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Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 8, 2000 Commission File No. 0-16728
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
10400 Fernwood Road
Bethesda, MD 20817-1109
(301) 380-9000
Delaware 52-1533559
- ----------------------------- --------------------------------------------------
(State of Organization) (I.R.S. Employer Identification Number)
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
-------------------------------------
(Title of Class)
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 ___.
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Courtyard by Marriott II Limited Partnership
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TABLE OF CONTENTS
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PAGE NO.
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PART I - FINANCIAL INFORMATION (Unaudited)
Condensed Consolidated Balance Sheets
September 8, 2000 and December 31, 1999..................................... 1
Condensed Consolidated Statements of Operations
Twelve and Thirty-Six Weeks Ended September 8, 2000 and September 10, 1999.. 2
Condensed Consolidated Statements of Cash Flows
Thirty-Six Weeks Ended September 8, 2000 and September 10, 1999............. 3
Notes to Condensed Consolidated Financial Statements......................... 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 7
Quantitative and Qualitative Disclosures about Market Risk................... 9
PART II - OTHER INFORMATION AND SIGNATURE
Courtyard by Marriott II Limited Partnership
Condensed Consolidated Balance Sheets
(in thousands)
September 8, December 31,
2000 1999
---- ----
(Unaudited)
ASSETS
Property and equipment, net................................ $ 443,338 $ 454,412
Deferred financing costs, net of accumulated amortization.. 11,602 12,690
Due from Courtyard Management Corporation.................. 7,060 8,795
Other assets............................................... 6 11
Property improvement funds................................. 16,789 5,395
Restricted cash............................................ 18,555 18,299
Cash and cash equivalents.................................. 17,107 23,341
----------- -----------
$ 514,457 $ 522,943
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
LIABILITIES
Debt....................................................... $ 472,225 $ 483,181
Management fees due to Courtyard Management Corporation.... 31,241 33,805
Due to Marriott International, Inc. and affiliates......... 8,730 8,812
Accounts payable and accrued liabilities................... 8,874 12,017
----------- -----------
Total Liabilities...................................... 521,070 537,815
----------- -----------
PARTNERS' CAPITAL (DEFICIT)
General Partner............................................ 9,091 8,311
Limited Partners........................................... (15,704) (23,183)
----------- -----------
Total Partners' Deficit................................ (6,613) (14,872)
----------- -----------
$ 514,457 $ 522,943
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
1
Courtyard by Marriott II Limited Partnership
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except Unit and per Unit amounts)
Twelve Weeks Ended Thirty-Six Weeks Ended
September 8, September 10, September 8, September 10,
2000 1999 2000 1999
------- ------- -------- --------
REVENUES
Hotel revenues
Rooms........................................... $65,704 $63,068 $193,565 $187,991
Food and beverage............................... 4,100 4,059 12,613 12,404
Other........................................... 2,108 2,284 6,907 6,904
------- ------- -------- --------
Total hotel revenues........................... 71,912 69,411 213,085 207,299
------- ------- -------- --------
OPERATING COSTS AND EXPENSES
Hotel property-level costs and expenses
Rooms........................................... 14,762 14,011 43,181 41,696
Food and beverage............................... 3,752 3,570 11,073 10,819
Other department costs and expenses............. 1,201 702 3,169 2,137
Selling, administrative and other............... 16,765 15,637 48,678 47,280
------- ------- -------- --------
Total hotel property-level costs and expenses.. 36,480 33,920 106,101 101,932
Depreciation..................................... 6,536 6,426 19,756 18,743
Ground rent, taxes and other..................... 5,027 5,598 20,664 17,771
Base and Courtyard management fees............... 4,315 4,165 12,785 12,438
Incentive management fee......................... 3,251 3,344 9,942 9,752
------- ------- -------- --------
Total operating costs and expenses............. 55,609 53,453 169,248 160,636
------- ------- -------- --------
OPERATING PROFIT.................................. 16,303 15,958 43,837 46,663
Interest expense................................. (9,734) (9,962) (29,531) (30,465)
Interest income.................................. 524 376 1,304 1,083
------- ------- -------- --------
NET INCOME........................................ $ 7,093 $ 6,372 $ 15,610 $ 17,281
======= ======= ======== ========
ALLOCATION OF NET INCOME
General Partner.................................. $ 354 $ 319 $ 780 $ 864
Limited Partners................................. 6,739 6,053 14,830 16,417
------- ------- -------- --------
$ 7,093 $ 6,372 $ 15,610 $ 17,281
======= ======= ======== ========
NET INCOME PER LIMITED PARTNER UNIT
(1,470 Units).................................... $ 4,584 $ 4,118 $ 10,088 $ 11,168
======= ======= ======== ========
See Notes to Condensed Consolidated Financial Statements.
