UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to __________
Commission File No. 1-9311
PRIME MOTOR INNS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 22-2754689
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o WHI
4243 Hunt Road
Cincinnati, Ohio 45242
(Address of principal offices, including zip code)
(513) 891-2920
(Registrant's telephone number, including area code)
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 X No ___
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations - Three
and Nine Months Ended September 30, 1996 and 1995 5
Consolidated Statement of Partners' Deficit -
Nine Months Ended September 30, 1996 6
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION AND SIGNATURES:
Item 6. Exhibits and Reports on Form 8-K 15
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30,
1996 December 31,
ASSETS (Unaudited) 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,459 $ 792
Accounts receivable, net 1,012 661
Prepaid expenses 864 941
Other current assets 369 375
Total current assets 4,704 2,769
Property and equipment
net of accumulated depreciation
and amortization 49,335 52,146
Cash and cash equivalents restricted for:
Acquisition of property
and equipment 1,007 831
Interest and taxes 489 491
Total restricted cash and
cash equivalents 1,496 1,322
Other assets, net 597 764
$ 56,132 $ 57,001
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30,
1996 December 31,
Liabilities and Partners' Deficit (Unaudited) 1995
<S> <C> <C>
Current liabilities:
Trade accounts payable $ 535 $ 568
Accrued payroll 618 688
Accrued payroll taxes 144 286
Accrued vacation 478 473
Accrued utilities 277 326
Sales tax payable 504 242
Other current liabilities 1,033 671
Total current liabilities 3,589 3,254
Long-term debt 65,679 65,645
Deferred interest 3,617 3,685
Other liabilities 150 150
Total long-term liabilities 69,446 69,480
Total liabilities 73,035 72,734
Commitments
Partners' deficit:
General partner ( 740) ( 729)
Limited partners (16,163) (15,004)
Total partners' deficit (16,903) (15,733)
$ 56,132 $ 57,001
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, except per Unit amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Lodging $ 11,999 $ 11,260 $ 29,828 $ 28,383
Food & beverage 2,444 2,445 6,997 6,962
Other income 91 110 281 304
Lease settlement proceeds - - - 1,025
Total revenue 14,534 13,815 37,106 36,674
Expenses
Direct operating expenses
Lodging 2,617 2,593 6,992 6,807
Food and beverage 2,083 2,067 5,893 5,803
Marketing 952 908 2,608 2,522
Utilities 780 853 2,293 2,241
Repairs and maintenance 887 885 2,664 2,630
Rent 329 329 987 988
Insurance 183 193 549 579
Property taxes 369 383 1,107 1,149
Other 2,303 2,113 6,082 5,701
Other general and administrative 202 213 505 501
Depreciation and amortization 1,355 1,370 4,059 4,112
Interest expense 1,494 1,502 4,537 4,559
Total expenses 13,554 13,409 38,276 37,592
Net income (loss) 980 406 ( 1,170) ( 918)
Net income (loss) allocable to
general partner 10 4 ( 11) ( 9)
Net income (loss) allocable to
limited partners $ 970 $ 402 $( 1,159) $( 909)
Number of limited partner
units outstanding 4,000 4,000 4,000 4,000
Net income (loss) allocable to
limited partners per unit $ 0.24 $ 0.10 $( 0.29) $( 0.23)
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT
(Dollars in Thousands)
Unaudited
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
General Limited
Partner Partners Total
<S> <C> <C> <C>
Balance at January 1, 1996 $( 729) $(15,004) $(15,733)
Net loss for the nine months
ended September 30, 1996 ( 11) ( 1,159) ( 1,170)
Balance at September 30, 1996 $( 740) $(16,163) $(16,903)
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Unaudited
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 1,170) $( 918)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization of property
and equipment 3,892 3,862
Lease settlement proceeds - ( 1,025)
Amortization of other assets 167 250
Amortization of debt discount 34 32
Increase (decrease from changes in:
Accounts recievable ( 351) ( 57)
Prepaid expenses 77 150
Other current assets 6 12
Trade accounts payable ( 33) 103
Accrued payroll and payroll taxes ( 212) ( 270)
Accrued vacation 5 -
Accrued utilities ( 49) 37
Sales tax payable 262 254
Other current liabilities 362 435
Deferred interest ( 68) ( 551)
Net cash provided by operating activities 2,922 2.314
Cash flows from investing activities:
Additions to property and equipment ( 1,081) ( 1,407)
Increase in restricted cash ( 174) ( 399)
Net cash used in investing activities ( 1,255) ( 1,806)
Cash flows from financing activities:
Borrowings under revolving credit facility 1,600 1,200
Repayments of revolving credit facility ( 1,600) ( 1,200)
Net cash provided by financing activities - -
Net increase in cash and cash equivalents 1,667 508
Cash and cash equivalents, beginning of period 792 1,368
Cash and cash equivalents, end of period $ 2,459 $ 1,876
Supplementary cash flow data:
Interest paid $ 4,571 $ 5,078
Noncash activities:
Lease settlement proceeds received
from former affiliate in the form
of stock used to reduce long-term debt $ - $ 1,025
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
PRIME MOTOR INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
In the opinion of the General Partner, the accompanying interim unaudited
financial statements of Prime Motor Inns Limited Partnership (the "Partnership")
and its 99% owned subsidiary, AMI Operating Partners, L.P. ("Operating
Partners"), referred to collectively as the "Partnerships", contain all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Partnerships as of September 30,
1996, their results of operations for the three and nine months ended September
30, 1996 and 1995, and their cash flows for the nine months ended September 30,
1996 and 1995.
