SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
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For the Period ended June 30, 1995
Commission File 0-8913
SUPER 8 MOTELS, LTD
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94 - 2514354
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 J Street
Sacramento, California 95814
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Address of principal executive offices Zip Code
Registrant's telephone number,
including area code (916) 442 - 9183
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 XX No
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<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1995 and December 31, 1994 2
Statement of Operations - Six Months Ended
June 30, 1995 and 1994 3
Statement of Changes in Partners' Equity -
Six Months Ended June 30, 1995 and 1994 4
Statement of Cash Flows - Six Months Ended
June 30, 1995 and 1994 5
Notes to Financial Statements 6
Management Discussion and Analysis 7 - 10
Other Information and Signatures 11 - 12
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
BALANCE SHEET
JUNE 30, 1995 AND DECEMBER 31, 1994
1995 1994
---- ----
ASSETS
Current Assets:
Cash and temporary investments $ 542,828 $ 502,138
Accounts receivable 61,767 89,647
Prepaid expenses 32,067 21,343
---------- ----------
Total current assets 636,662 613,128
Property and Equipment:
Buildings 5,189,887 5,189,887
Furniture and equipment 1,034,740 1,007,199
---------- ----------
6,224,627 6,197,086
Accumulated depreciation and amortization (4,335,218) (4,208,270)
---------- ----------
Property and equipment, Net 1,889,409 1,988,816
---------- ----------
Other Assets: 25,250 26,838
---------- ----------
Total Assets $ 2,551,321 $ 2,628,782
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Current portion of note payable $ 24,790 $ 23,761
Accounts payable and accrued liabilities 177,196 169,243
---------- ----------
Total current liabilities 201,986 193,004
Long - Term Liabilities:
Note payable 973,913 986,557
---------- ----------
Total liabilities 1,175,899 1,179,561
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Partners' Equity:
General Partners 54,934 53,172
Limited Partners 1,320,488 1,396,049
---------- ----------
Total partners' equity 1,375,422 1,449,221
---------- ----------
Total Liabilities and Partners' Equity $ 2,551,321 $ 2,628,782
========== ==========
The accompanying notes are an integral part of the financial statements
-2-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Three Months Six Months Three Months Three Months
Ended Ended Ended Ended
6/30/95 6/30/95 6/31/94 6/31/94
------------ ------------ ---------- -----------
Income:
Guest room $ 883,889 $ 1,608,232 $ 817,988 $ 1,532,622
Telephone and vending 16,773 30,647 17,224 30,968
Interest 3,373 6,419 1,406 3,088
Other 2,847 5,363 2,081 4,002
----------- ----------- ---------- -----------
Total Income 906,882 1,650,661 838,699 1,570,680
Expenses:
Motel operating expenses
(Note 2) 617,487 1,143,831 555,427 1,090,191
General and administrative 16,436 47,563 14,033 43,337
Depreciation & amortization 64,264 130,390 65,870 133,950
Interest 21,278 42,666 21,745 43,603
Property management fees 45,179 82,232 41,664 78,085
Partnership management fee 13,889 27,778 13,889 27,778
----------- ----------- ---------- -----------
Total Expenses 778,533 1,474,460 712,628 1,416,944
----------- ----------- ---------- -----------
Net Income (Loss) $ 128,349 $ 176,201 $ 126,071 $ 153,736
=========== =========== ========== ===========
Net Income (Loss) Allocable
to General Partners $1,283 $1,762 $1,261 $1,537
=========== =========== ========== ===========
Net Income (Loss) Allocable
to Limited Partners $127,066 $174,439 $124,810 $152,199
=========== =========== ========== ===========
Net Income (Loss)
per Partnership Unit $25.67 $35.24 $25.21 $30.75
=========== =========== ========== ===========
Distribution to Limited Partners
per Partnership Unit $25.00 $50.00 $25.00 $50.00
=========== =========== ========== ===========
The accompanying notes are an integral part of the financial statements
-3-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
1995 1994
General Partners:
Balance at beginning of year $ 53,172 $ 48,461
Net income (loss) 1,762 1,537
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Balance at end of period 54,934 49,998
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Limited Partners:
Balance at beginning of year 1,396,049 1,429,691
Net income (loss) 174,439 152,199
Less: Cash distributions to
Limited Partners (250,000) (250,000)
----------- -----------
Balance at end of period 1,320,488 1,331,890
----------- -----------
Total balance at end of period $ 1,375,422 $ 1,381,888
=========== ===========
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
1995 1994
Cash flows from operating activities:
Received from motel revenues $ 1,672,721 $ 1,566,693
Expended for motel operations and
general and administrative expenses (1,304,093) (1,247,188)
Interest received 5,820 3,058
Interest paid (42,748) (43,679)
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Net cash provided by operating activities 331,700 278,884
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Cash flows from investing activities:
Purchases of property and equipment (29,395) (19,516)
Proceeds from sale of equipment 950
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Net cash provided (used) by investing activities (29,395) (18,566)
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Cash flows from financing activities:
Principal payments on notes payable (11,615) (10,685)
Distributions paid to limited partners (250,000) (250,000)
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Net cash provided (used) by financing (261,615) (260,685)
activities ------------- -----------
Net increase (decrease) in cash
and temporary investments 40,690 (367)
Cash and Temporary Investments:
Beginning of period 502,138 360,751
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End of period $ 542,828 $ 360,384
============== ===========
Reconciliation of net income to net cash provided by operating activities:
Net income (loss) $ 176,201 $ 153,736
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 130,390 133,950
Gain on sale of property (950)
(Increase) decrease in accounts receivable 27,880 (929)
(Increase) decrease in prepaid expenses (10,724) (8,375)
(Increase) decrease in other assets 551
Increase (decrease) in accounts payable
and accrued liabilities 7,953 901
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Total adjustments 155,499 125,148
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Net cash provided by
operating activities $ 331,700 $ 278,884
============ ===========
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
Note 1:
-------
The attached interim financial statements include all adjustments which are,
in the opinion of management, necessary to a fair statement of the results for
the period presented.
