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, 1996
Commission File 0-9218
SUPER 8 MOTELS II, LTD
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94 - 2574309
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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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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1996 and September 30, 1995 2
Statement of Operations - Nine Months Ended
June 30, 1996 and 1995 3
Statement of Changes in Partners' Equity -
Nine Months Ended June 30, 1996 and 1995 4
Statement of Cash Flows - Nine Months Ended
June 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 II, LTD.
(A California Limited Partnership)
BALANCE SHEET
JUNE 30, 1996 AND SEPTEMBER 30, 1995
6/30/96 9/30/95
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ASSETS
Current Assets:
Cash and temporary investments $ 489,947 $ 453,839
Accounts receivable 5,674 17,785
Prepaid expenses 11,087 27,303
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Total Current Assets 506,708 498,927
--------- ---------
Property and Equipment:
Capital Improvements 34,947 34,947
Buildings 1,845,878 1,845,878
Furniture and equipment 487,886 466,449
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2,368,711 2,347,274
Accumulated depreciation and amortization (1,735,022) (1,673,284)
--------- ---------
Property and Equipment, Net 633,689 673,990
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Total Assets $1,140,397 $1,172,917
========= =========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 80,296 $ 84,276
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Total Liabilities 80,296 84,276
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Partners' Equity:
General Partners 46,060 46,345
Limited Partners 1,014,041 1,042,296
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Total Partners' Equity 1,060,101 1,088,641
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Total Liabilities and Partners' Equity $1,140,397 $1,172,917
========= =========
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
6/30/96 6/30/96 6/30/95 6/30/95
Income: --------- --------- --------- ---------
Guest room $ 223,383 $ 544,570 $ 213,769 $ 535,093
Telephone and vending 3,775 9,290 2,175 6,277
Interest 3,707 11,726 2,515 6,615
Other 881 1,203 225 798
--------- --------- --------- ---------
Total Income 231,746 566,789 218,684 548,783
--------- --------- --------- ---------
Expenses:
Motel operating expenses
(Note 2) 158,199 500,546 177,299 505,006
General and administrative expense 5,290 27,273 5,325 28,690
Depreciation and amortization 21,362 67,510 23,323 72,218
--------- ---------- --------- ---------
Total Expenses 184,851 595,329 205,947 605,914
--------- ---------- --------- ---------
Net Income (Loss) $ 46,895 $ (28,540) $ 12,737 $ (57,131)
========= ========= ========= =========
Net Income (Loss) Allocable to
General Partners $469 ($285) $127 ($571)
======= ======= ======= =======
Net Income (Loss) Allocable to
Limited Partners $46,426 (28,255) $12,610 ($56,560)
======= ======= ======= =======
Net Income (Loss) per Partnership $6.63 ($4.04) $1.80 ($8.08)
======= ======= ======= =======
Distribution to Limited Partners per
Partnership Unit $0.00 $0.00 $0.00 $0.00
======= ======= ======= =======
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
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General Partners:
Balance at beginning of year $ 46,345 $ 46,034
Net income (loss) (285) (571)
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Balance at End of Period 46,060 45,463
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Limited Partners:
Balance at beginning of year 1,042,296 1,011,518
Net income (loss) (28,255) (56,560)
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Balance at End of Period 1,014,041 954,958
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Total Partners' Equity $1,060,101 $1,000,421
========= =========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
Cash flows from operating activities: --------- ---------
Received from motel revenues $ 565,820 $ 547,612
Expended for motel operations and
general and administrative expenses (515,603) (520,897)
Interest received 13,080 6,087
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Net Cash Provided (Used) by Operating Activities 63,297 32,802
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Cash flows from investing activities:
Purchases of property and equipment (27,209) (13,924)
Proceeds from sale of property and equipment 20 -
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Net Cash Provided (Used) by Investing Activities (27,189) (13,924)
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Cash flows from financing activities:
Payments on capital lease obligations - -
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Net Cash Provided (Used) by Financing Activities - -
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Net Increase (Decrease) in Cash and
Temporary Investments 36,108 18,878
Cash and Temporary Investments:
Beginning of Period 453,839 338,374
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End of Period $ 489,947 $ 357,252
========= =========
Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ (28,540) $ (57,131)
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Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 67,510 72,218
Loss (gain) on disposition of property and equipment (20)
(Increase) decrease in accounts receivable 12,111 4,917
(Increase) decrease in prepaid expense 16,216 17,160
Increase (decrease) in accounts payable
and accrued liabilities (3,980) (4,362)
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Total Adjustments 91,837 89,933
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Net Cash Provided (Used) by Operating Activies $ 63,297 $ 32,802
========= =========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 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
financial statements for the year ended September 30, 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 to the General Partners or affiliates for the
period.
