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 September 30, 1996
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
SEPTEMBER 30, 1996 AND 1995
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - September 30, 1996 and December 31, 1995 2
Statement of Operations - Nine Months Ended
September 30, 1996 and 1995 3
Statement of Changes in Partners' Equity -
Nine Months Ended September 30, 1996 and 1995 4
Statement of Cash Flows - Nine Months Ended
September 30, 1996 and 1995 5
Notes to Financial Statements 6
Management Discussion and Analysis 7 - 8
Other Information and Signatures 9 - 10
<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Balance Sheet
September 30, 1996 and December 31, 1995
9/30/96 12/31/95
ASSETS ----------- ----------
Current Assets:
Cash and temporary investments $ 1,052,981 $ 631,200
Accounts receivable 118,636 94,659
Prepaid expenses 39,330 22,662
----------- -----------
Total current assets 1,210,947 748,521
----------- -----------
Property and Equipment:
Capital improvements
Buildings 5,223,252 5,223,252
Furniture and equipment 1,083,675 1,061,233
----------- -----------
6,306,927 6,284,485
Accumulated depreciation (4,611,285) (4,438,559)
----------- -----------
Property and equipment, net 1,695,642 1,845,926
----------- -----------
Other Assets: 22,075 23,663
----------- -----------
Total Assets $ 2,928,664 $ 2,618,110
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Current portion of note payable $ 26,403 $ 25,862
Accounts payable and accrued liabilities 226,775 151,535
----------- -----------
Total current liabilities 253,178 177,397
----------- -----------
Long - Term Liabilities:
Note payable 940,978 960,709
----------- -----------
Total liabilities 1,194,156 1,138,106
----------- -----------
Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 64,901 58,480
Limited Partners 1,669,607 1,421,524
----------- -----------
Total partners' equity 1,734,508 1,480,004
----------- -----------
Total Liabilities and Partners' Equity $ 2,928,664 $ 2,618,110
=========== ===========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Statement of Operations
For the Nine Months Ending September 30, 1996 and 1995
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
9/30/96 9/30/96 9/30/95 9/30/95
----------- ----------- ----------- -----------
Income:
Guest room $ 1,086,417 $ 2,774,285 $ 1,034,421 $ 2,642,652
Telephone and vending 27,402 64,320 24,961 55,609
Interest 7,209 17,994 5,030 11,449
Other 6,172 20,701 19,254 24,617
----------- ----------- ----------- -----------
Total Income 1,127,200 2,877,300 1,083,666 2,734,327
----------- ----------- ----------- -----------
Expenses:
Motel operating expense
(Note 2) 600,366 1,734,956 623,860 1,767,691
General and administration 17,461 62,640 17,330 64,893
Depreciation and amor-
tization 60,973 189,416 64,461 194,850
Interest 20,603 62,221 21,138 63,804
Property management fees 56,093 143,007 53,036 135,268
Partnership management 15,278 43,056 13,889 41,667
----------- ----------- ----------- -----------
Total Expenses 770,774 2,235,296 793,714 2,268,173
----------- ----------- ----------- -----------
Net Income (Loss) $ 356,426 $ 642,004 $ 289,952 $ 466,154
=========== =========== =========== ===========
Net Income (Loss) Allocable
to General Partners $3,564 $6,420 $2,900 $4,662
=========== =========== =========== ===========
Net Income (Loss) Allocable
to Limited Partners $352,862 $635,584 $287,052 $461,492
=========== =========== =========== ===========
Net Income (Loss)
per Partnership Unit $71.29 $128.40 $57.99 $93.23
=========== =========== =========== ===========
Distribution to Limited Partners
per Partnership Unit $27.50 $77.50 $25.00 $75.00
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements
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<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Statement of Changes in Partners' Equity
For the Nine Months Ending September 30, 1996 and 1995
1996 1995
----------- -----------
General Partners:
Balance at beginning of year $ 58,480 $ 53,172
Net income (loss) 6,420 4,662
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Balance at end of period 64,900 57,834
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Limited Partners:
Balance at beginning of year 1,421,524 1,396,049
Net income (loss) 635,584 461,492
Distributions to limited partners (387,500) (375,000)
----------- -----------
Balance at end of period 1,669,608 1,482,541
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Total balance at end of period $ 1,734,508 $ 1,540,375
=========== ===========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Statement of Cash Flows
For the Nine Months Ending September 30, 1996 and 1995
1996 1995
----------- -----------
Cash flows from operating activities:
Received from motel revenues $ 2,851,544 $ 2,728,039
Expended for motel operations and
general and administrative expenses (1,938,415) (1,983,664)
Interest received 16,779 9,482
Interest paid (62,357) (63,929)
----------- -----------
Net cash provided by operating activities 867,551 689,928
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Cash flows from investing activities:
Purchases of property and equipment (42,080) (34,083)
Proceeds from sales of property and equipment 3,000 -
----------- -----------
Net cash provided (used) by investing activities (39,080) (34,083)
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Cash flows from financing activities:
Principal payments on notes payable (19,190) (17,617)
Distributions paid to limited partners (387,500) (375,000)
----------- -----------
Net cash provided (used) by financing activities (406,690) (392,617)
----------- -----------
Net increase (decrease) in cash
and temporary investments 421,781 263,228
Cash and Temporary Investments:
Beginning of period 631,200 502,138
----------- -----------
End of period $ 1,052,981 $ 765,366
=========== ===========
Reconciliation of net income to net cash provided by operating activities:
Net income (loss) $ 642,004 $ 466,154
----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 189,416 194,850
(Gain) loss on sale of property 1,536
(Increase) decrease in accounts receivable (8,977) 3,194
(Increase) decrease in prepaid expenses (16,668) (15,178)
Increase (decrease) in accounts payable
and accrued liabilities 60,240 40,908
----------- -----------
Total adjustments 225,547 223,774
----------- -----------
Net cash provided by
operating activities $ 867,551 $ 689,928
=========== ===========
The accompanying notes are an integral part of the finacial statements.