Users of these interim financial statements should refer to the audited
financial statements for the year ended December 31, 1994 for a complete
disclosure of significant accounting policies and practices and other detail
necessary for a fair presentation of the financial statements.
In accordance with the partnership agreement, the following information is
presented related to fees paid or accrued to the General Partner or affiliates
for the period.
Property Management Fees $ 82,232
Franchise Fees $ 32,205
Partnership Management Fees $ 27,778
Note 2:
-------
The following table summarizes the major components of motel operating
expenses for the periods reported:
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
6/30/95 6/30/95 6/30/94 6/30/94
----------- ---------- ---------- ----------
Salaries and related costs $ 192,784 $ 380,749 $ 202,466 $ 397,818
Rent 46,389 92,779 45,717 90,230
Utilities 38,902 76,064 35,009 69,805
Allocated costs,
mainly indirect salaries 66,827 130,220 60,989 120,749
Other operating expenses 272,585 464,019 211,246 411,589
---------- ---------- ---------- ----------
Total motel operating
expenses $ 617,487 $1,143,831 $ 555,427 $1,090,191
========== ========== ========== ==========
The following additional material contingencies are required to be restated
in interim reports under federal securities law: None.
-6-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1995
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has current assets of $636,662 which exceed its
current liabilities of $201,986 by $434,676. This surplus provides an
operating reserve equal to 8.7% of the Partnership's original capital
raised. While the Partnership agreement has no reserve requirement,
the General Partner has set a $250,000 target (5% of the Partnership's
original capitalization). Recurring seasonal cash flows have resulted
in slight depletions and subsequent replenishments of the target operating
reserve. the Limited Partners have received a stable distribution of
$125,000 per quarter rather than reduced amounts after the slower winter
quarter, offset by slightly increased distribution amounts after the
summer quarter.
As shown on the Statement of Cash Flows for the six months ended
June 30, 1995, the Partnership's cash resources increased by $40,690 during
the period covered by this report as compared with a decrease of $367 during
the corresponding period of the preceding fiscal year, which is an improvement
pof $41,057. Other than operating cash flow, additional borrowing against
Other properties is the only realistic source of cash in the unlikely event that
reserves do not satisfy the Partnership's future cash requirements.
During the first six months of this fiscal year, the Partnership's
expenditures for replacement and renovation (which include both capitalized
replacements of personal property and certain non-recurring repairs and
refurbishment to both real and personal property) amounted to approximately
$106,391 (of which $29,395 was capitalized). These expenditures represent
6.6% of guest room revenues. The General Partner's guideline for this type
of expenditure is 3% of annual guest room revenue. For operational efficiency,
essentially all of this year's improvements were performed during the first
two calendar quarters when occupancy is at its lowest point. The General
Partner expects that the amounts expended during the whole of calendar 1995
will not exceed their guideline.
No further significant renovation or replacement expenditures are
anticipated during the remainder of the current fiscal year. The General
Partner has decided to continue to fund long life replacements from cash
flow rather than using leases as the rate spread between potential interest
income and typical lease rates is too great. The Partnership will continue
this policy while operational cash flow can satisfy operating needs, the
current level of distributions to Limited Partners and the minor replacements
and refurbishment necessary to maintain the properties in acceptable
condition.
-7-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1995
(Continued)
-----------------------------------------------
NEW ACCOUNTING STANDARDS
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed OF, requires the Partnership to
disclose information about potential impairment to the value of long-lived
assets. The Partnership is not required to adopt and does not currently
plan to adopt SFAS No. 121 until its fiscal year ending December 31, 1996.
