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 March 31, 1997
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
MARCH 31, 1997 AND 1996
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - March 31, 1997 and September 30, 1996 2
Statement of Operations - Six Months Ended
March 31, 1997 and 1996 3
Statement of Changes in Partners' Equity -
Six Months Ended March 31, 1997 and 1996 4
Statement of Cash Flows - Six Months Ended
March 31, 1997 and 1996 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
March 31, 1997 and December 31, 1996
3/31/97 9/30/96
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ASSETS
Current Assets:
Cash and temporary investments $ 306,638 $ 614,405
Accounts receivable 16,720 9,323
Prepaid expenses 5,056 21,662
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Total current assets 328,414 645,390
--------- ---------
Property and Equipment:
Capital improvements 34,947 34,947
Buildings 1,845,878 1,845,878
Furniture and equipment 495,695 497,661
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2,376,520 2,378,486
Accumulated depreciation (1,788,151) (1,759,327)
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Property and equipment, net 588,369 619,159
Other Assets: 10,818 3,675
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Total Assets $ 927,601 $1,268,224
========= =========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 77,384 $ 99,153
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Total current liabilities 77,384 99,153
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Total liabilities 77,384 99,153
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 47,529 47,359
Limited Partners 802,688 1,121,712
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Total partners' equity 850,217 1,169,071
--------- ---------
Total Liabilities and Partners' Equity $ 927,601 $1,268,224
========= =========
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)
Statement of Operations
Six Months Ended March 31, 1997 and 1996
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
3/31/97 3/31/97 3/31/96 3/31/96
--------- --------- --------- ---------
Income:
Guest room $ 190,620 $ 395,483 $ 129,724 $ 321,187
Telephone and vending 3,312 7,552 2,431 5,515
Interest 4,551 10,051 3,901 8,020
Other 606 1,130 128 321
--------- --------- --------- ---------
Total Income 199,089 414,216 136,184 335,043
--------- --------- --------- ---------
Expenses:
Motel operating expenses (Note 2) 159,019 317,542 156,768 342,347
General and administrative 8,685 34,874 5,587 21,983
Depreciation and amortization 22,498 44,654 23,185 46,148
--------- --------- --------- ---------
Total Expenses 190,202 397,070 185,540 410,478
--------- --------- --------- ---------
Net Income (Loss) $ 8,887 $ 17,146 $ (49,356) $ (75,435)
========= ========= ========= =========
Net Income (Loss) Allocable
to General Partners $89 $171 ($494) ($754)
======== ======== ======== ========
Net Income (Loss) Allocable
to Limited Partners $8,798 $16,975 ($48,862) ($74,681)
======== ======== ======== ========
Net Income (Loss)
per Partnership Unit $1.26 $2.43 ($6.98) ($10.67)
======== ======== ======== ========
Distribution to Limited Partners
per Partnership Unit $45.00 $3.00 $0.00 $0.00
======== ======== ======== ========
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)
Statement of Partners' Equity
For the Six Months Ended March 31, 1997 and 1996
3/31/97 3/31/96
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General Partners:
Balance, beginning of year $ 47,359 $ 46,345
Net income (loss) 171 (754)
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Balance, End of period 47,530 45,591
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Limited Partners:
Balance, beginning of year 1,121,712 1,042,296
Net income (loss) 16,975 (74,681)
Distributions to Limited Partners (336,000) -
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Balance, End of Period 802,687 967,615
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Total Partners' Equity $ 850,217 $1,013,206
========= =========
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)
Statement of Cash Flows
For the Six Months Ended March 31, 1997 and 1996
3/31/97 3/31/96
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Cash Flows from Operating Activities:
Received from motel revenues $ 396,925 $ 336,322
Expended for motel operations and
general and administrative expenses (364,391) (365,741)
Interest received 9,894 7,996
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Net Cash Provided (Used) by Operating Activities 42,428 (21,423)
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Cash Flows from Investing Activities:
Purchases of property and equipment (14,695) (21,566)
Proceeds from sale of land 500 20
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Net Cash Provided (Used) by Investing Activities (14,195) (21,546)
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Cash Flows from Financing Activities:
Distributions to limited partners (336,000) -
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Net Cash Provided (Used) by Financing Activities (336,000) -
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Net Increase (Decrease) in Cash and
Temporary Investments (307,767) (42,969)
Cash and Temporary Investments:
Beginning of period 614,405 453,839
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End of period $ 306,638 $ 410,870
========= =========
Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ 17,146 $ (75,435)
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Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 44,654 46,148
(Gain) loss on disposition of property and equipment 331 (20)
(Increase) decrease in accounts receivable (7,397) 9,275
(Increase) decrease in prepaid expenses 16,606 20,310
(Increase) decrease in other assets (7,143) -
Increase (decrease) in accounts payable (21,769) (21,701)
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Total Adjustments 25,282 54,012
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Net Cash Provided (Used) by Operating Activities $ 42,428 $ (21,423)
========= =========
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
Six Months Ended March 31, 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 September 30, 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 to the General Partners or affiliates for the
period.
