Red Lion Inns Limited Partnership is a publicly-traded partnership
which, through its 99% interest in Red Lion Inns Operating L.P.,
owns ten Red Lion hotels with 3,069 rooms located in the western
United States. The hotels are managed by Red Lion Hotels & Inns as
part of its chain of 53 hotels.
Partnership Hotels:
- -------------------------------------------------------------------
California Nebraska Washington
Sacramento Omaha Bellevue Center
Spokane
Colorado Oregon Yakima Valley
Colorado Springs Portland:
Lloyd Center
Idaho Downtown
Boise-Riverside Springfield
For reservations at these and other Red Lion Hotels & Inns call toll
free 800-547-8010.
- -------------------------------------------------------------------
Red Lion Inns Limited Partnership units are listed on the American
Stock Exchange under the symbol RED. Per unit market prices during
1993 and 1992 were:
Quarter Ended:
-------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
1993
High $26 $26-1/2 $26-1/4 $29
Low 21-1/4 23-1/4 23 26
1992
High 20-1/4 20-3/4 21-1/2 22
Low 18-1/8 18-3/4 19-7/8 20-3/8
- ---------------------------------------------------------------------------
Cash distributions to unitholders were:
Per Unit Cash
1993 Record Date Payment Date Distribution
- -------------- ---------------- ----------------- -------------
First Quarter April 30, 1993 May 14, 1993 $ .55
Second Quarter July 31, 1993 August 13, 1993 .55
Third Quarter October 31, 1993 November 15, 1993 .55
Fourth Quarter January 31, 1994 February 15, 1994 .55
-------
$ 2.20
=======
1992
- --------------
First Quarter April 30, 1992 May 15, 1992 $ .55
Second Quarter July 31, 1992 August 14, 1992 .55
Third Quarter October 31, 1992 November 13, 1992 .55
Fourth Quarter January 31, 1993 February 12, 1993 .55
-------
$ 2.20
=======
At December 31, 1993, the Partnership had 1,868 unitholders of
record, representing 5,443 identified beneficial owners.
2
CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per unit amounts)
Year Ended December 31,
--------------------------------
1993 1992 1991
--------- --------- ---------
REVENUES:
Rooms ............................ $ 54,778 $ 52,723 $ 52,067
Food and beverage ................ 33,108 34,560 36,918
Other ............................ 8,351 8,462 7,974
--------- --------- --------
Total revenues ................. 96,237 95,745 96,959
--------- --------- --------
OPERATING COSTS AND EXPENSES:
Rooms ............................ 13,791 13,567 13,148
Food and beverage ................ 26,883 27,841 29,594
Administrative and general ....... 8,657 8,534 9,206
Sales, promotion and advertising.. 4,326 4,183 4,480
Utilities ........................ 3,265 3,285 3,395
Repairs and maintenance .......... 3,768 3,682 3,451
Property taxes ................... 2,791 2,891 2,645
Base management fee .............. 2,887 2,872 2,909
Incentive management fee ......... 1,142 897 700
Depreciation and amortization .... 10,249 9,924 9,173
Other ............................ 5,054 4,702 4,853
--------- --------- --------
Total operating costs and
expenses ..................... 82,813 82,378 83,554
--------- --------- ---------
Operating income ................... 13,424 13,367 13,405
INTEREST EXPENSE ................... 10,218 10,329 10,408
--------- --------- ---------
Income Before Cumulative Effect of
Change in Accounting Principle ... 3,206 3,038 2,997
Cumulative Effect of Change in
Accounting for Income Taxes ...... 1,351 -- --
--------- --------- ---------
NET INCOME ......................... $ 1,855 $ 3,038 $ 2,997
========= ========= =========
ALLOCATION OF NET INCOME:
General Partner .................. $ 37 $ 60 $ 60
========= ========= =========
Limited Partners ................. $ 1,818 $ 2,978 $ 2,937
========= ========= =========
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE
PER LIMITED PARTNER UNIT ......... $ 0.76 $ 0.72 $ 0.71
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES PER
LIMITED PARTNER UNIT ............. (0.32) -- --
--------- --------- ---------
NET INCOME PER LIMITED PARTNER UNIT. $ 0.44 $ 0.72 $ 0.71
========= ========= =========
AVERAGE LIMITED PARTNER UNITS
OUTSTANDING ...................... 4,133,500 4,133,500 4,133,500
========= ========= =========
The accompanying notes are an integral part of these consolidated
statements.
