<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB - Quarterly or Transitional Report
/ X / QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File Number: 33-16163-LA
Nashville Super 8 Ltd., A California Limited Partnership
(Exact name of small business issuer as specified in its charter)
California 33-0249749
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3145 Sports Arena Blvd., San Diego, CA 92110
(Address of principal executive offices)
(619) 226-1212
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant (1) has filed all reports required to be filed
by Sections 13 or 15(d) of the Exchange Act during the last 12 months (or for
such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes /X/ No / /
State the number of limited partnership interests outstanding as of the
latest practicable date: 3,975
<PAGE>
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial information:
Balance Sheet as of March 31, 1996 and December 31, 1995.
Statement of Operations for the three-month periods ended March 31, 1996
and March 31, 1995.
Statement of Cash Flows for the three-month periods ended March 31, 1996
and March 31, 1995.
Notes to Financial Statements.
1
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
(Unaudited)
(Part 1)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ------------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 36,424 $ 56,208
Accounts receivable 10,069 6,490
Operating supplies 15,455 15,455
Prepaid expenses 32,154 10,439
Due from affiliates (note 4) 0 7,899
---------- ---------
Total current assets 94,102 96,491
Investment property, at cost:
Land 711,092 711,092
Building and improvements 2,801,592 2,796,407
Furniture, fixtures and equipment 616,138 608,295
---------- ----------
4,128,822 4,115,794
Less accumulated depreciation 952,316 910,756
---------- ----------
Investment property, net of
accumulated depreciation 3,176,506 3,205,038
---------- ----------
Franchise fees, net (note 3) 13,167 13,417
---------- ----------
$3,283,775 $3,314,946
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
(Unaudited)
(Part 2)
<TABLE>
<CAPTION>
LIABILITIES AND March 31, December 31,
PARTNER'S CAPITAL ACCOUNTS 1996 1995
-------------------------- ------------- ------------
<S> <C> <C>
Current liabilities:
Notes Payable (note 5) $ 7,541 $ 7,374
Accounts payable and accrued expenses 80,635 65,038
Due to affiliates (note 4) 20,176 908
---------- ----------
Total current liabilities 108,352 73,320
---------- ----------
Long-term debt, less
current portion (note 5) 169,746 171,640
---------- ----------
Total liabilities 278,098 244,960
---------- ----------
Partners' capital accounts (deficit):
General Partners:
Cumulative net earnings 6,033 12,463
Cumulative cash distributions (50,450) (50,450)
---------- ----------
(44,417) (37,987)
Limited partners:
Capital contributions,
net of offering costs 3,449,823 3,449,823
Cumulative net earnings 54,314 112,193
Cumulative cash distributions (454,043) (454,043)
---------- ----------
3,050,094 3,107,973
---------- ----------
Total partners' capital accounts 3,005,677 3,069,986
---------- ----------
$3,283,775 $3,314,946
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Revenues:
Room revenues $ 176,437 $ 183,974
Phone revenues 3,857 3,612
Interest income 124 2,034
Other income 388 394
---------- ----------
180,806 190,014
---------- ----------
Expenses:
Property operating expenses 107,918 92,062
Depreciation 41,560 34,125
General and administrative 42,351 37,196
Amortization 250 250
Management fees 10,841 11,271
Royalties and advertising 10,566 11,029
Real estate taxes 9,087 9,235
Marketing 17,629 16,643
Interest expense 4,913 0
---------- ----------
245,115 211,811
---------- ----------
Net earnings $ (64,309) $ (21,797)
---------- ----------
---------- ----------
Net earnings per limited
partnership interest $ (14.56) $ (4.94)
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statement of Cash Flows
Three Months
Ended March 31, 1996 and March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ (64,309) $ (21,797)
Adjustments to reconcile net earnings to cash:
Depreciation and amortization 41,810 34,375
Changes in assets and liabilities:
(Increase) decrease in other assets: (25,294) (81,109)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 15,597 51,530
Due to/from Affiliates 27,167 10,392
---------- ----------
Net cash provided by operating activities (5,029) (6,608)
---------- ----------
Cash flows used in or provided from investing activities:
Acquisition & construct costs of investment property (13,028) (376,021)
---------- ----------
Net cash (used in)/provided by investing activities (13,028) (376,021)
---------- ----------
Cash flows from financing activities:
Increase (decrease) to Notes payable (1,727) 0
Cash distributions to partners 0 0
---------- ----------
Net cash (used in) financing activities (1,727) 0
---------- ----------
Net increase (decrease) in cash (19,783) (382,628)
Cash and cash equivalents at beginning of period 56,208 411,064
---------- ----------
Cash and cash equivalents at end of period $ 36,425 $ 28,436
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements
March 31, 1996
(Unaudited)
Readers of this quarterly report should refer to the partnership
audited financial statements and annual report Form 10-KSB (File
No. 33-16163-LA) for the period ended December 31, 1995, as
certain footnote disclosures which would substantially duplicate
those contained in such financial reports have been omitted from
this report.
