<PAGE>   1
===============================================================================



                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-K

  (MARK ONE)

   [X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
             OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                       OR

   [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                         COMMISSION FILE NO. 34-0-25340

                            STUDIO PLUS HOTELS, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                VIRGINIA                                    61-1273532
    (STATE OR OTHER JURISDICTION OF                     (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NO.)

      1999 RICHMOND ROAD, SUITE 4
          LEXINGTON, KENTUCKY                                 40502
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                   (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (606) 269-1999

          Securities registered pursuant to Section 12(b) of the Act:

                                      None

          Securities registered pursuant to Section 12(g) of the Act:

                                                  NAME OF EACH EXCHANGE
        TITLE OF EACH CLASS                        ON WHICH REGISTERED
    ----------------------------                 ------------------------  
    Common Stock, $.01 par value                 The Nasdaq Stock Market   
                                                     National Market       
                                                                           

         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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No
                                              ---   ---
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

         As of February 28, 1997, there were outstanding 12,557,320 shares of
the registrant's common stock, par value $.01, which is the only class of
common or voting stock of the registrant.



===============================================================================

<PAGE>   2



                                     PART I

ITEM 1. BUSINESS

          Studio Plus Hotels, Inc. (the "Company") owns, develops and operates
StudioPLUS(TM) extended stay hotels and owns the rights to the related trade
name and service marks for "StudioPLUS." StudioPLUS hotels are designed to
combine the convenience of a hotel with many of the comforts of an apartment in
order to provide affordable lodging for extended stay guests. The Company
believes that StudioPLUS accommodates an underserved niche of guests in the
extended stay sector of the lodging industry. These guests include business
travelers, professionals on temporary work assignment, persons relocating or
purchasing a home, tourists and others desiring high quality, furnished
accommodations with full kitchens. StudioPLUS guests typically prefer weekly
rather than daily accommodations.

         The Company's Predecessor Entities (defined hereafter) were founded in
1985 by Norwood Cowgill, Jr. ("Mr. Cowgill"), Chairman of the Board of
Directors and Chief Executive Officer. On December 19, 1994, the Company was
formed to acquire, through merger and exchange of partnership interests all of
the assets of Studio Plus, Inc. and the corporations and partnerships which
owned and operated StudioPLUS extended stay hotels (collectively, the
"Predecessor Entities").

         In June, 1995, the Company completed an initial public offering of
5,347,500 shares of common stock ("Common Stock") at $10.00 per share and
received net cash proceeds of approximately $48.1 million (the "IPO"). In
April, 1996, the Company completed a follow-on equity offering of 4,855,347
shares of common stock at $16.83 per share and received net cash proceeds of
approximately $76.8 million (the "Offering") . In July, 1996, a three-for-two
split of the Company's Common Stock was effected in the form of a stock
dividend of three shares of Common Stock for each two shares of Common Stock
outstanding at the close of business on June 20, 1996 (the "Stock Split"). For
a discussion of the Company's credit facilities, see "Management's Discussions
and Analysis of Financial Condition and Results of Operations" in this report.

         The StudioPLUS concept was developed to meet the demand for high
quality extended stay lodging and provide an affordable alternative to the
nightly rates of hotels and the long-term commitments of apartment leases. Mr.
Cowgill designed the StudioPLUS concept to target this market segment.
Currently, a typical StudioPLUS hotel contains 72 suites; however, the Company
has developed prototype plans for larger hotels it can construct when it is
determined appropriate based on market size and demand. All StudioPLUS hotels
have weekly maid service, with an option for daily service, and coin-operated
laundry facilities; most of the hotels have an exercise room and a swimming
pool.

         The Company is currently operating, constructing or has sites under
contract on which to construct StudioPLUS hotels in 22 states. As of February
28, 1997, the Company owned and

                                       2


<PAGE>   3



operated 37 StudioPLUS hotels (the "Existing Hotels"), and had 11 StudioPLUS
hotels under construction (the "Construction Properties") and had contracts to
purchase 28 additional sites (the "Planned Sites"). The Existing Hotels contain
an aggregate of 2,650 suites, average approximately four years in age, and are
located in Ohio (8), North Carolina (6), Kentucky (5), Tennessee (5), Indiana
(4), Alabama (3), South Carolina (3), Missouri (2) and Mississippi (1).

         The Company's strategy is to grow by (i) developing and operating
additional affordable extended stay hotels, (ii) actively managing its hotels
to increase revenues and reduce operating costs and (iii) increasing awareness
of StudioPLUS hotels by consistently providing high quality accommodations for
its guests. As its primary development strategy, the Company intends to expand
into new markets and, to a lesser extent, to develop additional hotels in its
existing markets. The Company oversees all phases of development to facilitate
on-time, within budget, quality construction. The Company also may consider
franchising opportunities and may consider acquiring operating properties for
conversion to StudioPLUS hotels if appropriate opportunities are identified.

         For a discussion of seasonality, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this report.

OPERATING PRACTICES

         The Company has operated each of the Existing Hotels since its
opening. The Company's operating strategy is to encourage decision-making by
on-site employees. Each StudioPLUS hotel employs a general manager who is
responsible for the operations of the particular hotel. Each general manager
typically oversees a staff of five employees, including an assistant manager,
housekeeping and maintenance personnel. Hotel level employees are cross-
trained to afford greater staffing flexibility in responding to guests' needs,
which management believes helps minimize operating costs. StudioPLUS hotels'
office typically is open Monday through Saturday from 9:00 a.m. to 6:00 p.m.
and on Sunday from 12:00 p.m. to 5:00 p.m. Maid service is provided on a weekly
basis, with daily service available at the option of each guest for an
additional charge. A manager resides on-site at each hotel, thereby providing
after-hour accessability to guests.

         Each general manager reports to a regional manger, both of whom are
supported by the Company's executive officers and headquarters staff. Prior to
assuming responsibility for a hotel, general managers and assistant managers
undergo a management training program designed to familiarize each trainee with
various facets of the Company's management, operation and development programs.
The program also emphasizes the Company's guest service policies and provides
hands-on operating experience at the hotel level. The Company's management
training program also is intended to train assistant managers for promotion to
general manager.

         Each general manager is responsible for local marketing and
advertising programs and for promoting StudioPLUS hotels within the local
community. The Company's Vice President of Marketing coordinates system wide
and regional marketing, and facilitates the Company's sales, promotion and
marketing efforts. The Company offers a cash bonus program for each hotel



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<PAGE>   4



employee, based on property performance and profitability at the Existing
Hotels.

         Management of the Company's hotels is coordinated from the Company's
headquarters in Lexington, Kentucky. The Company employs approximately 325
persons and performs all marketing, accounting and management functions
necessary to operate the Existing Hotels and complete the development of the
Construction Properties and Planned Sites.

COMPETITION

         The lodging industry is highly competitive. Competitive factors within
the industry include room rates, quality of accommodations, name recognition,
supply and availability of alternative lodging, including short-term lease
apartments, service levels, name recognition, reputation, reservation systems
and convenience of location. Each of the Existing Hotels and Construction
Properties is located in a developed area that includes competing lodging
facilities. In addition, each of the Planned Sites will be located in an area
that includes competing facilities.

         The Company anticipates that competition within the extended stay
lodging market will increase substantially in the foreseeable future. A number
of other lodging chains and developers have announced their intent to develop
or are attempting to implement rollouts of extended stay lodging hotels which
may compete with the Company's hotels. In particular, some of these entities
have announced their intent to target the mid-price segment of the extended
stay market in which the Company competes. The Company may compete for guests
and for new development sites with certain of these established entities which
have greater financial resources than the Company and better relationships with
lenders and real estate sellers.

ENVIRONMENTAL MATTERS

         Under various federal, state and local laws and regulations, an owner
or operator of real estate may be liable for the cost of removal or remediation
of certain hazardous or toxic substances on such property. Such laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of hazardous or toxic substances. Furthermore, a
person that arranges for the disposal or transports for disposal or treatment a
hazardous substance at a property owned by another may be liable for the costs
of removal or remediation of hazardous substances released into the environment
at that property. The costs of remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to properly
remediate such substances, may adversely effect the owner's ability to use or
sell such real property or borrow using such real property as collateral. In
connection with the ownership and operation of its properties, the Company may
be potentially liable for any such costs.

         Phase I environmental site assessments (the "Assessments") have been
obtained on all of the Existing Hotels and the Construction Properties. For
recently constructed Existing Hotels and all of the Construction Properties,
Phase I Assessments were conducted as part of the pre- development review
process. The Phase I Assessments were intended to identify potential
environmental contamination and regulatory compliance concerns. The Phase I
Assessments



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<PAGE>   5



generally include historical reviews of the properties, reviews of certain
public records, preliminary investigations of the site and surrounding
properties, screening for the presence of hazardous substances, toxic
substances, and underground storage tanks, and the preparation and issuance of
written reports. The Phase I Assessments did not include invasive procedures,
such as soil sampling or ground water analysis. The Company will obtain Phase I
Assessments on the Planned Sites prior to purchasing such properties.

         The Phase I Assessments have not revealed any environmental liability
or compliance concern that the Company believes would have a material adverse
effect on the Company's business, assets, results of operations or liquidity,
nor is the Company aware of any such liability or concern. Nevertheless, it is
possible that the Phase I Assessments do not reveal all environmental
liabilities or compliance concerns or that there are material environmental
liabilities or compliance concerns of which the Company is unaware. Moreover,
no assurances can be given that (i) future laws, ordinances or regulations will
not impose any material environmental liability, or (ii) the current
environmental condition of the Existing Hotels or Construction Properties will
not be affected by the condition of the properties in the vicinity of the
Existing Hotels or Construction Properties (such as the presence of leaking
underground storage tanks) or by actions of third parties unrelated to the
Company.

         The Company believes that the Existing Hotels and the Construction
Properties are in compliance in all material respects with all federal, state
and local ordinances and regulations regarding hazardous or toxic substances
and other environmental matters. Neither the Company nor, to the knowledge of
the Company, any of the current owners of the Planned Sites have been notified
by any governmental authority of any material noncompliance, liability or claim
relating to hazardous or toxic substances or other environmental matter in
connection with the Existing Hotels, the Construction Properties or the Planned
Sites.

SUBSEQUENT EVENT

         On January 16, 1997, the Company and Extended Stay America, Inc.
("ESA"), together with ESA Merger Sub, Inc., a wholly-owned subsidiary of ESA
("Merger Sub") a Delaware corporation whose common stock is traded on The
Nasdaq Stock Market under the symbol "STAY," entered into an  Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which the Company will be
merged with and into Merger Sub (the "Merger"). The Merger Agreement provides
that Merger Sub will be the surviving corporation and that upon consummation of
the Merger (i) each share of the Company's common stock, par value $.01 per
share (the "Common Stock"), will be converted into the right to receive 1.2272
shares of ESA common stock and (ii) all outstanding options to purchase the
Company's Common Stock from the Company will be converted into options to
purchase common stock in ESA.  As of December 31, 1996, ESA owned and operated
40 extended stay lodging facilities, had 50 of such facilities under
construction, and options to purchase 106 additional sites for development.



                                       5


<PAGE>   6



         Consummation of the Merger is subject to (i) the approval of the
Merger Agreement by the stockholders of the Company and the stockholders of
ESA, (ii) the ability to account for the Merger as a pooling of interests,
(iii) the appointment of Mr. Norwood Cowgill, Jr., the Chairman of the Board
and Chief Executive Officer of the Company to ESA's board  of directors, and
(iv) other customary closing conditions. The Merger Agreement may be terminated
prior to its consummation by any of the parties if the Merger is not
consummated on or before August 31, 1997. The Merger Agreement also may be
terminated prior to its consummation for a number of other reasons, including
the following: (i) by mutual written consent of the of the Company and ESA;
(ii) by either the Company or ESA if the necessary stockholder approvals are
not received; (iii) by the Company if its Board of Directors determines in good
faith that their fiduciary duties require them to terminate the Merger
Agreement by reason of any proposal or offer with respect to a merger,
consolidation, reorganization, exchange, plan of liquidation, or similar
transaction involving the Company or its subsidiary, other than the Merger (an
"Alternative Proposal"); or (iv) by ESA, if the Board of Directors of the
Company shall have (a) withdrawn, or modified in a manner materially adverse to
ESA, its approval of the Merger Agreement, (b) recommended an Alternative
Proposal, or (c) adopted resolutions to accept or implement an Alternative
Proposal. If the Merger Agreement is terminated pursuant to clause (iii) or
(iv) above, the Company must pay ESA a fee of $7,500,000.

