<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 June 30, 1997
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)
1466 9th Avenue, San Diego, CA 92101
(Address of principal executive offices)
(619) 699-6100
(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 June 30, 1997 and December 31, 1996.
Statement of Operations for the three and six month periods ended
June 30, 1997 and June 30, 1996.
Statement of Cash Flows for the three and six month periods ended
June 30, 1997 and June 30, 1996.
Notes to Financial Statements.
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
June 30, 1997 and December 31, 1996
(Unaudited)
(Part 1 of 2)
<TABLE>
<CAPTION>
June 30, December 31,
ASSET 1997 1996
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 109,509 $ 79,268
Accounts receivable 43,421 5,554
Operating supplies 15,455 15,455
Prepaid expenses 7,539 5,197
----------- -----------
Total current assets 175,924 105,474
Investment property, at cost:
Land 711,092 711,092
Building and improvements 2,851,493 2,805,283
Furniture, fixtures and equipment 626,273 624,444
------------ -------------
4,188,858 4,140,819
Less accumulated depreciation 1,165,370 1,078,638
------------- -------------
Investment property, net of
accumulated depreciation 3,023,488 3,062,181
------------- -------------
Franchise fees, net (note 3) 11,917 12,417
------------- -------------
$3,211,329 $3,180,072
============ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
June 30, 1997 and December 31, 1996
(Unaudited)
(Part 2 of 2)
<TABLE>
<CAPTION>
LIABILITIES AND June 30, December 31,
PARTNER'S CAPITAL ACCOUNTS 1997 1996
<S> <C> <C>
Current liabilities:
Notes Payable (note 5) $ 8,124 $ 8,163
Accounts payable and accrued expenses 92,351 66,229
Due to affiliates (note 4) 10,218 3,931
---------- ----------
Total current liabilities 110,693 78,323
---------- ----------
Long-term debt, less current portion (note 5) 160,163 164,108
---------- ----------
Total liabilities $270,856 $242,431
---------- ----------
Partners' capital accounts (deficit):
General Partners:
Cumulative net earnings $ 14,511 $ 14,228
Cumulative cash distributions (65,450) (65,450)
----------- -----------
(50,939) (51,222)
Limited partners:
Capital contributions, net of offering costs 3,449,823 3,449,823
Cumulative net earnings 130,631 128,082
Cumulative cash distributions (589,042) (589,042)
----------- -----------
2,991,412 2,988,863
----------- -----------
Total partners' capital accounts 2,940,473 2,937,641
----------- -----------
$3,211,329 $3,180,072
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Statement of Operations
Three Months and Six Months Ended
June 30, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Room revenues $ 376,871 $ 331,712 $ 564,660 $508,149
Phone revenue 4,697 5,701 7,973 9,558
Interest income 82 146 141 270
Other income 795 432 937 820
------------- ------------ ------------ ------------
382,445 337,991 573,711 518,797
------------ ------------ ------------ ------------
Expenses:
Property oper-
ating expenses 165,101 126,431 277,362 234,349
Depreciation 44,575 42,046 86,732 83,606
General and
administrative 44,930 34,409 83,941 76,760
Amortization 250 250 500 500
Management fees 22,942 20,271 34,414 31,112
Royalties and
advertising 18,843 19,902 29,965 30,468
Real estate taxes 10,388 9,637 19,725 18,724
Interest expense 4,516 4,516 8,916 9,429
Marketing 16,904 15,717 29,324 33,346
------------ ------------ ----------- ------------
328,449 273,179 570,879 518,294
------------ ------------ ----------- ------------
Net earnings $ 53,996 $ 64,812 $ 2,832 $ 503
=========== ============ ============ ============
Net earnings per
limited partnership
interest $12.23 $ 14.67 $ .64 $ .11
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Statement of Cash Flows
Three Months and Six Months Ended
June 30, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 53,996 $ 64,812 $ 2,832 $ 503
Adjustments to reconcile net income to cash:
Depreciation/amortization 44,825 42,296 87,232 84,106
(Increase) decrease in:
Other assets (45,404) 13,959 (40,209) (11,335)
Increase (decrease) in:
Accounts payable
and accrued expenses 45,576 (12,253) 26,122 3,344
Due to/from Affiliates (25,295) 5,664 6,287 32,831
----------- ----------- ----------- ---------
Net cash provided by (used in)
