<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 September 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 Identification Number
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 September 30, 1997 and December 31, 1996.
Statement of Operations for the three months and nine months ended September
30, 1997 and September 30, 1996.
Statement of Cash Flows for the three months and nine months ended September
30, 1997 and September 30, 1996.
Notes to Financial Statements.
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
September 30, 1997 and December 31, 1996
(Unaudited)
(Part 1 of 2)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 197,249 $ 79,268
Accounts receivable 20,233 5,554
Operating supplies 15,455 15,455
Prepaid expenses 2,818 5,197
----------- -----------
Total current assets 235,755 105,474
Investment property, at cost:
Land 711,092 711,092
Building and improvements 2,853,862 2,805,283
Furniture, fixtures and equipment 629,523 624,444
----------- ----------
4,194,477 4,140,819
Less accumulated depreciation 1,208,456 1,078,638
------------ -----------
Investment property, net of
accumulated depreciation 2,986,021 3,062,181
----------- -----------
Franchise fees, net (note 3) 11,867 12,417
----------- ------------
$3,233,443 $3,180,072
=========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 1
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
September 30, 1997 and December 31, 1996
(Unaudited)
(Part 2 of 2)
<TABLE>
<CAPTION>
LIABILITIES AND September 30, December 31,
PARTNER'S CAPITAL ACCOUNTS 1997 1996
<S> <C> <C>
Current liabilities:
Notes Payable (note 5) $ 8,324 $ 8,163
Accounts payable and accrued expenses 122,817 66,229
Due to affiliates (note 4) 1,805 3,931
----------- ----------
Total current liabilities 132,946 78,323
----------- ----------
Long-term debt,less current portion(note 5) 158,013 164,108
----------- ----------
Total liabilities $290,959 $242,431
----------- ----------
Partners' capital accounts (deficit):
General Partners:
Cumulative net earnings $ 14,712 $ 14,228
Cumulative cash distributions (65,450) (65,450)
-------------- -------------
(50,738) (51,222)
Limited partners:
Capital contributions,
net of offering costs 3,449,823 3,449,823
Cumulative net earnings 132,441 128,082
Cumulative cash distributions (589,042) (589,042)
-------------- -------------
2,993,222 2,988,863
-------------- -------------
Total partners' capital accounts 2,942,484 2,937,641
------------ ------------
$3,233,443 $3,180,072
=========== ============
</TABLE>
See accompanying notes to financial statements.
Page 2
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Statement of Operations
Three Months and Nine Months Ended
September 30, 1997 and September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Room revenues $ 368,035 $ 339,959 $ 932,695 $848,108
Phone revenue 6,581 5,918 14,554 15,476
Interest income 336 184 477 454
Other income 625 825 1,562 1,645
------------- ------------ ------------ ------------
375,577 346,886 949,288 865,683
------------ ------------ ------------ ------------
Expenses:
Property operating 175,242 149,237 452,604 383,586
Depreciation 43,086 42,131 129,818 125,737
General/Administrative 82,096 37,191 166,037 113,951
Amortization 250 250 750 750
Management fees 22,515 20,792 56,929 51,904
Royalties/Avertising 18,911 20,397 48,876 50,865
Real estate taxes 13,639 7,786 33,364 26,510
Interest expense 4,586 4,504 13,502 13,933
Marketing 13,241 16,572 42,565 49,918
------------ -------------- ------------- ------------
373,566 298,860 944,445 817,154
------------ -------------- ------------- ------------
Net earnings $ 2,011 $ 48,026 $ 4,843 $ 48,529
======== ========= ========= ==========
Net earnings per limited
partnership interest $ .46 $ 10.87 $ 1.10 $ 10.99
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
Page 3
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Statement of Cash Flows
For the Three months and Nine Months Ended
September 30, 1997 and September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 2,011 $ 48,026 $ 4,843 $ 48,529
Adjustments to reconcile net income to cash:
Depreciation and amortization 43,336 42,381 130,568 126,487
(Increase)decrease in other assets: 27,909 7,672 (12,300) (3,663)
Increase (decrease) in:
Accounts payable/accrued expenses 30,466 9,606 56,588 12,950
Due to/from Affiliates (8,413) (21,133) (2,126) 11,698
Net cash provided by (used in) ---------- ---------- ----------- -----------
operating activities 95,309 86,552 177,573 196,001
---------- ---------- ----------- -----------
Cash flows from investing activities:
Investment property expenditures ( 5,619) (1,194) (53,658) (25,025)
---------- ---------- ----------- -----------
Net cash used in investing
activities (5,619) (1,194) (53,658) (25,025)
---------- ---------- ----------- -----------
Cash flows from financing activities:
Proceeds/(Paymts) of notes payable (1,950) (1,838) (5,934) (4,791)
Cash distributions to partners 0 (125,003) 0 (125,003)
Net cash provided by (used in) ---------- ---------- ----------- ---------
financing activities (1,950) (126,841) (5,934) (129,794)
---------- ---------- ----------- ---------
Net increase (decrease) in cash 87,740 (41,484) 117,981 41,182
Cash and cash equivalents,
beginning of period 109,509 138,874 79,268 56,208
---------- ---------- ----------- ---------
Cash and cash equivalents,
end of period 197,249 97,390 197,249 97,390
========= ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
Page 4
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements
September 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.