ITEM 2.  PROPERTIES

         The Existing Hotels are located in nine southeastern and midwestern
states and contain a total of 2,650 extended stay suites. The exterior of each
Studio PLUS hotel is constructed of either brick or synthetic stucco. Each
Studio PLUS hotel currently contains two types of suites: designer suite and
deluxe suite. The deluxe suite is approximately one-third larger than the
designer suite. The newer hotels contain a third type of suite, a double suite
that consists of two queen beds. All suites contain a separate dining area and
a complete kitchen, including a full-size refrigerator, range with conventional
oven, microwave, cooking and eating utensils, and bed, sofa, easy chair, voice
mail, a computer data port, a direct-dial telephone and remote control cable or
satellite television. Each StudioPLUS hotel also has a coin-operated laundry
facility and offers weekly or optional daily maid service. Most properties also
have an exercise room and a swimming pool.
         
         The following tables set forth certain information with respect to the
Existing Hotels and Construction Properties.


<TABLE> 
<CAPTION>                                                                               
        Location of Existing Hotels                      Year Opened       Number of Suites (1) 
        ---------------------------                      -----------       -------------------- 
        <S>                                                  <C>                    <C>         
        1.  Lexington, KY                                    1986                   60          
        2.  Lexington, KY                                    1987                   72          
        3.  Cincinnati, OH                                   1988                   72          
        4.  Louisville, KY                                   1988                   76          
        5.  Louisville, KY                                   1989                   66          
        6.  Cincinnati, OH                                   1989                   72          
        7.  Columbus, OH                                     1989                   72          
</TABLE> 


                                                                      
                                       6

<PAGE>   7

<TABLE>
        <S>                                                  <C>                    <C> 
        8.  Dayton, OH                                       1989                   72  
        9.  Columbus, OH                                     1990                   72  
        10. Knoxville, TN                                    1990                   72  
        11. Indianapolis, IN                                 1990                   72  
        12. Memphis, TN                                      1990                   72  
        13. Nashville, TN                                    1991                   72  
        14. Indianapolis, IN                                 1991                   72  
        15. Cincinnati, OH                                   1992                   72  
        16. St. Louis, MO                                    1992                   72  
        17. Nashville, TN                                    1993                   72  
        18. St. Louis, MO                                    1994                   72  
        19. Greenville, SC                                   1995                   72  
        20. Charlotte, NC                                    1995                   72  
        21. Greensboro, NC                                   1995                   72  
        22. Columbia, SC                                     1995                   72  
        23. Montgomery, AL                                   1996                   72  
        24. Charlotte, NC                                    1996                   72  
        25. Birmingham, AL                                   1996                   72  
        26. Cary, NC                                         1996                   72  
        27. Birmingham, AL                                   1996                   72  
        28. Florence, KY                                     1996                   72  
        29. Charleston, SC                                   1996                   72  
        30. Raleigh, NC                                      1996                   72  
        31. Durham, NC (2)                                   1996                   72  
        32. Jackson, MS                                      1996                   72  
        33. Akron, OH                                        1996                   72  
        34. Fort Wayne, IN                                   1996                   72  
        35. Memphis, TN                                      1996                   72  
        36. Dayton, OH                                       1997                   72  
        37. Evansville, IN                                   1997                   72  
                                                                                  ----- 
              Total                                                               2,650 
                                                                                  ===== 
</TABLE>
        


         

(1)      One suite at each StudioPLUS hotel is occupied by a resident manager.
(2)      The Company leases the real estate for this hotel.


<TABLE>
<CAPTION>
                                                       Estimated         Number of
Location of Construction Properties                    Opening (1)       Suites (2)
-----------------------------------                    -----------       ----------
<S>                                                       <C>                <C>
1.   Richmond, VA                                         1997               92
2.   Atlanta, GA                                          1997               73
3.   Tulsa, OK                                            1997               73
4.   Toledo, OH                                           1997               73
5.   Newport News, VA                                     1997               73
6.   Atlanta, GA                                          1997               92
7.   St. Louis, MO                                        1997               73
8.   Dallas, TX                                           1997               98
9.   Dallas, TX                                           1997              137
10.  Cleveland, OH                                        1997               92
11.  Cleveland, OH                                        1997               73
                                                                            ---
         Total                                                              949
                                                                            ===
</TABLE>



                                       7
<PAGE>   8



(1)      There can be no assurance that the Company will complete the 
         development of the Construction Properties as scheduled.

(2)      One suite at each StudioPLUS hotel is occupied by a resident manager.

         The Company's corporate headquarters in Lexington, Kentucky, is
occupied pursuant to a lease that expires in 1997 and the Company also owns
office condominium space (purchased in 1997) at the same location. Management
believes that such offices are sufficient to meet its present needs and does
not anticipate any difficulty in securing additional space, as needed, on terms
acceptable to the Company.

ITEM 3.  LEGAL PROCEEDINGS

         The Company currently is not involved in any material litigation nor,
to the Company's knowledge, is any material litigation currently threatened
against the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the Company's shareholders
during the Company's fourth quarter.



                                       8
<PAGE>   9


                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK

         The Common Stock is listed on The Nasdaq Stock Market under the symbol
"SPHI." The price to the public for the Common Stock in the IPO was $10.00 per
share (the "IPO Price") and the Common Stock began trading on June 21, 1995.
The last reported sale price of the Company's Common Stock on The Nasdaq Stock
Market on February 28, 1997 was $23.75. All per share amounts have been
adjusted to reflect the July 9, 1996, three-for-two Stock Split.

         The following table sets forth for the indicated periods the high and
low closing sale prices for the Common Stock:

<TABLE>
<CAPTION>
                                                                     Price Range
                                                                     -----------
Year Ended December 31, 1995                                      High           Low
                                                                ------         ------
<S>                                                             <C>            <C>   
Second Quarter (since June 21, 1995) ..................         $11.16         $10.83
Third Quarter .........................................          18.67          11.16
Fourth Quarter ........................................          17.75          12.50

Year Ended December 31, 1996

First Quarter .........................................          21.67          14.33
Second Quarter ........................................          22.00          16.67
Third Quarter .........................................          23.88          15.50
Fourth Quarter ........................................          18.50          14.75
</TABLE>

         As of February 28, 1997, the Company estimates that there are
approximately 72 holders of record and 2,500 beneficial owners, respectively,
of the Common Stock.

DIVIDEND POLICY

         The Company, to date, has not paid any cash dividends on its Common
Stock. The Board of Directors presently intends to retain all earnings to
finance the future growth of the Company's operations and the development of
additional StudioPLUS hotels and does not anticipate the payment of cash
dividends on the Common Stock in the foreseeable future. Any payment of cash
dividends on the Common Stock in the future will be at the sole discretion of
the Board of Directors and will depend upon the Company's earnings, capital
expenditure requirements, financial condition and such other factors as the
Board of Directors deems relevant.

ITEM 6.  SELECTED FINANCIAL DATA

         The following tables set forth selected financial information and
other data consisting of the Predecessor Entities prior to the Company's IPO
and for the Company since the date of the IPO. The selected historical
financial information and other data for the Company and the Predecessor
Entities for each of the five years in the period ended December 31, 1996, have
been derived from the historical financial statements and notes of the Company
audited by Coopers & Lybrand L.L.P., independent accountants. The following
selected financial information should be read in conjunction with the
historical financial statements and related notes.



                                       9


<PAGE>   10




                            STUDIO PLUS HOTELS, INC.
            SELECTED HISTORICAL FINANCIAL INFORMATION AND OTHER DATA
              (IN THOUSANDS, EXCEPT SHARE AND CERTAIN OTHER DATA)


<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31,
                                                                                          -----------------------
                                                                          1996        1995         1994        1993        1992
                                                                         --------    --------    --------    --------    --------
<S>                                                                      <C>         <C>         <C>         <C>         <C>     
Statement of operations:
  Revenue:
    Room revenue ....................................................    $   22,201  $  15,309   $ 11,830    $  9,985    $  8,316
    Other revenue ...................................................           864        581        322         324         199
                                                                         ----------  ---------   --------    --------    --------
         Total revenue ..............................................        23,065     15,890     12,152      10,309       8,515
                                                                         ----------  ---------   --------    --------    --------
  Operating expenses ................................................        13,453      8,488      6,137       5,250       4,100
  Depreciation and amortization .....................................         3,336      1,912      1,472       1,313       1,185
  Interest expense, net .............................................        (2,206)     1,356      2,532       2,498       2,542
                                                                         ----------  ---------   --------    --------    --------
         Total costs and expenses ...................................        14,583     11,756     10,141       9,061       7,827
                                                                         ----------  ---------   --------    --------    --------
Income before third party investors' interest,
   income taxes and extraordinary loss ..............................         8,482      4,134      2,011       1,248         688
Third party investors' interest .....................................          (142)      (358)      (198)       (126)
                                                                         ----------  ---------   --------    --------    --------
Income before income taxes and extraordinary loss ...................         8,482      3,992      1,653       1,050         562
Provision for income taxes (1) ......................................         3,308      1,670
                                                                                                             --------    --------
Income before extraordinary loss ....................................         5,174      2,322      1,653       1,050         562
Extraordinary loss (2) ..............................................                     (185)                            
                                                                                                             --------    --------
         Net income .................................................    $    5,174  $   2,137   $  1,653    $  1,050    $    562
                                                                         ==========  =========   ========    ========    ========
Earnings per common and common equivalent
         shares, primary and fully diluted...........................    $     0.45
                                                                         ==========
Pro forma income data: (3)
  Income before income taxes ........................................                $   2,322                            
  Pro forma provision for income taxes ..............................                      176                            
                                                                                     ---------
  Pro forma income before extraordinary loss ........................                    2,498                            
  Extraordinary loss ................................................                     (185)                           
                                                                                     ---------
  Pro forma net income ..............................................                $   2,313                            
                                                                                     =========
Pro forma earnings per share: (4)

  Pro forma income before extraordinary loss ........................                $    0.50                            
  Extraordinary loss ................................................                    (0.04)                           
                                                                                     ---------
  Pro forma net income ..............................................                $    0.46                            
                                                                                     =========
Weighted average number of common shares outstanding ................    11,580,169  4,995,104                            

OTHER DATA:
  EBITDA (5) ........................................................    $    9,612  $   7,402   $  6,015    $  5,059    $  4,415
  Cash flows provided by (used in):
    Operating activities ............................................    $    9,720  $   4,844   $  3,160    $  2,498    $  1,708
    Investing activities ............................................       (50,112)   (17,162)    (5,891)     (2,692)     (3,583)
    Financing activities ............................................        72,514     14,417      2,327         380       1,918
  Number of properties open at period end ...........................            35         22         18          17          16
  Occupancy .........................................................          80.8%      83.5%      84.8%       83.0%       82.1%
  Average weekly rate ...............................................    $   284.13  $  254.11   $ 222.37    $ 202.32    $ 179.81
  Weekly revenue per available room .................................    $   229.60  $  212.19   $ 188.64    $ 167.99    $ 147.67

BALANCE SHEET DATA:

  Total assets ......................................................    $  146,240  $  63,376   $ 36,222    $ 30,313    $ 28,541
  Long-term debt ....................................................          --        4,000     32,306      28,831      29,018
  Shareholders' equity (deficit) ....................................       133,613     51,646     (1,247)     (1,611)     (1,699)
</TABLE>


                                       10


<PAGE>   11



 (1)     Historical financial information prior to the IPO does not include a
         provision for income taxes because the Predecessor Entities were S
         corporations or partnerships not subject to income taxes.

(2)      As a result of repaying approximately $37,049 of mortgage
         indebtedness, including approximately $226 of accrued interest, with
         the proceeds of the IPO, the Company wrote off approximately $308 of
         unamortized deferred loan costs associated with this debt. The charge
         has been recorded as an extraordinary loss, net of related income tax
         benefit of approximately $123.

(3)      Prior to June 26, 1995, the Company was not fully subject to income
         taxes due to the election of S corporation and partnership tax status
         by the Predecessor Entities. Income before extraordinary loss has been
         adjusted to pro forma income before extraordinary loss by reflecting
         the tax that would have been paid by the Company if it had been
         subject to income tax for the full year.

(4)      The pro forma earnings per share for the year ended December 31, 1995,
         has been calculated by dividing the pro forma net income by the
         weighted average number of shares of Common Stock deemed to be
         outstanding. Prior to June 26, 1995, the assets of the Company were
         owned and operated by the Predecessor Entities. The outstanding shares
         or other equity interests of the Predecessor Entities differ
         substantially from the shares of Common Stock of the Company
         outstanding after the IPO. Accordingly, the Company believes that the
         presentation of historical per share information for the periods prior
         to the IPO is not meaningful.

