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 0-10134
SUPER 8 MOTELS III, LTD
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94 - 2664921
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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 III, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1997 and December 31, 1996 2
Statement of Operations - Six Months Ended
June 30, 1997 and 1996 3
Statement of Changes in Partners' Equity -
Six Months Ended June 30, 1997 and 1996 4
Statement of Cash Flows - Six Months Ended
June 30, 1997 and 1996 5
Notes to Financial Statements 6
Management Discussion and Analysis 7
Other Information and Signatures 8 - 9
<PAGE>
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Balance Sheet
June 30, 1997 and December 31, 1996
6/30/97 12/31/96
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ASSETS
Current Assets:
Cash and temporary investments $ 461,690 $ 254,782
Accounts receivable 71,058 68,114
Prepaid expenses 12,604 11,341
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Total current assets 545,352 334,237
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Property and Equipment:
Land 1,670,129 1,670,129
Capital improvements 26,175 26,175
Buildings 3,276,870 3,276,870
Furniture and equipment 780,792 756,837
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5,753,966 5,730,011
Accumulated depreciation (2,903,023) (2,826,379)
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Property and equipment, net 2,850,943 2,903,632
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Total Assets $ 3,396,295 $ 3,237,869
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 88,130 $ 63,785
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Total current liabilities 88,130 63,785
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Total liabilities 88,130 63,785
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 20,546 19,205
Limited Partners 3,287,619 3,154,879
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Total partners' equity 3,308,165 3,174,084
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Total Liabilities and Partners' Equity $ 3,396,295 $ 3,237,869
=========== ===========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Statement of Operations
For the Six Months Ending June 30, 1997 and 1996
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
6/30/97 6/30/97 6/30/96 6/30/96
---------- ---------- ---------- ----------
Income:
Guest room $ 426,318 $ 829,613 $ 360,354 $ 715,766
Telephone and vending 7,936 16,344 7,711 15,429
Interest 2,427 3,789 2,123 4,657
Other 4,043 4,962 1,445 1,979
---------- --------- --------- ---------
Total Income 440,724 854,708 371,633 737,831
---------- --------- --------- ---------
Expenses:
Motel operating expenses
(Note 2) 288,952 568,366 308,693 595,538
General and
administrative 10,166 32,627 14,463 33,926
Depreciation and
amortization 38,666 77,242 40,261 80,511
Interest - - 2,239 5,763
Property management fees 21,746 42,392 18,441 36,633
--------- --------- --------- ---------
Total Expenses $ 359,530 $ 720,627 $ 384,097 $ 752,371
--------- --------- --------- ---------
Net Income (Loss) 81,194 134,081 (12,464) (14,540)
========= ========= ========= =========
Net Income (Loss) Allocable
to General Partners $812 $1,341 ($125) ($145)
========= ========= ========= =========
Net Income (Loss) Allocable
to Limited Partners $80,382 $132,740 ($12,339) ($14,395)
========= ========= ========= =========
Net Income (Loss)
per Partnership Unit $13.53 $22.34 ($2.08) ($2.42)
========= ========= ========= =========
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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<PAGE>
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Statement of Partners' Equity
For the Six Months Ending June 30, 1997 and 1996
1997 1996
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General Partners:
Balance at beginning of year $ 19,205 $ 19,194
Net income (loss) 1,341 (145)
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Balance at end of period 20,546 19,049
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Limited Partners:
Balance at beginning of year 3,154,879 3,153,774
Net income (loss) 132,740 (14,395)
Less: Cash distributions -
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Balance at end of period 3,287,619 3,139,379
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Total balance at end of period $ 3,308,165 $ 3,158,428
=========== ===========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Statement of Cash Flows
For the Six Months Ending June 30, 1997 and 1996
1997 1996
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Cash Flows From Operating Activities:
Received from motel revenues $ 847,975 $ 715,540
Expended for motel operations
and general and administrative expenses (620,423) (684,825)
Interest received 3,789 4,961
Interest paid - (6,500)
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Net cash provided (used) by operating activities 231,341 29,176
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Cash Flows From Investing Activities:
Purchases of property and equipment (24,553) (11,098)
Proceeds from sale of equipment 120 -
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Net cash provided (used) by investing activities (24,433) (11,098)
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Cash Flows From Financing Activities:
Payments on notes payable - (88,400)
Distributions paid to Limited Partners - -
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Net cash provided (used) by financing activities - (88,400)
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Net increase (decrease) in cash
and temporary investments 206,908 (70,322)
Cash and temporary investments:
Beginning of year 254,782 285,554
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End of period $ 461,690 $ 215,232
=========== ===========
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net income (loss) $ 134,081 $ (14,540)
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Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 77,242 80,511
Gain on disposition of property (120) -
(Increase) decrease in accounts receivable (2,944) (17,329)
(Increase) decrease in prepaid expenses (1,263) (9,155)
Increase (decrease) in accounts payable
and accrued liabilities 24,345 (10,311)
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Total adjustments 97,260 43,716
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Net cash provided by operating activities $ 231,341 $ 29,176
=========== ===========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Notes to Financial Statements
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 December 31, 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 or accrued to the General Partner or affiliates
for the period.
