FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission
File
Number
March 28, 1997 0-9708
SUPER 8 MOTELS TEXAS, LTD.
(Exact name of registrant as specified in its charter)
State of Organization TEXAS IRS Identification No.
74-2062237
P. O. Box 969, Rockwall, TX 75087-0969
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972)
771-6783
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 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
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SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
March 28, 1997
CONTENTS
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statement of Operations
Three Months ended March 28, 1997 and
March 29, 1996 4
Statement of Partners' Equity 5
Statement of Cash Flows
Three Months ended March 28, 1997 and
March 29, 1996 6
Notes of Financial Statements 7 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS 10 - 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING 12
ITEM 2. CHANGES IN SECURITIES 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SUPER 8 MOTELS TEXAS. LTD.
(A Limited Partnership)
BALANCE SHEETS
March 28, 1997 and December 27, 1996
ASSETS 1997 1996
Unaudited
CURRENT ASSETS
Cash $67,154 $37,456
Accounts Receivable, net
of allowance for doubtful
accounts of $10,000 in 1997
and $10,046 in 1996 85,885 92,328
Prepaid expenses 15,721 20,503
Total current assets 168,760 150,287
PROPERTY AND EQUIPMENT
Land 769,800 769,800
Building and
improvements 2,539,443 2,539,443
Furniture and equipment 471,626 471,626
3,780,869 3,780,869
Accumulated Depreciation 1,221,828 1,183,972
2,559,041 2,596,897
OTHER ASSETS 26,271 26,943
$2,754,072 $2,774,127
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current portion of
mortgage payable $ 45,000 $ 45,000
Accounts payable 64,366 59,188
Sales tax payable 38,447 35,837
Property taxes payable 11,593 49,446
Accrued compensation 12,159 21,791
Accrued interest payable 1,301 1,251
Total current liabilities 172,866 212,513
MORTGAGE PAYABLE,
less current portion 270,588 281,838
PARTNERS' EQUITY 2,310,618 2,279,776
$2,754,072 $2,774,127
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
March 28, 1997 and March 29, 1996
(Unaudited)
1997 1996
AVERAGE ROOM RATE $38.24 $38.69
OCCUPANCY PERCENTAGE 87.9% 82.8%
Revenues
Room rentals 385,279 367,080
Other 17,505 17,109
402,784 384,189
Expenses
Departmental:
Rooms 107,403 105,502
Other 5,608 6,940
General and administrative 66,774 67,795
Sales 12,268 12,912
Franchise fees 33,135 31,331
Utilities 30,598 26,094
Maintenance & Repair 25,744 33,669
Management fees 22,974 20,155
Depreciation 37,856 34,070
Amortization 703 703
Property taxes 12,519 9,774
Insurance 7,634 7,560
Interest 8,726 10,323
371,942 366,828
NET INCOME (LOSS) $ 30,842 $ 17,361
The accompanying notes are an integral part of this
statement.
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SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
FOR THE THREE MONTH PERIODS ENDED
March 27, 1997 and March 29, 1996
(Unaudited)
General Limited
Partners Partners Total
Balance -
December 29, 1995 $(18,446) $2,332,944 $2,314,498
Net Income (Loss) -
Three Months Ended
March 29, 1996 174 17,187 17,361
Balance - March 29, 1996 $(18,272) $2,350,131 $2,331,859
Balance -
December 27, 1996 $(18,793) $2,298,569 $2,279,776
Net Income (Loss) -
Three Months Ended
March 28, 1997 308 30,534 30,842
Balance -
March 28, 1997 $(18,485) $2,329,103 $2,310,618
The accompanying notes are an integral part of this
statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENT OF CASH FLOWS
Three Months Ended March 28, 1997 and March 29, 1996
(Unaudited)
1997 1996
Cash flows from
operating activities
Net income (loss) $ 30,842 $ 17,361
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities
Depreciation and amortization 38,559 34,773
Change in operating assets and
liabilities
Accounts receivable 6,443 2,751
Prepaid expenses 4,782 7,560
Other assets (31) 8,487
Accounts payable 5,178 24,662
Sales tax payable 2,610 6,336
Property taxes payable (37,853) (28,190)
Accrued compensation (9,632) (3,870)
Accrued interest 50 (294)
Net cash provided by (used in)
operating activities 40,948 69,576
Cash flows from financing
activities
Payments made on mortgage payable (11,250) (11,250)
Net cash provided by (used in)
financing activities (11,250) (11,250)
Cash flows from investing
activities
Property additions (45,739)
Net cash provided by (used in)
investing activities (45,739)
NET INCREASE (DECREASE) IN
CASH 29,698 12,587
Cash at beginning of year 37,456 48,744
Cash at end of period $67,154 $ 61,331
Interest paid during the period $ 8,676 $ 10,617
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in
the preparation of the accompanying financial statements
follows.
