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EXHIBIT 99
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEAR ENDED DECEMBER 31, 1995
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Wyndham Hotel Corporation:
We have audited the accompanying balance sheet of the Wyndham Hotel
Corporation Acquisition Hotel - The Bristol Place Hotel Toronto (described in
Note 1) as of December 31, 1995 and the related statements of operations,
partners' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of management of the Partnership. 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.
The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 1 to the financial statements.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Wyndham Hotel Corporation
Acquisition Hotel - The Bristol Place Hotel Toronto as of December 31, 1995
and its results of operations and its cash flows for the year ended December
31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND, LLP
Dallas, Texas
November 7, 1996
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
BALANCE SHEET
DECEMBER 31, 1995
(IN U.S. DOLLARS)
ASSETS
Investment in hotel property at cost:
Buildings and improvements $ 6,544,826
Furniture, fixtures and equipment 4,060,874
------------
10,605,700
Less accumulated depreciation and amortization (7,478,951)
------------
Net investment in hotel property 3,126,749
Cash and cash equivalents 655,804
Accounts receivable 651,680
Inventories 178,930
Other assets 71,174
------------
Total assets $ 4,684,337
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LIABILITIES AND PARTNERS' DEFICIT
Mortgages payable and accrued interest $ 27,204,560
Accounts payable, trade 559,537
Accrued expenses and other liabilities 588,370
------------
Total liabilities 28,352,467
Commitments and contingencies
Partners' deficit (23,668,130)
------------
Total liabilities and partners' deficit $ 4,684,337
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The accompanying notes are an integral part of these statements.
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN U.S. DOLLARS)
Revenues:
Rooms $ 5,048,871
Food and beverage 4,747,696
Other 507,098
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Total revenue 10,303,665
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Expenses:
Property operating costs and expenses 2,032,047
Food and beverage costs and expenses 3,741,512
Selling, general and administrative 1,274,665
Repairs and maintenance 502,394
Utilities 388,291
Receivership expenses 339,079
Management fees 305,273
Franchise cost 84,733
Depreciation and amortization 229,079
Real estate and personal property taxes, and property insurance 1,008,687
Interest expense 2,770,274
Other expense 258,499
------------
Total expenses 12,934,533
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Net loss $ (2,630,868)
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The accompanying notes are an integral part of these financial statements.
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
STATEMENT OF PARTNERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN U.S. DOLLARS)
Balance at December 31, 1994 $(20,505,040)
Translation adjustment (532,222)
Net loss (2,630,868)
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Balance at December 31, 1995 $(23,668,130)
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The accompanying notes are an integral part of these statements.
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN U.S. DOLLARS)
Cash flows from operating activities:
Net loss $(2,630,868)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 229,079
Changes in assets and liabilities:
Accounts receivable (214,304)
Inventories 34,049
Prepaid expenses 59,270
Other assets (5,861)
Accounts payable, trade (1,063)
Accrued expenses and other liabilities 178,074
Accrued interest recognized in mortgages payable 2,077,287
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Net cash provided by operating activities (274,337)
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Cash flows used in investing activities:
Improvements and additions to hotel property (22,719)
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Cash flows provided by financing activities:
Proceeds from borrowings 732,500
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Effect of exchange rate changes on cash 16,214
Net change in cash and cash equivalents 451,658
Cash and cash equivalents at beginning of periods 204,146
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Cash and cash equivalents at end of periods $ 655,804
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Supplement disclosure of cash flow information:
Cash paid during the period for interest $
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
1. ORGANIZATION AND BASIS OF PRESENTATION:
Organization - Wyndham Hotel Corporation ("WHC") acquired a 287 room -
hotel, The Bristol Place Hotel ("Bristol"), located in Toronto, Ontario,
Canada from parties controlled by persons unaffiliated with WHC on
August 30, 1996. The hotel was placed into receivership by the mortgage
payable holders on July 25, 1995.
Basis of Presentation - The accompanying financial statements of Bristol
have been presented on a basis consistent with WHC due to the anticipated
common ownership and management since the entity will be the subject of a
business combination with WHC. The financial statements have been
presented in accordance with U.S. generally accepted accounting
principles and using U.S. dollars as the reporting functional currency.
The hotel was owned by an unincorporated joint venture for income tax
purposes and therefore federal and provincial income taxes are the
responsibility of the owners. Substantially all assets and operations of
the joint venture were acquired by WHC on August 30, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Investment in Hotel Property - The hotel property is stated at the lower
of cost or net realizable value and is depreciated using the declining
balance method at a rate of 5% for building and improvements and 20% for
furniture, fixtures and equipment.
The management of Bristol reviews the carrying value of the property to
determine if circumstances exist indicating an impairment in the carrying
value of the investment of the hotel property or that depreciation
periods should be modified. If facts or circumstances support the
possibility of impairment, the owner of the Bristol will prepare a
projection of the discounted future cash flows, without interest charges,
of the specific hotel property and determine if the investment in hotel
property is recoverable based on the discounted future cash flows. The
owner of Bristol does not believe that there are any factors or
circumstances indicating impairment of any of its investment in hotel
property.