(5)      EBITDA represents income (loss) before third party investors'
         interest, income taxes, extraordinary loss, interest expense, net, and
         depreciation and amortization. EBITDA is used by the Company for the
         purpose of analyzing operating performance, leverage and liquidity.
         Such data are not a measure of financial performance under generally
         accepted accounting principles and should not be considered as an
         alternative to net income as an indicator of the Company's operating
         performance or as an alternative to cash flows as a measure of
         liquidity.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

OVERVIEW

         The Company owns, develops, and operates StudioPLUS(TM) extended stay
hotels and owns the rights to the related trade name and service marks for
"StudioPLUS." StudioPLUS hotels are designed to combine the convenience of a
hotel with many of the comforts of an apartment in order to provide affordable
lodging for extended stay guests.

         The Company is currently operating or developing hotels in 22 states.
As of February 28, 1997, the Company owned and operated 37 StudioPLUS hotels
and had 11 StudioPLUS hotels under construction. The Company has developed all
of its hotels and intends to continue expanding geographically through the
development of additional StudioPLUS hotels. The Company may consider
franchising the StudioPLUS concept or acquiring properties for conversion to
StudioPLUS hotels if appropriate opportunities arise.

         On January 16, 1997, the Company signed a definitive agreement to
merge with Extended Stay America, Inc. ("ESA"). Under the agreement, ESA will
issue 1.2272 shares of its common stock for each share of the Company's Common
Stock. The transaction will be accounted for as a pooling of interests and is
currently expected to be completed in April, 1997.

         The following table sets forth historical operating information for
the Company and the Predecessor Entities, as a percentage of total revenue, for
the periods indicated.


                                       11


<PAGE>   12




<TABLE>
<CAPTION>
                                              Year Ended December 31,
                                              -----------------------
                                             1994     1995       1996
                                             ----     -----      ----
<S>                                         <C>       <C>       <C>   
STATEMENT OF OPERATIONS DATA:

Room Revenue ...........................     97.3%     96.3%     96.3%
Other Revenue ..........................      2.7%      3.7%      3.7%
                                            -----     -----     -----
         Total Revenue .................    100.0%    100.0%    100.0%
                                            -----     -----     -----
Operating expenses .....................     50.6%     53.5%     58.3%
Depreciation and amortization ..........     12.1%     12.0%     14.5%
Interest expense, net ..................     20.8%      8.5%     (9.6%)
                                            -----     -----     -----
         Total costs and expenses ......     83.5%     74.0%     63.2%
                                            =====     =====     =====
</TABLE>

RESULTS OF OPERATIONS

Comparison of year ended December 31, 1996 to year ended December 31, 1995

         Total revenue for 1996 was $23,065,000, an increase of approximately
$7,175,000, or 45.2% over 1995. Room revenue for the year increased by
approximately $6,892,000, of which (i) approximately $993,000 is attributable
to the 18 hotels open throughout both periods and (ii) approximately $5,899,000
is attributable to the 17 hotels opened during 1995 and 1996 (the "1996 New
Hotels"). The increase in room revenue from the 18 hotels opened throughout
both periods resulted from a 7.0% increase in weekly revenue per available room
from $207.27 to $221.73, which reflects an 8.7% increase in average weekly
rates from $247.32 to $268.93 and a decrease in occupancy from 83.8% to 82.4%.
Other revenue during 1996 increased approximately $283,000, or 48.7%, over
1995, due primarily to the other revenue generated from the 1996 New Hotels.

         Property operating expenses for 1996 were $9,631,000, an increase of
approximately $3,257,000, or 51.1%, over 1995, of which (i) approximately
$728,000 is attributable to the 18 hotels open throughout both periods and (ii)
approximately $2,529,000 is attributable to the 1996 New Hotels. The increase
in property operating expenses for the 18 hotels open throughout both periods
resulted primarily from higher housekeeping and labor expenses. Corporate
operating expenses increased by approximately $1,708,000 as a result of (i)
operating the entire year as a public company and (ii) expanding the Company's
corporate infrastructure to support its national expansion program.

         Depreciation and amortization expense increased approximately
$1,424,000, or 74.5%, primarily as a result of operating the 1996 New Hotels
and the associated amortization of their preopening costs. The increase of
approximately $3,562,000 in net interest income during 1996 over 1995 can
primarily be attributed to the investment of the net cash proceeds from the
Company's follow-on offering completed April 2, 1996. The provision for income
taxes for 1996 was approximately $3,308,000, for an effective tax rate of
39.0%. Prior to the Company's IPO, the



                                       12


<PAGE>   13



Predecessor Entities were not subject to income taxes.

Comparison of year ended December 31, 1995 to year ended December 31, 1994

         Total revenue for 1995 was $15,890,000, an increase of approximately
$3,738,000 or 30.8%, over 1994. Room revenue for 1995 increased by
approximately $3,479,000 of which (i) approximately $807,000 is attributable to
the 17 hotels open throughout both periods and (ii) approximately $2,672,000 is
attributable to the five new hotels opened during 1994 and 1995 (the "1995 New
Hotels"). The increase in room revenue from the 17 hotels open throughout both
periods resulted from an increase in weekly revenue per available room from
$189.58 to $202.55, which reflects a 9.0% increase in average weekly rates from
$222.21 to $242.12 that offset a decline in occupancy from 85.3% to 83.7%.
Other revenue during 1995 increased $259,000, which resulted primarily from an
increase in telephone commissions and gains from disposition of assets.

         Property operating expenses for 1995 were $6,374,000, or an increase
of approximately $1,118,000, or 21.3%, over 1994, of which (i) approximately
$133,000 is attributable to the 17 hotels open throughout both periods and (ii)
approximately $985,000 is attributable to the 1995 New Hotels. Corporate
operating expenses increased approximately $1,233,000 as a result of (i)
corporate infrastructure expansion and (ii) various expenses associated with
operating as a public company during the second half of 1995.

         Depreciation and amortization expense increased approximately
$440,000, or 29.9%, principally as a result of operating the 1995 New Hotels,
as well as an increase in the carrying value of assets acquired at the time of
the IPO. Interest expense decreased approximately $1,176,000, or 46.4%, from
$2,532,000 to $1,356,000 as a result of debt being repaid with proceeds of the
IPO.

LIQUIDITY AND CAPITAL RESOURCES

         During 1996, the Company generated $9,720,000 in cash provided by
operating activities, an increase of $4,876,000 over 1995. This 100.7% increase
can be attributed primarily to an improvement in net income resulting from
operating the 1996 New Hotels.

         In February, 1996, the Company amended its existing line of credit
with Bank One, Kentucky, NA to increase its borrowing capacity from $30 million
to $50 million (the "$50 Million Facility"). In December, 1996, the Company
received a commitment from a group of banks (the "Commitment") for a "$200
million, revolving credit facility (the "$200 Million Line of Credit") which
expired February 28, 1997. The Commitment for the $200 Million Line of Credit
included financial covenants and terms and conditions which the Company
believed to be customary for loans of this type.

         Under the terms of the $200 Million Line of Credit, a merger, such as
the one presently anticipated with ESA, would have restricted future borrowings.
Therefore, the Company has concluded that it is in its best interest to
re-evaluate the available alternatives with regard to revolving credit
facilities and negotiate for a facility that would provide for the Company's
short term construction commitment requirements, while substantially reducing
the amount of commitment fees that would need to be paid prior to consummation
of the merger.  In the event the Company does not close on the $200 Million Line
of Credit the related unamortized loan cost of approximately $278,000 as of
February 28, 1996 would be charged off.



                                       13


<PAGE>   14




         The Company expects to open the Construction Properties by the end of
1997, and estimates that these 11 StudioPLUS hotels should have a total
development cost of approximately $48.7 million, of which approximately $14.9
million has already been incurred. The Company currently intends to fund the
development of these hotels with available cash, borrowings under the $50
Million Facility and cash flow from operations. However, there can be no
assurance that the Company will complete the development of such additional
StudioPLUS hotels in a timely manner or within budget.

         The Company in the future may seek to increase the amount of its
credit facilities, negotiate additional credit facilities, or issue corporate
debt instruments. Any debt incurred or issued by the Company may be secured or
unsecured at fixed or variable interest rates and may be subject to such terms
as the Board of Directors of the Company deems prudent.

INFLATION

         The rate of inflation as measured by changes in the average consumer
price index has not had a material effect on the revenue or operating results
of the Company during the three most recent fiscal years.

SEASONALITIES AND OTHER FACTORS AFFECTING QUARTERLY EARNINGS

         The lodging industry is seasonal in nature. During 1996, approximately
53.0% of the Company's revenue occurred during the second and third quarters.
Because many of the Company's expenses do not fluctuate with revenue, this
seasonality in revenue may cause even greater quarterly fluctuations to the
Company's earnings. Quarterly earnings may be adversely effected by risks
beyond the Company's control, including poor weather conditions, economic
factors and competition. In addition, quarterly earnings may be effected by the
timing of development and the opening of new hotels.




                                       14


<PAGE>   15



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                       INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                             Page
<S>                                                                                                           <C>
Report of Independent Accountants                                                                             16

Financial Statements

         Consolidated Balance Sheets for the years ended December 31, 1996 and                                17
         1995

         Consolidated Statements of Operations for the years ended December 31,                               18
         1996, 1995, and 1994

         Consolidated Statements of Shareholders' Equity for the years ended                                  19
         December 31, 1996, 1995 and 1994

         Consolidated Statements of Cash Flows for the years ended December 31,                               20
         1996, 1995 and 1994

         Notes to Consolidated Financial Statements                                                           21
</TABLE>



                                       15


<PAGE>   16



                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Studio Plus Hotels, Inc.
Lexington, Kentucky

         We have audited the accompanying consolidated balance sheets of Studio
Plus Hotels, Inc. and Subsidiary as of December 31, 1996 and 1995 and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Studio
Plus Hotels, Inc. and Subsidiary as of December 31, 1996 and 1995 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.

   /s/ COOPERS & LYBRAND L.L.P.
--------------------------------
Coopers & Lybrand L.L.P.
Cincinnati, Ohio
February 4, 1997



                                       16


<PAGE>   17





                            STUDIO PLUS HOTELS, INC.
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 1996 and 1995

                                    ASSETS
<TABLE>
<CAPTION>
                                                                                      1996              1995
                                                                                  ------------     ------------ 
<S>                                                                               <C>              <C>         
Current assets:
  Cash and cash equivalents                                                       $ 34,678,343     $  2,556,744
  Accounts receivable, net of allowance of $102,126
    and $70,654 as of 1996 and 1995, respectively                                      638,012          372,771
  Pre-opening costs, net of accumulated amortization of
    $822,550 and $390,989 as of 1996 and 1995, respectively                            725,911          209,974
  Other current assets                                                                 335,569          325,983
                                                                                  ------------     ------------ 
      Total current assets                                                          36,377,835        3,465,472
                                                                                  ------------     ------------

Property and equipment, net                                                        107,566,933       59,355,184
Site deposits and preacquisition costs                                               1,924,820          275,000
Deferred loan costs, net of accumulated amortization of
  $211,227 and $48,281 as of 1996 and 1995, respectively                               360,978          244,991
Non-compete agreement, net of accumulated amortization
  of  $125,000 as of 1995                                                               25,000
Other assets                                                                             9,300           10,726
                                                                                  ------------     ------------
                                                                                  $146,239,866     $ 63,376,373
                                                                                  ============     ============

                                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                                $  5,057,245     $  1,876,622
  Accrued expenses:
    Property tax                                                                       467,888          322,584
    Compensation                                                                       537,612          245,581
    Income taxes                                                                       238,969
    Other accrued expenses                                                             737,583          458,122
                                                                                  ------------     ------------
      Total current liabilities                                                      7,039,297        2,902,909
                                                                                  ------------     ------------

Long-term debt                                                                       4,000,000
Deferred income taxes                                                                5,587,758        4,827,410
Commitments

Shareholders' equity:
  Preferred stock, par value $.01 per share, 10,000,000 shares authorized,
    none issued or outstanding
  Common stock, par value $.01 per share, 50,000,000 shares
    authorized, 12,528,845 shares issued and outstanding                               125,288           51,150
  Additional paid-in capital                                                       127,209,452       50,490,353
  Retained earnings                                                                  6,278,071        1,104,551
                                                                                  ------------     ------------
      Total shareholders' equity                                                   133,612,811       51,646,054
                                                                                  ------------     ------------
                                                                                  $146,239,866     $ 63,376,373
                                                                                  ============     ============
</TABLE>





The accompanying notes are an integral part of the consolidated financial
statements.