The results of operations for the nine months ended September 30, 1996, are
not necessarily indicative of the results to be expected for the full year.
Unless cash flows from operations are sufficient to pay operating expenses and
debt service, and create required reserves, the Partnerships may not be able
to continue as going concerns.
Information included in the consolidated balance sheet as of December 31, 1995
has been derived from the audited balance sheet in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1995 filed with the
Securities and Exchange Commission (the "1995 Form 10-K"). These interim
unaudited financial statements should be read in conjunction with the audited
consolidated financial statements and other information included in the 1995
Form 10-K.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Partnership
and Operating Partners. Operating Partners operates under a 52/53 week fiscal
year (1995 was a fifty two week year and 1996 is a fifty three week year).
Operating costs of the Partnership are reflected in the consolidated statements
of operations as other general and administrative expenses. All material
intercompany accounts and transactions have been eliminated.
Cash Equivalents
Cash equivalents are highly liquid investments with a maturity of three months
or less when acquired.
Property and Equipment
Property and equipment are stated at the lower of cost or fair market value.
Expenditures for improvements and major renewals are capitalized. Expenditures
for maintenance and repairs, which do not extend the useful life of the asset,
are expensed as incurred. For financial statement purposes, provision is
made for depreciation and amortization using the straight-line method over the
lesser of the estimated useful lives of the assets or the terms of the related
leases. For federal income tax purposes, accelerated methods are used in
calculating depreciation.
Impairment of Long Lived Assets
In March, 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long Lived Assets", which is effective for
years beginning after December 15, 1995, with earlier adoption encouraged.
The Partnership elected early adoption of SFAS No. 121 in 1995. In accordance
with this new pronouncement, the Partnerships review for impairment and
recoverability of, primarily, property and equipment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable.
Other Assets
Franchise fees, deferred lease costs and deferred debt acquisition costs are
amortized on a straight-line basis over the estimated lives of the assets or
the specific term of the related agreement, lease or mortgage loan.
Net Loss Per Unit
Net loss per Unit is calculated based on net loss allocable to limited partners
divided by the 4,000,000 Units outstanding.
Reclassifications
Certain amounts in the 1995 financial statements have been reclassified to
conform to the 1996 presentation.
3. OPERATIONS OF THE INNS:
Winegardner & Hammons, Inc. ("W&H") manages the operations of the Inns (the
"Inns") pursuant to a management agreement with Operating Partners. At
September 30, 1996 and December 31, 1995, the Partnerships had approximately
$113,000 and $61,000, respectively, in receivables from an entity controlled
by W&H which manages certain of the Inns' lounges.
OTHER ASSETS:
The components of other assets are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Deferred lease costs $ 21,000 $ 21,000
Debt acquisition costs 2,839,000 2,839,000
Franchise fees 820,000 820,000
Other 4,000 4,000
3,684,000 3,684,000
Less accumulated
amortization 3,087,000 2,920,000
$ 597,000 $ 764,000
</TABLE>
Amortization of debt acquisition costs charged to expense was $121,000 and
$145,000 in the nine months ended September 30, 1996 and 1995, respectively.
Amortization of franchise acquisition costs charged to expense was $46,000 and
$105,000 in the nine months ended September 30, 1996 and 1995, respectively.
5. DEBT
The Tranche A portion of the Priming Loan was fully drawn in July, 1994.