Maintenance and repairs are charged to operations as incurred; major
renewals and betterments are capitalized. Upon the sale or disposition of
a fixed asset, the asset and related accumulated depreciation are removed
from the accounts and the gain or loss is included in operations.
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
NOTES TO FINANCIAL STATEMENTS - (continued)
(IN U.S. DOLLARS)
Cash and Cash Equivalents - For purposes of reporting cash flows, all
highly liquid debt instruments with original maturities of three months
or less are considered to be cash equivalents.
Inventories - Inventories consist primarily of food and beverage items
and are stated at the lower of cost or market, with cost determined using
the first-in, first-out method.
Foreign Currency Translation - Assets and liabilities denominated in
foreign currencies are translated into US dollars at the current rate in
effect at year-end. All foreign income and expenses are translated at the
weighted average exchange rates during the year.
Current year translation loss is reported separately as a component of
partners' capital.
Income Taxes - The hotel is included in an unincorporated joint venture
which is not a taxable entity. The results of operations are included in
the tax returns of the partners. The joint venture's tax return and the
amount of allocable income or loss are subject to examination by federal
and provincial taxing authorities. If such examinations result in changes
to income or loss, the tax liability of the partners could be changed
accordingly.
Revenue Recognition - Room, food and beverage and other revenues are
recognized when 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.
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.
Advertising Costs - The hotel participates in various advertising and
marketing programs. All advertising costs are expensed in the period
incurred. The hotel recognized advertising expenses of $205,846 for the
year ended December 31, 1995.
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. MORTGAGES PAYABLE:
Mortgages payable at December 31, 1995 consists primarily of four
mortgage note payables totaling $25,961,537, including accrued interest
(as described below) and an escrow account for property taxes paid in the
amount of $459,439, including interest at a rate of 11.50%.
All debt is collateralized by the investment in hotel property.
Mortgage Interest Amount
-------------------- -------------- -----------
First 10.00% $ 2,648,841
Second 11.00% 1,813,051
Third 11.50% 2,691,454
Fourth 11.50% 18,859,275
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Total $26,012,621
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The owner defaulted on the mortgage note payables on July 25, 1995 and
the hotel was placed into receivership by the trustee.
A receivers certificate was received on September 8, 1995 in the amount
of $732,500, the liability to the receiver is due upon receivership
termination and Bristol accrued $51,328 interest at a rate of prime plus
2%.
Upon the sale of the hotel to WHC on August 30, 1996, the receiver
anticipates using the proceeds from the sale to repay the receivers
certificate in full and to repay the remainder to the mortgage note
payables holders.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statements of Financial Accounting Standards No. 107 requires all
entities to disclose the fair value of certain financial instruments in
their financial statements. Accordingly, Bristol reports the carrying
amounts of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses and other liabilities at cost, which
approximates fair value due to the short maturity of these instruments.
The carrying amount of Bristol's debt approximates fair value due to the
ability to obtain such borrowings at comparable interest rates.
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. COMMITMENTS AND CONTINGENCIES:
The hotel is required to remit 11.5% of gross room revenue to the
franchiser for reservation costs and sales and advertising expenses
incurred to promote the hotel at the national level. Additional sales and
advertising costs are incurred at the local property level.
Participation fees represent the annual expense under the terms of the
lease agreement expiring November 30, 2066. Participation costs are based
upon 8% of the defined gross annual profit up to $582,880 and 4.5% upon
profit exceeding the limit. When the mortgages are repaid these amounts
reduce to 6.5% and 3% respectively.
WHC is subject to environmental regulations related to the ownership of
real estate (hotels). As part of the diligence procedures, WHC has
conducted a Phase I environmental assessment on the hotel prior to
acquisition. The cost of complying with the environmental regulations was
not material to the statements of operations for the year ended December
31, 1995. WHC is not aware of any environmental condition at the hotel
which is likely to have a material adverse effect on the financial
statements.
The aggregate future minimum lease payments for operating leases relating
to the premises and the hotel's operations are as follows:
For the year ending: Amount
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December 31, 1996 $ 101,837
December 31, 1997 88,941
December 31, 1998 87,847
December 31, 1999 71,061
December 31, 2000 55,302
Thereafter 2,370,907
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Total $2,775,895
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WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. RELATED PARTY TRANSACTIONS:
Transactions between related parties included in the financial statements
are as follows:
Bristol Group International--management fees $305,273
Park Plaza Hotel--other operating expenses 25,309
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Total $330,582
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7. SUBSEQUENT EVENTS:
As discussed in Note 1, Bristol was acquired by WHC on August 30, 1996.
The acquisition will be accounted for by WHC under the purchase method of
accounting. Accordingly, the cost basis of the hotel will change to
reflect the acquisition price of the hotel by WHC. Any post-acquisition
debt will be different than the historical debt reflected in the
accompanying financial statements. The management agreement is expected
to be terminated concurrently with the sale of the hotel to WHC. The
financial statements do not reflect the effects of this transaction.
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