                                      17


<PAGE>   18
                           STUDIO PLUS HOTELS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
             for the years ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>
                                                                             1996            1995             1994
                                                                        ------------     ------------     ----------- 
Revenue:
<S>                                                                     <C>              <C>              <C>        
  Room revenue                                                          $ 22,200,495     $ 15,308,835     $11,830,374
                                                                                                                      
  Other revenue                                                              864,010          581,416         322,159
                                                                        ------------     ------------     -----------
    Total revenue                                                         23,064,505       15,890,251      12,152,533
Costs and expenses:                                                     ------------     ------------     ----------- 
  Property operating expenses                                              9,631,338        6,374,355       5,256,359
  Corporate operating expenses                                             3,821,369        2,113,731         880,511
  Depreciation and amortization                                            3,336,121        1,912,132       1,472,358
  Interest expense, net of interest income                                (2,205,539)       1,356,082       2,531,990
                                                                        ------------     ------------     -----------
    Total costs and expenses                                              14,583,289       11,756,300      10,141,218
                                                                        ------------     ------------     -----------
      Income before third party investors' interest, income taxes
           and extraordinary loss                                          8,481,216        4,133,951       2,011,315
  Third party investors' interest                                                            (141,612)       (358,432)
                                                                        ------------     ------------     -----------
      Income before income taxes and extraordinary loss                    8,481,216        3,992,339       1,652,883
  Provision for income taxes                                               3,307,696        1,670,459
                                                                        ------------     ------------     -----------
      Income before extraordinary loss                                     5,173,520        2,321,880       1,652,883
  Extraordinary loss, net of tax benefit                                                     (184,618)
                                                                        ------------     ------------     -----------
      Net income                                                        $  5,173,520     $  2,137,262     $ 1,652,883
                                                                        ============     ============     ===========

Earnings per common and common equivalent shares,
  primary and fully diluted (Note 9)                                    $      0.45
                                  =                                     ===========

Pro forma income data: (Note 9)
  Income before extraordinary loss                                                       $ 2,321,880      $1,652,883
  Pro forma adjustment for income taxes                                                      176,458        (614,872)
                                                                                         -----------      ----------  
  Pro forma income before extraordinary loss                                               2,498,338       1,038,011
  Extraordinary loss                                                                        (184,618)
                                                                                         -----------      ----------  
  Pro forma net income                                                                   $ 2,313,720      $1,038,011
                                                                                         ===========      ==========

Pro forma earnings per share: (Note 9)
  Pro forma income before loss                                                           $      0.50
  Extraordinary loss                                                                           (0.04)
                                                                                         -----------
  Pro forma net income                                                                   $      0.46
                                                                                         -----------

Weighted average number of common shares outstanding                    11,580,169         4,995,104
</TABLE>






The accompanying notes are an integral part of the consolidated financial
statements

                                      18




<PAGE>   19
                            STUDIO PLUS HOTELS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
             for the years ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
                                                  Shareholders' Equity (Deficit)
                                                  --------------------------------------------------
                                                                                            Retained
                                                 Common          Additional       Treasury   Earnings    Partners'
                                                  Stock         Paid-in capital     Stock   (Deficit)    (Deficit        Total
                                                  --------      ---------------   -------  ---------     --------       ---------
<S>                                               <C>               <C>                    <C>           <C>          <C>         
Balance, January 1, 1994                          $190,000          $106,846               $(1,607,605)  (300,004)    $(1,610,763)
  Issuance of stock                                 20,000                                                                 20,000
  Cash dividends                                                                            (1,139,111)                (1,139,111)
  Partners' draws                                                                                        (116,916)       (116,916)
  Conversion of note payable to stock                                 21,450                                               21,450
  Repurchase of treasury stock                                                   $(75,000)                                (75,000)
  Net income                                                                                 1,537,608    115,275       1,652,883
                                                  --------      ------------     --------   ----------   --------    ------------
Balance, December 31, 1994                         210,000           128,296      (75,000)  (1,209,108)  (301,645)     (1,247,457)
                                                  --------      ------------     --------   ----------   --------    ------------
  Cash dividends                                                                            (1,747,956)                (1,747,956)
  Partners' draws                                                                                        (547,074)       (547,074)
  Reclassification of shareholders' and
    partners' interest to paid-in capital in
    connection with S corporation and
    partnership termination                       (210,000)       (1,631,115)      75,000    1,250,795    515,320
  Purchase of minority shareholders'
    interest                                                       3,955,515                   673,558    333,399       4,962,472
  Proceeds from initial public offering of 
    stock, net                                      51,150        48,037,657                                           48,088,807
  Net income                                                                                 2,137,262                  2,137,262
                                                  --------      ------------     --------   ----------   --------    ------------
Balance, December 31, 1995                          51,150        50,490,353        --       1,104,551      --         51,646,054
                                                  --------      ------------     --------   ----------   --------    ------------  
  Proceeds from follow-on offering                  32,369        76,750,748                                           76,783,117
  Proceeds from exercise of stock options               10            10,110                                               10,120
  Effect of three-for-two stock split               41,759           (41,759)
  Net income                                                                                 5,173,520                  5,173,520
                                                  --------      ------------     --------   ----------   --------    ------------
Balance, December 31, 1996                        $125,288      $127,209,452        --      $6,278,071      --       $133,612,811
                                                  ========      ============     ========   ==========   ========    ============
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.



                                      19


<PAGE>   20




                            STUDIO PLUS HOTELS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994



<TABLE>
<CAPTION>
                                                                                       1996              1995        1994
                                                                                       ----              ----        ----
<S>                                                                                 <C>               <C>          <C>       
Cash flows from operating activities:
  Net income                                                                        $5,173,520        $2,137,262   $1,652,883
  Adjustments to reconcile net income to net cash provided by 
   operating activities:
    Third party investors' interest                                                                      141,612      358,432
    Depreciation and amortization                                                    3,336,121         1,912,132    1,472,358
    Discount accretion on investment securities                                       (378,953)
    Gain on sale of investment securities                                              (89,960)
    Loss (gain) on sale of assets                                                                        (72,393)       2,746
    Bad debt expense                                                                    96,858            47,892      140,400
    Deferred income tax expense                                                        650,891           593,186
    Extraordinary loss                                                                                   184,618
    Change in:
      Accounts receivable                                                             (362,099)         (166,027)    (199,039)
      Other current assets                                                             (62,225)         (139,125)     (24,212)
      Other assets                                                                       1,426           (49,597)    (171,680)
      Accounts payable                                                                 236,346           167,354     (154,897)
      Income taxes payable                                                             401,065          (162,096)
      Accrued expenses                                                                 716,796           249,161       82,816
                                                                                    ----------        ----------   ----------
           Net cash provided by operating activities                                 9,719,786         4,843,979    3,159,807
                                                                                    ----------        ----------   ----------

Cash flows from investing activities:
  Expenditures for land, buildings and furnishings                                 (46,962,647)      (14,806,613)  (5,558,901)
  Payment for site deposits and preacquisition costs                                (2,671,259)         (862,269)    (234,649)
  Proceeds from sale of land and  furnishings                                                            132,812        4,000
  Purchase of investments available-for-sale                                       (38,829,263)
  Proceeds from sale/maturity of investments available-for-sale                     39,298,176
  Additions to preopening costs                                                       (947,498)         (125,826)    (101,175)
  Purchase of third party investors' interest                                                         (1,500,000)
                                                                                   -----------        ----------   ----------
           Net cash used in investing activities                                   (50,112,491)      (17,161,896)  (5,890,725)
                                                                                   -----------        ----------   ----------

Cash flows from financing activities:
  Proceeds from long-term debt                                                      27,000,000         6,916,222    4,319,832
  Proceeds from notes payable to shareholders and partners                                             1,727,500      875,000
  Principal payments on long-term debt                                             (31,000,000)      (36,810,859)    (517,314)
  Principal payments on notes payable to shareholders and partners                                    (3,111,000)    (567,675)
  Partners' draws                                                                                                    (116,916)
  Cash dividends                                                                                      (2,295,030)  (1,139,111)
  Distribution to third party investors                                                                              (281,473)
  Proceeds from sale of stock                                                                                          20,000
  Proceeds from public offering, net of underwriting costs                          77,236,432        49,731,750
  Proceeds from exercise of stock options                                               10,120
  Additions to deferred loan costs                                                    (278,933)         (336,250)     (27,320)
  Additions to public offering costs                                                  (453,315)       (1,405,117)    (237,826)
                                                                                   -----------        ----------   ----------
           Net cash provided by financing activities                                72,514,304        14,417,216    2,327,197
                                                                                   -----------        ----------   ----------
           Net increase (decrease) in cash                                          32,121,599         2,099,299     (403,721)
Cash and cash equivalents at beginning of periods                                    2,556,744           457,445      861,166
                                                                                   -----------        ----------   ----------
Cash and cash equivalents at end of periods                                        $34,678,343        $2,556,744   $  457,445
                                                                                   ===========        ==========   ==========

Supplemental cash flow disclosures:
  Interest paid, net of amount capitalized                                         $     2,808        $1,775,249   $2,539,213
                                                                                   ===========        ==========   ==========
  Income taxes paid                                                                $ 2,266,837        $1,182,200
                                                                                   ===========        ==========             

Non-cash transactions:
  Contract payable for non-compete agreement                                                                       $  150,000
                                                                                                                   ==========
  Additions to public offering costs included in accounts payable                                                  $  505,298
                                                                                                                   ==========
  Conversion of note payable to stock                                                                              $   21,450
                                                                                                                   ==========
  Repurchase of treasury stock for note payable                                                                    $   75,000
                                                                                                                   ==========
  Public offering costs netted against offering proceeds                                              $1,642,943
                                                                                                      ==========
  Purchase of minority shareholders' interest for stock and assumption of deficit 
    capital balances                                                                                  $4,962,472
                                                                                                      ==========
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.




                                      20




<PAGE>   21




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

     Business

         Studio Plus Hotels, Inc. and its wholly owned subsidiary, Studio Plus
Properties, Inc. (together, the "Company") own, develop and operate
StudioPLUS(TM) extended stay hotels and own the rights to the related trade
name and service marks for "StudioPLUS." StudioPLUS hotels are designed to
combine the convenience of a hotel with many of the comforts of an apartment in
order to provide affordable lodging for extended stay guests.

         At December 31, 1996, the Company had 35 StudioPLUS hotels in
operation and 11 StudioPLUS hotels under construction. These 46 hotels are
located in 13 states in the Midwest and Southeast United States.

     Corporate Organization and Initial Public Offering

         The Company was formed on December 19, 1994, to acquire, through
merger and exchange of partnership interests all of the assets of Studio Plus,
Inc. and the corporations and partnerships (collectively, the "Predecessor
Entities") which owned and operated StudioPLUS extended stay hotels. On June
26, 1995, the Company completed an initial public offering of 5,347,500 shares
of common stock, $0.01 par value (the "Common Stock") including shares issued
as a result of the exercise of the underwriters' over-allotment option, at
$10.00 per share and received net cash proceeds of approximately $48.1 million
( the "IPO"). Just prior to completion of the IPO, the Company acquired through
merger and exchange of Common Stock for partnership interests the assets of the
Predecessor Entities which owned and operated all of the StudioPLUS extended
stay hotel properties then in operation or under development ( the "Corporate
Organization"). The Company issued an aggregate of 2,322,750 shares of common
stock and paid $1.5 million of cash to the partners and shareholders of the
Predecessor Entities. The acquisition of the interests of the controlling
shareholder or partner and affiliates of the Predecessor Entities has been
accounted for as if it were a pooling of interests, with no increase in the
carrying value for the interests acquired. The acquisition of the third party
investors' interests has been accounted for as a purchase which resulted in an
increase to the carrying value of the underlying assets acquired of
$10,475,000.

     Follow-on Offering and Stock Split

         In April, 1996, the Company completed a follow-on equity offering of
5,175,000 shares of Common Stock, including 675,000 shares issued as a result
of the exercise of the underwriters' over-allotment option, and 319,653 shares
sold by selling shareholders at $16.83 per share. Net cash proceeds to the
Company were approximately $76.8 million, which excluded any proceeds from the
selling shareholders.

         On July 9, 1996, a three-for-two split of the Company's Common Stock
was effected in the form of a stock dividend of three shares of Common Stock
for each two shares of Common Stock outstanding at the close of business on
June 20, 1996 (the "Stock Split"). Accordingly, all applicable share and per
share data have been adjusted for the Stock Split.



                                       21


<PAGE>   22



     Principles of Consolidation

         The consolidated financial statements include the accounts of Studio
Plus Hotels, Inc. and its wholly owned subsidiary Studio Plus Properties, Inc.
All significant intercompany items and transactions have been eliminated.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Management's Estimates

         The preparation of the consolidated 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.

     Cash and Cash Equivalents

         The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.

     Property and Equipment

         Property and equipment is stated at cost, including interest, salaries
and related expenses from site design and construction supervision incurred
during the construction period. Expenditures for replacements and improvements
are capitalized. Maintenance and repairs are charged to operations as incurred.

