<PAGE> 1
FORM 10-Q
SECURITIES 7 EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: March 31, 1997
Commission File Number: 2-76543
SUPER 8 MOTELS NORTHWEST II
Washington 91-1172558
PART 1
Financial Information
Item 1. Financial Statements
See attached unaudited March 31, 1997 Financial Statements and the partnership's
balance sheet for the year ended December 31, 1996. The Statement of Cash Flows
is omitted from the attachment and is presented as follows:
<TABLE>
<CAPTION>
PERIOD ENDED MARCH 31,
1997 1996
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 688,697 $ 832,009
Operating expenses paid in cash (580,118) (651,857)
Interest paid (40,389) (61,430)
--------- ---------
Net cash provided by operating activities 68,190 118,722
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net -- (654)
Proceeds from disposals of property and equipment -- --
--------- ---------
Net cash provided (used) by investing
activities -- (654)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on debt (30,624) (35,086)
Distributions to partners (119,173) (315,537)
--------- ---------
Net cash used by financing activities (149,797) (350,623)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (81,607) (232,555)
CASH AND CASH EQUIVALENTS, beginning of period 551,202 733,916
========= =========
CASH AND CASH EQUIVALENTS, end of period $ 469,595 $ 501,361
========= =========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
PERIOD ENDED MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income $ 76,900 $ 236,577
--------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 43,816 43,816
Lease expense - deferred (1,994) 4,336
Change in assets and liabilities
Accounts receivable 9,658 (10,801)
Prepaid expenses 7,065 (9,397)
Accounts payable (4,946) 20,174
Accrued expenses (62,309) 2,129
Accrued management fees -- (168,112)
--------- ---------
(8,710) (117,855)
========= =========
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 68,190 $ 118,722
========= =========
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
See attached First Quarter (3/31/96) Update from the Issuer delivered to its
limited partners.
PART 2
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 a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
27 Financial Data Schedule
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities 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 NORTHWEST II
a Washington limited partnership
By:
------------------------------------
Gerald L. Whitcomb, General Partner
Dated: May 7, 1997
<PAGE> 4
SUPER 8 NORTHWEST II
BALANCE SHEET
MARCH 31, 1997 AND 1996
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 469,595 $ 501,361
Accounts receivable 10,948 89,608
Inventory 58,319 57,853
Prepaid expenses 4,548 24,398
----------- -----------
TOTAL CURRENT ASSETS 543,410 673,220
PROPERTY AND EQUIPMENT
Land 714,301 714,301
Buildings 4,097,106 4,097,106
Equipment, furniture and fixtures 1,241,326 1,240,594
----------- -----------
Subtotal 6,052,733 6,052,001
Less accumulated depreciation (2,781,320) (2,623,784)
----------- -----------
TOTAL PROPERTY AND EQUIPMENT, NET 3,271,413 3,428,217
OTHER ASSETS
Franchise fees 45,000 45,000
Organization costs 6,000 6,000
Deposits and bank fees 26,375 26,375
----------- -----------
Subtotal 77,375 77,375
Less accumulated amortization (47,372) (42,536)
----------- -----------
Subtotal 30,003 34,839
TOTAL OTHER ASSETS 30,003 34,839
TOTAL ASSETS $ 3,844,826 $ 4,136,276
=========== ===========
LIABILITIES AND PARTNER'S CAPITAL EQUITY
1997 1996
----------- -----------
CURRENT LIABILITIES
Accounts payable - trade $ 87,296 $ 72,876
Accounts payable - affiliates 38,443 34,090
Accrued expenses 64,169 118,006
Current portion of long-term debt 168,865 144,880
----------- -----------
TOTAL CURRENT LIABILITIES 358,773 369,852
NONCURRENT LIABILITIES
Accrued rent under lease agreement 135,027 125,374