Property Management Fees $42,392
Franchise Fees $16,592
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
6/30/97 6/30/97 6/30/96 6/30/96
---------- ---------- ---------- ----------
Salaries and related costs $ 115,862 $ 225,591 $ 113,945 $ 221,634
Franchise and advertising 21,310 41,481 18,037 35,813
Utilities 27,194 49,859 24,626 48,478
Allocated costs,
mainly indirect salaries 44,313 88,423 47,631 93,450
Replacements and renovations 3,436 16,101 25,868 33,172
Other operating expenses 76,837 146,911 78,586 162,991
---------- --------- --------- ---------
Total motel operating
expenses $ 288,952 $ 568,366 $ 308,693 $ 595,538
========== ========= ========= =========
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 III, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1997 _
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's current assets of $545,352 exceed its current liabilities of
$88,130 by $457,222. This excess of current assets over current liabilities
constitutes an operating reserve that is greater than the $297,050 operating
reserve requirement in the Partnership Agreement. The General Partner
anticipates that the Partnership will begin quarterly distributions of
approximately $12.50 per unit with a distribution for the second calendar
quarter on or around August 15, 1997.
The Partnership has no major commitments for capital expenditures. The
Partnership has a replacement and renovation target equal to 3% of guest room
revenue. During the six months ended June 30, 1997, the Partnership expended
$40,654 in such expenditures which is equal to 4.9% of guest room revenue.
Included in the renovations was $13,710 for guest room carpet at both
properties, $3,682 for replacement bedspreads, $3,206 for replacement
televisions and $4,010 for a replacement ice machine. The General Partners
anticipate that renovation and repair expenditures will not exceed 3% of guest
room revenue during the current fiscal year.
RESULTS OF OPERATIONS
The following is a comparison of the first six months of the fiscal year ending
December 31, 1997 with the corresponding period of the preceding fiscal year.
Total revenues increased $116,877 (or 15.8%) for the six month period as
compared to the previous fiscal year. The increase in total revenue was due to a
$113,847 (or 15.9%) increase in room revenue. Motel occupancy increased from
69.5% during the previous fiscal year to 73.9% during the current fiscal year,
while the average room rate increased from $33.19 during the first six months of
1996 to $36.29 during the corresponding period of 1997. The increase in guest
room revenue occurred primarily at the Partnership's San Bernardino motel and
was due to increased patronage in the corporate and leisure market segments.
The Partnership's expenses decreased by $31,744 or 4.2%. This reduction is due
to reduced interest expense and to reduced renovation expenses during the
current fiscal year.
FUTURE TRENDS
The General Partners expect that overall occupancy for the fiscal year ending
December 31, 1997 will be greater than that achieved in 1996. The General
Partners expect income for the current fiscal year to be greater than the
previous fiscal year. Expenses are subject to both cost inflation and to the
deferred maintenance associated with the effects of high occupancy in previous
years. The net effect should be net income greater than the previous fiscal
year.
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
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None
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
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<PAGE>
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 III, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 461,690
<SECURITIES> 0
<RECEIVABLES> 71,058
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 545,352
<PP&E> 5,753,966
<DEPRECIATION> 2,903,023
<TOTAL-ASSETS> 3,396,295
<CURRENT-LIABILITIES> 88,130
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,308,165
<TOTAL-LIABILITY-AND-EQUITY> 3,396,295
<SALES> 845,957
<TOTAL-REVENUES> 854,708
<CGS> 568,366
<TOTAL-COSTS> 568,366
<OTHER-EXPENSES> 152,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 134,081
<INCOME-TAX> 0
<INCOME-CONTINUING> 134,081
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 134,081
<EPS-PRIMARY> 22.34
<EPS-DILUTED> 22.34
</TABLE>