         Depreciation is computed by the straight-line method over the
estimated useful lives of the assets. A summary of the estimated useful lives
of the assets is as follows:

<TABLE>
<S>                                                               <C>     
         Building and improvements................................  40 years
         Furniture, fixtures and equipment........................3-10 years
</TABLE>

         The carrying amounts of major assets sold, retired, or otherwise
disposed of, and the related accumulated depreciation amounts are eliminated
from the accounts. Any resulting gain or loss is included in income.

     Preacquisition Costs

         The Company incurs costs related to the acquisition of hotel sites.
These costs are capitalized when it is probable that a site will be acquired.
These costs are reclassified to property and equipment upon acquisition. In the
event the acquisition is not consummated, the costs are expensed. All other
site selection costs are expensed as incurred.

     Deferred Loan Costs

         The Company has incurred costs in obtaining financing. These costs
have been deferred and are being amortized over the life of the loan using the
straight-line method.


                                       22


<PAGE>   23



     Preopening Costs

         The Company capitalizes compensation and other costs relating to the
opening of new properties. Amortization is provided using the straight-line
method over a twelve-month period.

     Concentration of Credit Risk

         The Company maintained deposits totaling $7,498,927 and $619,239 at
December 31, 1996 and 1995, respectively with one bank. Deposits in excess of
$100,000 are not insured by the Federal Deposit Insurance Corporation.

     Stock Options

         The Company accounts for stock options issued to employees in
accordance with Accounting Principles Board Opinion (APB) No. 25, "Accounting
for Stock Issued to Employees". Under APB No. 25 the Company recognizes expense
based on the intrinsic value of the options. Pro forma disclosure of income and
earnings per share, based on the fair market value of the options, have been
provided in Note 8 as required by The Financial Accounting Standards Board
(SFAS) No. 123, "Accounting for Stock-Based Compensation".

3.  PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                        1996                   1995
                                                        ----                   ----
Hotel, property and equipment:

<S>                                               <C>                     <C>          
  Land                                            $  23,428,908           $  12,403,803
  Building and improvements                          67,603,333              40,824,006
  Furniture, fixtures and equipment                  16,892,961               8,242,087
  Construction in process                             8,247,616               4,249,605
                                                  -------------           -------------
                                                    116,172,818              65,719,501
  Less accumulated depreciation                      (9,261,988)             (6,678,808)
                                                  -------------           -------------
                                                    106,910,830              59,040,693
                                                  -------------           -------------

Corporate property and equipment:

  Furniture, fixtures and equipment                     942,674                 473,067
                                                  -------------           -------------
     Less accumulated depreciation                     (286,571)               (158,576)
                                                  -------------           -------------
                                                        656,103                 314,491
                                                  -------------           -------------
           Total property and equipment           $ 107,566,933           $  59,355,184
                                                  =============           =============
</TABLE>

             Included in December 31, 1996 and 1995 accounts payable are
amounts related to the purchase of property and equipment totaling
approximately $4,635,000 and $1,609,000, respectively. In addition, interest
capitalized and included in the cost of building and improvements for December
31, 1996, 1995 and 1994 was $329,432, $157,592 and $152,679, respectively. The
Company incurred total interest expense of $332,240, $1,675,265 and $2,684,669
for the years ended December 31, 1996, 1995 and 1994, respectively.



                                       23


<PAGE>   24



4.  LINE OF CREDIT

             On February 28, 1996, the Company increased its $30 million
revolving line of credit to $50 million (the "Line of Credit"), maturing June
22, 1998, to fund future development and construction of additional hotels and
for working capital. Outstanding indebtedness under the Line of Credit bears
interest at either a rate based upon the London Interbank Offering Rate or the
prime interest rate, at the selection of the Company. The interest rate on the
outstanding indebtedness adjusts periodically based upon prevailing rates.
Interest is payable monthly with the unpaid principal due at maturity. The Line
of Credit contains certain financial covenants, including maintenance of a
minimum debt service coverage ratio and a maximum ratio of debt to tangible net
worth and limitations upon the incurrence of additional debt without the
consent of the lender. Borrowings under the Line of Credit are collateralized
by certain property and equipment. At December 31, 1996 there were no
outstanding borrowings under the Line of Credit.

             The Company used the net proceeds of the IPO to retire
approximately $36.8 million of outstanding mortgage debt, which was guaranteed
by the former shareholders and partners of the Predecessor Entities, and
approximately $3.1 million of loans from shareholders. In connection with the
early extinguishment of mortgage debt in 1995, the Company incurred an
extraordinary loss of $184,618, net of $123,079 in taxes, relating to the
write-off of unamortized loan fees.


5.  INCOME TAXES

             The Company accounts for income taxes in accordance with SFAS No.
109, "Accounting for Income Taxes." SFAS No. 109 requires recognition of
deferred tax liabilities and assets for the temporary differences between the
financial statement carrying amounts and the tax basis of existing assets and
liabilities using currently enacted tax rates.

             The components of the provision for income taxes reflected in the
consolidated statements of operations for the years ended December 31, 1996 and
1995 are as follows:

<TABLE>
<CAPTION>
                                                      1996                      1995
                                                      ----                      ----
<S>                                               <C>                     <C>          
Currently payable:
   Federal                                        $   2,136,700           $     929,183
   State and local                                      520,105                 148,000
                                                  -------------           -------------
                                                      2,656,805               1,077,183
                                                  -------------           -------------

Deferred taxes:

  Federal                                               413,444                 507,615
  State                                                 237,447                 785,661
                                                  -------------           -------------
                                                        650,891                 593,276
                                                  -------------           -------------
Provision for income taxes                        $   3,307,696           $   1,670,459
                                                  =============           =============
</TABLE>



                                       24


<PAGE>   25



             Prior to the Corporate Organization, the Company's operations were
conducted through S corporations and partnerships. Accordingly, the deferred
tax provision for the year ended December 31, 1995, includes approximately
$540,000 relating to recognition of a net deferred tax liability representing
temporary differences existing on the date of the Corporate Organization. Prior
to the Corporate Organization, income taxes on earnings were paid by the
shareholders and partners of the Predecessor Entities.

             The differences between the statutory federal income tax rate and
the effective tax rate expressed as a percentage of income before income taxes
were as follows:

<TABLE>
<CAPTION>
                                                                              1996             1995
                                                                              ----             ----
                <S>                                                           <C>              <C>  
                Statutory federal tax rate                                    34.0%            34.0%
                Effect of termination of S corporation
                   and partnership status with the
                   Corporate Organization                                     --               13.5
                S corporation and partnership income
                   for which no current income taxes
                   were provided                                              --              (10.0)
                State income taxes, net of federal benefit                     4.6              2.5
                Other                                                          0.4              1.8
                                                                              ----             ----
                                                                              39.0%            41.8%
                                                                              ====             ====  
</TABLE>


             Components of the Company's net deferred asset and liability
included in the consolidated balance sheets were as follows:

<TABLE>
<CAPTION>
                                                                             1996              1995
                                                                             ----              ----
             <S>                                                        <C>              <C>        
             Deferred tax assets:
                Compensation and benefits                               $     55,143     $        --
                Bad debt and other allowances                                 69,555     $    59,270
                Other                                                         18,407              --
                                                                        ------------     ----------- 
                                                                             143,105          59,270
                                                                        ------------     ----------- 

             Deferred tax liabilities:
                Property and equipment                                   (5,621,406)      (4,886,680)
                                                                        ------------     ----------- 
                           Net deferred tax liability                   $(5,478,301)     $(4,827,410)
                                                                        ===========      =========== 
</TABLE>

6.  OPERATING LEASES

             The Company leases office space under an operating lease expiring
in 1997. The lease is renewable for two five-year periods. In addition the
Company leases the land on which one hotel is built. The land lease is for a
term of 20 years with four five-year renewal options with an option to purchase
under certain conditions. The future minimum rental payments under the
operating leases as of December 31, 1996, are as follows:



                                       25


<PAGE>   26



<TABLE>
<S>               <C>               <C>     
                      1997          $   171,964
                      1998               33,990
                      1999               35,010
                      2000               36,060
                      2001               37,142
                  Thereafter            711,521
                                    -----------

                   Total            $ 1,025,687
                                    ===========
</TABLE>

             The Company incurred rent expense of $166,096, $149,228 and
$135,876 for the years ended December 31, 1996, 1995 and 1994, respectively.

7.  RIGHTS AGREEMENT

             Under the terms of the Company's Rights Agreement, one right (a
"Right") is attached to each share of Common Stock. Initially, each Right will
entitle the registered holder to purchase from the Company one one-hundredth of
a share (a "Unit") of Class A Cumulative Participating Preferred Stock ("Class
A Preferred Stock"), of which 100,000 shares have been reserved for issuance
pursuant to the Rights Agreement. Each Unit of Class A Preferred Stock is
structured to be the economic equivalent of one share of Common Stock. The
exercise price per Right will be $56.00 subject to adjustment (the "Purchase
Price").

             The Rights Agreement also provides that if any person becomes an
Acquiring Person (as defined below), proper provision shall be made so that
each holder of a Right (except as set forth below) will thereafter have the
right to receive, upon exercise and payment of the Purchase Price, Class A
Preferred Stock or Common Stock at the option of the Company (or, in certain
circumstances, cash, property or other securities of the Company) having a
value equal to twice the amount of the Purchase Price.

             The Rights will separate from the Common Stock and a distribution
of Rights Certificates will occur (the "Distribution Date") upon the earlier of
(i) 10 days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), or (ii) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially becoming an Acquiring
Person.

             Effective February 27, 1996, the Rights Agreement was amended to
lower the percentage of beneficial ownership required to be deemed an Acquiring
Person from 20% to 15% of the outstanding shares of Common Stock of the Company
(the "Ownership Reduction"), and to add a provision which permits a person who
becomes an Acquiring Person, solely because of the Ownership Reduction, to
reduce its beneficial ownership of Common Stock to less than 15% by the close
of business on the tenth business day following notice from the Company that
such person's beneficial ownership equals or exceeds 15% of the outstanding
shares of Common Stock to avoid classification as an Acquiring Person.

             In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger, statutory share exchange, or
other business combination in which the Company is not the surviving
corporation, or (ii) 50% or more of the Company's assets or earning power is
sold or transferred, each holder of a Right (except as set forth below) shall
thereafter have the right to


                                       26


<PAGE>   27



receive, upon exercise and payment of the Purchase Price, common stock of the
acquiring company having a value equal to twice the Purchase Price. The events
set forth in this paragraph and in the preceding paragraphs are referred to as
the "Triggering Events." The Rights are not exercisable until the Distribution
Date and will expire at the close of business on June 30, 2000, unless earlier
redeemed or exchanged by the Company as described below or unless such
expiration date is extended pursuant to the Rights Agreement.

             The Purchase Price payable, and the number of shares of Class A
Preferred Stock, Common Stock or other securities or property issuable upon
exercise of the Rights, are subject to adjustment from time to time to prevent
dilution.

             At any time after any person becomes an Acquiring Person, the
Company may exchange all or part of the Rights (except as set forth below) for
shares of Common Stock (an "Exchange") at an exchange ratio of one share per
Right, as appropriately adjusted to reflect any stock split or similar
transaction.

             At any time until ten days following the Stock Acquisition Date,
the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right (the "Redemption Price").

             The Rights Agreement may be amended by authorization of the Board
of Directors, in the event of a merger or acquisition of the Company, whereby
the acquiring company would not be deemed an "Acquiring Person" within the
meaning of the Rights Agreement as defined above. Refer to Note 11 regarding
subsequent amendment to the Rights Agreement.

8. STOCK OPTIONS

             The Company has two stock option plans, the 1995 Stock Incentive
Plan (the "1995 Plan") and the 1995 Non-Employee Directors' Stock Incentive
Plan (the "Directors Plan"). Under the 1995 Plan, an aggregate of 1,251,488
shares of common stock have been reserved for awards. Grants or awards are
issued at the discretion of the Compensation Committee of the Board of
Directors and may be in the form of stock options, stock appreciation rights,
restricted stock awards or performance share awards. Options granted to date
under the 1995 Plan have an exercise price equal to the market price of the
Company's stock on the date of grant and an option's maximum term is 10 years.
Any vesting period is at the discretion of the Compensation Committee; however,
the majority of the options vest over a four year period.

             Options granted under the Directors' Plan vest over a four year
period from the grant date and expire in ten years. The option price per share
may not be less than the fair market value of a share on the date the option is
granted. Under the Directors' Plan at December 31, 1996, options to acquire
45,000 and 15,000 shares had been granted at exercise prices per share of
$10.00 and $14.42, respectively. Options to acquire an aggregate of 11,250
shares of Common Stock were exercisable at December 31, 1996, with an exercise
price of $10.00 per share. All options under the Directors Plan were issued in
1995 with none having been exercised to date.