Long-term debt, net of current portion shown above 2,301,311 2,461,854
Accrued property management fees 699,048 1,199,048
----------- -----------
TOTAL NONCURRENT LIABILITIES 3,135,386 3,786,276
PARTNER'S CAPITAL EQUITY
General partner 57,293 (31,408)
Limited partners 293,374 11,555
----------- -----------
TOTAL PARTNER'S CAPITAL EQUITY 350,667 (19,852)
----------- -----------
$ 3,844,826 $ 4,316,276
=========== ===========
</TABLE>
<PAGE> 5
SUPER 8 NORTHWEST II
STATEMENT OF INCOME
FOR THE THREE MONTHS ENDING MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
-------- ---------
<S> <C> <C>
SALES
Rooms $655,657 $813,882
Other 20,378 24,736
-------- --------
Total sales 676,035 838,618
DIRECT OPERATING EXPENSES
Payroll and related expenses 151,959 156,787
Supplies and maintenance 67,342 35,682
Utilities 48,715 51,798
Other 6,321 9,036
-------- --------
Total direct operating expenses 274,337 253,303
INDIRECT OPERATING EXPENSES
Advertising and promotion 20,403 17,928
Bank and credit card charges 8,596 9,565
Insurance 9,413 9,296
Property and business taxes 35,122 37,638
Other 3,261 2,973
-------- --------
Total indirect operating expenses 76,795 77,400
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 50,986 47,456
Franchise fees 26,226 32,447
Management fees 33,801 41,909
Professional services 4,408 6,350
Other 4,954 3,005
-------- --------
Total administrative and general
expenses 120,375 131,167
FIXED CHARGES
Amortization 1,159 1,159
Depreciation 42,657 42,657
Interest 46,579 61,430
Lease expense 36,352 34,781
Deferred land lease 3,882 4,336
-------- --------
Total fixed charges 130,629 144,363
INCOME FROM OPERATIONS 73,899 232,385
OTHER INCOME
Gain (loss) on sale of equipment 0 0
Interest income 3,004 4,192
-------- --------
Total other income 3,004 4,192
-------- --------
NET INCOME (LOSS) $ 76,903 $236,577
======== ========
</TABLE>
This statement subject to change after audit to be performed
by Moss Adams, CPA's.
<PAGE> 6
VOL. 17 NO. 1 /APRIL 30, 1997 FIRST QUARTER 1997
UPDATE
SUPER 8 MOTELS NORTHWEST II
NATIONAL NEWS
DOMINANCE IN ECONOMY LODGING CONTINUES IN '97
The first quarter of 1997 was one of continuing strength throughout the nation.
As the fastest-growing motel chain in North America, Super 8 now has over 1,500
motels operating in 48 states and 6 Canadian provinces. The additional 260
properties currently under construction will provide for even greater dominance
by Fall.
D.K. Shiffiet, the leading consumer research firm in the hospitality industry,
recently confirmed that Super 8 leads all other brands in the economy segment
both in system growth rate and in the number of reservations secured through the
toll-free reservation system. Rooms reserved through Superline stand at a
record-breaking 43%.
Completing the picture is a look at the VIP Club, clearly an industry stand-out
in customer-retention programs. The Club now boasts over 4.4 million members,
accounting for 51% of Super 8 reservations in 1996.
SUPER 8 UPHOLDS QUALITY
Following its commitment made one year ago, Super 8 has continued to be vigilant
in quality assurance by terminating 14 motels in 1996, while still maintaining
dynamic growth. "Super 8 will not tolerate motels that jeopardize the quality
image of the system. With quarterly inspections at motels, Super 8 continues to
have the most consistent quality image among large chains in America," said
Super 8 President Bob Weller.
On a positive note, there were several cases where reinstatement of terminated
properties was granted based upon extensive renovations and upgrades reviewed
and approved by Super 8. The owners of these reinstated motels recognized Super
8's competitive advantage and decided to comply with Super 8's quality standards
in order to remain in the system. Super 8 will continue to be vigilant with its
quality assurance policies.