Therefore, no additional debt for capital improvements has been incurred by
Operating Partners. All capital improvements and refurbishment's made during
the nine months ended September 30, 1996 were funded from cash restricted for
acquisition of property and equipment (the "FF&E Reserve").
During the first quarter of 1996, Operating Partners borrowed $1,600,000 from
the revolving credit portion of the Priming Loan, defined as the Tranche B Loan.
This borrowing funded operating expenses that could not be paid from operating
revenues during the first quarter. Operating Partners repaid the entire
$1,600,000 of the Tranche B Loan from excess working capital in the second
and third quarters of 1996, as required under the Priming Loan.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
<S> <C> <C>
Mortgage Notes, net of
unamortized discount $ 54,179,000 $ 54,145,000
Priming Loan 11,500,000 11,500,000
$ 65,679,000 $ 65,645,000
Unamortized discount on the Mortgage Notes was $170,000 and $204,000 at
September 30, 1996 and December 31, 1995, respectively.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
The Partnership derives its income from its interest in Operating Partners,
whose income currently is derived from the operations of the Inns. As part
of its 1992 plan of reorganization, Operating Partners restructured its
Mortgage Notes under the Restated Loan Agreement and arranged for a Priming
Loan to fund necessary capital improvements and to finance operating
deficiencies. The ability of the Partnership to pay operating expenses and
debt service, and to create required reserves, depends upon the ability of
Operating Partners to increase future cash flows from operations. Unless cash
flows from operations are sufficient, the Partnerships may not be able to
continue as going concerns. It is the intention of the Partnerships to continue
to operate the Inns as going concerns. On September 7, 1996, Operating Partners
entered into a purchase agreement for the sale of the Moravia Inn. On or
before December 6, 1996, the buyer must give notice of intent to close or may
terminate the purchase agreement without penalty. Under limited circumstances
and at the cost of the buyer, the contract may be extended. Upon consummating
the sale, the net sales proceeds will be utilized to reduce the outstanding
principal balance of the Priming Loan.
The Partnerships' investment in the Inns continues to be subject to the risks
generally incident to the ownership of real estate, including those relating
to the uncertainty of cash flow to meet fixed obligations, adverse changes in
national economic conditions, adverse changes in local market conditions,
construction of new hotels and/or the franchising by Holiday Inn of competitor
hotels, changes in interest rates, the availability of financing for operating
or capital needs, changes in real estate tax rates and other operating expenses,
adverse changes in governmental rules and fiscal policies, acts of God (which
may result in uninsured losses), condemnation and other factors that are beyond
the control of the General Partner, the Partnership, Operating Partners or W&H.
Results of Operations
Operations in the third quarter of 1996 generated net income of $980,000,
compared to net income of $406,000 generated during the third quarter of 1995.
The net loss for the nine months ended September 30, 1996 was $1,170,000, as
compared to a net loss of $918,000 in the first nine months of 1995.
Excluding the lease settlement proceeds of $1,025,000 recognized in the first
quarter of 1995, the net loss from operations decreased by $773,000 in the first
nine months of 1996, from $1,943,000 in the first nine months of 1995 to
$1,170,000 in the first nine months of 1996.
Total revenues for the three months ended September 30, 1996 increased
to $14,534,000 from $13,815,000 in the corresponding quarter of 1995. Excluding
the $1,025,000 in lease settlement proceeds recognized in the first quarter of
1995, and the other income recognized in the first nine months of each year,
total revenues from operations ("Operating Revenues"), which consist of lodging,
food and beverage revenues, increased in the first nine months of 1996 to
$36,825,000, as compared to $35,345,000 in the previous nine months of 1995.
The increase in Operating Revenues is primarily due to the increase in lodging
revenues from the achievement of higher average daily room rates (ADR) at the
Inns.
The following table compares lodging revenues, occupancy percentage levels and
ADR, for the periods indicated:
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Lodging Revenues $11,999,000 $11,260,000 $29,828,000 $28,383,000
Occupancy 72.4% 72.2% 62.1% 63.2%
ADR $71.44 $67.06 $68.86 $64.39
</TABLE>
The ADR increased 6.5%, or $4.38, from a $67.06 ADR in the third quarter of
1995 to a $71.44 ADR in the third quarter of 1996. For the nine months ended
September 30, 1996, the ADR increased 6.9%, or $4.47, from $64.39 in the first
nine months of 1995 to $68.86 in the first nine months of 1996. This has been
accomplished because the Inns have replaced higher volume, lower ADR guests and
have retained market segments that are willing to pay higher room rates.