3
CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands)
As of December 31,
-------------------
1993 1992
-------- --------
ASSETS
CURRENT ASSETS:
Cash ........................................ $ 467 $ 567
Accounts receivable, net .................... 2,905 3,218
Inventories ................................. 1,082 1,018
Prepaid expenses ............................ 1,271 1,057
-------- --------
Total current assets .................... 5,725 5,860
-------- --------
PROPERTY AND EQUIPMENT:
Land ........................................ 17,713 17,713
Buildings and improvements .................. 156,573 155,622
Furnishings and equipment ................... 45,764 42,656
Construction in progress .................... 2,888 1,732
-------- --------
222,938 217,723
Less--accumulated depreciation .............. (55,254) (46,278)
-------- --------
167,684 171,445
DEFERRED LOAN COSTS, net ...................... 146 260
-------- --------
$173,555 $177,565
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ............................ $ 2,635 $ 2,296
Payable to affiliate ........................ 10,312 7,371
Accrued distributions to partners ........... 2,329 2,329
Interest payable ............................ 793 802
Taxes other than income and payroll ......... 1,325 1,124
Current portion long-term debt .............. 1,371 1,254
-------- --------
Total current liabilities ............... 18,765 15,176
-------- --------
LONG-TERM DEBT NET OF CURRENT PORTION ......... 124,023 125,514
-------- --------
DEFERRED INCOME TAXES ......................... 1,351 --
-------- --------
PARTNERS' CAPITAL:
Limited Partners, 4,940,000 units issued .... 41,777 49,053
Less--806,500 treasury units, at cost ....... (11,202) (11,202)
-------- --------
Limited Partners, net ....................... 30,575 37,851
General Partner ............................. (1,159) (976)
-------- --------
Total partners' capital ................. 29,416 36,875
-------- --------
$173,555 $177,565
======== ========
The accompanying notes are an integral part of these consolidated
statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash (dollar amounts in thousands)
Year Ended December 31,
-------------------------------
1993 1992 1991
--------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income ..................... $ 1,855 $ 3,038 $ 2,997
Adjustments to reconcile net
income to cash provided by
operating activities--
Depreciation and
amortization ............. 10,249 9,924 9,173
Deferred income taxes ...... 1,351 -- --
Accrued incentive management
fee .................. (667) (631) (1,025)
Change in certain current
assets and liabilities:
Decrease (increase) in
receivables .......... 313 790 (157)
Decrease (increase) in
inventories .......... (64) (25) 77
Increase in prepaid
expenses ............. (214) (33) (164)
Increase in payables and
accruals ............. 4,139 1,369 1,107
--------- --------- ---------
Net cash provided by
operating activities ...... 16,962 14,432 12,008
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property and
equipment .................... (6,374) (5,125) (4,229)
Cash reserved for capital
improvements ................. (2,887) (2,872) (2,909)
Cash withdrawn from reserve for
capital improvements ......... 2,887 2,872 2,909
--------- --------- ---------
Net cash used in investing
activities ................. (6,374) (5,125) (4,229)
--------- --------- ---------
5
CASH FLOWS FROM FINANCING
ACTIVITIES:
Distribution of cash to partners (9,314) (9,314) (9,208)
Payments on term loan .......... (1,254) (776) --
Net borrowings (repayments)
under revolving credit
facility ................... (120) 247 872
--------- --------- --------
Net cash used in financing
activities ............. (10,688) (9,843) (8,336)
DECREASE IN CASH ................... (100) (536) (557)
CASH AT BEGINNING OF YEAR .......... 567 1,103 1,660
--------- --------- --------
CASH AT END OF YEAR ................ $ 467 $ 567 $ 1,103
========= ========= ========
The accompanying notes are an integral part of these consolidated
statements.
