SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
---------------------------------------------
For the Period ended December 31, 1995
Commission File 0-9218
SUPER 8 MOTELS II, LTD
-----------------------------------------------------
(Exact name of registrant as specified in its charter
CALIFORNIA 94 - 2574309
------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 J Street
Sacramento, California 95814
-------------------------------------- --------------
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
---- ----
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - December 31, 1995 and September 30, 1995 2
Statement of Operations - Three Months Ended
December 31, 1995 and 1994 3
Statement of Changes in Partners' Equity -
Three Months Ended December 31, 1995 and 1994 4
Statement of Cash Flows - Three Months Ended
December 31, 1995 and 1994 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
DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
----------------------------------------
12/31/95 9/30/95
-------- -------
ASSETS
------
Current Assets:
Cash and temporary investments $ 466,249 $ 453,839
Accounts receivable 13,765 17,785
Prepaid expenses 17,692 27,303
------- -------
Total Current Assets 497,706 498,927
Property and Equipment:
Capital Improvements 34,947 34,947
Buildings 1,845,878 1,845,878
Furniture and equipment 472,006 466,449
---------- ----------
2,352,831 2,347,274
Accumulated depreciation and amortization (1,696,247)(1,673,284)
--------- ---------
Property and Equipment, Net 656,584 673,990
--------- ---------
Total Assets $1,154,290 $1,172,917
========= =========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 91,724 $ 84,276
------ ------
Total Liabilities 91,724 84,276
Partners' Equity:
General Partners 46,084 46,345
Limited Partners 1,016,482 1,042,296
--------- ---------
Total Partners' Equity 1,062,566 1,088,641
--------- ---------
Total Liabilities and Partners' Equity $1,154,290 $1,172,917
========= =========
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
---------------------------------------------
Three Three
Months Months
Ended Ended
12/31/95 12/31/94
-------- --------
Income:
Guest room $ 191,463 $ 177,189
Telephone and vending 3,084 2,471
Interest 4,119 2,120
Other 194 287
------- -------
Total Income 198,860 182,067
Expenses:
Motel operating expenses (Note 2) 185,576 175,098
General and administrative expenses 16,396 16,864
Depreciation and amortization 22,963 24,201
------- -------
Total Expenses 224,935 216,163
------- -------
Net Income (Loss) $ (26,075)$ (34,096)
======= =======
Net Income (Loss) Allocable to
General Partners ($261) ($341)
======== ========
Net Income (Loss) Allocable to
Limited Partners ($25,814) ($33,755)
========= =========
Net Income (Loss) per Partnership Unit ($3.73) ($4.87)
======= =======
Distribution to Limited Partners per
Partnership Unit $0.00 $0.00
===== =====
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
---------------------------------------------
1995 1994
---- ----
General Partners:
Balance at beginning of year $ 46,345 $ 46,034
Net income (loss) (261) (341)
------ ------
Balance at End of Period 46,084 45,693
Limited Partners:
Balance at beginning of year 1,042,296 1,011,518
Net income (loss) (25,814) (33,755)
--------- ---------
Balance at End of Period 1,016,482 977,763
--------- ---------
Total Partners' Equity $1,062,566 $1,023,456
========= =========
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
---------------------------------------------
1995 1994
Cash flows from operating activities: ---- ----
Received from motel revenues $ 197,444 $ 186,772
Expended for motel operations and
general and administrative expenses (184,913) (174,775)
Interest received 5,436 2,191
------- -------
Net Cash Provided (Used) by Operating Activities 17,967 14,188
Cash flows from investing activities:
Purchases of property and equipment (5,557) (3,748)
----- -----
Net Cash Provided (Used) by Investing Activities (5,557) (3,748)
Cash flows from financing activities:
Payments on capital lease obligations 0 0
----- -----
Net Cash Provided (Used) by Financing Activities 0 0
Net Increase (Decrease) in Cash and Temporary Investments 12,410 10,440
Cash and Temporary Investments:
Beginning of Period 453,839 338,374
------- -------
End of Period $ 466,249 $ 348,814
======= =======
Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ (26,075)$ (34,096)
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 22,963 24,201
(Increase) decrease in accounts receivable 4,020 6,897
(Increase) decrease in prepaid expense 9,611 9,148
Increase (decrease) in accounts payable
and accrued liabilities 7,448 8,038
Total Adjustments 44,042 48,284
------- -------
Net Cash Provided (Used) by Operating Activities $ 17,967 $ 14,188
======= =======
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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 $ 3,830
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 Three Months
Ended Ended
12/31/95 12/31/94
---------- ----------
Salaries and related costs $ 49,508 $ 53,110
Rent 23,349 23,970
Utilities 15,564 14,679
Allocated costs, mainly indirect 24,870 23,394
Replacements and renovations 19,863 12,988
Other operating expenses 52,422 46,957
---------- ----------
Total motel operating expense $ 185,576 $ 175,098
========== ==========
The following additional material contingencies are required to be
restated in interim reports under federal securities law: None.