1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nashville Super 8 Ltd., A California Limited Partnership (the
Partnership), (formerly Motels of America Series XI), a California
Limited Partnership, was formed on September 1, 1988 pursuant to
the California Revised Uniform Limited Partnership Act. The
purpose of the Partnership is to construct, own, and operate a
110-room "economy" motel under a Super 8 Franchise. The motel was
opened in April 1989.
The following is a summary of the Partnership's significant
accounting policies:
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid instruments purchased
with an original maturity of three months or less to be cash
equivalents.
INVESTMENT PROPERTY
Investment property is recorded at cost. Depreciation is computed
using the straight-line method based on estimated useful lives of
5 to 35 years. Maintenance and repair costs are expensed as
incurred, while significant improvements, replacements, and major
renovation are capitalized.
FRANCHISE FEES
Franchise fees are amortized over the 20-year life of the
franchise agreement. Organization costs are amortized over a 60-
month period.
INCOME TAXES
No provision for income taxes has been made as any liability for
such taxes would be that of the partners rather than the
Partnership.
(Continued)
7
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements (Continued)
Net income per interest is based upon the 90% allocated to limited
partners divided by 3,975 limited partner interests outstanding
throughout the year.
2. PARTNERSHIP AGREEMENT
Net income or loss and cash distributions from operations of the
Partnership are allocated 90% to the limited partners and 10% to
the general partner. Profits from the sale or other disposition
of Partnership property are to be allocated to the general partner
until its capital account equals zero; thereafter, to the limited
partners until their capital accounts equal their capital
contributions reduced by prior distributions of cash from sale or
refinancing plus an amount equal to a cumulative but not
compounded annual 8% return thereon which cumulative return shall
be reduced (but not below zero) by the aggregate amount of prior
distributions of cash available for distribution; thereafter, gain
shall be allocated 15% to the general partner and 85% to the
limited partners. Loss from sale shall be allocated 1% to the
general partner and 99% to the limited partners.
3. FRANCHISE AGREEMENT
The Partnership has entered into a twenty-year franchise agreement
with Super 8 Motels, Inc. to provide the Partnership with
consultation in the areas of design, construction and operation of
the motel. The agreement required the payment of an initial fee
of $20,000 and ongoing royalties equal to 4% of gross room
revenues and a chain-affiliated advertising fee equal to 2% of
gross room revenues.
During 1994, the franchise agreement was amended to reduce the
Partnership's area of protection in exchange for the franchisor
reducing by one-half the liquidated damages that would be payable
by the Partnership in the event it elects an early termination of
the franchise agreement. In addition, if the franchisor grants a
franchise in the released area and the occupancy rate at the
Partnership's motel drops by three or more points for any twelve
month period, the Partnership may obtain a 1% of gross room sales
reduction in royalties payable for the balance of the franchise
agreement or terminate the franchise agreement upon payment of the
reduced liquidated damages.
4. RELATED PARTY TRANSACTIONS
The motel is operated pursuant to a management agreement with GHG
Hospitality, Inc. (GHG). The agreement provides for the payment
of monthly management fees of 6% of gross revenues.
(Continued)
8
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements (Continued)
The Partnership has agreed to reimburse GHG for certain expenses
related to services performed in maintaining the books and
administering the affairs of the Partnership.
GHG and an affiliate, GMS Management Services, Inc. (GMS),
allocate to the Partnership certain marketing, accounting, and
maintenance salaries and certain other expenses directly related
to the operation of the Partnership.
Fees and reimbursements for partnership administration expenses
paid to GHG and GMS for the three months ended March 31, 1996 and
March 31, 1995 are as follows:
<TABLE>
<CAPTION>
Three Months Ended
------------------
3/31/96 3/31/95
------- -------
<S> <C> <C>
Management Fees $10,841 $11,271
Reimbursement for
partnership admini-
stration expenses $ 5,737 $ 5,406
Salaries and other
allocated expenses $ 6,534 $22,534
</TABLE>
In addition, all motel employees are paid by GMS. The Partnership
reimbursed GMS $67,343 for the wages of these employees including
a one percent processing fee. At March 31, 1996, $20,176 was owed
to GHG and GMS relating to reimbursement for these operating
expenses.
5. LONG-TERM DEBT
The Partnership has a note payable to a bank due in monthly
installments of approximately $2,150, including interest at the
bank's index rate plus 2% (10.75% at March 31, 1996) through
August 2009. The note is secured by a first priority deed of
trust on the Partnership's motel. The fair value of long-term
debt approximates its carrying amount based on the borrowing rates
currently available to the Partnership for loans with similar
terms.
(Continued)
9
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements (Continued)
5. LONG-TERM DEBT (Continued)
Principal payments on this note are due as follows:
1996 $ 7,374
1997 8,163
1998 9,063
1999 10,062
2000 11,170
Thereafter 133,182
$179,014
6. ADJUSTMENTS
In the opinion of the general partners, all adjustments
(consisting solely of normal recurring adjustments) necessary for
a fair presentation have been made to the accompanying figures as
of and for the nine months ended March 31, 1996.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition:
On September 1, 1987, the Partnership commenced its public offering
pursuant to its Prospectus. On September 27, 1988, the Partnership
completed the public offering. The Partnership received $3,449,823
(net of offering costs of $525,177) from the sale of limited
partnership interests. These funds were available for investment in
property, to pay legal fees and other costs related to the
investments, to pay operating expenses, and for working capital.