6
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(dollar amounts in thousands)
Limited Partners
-------------------------------------
Issued Units Treasury Units
----------------- -------------------
General
Units Amount Units Amount Partner Total
--------- ------- --------- --------- ------- ------
Balance at
December 31,
1990 ....... 4,940,000 $61,274 (806,500) $(11,202) $(657) $49,415
Distributions
to partners. -- (9,042) -- -- (219) (9,261)
Net income ... -- 2,937 -- -- 60 2,997
--------- -------- -------- -------- ------- ------
Balance at
December 31,
1991 ....... 4,940,000 55,169 (806,500) (11,202) (816) 43,151
Distributions
to partners -- (9,094) -- -- (220) (9,314)
Net income ... -- 2,978 -- -- 60 3,038
--------- ------- -------- -------- ----- ------
Balance at
December 31,
1992 ....... 4,940,000 49,053 (806,500) (11,202) (976) 36,875
Distributions
to partners -- (9,094) -- -- (220) (9,314)
Net income ... -- 1,818 -- -- 37 1,855
--------- ------- -------- -------- ----- -------
Balance at
December 31,
1993 ....... 4,940,000 $41,777 (806,500) $(11,202) $(1,159) $29,416
========= ======= ======== ======== ======= =======
The accompanying notes are an integral part of these consolidated
statements.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993, 1992, and 1991.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying consolidated financial statements include the
accounts of Red Lion Inns Limited Partnership, a Delaware limited
partnership (the "Partnership"), and its subsidiary limited
partnership, Red Lion Inns Operating L.P. (the "Operating
Partnership"). The Partnership was organized in 1987 for the
purpose of acquiring and owning ten hotels (the "Hotels") from
Red Lion, a California Limited Partnership ("Red Lion") through
the Operating Partnership. The acquisition of the Hotels was
completed on April 14, 1987. All significant intercompany
transactions and accounts have been eliminated.
Accounts Receivable
Accounts receivable are shown net of allowances for doubtful
accounts of $77,000 and $74,000 at December 31, 1993 and 1992,
respectively.
Inventories
Inventories consist primarily of consumable products and are
valued at the lower of cost, determined on a first-in, first-out
basis, or market.
Property and Equipment
The Partnership recorded the April 14, 1987 acquisition of
property and equipment on the basis of an allocation of the
purchase price to the assets acquired. Subsequent additions and
improvements have been capitalized at their cost.
Normal repairs and maintenance are charged to expense as
incurred. Upon sale or retirement of property and equipment, the
cost and related accumulated depreciation are removed from the
respective accounts and the resulting gain or loss, if any, is
included in income.
Base stock (linens, china, silverware and glassware) for new
hotels is depreciated to 50 percent of its initial cost on a
straight-line basis over a three year period. Subsequent
replacements are expensed when purchased. The carrying value of
base stock is included in furnishings and equipment in the
accompanying consolidated balance sheets.
Depreciation is computed on a straight-line basis using the
following estimated useful lives:
Buildings and improvements ........................... 5 to 35 years
Furnishings and equipment ............................ 3 to 15 years
8
Deferred Loan Costs
Deferred loan costs consist primarily of financing fees on the
Partnership's mortgage loan and are being amortized over the
eight year term of the loan.
Income Taxes
No current provision for federal or state income taxes has been
provided by the Partnership in the accompanying consolidated
financial statements since such taxes are the responsibility of
the individual partners (see Note 3).
Cash Distributions
The Partnership declares each quarterly distribution in the month
following the end of the quarter to which it applies. Fourth
Quarter distributions are accrued in the accompanying
consolidated balance sheets for both of the years presented.
