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 December 31, 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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<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
<PAGE>
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - December 31, 1996 and September 30, 1996 2
Statement of Operations - Three Months Ended
December 31, 1996 and 1995 3
Statement of Changes in Partners' Equity -
Three Months Ended December 31, 1996 and 1995 4
Statement of Cash Flows - Three Months Ended
December 31, 1996 and 1995 5
Notes to Financial Statements 6
Management Discussion and Analysis 7
Other Information and Signatures 8 - 9
<PAGE>
Super 8 Motels II, Ltd.
(A California Limited Partnership)
Balance Sheet
December 31, 1996 and September 30, 1996
12/31/96 9/30/96
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ASSETS
Current Assets:
Cash and temporary investments $ 605,723 $ 614,405
Accounts receivable 9,866 9,323
Prepaid expenses 13,932 21,662
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Total current assets 629,521 645,390
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Property and Equipment:
Capital improvements 34,947 34,947
Buildings 1,845,878 1,845,878
Furniture and equipment 488,460 497,661
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2,369,285 2,378,486
Accumulated depreciation (1,767,040) (1,759,327)
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Property and equipment, net 602,245 619,159
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Other Assets: 3,675 3,675
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Total Assets $ 1,235,441 $ 1,268,224
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LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 79,111 $ 99,153
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Total current liabilities 79,111 99,153
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Total liabilities 79,111 99,153
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 47,442 47,359
Limited Partners 1,108,888 1,121,712
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Total partners' equity 1,156,330 1,169,071
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Total Liabilities and Partners' Equity $ 1,235,441 $ 1,268,224
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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
For the Three Months Ending December 31, 1996 and 1995
Three Months Three Months
Ended Ended
12/31/96 12/31/95
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Income:
Guest room $ 204,863 $ 191,463
Telephone and vending 4,240 3,084
Interest 5,500 4,119
Other 524 194
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Total Income 215,127 198,860
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Expenses:
Motel operating expenses (Note 2) 158,523 185,576
General and administrative 26,189 16,396
Depreciation and amortization 22,156 22,963
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Total Expenses 206,868 224,935
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Net Income (Loss) $ 8,259 $ (26,075)
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Net Income (Loss) Allocable
to General Partners $83 ($261)
========= ========
Net Income (Loss) Allocable
to Limited Partners $8,176 ($25,814)
========= =========
Net Income (Loss)
per Partnership Unit $1.17 ($3.69)
========= =========
Distribution to Limited Partners
per Partnership Unit $3.00 $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 Three Months Ended December 31, 1996 and 1995
12/31/96 12/31/95
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General Partners:
Balance, beginning of year $ 47,359 $ 46,345
Net income (loss) 83 (261)
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Balance, End of period 47,442 46,084
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Limited Partners:
Balance, beginning of year 1,121,712 1,042,296
Net income (loss) 8,176 (25,814)
Distributions to Limited Partners (21,000) -
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Balance, End of Period 1,108,888 1,016,482
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Total Partners' Equity $ 1,156,330 $ 1,062,566
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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 Three Months Ended December 31, 1996 and1995
12/31/96 12/31/95
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Cash Flows from Operating Activities:
Received from motel revenues $ 207,939 $ 197,444
Expended for motel operations and
general and administrative expenses (197,524) (184,913)
Interest received 6,645 5,436
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Net Cash Provided (Used) by Operating Activities 17,060 17,967
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Cash Flows from Investing Activities:
Purchases of property and equipment (5,242) (5,557)
Proceeds from sale of land 500
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Net Cash Provided (Used) by Investing Activities (4,742) (5,557)
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Cash Flows from Financing Activities:
Distributions to limited partners (21,000)
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Net Cash Provided (Used) by Financing Activities (21,000) 0
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Net Increase (Decrease) in Cash
and Temporary Investments (8,682) 12,410
Cash and Temporary Investments:
Beginning of period 614,405 453,839
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End of period $ 605,723 $ 466,249
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Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ 8,259 $ (26,075)
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 22,156 22,963
(Gain) loss on disposition of property (500)
(Increase) decrease in accounts receivable (543) 4,020
(Increase) decrease in prepaid expenses 7,730 9,611
Increase (decrease) in accounts payable (20,042) 7,448
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Total Adjustments 8,801 44,042
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Net Cash Provided (Used) by Operations $ 17,060 $ 17,967
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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
December 31, 1996 and 1995
Note 1:
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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 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 $ 4,103
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:
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The following table summarizes the major components of motel operating expenses
for the periods reported:
Three Months Three Months
Ended Ended
12/31/96 12/31/95
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Salaries and related costs $ 48,750 $ 49,508
Rent 23,349 23,349
Franchise and advertising fees 10,257 9,575
Utilities 16,663 15,564
Allocated costs,
mainly indirect salaries 24,547 24,870
Replacements and renovations 3,740 19,863
Other operating expenses 31,217 42,847
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Total motel operating expenses $ 158,523 $ 185,576
=========== ===========
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
December 31, 1996
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, the Partnership's current assets of $629,521 exceeded
its current liabilities of $79,111 thereby providing an operating reserve of
$550,410. The Partnership experienced a slight negative cash flow of $8,682
for the three month period ended December 31, 1996, which is a reduction in the
$12,410 positive cash flow during the corresponding period of the previous
fiscal year and is due to the $21,000 distribution made during the quarter.
The Partnership's operating reserve of $550,410 exceeds the General Partners'
reserve target of $174,716. The General Partners resumed modest distributions
of $3.00 per unit on August 15, 1996, the previous regular distribution date.
On November 15, 1996 another $3.00 per unit distribution was made. The amount
of the next distribution scheduled for February 15, 1997 will be $5.00 per
unit.
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 three months of
the fiscal year which will end on September 30, 1997 were $8,982 or 4.4% of
room revenues. Capitalized expenditures consisted of $5,242 for guest room
carpet.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the three month periods
ended December 31, 1996 and December 31, 1995.
Total revenues increased $16,267 or 8.2%. Guest room revenue increased $13,400
or 7.0% due to an increase the occupancy rate from 48.1% to 54.1% while the
Partnership's property experienced a decrease in the average room rate from
$43.27 to $41.13.
Total expenses for the three month period ended December 31, 1996 decreased
$18,067 (or 8.0%) from those incurred in the corresponding period of the
previous fiscal year. The decrease in expenditures is associated with the
General Partners cost-cutting program.
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.
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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
2-7-97 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
2-7-97 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> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 605,723
<SECURITIES> 0
<RECEIVABLES> 9,866
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 629,521
<PP&E> 2,369,285
<DEPRECIATION> 1,767,040
<TOTAL-ASSETS> 1,235,441
<CURRENT-LIABILITIES> 79,111
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,156,330
<TOTAL-LIABILITY-AND-EQUITY> 1,235,441
<SALES> 209,103
<TOTAL-REVENUES> 215,127
<CGS> 158,523
<TOTAL-COSTS> 158,523
<OTHER-EXPENSES> 48,345
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,259
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,259
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