Franchise Fees $ 7,917
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 Months Six Months Three Months Six Months
Ended Ended Ended Ended
3/31/97 3/31/97 3/31/96 3/31/96
--------- --------- --------- ---------
Salaries and related costs $ 48,218 $ 96,968 $ 40,295 $ 89,803
Rent 23,349 46,713 23,349 46,697
Franchise and advertising fees 9,536 19,793 6,489 16,064
Utilities 16,056 32,719 12,022 27,586
Allocated costs,
mainly indirect salaries 22,055 46,602 22,909 47,780
Replacements and renovations 1,538 5,278 5,518 25,381
Other operating expenses 38,267 69,469 46,186 89,036
--------- --------- --------- ---------
Total motel operating expenses $ 159,019 $ 317,542 $ 156,768 $ 342,347
========= ========= ========= =========
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 II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
MARCH 31, 1997
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Partnership's current assets of $328,414 exceeded its
current liabilities of $77,384 thereby providing an operating reserve of
$251,030. The Partnership experienced a negative cash flow of $307,767 for the
six month period ended March 31, 1997 due to partnership distributions totaling
$336,000. The Partnership distributed $280,000 in accumulated reserves as a
special distribution in February 1997. The normal quarterly distribution is
expected to be around $5 per unit. The Partnership achieved an increase in cash
flow from operations of $63,851 during the six month period covered by this
report as compared to the previous fiscal year.
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 six months of the
fiscal year which will end on September 30, 1997 were $19,767 or 5.0% of room
revenues. Included in these expenditures was $7,447 for a replacement washing
machine, $5,242 for guest room carpet and vinyl, $2,006 for a replacement ice
machine and $2,006 for replacement chairs. During the fiscal years ending
September 30, 1997 and 1998, the Partnership anticipates both parking lot
renovation and building painting will be paid for from the cash reserves.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the six month periods
ended March 31, 1997 and March 31, 1996.
Total revenues increased $79,173 or 23.6% during the first six months of fiscal
year ending September 30, 1997 as compared to the corresponding period of the
previous fiscal year. Guest room revenue increased $74,296 or 23.1% during the
period covered by this report. The Partnership's motel achieved an increase in
its occupancy rate from 40.9% in the previous fiscal year compared to 52.8% in
the current fiscal year. This performance increase was slightly offset by a
reduction in average daily room rate from $42.86 previously to $41.12 currently.
The motel achieved improved occupancy in the leisure and corporate business
segments.
Total expenses for the six month period ended March 31, 1997 decreased $13,408
or 3.3% from those incurred in the corresponding period of the previous fiscal
year. Reduced expenditures for renovations and replacements was the primary
element in the comparatively reduced expenses.
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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
MARCH 31, 1997 (Continued)
FUTURE TRENDS
The Santa Rosa lodging market has started to recover after its poor performance
over the previous three years. The leisure market segment and to a lessor
degree, the corporate market segment have returned to the levels previously
experienced by the Partnership. The Partnership's economic performance will be
dependent on the trends in the Santa Rosa and nearby markets on the Highway 101
corridor. The Partnership's expenses are subject to cost inflation.
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 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
--------------------------------
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
5-5-97 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
5-5-97 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 306,638
<SECURITIES> 0
<RECEIVABLES> 16,720
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 328,414
<PP&E> 2,376,520
<DEPRECIATION> 1,788,151
<TOTAL-ASSETS> 927,601
<CURRENT-LIABILITIES> 77,384
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 850,217
<TOTAL-LIABILITY-AND-EQUITY> 927,601
<SALES> 403,035
<TOTAL-REVENUES> 414,216
<CGS> 317,542
<TOTAL-COSTS> 317,542
<OTHER-EXPENSES> 79,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 17,146
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,146
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,146
<EPS-PRIMARY> 2.43
<EPS-DILUTED> 2.43
</TABLE>