2
Courtyard by Marriott II Limited Partnership
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Thirty-Six Weeks Ended
September 8, September 10,
2000 1999
-------- --------
OPERATING ACTIVITIES
Net income........................................ $ 15,610 $ 17,281
Depreciation expense.............................. 19,756 18,743
Loss (Gain) on sale of fixed assets............... 17 (27)
Decrease in prepaid expenses...................... 5 --
Amortization of deferred financing fees........... 1,088 1,088
Changes in operating accounts..................... (4,310) (2,842)
-------- --------
Cash provided by operating activities......... 32,166 34,243
-------- --------
INVESTING ACTIVITIES
Additions to property and equipment, net.......... (8,699) (13,812)
Change in property improvement funds.............. (11,394) (447)
Change in working capital reserve................. -- (51)
-------- --------
Cash used in investing activities............. (20,093) (14,310)
-------- --------
FINANCING ACTIVITIES
Repayments of debt................................ (10,956) (10,167)
Capital distributions............................. (7,351) (5,880)
-------- --------
Cash used in financing activities............. (18,307) (16,047)
-------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS... (6,234) 3,886
CASH AND CASH EQUIVALENTS at beginning of period... 23,341 17,903
-------- --------
CASH AND CASH EQUIVALENTS at end of period......... $ 17,107 $ 21,789
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for mortgage and other interest......... $ 31,930 $ 32,686
======== ========
See Notes to Condensed Consolidated Financial Statements.
3
Courtyard by Marriott II Limited Partnership
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization
Courtyard by Marriott II Limited Partnership (the "Partnership"), a Delaware
limited partnership, owns 70 Courtyard by Marriott hotels located in 29 states
within the contiguous United States. The hotels are operated, under a management
agreement by a subsidiary of Marriott International.
2. Summary of Significant Accounting Policies
The accompanying unaudited, condensed consolidated financial statements have
been prepared by the Partnership. Certain information and footnote disclosures
normally included in financial statements presented in accordance with
accounting principles generally accepted in the United States have been
condensed or omitted from the accompanying statements. The Partnership believes
the disclosures made are adequate to make the information presented not
misleading. However, the unaudited, condensed consolidated financial statements
should be read in conjunction with the Partnership's consolidated financial
statements and notes thereto included in the Partnership's Form 10-K for the
year ended December 31, 1999.
In the opinion of the Partnership, the accompanying unaudited, condensed
consolidated financial statements reflect all adjustments necessary to present
fairly the financial position of the Partnership as of September 8, 2000, the
results of operations for the twelve and thirty-six weeks ended September 8,
2000 and September 10, 1999 and cash flows for the thirty-six weeks ended
September 8, 2000 and September 10, 1999. Interim results are not necessarily
indicative of full year performance because of seasonal and short-term
variations.
For financial reporting purposes, the net income of the Partnership is allocated
95% to the Limited Partners and 5% to CBM Two LLC (the "General Partner").
Significant differences exist between the net income for financial reporting
purposes and the net income reported for Federal income tax purposes. These
differences are due primarily to the use for Federal income tax purposes of
accelerated depreciation methods, shorter depreciable lives for certain assets,
differences in the timing of the recognition of certain fees and straight-line
rent adjustments.