NATIONAL ADVERTISING AND PROMOTIONS FOR 1997
Super 8 Motels will continue its NASCAR sponsorship with Bill Elliott
Motorsports in 1997. Advertising space has been acquired on the TV panel located
on the rear of Elliott's Winston Cup car #94. Other sponsors on the car include
Ford Thunderbird and McDonald's restaurants.
In order to increase television exposure, Super 8 will air its commercials on
the highly-viewed NBA playoff games this Spring. A total of 18 games is slotted
to reach the 70% male market.
<PAGE> 7
A thirteen-week schedule from April to June has been set on "Imus in the
Morning," a national radio program that airs during morning drive-time in 72
markets. Don Imus, the hottest radio personality in America today, covers
politics, current events, and celebrity interviews. Imus will do a live read of
five 30-second spots per week.
NEW SUPER 8 OPENINGS OF INTEREST
**San Diego at Sea World **Tucson, Arizona/Downtown and West
**Baton Rouge, Louisiana **Daytona Beach, Florida **Pittsburgh, Pennsylvania
**Memphis, Tennessee **Austin, Texas
REGIONAL NEWS
On April 7, key members of Peninsula Management Northwest traveled to REDMOND,
OREGON, for a Redmond Chamber of Commerce "Business After Hours" function, held
at the construction site of the newest Northwest Super 8 Motel. In addition to
an excellent turnout of Chamber members, Peninsula was joined by the Redmond
Mayor, Rotary President, and representatives of numerous area developers. Tours
of the facility were offered, and PMNW sales/marketing staff enlightened
attendees as to the amenities of the new Super 8.
This 85-room property features an elevator, central corridor, indoor pool and
spa, guest laundry facilities, electronic door locks, and a meeting room that
seats approximately 30 people. Adjacent to the property is a family-style
restaurant, which will complement the Super 8 operation well. Look for this
motel to open on June 27 for a brisk Summer season.
Construction continues on a new 81 -room Super 8 Motel, which will be located
just off the I-5 corridor in WOODBURN, OREGON. The property will feature all the
amenities mentioned above, including a complementary continental breakfast,
indoor pool and spa, and a handicapped-accessible suite. A Fall opening date
will be announced in the next edition of the Update.
SUPER 8 MOTELS NORTHWEST II
Primarily due to the termination of the large Navy contract at the Bremerton
Super 8 Motel, first quarter Total Sales for Super 8 Motels Northwest II
declined by $165,582, when compared to the same time period in l996. Overall,
costs were controlled very well at the properties, resulting in a net income of
$76,900.
Bremerton occupancy has now returned to more customary winter occupancy, ending
the first quarter at 46%, while average daily rate has increased $2.37 over
1996. Yakima occupancy continues to be somewhat slow. Occupancy is down from
1996 by about 3 percentage points, but still ended the quarter at 54%. In an
effort to build occupancy, room rate increases were not implemented in Yakima
with the result being a slightly reduced average daily rate. Occupancy at
Portland, though down from the very high 1996 levels, remained at over 76%,
while room rate rose just under a dollar. This property continues to do well
despite the fact that additional rooms keep being added to the area.
<PAGE> 8
First quarter distribution is in the amount of $25.00 per partnership unit. This
represents a 10% annualized return on your original partnership investment.
Enclosed you will find occupancy and room rate charts, first quarter unaudited
financial statements, and a copy of the December 31,1996 year-end audited
financial statements as prepared by the CPA firm of Moss Adams.
The partnership informational Meeting was held at SeaTac on April 14th and at
Portland on April 16th. Partner attendance was very good and we appreciate the
interest. One of the comments at the meeting was that once again there had been
offers made by various liquidity funds to purchase units at far below the
original unit cost of $1,000. If you find a need to dispose of your units, you
are urged to call your NASD registered securities representative or the
partnership office so that you may be assisted in receiving a fair value for
your units.
The official Business Meeting for Super 8 Motels Northwest II will be held on
Thursday, June 12, 1997, at 11:30 a.m. at the Corporate Office of The Peninsula
Group located at 7515 Terminal Street S.W., Tumwater, Washington.