The majority of the proceeds was used to acquire and construct the
110-room "economy" motel on approximately 2 acres of land.
Construction of an indoor swimming pool, workout center, and spa and
renovations of the lobby and certain guest rooms were completed in
1995. The total cost of the project was approximately $677,300.
The project's cost was funded by cash from operations and a loan of
$184,258 from First Bank & Trust of Tennessee. As of March 31,
1996, a principal balance of $177,287 was outstanding on this note.
The note is payable in monthly installments of approximately $2,150
including interest at two points over the index which is the New
York Consensus Prime as quoted in the Wall Street Journal. The
interest rate at March 31, 1996 was 10.75%. The final balance is
due August 2009. The note is secured by a first priority deed of
trust on the Partnership's motel.
During 1994, the franchise agreement with Super 8 was amended to
reduce the Partnership's area of protection in exchange for the
franchisor reducing by one-half the liquidated damages that would be
payable by the Partnership in the event it elects an early
termination of the franchise agreement. The area of protection
released by the Partnership is small in relation to the original
area of protection and is to the south and west of the Partnership's
motel, away from Opryland and other growth areas. In addition, if
the franchisor grants a franchise in the released area and the
occupancy rate at the Partnership's motel drops by three or more
percentage points for any twelve month period, the Partnership may
obtain a 1% of gross room sales reduction in royalties payable for
the balance of the franchise agreement or terminate the franchise
agreement upon payment of the reduced liquidated damages.
Management has been considering changing to another national
franchisor due to the proliferation of Super 8 motels in the
Nashville area. However, there are no immediate plans to make such
a change.
The occupancy at the hotel is on a decline. Occupancy was 43.5% for
the three months ended December 31, 1995 compared to occupancy of
49.7% of the three months ended December 31, 1994 and 38.09% for the
three months ended March 31, 1996 compared to 55.46% for the three
months ended March 31, 1995.
11
<PAGE>
At March 31, 1996, the Partnership had cash and cash equivalents of
approximately $36,424. Such funds will be utilized for working
capital requirements.
Results of Operations:
For the three months ended March 31, 1996, room revenues were
$176,437, the occupancy rate was 38.09% and the average daily rate
was $48.02. This compares to the three months ended March 31, 1995
when room revenues were $183,975, the occupancy rate was 55.46% and
the average daily rate was $34.77.
Occupancy in the Nashville area is down for 1996 compared to 1995.
The local hotel association reports an occupancy decline of 12% for
the three months ended March 31, 1996. This is due in part to the
fact that Nashville has become over built with hotels. Another
factor causing this decline in business was the severe weather
conditions in the winter season. The partnership's occupancy was
down 17% for the three months ended March 31, 1996. The partnership
had a temporary contract with American Eagle Airlines in 1995 that
added 18 % to our occupancy for the three months ended March 31,
1995.
The addition of the swimming pool has increased our average rate
substantially ($48.50 for the three months ending March 31, 1996
compared to $35.21 for the three months ending March 31, 1995).
This increase in average daily rate enabled the hotel's gross
receipts to fall only 4% while occupancy was down 17%.
Management is working towards recovering from this decline in
occupancy. The partnership has increased its sales efforts to
travel agents, group tours and other leisure travel, as well as
corporate business.
The effect of current operations on liquidity was net cash used in
operating activities of $5,029 for the three months ending March 31,
1996. Investment property expenditures were $13,028 for the three
months ended March 31, 1996.
Seasonality:
The motel business is seasonal with the third quarter being the
strongest due to the tourist business and the last half of the
fourth quarter and the first half of the first quarter being the
weakest.
12
<PAGE>
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.
(REGISTRANT) NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
By: GHG Hospitality, Inc.
Corporate General Partner
BY (SIGNATURE) /s/ J. Mark Grosvenor
(NAME AND TITLE) J. Mark Grosvenor, President and Director
(DATE) May 13, 1996
BY (SIGNATURE) /s/ Sylvia Mellor Clark
(NAME AND TITLE) Controller and Director
(DATE) May 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 36,424
<SECURITIES> 0
<RECEIVABLES> 10,069
<ALLOWANCES> 0
<INVENTORY> 15,455
<CURRENT-ASSETS> 94,102
<PP&E> 4,128,822
<DEPRECIATION> 952,316
<TOTAL-ASSETS> 3,282,775
<CURRENT-LIABILITIES> 108,352
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,283,775
<SALES> 0
<TOTAL-REVENUES> 180,806
<CGS> 0
<TOTAL-COSTS> 240,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,913
<INCOME-PRETAX> (64,309)
<INCOME-TAX> 0
<INCOME-CONTINUING> (64,309)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (64,309)
<EPS-PRIMARY> (14.56)
<EPS-DILUTED> (14.56)
</TABLE>