Certain reclassifications were made to the prior year unaudited, condensed
consolidated financial statements to conform to the 2000 presentation.
3. Amounts Paid to the General Partner and Marriott International, Inc.
The chart below summarizes amounts paid to the General Partner and Marriott
International, Inc. for the thirty-six weeks ended September 8, 2000 and
September 10, 1999 (unaudited, in thousands):
Marriott International, Inc.:
2000 1999
------- -------
Incentive management fee..................... $12,506 $11,984
Base management fee.......................... 7,458 7,256
Chain services and Marriott Rewards Program.. 6,431 6,117
Courtyard by Marriott system fee............. 5,327 5,182
Marketing fund contribution.................. 3,871 3,751
------- -------
$35,593 $34,290
======= =======
General Partner:
Administrative expenses reimbursed........... $ 537 $ 125
======= =======
4
Courtyard by Marriott II Limited Partnership
Notes to Condensed Consolidated Financial Statements
(Unaudited)
4. Contingencies
The Partnership and the Hotels are involved in routine litigation and
administrative proceedings arising in the ordinary course of business, some of
which are expected to be covered by liability insurance and which collectively
are not expected to have a material adverse effect on the business, financial
condition or results of operations of the Partnership.
Texas Multi-Partnership Lawsuit. On March 16, 1998, limited partners in several
limited partnerships sponsored by Host Marriott Corporation ("Host Marriott") or
its subsidiaries filed a lawsuit, Robert M. Haas, Sr. and Irwin Randolph Joint
Tenants, et al. v. Marriott International, Inc., et al., Case No. 98-CI-04092,
in the 57th Judicial District Court of Bexar County Texas, alleging that the
defendants conspired to sell hotels to the partnerships for inflated prices and
that they charged the partnerships excessive management fees to operate the
partnerships' hotels. A Marriott International subsidiary manages each of the
hotels involved and, as to some properties, Marriott International, or one of
its subsidiaries, is the ground lessor and collects rent. Host Marriott,
Marriott International, several of their subsidiaries, and J.W. Marriott, Jr.
are among the various named defendants. The Haas lawsuit originally involved
the following partnerships:
1.) Courtyard by Marriott Limited Partnership ("CBM I");
2.) Courtyard by Marriott II Limited Partnership ("CBM II");
3.) Marriott Residence Inn Limited Partnership ("Res I");
4.) Marriott Residence Inn II Limited Partnership ("Res II");
5.) Fairfield Inn by Marriott Limited Partnership ("Fairfield);
6.) Desert Springs Marriott Limited Partnership ("Desert Springs"); and
7.) Atlanta Marriott Marquis Limited Partnership ("AMMLP").
Host Marriott has settled the claims of the AMMLP unitholders as part of a
settlement of a separate class action suit, pursuant to which settlement Host
Marriott paid $4.25 million in return for a release of all claims. This
settlement, which has been finalized, is not contingent on any portion of the
Partnership Litigation Settlement, discussed more fully below. In addition, Host
Marriott consummated settlements with the unitholders of Res I, Res II,
Fairfield and Desert Springs, under the umbrella of the Partnership Litigation
Settlement. The CBM I and CBM II settlements remain to be completed, as
described below.
Courtyard by Marriott II Limited Partnership (CBM II). A subsidiary of Host
Marriott is the sole general partner of CBM II and Marriott International or one
of its subsidiaries manages all of the hotels owned by CBM II. A group of
partners in CBM II filed a lawsuit, Whitey Ford, et al v. Host Marriott
Corporation, et al., Case No. 96-CI-08327, on June 7, 1996, in the 285th
Judicial District Court of Bexar County, Texas against Host Marriott, Marriott
International, and others alleging breach of fiduciary duty, breach of contract,
fraud, negligent misrepresentation, tortious interference, violation of the
Texas Free Enterprise and Antitrust Act of 1983 and conspiracy in connection
with the formation, operation and management of CBM II and its hotels. The
plaintiffs are seeking unspecified damages. On January 29, 1998, two other
limited partners, A.R. Milkes and D.R. Burklew, filed a petition in intervention
that converted the Whitey Ford lawsuit into a class action with a certified
class of limited partners. This case is separate from the CBM II lawsuit, filed
as part of the Haas lawsuit; however it will be resolved by the Partnership
Litigation Settlement described below.