2. ORGANIZATION:
The Partnership was formed on January 16, 1987, under the
Delaware Revised Uniform Limited Partnership Act and will
continue until December 31, 2062, unless sooner terminated under
the provisions of the partnership agreement. The Partnership was
formed to acquire, own and operate the Hotels through its 99
percent limited partnership interest in the Operating
Partnership.
Red Lion Properties, Inc. (the "General Partner"), a wholly-owned
subsidiary of Red Lion, is the General Partner of the Partnership
and the Operating Partnership. On April 14, 1987, the
Partnership completed an initial public offering of units
representing limited partnership interests ("units") totaling
$98.8 million. These proceeds, accompanied by a $105.9 million
mortgage loan, were used to acquire, through the Operating
Partnership, the Hotels from Red Lion for approximately $195
million. After completion of this acquisition, the Partnership's
limited partners have an effective 98.01 percent ownership
interest in the Hotels with the General Partner retaining the
remaining 1.99 percent ownership interest.
The allocation of the Partnerships profits and losses is based on
the relative ownership interests in accordance with the terms of
the partnership agreement. Cash flow available for distribution,
as defined in the partnership agreement, will generally be
distributed to the partners in proportion to their respective
ownership interests until certain preferential distributions are
achieved and then allocated to both the general and limited
partners depending on factors related to the source of the net
cash flow and cash distributions as specified in the partnership
agreement (see Note 6).
9
3. INCOME TAXES:
During 1987, Congress passed the Omnibus Budget Reconciliation
Act which, among other things, treats certain publicly traded
partnerships as corporations for tax purposes for the years
beginning after December 31, 1987. Publicly-traded partnerships
in existence prior to December 18, 1987 will not be treated as
corporations, for tax purposes, for ten years from the effective
date of the 1987 law or until taxable years beginning after
December 31, 1997. The effect of treating publicly traded
partnerships as corporations will be to tax the income of the
partnership at the entity level and reflect distributions to
partners as dividends.
During the first quarter of 1993, the Partnership adopted
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109). This statement requires, among
other things, the recording of deferred income taxes based on the
difference between the financial statement and income tax bases
of assets and liabilities using the enacted marginal income tax
rate. The cumulative effect of this accounting change resulted
in a first quarter non-cash charge to income of $1,351,000, or
$.32 per unit. This charge reflects the tax effect, as of
January 1, 1993, of cumulative differences between the book and
tax bases of the Partnership's assets from depreciation
differences that are estimated to exist after the Partnership
becomes a taxable entity.
The cumulative effect of the change in accounting method is
comprised of federal deferred income taxes of $1,209,000 and
state deferred income taxes, net of federal benefits, of
$142,000.
This accounting change also requires provision of deferred income
taxes resulting from the accumulation of book/tax depreciation
differences on assets acquired in periods after the effective
date of the change.
No additional deferred taxes were provided in 1993.
4. CASH RESERVE FOR CAPITAL IMPROVEMENTS:
A cash reserve for capital improvements has been established in
accordance with the provisions of the management agreement.
Funding of three percent of gross revenues is to be used for
renovations, refurbishments and other capital expenditures.
During the years ended December 31, 1993, 1992 and 1991,
$2,887,000, $2,872,000, and $2,909,000 respectively, was
accumulated, then withdrawn, from this reserve.
10
5. LONG-TERM DEBT:
Long-term debt at December 31 consists of the following (in
thousands):
1993 1992
-------- --------
Mortgage note, payable in varying
installments through April 14, 1995 ...... $103,841 $105,095
Revolving line of credit, due
April 14, 1995 ........................... 11,827 11,947
Non-interest bearing amounts payable to
Red Lion ................................. 9,726 9,726
-------- --------
Total long-term debt ....................... 125,394 126,768
Less current portion ....................... 1,371 1,254
-------- --------
$124,023 $125,514
======== ========
The mortgage note bears interest at a 9 percent fixed rate.
Payments on the mortgage note were interest only through April
13, 1992. Scheduled maturities on the mortgage note for the
years subsequent to 1993 are as follows: 1994 - $1,371,000 and
1995 - $102,470,000.