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<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Notes to Financial Statements
September 30, 1996
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 finan-
cial statements for the year ended December 31, 1995 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
the period.
Property Management Fees $ 143,007
Franchise Fees $ 55,545
Partnership Management Fees $ 43,056
Note 2:
The following table summarizes the major components of motel operating
expenses for the periods reported:
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
9/30/96 9/30/96 9/30/95 9/30/95
----------- ----------- ----------- -----------
Salaries and related costs $ 208,354 $ 589,170 $ 210,518 $ 591,267
Rent 47,482 139,878 46,389 139,168
Franchise and advertising 60,702 177,651 58,920 172,006
Utilities 53,721 124,988 52,870 128,935
Allocated costs,
mainly indirect salaries 62,280 202,455 67,580 197,800
Replacements and renovations 6,905 34,290 26,781 102,944
Other operating expenses 160,922 466,526 160,802 435,571
----------- ----------- ----------- -----------
Total motel operating
expenses $ 600,366 $ 1,734,958 $ 623,860 $ 1,767,691
=========== =========== =========== ===========
The following additional material contingencies are required to be restated in
the 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
September 30, 1996
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has current assets of $1,210,947 which exceed its current
liabilities of $253,178 by $957,769. This surplus provides an operating reserve
equal to 19.2% of the Partnership's original capital raised. While the Partner-
ship agreement has no reserve requirement, the General Partner has set a
$250,000 target (5% of the Partnership's original capitalization).
As shown on the Statement of Cash Flows for the nine months ended September 30,
1996, the Partnership's cash resources increased by $421,781 during the period
covered by this report as compared with an increase of $263,228 during the
corresponding period of the preceding fiscal year. Other than operating cash
flow, additional borrowing against the properties is the only realistic source
of cash in the unlikely event that reserves do not satisfy the Partnership's
future cash requirements.
Due to the improved performance of the Partnership's motels, the General
Partners expect to increase the quarterly distribution from $27.50 per units
to $30.00 per unit starting with the fourth distribution of 1996 to be made on
or around November 15, 1996.
During the nine month period covered by this report, the Partnership's
expenditures for replacements and renovation totaled $65,221 or 2.4% of guest
room revenues. Included in the total renovations and replacements was $22,241
in lobby and guest room carpet, $3,192 in air conditioning units, $2,059 in
sundeck repairs, $2,620 in replacement bedspreads and $17,743 for interior and
exterior painting and repairs of the South San Francisco property. The annual
partial replacement of guest room carpets is expected in the fourth calendar
quarter.
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.
RESULTS OF OPERATIONS
The following is a comparison of the first nine months of the fiscal year
ending December 31, 1996 with the corresponding period of the preceding fiscal
year.
Total income increased $142,973 or 5.2%. The major revenue item, guest room
revenue, increased $131,633 or 5.0%, due to an average rate increase from
$44.24 in 1995 to $46.36 in 1996. This increase was offset by a decrease in
the occupancy rate from 67.3% in 1995 to 67.2% in 1996.
- 7 -
<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Management Discussion and Analysis
of Financial Condition and Results of Operation
September 30, 1996 (Continued)
The San Francisco motel achieved a net increase in room revenue due to
increased room nights in the leisure market segment. The Sacramento motel
experienced a slight decrease in occupancy due to reduced demand in the leisure
and government market segments, which was partially offset by increased demand
in the corporate and discount market segments. The Modesto motel experienced
reduced or static demand in the all market segments.
Total expenses decreased $32,877 or 1.4% during the nine months of the fiscal
year ended September 30, 1996 as compared to the corresponding period of the
previous fiscal year. The expenses are substantially unchanged from the
previous fiscal year due to the unchanged occupancy.
FUTURE TRENDS
The General Partners anticipate a slightly improved economic climate for 1996
as compared with the previous fiscal year. The South San Francisco market,
which traditionally generated 40% of the Partnership's room revenue, has
recovered from its depressed condition. The General Partners have determined
that a continuing cost control strategy 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 continue to benefit the Partnership through the
fiscal quarter covered by this report.
Prior to 1995 the Sacramento property had significant occupancy from the
McClellan Air Force Base. In 1995 the base added 30 rooms to its on-base
transient housing. This reduced the motels demand in 1995 and in 1996. The
facility was added to the 1995 base closing list. The remaining room nights
generated from this source will decline as the base operations are phased out
through 1997. The actual closing activity and the future use of the facility
should generate some business for the Sacramento motel.
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.
- 8 -
<PAGE>
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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None
Item 2. Changes in Securities
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None
Item 3. Defaults upon Senior Securities
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None
Item 4. Submission of Matters
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None
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
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None
-9-
<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
11-11-96 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
11-11-96 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,052,981
<SECURITIES> 0
<RECEIVABLES> 118,636
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,210,947
<PP&E> 6,306,927
<DEPRECIATION> 4,611,285
<TOTAL-ASSETS> 2,928,664
<CURRENT-LIABILITIES> 253,178
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,734,508
<TOTAL-LIABILITY-AND-EQUITY> 2,928,664
<SALES> 2,838,605
<TOTAL-REVENUES> 2,877,300
<CGS> 1,734,956
<TOTAL-COSTS> 1,734,956
<OTHER-EXPENSES> 438,119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,221
<INCOME-PRETAX> 642,004
<INCOME-TAX> 0
<INCOME-CONTINUING> 642,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 642,004
<EPS-PRIMARY> 128.40
<EPS-DILUTED> 128.40
</TABLE>