5
Courtyard by Marriott II Limited Partnership
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Pursuant to the terms of the Partnership Litigation Settlement, CBM I and CBM II
are currently subject to the tender offers described below, the completion of
which will release Host Marriott and the other defendants from all claims by CBM
I and CBM II unitholders who have not opted out of these settlements. As of
October 20, 2000, no CBM I limited partners have opted out and only two CBM II
limited partners, representing three units, have opted out.
Partnership Litigation Settlement. On March 9, 2000, Host Marriott and Marriott
International entered into a settlement agreement that will resolve the Texas
Multi-Partnership, the CBM II, and the CBM I litigation. Under this settlement,
Host Marriott and Marriott International have settled with the Res I, Res II,
Fairfield and Desert Springs Plaintiffs for an aggregate payment of
approximately $62 million (of which Host Marriott and its subsidiaries have paid
approximately $31 million) in return for a general release of all claims. The
Res I, Res II, Fairfield and Desert Springs settlements were severed from the
CBM I and CBM II settlements by a court order dated September 25, 2000. This
settlement is subject to a thirty day appeal period beginning September 28,
2000, during which time any class members can appeal the settlement.
Host Marriott is currently in the process of finalizing the settlements for the
CBM I and CBM II partnerships. The principal feature of the proposed settlements
is the acquisition of all CBM I and CBM II limited partner units by a joint
venture formed by Host Marriott (through non-controlled subsidiaries) and
Marriott International and a full release of all claims from all limited
partners (other than those who have opted out of the class settlement) for an
aggregate payment of approximately $372 million plus interest and attorneys'
fees of the plaintiffs' counsels (of which Host Marriott will pay approximately
$91 million of the aggregate amount). The joint venture would acquire CBM I and
CBM II by acquiring partnership units pursuant to a tender offer for such units
followed by a merger of each of CBM I and CBM II with and into subsidiaries of
the joint venture. The joint venture will finance the acquisition of CBM I and
CBM II with mezzanine indebtedness borrowed from Marriott International and with
cash and other assets contributed to it by Host Marriott (through its non-
controlled subsidiaries) and Marriott International. Upon consummation of the
acquisition of CBM I and CBM II, Host Marriott will, through a nonconsolidated
subsidiary, own a 50% interest in the joint venture.
Host Marriott and Marriott International may terminate the settlement with
respect to CBM I and CBM II if Host Marriott and Marriott International fail to
receive any necessary third party consents to the merger. The CBM I and CBM II
settlements are mutually conditioned on each other, so that, Host Marriott and
Marriott International will not be required to consummate the settlement with
respect to one partnership if the settlement with respect to the other
partnership is not successfully completed. The condition is waivable by Host
Marriott and Marriott International in their sole discretion.
Host Marriott has received sufficient votes to complete the merger for both
partnerships. The fairness hearing for the CBM II settlement was held on
September 28, 2000 and the settlement with respect to CBM II was approved. The
fairness hearing for CBM I was held on October 19, 2000 and the settlement with
respect to CBM I was approved. However, the court has not entered a final
judgement for CBM I or CMB II. The CBM I and CBM II settlements remain subject
to certain third party consents. If these third party consents are not obtained,
the CBM I and CBM II settlements would be terminated and the cases would go to
trial, unless Host Marriott and Marriott International waive the condition.
These settlements, if finalized by court orders, will be subject to thirty day
appeal periods running from the entry of the court's judgment orders (presently
expected to coincide with the receipt of the third party consents) during which
time any class member may appeal the approval of the settlements.
As a result of the proposed settlement of the above discussed litigation, each
limited partner who did not opt out of the settlement will receive per limited
partner unit approximately $148,000, which may be adjusted for interest income,
legal fees and certain other expenses.