Operating Partners has been able to attract and maintain the higher rated
market segments because of the continued upgrades and maintenance at the Inns,
along with conducting effective internal marketing and sales promotions. While
the Partnerships anticipate that the Inns can continue to improve their mix of
market segments, and thereby increase ADR and improve profit margins, there
can be no assurance as to whether this will be realized, due to, among other
things, competitive pressures in the marketplace
Occupancies for the three months ended September 30, 1996 were up slightly, to
72.4%, from 72.2% in the three months ended September 30, 1995. However,
occupancies decreased 1.1 percentage points, to 62.1% in the first nine months
of 1996, as compared to 63.2% during the first nine months of 1995. The decline
in occupancy is attributable to two main factors. First, occupancies decreased
2.5 percentage points in the first quarter of 1996 due primarily to the harsh
winter weather in the first quarter of 1996, as compared to the previous year.
Second, the Inns removed higher volume, lower rated ADR market segments (such
as airline crews and tour groups) to provide available rooms during higher
demand periods for the market segments with higher ADR. Therefore, it has
been difficult to significantly increase the occupancy levels of the Inns, and
Operating Partners believes it will continue, due to the lack of increases in
demand where the Inns are located. Contributing to current and future
competition are certain competitor changes, which include conversions of
competitor hotels to be Holiday Inns and the opening of new hotels in certain
markets where the Inns are located.
Food and beverage revenues for the three and nine months ended September 30,
1996 and 1995 were relatively flat. In the third quarter of 1996, food and
beverage revenues were $2,444,000, which was $1,000 less than the corresponding
quarter of 1995. Overall, in the nine months ended September 30, 1996,
food and beverage revenues increased to $6,997,000 as compared to $6,962,000
in the first nine months of 1995. The primary reason for this increase is from
revenues generated from meeting room facilities and the amenities provided to
guests utilizing these facilities. These guests are the higher rated market
segments that the Inns have been attracting, who use the meeting room
facilities at the Inns. Also, during the nine months ended September 30,
1996, beverage revenues have increased, relating to the change in mix of
market segments at the Inns, to those guests that are more likely to use the
lounge facilities at the Inns.
Direct operating expenses increased $179,000 for the quarter ended September 30,
1996, to $10,503,000, from $10,324,000 during the corresponding quarter of 1995.
A portion of this increase is in lodging expenses, such as room amenities,
travel agent commissions and guest supplies, which are incurred in servicing
the higher rated market segments. In addition, other lodging and food and
beverage expenses increased during the third quarter of 1996 over the same
quarter of 1995, representing inflationary increases in labor and food costs.
Increased marketing costs during the third quarter of 1996 reflect increases
in marketing and sales efforts. The utility costs decreased during the third
quarter of 1996 as compared to the same quarter of 1995, as a result of milder
weather in the third quarter of 1996 than in the third quarter of 1995, which
was reflected in reduced electricity consumption. Utility costs increased for
the nine months ended September 30, 1996 as compared to the first nine months
of 1995, as a result of the severe winter weather in the first quarter of 1996
as compared to the milder weather in the first quarter of 1995. Other
direct operating costs increased, due in part because certain costs, such
as credit card commissions, Inn management fees and franchise fees are based
upon, and increase with, revenues. In addition, inflationary increases in
administrative labor and expenses, plus employment cost increases, have
contributed to the year over year increase in other direct operating costs.
Depreciation and amortization decreased in the third quarter of 1996 from the
third quarter of 1995, due to the original debt acquisition costs having been
fully amortized in the first quarter of 1995, and certain of the Inn's original
franchise acquisition fees also becoming fully amortized at the end of 1995.
Liquidity and Capital Resources
The following table represents the changes in cash and cash equivalents for
the nine months ended September 30, 1996:
<TABLE>
<CAPTION>
<S> <C>
Net cash provided by operating activities $ 2,922,000
Net cash used in investing activities (1,255,000)
Net cash provided by financing activities -
Net increase in cash and cash equivalents $ 1,667,000
</TABLE>
Cash flows provided by operating activities of $2,922,000 are a result of the
increased revenues and improved margins in the quarter and nine months ended
September 30, 1996, compared to the same periods in 1995. Historically, the
Inns have experienced negative cash flows from operations in the first quarter
of each year and increased cash flows from operations during the second and
third quarters of each year.