-6-
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
DECEMBER 31, 1995
-------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's current assets of $489,706 exceeded its current
liabilities of $83,511 thereby providing an operating reserve of $406,195. The
Partnership experienced a positive cash flow for the three month period ended
December 31, 1995 of $12,410, which is an improvement of approximately $2,010
from the results of the corresponding period of the previous fiscal year.
While the Partnership's operating reserve is $231,479 in excess of the General
Partners' reserve target of $174,716, the General Partners believe that
prudence requires that quarterly distributions remain suspended.
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.
This positive cash flow would support a modest loan.
The Partnership has no material commitments for capital
expenditures. The Partnership's guideline for replacements and
renovation is to spend approximately 3% of room revenues.
Applicable expenditures during the first three months of the
fiscal year which will end on September 30, 1996 were $25,420
(of which $5,557 was capitalized), or 13.3% of room revenues.
Although operational considerations have accelerated the timing
of these expenditures and the 13.3% figure is not reflective of
anticipated year-end expenditures, annual expenditures of this
type may exceed the General Partners' guideline due to deferred
maintenance requirements.
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.
-7-
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
DECEMBER 31, 1995
-------------------------------------------------
RESULTS OF OPERATIONS
- ----------------------
The following is a comparison of operating results for the
three month periods ended December 31, 1995 and December 31, 1994.
1995 1994
----- -----
Occupancy 48.1% 48.6%
Average Room Rate $43.27 $39.67
Total revenues increased $16,793 during the first three months
of fiscal year ending September 30, 1996 as compared to the
corresponding period of the previous fiscal year. Room revenue
increased $14,274 (or 8.1%), as the decrease in occupancy rate
for the three month period was offset by an increase in the
average room rate. The motel had more guests from the
corporate and leisure market segments and fewer guests in the
group and discount market segments. Room rates for the
corporate and leisure market segments are generally higher than
for those segments that experienced a decline in occupancy.
Total expenses for the three month period ended December 31,
1995 increased $8,559 (or 4.0%) from those incurred in the
corresponding period of the previous fiscal year. The
increased costs are associated with increased replacement and
renovations expenditures incurred during the three month period
as compared to the corresponding period of the previous fiscal
year.
FUTURE TRENDS
- -------------
Commercial travel in the Santa Rosa lodging market continues its lack-
luster performance, while there is an improvement in the leisure market
segment. The General Partners do not anticipate substantial improvement in the
property's fiscal performance until the commercial travel segment rebounds.
Intense competitive conditions in the Santa Rosa market might place adverse
pressure on the average room rates.
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
----------------------------
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
None
Item 5. Other Information
-----------------
See Notes to Financial Statements
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
-9-
<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
2-14-96 By /S/ David P. Grotewohl
-------------------------
Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
2-14-96 By /S/ David P. Grotewohl
-------------------------
Date David P. Grotewohl,
Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 466,249
<SECURITIES> 0
<RECEIVABLES> 5,765
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 489,706
<PP&E> 2,352,831
<DEPRECIATION> 1,696,247
<TOTAL-ASSETS> 1,146,290
<CURRENT-LIABILITIES> 83,511
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,062,779
<TOTAL-LIABILITY-AND-EQUITY> 1,146,290
<SALES> 194,547
<TOTAL-REVENUES> 198,860
<CGS> 185,363
<TOTAL-COSTS> 185,363
<OTHER-EXPENSES> 39,359
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (25,862)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,862)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,862)
<EPS-PRIMARY> (3.69)
<EPS-DILUTED> (3.69)
</TABLE>