6
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events. Certain, but not necessarily all, of such forward-looking
statements can be identified by the use of forward-looking terminology, such as
"believes," "expects," "may," "will," "should," "estimates," or "anticipates,"
or the negative thereof or other variations thereof or comparable terminology.
All forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause our actual transactions, results, performance
or achievements to be materially different from any future transactions,
results, performance or achievements expressed or implied by such forward-
looking statements. Although we believe the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, we can give no
assurance that our expectations will be attained or that any deviations will not
be material. We disclaim any obligations or undertaking to publicly release any
updates or revisions to any forward-looking statement contained in this
quarterly report on Form 10-Q to reflect any change in our expectations with
regard thereto or any change in events, conditions or circumstances on which any
such statement is based.
RESULTS OF OPERATIONS
Hotel Revenues. Total hotel revenues increased approximately $2.5 million to
$71.9 million and $5.8 million to $213.1 million for the twelve and thirty-six
weeks ended September 8, 2000, respectively. The increase in hotel revenues was
achieved primarily through a $2.6 million and $5.6 million increase in rooms
revenue for the third quarter and year-to-date 2000, respectively, as compared
to the same periods in 1999.
Rooms Revenue. The increase in rooms revenue of $2.6 million for the quarter
and $5.6 million for the year-to-date when compared to the same period last year
was due to an increase in revenue per available room ("REVPAR"). REVPAR for the
twelve and thirty-six weeks ended September 8, 2000 increased 3.0% to $74.31 and
4.7% to $75.67 respectively, when compared to the same periods in 1999. The
increase in REVPAR was driven by an increase in the average room rate of 3.9% to
$93.26 and 4.5% to $93.27 for the quarter and year-to-date, respectively.
Operating Costs and Expenses. For the twelve weeks ended September 8, 2000, the
Partnership's operating costs and expenses increased $2.1 million, or 3.9%, to
$55.6 million as compared to the same period in 1999. For the thirty-six weeks
ended September 8, 2000, the Partnership's operating costs and expenses
increased $8.6 million, or 5.4%, to $169.2 million. As a percentage of hotel
revenues, operating costs and expenses increased to 77.3% of revenues for the
third quarter of 2000 as compared to 77.0% for the third quarter of 1999.
Through the third quarter of 2000, operating costs and expenses as a percentage
of sales increased to 79.4% as compared to 77.5% for the same period in 1999.
The increase in operating costs and expenses for the third quarter and year-to-
date in 2000 relative to the same periods in 1999 was primarily due to the
increase in hotel property-level costs and expenses, depreciation and ground
rent, taxes and other expenses discussed below.
Hotel property-level costs and expenses. The Partnership's hotel property-level
costs and expenses increased 7.5% to $36.5 million and 4.1% to $106.1 million
for the twelve and thirty-six weeks ended September 8, 2000, respectively, as
compared to the same periods in 1999. Hotel property-level costs and expenses
increased primarily due to higher salary and benefit expenses as the Hotels
endeavor to maintain competitive wage scales. Additionally, other departments
costs and expenses increased $499,000 and $1.0 million for the twelve and
thirty-six weeks ended September 8, 2000, respectively, as costs of replacing
certain FF&E and lease expenses increased relative to the prior year. The
increases were offset by decreases in the cost of telephone operations of
$476,000 year-to-date 2000.
7
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Depreciation. Depreciation expense increased $110,000 to $6.5 million for the
twelve weeks ended September 8, 2000 and increased $1.0 million to $19.8 million
for the thirty-six weeks ended September 8, 2000, as compared to the same
periods in 1999. The increase was due to property, plant, and equipment
additions between the end of the third quarter of 1999 and 2000, respectively,
primarily as a result of the completion of rooms renovations during 1999.
Ground rent, taxes and other. Ground rent, taxes and other expenses decreased
$570,000 to $5.0 million and increased $2.9 million to $20.7 million for the
twelve and thirty-six weeks ended September 8, 2000, respectively, as compared
to the same periods in 1999 due to increases in administrative costs.
