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 0-9218
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, 1997 AND 1996
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1997 and September 30, 1996 2
Statement of Operations - Nine Months Ended
June 30, 1997 and 1996 3
Statement of Changes in Partners' Equity -
Nine Months Ended June 30, 1997 and 1996 4
Statement of Cash Flows - Nine Months Ended
June 30, 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
June 30, 1997 and September 30, 1996
6/30/97 9/30/96
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ASSETS
Current Assets:
Cash and temporary investments $ 365,856 $ 614,405
Accounts receivable 14,986 9,323
Prepaid expenses 6,920 21,662
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Total current assets 387,762 645,390
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Property and Equipment:
Capital improvements 34,947 34,947
Buildings 1,845,878 1,845,878
Furniture and equipment 514,591 497,661
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2,395,416 2,378,486
Accumulated depreciation (1,811,066) (1,759,327)
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Property and equipment, net 584,350 619,159
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Other Assets: 10,818 3,675
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Total Assets $ 982,930 $ 1,268,224
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 86,361 $ 99,153
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Total current liabilities 86,361 99,153
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Total liabilities 86,361 99,153
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 48,344 47,359
Limited Partners 848,225 1,121,712
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Total partners' equity 896,569 1,169,071
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Total Liabilities and Partners' Equity $ 982,930 $ 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
Nine Months Ended June 30, 1997 and 1996
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
6/30/97 6/30/97 6/30/96 6/30/96
---------- ---------- ---------- ----------
Income:
Guest room $ 267,559 $ 663,042 $ 223,383 $ 544,570
Telephone and vending 3,379 10,931 3,775 9,290
Interest 2,856 12,907 3,707 11,726
Other 3,481 4,611 881 1,203
--------- --------- --------- ---------
Total Income 277,275 691,491 231,746 566,789
--------- --------- --------- ---------
Expenses:
Motel operating expenses
(Note 2) 170,488 488,030 158,199 500,546
General and administrative 2,520 37,394 5,290 27,273
Depreciation and
amortization 22,915 67,569 21,362 67,510
--------- --------- --------- ---------
Total Expenses 195,923 592,993 184,851 595,329
--------- --------- --------- ---------
Net Income (Loss) $ 81,352 $ 98,498 $ 46,895 $ (28,540)
========= ========= ========= =========
Net Income (Loss) Allocable
to General Partners $814 $985 $469 ($285)
========= ========= ========= =========
Net Income (Loss) Allocable
to Limited Partners $80,538 $97,513 $46,426 ($28,255)
========= ========= ========= =========
Net Income (Loss)
per Partnership Unit $11.51 $13.93 $6.63 ($4.04)
========= ========= ========= =========
Distribution to Limited
Partners per
Partnership Unit $5.00 $53.00 $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 Nine Months Ended June 30, 1997 and 1996
6/30/97 6/30/96
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General Partners:
Balance, beginning of year $ 47,359 $ 46,345
Net income (loss) 985 (285)
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Balance, End of period 48,344 46,060
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Limited Partners:
Balance, beginning of year 1,121,712 1,042,296
Net income (loss) 97,513 (28,255)
Distributions to Limited Partners (371,000) -
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Balance, End of Period 848,225 1,014,041
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Total Partners' Equity $ 896,569 $ 1,060,101
========== ==========
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 Nine Months Ended June 30, 1997 and 1996
6/30/97 6/30/96
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Cash Flows from Operating Activities:
Received from motel revenues $ 671,817 $ 565,820
Expended for motel operations and
general and administrative expenses (530,286) (515,603)
Interest received 14,011 13,080
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Net Cash Provided (Used) by Operating Activities 155,542 63,297
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Cash Flows from Investing Activities:
Purchases of property and equipment (33,591) (27,209)
Proceeds from sale of land 500 20
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Net Cash Provided (Used) by Investing Activities (33,091) (27,189)
