AND CONTINGENCIES The Company leases various equipment under noncancelable capital lease agreements expiring at varying intervals through 1998. The future minimum rental payments required under these leases as of December 31, 1995 are as follows:
YEAR AMOUNT (IN THOUSANDS) 1996 $ 96 1997 99 1998 46 ------------------- $ 241 ===================
Rental expense was approximately $66,000 for the year ended December 31, 1995. The franchise licenses held by the Company require the payment of certain franchise and marketing fees to the franchisor. Three of the four hotels entered into new franchise agreements in 1995. The fees required under the new agreements increase annually in 1% increments from 1% in 1995 to 5% in 1999. The fees are generally based on a percentage of room revenue. The Company's Pleasanton hotel is subject to a special tax assessment related to certain interstate exchanges and other highway and road improvements. The special tax assessment is used by the local taxing authorities to pay a portion of its principal and interest payments on the bonds used to finance the improvements. The special assessment for the year ended December 31, 1995 was approximately $206,000. The Company has two employee benefit plans with one participant in each respective plan. One plan is a defined contribution plan and provides for contributions by the Company based on a percentage of the participants' annual earnings. The other plan provides for payments of $27,000 per year through 2002. 9 11 GUS HOTELS NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED 5. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH The carrying amount approximates fair value because of the short maturity of those instruments. NOTES PAYABLE The fair value of the Company's notes payable is based on the current rates offered to the Company for similar debt instruments of the same remaining maturities. The estimated fair value of the Company's financial instruments is as follows:
DECEMBER 31, 1995 --------------------------------- CARRYING FAIR AMOUNT VALUE (IN THOUSANDS) Cash and cash equivalents $ 1,614 $ 1,614 Notes payable 38,215 38,215
6. RELATED PARTY TRANSACTIONS The Company has management agreements covering the operations of each hotel with Tamalpa's Hotel Services Corporation ("THS") which expire in 1999. Certain partners of the Company are officers or shareholders of THS. The management agreements provide for the payments of a fee based upon a percentage of each hotel's total revenue. Management fees charged to the Company by THS were $1,451,000 in 1995. The mortgage note payable for the Bakersfield hotel is held by Bakersfield Partners ("BP"). Certain partners of the Company are also partners of BP. Included in accounts payable and accrued expenses at December 31, 1995 is approximately $60,000 of accrued interest related to the Bakersfield note. Interest charged on the Bakersfield note was approximately $247,000 in 1995. The mortgage notes payable on the Sunnyvale, Pleasanton and San Jose properties are guaranteed by a partner of the Company. During 1995, the Company leased one of its restaurants to a third party. The lease term is 10 years and requires minimum payments to the Company of $75,000 per year. 10 12 GUS HOTELS NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED 7. SUBSEQUENT EVENTS During 1996, three of the four hotels entered into agreements to lease their respective restaurants to third parties. The terms of the agreements provide for the payment of base rents and additional rent based on a percentage of restaurant revenue exceeding defined thresholds. 11 EX-99.2 4 UNAUDITED PROFORMA FINANCIAL INFO. 1 EXHIBIT 99.2 RFS HOTEL INVESTORS, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS)
ACTUAL PRO FORMA -------- --------- Lease revenue $47,249 $55,958 Interest income 1,058 1,058 ------- ------- Total revenue 48,307 57,016 ------- ------- Real estate taxes and property and casualty insurance 5,019 6,265 Depreciation 8,578 11,681 Amortization of franchise fees and unearned compensation 536 536 Compensation 936 936 Franchise taxes 283 283 General and administrative 968 968 Amortization of loan costs 310 310 Interest expense, net 592 4,489 ------- ------- Total expenses 17,222 25,468 ------- ------- Income before allocation to minority interests 31,085 31,548 Income allocation to minority interest 439 2,997 ------- ------- Net income $30,646 $28,551 ======= ======= Net income per common and common equivalent share $ 1.26 $ 1.17 Weighted average shares and partnership units outstanding 24,620 26,865
2 RFS HOTEL INVESTORS, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (IN THOUSANDS)
ACTUAL PRO FORMA -------- --------- Lease revenue $47,594 $55,294 Interest income 259 259 ------- ------- Total revenue 47,853 55,553 ------- ------- Real estate taxes and property and casualty insurance 4,459 5,394 Depreciation 7,944 10,270 Amortization of franchise fees and unearned compensation 543 543 Compensation 1,485 1,485 Franchise taxes 195 195 General and administrative 1,475 1,475 Loss on sale of a property 244 244 Amortization of loan costs 264 264 Interest expense, net 2,360 5,283 ------- ------- Total expenses 18,969 25,153 ------- ------- Income before allocation to minority interests 28,884 30,400 Income allocation to minority interest 406 2,888 ------- ------- Net income $28,478 $27,512 ======= ======= Net income per common and common equivalent share $ 1.14 $ 1.10 Weighted average shares and partnership units outstanding 24,667 26,912
3 RFS HOTEL INVESTORS, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 (IN THOUSANDS)
ACTUAL PRO FORMA -------- --------- ASSETS Investment in hotel properties, net $401,883 $492,883 Hotels under development 7,967 7,967 Cash and cash equivalents 1,124 1,124 Accounts receivable-Lessees 11,494 11,494 Deferred expenses, net 1,345 1,345 Prepaid and other assets 577 577 Escrow deposits on hotels under development 2,045 2,045 -------- -------- $426,435 $517,435 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses $ 1,989 $ 1,989 Accrued real estate taxes 2,641 2,641 Borrowings on line of credit 48,600 101,435 Long-term debt 8,305 8,305 Minority interest 4,581 38,412 -------- -------- 66,116 152,782 -------- -------- Commitments and contingencies Shareholders' equity: Preferred Stock, $.01 par value, 5,000,000 shares authorized, 973,884 and none outstanding 10 10 Common Stock, $.01 par value, 100,000,000 shares authorized, 24,384,000 and 24,294,000 shares outstanding 244 244 Paid-in capital 356,548 360,882 Undistributed income 6,027 6,027 Unearned directors' and officers' compensation (2,510) (2,510) -------- -------- Total shareholders' equity 360,319 364,653 -------- -------- $426,435 $517,435 ======== ========
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