The revolving line of credit allows borrowings up to $14.1
million. This facility has been used to cover, among other items,
the cost of units repurchased and incurs interest at floating
interest rates. The weighted average interest rate on this
facility was 4.6 percent at December 31, 1993. The Partnership
must pay a nominal commitment fee on the unused portion of the
line. The line has no scheduled principal payments until its
expiration on April 14, 1995. Borrowings under the line averaged
$11,784,000, $11,791,000 and $11,237,000 during 1993, 1992 and
1991, respectively. The average interest rates for borrowings
under the line for the years ended December 31, 1993, 1992, and
1991 were 4.6 percent, 5.2 percent and 7.5 percent, respectively.
Both the credit line and mortgage note are secured by the Hotels.
Non-interest bearing amounts payable to Red Lion comprise
deferred incentive management fees of $6 million at December 31,
1993 and 1992 and amounts drawn against a $4 million General
Partner credit facility of $3,726,000 at December 31, 1993 and
1992. These items are more fully discussed in Note 6.
During the years ended December 31, 1993, 1992, and 1991, the
Partnership made total interest payments of $10,227,000,
$10,365,000, and $10,407,000, respectively.
Disclosures Concerning Fair Value of Financial Instruments:
Based on the borrowing rates currently quoted by financial
institutions for bank loans with terms and maturities similar to
the Partnerships mortgage debt, the carrying value of such debt
approximates its fair value.
11
6. CASH DISTRIBUTIONS TO PARTNERS:
Since inception, the Partnership has made quarterly cash
distributions to partners to the extent that cash flow has been
available for distribution as defined in the management
agreement.
The Partnership declared cash distributions of $9.3 million in
1993, 1992 and 1991. On a per unit basis, declared cash
distributions were $2.20 in both 1993 and 1992 and $2.1875 in
1991.
In accordance with the management agreement, Red Lion has
subordinated current payment of its incentive management fee (see
Note 8) to an amount sufficient to make annual priority
distributions. These priority distributions were $2.00 per unit
during the first 12 months of operations, increasing annually at
the rate of $.05 per unit until annual distributions reached
$2.20 per unit in the second quarter of 1991.
During 1993, 1992 and 1991, the Partnership's cash flow available
for distribution covered 100 percent of the priority cash
distributions and also allowed payment of current incentive
management fees to Red Lion of $1,142,000, $897,000 and $700,000
for those years, respectively.
For the first 36 months of operations, the General Partner also
agreed to make available to the Partnership a $4 million
non-interest bearing revolving credit facility which was to be
used in the event that cash flow available for distributions was
insufficient to make priority distributions. During the 36 month
period, which ended April 30, 1990, the General Partner was
required to fund $3,726,000 from the facility. This amount will
be repaid out of either (i) cash flow after payment of priority
distributions and incentive management fees, or (ii) sale or
refinancing proceeds prior to any distribution to limited
partners.
In connection with the subordination of incentive management fees
noted above, the Partnership reached, in 1988, the maximum
deferred amount of $6 million of such fees in accordance with the
management agreement. The deferred amount, which will not accrue
interest, will be paid out of either (i) 25 percent of cash flow
after payment of priority distributions and current incentive
management fees or (ii) sale or refinancing proceeds prior to any
distribution to limited partners.
12
Following is a calculation of 1993, 1992, and 1991 cash flow
available for distribution and related cash flow available for
payment of incentive management fees (in thousands):
1993 1992 1991
------- ------- -------
Net income .................... $ 1,855 $ 3,038 $ 2,997
Add (Deduct):
Depreciation and amortization 10,249 9,924 9,173
Incentive management fee .... 1,142 897 700
Cash reserved for capital
improvements .............. (2,887) (2,872) (2,909)
Repayments on term loan ..... (1,254) (776) --
Cumulative effect of change
in accounting for
income taxes .............. 1,351 -- --
------- ------- --------
Cash flow available for
distribution and incentive
management fee .............. 10,456 10,211 9,961
Distributions to partners ..... (9,314) (9,314) (9,261)
------- ------- --------
Cash flow available for payment
of incentive management fee . $ 1,142 $ 897 $ 700
======= ======= =======
7. LEASES:
Two of the Hotels hold leases on all or a portion of their land.