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Cash Flows from Financing Activities:
Distributions to limited partners (371,000) -
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Net Cash Provided (Used) by Financing Activities (371,000) -
--------- ----------
Net Increase (Decrease) in Cash
and Temporary Investments (248,549) 36,108
Cash and Temporary Investments:
Beginning of period 614,405 453,839
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End of period $ 365,856 $ 489,947
========= ==========
Reconciliation of Net Income (Loss) to
Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ 98,498 $ (28,540)
--------- ----------
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 67,569 67,510
(Gain) loss on disposition of
property and equipment 331 (20)
(Increase) decrease in accounts receivable (5,663) 12,111
(Increase) decrease in prepaid expenses 14,742 16,216
(Increase) decrease in other assets (7,143) -
Increase (decrease) in accounts payable (12,792) (3,980)
--------- -----------
Total Adjustments 57,044 91,837
--------- -----------
Net Cash Provided (Used) by
Operating Activities $ 155,542 $ 63,297
========= ==========
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
Nine Months Ended 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 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 $ 13,267
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 Nine Months Three Months Nine Months
Ended Ended Ended Ended
6/30/97 6/30/97 6/30/96 6/30/96
---------- ----------- ---------- ----------
Salaries and related costs $ 52,494 $ 149,462 $ 44,783 $ 134,586
Rent 23,349 70,062 23,349 70,046
Franchise and advertising fees 13,375 33,168 11,171 27,235
Utilities 18,909 51,628 16,104 43,690
Allocated costs,
mainly indirect salaries 22,157 68,759 23,816 71,595
Replacements and renovations 941 6,219 1,110 26,491
Other operating expenses 39,263 108,732 37,866 126,903
--------- --------- --------- --------
Total motel operating
expenses $ 170,488 $ 488,030 $ 158,199 $ 500,546
========= ========= ========= =========
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
JUNE 30, 1997
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Partnership's current assets of $387,762
exceeded its current liabilities of $86,361 thereby providing an operating
reserve of $301,401. The Partnership experienced a negative cash flow of
$248,549 for the nine month period ended June 30, 1997 due to partnership
distributions totaling $371,000. 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 increased cash flow from operations of $92,245 during the nine 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 nine months of
the fiscal year which will end on September 30, 1997 were $39,810 or 6.0% of
room revenues. Included in these expenditures was $8,024 for a replacement
washing machine, $23,560 for guest room and corridor 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
funding both parking lot refurbishments and building painting from the cash
reserves.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the nine month
periods ended June 30, 1997 and June 30, 1996.
Total revenues increased $124,702 or 22.0% during the first nine months
of fiscal year ending September 30, 1997 as compared to the corresponding period
of the previous fiscal year. Guest room revenue increased $118,472 or 21.8%
during the period covered by this report. The Partnership's motel achieved an
increase in its occupancy rate to 55.4% in the current fiscal year compared to
46.0% in the previous fiscal year. This performance increase was slightly
supplemented by an increase in average daily room rate from $43.20 previously to
$43.82 currently. The motel achieved improved occupancy in the leisure and
corporate business segments.
Total expenses for the nine month period ended June 30, 1997 decreased
$2,336 or 0.4% from those incurred in the corresponding period of the previous
fiscal year. The increased expenditures were associated with increased
occupancy.
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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, 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
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
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 365,856
<SECURITIES> 0
<RECEIVABLES> 14,986
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 387,762
<PP&E> 2,395,416
<DEPRECIATION> 1,811,066
<TOTAL-ASSETS> 982,930
<CURRENT-LIABILITIES> 86,361
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 896,569
<TOTAL-LIABILITY-AND-EQUITY> 982,930
<SALES> 673,973
<TOTAL-REVENUES> 691,491
<CGS> 488,030
<TOTAL-COSTS> 488,030
<OTHER-EXPENSES> 104,963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 98,498
<INCOME-TAX> 0
<INCOME-CONTINUING> 98,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,498
<EPS-PRIMARY> 13.93
<EPS-DILUTED> 13.93
</TABLE>