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)
Page 5
<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 contribu-
tions 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 6
<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 and nine months ended September 30, 1997 and
September 30, 1996 are as follows:
<TABLE>
<CAPTION>
Three months Ended Nine Months Ended
9/30/97 9/30/96 9/30/97 9/30/96
<S> <C> <C> <C> <C>
Management Fees $ 22,515 $20,792 $56,929 $51,904
Reimbursement for partnership
administration expenses $ 5,598 $ 5,885 $15,794 $17,654
Salaries and other
allocated expenses $ 5,107 $ 2,421 $21,716 $15,954
</TABLE>
In addition, all motel employees are paid by GMS. For the three months ended
September 30, 1997, the Partnership reimbursed GMS $102,995 for the wages of
these employees including a one percent processing fee. At September 30,
1997, $1,805 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 September 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 September 30, 1997 was $166,337. 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 7
<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>
Oct. 1997 - Dec 1997 $ 2,229
1998 9,063
1999 10,062
2000 11,170
2001 12,402
Thereafter 121,411
----------
$166,337
========
</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 three months and nine months
ended September 30, 1997.
7. SUBSEQUENT EVENT
In November 1997, the Partnership paid a distribution of $58,498.95 to the
limited partners.
Page 8
<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 September 30, 1997, a principal balance of $166,337 was out-
standing on this note. The note is payable in monthly installments of approxi-
mately $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 September 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 Partnership'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 $2,986,021 as of
September 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 September 30, 1997, the Partnership had cash and cash equivalents of
$197,249. Such funds will be utilized for working capital requirements and
distributions to partners.
Page 9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
Results of Operations:
For the three months ended September 30, 1997, room revenues were $368,035, the
occupancy rate was 75.58% and the average daily rate was $49.93. This compares
to the three months and nine months ended September 30, 1996 when room revenues
were $339,959, the occupancy rate was 63.48% and the average daily rate was
$54.91.
For the nine months ended September 30, 1997, room revenues were $939,695, the
occupancy rate was 63.04% and the average daily rate was $51.13. This compares
to the nine months ended September 30, 1996 when room revenues were
$848,108, the occupancy rate was 54.85% and the average daily rate was $53.23.
When compared to the third quarter 1996, average daily rate decreased by $4.98
while occupancy increased by 12.1% resulting in increased room revenue revenue
of $28,076. A comparison of year to date statistics shows 1997 room revenue is
$84,587 more than 1996, average daily rate decreased by $2.10 and occupancy
increased by 8.19%.
Profits for the three months ended September 30, 1997 were $2,011 and $48,026
for the three months ended September 30, 1996. The nine months ended September
30, 1996 showed profits of $48,529 compared to the nine months ended
September 30, 1997 of $4,843, a decrease of $43,686 .
The General Partner is currently considering strategic opportunities which the
Partnership could pursue in an effort to increase cash returns to the partners
and preserve and enhance the value of the Limited Partners' investment in the
Partnership. These opportunities include a sale of the property, a reorgan-
ization into another entity, and maintaining the status quo. In connection with
the evaluation of these opportunities the Partnership has incurred professional
fees in the amount of $61,137 which are included in general and administra-
tive expenses. This has contributed to the decreased profit for the nine months
ended September 30, 1997.
Business continues to be good. Our hotel is one of only a few in Nashville
ahead in revenue from last year. Along with the business already booked for
1998, the hotel booked another 90 rooms for three nights in April 1998 and
90 rooms for 3 nights in April 1999. Total of room revenue for these two groups
total $27,000. The fourth quarter 1997 is expected to out perform 1996's
fourth quarter.
Superline reservations accounted for approximately 13% of our room nights in
July 1997, 12.5 % in August 1997, and 10% in September 1997.
Capital expenditures for 1997 included guest room carpet replacement throughout
the entire property which was completed at the end of the first quarter 1997 at
a cost of $44,226. Again our most recent Quality Assurance inspection resulted
in a "Good" rating. Numerous TVs have been replaced and eight new air condi-
tioning/heating units were purchased. 1998 projects will most likely include
replacing hallway carpet. Also the hotel needs new box spring/mattresses for at
least 50 rooms, extensive painting (inside and out), some room furniture and
some bedspreads and drapes. Super 8 has announced electronic locks will be a
requirement for all franchisees by 1999.
Page 10
<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 $95,309 for the three months ending September 30, 1997 and
$177,573 for the nine months ended September 30, 1997. This compares to
net cash provided by operating activities of $86,552 for the three months ended
September 30, 1996 and $196,001 for the nine months ended September 30, 1997.
Investment property expenditures were $53,658, for the nine months ended
September 30, 1997 and $25,025 for the nine months ended September 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 11
<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) November 13, 1997
By (SIGNATURE) / s / Sylvia Mellor Clark
(NAME AND TITLE) Sylvia Mellor Clark, Controller
(DATE) November 13, 1997
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 197,249
<SECURITIES> 0
<RECEIVABLES> 20,233
<ALLOWANCES> 0
<INVENTORY> 15,455
<CURRENT-ASSETS> 235,755
<PP&E> 4,194,477
<DEPRECIATION> 1,208,456
<TOTAL-ASSETS> 3,233,443
<CURRENT-LIABILITIES> 132,946
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,233,443
<SALES> 0
<TOTAL-REVENUES> 949,288
<CGS> 0
<TOTAL-COSTS> 930,943
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,502
<INCOME-PRETAX> 4,843
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,843
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.10
</TABLE>