operating activities 73,698 114,478 82,264 109,449
Cash flows from investing activities:
Investment property
expenditures ( 1,984) (10,803) (48,039) (23,831)
------------ ----------- ------------ -----------
Net cash used in
investing activities (1,984) (10,803) (48,039) (23,831)
------------ ------------ ---------- -----------
Cash flows from
financing activities:
Proceeds/(Payts)-notes payable(1,935) (1,226) (3,984) (2,953)
Cash distributions to partners 0 0 0 0
Net cash provided by ------------- ----------- ----------- ----------
(used in) financing
activities (1,935) (1,226) (3,984) (2,953)
------------- ----------- ----------- -----------
Net increase (decrease)
in cash 69,779 102,449 30,241 82,666
Cash and cash equivalents,
beginning of period 39,730 36,425 79,268 56,208
------------ ----------- ----------- -----------
Cash and cash equivalents,
end of period 109,509 138,874 109,509 138,874
============ =========== =========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements
June 30, 1997
(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, 1996, 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 39 years. Main-
tenance and repair costs are expensed as incurred, while significant improve-
ments, 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)
<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 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 reduce the royalties from 6% to 5% of gross
room sales and reduce the royalties payable for the balance of the franchise
agreement or terminate the franchise agreement upon payment of the reduced
liquidated damages. The occupancy rate was 51.81% in 1996 compared to 65.38%
in 1995 and, therefore, management has notified Super 8 that the Partnership
is entitled to the reduction in royalties approximately payable for the
balance of the franchise agreement.
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.
<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 and six months ended June 30, 1997 and June 30, 1996 are
as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/97
<S> <C> <C> <C> <C>
Management Fees $ 22,942 $20,271 $ 34,414 $31,112
Reimbursement for partnership
administration expenses $ 4,419 $ 6,032 $ 11,196 $11,769
Salaries and other
allocated expenses $ 7,079 $ 5,999 $ 17,273 $12,533
</TABLE>
In addition, all motel employees are paid by GMS. For the three months ended
June 30, 1997, the Partnership reimbursed GMS $88,342 for the wages of these
employees including a one percent processing fee. At June 30, 1997, $10,218
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%
(10.5% at June 30, 1997) through August 2009. The note is secured by a
first priority deed of trust on the Partnership's motel and the unpaid
balance at June 30, 1997 was $168,287. 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)
<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:
<TABLE>
<CAPTION>
<S> <C>
July 1997 - Dec 1997 $ 4,179
1998 9,063
1999 10,062
2000 11,170
2001 12,402
Thereafter 121,411
----------
$168,287
========
</TABLE>
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 six months ended June 30,
1997.
<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 June 30, 1997, a principal balance of $168,287 was out-
standing 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 June 30, 1997 was 10.5%. The final balance is due August
2009. The note is secured by a first priority deed of trust on the Partner-
ship's motel.
An independent appraisal valued the Partnership's motel property at $3,200,000
as of August 26, 1996. An update of this appraisal was completed in August
1997 showing the same value of $3,200,000. The carrying amount of investment
property on the Partnership's financial statements was $3,023,488 as of June
30, 1997.
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 reduce the royalties from 6% to 5%
of gross room sales and royalties payable for the balance of the franchise
agreement or terminate the franchise agreement upon payment of the reduced
liquidated damages. The occupancy rate was 51.81% in 1996 compared to 65.38%
in 1995 and, therefore, management has notified Super 8 that the Partnership
is entitled to the reduction in royalties payable for the balance of the
franchise agreement.
At June 30, 1997, the Partnership had cash and cash equivalents of $109,509.