Depreciation
Depreciation is provided in amounts sufficient to relate the
cost of depreciable assets to operations over their
estimated service lives by the straight-line method.
Accelerated methods of depreciation are used for tax
purposes.
Federal Income Taxes
Federal income taxes (benefits) are not reflected in the
financial statements as the partners individually report
their distributive shares of the taxable income or loss of
the Partnership.
Fiscal Year
The Partnership's fiscal year ends on the Friday nearest
December 31. Fiscal years 1997 and 1996 are comprised of
fifty-three and fifty-two week periods, respectively.
NOTE B - PARTNERSHIP AGREEMENT
The Partnership was formed under the laws of the State of
Texas in September 1979. The Partnership was organized to
develop and operate nonspecified "budget" hotels in Texas.
Allocation of cash distributions and income (losses) are 99%
and 1%, respectively, to limited partners and general
partners.
The general partners have an option which expires in 1999 to
purchase a special 20% limited partner interest for
$500,000.
Franchise Fees
Effective June 30, 1994, the partnership received approval
from Ramada Franchise Systems, Inc. to operate the facility
as a Ramada Limited hotel for a term of fifteen years
subject to Ramada having the right to terminate the license
without cause effective on the fifth anniversary of the
license. Prior to June 30, 1994, the Partnership paid to
Super 8 Motels, Inc. monthly fees equal to 4% of its gross
room revenue and contributed an additional 1% of its gross
room revenues to an advertising fund administered by the
franchisor. Effective June 30, 1994, the Partnership will
pay to Ramada Franchise Systems, Inc. monthly fees equal to
3.5% of its gross room revenue for the first twelve months
from the effective date of the Ramada license and 4% of its
gross room revenue beginning in the thirteenth month through
the balance of the license term. In addition, the
partnership must contribute 4.5% of its gross room revenue
to Ramada Inter-National Association for marketing,
reservation systems and other assessments. Franchise fees
were $33,135 and $31,331 for the three months ended March
28, 1997 and March 29, 1996, respectively.
NOTE C - RELATED PARTY TRANSACTIONS
Management Fees
An affiliate of one of the former General Partners managed
the hotel for the Partnership until May 31, 1989. The fee
for this service was 5% of gross operating revenues from
Partnership operations. This management fee was payable
monthly; however, three-fifths of the management fee was
deferred until receipt by the Limited Partners of a
cumulative 10% per annum pre-tax return on their adjusted
capital contributions. During 1994 this obligation was
written off because it was determined that it was unlikely
to require payment in the future.
On June 1, 1989, an affiliate of one of the current General
Partners assumed management of the hotel. For its services,
the management company receives a base management fee equal
to the greater of three percent (3%) of the Gross Revenues
of the hotel or $36,000 per year. In addition to the base
management fee, the management company receives an incentive
management fee equal to ten percent (10%) of Gross Operating
Profit. For the three months ended March 28, 1997 and March
29, 1996, management fees were $22,974 and $20,155,
respectively. Additionally, accounting service fees paid to
another affiliate of a general partner were $7,000 for the
three months ended March 28, 1997 and March 29, 1996,
respectively. Expense reimbursements to a general partner
for expenses incurred were $5,442 and $4,433 for the three
months ended March 28, 1997 and March 29, 1996,
respectively.