Thank you for your continuing support and remember: If your summer plans include
travel, CALL SUPERLI NE AT 1-800-800-8000 TO RESERVE YOUR ROOM AT ANY SUPER 8
LOCATED IN THE UNITED STATES AND CANADA.
- --------------------------------------------------------------------------------
The Official Publication of
THE PENINSULA GROUP, INC.
7515 Terminal St. SW, Tumwater, WA 98501 / (360) 943-8000
Owners and operators of America's finest economy lodging serving 23 convenient
Northwest locations: ALASKA: Anchorage - Fairbanks - Juneau - Ketchikan OREGON:
Ashland - Bend - Corvallis - Grants Pass - Klamath Falls Portland International
Airport - *Redmond - *Roseburg - Salem - Wilsonville - *Woodburn WASHINGTON:
Bremerton - Ellensburg - Federal Way Ferndale - Kelso - Kennewick - Moses Lake -
Olympia/Lacey - Port Angeles - Sea-Tac International Airport - Walla Walla -
Yakima
*Coming soon
<PAGE> 9
SUPER 8 MOTELS NORTHWEST II
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 551,202 $ 733,916
Accounts receivable, trade 17,457 76,718
Accounts receivable, affiliates 3,149 2,089
Inventory 58,319 57,853
Prepaid expenses 11,613 15,000
Total current assets 641,740 885,576
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land 714,301 714,301
Buildings 4,097,107 4,097,107
Equipment, furniture and fixtures 1,241,326 1,239,937
----------- -----------
6,052,734 6,051,345
Less accumulated depreciation (2,738,663) (2,581,127)
Total property and equipment 3,314,071 3,470,218
----------- -----------
OTHER ASSETS
Loan fees 26,375 26,375
Franchise fees 45,000 45,000
Lease option costs 6,000 6,000
----------- -----------
77,375 77,375
Less accumulated amortization (46,214) (41,376)
----------- -----------
Total other assets 31,161 35,999
----------- -----------
$ 3,986,972 $ 4,391,793
=========== ===========
</TABLE>
<PAGE> 10
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable, trade $ 47,021 $ 43,098
Accounts payable, affiliates 83,663 43,694
Accrued expenses 126,478 115,876
Current portion of long-term debt 155,000 142,000
----------- -----------
Total current liabilities 412,162 344,668
----------- -----------
NONCURRENT LIABILITIES
Long-term debt, net of current portion shown above 2,345,801 2,499,820
Accrued rent under lease agreements 137,021 121,038
----------- -----------
2,482,822 2,620,858
----------- -----------
ACCRUED PROPERTY MANAGEMENT FEES 699,048 1,367,160
----------- -----------
PARTNERS' EQUITY
General partners' equity (deficiency) 63,632 (30,618)
Limited partners' equity (authorized, issued and
outstanding 4,052 units) 329,308 89,725
----------- -----------
392,940 59,107
----------- -----------
$ 3,986,972 $ 4,391,793
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 469,595 0
<SECURITIES> 0 0
<RECEIVABLES> 10,948 0
<ALLOWANCES> 0 0
<INVENTORY> 58,319 0
<CURRENT-ASSETS> 543,410 0
<PP&E> 6,052,733 0
<DEPRECIATION> 2,781,320 0
<TOTAL-ASSETS> 3,844,826 0
<CURRENT-LIABILITIES> 358,773 0
<BONDS> 3,135,386 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 350,667 0
<TOTAL-LIABILITY-AND-EQUITY> 3,844,826 0
<SALES> 0 0
<TOTAL-REVENUES> 676,035 0
<CGS> 0 0
<TOTAL-COSTS> 274,337 0
<OTHER-EXPENSES> 281,223 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 46,579 0
<INCOME-PRETAX> 76,900 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 76,900 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 76,900 0
<EPS-PRIMARY> 16.13 0
<EPS-DILUTED> 16.13 0
</TABLE>
