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, 1997
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, 1997 AND 1996
<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1997 and December 31, 1996 2
Statement of Operations - Six Months Ended
June 30, 1997 and 1996 3
Statement of Changes in Partners' Equity -
Six Months Ended June 30, 1997 and 1996 4
Statement of Cash Flows - Six Months Ended
June 30, 1997 and 1997 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
June 30, 1997 and December 31, 1996
6/30/97 12/31/96
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ASSETS
Current Assets:
Cash and temporary investments $ 778,903 $ 1,058,309
Accounts receivable 137,093 122,841
Prepaid expenses 29,398 24,463
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Total current assets 945,394 1,205,613
---------- ----------
Property and Equipment:
Buildings 5,223,252 5,223,252
Furniture and equipment 1,094,573 1,049,769
---------- ----------
6,317,825 6,273,021
Accumulated depreciation (4,732,613) (4,620,543)
---------- ----------
Property and equipment, net 1,585,212 1,652,478
---------- ----------
Other Assets: 18,900 20,488
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Total Assets $ 2,549,506 $ 2,878,579
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Current portion of note payable $ 29,366 $ 28,148
Accounts payable and accrued liabilities 219,351 167,471
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Total current liabilities 248,717 195,619
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Long - Term Liabilities:
Note payable 917,567 932,561
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Total liabilities 1,166,284 1,128,180
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 72,012 66,559
Limited Partners 1,311,210 1,683,840
---------- ----------
Total partners' equity 1,383,222 1,750,399
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Total Liabilities and Partners' Equity $ 2,549,506 $ 2,878,579
========== ==========
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 Six Months Ending June 30, 1997 and 1996
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
6/30/97 6/30/97 6/30/96 6/30/96
----------- ----------- ----------- -----------
Income:
Guest room $ 1,083,984 $ 1,995,705 $ 940,014 $ 1,687,868
Telephone and vending 21,648 43,350 19,449 36,918
Interest 10,293 20,360 5,685 10,786
Other 12,863 21,707 8,314 14,529
---------- ---------- ---------- ----------
Total Income 1,128,788 2,081,122 973,462 1,750,101
---------- ---------- ---------- ----------
Expenses:
Motel operating expenses
(Note 2) 612,479 1,188,866 586,934 1,133,837
General and administrative 15,915 44,549 18,704 45,179
Depreciation and
amortization 62,873 124,364 64,040 128,443
Interest 20,172 40,491 20,741 41,617
Property management fees 55,655 102,807 48,332 86,913
Partnership management fees 18,056 34,722 13,889 27,778
---------- ---------- ---------- ----------
Total Expenses 785,150 1,535,799 752,640 1,463,767
---------- ---------- ---------- ----------
Net Income (Loss) $ 343,638 $ 545,323 $ 220,822 $ 286,334
========== ========== ========== ==========
Net Income (Loss) Allocable
to General Partners $3,436 $5,453 $2,208 $2,863
======== ======== ======== ========
Net Income (Loss) Allocable
to Limited Partners $340,202 $539,870 $218,614 $283,471
======== ======== ======== ========
Net Income (Loss)
per Partnership Unit $68.04 $107.97 $43.72 $56.69
======== ======== ======== ========
Distribution to Limited Partners
per Partnership Unit $152.50 $182.50 $25.00 $50.00
======== ======== ======== ========
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 Six Months Ending June 30, 1997 and 1996
6/30/97 12/31/96
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General Partners:
Balance at beginning of year $ 66,559 $ 58,480
Net income (loss) 5,453 2,863
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Balance at end of period 72,012 61,343
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Limited Partners:
Balance at beginning of year 1,683,840 1,421,524
Net income (loss) 539,870 283,471
Distributions to limited partners (912,500) (250,000)
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Balance at end of period 1,311,210 1,454,995
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Total balance at end of period $ 1,383,222 $ 1,516,338
========== ==========
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 Six Months Ending June 30, 1997 and 1996
1997 1996
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Cash flows from operating activities:
Received from motel revenues $ 2,046,551 $ 1,713,822
Expended for motel operations and
general and administrative expenses (1,323,900) (1,260,786)
Interest received 20,319 10,823
Interest paid (40,589) (41,707)
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Net cash provided by operating activities 702,381 422,152
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Cash flows from investing activities:
Purchases of property and equipment (55,511) (41,699)
Proceeds from sales of property and equipment - 3,000
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Net cash provided (used) by investing activities (55,511) (38,699)
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Cash flows from financing activities:
Principal payments on notes payable (13,776) (12,657)
Distributions paid to limited partners (912,500) (250,000)
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Net cash provided (used) by financing activities (926,276) (262,657)
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Net increase (decrease) in cash
and temporary investments (279,406) 120,796
Cash and Temporary Investments:
Beginning of period 1,058,309 631,200
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End of period $ 778,903 $ 751,996
========== ==========
Reconciliation of net income to net cash provided by operating activities:
Net income (loss) $ 545,323 $ 286,334
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Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 124,364 128,443
(Gain) loss on sale of property - 1,536
(Increase) decrease in accounts receivable (14,252) (25,456)
(Increase) decrease in prepaid expenses (4,935) (16,567)
Increase (decrease) in accounts payable
and accrued liabilities 51,881 47,862
---------- ----------
Total adjustments 157,058 135,818
---------- ----------
Net cash provided by
operating activities $ 702,381 $ 422,152
========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Motels, Ltd.