             The following is a summary of stock option activity and number of
shares reserved for outstanding options under the 1995 Plan:



                                       27


<PAGE>   28




<TABLE>
<CAPTION>
                                                                    Weighted Average
                                                                     Option Price         Number
                                                                       per Share        of Shares
                                                                       ---------        ---------
             <S>                                                       <C>              <C>    
             Balance at January 1, 1996                                $11.02             711,750
                  Granted                                              $17.63             396,502
                  Exercised                                            $10.00              (1,012)
                  Forfeited                                            $13.05             (95,726)
                                                                                        ---------
             Balance at December 31, 1996                              $13.43           1,011,514
                                                                                        =========
</TABLE>

             All options included in the January 1, 1996, balance were issued
during 1995 with none being forfeited or exercised. The following is a summary
of stock options outstanding at December 31, 1996, under the 1995 Plan:

<TABLE>
<CAPTION>
                                                   Options Outstanding                        Options Exercisable
                          -------------------------------------------------------       ------------------------------
                                                Weighted-
                             Number              Average             Weighted-            Number            Weighted-
    Range of              Outstanding           Remaining             Average           Exercisable          Average
 Exercise Prices          at 12/31/96        Contractual Life      Exercise Price       at 12/31/96       Exercise Price
 ---------------          -----------        ----------------      --------------       -----------       --------------
<S>                        <C>                     <C>                 <C>                <C>                 <C>   
$10.00 to $13.67             596,512               8.75                $10.61             395,361             $10.36

$15.33 to $20.83             415,002               9.50                $17.44               7,126             $15.33
                           ---------                                                      -------             
$10.00 to $20.83           1,011,514               9.00                $13.43             402,487             $10.45
                           =========                                                      =======             
</TABLE>

             The Company applies APB Opinion No. 25 and related Interpretations
in accounting for its plans. Accordingly, no compensation cost has been
recognized for its stock-based compensation plans. Had compensation cost for
the Company's stock option plans been determined based on the fair value at the
grant dates for awards under those plans consistent with the method of SFAS No.
123, the Company's net income and earnings per share would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                          1996              1995
                                                                          ----              ----
             <S>                                                       <C>              <C>       
             Net income                     As reported                $5,173,520       $2,313,720
                                            Pro forma                  $4,484,576       $1,398,979

             Primary and fully diluted
                  earnings per share        As reported                $     0.45       $     0.46
                                            Pro forma                  $     0.39       $     0.28
</TABLE>

             Options granted during the year had a weighted-average fair value
of $7.66 per share. The fair value of each option grant is estimated on the
date of grant using the Black-Scholes option- pricing model with the following
assumptions for grants made during 1995 and 1996: expected volatility of 31.7
percent, risk-free interest rate of 6.0 percent, zero dividend yield, and an
expected life of 6 years.



                                       28


<PAGE>   29



9.  EARNINGS PER SHARE

             Prior to June 26, 1995, the assets of the Company were owned and
operated by the Predecessor Entities. The outstanding shares or other equity
interests of the Predecessor Entities differ substantially from the shares of
Common Stock of the Company outstanding after the IPO. Accordingly, the Company
believes that the presentation of historical per share information for the
periods prior to the IPO is not meaningful.

             The pro forma earnings per share for the year ended December 31,
1995, has been calculated by dividing the pro forma net income by the weighted
average number of shares of Common Stock deemed to be outstanding. Income
before extraordinary loss has been adjusted to pro forma income before
extraordinary loss by reflecting the tax that would have been paid by the
Company if it had been subject to income tax for the full year, assuming a
37.2% effective tax rate. Prior to June 26, 1995, the Company was not fully
subject to income taxes due to the election of S corporation and partnership
tax status by the Predecessor Entities. If the Company had been subject to tax,
it would have incurred income tax expense of approximately $1,371,000 and
$615,000 for the years ended December 31, 1995 and 1994, respectively.

             Included in the weighted average number of common shares
outstanding at December 31, 1996 and 1995 is an average of 292,590 and 92,940
common stock equivalents for each year, respectively.

10.  RELATED PARTY TRANSACTIONS

             Borrowings from partners and shareholders of the Predecessor
Entities were $1,727,500 and $875,000 for 1995 and 1994, respectively.
Principal repayments on loans from shareholders and partners of the Predecessor
Entities were $3,111,000 and $567,675 for 1995 and 1994, respectively. In
addition, the Company incurred interest expense of $156,851 and $73,625 for the
same periods, respectively, on shareholder debt.

             Prior to the IPO, the Company distributed $2,295,030 to the
shareholders of the Predecessor Entities in accordance with the merger
agreements.

11.  SUBSEQUENT EVENT

             On January 16, 1997, the Company entered into a merger agreement
(the "Merger Agreement") with Extended Stay America, Inc. ("ESA") whereby each
share of the Company's Common Stock would be exchanged for 1.2272 shares of ESA
common stock (the "Merger"). The Merger is expected to be accounted for as a
"pooling of interests" in accordance with APB Opinion No. 16, "Business
Combinations." Pending shareholder approval, the approval of the Merger by
certain regulatory bodies, and barring the occurrence of certain events as
detailed in the Merger Agreement, the merger is expected to be completed in
April, 1997.

             The Company and Fifth Third Bank, as rights agent (the "Rights
Agent"), entered into an Amended and Restated Rights Agreement, dated as of
June 6, 1995, and amended as of February 27, 1996 (the "Rights Agreement"),
between the Company and the Rights Agent. On January 16, 1997, the Company and
the Rights Agent entered into Amendment No. 2 to the Rights Agreement (the
"Rights Amendment"). Pursuant to the Rights Amendment, neither ESA, Merger Sub,
Inc., or any affiliate or associate of ESA or Merger Sub, Inc. shall be deemed
to be an "Acquiring Person" by



                                       29


<PAGE>   30



virtue of the Merger Agreement or any of the transactions contemplated by the
Merger Agreement, and immediately prior to the consummation of the Merger all
Rights (as defined in the Rights Agreement) shall expire.

ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

             None.




                                       30


<PAGE>   31



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

             The Board of Directors presently consists of seven members and is
divided into three classes. Certain information regarding the directors and
executive officers (the "Named Executive Officers") of the Company is set forth
below.

                                                                            
<TABLE>
<CAPTION>
                                                                                                              Term   
Name                               Age        Position                                             Class      Expires
----                               ---        --------                                             -----      -------
<S>                                <C>        <C>                                                   <C>       <C> 
Norwood Cowgill, Jr.               53         Chairman of the Board &                               III       1998
                                              Chief Executive Officer
Michael J. Moriarty                50         Director, President &                                 III       1998
                                              Chief Operating Officer
William E. Anderson                53         Director, Executive Vice President,                   II        1997
                                              Secretary and General Counsel
Warren W. Rosenthal                73         Director                                              I         1999
Daniel W. Daniele                  42         Director                                              I         1999
Richard W. Furst                   58         Director                                              II        1997
Thomas P. Dupree                   66         Director                                              III       1998
Michael L. Tetterton               36         Vice President of Operations
Creighton R. Schneck               51         Vice President of Development
James C. Baughman, Jr.             34         Chief Financial Officer & Treasurer
</TABLE>

DIRECTORS AND EXECUTIVE OFFICERS

             Norwood Cowgill, Jr. is the Chairman of the Board of Directors and
Chief Executive Officer of the Company, and founded the Company's Predecessor
Entities in 1985. Prior to 1985, Mr. Cowgill was a real estate developer in
Lexington, Kentucky, who was active in various aspects of real estate,
including subdivision of land, construction of single family housing,
conversion of apartments to condominiums, and construction, ownership,
management and renovation of multi-housing communities. Mr. Cowgill has been a
director of the Company since 1994.

             Michael J. Moriarty has been employed by the Company since August,
1996, and is the President, Chief Operating Officer as well as a Director.
Prior to joining the Company, Mr. Moriarty was the Brand Vice President for
Fairfield Inn by Marriott, where he worked for approximately fifteen years.
Other positions he held at Marriott include Vice President Operations and Vice
President Finance and Development for Residence Inn by Marriott.

             William E. Anderson II has been employed by the Company since
January, 1995, and is the Company's Executive Vice President, Secretary and
General Counsel as well as a Director. Before joining the Company, Mr. Anderson
served as Senior Vice President, Secretary and General Counsel of Long John
Silver's Restaurants, Inc. and its predecessor, Jerrico, Inc., positions he
held from October, 1984, until January, 1995. Mr. Anderson has been a director
of the Company since 1995.

             Warren W. Rosenthal is a private investor. From 1963 to 1985, Mr.
Rosenthal served as Chairman of the Board of Directors, President and Chief
Executive Officer of Jerrico, Inc. and, from 1985 to 1989, served as Chairman
of the Board of Directors of Jerrico, Inc., which owned or



                                       31


<PAGE>   32



franchised approximately 1,500 restaurants. Mr. Rosenthal presently serves on
the Board of Directors of Immunomedics, Inc. where he serves as a member of the
Compensation, Finance and Nomination Committees. Mr. Rosenthal has been a
director of the Company since 1994.

             Daniel W. Daniele serves as Executive Vice President of Motels
of America, Inc. a position has held since September 1994. From March, 1991, to
September, 1994, Mr. Daniele was National Hospitality Director and Principal
for the consulting practice of Ernst & Young, L.L.P. Mr. Daniele has been a
director of the Company since 1995.

             Richard W. Furst, Ph.D. has served as the Dean and Professor of
Finance of the Carol Martin Gatton College of Business and Economics at the
University of Kentucky since 1981. Dr. Furst serves on the Board of Trustees of
Armada Funds. He also serves as a consultant to several private companies and
non-profit organizations. Dr. Furst has been a director of the Company since
1994.

             Thomas P. Dupree is President of Dupree and Company, Inc., an
investment advisory firm, a position he has held since 1970. Since 1979, Mr.
Dupree has also been President and a trustee of Dupree Mutual Funds, managing a
portfolio of municipal and government bonds. Mr.
Dupree has been a director of the Company since 1994.

             Michael L. Tetterton has been Vice President of Operations of the
Company since January, 1994. Before joining the Company, Mr. Tetterton was a
Southeast regional manager for Residence Inn by Marriott, overseeing the
operation of various Marriott-managed properties in North Carolina, South
Carolina, Alabama and Mississippi from 1990 to 1993. From 1988 to 1990, he was
a district manager for Residence Inn by Marriott for North Carolina, South
Carolina, Florida and Georgia.

             Creighton R. Schneck has been Vice President of Development since
September, 1996. Since 1995 and prior to joining the Company, Mr. Schneck was
Director of Development for Tishman Speyer Properties and was responsible for
development of residential and commercial real estate projects. From 1990 to
1994 Mr. Schneck was a Principal of Palisades Realty and Development which was
engaged in the development of retail office space. Since 1993, Mr. Schneck has
served as a director of Mid-Atlantic Medical Services, Inc.

             James C. Baughman, Jr. has been associated with the Company since
September, 1994 and is Chief Financial Officer and Treasurer of the Company.
Before joining the Company, Mr. Baughman served as Senior Trust Officer for The
Vine Street Trust Company from 1993 to 1994, and as a Trust Officer for Bank
One, Lexington, NA from 1988 to 1993. Mr. Baughman also served as an adjunct
instructor in the Department of Business and Economics of Transylvania
University from 1992 to 1994. Mr. Baughman is Mr. Cowgill's son-in-law.

             There is no arrangement or understanding between any officer and
any other person regarding any executive officer being selected as an officer.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

             Section 16(a) of the Exchange Act requires executive officers and
directors of the Company and persons who beneficially own more than 10 percent
of the Company's Common Stock to file with the Commission certain reports, and
to furnish copies thereof to the Company, with respect to each such person's
beneficial ownership of the Company's equity securities. Based solely



                                       32


<PAGE>   33



upon a review of the form copies of such persons, the Company's executive
officers and directors have complied with the applicable reporting requirements
except that Messrs. Cowgill and Baughman filed one Form 4 late.

ITEM 11.  EXECUTIVE COMPENSATION

             The following table sets forth certain information concerning the
compensation paid to the Company's executive officers (the "Named Executive
Officers") whose salary and bonus compensation exceeded $100,000 for the years
ended December 31, 1996, 1995 or 1994.