The leases contain rental provisions which are based on increases
in the Consumer Price Index. The terms of the leases exceed the
estimated remaining useful lives of the Hotels. The Partnership
leases certain equipment under operating leases. Total land and
equipment rent expenses for 1993, 1992 and 1991 were $88,000,
$128,000, and $198,000, respectively.
Future minimum rental payments, substantially all of which relate
to land leases, are as follows:
Minimum
Rental
Year Ending December 31, Payment
- ------------------------ ----------
1994 $ 85,000
1995 98,000
1996 98,000
1997 98,000
1998 98,000
Thereafter 5,835,000
----------
$6,312,000
==========
13
8. RELATED PARTY TRANSACTIONS:
The General Partner is responsible for the management and
administration of the Partnership. In accordance with the
partnership agreement, the Partnership reimbursed the General
Partner for such services in the amount of $457,000 for 1993,
$458,000 for 1992 and $486,000 for 1991.
Red Lion manages the Hotels pursuant to a management agreement
and receives a base management fee equal to three percent of the
annual gross revenues of the Hotels plus an incentive management
fee based on adjusted gross operating profit, as defined in the
management agreement.
The Hotels, in accordance with the management agreement, are also
charged by Red Lion for their pro rata share of support services
such as computer, advertising, public relations, promotional and
sales and central reservation services.
All Partnership personnel are employees of Red Lion and its
affiliates. All costs for services of such employees are
reimbursed to Red Lion by the Operating Partnership. These costs
include salaries, wages, payroll taxes and other employee
benefits. Additionally, auxiliary enterprises owned by Red Lion
sell operating supplies, furnishings and equipment to the
Partnership. In the opinion of Red Lion management, sales to the
Partnership by the auxiliary enterprises were made at prices and
terms which approximated arms-length transactions.
The aggregate amounts, excluding personnel related expenses
charged to the Partnership during 1993, 1992, and 1991 under the
arrangements described above were as follows (in thousands):
1993 1992 1991
------ ------ ------
Management fees ............... $4,029 $3,769 $3,609
Support services .............. 4,405 4,279 4,269
Purchases from auxiliary
enterprises ................. 9,409 9,470 8,919
The amounts shown in current liabilities as payable to affiliate
in the accompanying consolidated balance sheets consist of
amounts payable to Red Lion for payroll and payroll taxes,
support services, base and current incentive management fees and
purchases of operating supplies, furnishings and equipment. These
balances are due in the normal course of business. Included in
amounts payable to affiliate at December 31, 1993 and 1992 is
$1,703,000 relating to capital expenditures. This amount was
treated as a non-cash investing item for purposes of the 1991
consolidated statement of cash flows.
Included in long-term debt on the accompanying consolidated
balance sheets are deferred incentive management fees of $6
million and $3,726,000 advanced under the $4 million non-interest
bearing credit facility. For further discussion of the
non-current amounts due to Red Lion, see Note 5.
14
9. PROPERTY TAX REFUNDS:
In 1991, the General Partner was successful in obtaining a
reassessment, for property tax purposes, of one of the Hotels.
The reassessment resulted in a refund, related to property tax,
totalling $651,000 in 1991. The entire 1991 refund related to
prior years' property taxes. The refund was recorded as a
reduction of property tax expense in the 1991 results of
operations.
10. COMMITMENTS AND CONTINGENCIES:
At December 31, 1993, the Partnership had commitments, relating
to capital improvement projects, of $547,000.
The Partnership is subject to claims arising in the ordinary
course of business. In the opinion of management such claims
will not have a material effect, if any, on the financial
position or results of operations of the Partnership or its
subsidiary.
11. SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited):
Summarized quarterly financial data are as follows: (in
thousands, except per unit amounts, room and occupancy
statistics)
Quarter Ended
------------------------------------
1993 Mar. 31 Jun. 30 Sep. 30 Dec. 31
- ---- ------- ------- ------- -------
Revenues ...................... $22,149 $25,315 $25,583 $23,190
Operating income .............. $ 2,346 $ 4,338 $ 3,430 $ 3,310
Income (loss) before cumulative
effect of change in
accounting principle ........ $ (252) $ 1,719 $ 817 $ 922
Cumulative effect of change in
accounting principle ........ $(1,351) -- -- --
Net income (loss) ............. $(1,603) $ 1,719 $ 817 $ 922
Per unit:
Income (loss) before
cumulative effect of change
in accounting principle ... $ (.06) $ .41 $ .19 $ .22
Cumulative effect of change
in accounting principle ... $ (.32) -- -- --
Net income .................... $ (.38) $ .41 $ .19 $ .22
Average units outstanding ..... 4,134 4,134 4,134 4,134
Occupancy % ................... 67.2% 76.7% 82.8% 66.6%
Average room rate ............. $ 65.61 $ 67.81 $ 68.34 $64.35
15
Quarter Ended
------------------------------------------------------
1992 Mar. 31 Jun. 30 Sep. 30 Dec. 31
- ---- ------- ------- ------- -------
Revenues ...................... $21,930 $25,700 $25,076 $23,039
Operating income .............. $ 2,165 $ 4,404 $ 3,435 $ 3,363
Net income (loss) ............. $ (373) $ 1,817 $ 880 $ 714
Allocated net income
(loss) per unit ............. $ (.09) $ .43 $ .21 $ .17
Average units outstanding ..... 4,134 4,134 4,134 4,134
Occupancy % ................... 65.4% 78.5% 81.3% 65.4%
Average room rate ............. $ 63.64 $ 65.04 $ 66.31 $ 62.74
Fourth Quarter 1993 net income includes a $.4 million increase in
estimated insurance liabilities offset by a $.2 million reduction
of estimated deferred income taxes recorded in prior quarters.
16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Red Lion Inns Limited Partnership and its Subsidiary Limited
Partnership:
We have audited the accompanying consolidated balance sheets of
Red Lion Inns Limited Partnership (a Delaware limited
partnership) and its subsidiary limited partnership as of
December 31, 1993 and 1992 and the related consolidated
statements of income, partners' capital and cash flows for each
of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the partnerships'
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Red Lion Inns Limited Partnership and its subsidiary
limited partnership as of December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity
with generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements,
effective January 1, 1993, the Partnership changed its method of
accounting for income taxes.
/s/ARTHUR ANDERSEN & CO.
Portland, Oregon
February 11, 1994
17
SELECTED FINANCIAL DATA
(in thousands, except for operating data)
Year Ended December 31,
-------------------------------------------------------------------
(unaudited)
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
Financial Data:
Operating revenues ... $96,237 $95,745 $96,959 $94,712 $91,304
Gross operating
profit (a) ......... 31,999 31,163 30,303 30,216 29,939
Operating Data:
Gross operating profit
as a percentage of
operating revenues.. 33.3% 32.5% 31.3% 31.9% 32.8%
Number of rooms at end
of period .......... 3,069 3,071 3,075 3,075 3,075
Occupancy
percentage (b) ..... 73.3% 72.7% 73.0% 70.7% 71.4%
Average room rate (c). $ 66.67 $ 64.56 $ 63.58 $ 62.97 $ 60.86
Balance Sheet Data:
December 31,
-------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
Total assets ........... $173,555 $177,565 $182,578 $187,187 $191,359
Total liabilities ...... 144,139 140,690 139,427 137,772 133,897
Partners' capital ...... 29,416 36,875 43,151 49,415 57,462
(a) "Gross operating profit" is net income before income and property
taxes, insurance, rent, interest, depreciation, amortization,
management fees and extraordinary items.
(b) Calculated on a per available room per year basis.
(c) Based on rooms occupied.