The Partnership does not expect to make any disclosures about impairment
of long-lived assets under SFAS No. 121.
RESULTS OF OPERATIONS
The following is a comparison of the first six months of the fiscal
year ending December 31, 1995 with the corresponding period of the preceding
fiscal year.
Occupancy Percentage
1995 1994
Current Year to Current Year to
Quarter Date Quarter Date
------- ------- ------- -------
South
San Francisco 66.6% 62.9% 59.0% 58.4%
Sacramento 63.9% 57.9% 67.9% 65.1%
Modesto 74.3% 72.8% 72.1% 69.3%
Combined 67.5% 63.4% 65.7% 63.7%
Average Room Rate
1995 1994
Current Year to Current Year to
Quarter Date Quarter Date
------- ------- ------- -------
South
San Francisco $49.28 $47.88 $48.50 $47.10
Sacramento $41.44 $40.16 $37.47 $35.95
Modesto $41.73 $40.94 $41.32 $40.64
Combined $44.31 $43.14 $42.08 $40.89
Total income increased by $79,981 or 5.1%. The major revenue item,
guest room revenue, increased $75,610 or 4.9%, due to an increase in the
combined average room rate during the first six months of 1995 as compared
to the corresponding period of the previous fiscal year.
-8-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1995
(Continued)
-----------------------------------------------
The increases in the South San Francisco and Modesto occupancy rates
were offset by the decline in the Sacramento occupancy rate. The South San
Francisco motel has achieved a substantial increase in business from the
corporate and group market segment. The Modesto motel derived its occupancy
increase from the leisure market segment. The decrease in occupancy at the
Sacramento property due to a 50% decline in the room nights provided by the
McClellan Air Force Base. The base installed 30 additional rooms to its
supply of on-base transient housing. Partially offsetting the loss of
military rooms was an increase in the number of leisure rooms rented.
The Partnership has been able to achieve average room rate increases
in each of its three markets. The general market conditions in both of the
San Francisco and Modesto markets has enabled the properties to reduce
acceptance of discounted business and in favor of higher-rate corporate and
leisure business. The Sacramento motel has achieved an increase in its leisure
business while experiencing a decrease in its discounted military business.
Sacramento's guest room revenue is actually higher than that achieved in the
corresponding quarter of the previous fiscal year and is basically unchanged
for the six month period covered by this report.
Total expenses increased $57,516, or 4.1%. Motel operating expenses,
the major expense component, increased by $53,640, or 4.9%. Included within
the increased expenditures is a replacement roof for the Sacramento property
in the amount of $21,517. The other increased expenses are due primarily to
cost inflation.
FUTURE TRENDS
The General Partners anticipate slightly improved market conditions
for 1995 as compared with the previous fiscal year. The South San Francisco
market, which traditionally generated 40% of the Partnership's room revenue,
has substantially recovered from the recessionary conditions of the last two
years. The General Partners have determined that cost control efforts will
provide the best immediate return to the Partnership. The major components
of the cost control program were in place by December 31, 1993 and have
in significant increases in profitability.
The Sacramento property historically has had significant occupancy
from the McClellan Air Force Base. The Base added 30 additional rooms to
its transit housing during 1994 which has had a negative effect on the
Sacramento property's occupancy. The inclusion of the McClellan Air Force
Base on the 1995 Department of Defense base closing list will have an
additional negative effect on the property's future occupancy sometime after
negative effect on the property's future occupancy sometime
1996 when base operations begin to wind down.
-9-
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1995
(Continued)
------------------------------------------------
In the opinion of Management, these financial statements reflect all
adjustments which were necessary to a fair statement of results for the
interim periods presented. All adjustments are of a normal recurring nature.
-10-
<PAGE>
PART II. OTHER INFORMATION
----------------------------
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters
---------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
-11-
<PAGE>
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SUPER 8 MOTELS, LTD
8-10-95 By /S/ David P. Grotewohl
-------------------------
Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
8-10-95 By /S/ David P. Grotewohl
-------------------------
Date David P. Grotewohl,
Chief Financial Officer
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 542,828
<SECURITIES> 0
<RECEIVABLES> 61,767
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 636,662
<PP&E> 6,224,627
<DEPRECIATION> 4,335,218
<TOTAL-ASSETS> 2,551,321
<CURRENT-LIABILITIES> 201,986
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,375,422
<TOTAL-LIABILITY-AND-EQUITY> 2,551,321
<SALES> 1,638,879
<TOTAL-REVENUES> 1,650,661
<CGS> 1,143,831
<TOTAL-COSTS> 1,143,831
<OTHER-EXPENSES> 287,963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,666
<INCOME-PRETAX> 176,201
<INCOME-TAX> 0
<INCOME-CONTINUING> 176,201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 176,201
<EPS-PRIMARY> 35.24
<EPS-DILUTED> 0
</TABLE>