<TABLE>
<CAPTION>
                                                                                                          Other Annual
                                                                                                          Compensation
Name and Principal Position                              Year       Salary($)        Bonus($)             ($)(1)(2)
---------------------------                              ----       ----------       ---------            -----------
<S>                                                      <C>         <C>               <C>                     <C>
Norwood Cowgill, Jr.                                     1996        150,000             --                    --
     Chairman of the Board                               1995         73,797             --                    --
     and Chief Executive Officer                         1994        100,000             --                    --

Michael J. Moriarty                                      1996         66,923           50,000                  --
     President and Chief Operating Officer

William E. Anderson, II                                  1996        125,000           25,000                  --
     Executive Vice President,                           1995        113,450           25,000                  --
     Secretary and General Counsel

Michael L. Tetterton                                     1996        100,000           50,000                  --
     Vice President of Operations                        1995         98,961           50,000                  --
                                                         1994         78,500           70,000                  --
James C. Baughman, Jr.                                   1996        100,000           50,000                  --
     Chief Financial Officer and Treasurer               1995         37,693           25,000                  --
</TABLE>

(1)  The aggregate amount of perquisites and personal benefits for Messrs.
     Cowgill, Moriarty, Anderson, Tetterton and Baughman for the years ended
     December 31, 1996, 1995 and 1994 did not exceed the lesser of (a) $50,000
     or (b) 10% of their respective annual salary and bonus for the fiscal
     years presented.

(2)  All other compensation for Messrs. Cowgill, Moriarty, Anderson, Tetterton
     and Baughman consists of an auto allowance.

OPTION GRANTS

          The following table sets forth information regarding grants of stock
options to the Named Executive Officers during 1996 pursuant to the 1995 Plan.
Options to acquire 396,502 shares of Common Stock were granted under the 1995
Plan during 1996. No separate stock appreciation rights ("SARs") were granted
during 1996.


                                       33


<PAGE>   34



<TABLE>
<CAPTION>
                                                                     INDIVIDUAL GRANTS
                                                                     -----------------
                                 Number of        % of Total                                           Potential Realizable Value 
                                 Securities          Options                                            at Assumed Annual Rates   
                                 Underlying         Granted to         Exercise                           of Stock Price  
                                  Options         Employees in           Price            Expiration      Apreciation for   
Name                              Granted        Fiscal Year (1)      Per Share (6)         Date            Option Term (2)       
----                              -------        ---------------      ------------          ----       ---------------------------
<S>                               <C>                <C>               <C>                  <C>         <C>          <C>       
                                                                                                           5%            10% 
Michael J. Moriarty               150,000 (3)        37.8%             $15.75               8/22/06     $1,486,500   $  3,765,000
Creighton R. Schneck               75,000 (4)        18.9%             $15.25              11/11/06     $  719,250   $  1,822,500
James C. Baughman, Jr.             75,000 (5)        18.9%             $20.83               5/28/06     $  982,500   $  2,490,000
</TABLE>



(1)       Includes options to acquire an aggregate of 96,502 shares granted to 
          11 other employees of the Company during 1996.

(2)       Represents potential realizable value at assumed annual rates of 
          appreciation over the exercise price of the options for the option 
          term.

(3)       Thirty-three percent of such options became exercisable on August 22,
          1996, grant date. An additional one-third of such options will become
          exercisable on August 22 of each of the two years thereafter. The
          options are exercisable for ten years from the grant date.

(4)       Twenty-five percent of such options become exercisable on November
          11, 1997, and an additional twenty-five percent of such options will
          become exercisable on November 11 of each of the three years
          thereafter. The options are exercisable for ten years from the grant
          date.

(5)       Twenty-five percent of such options become exercisable on May 28,
          1997, and an additional twenty- five percent of such options will
          become exercisable on May 28 of each of the three years thereafter.
          The options are exercisable for ten years from the grant date.

(6)       The exercise price equals the closing market price on the date of 
          grant.

1995 YEAR-END OPTION VALUE TABLE

          The following table sets forth certain information with respect to
the value of unexercised "in-the-money" options held by the Named Executive
Officers of the Company at December 31, 1996. No options were exercised by the
Named Executive Officers of the Company during 1996.

<TABLE>
<CAPTION>
                                            Number of Securities                      Value of Unexercised
                                           Underlying Unexercised                   In-The-Money Options at
Name                                         Options at 12/31/96                            12/31/96

                                           Exercisable        Unexercisable          Exercisable       Unexercisable
                                                 #                    #                   $                  $
                                           ------------       -------------         ------------       -------------
<S>                                            <C>                  <C>               <C>                    <C>    
Norwood Cowgill, Jr.                           300,000                --              1,725,000                --
Michael J. Moriarty                             50,000              100,000               --                   --
William E. Anderson II                          28,125               84,375             161,719              485,156
Michael L. Tetterton                            28,125               84,375             122,719              368,157
Creighton R. Schneck                              --                 75,000                                   37,500
James C. Baughman, Jr.                           9,376              103,124              23,926               71,775
</TABLE>

(1)       The value of unexercised "in-the-money" options is based on the
          difference between the December 31, 1996, closing price of the
          Company's Common Stock of $15.75 as reported by The Nasdaq Stock
          Market, on which the Company's Common Stock trades, and the exercise
          price of the options.

COMPENSATION OF DIRECTORS

          Each non-employee director serving at the time of the Company's IPO
was awarded 750 shares of Common Stock and each non-employee director was
granted options to purchase 15,000 shares of Common Stock at an exercise price
equal to the closing price of a share of the Company's Common Stock on the date
of their election to the Board of Directors, or for the directors serving at
the time of the IPO, the price of a share of common stock in the IPO. Each
non-employee director



                                       34


<PAGE>   35



also is paid a $10,000 annual retainer paid quarterly, plus $500 for each Board
of Directors meeting attended, $250 for each committee meeting attended and
$250 for each telephonic Board of Directors or committee meeting attended. In
addition, the Company reimburses all directors for their out-of-pocket expenses
incurred in connection with their service on the Board of Directors. Messrs.
Cowgill, Moriarty and Anderson receive no compensation as directors, other than
reimbursement for out-of-pocket expenses incurred in connection with attendance
at meetings of the Board of Directors.

EMPLOYMENT AGREEMENTS, UNDERSTANDINGS, NON-COMPETE AGREEMENTS AND EMPLOYEE
COMPENSATION

          In June, 1995, Mr. Cowgill entered into an employment agreement (the
"Cowgill Employment Agreement") with the Company. Pursuant to the Cowgill
Employment Agreement, Mr. Cowgill serves as Chairman of the Board of Directors
and Chief Executive Officer of the Company. The Cowgill Employment Agreement
provides for initial annual base compensation of approximately $150,000,
subject to any increase in base compensation approved by the Compensation
Committee of the Board of Directors. The Cowgill Employment Agreement provides
for a term of approximately two years from the closing of the IPO, subject to
earlier termination in the event of death, disability or other termination. The
Cowgill Employment Agreement also provides that Mr. Cowgill may voluntarily
terminate his employment with the Company upon 90 days written notice but would
remain subject to the non-compete provisions of the Cowgill Employment
Agreement. The Cowgill Employment Agreement provides for certain severance
payments in the event of death or disability or upon termination of employment
by the Company without cause and, after a Change in Control of the Company (as
defined in the Cowgill Employment Agreement). In addition, the Cowgill
Employment Agreement contains certain non-compete covenants which prohibit Mr.
Cowgill from managing or developing any extended stay hotels during the term of
employment with the Company and for a period of two years thereafter.

          In July, 1996, Mr. Moriarty who is a director, President and Chief
Operating Officer of the Company, entered into an employment agreement (the
"Moriarty Employment Agreement") with the Company. The Moriarty Employment
Agreement provides for an annual salary of approximately $200,000, subject to
any increase in base salary approved by the Compensation Committee of the Board
of Directors. The Moriarty Employment Agreement provides for a term of
approximately two and one-half years, expiring December 31, 1998, subject to
earlier termination in the event of death, disability or other termination. The
Moriarty Employment Agreement also provides that Mr. Moriarty may voluntarily
terminate his employment with the Company upon 90 days written notice but would
remain subject to the non-compete provisions of the Moriarty Employment
Agreement. The Moriarty Employment Agreement provides for certain severance
payments in the event of death or disability or upon termination of employment
by the Company without Cause, as defined in the agreement. In addition, Mr.
Moriarty is entitled to a lump-sum payment of $300,000 in the event his
employment with the Company continues through August 21, 2001, or he is
terminated by the Company without Cause prior to August 31, 2001; earlier
Voluntary Termination will entitle Mr. Moriarty to a pro-rated payment between
$15,000 and $60,000. The Moriarty Employment Agreement contains certain
non-compete covenants which prohibit Mr. Moriarty from managing or developing
any extended stay hotels during the term of employment with the Company and for
a period of two years thereafter.

          Messrs. Anderson, Tetterton, Schneck and Baughman have entered into
non-compete agreements with the Company, which provide that if each such
executive officer voluntarily terminates his employment, such executive officer
shall not for a period of two years thereafter serve



                                       35


<PAGE>   36



as an officer, director, owner or in any other capacity in an extended stay
hotel within 300 miles of a StudioPLUS hotel. If such executive officer's
employment is terminated by the Company, the Company may elect to put in effect
the non-compete provision described above for any period of time between 6
months and 24 months by so advising such executive officer within 14 days of
his termination date and paying that executive officer during such period an
amount equal to the higher of his rate of weekly salary in effect when the
agreement was entered into or his weekly salary at the time of termination of
his employment.

          Salaries for the other Named Executive Officers of the Company are
Mr. Anderson - $125,000, Mr. Tetterton - $100,000, and Mr. Schneck - $150,000,
Mr. Baughman - $125,000 subject to any increase approved by the Compensation
Committee of the Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

          The Compensation Committee consists of Warren W. Rosenthal, Chairman,
Richard W. Furst, Thomas P. Dupree and Daniel W. Daniele. All Compensation
Committee members are non-employee directors and none has any direct or
indirect material interest in or a relationship with the Company, other than as
less than one percent (1%) shareholders and as related to his position as a
director. During 1996, none of the executive officers of the Company served on
the board of directors or compensation committee of any other entity, whose
executive officers served on the Compensation Committee or Board of the
Company.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

          The following table sets forth the beneficial ownership of shares of
Common Stock as of February 28, 1997, for (i) directors of the Company, (ii)
the Chief Executive Officer and each of the Named Executive Officers, (iii) the
directors and officers of the Company as a group, and (iv) each person who is a
shareholder of the Company holding more than a 5% interest in the Company.
Unless otherwise indicated in the footnotes, all such interests are owned
directly, and the indicated person or entity has sole voting and disposition
power. The number of shares represents (a) the number of shares of Common Stock
the person beneficially owns plus (b) the number of shares issuable upon
exercise of currently exercisable options.

                                       Amount and Nature of Beneficial Ownership

<TABLE>
<CAPTION>
                                                              Number of
Beneficial Owners(1)                                           Shares           Percent of Class
---------------------                                          ------           ----------------
<S>                                                           <C>                      <C>   
Norwood Cowgill, Jr.(2)                                       1,755,927                13.50%
1999 Richmond Road, Suite 4
Lexington, Kentucky 40502

Cohen & Steers Capital                                        1,641,100                12.61%
Management, Inc.
757 Third Avenue
New York, New York 10017
</TABLE>



                                       36


<PAGE>   37




<TABLE>
<S>                                                           <C>                     <C>   
Putnam Investments, Inc.                                      1,522,104               11.70%
One Post Office Square
Boston, Massachusetts 02109

T. Rowe Price Associates, Inc                                   802,900                6.20%
100 E. Pratt Street
Baltimore, Maryland 21202

William E. Anderson II(3)                                        93,750                 * 
Michael L. Tetterton(4)                                          79,830                 * 
Michael J. Moriarty(5)                                           50,000                 * 
James C. Baughman, Jr.(6)                                        74,215                 * 
Warren W. Rosenthal(7)                                           23,250                 * 
Thomas P. Dupree(7)                                              12,750                 * 
Richard W. Furst(7)                                               9,750                 * 
Daniel W. Daniele(8)                                              3,750                 * 
Creighton R. Schneck                                              1,000                 * 
                                                              ---------               -----
Total for all directors and
executive officers as a group
(ten persons)(2)(3)(4)(5)
(6)(7)(8)                                                     6,070,326               46.65%
                                                              =========               ===== 
</TABLE>

*    Represents less than 1% of the outstanding shares of Common Stock

(1)  Unless otherwise indicated, the address of such person is c/o Studio Plus
     Hotels, Inc., 1999 Richmond Road, Suite 4, Lexington, Kentucky 40502.

(2)  Includes 300,000 shares subject to options granted to Mr. Cowgill under
     the 1995 Plan exercisable at $10.00 per share. All such options are
     currently exercisable. Also includes 470,000 shares owned by Cowgill
     Partners, L.P., a limited Partnership controlled by Mr. Cowgill and
     certain of his family members.

(3)  Includes 56,250 shares issuable to Mr. Anderson upon the exercise of
     options which are currently exercisable at an exercise price of $10.00 per
     share.