Such funds will be utilized for working capital requirements. No distri-
bution to the partners will be paid for the three months ended June 30, 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
Results of Operations:
For the three months ended June 30, 1997, room revenues were $376,871, the
occupancy rate was 72.62% and the average daily rate was $53.80. This
compares to the three months ended June 30, 1996 when room revenues were
$331,712, the occupancy rate was 62.9% and the average daily rate was $54.67.
For the six months ended June 30, 1997, room revenues were $564,660, the
occupancy rate was 56.67% and the average daily rate was $51.94. This
compares to the six months ended June 30, 1996 when room revenues were
$508,149, the occupancy rate was 50.49% and the average daily rate was
$52.17.
When compared to the second quarter 1996, average daily rate decreased by $.87
while occupancy increased by 9.72% resulting in increased room revenue revenue
of $45,519. A comparsion of year to date statistics shows 1997 room revenue
is $56,511 more than 1996, average daily rate decreased by $.23 and occupancy
increased by 6.18%.
Profits for the six months ended June 30, 1997 were $2,832, and $ 503 for the
six months ended June 30, 1996. The three months ended June 30, 1997 showed
profits of $53,996 compared to the three months ended June 30, 1997 of
$64,812, a decrease of $10,816.
The General Partner is currently considering strategic opportunities which the
Partnership could pursue in an effort to maximize the value of the Limited
Partners' investment in the Partnereship. Because the General Partner wishes to
maintain as much flexibility to enter into any such strategic transaction which
may be identified, the General Partner has determined to retain the amounts
which it would normally distribute for the second quarter. General and
administrative expenses relating to this matter in the amount of $9,092
attributed to the decreased profit.
The motel has booked $42,273 in individual sales and tour groups for the period
July through December 1997. New corporate accounts should bring in $60,000
in increased revenue through the end of the year. Nashville has two new
professional sports teams, the NHL and NFL, which should result in extra
bookings and increase business for 1998 and 1999. Customers can now make
inquiries and reservations through the Internet at our E-Mail address at
[email protected].
Superline reservations accounted for approximately 9.6% of our room nights in
April 1997, 10.6% in May 1997, and 10.8% in June 1997. This compares to the
1996 Superline reservations provided as follows: April 1996 was 11%, May 1996
was 19%, and June 1996 was 13%.
Capital expenditures for 1997 include guest room carpet replacement through-
out the entire property which was completed at the end of the first quarter
1997 at an approximate cost of $44,000. Guest room carpet was responsible
for over 4,500 deficiency points on February's Quality Assurance Inspection.
Our most recent Quality Assurance inspection resulted in a "Good" rating.
Numerous TVs were replaced and six new air conditioning/heating units were
purchased. Future 1997 or 1998 projects will most likely include replacing
hallway carpet. Super 8 has announced electronic locks will be a requirement
for all franchisees by 1999.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
The effect of current operations on liquidity was net cash provided by operating
activities of $73,698 for the three months ending June 30, 1997 and $82,264
for the six months ended June 30, 1997. This compares to net cash provided
by operating activities of $114,478 for the three months ended June 30, 1996
and $109,449 for the six months ended June 30, 1997. Investment property
expenditures were $48,039. for the six months ended June 30, 1997 and $23,831
for the six months ended June 30, 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.
<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) August 13, 1997
By (SIGNATURE) / s / Sylvia Mellor Clark
(NAME AND TITLE) Sylvia Mellor Clark, Controller
(DATE) August 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 109,509
<SECURITIES> 0
<RECEIVABLES> 43,421
<ALLOWANCES> 0
<INVENTORY> 15,455
<CURRENT-ASSETS> 175,924
<PP&E> 4,188,858
<DEPRECIATION> 1,165,370
<TOTAL-ASSETS> 3,211,329
<CURRENT-LIABILITIES> 110,693
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,211,329
<SALES> 0
<TOTAL-REVENUES> 573,711
<CGS> 0
<TOTAL-COSTS> 561,963
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,916
<INCOME-PRETAX> 2,832
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,832
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,832
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