Operating Profit. Operating profit increased $345,000 to $16.3 million for the
twelve weeks ended September 8, 2000 and decreased $2.8 million to $43.8 million
for the thirty-six weeks ended September 8, 2000, as compared to the same
periods in 1999. The year-to-date decrease was due to the increases in
depreciation, ground rent, taxes and other expenses. As a percentage of hotel
revenues, operating profit represented 22.7% of revenues for the third quarter
of 2000 as compared to 23.0% for the third quarter of 1999. Through the year-to-
date in 2000, operating profit represented 20.6% of revenues as compared to
22.5% for the same period in 1999.
Interest Expense. Interest expense decreased to $9.7 million and $29.5 million
for the twelve and thirty-six weeks ended September 8, 2000 from $10.0 million
and $30.5 million for the comparable periods in 1999. The decrease was
primarily due to principal amortization on the commercial mortgage backed
securities which results in lower principal debt balances in 2000 as compared to
1999.
Net Income. As a result of the items discussed above, for the twelve weeks ended
September 8, 2000, net income increased $721,000 from the comparable period
in 1999 to $7.1 million. For year-to-date third quarter 2000, net income
decreased $1.7 million to $15.6 million when compared to year-to-date third
quarter 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's financing needs have historically been funded through loan
agreements with independent financial institutions. The General Partner
believes that cash from Hotel operations will be sufficient to make the required
debt service payments, to fund the current capital expenditures needs of the
Hotels as well as to make cash distributions to the limited partners.
Principal Sources and Uses of Cash
The Partnership's principal source of cash is from operations. Its principal
uses of cash are to make debt service payments, fund the property improvement
fund and to make distributions to limited partners.
Cash provided by operations for the twelve and thirty-six weeks ended September
8, 2000 and September 10, 1999, was $32.2 million and $34.3 million,
respectively. The decrease in cash provided by operations was primarily due to
increased payments towards the deferred incentive management fees in 2000 when
compared to 1999. The cash flow provided by improved hotel operations enabled
the Partnership to increase the payment of deferred incentive management fees.
Cash used in investing activities was $20.1 million for the first three quarters
of 2000 and $14.3 million for the first three quarters of 1999. Cash used in
investing activities for 2000 includes capital expenditures of $8.7 million,
primarily related to renovations and replacements of furniture, fixtures and
equipment at the Partnership's Hotels as compared to $13.8 million of capital
expenditures in 1999. The property improvement fund increased $11.4 million
8
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
for the first three quarters of 2000 as compared to an increase of $447,000 for
the comparable period in 1999. During the first three quarters of 2000, the
Partnership funded $10.7 million to the property fund to reimburse certain
capital expenditures.
Cash used in financing activities was $18.3 million and $16.0 million for the
first three quarters of 2000 and 1999, respectively. During these periods, the
Partnership repaid $11.0 million and $10.2 million, respectively, of principal
on the commercial mortgage backed securities. Cash used in financing activities
included $7.4 million and $5.9 million of cash distributions to limited partners
during the thirty-six weeks ended September 8, 2000 and September 10, 1999,
respectively.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership does not have significant market risk with respect to interest
rates, foreign currency exchanges or other market rate or price risks, and the
Partnership does not hold any financial instruments for trading purposes. As of
September 8, 2000, all of the Partnership's debt has a fixed interest rate. As
of September 8, 2000 and December 31, 1999, the Partnership's debt totaled
$472.2 million and $483.2 million, respectively.
9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Incorporated by reference to the description of legal proceedings in footnote
four to the condensed consolidated financial statements set forth in Part I,
"Financial Information."
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-Q to be signed on its behalf by the
undersigned, thereunto duly authorized.
COURTYARD BY MARRIOTT II
LIMITED PARTNERSHIP
By: CBM TWO LLC
General Partner
October 23, 2000 By: /s/ Mathew Whelan
--------------------------------------------
Mathew Whelan
Vice President and Chief Accounting Officer
11