(4)  Includes 37,500 shares issuable to Mr. Tetterton upon the exercise of
     options of which 18,750 are exercisable at $10.00 per share and an
     additional 18,750 are exercisable at $13.67 per share.

(5)  Includes 50,000 shares issuable to Mr. Moriarty upon the exercise options
     which are currently exercisable at an exercise price of $15.75 per share.

(6)  Includes 13,125 shares issuable to Mr. Baughman upon the exercise of
     options of which 7,500 are exercisable at $10.00 per share and 5,624 are
     exercisable at $15.33 per share. Mr. Baugman's balance also includes
     29,590 shares owned by Mrs. Baughman, as to which he disclaims beneficial
     ownership. Mr Baughman's balance also includes 30,000 shares held in a
     Cowgill family trust of which he is co-trustee.

(7)  Includes 7,500 shares issuable to each to Messrs. Rosenthal, Dupree and
     Furst upon the exercise of options which are currently exercisable at an
     exercise price of $10.00 per share.

(8)  Includes 3,750 shares issuable to Mr. Daniele upon the exercise of options
     which are currently exercisable at an exercise price of $14.42 per share.

         In connection with the Merger of the Company with ESA as discussed in
Item 7 of this report on Form 10-K, Mr. Cowgill has entered into a stockholder
agreement (the "Stockholder Agreement") with ESA. The terms of the Stockholder
Agreement provide that Mr. Cowgill may not sell, transfer, pledge, encumber or
otherwise dispose of his shares of Studio Plus Hotels, Inc. Common Stock (the
"Cowgill Shares"). In addition, ESA is granted an option to


                                       37


<PAGE>   38



purchase all of the Cowgill Shares at a purchase price of $25.00 per share. The
Stockholder Agreement also permits certain executive officers of ESA to
represent and to vote the Cowgill Shares with respect to the merger.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  During the year ended December 31, 1996, the Company's executive officers,
directors and nominees for director did not have significant business relations
with the Company.



                                       38


<PAGE>   39



                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON

          FORM 8-K

(A) INDEX TO FINANCIAL STATEMENTS

  1.  Financial Statements:

      The financial statements filed as part of this report are listed on the
  Index to Financial Statements on page 15.

  2.  Financial Statement Schedules:

      -27- Financial Data Schedule (for SEC use only).

(B) REPORTS ON FORM 8-K

      No reports on Form 8-K were filed during the fourth quarter of 1995.

(C) EXHIBITS

EXHIBIT
NUMBER
-------
 2.1 Agreement and Plan of Merger dated as of January 16, 1997, by and among
     Studio Plus Hotels, Inc. and Extended Stay America, Inc. (previously filed
     as Exhibit 2 to the Company's Current Report on Form 8-K dated January 16,
     1997, and incorporated by reference hereto).
    
 3.1 Amended and Restated Articles of Incorporation of the Registrant
     (previously filed as Exhibit 3.1(b) to Registration Statement on Form S-1
     (Registration No. 33-87836) and incorporated by reference hereto).
    
 3.2 First Amended and Restated By-Laws of the Registrant (previously filed as
     Exhibit 3.2(b) to Registration Statement on Form S-1 (Registration No.
     33-87836) and incorporated by reference hereto).
    
 4.1 Form of Rights Agreement Between Studio Plus Hotels, Inc. and Bank One,
     Indianapolis, NA. (previously filed as Exhibit 4.2 to Registration
     Statement on Form S- 1 (Registration No. 33-87836) and incorporated by
     reference hereto).
    
 4.2 Form of Amendment and Substitution Agreement to Rights Agreement among
     Studio Plus Hotels, Inc., Bank One, Indianapolis N.A. and Fifth Third Bank
     (previously filed as Exhibit 4.3 to Registration Statement on Form S-1
     (Registration No. 333-1864) and incorporated by reference hereto).

*4.3 Form of Amendment No. 2 to Rights Agreement among Studio Plus Hotels,
     Inc., and Fifth Third Bank.



                                       39


<PAGE>   40




*10.1  Employment Agreement and Offer Letter between the Company and Michael J.
       Moriarty.

*10.2  Confidentiality and Non-Compete Agreement between the Company and
       Creighton R. Schneck.
       
 10.3  Trademark Assignment Agreement between Studio Plus, Inc. and Studio Plus
       of America, Inc. (previously filed as Exhibit 10.29 to Registration
       Statement on Form S-1 (Registration No. 33-87836) and incorporated by
       reference hereto).

 10.4  Indemnification Agreement among Studio Plus of America, Inc., Studio Plus
       Properties, Inc. and Norwood Cowgill, Jr. (previously filed as Exhibit
       10.29 to Registration Statement on Form S-1 (Registration No. 33-87836)
       and incorporated by reference hereto).

 10.5  Studio Plus Hotels, Inc. 1995 Stock Incentive Plan (previously filed as
       Exhibit 10.29 to Registration Statement on Form S-1 (Registration No.
       33-87836) and incorporated by reference hereto).
     
 10.6  Studio Plus Hotels, Inc. Non-Employee Directors' Stock Incentive Plan
       (previously filed as Exhibit 10.29 to Registration Statement on Form S-1
       (Registration No. 33- 87836) and incorporated by reference hereto).
     
 10.7  Revolving Credit Loan Agreement between Studio Plus Hotels, Inc., Studio
       Plus Properties, Inc. and Bank One, Lexington, NA dated as of May 23, 
       1995 (previously filed as Exhibit 10.33 to Registration Statement on 
       Form S-1 (Registration No. 333- 1864) and incorporated by reference 
       hereto).
     
 10.8  First Amendment to Revolving Credit Loan Agreement between Studio Plus
       Hotels, Inc., Studio Plus Properties, Inc. and Bank One, Lexington, NA
       dated as of May 23, 1995 (previously filed as Exhibit 10.33(a) to
       Registration Statement on Form S-1 (Registration No. 333-1864) and
       incorporated by reference hereto).
     
 10.9  Second Amendment to Revolving Credit Loan Agreement between Studio Plus
       Hotels, Inc., Studio Plus Properties, Inc. and Bank One, Lexington, NA
       dated as of February 28, 1996 (previously filed as Exhibit 10.33(b) to
       Registration Statement on Form S-1 (Registration No. 333-1864) and
       incorporated by reference hereto).

 10.10 Form of Indemnification Agreement between Studio Plus Hotels, Inc. and
       its directors and officers (previously filed as Exhibit 10.34 to
       Registration Statement on Form S-1 (Registration No. 33-87836) and
       incorporated by reference hereto).
      
 10.11 Employment Agreement between Studio Plus, Inc. and Norwood Cowgill, Jr.
       (previously filed as Exhibit 10.35 to Registration Statement on Form S-1
       (Registration No. 33-87836) and incorporated by reference hereto).
      
 10.12 Confidentiality and Non-Compete Agreement between the Company and William
       E. Anderson, II dated October 26, 1995 (previously filed as Exhibit 10.36
       to Registration


                                       40


<PAGE>   41



      Statement on Form S-1 (Registration No. 333-1864) and incorporated by
      reference hereto).

10.13 Confidentiality and Non-Compete Agreement between the Company and
      Benjamin A. Keam dated October 26, 1995 (previously filed as Exhibit 10.37
      to Registration Statement on Form S-1 (Registration No. 333-1864) and
      incorporated by reference hereto).

10.14 Confidentiality and Non-Compete Agreement between the Company and Michael
      L. Tetterton dated October 26, 1995 (previously filed as Exhibit 10.38 to
      Registration Statement on Form S-1 (Registration No. 333-1864) and
      incorporated by reference hereto).

10.15 Confidentiality and Non-Compete Agreement between the Company and James
      C. Baughman, Jr. dated October 26, 1995 (previously filed as Exhibit 10.39
      to Registration Statement on Form S-1 (Registration No. 333-1864) and
      incorporated by reference hereto).
 
10.16 Form of Canadian Trademark Assignment Agreement between Studio Plus, Inc.
      and Studio Plus Hotels, Inc. (previously filed as Exhibit 10.36 to
      Registration Statement on Form S-1 (Registration No. 33-87836) and
      incorporated by reference hereto).

10.17 Registration Rights Agreement between Studio Plus Hotels, Inc. and
      Affiliated Shareholders (previously filed as Exhibit 10.37 to Registration
      Statement on Form S-1 (Registration No. 33-87836) and incorporated by
      reference hereto).

10.18 Merger Agreement among Studio Plus at Greensboro, Inc., Studio Plus
      Hotels, Inc. and Studio Plus Properties, Inc. (previously filed as Exhibit
      10.41 to Registration Statement on Form S-1 (Registration No. 33-87836)
      and incorporated by reference hereto).

10.19 Form of Amendment to Merger Agreement between Subchapter S Predecessor
      Entities, Studio Plus Properties, Inc. and Studio Plus Hotels, Inc.
      (previously filed as Exhibit 10.42 to Registration Statement on Form S-1
      (Registration No. 33-87836) and incorporated by reference hereto).

10.20 Form of Second Amendment to Merger Agreement between Studio Plus, Inc.
      and Studio Plus Hotels, Inc. (previously filed as Exhibit 10.43 to
      Registration Statement on Form S-1 (Registration No. 33-87836) and
      incorporated by reference hereto).

10.21 Form of First Amendment to Exchange Agreement among Norwood Cowgill, Jr.,
      Walker L. Newton and Studio Plus Hotels, Inc. (previously filed as Exhibit
      10.44 to Registration Statement on Form S-1 (Registration No. 33-87836)
      and incorporated by reference hereto).

10.22 Form of First Amendment to Exchange Agreement among Norwood Cowgill, Jr.,
      Walker L. Newton and Studio Plus Hotels, Inc. (previously filed as Exhibit
      10.45 to Registration Statement on Form S-1 (Registration No. 33-87836)
      and incorporated by reference hereto).


                                       41


<PAGE>   42



 10.23 Form of Amendment to Exchange Agreement among W&W, Inc. Studio Plus North
       Lindbergh, Inc. and Studio Plus Hotels, Inc. (previously filed as Exhibit
       10.46 to Registration Statement on Form S-1 (Registration No. 33-87836)
       and incorporated by reference hereto).
      
 10.24 Form of Amendment to Exchange Agreement among Myrtle Redevelopment
       Corporation, Studio Plus at Westport, Inc. and Studio Plus Hotels, Inc
       (previously filed as Exhibit 10.47 to Registration Statement on Form S-1
       (Registration No. 33-87836) and incorporated by reference hereto).

*11.1  Computation of Earnings Per Share.

 21.1  List of subsidiaries (previously filed as Exhibit 21.1 to the 1995 
       Current Report on Form 10-K dated March 18, 1996 and incorporated by 
       reference hereto).

*23.1  Consent of Coopers & Lybrand L.L.P.

*27    Financial Data Schedule (for SEC use only).

* Filed herewith



                                       42


<PAGE>   43



SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereto duly authorized.

                              STUDIO PLUS HOTELS, INC.
                              a Virginia Corporation
                              (Registrant)

                              By:      /s/ NORWOOD COWGILL, JR
                                       ----------------------------------
                                       Norwood Cowgill, Jr.
                                       Chairman of the Board of Directors
                                       and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          SIGNATURE                               TITLE                                   DATE
          ---------                               -----                                   ----
<S>                                        <C>                                        <C>
    /s/ NORWOOD COWGILL, JR.               Chairman of the Board of                   March 4, 1997
--------------------------------           Directors and Chief Executive 
         Norwood Cowgill, Jr.              Officer                       
                                           

    /s/ RICHARD W. FURST                   Director                                   March 4, 1997
--------------------------------
        Richard W. Furst

                                           Director                                   March 4, 1997
--------------------------------
        Thomas P. Dupree

                                           Director                                   March 4, 1997
--------------------------------
        Warren W. Rosenthal

                                           Director                                   March 4, 1997
--------------------------------
        Daniel W. Daniele

/s/ Michael J. Moriarty                    Director, President and Chief              March 4, 1997
--------------------------------           Operating Officer   
        Michael J. Moriarty                
</TABLE>



                                       43


<PAGE>   44




<TABLE>
<S>                                                 <C>                                        <C>
    /s/ WILLIAM E. ANDERSON, JR.                    Director, Executive Vice                   March 4, 1997
--------------------------------                    President, Secretary and  
        William E. Anderson, Jr.                    General Counsel           
                                                                              

    /s/ JAMES C. BAUGHMAN, JR.                      Chief Financial Officer and                March 4, 1997
---------------------------------                   Treasurer (Principal Financial    
        James C. Baughman, Jr.                      Officer)                          
                                                                                      

    /s/ DONALD F. VITTITOW                          Vice President, Controller
---------------------------------                   (Principal Accounting Officer)             March 4, 1997
        Donald F. Vittitow                                      
</TABLE>


                                       44