(A California Limited Partnership)
Notes to Financial Statements
For the Six Months Ending June 30, 1997 and 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
financial statements for the year ended December 31, 1996 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 $ 102,807
Franchise Fees $ 39,914
Partnership Management Fees $ 34,722
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
6/30/97 6/30/97 6/30/96 6/30/96
----------- ----------- ----------- -----------
Salaries and related costs $ 209,029 $ 408,523 $ 190,912 $ 380,552
Rent 48,125 96,036 46,198 92,397
Franchise and advertising 54,142 99,785 47,029 84,436
Utilities 44,565 86,152 38,580 70,266
Allocated costs,
mainly indirect salaries 66,470 132,635 71,447 140,175
Replacements and renovations 8,620 18,524 16,792 27,385
Other operating expenses 181,528 347,211 175,976 338,626
---------- ---------- ---------- ----------
Total motel operating
expenses $ 612,479 $ 1,188,866 $ 586,934 $ 1,133,837
========== ========== ========== ==========
The following additional material contingencies are required to be restated in
interim reports under federal securities law: None.
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<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1997
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has current assets of $945,394 which exceed its current
liabilities of $248,717 by $696,677. This surplus provides an operating reserve
equal to 13.9% 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).
As shown on the Statement of Cash Flows for the six months ended June
30, 1997, the Partnership's cash resources decreased by $279,406 during the
period covered by this report as compared with an increase of $120,796 during
the corresponding period of the preceding fiscal year. The decrease in net cash
flow is primarily due to a special, non-recurring $600,000 distribution. Cash
provided by operating activity grew by $280,229 during the six months covered by
this report as compared to the previous 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.
During the six month period covered by this report, the Partnership's
expenditures for replacements and renovation totaled $74,035 or 3.7% of guest
room revenues. The Partnership spent $33,228 on washers for the South San
Francisco and Sacramento properties, $4,166 for furniture repairs at the South
San Francisco property, $5,504 for bedspreads at all three properties and $5,111
for replacement air-conditioning units.
RESULTS OF OPERATIONS
The following is a comparison of the first six months of the fiscal
year ending December 31, 1997 with the corresponding period of the preceding
fiscal year.
Total income increased $331,021 or 18.9%. The major revenue item, guest
room revenue, increased $307,837 or 18.2%, due to an average rate increase from
$45.17 in 1996 to $47.65 in 1997 and an occupancy rate increase from $63.2% in
1996 to 71.2% in 1997. All three motel achieved increases in both the average
daily room rate in the average occupancy rate. The South San Francisco motel
achieved 65% of the increased guest room revenues. The South San Francisco
markets achieved higher patronage in all market segments with the highest
increases in the leisure and the corporate market segments. The Sacramento
property achieved a similar increase in its average occupancy rate and a minimal
increase in its average room rate. The Modesto motel had substantially unchanged
occupancy rates, but was able to achieve higher room rates due to improved
market conditions.
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<PAGE>
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1997 (Continued)
Total expenses increased $72,032 or 4.9% during the first six months of
the fiscal year ending December 31, 1997 as compared to the corresponding
quarter of the previous fiscal year. This increase is attributable to the
increase in guest room occupancy.
FUTURE TRENDS
The General Partners anticipate an improved economic climate for 1997
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.
The Sacramento property had significant occupancy from the McClellan
Air Force Base. The facility was added to the 1995 base closing list. The room
nights generated from this source will decline as the base operations are phased
out through 2002. 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.
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<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
--------------------------------
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
8-12-97 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
8-12-97 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
-10-
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 778,903
<SECURITIES> 0
<RECEIVABLES> 137,093
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 945,394
<PP&E> 6,317,825
<DEPRECIATION> 4,732,613
<TOTAL-ASSETS> 2,549,506
<CURRENT-LIABILITIES> 248,717
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,311,210
<TOTAL-LIABILITY-AND-EQUITY> 2,549,506
<SALES> 2,039,055
<TOTAL-REVENUES> 2,081,122
<CGS> 1,188,866
<TOTAL-COSTS> 1,188,866
<OTHER-EXPENSES> 306,442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,491
<INCOME-PRETAX> 545,323
<INCOME-TAX> 0
<INCOME-CONTINUING> 545,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 545,323
<EPS-PRIMARY> 107.97
<EPS-DILUTED> 107.97
</TABLE>