Net cash used in investing activities totaled $1,255,000 for the nine months
ended September 30, 1996, resulting from cash utilized for capital improvements
and refurbishment's of $1,081,000, and the net increase in restricted cash of
$174,000. The net increase in restricted cash included an increase in the
FF&E Reserve of $176,000 (the funding to the FF&E Reserve of $1,757,000 at 5%
of revenues, plus interest earned on the account, exceeded capital expenditures
of $1,581,000, which were funded from the FF&E Reserve), net of a decrease of
$2,000 in the interest reserve and tax escrow accounts.
Operating Partners borrowed $1,600,000 under the Tranche B portion of the
Priming Loan for operating cash deficiencies during the first quarter of 1996
and repaid the entire $1,600,000 of the Tranche B Loan from excess working
capital during the second and third quarters of 1996.
The Partnerships anticipate that their future earnings, together with the
advances under the Priming Loan, will enable the Partnerships to pay all
operating expenses, service debt, create required reserves and satisfy the
current requirements under the HII franchise agreements. However, while the
Partnerships' budgets and capital plans reflect their present best estimates
of future events, those events are beyond the control of the Partnerships, the
General Partner and W&H, and no assurances can be given that the Partnerships
will have the liquidity to meet future operating and capital commitments.
Further, the "Holiday Inn" franchise of ten of the Inns will expire on June 30,
1997 and the franchises of two additional Inns will expire on December 31, 1997.
Before the expiration of the franchise for any "Holiday Inn" property, the
property is inspected by HII and that inspection forms the basis for a Property
Improvement Plan ("PIP"), the completion of which is a condition to the renewal
of the franchise for the property. Prior to December 31, 1995, HII had
inspected and prepared PIP's for ten of the Inns, whose franchises expire in
1997. During the second quarter of 1996, HII inspected and prepared PIP's for
the remaining two hotels whose franchises expire in 1997, (though HII had
previously indicated that it might not renew those franchises and, accordingly,
had not prepared PIP's for those Inns). Operating Partners' current estimate of
the cost of the capital expenditures of the PIP's for the twelve Inns, could
be in the range of $15,000,000, although Operating Partners believes that the
scope of work and related costs are subject to negotiation. Accordingly,
Operating Partners is evaluating, for each Inn, the relative benefits and costs
(including the franchise renewal/application fee and the PIP costs) of renewing
the "Holiday Inn" franchise for the Inn, operating the Inn under other
franchises that may be available, and operating the Inn without a franchise
affiliation. In addition, Operating Partners is evaluating the improvements
and expenditures included in each PIP in order to identify those items that
Operating Partners believes will enhance the Inn's ability to compete in its
market and will add value to the Inn, and those improvements or expenditures
that Operating Partners believes to be less necessary or to add little value,
and has begun negotiating with HII the scope of work included in each PIP and
the length of time that will be required to complete such improvements.
Generally, in connection with the renewal of the franchise for an Inn,
Operating Partners will have one year, which may be negotiable, from the
franchise expiration date to complete the capital improvements included in the
PIP. It is anticipated that those capital improvements will be financed
partially from the FF&E Reserve and from additional financing, if available.
Operating Partners has been actively investigating financing possibilities.
However, there can be no assurance that additional financing will be available,
or that the Partnerships can obtain financing. If financing is not available and
Operating Partners is unable to defer the timing and costs of the PIP's, the
Inns may have to change franchise affiliations or become independent hotels.
Further, the Priming Loan and Restated Loan Agreements require prior approval
by the Lenders of any franchise changes, capital expenditures or additional
financing.
PART II. OTHER INFORMATION AND SIGNATURES
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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.
PRIME MOTOR INNS LIMITED PARTNERSHIP
(REGISTRANT)
By: Prime-American Realty Corp.
General Partner
Date: November 11, 1996 By: /s/ S. Leonard Okin
S. Leonard Okin
Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1993
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 0 2459
<SECURITIES> 0 0
<RECEIVABLES> 0 1012
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 369
<PP&E> 0 49335
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 56132
<CURRENT-LIABILITIES> 0 3589
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 (16903)
<TOTAL-LIABILITY-AND-EQUITY> 0 56132
<SALES> 14443 36825
<TOTAL-REVENUES> 14534 37106
<CGS> 4700 12885
<TOTAL-COSTS> 10503 29175
<OTHER-EXPENSES> 1557 4564
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1494 4537
<INCOME-PRETAX> 980 (1170)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 980 (1170)
<EPS-PRIMARY> .24 (.29)
<EPS-DILUTED> .24 (.29)
</TABLE>