NOTE D - SIGNIFICANT CUSTOMER
The Partnership's revenues for the three months ended
March 28, 1997 and March 29, 1996 include amounts from a
single customer of approximately $62,199 and $4,475,
respectively.
NOTE E - MORTGAGE PAYABLE
In April 1994, the partnership entered into a mortgage note
agreement to borrow $450,000 from a financial institution.
The proceeds of this loan were used to complete the
renovation of the facility to comply with the Ramada license
requirements. Under terms of the agreement, the partnership
is required to make monthly principal installments of $3,750
and interest on the outstanding principal balance at 2%
above the financial institution's prime lending rate. The
mortgage note is collateralized by the hotel's property and
equipment. As of March 28, 1997, the outstanding principal
balance was $315,588, with a current portion of $45,000.
All unpaid principal is due in 2004. The payee may demand
payment of the outstanding balance of the note on the six
year, seven year, eight year and nine year anniversary dates
of the note.
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SUPER 8 MOTELS TEXAS, LTD.
Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Opinion of Management
In the opinion of management, the accompanying unaudited
financial statements reflect all adjustments (consisting
only of normal recurring adjustments) necessary to present
fairly the financial position as of March 28, 1997 and March
29, 1996, and the results of operation and its cash flows
for the periods then ended.
Liquidity
The General Partners believe that the Partnership's
liquidity, defined as its ability to generate adequate
amounts of cash to meet its cash needs, is satisfactory. The
Partnership's primary source of liquidity is its revenue
from operations, the cash provided from the sale of its
restaurant in 1990 and the proceeds of the mortgage note
incurred to finance the renovation of the hotel. The
Partnership actively negotiated with the lessee of the
restaurant building to sell the building to such lessee.
Such sale took place on September 14, 1990. The contract
sale price was $500,000. This sale provided a cash infusion
to the property of $445,000 which was used to pay off
delinquent taxes of $137,605, current taxes on the
restaurant through September 14, 1990 of $14,160 and a
$22,000 bank loan secured by the lease. As of March 28,
1997, the Partnership had cash and other current assets in
the amount of $168,760 compared to $131,745 at March 29,
1996. Current liabilities were $172,860 at March 28,1997,
compared to $204,980 at March 29, 1996.
Capital Resources
The partnership spent approximately $62,636, $6,606 and
$451,000 in capital improvements to the hotel's facilities
in 1996, 1995 and 1994, respectively. The partnership has
not purchased any capital improvements for the hotel during
the first three months of 1997. The partnership expects to
spend an additional $40,000 in capital expenditures during
the balance of this year if cash flow is available to fund
the expenditures. The hotel is now operating in full
compliance with the Ramada Limited standards.
Results of Operations
The Partnership's hotel average occupancy rate for the three
month period ended March 28, 1997, was 87.9% compared to
82.8% for the three month period ended March 29, 1996. The
average daily room rate for the three month period ended
March 28, 1997, was $38.24 compared to $38.69 for the three
month period ended March 29,1996. Room Revenue for the
three month period ended March 28, 1997 was $385,279
compared to $367,080 for the three month period ended March
29, 1996.
The airline employee and airline related lodging resulted in
daily room rentals of approximately 54.0% of the hotel's 126
rooms for the three month period ended March 28, 1997,
compared to 35.8.0% for the three month period ended March
29, 1996.
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SUPER 8 MOTELS TEXAS, LTD.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
Item 2. CHANGES IN SECURITIES
There have been no changes in securities for the three
months ended March 28, 1997.
Item 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities and accordingly, there are no
defaults for the three months ended March 28, 1997.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders for
the three months ended March 28, 1997.
Item 5. OTHER INFORMATION
There is no other information to report for the three months
ended March 28, 1997.
Item 6. EXHIBITS AND REPORT OF FORM 8-K
There are no exhibits or reports on Form 8-k to be filed
with this Form 10-Q.
SIGNATURE
Pursuant to the requirements of the Securities 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 TEXAS, LTD.
(REGISTRANT)
S/S
Martin J. Cohen, General Partner