Franchise Fees $ 10,894
Upon the sale of the Ontario Motel property in February, 1990, management felt
that the payment of the property management fees and partnership management
fees became remote. Therefore, no property management fees or partnership
management fees have been accrued.
Note 2:
The following table summarizes the major components of motel operating expenses
for the periods reported:
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
6/30/96 6/30/96 6/30/95 6/30/95
--------- --------- --------- ---------
Salaries and related costs $ 44,783 $ 134,586 $ 46,682 $ 145,198
Rent 23,349 70,046 23,349 70,668
Utilities 16,104 43,690 19,451 50,383
Allocated costs, mainly
indirect salaries 23,816 71,595 22,276 66,800
Replacements and renovations 1,110 26,491 12,205 27,186
Other operating expenses 49,037 154,138 53,336 144,771
--------- --------- --------- ---------
Total motel operating expenses $ 158,199 $ 500,546 $ 177,299 $ 505,006
========= ========= ========= =========
The following additional material required to be restated in interim reports
under federal securities law: None.
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<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1996
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Partnership's current assets of $506,708
exceeded its current liabilities of $80,296 thereby providing an operating
reserve of $426,412. The Partnership experienced a positive cash flow of
$36,108 for the nine month period ended June 30, 1996, which is an improvement
in the $18,878 increase in cash flow during the corresponding period of the
previous fiscal year.
The Partnership's operating reserve of $426,412 exceeds the General
Partners' reserve target of $174,716, by $251,696. The General Partners
anticipate the resumption of modest distributions on or about August 15, 1996,
the next regular distribution date. The distribution planned will be about
$3.00 per unit per calendar quarter.
The Partnership has equity in its Santa Rosa motel that could provide
security for a loan against the property. The total annual cash flow for the
Santa Rosa property has been positive in recent years. This positive cash
flow would support a modest loan.
The Partnership has no material commitments for capital expenditures.
Expenditures for replacements and renovations during the first nine months of
the fiscal year which will end on September 30, 1996 were $53,698 or 7.9% of
room revenues. Capitalized expenditures totaled $27,207 consisted of $10,766
for computer systems, of $6,088 for guest room carpet, of $8,149 for a new
washing machine and of $2,204 for eight televisions. Included in the $26,491
of uncapitalized expenditures is $6,817 for new backflow devices required by the
city, $2,969 for bed sets, $2,730 for portico repairs, $3,050 for guest room
chairs and $2,531 for replacement drapes.
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 September 30, 1997. 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 operating results for the nine month
periods ended June 30, 1996 and June 30, 1995.
Total revenues increased $18,006 or 3.3%. Guest room revenue increased
$9,477 or 1.8% due to an increase in the average room rate from $40.30 to $43.20
while the occupancy rate dropped from 48.6% to 46%.
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<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1996 (Continued)
Total expenses for the nine month period ended June 30, 1996 decreased
$10,585 (or 1.7%) from those incurred in the corresponding period of the
previous fiscal year. The decrease in expenditures is associated with the
decrease in room occupancy.
FUTURE TRENDS
Commercial travel in the Santa Rosa lodging market continues its
lackluster performance. The General Partners do not anticipate substantial
improvement in the property's fiscal performance until the commercial travel
segment rebounds. The continued intense competitive conditions in the Santa
Rosa market will continue to place adverse pressure on guest room occupancies.
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 to Vote of Security Holders
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None
Item 5. Other Information
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See Notes to Financial Statements
Item 6. Exhibits and Reports on Form 8-K
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None
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<PAGE>
SIGNATURES
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 II, LTD
8-2-96 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
8-2-96 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
-10-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 489,947
<SECURITIES> 0
<RECEIVABLES> 5,674
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 506,708
<PP&E> 2,368,711
<DEPRECIATION> 1,735,022
<TOTAL-ASSETS> 1,140,397
<CURRENT-LIABILITIES> 80,296
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,060,101
<TOTAL-LIABILITY-AND-EQUITY> 1,140,397
<SALES> 553,860
<TOTAL-REVENUES> 566,789
<CGS> 500,546
<TOTAL-COSTS> 500,546
<OTHER-EXPENSES> 94,783
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (28,540)
<INCOME-TAX> 0
<INCOME-CONTINUING> (28,540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,540)
<EPS-PRIMARY> (4.04)
<EPS-DILUTED> (4.04)
</TABLE>
