<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, 1998
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 March 31, 1998 and December 31, 1997.
Statement of Operations for the three months ended March 31, 1998 and
March 31, 1997.
Statement of Cash Flows for the three months ended March 31, 1998 and
March 31, 1997.
Notes to Financial Statements.
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
March 31, 1998 and December 31, 1997
(Unaudited)
(Part 1 of 2)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 104,621 $ 159,319
Accounts receivable 12,990 17,447
Operating supplies 15,455 15,455
Prepaid expenses 4,719 4,947
----------- ----------
Total current assets 137,785 197,168
Investment property, at cost:
Land 711,092 711,092
Building and improvements 2,857,622 2,854,422
Furniture, fixtures and equipment 634,303 634,303
------------ -----------
4,203,017 4,199,817
Less accumulated depreciation 1,279,742 1,252,452
------------ ------------
Investment property,
net of accumulated depreciation 2,923,275 2,947,365
------------ -------------
Franchise fees, net (note 3) 11,167 11,417
------------ -------------
$3,072,227 $3,155,950
============ =============
</TABLE>
See accompanying notes to financial statements.
Page 1
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
March 31, 1998 and December 31, 1997
(Unaudited)
(Part 2 of 2)
<TABLE>
<CAPTION>
LIABILITIES AND March 31, December 31,
PARTNER'S CAPITAL ACCOUNTS 1998 1997
<S> <C> <C>
Current liabilities:
Notes Payable (note 5) $ 8,872 $ 8,163
Accounts payable and accrued expenses 49,119 82,430
Due to affiliates (note 4) 8,652 11,553
----------- ----------
Total current liabilities 66,643 102,146
----------- ----------
Long-term debt, less current
portion (note 5) 153,258 156,121
----------- ----------
Total liabilities $219,901 $258,267
----------- ----------
Partners' capital accounts (deficit):
General Partners:
Cumulative net earnings $ 12,196 $ 16,732
Cumulative cash distributions (71,950) (71,950)
------------ ------------
(59,754) (55,218)
Limited partners:
Capital contributions,
net of offering costs 3,449,823 3,449,823
Cumulative net earnings 109,799 150,620
Cumulative cash distributions (647,542) (647,542)
-------------- -------------
2,912,080 2,952,901
-------------- -------------
Total partners' capital accounts 2,852,326 2,897,683
------------ ------------
$3,072,227 $3,155,950
============ =============
</TABLE>
See accompanying notes to financial statements.
Page 2
<PAGE>
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Statement of Operations
Three Months Ended
March 31, 1998 and March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
<S> <C> <C>
Revenues:
Room revenues $ 217,847 $ 187,789
Phone revenue 7,174 3,276
Interest income 778 59
Other income 225 142
------------- ------------
226,024 191,266
------------ ------------
Expenses:
Property operating expenses 119,449 94,873
Depreciation 27,290 42,157
General and administrative 34,374 33,437
Repairs and maintenance 31,365 17,388
Amortization 250 250
Management fees 13,515 11,472
Royalties and advertising 10,892 11,122
Real estate taxes 11,022 9,337
Marketing 16,384 12,420
Property and liability insurance 2,544 5,574
Interest expense 4,296 4,400
------------ --------------
271,381 242,430
------------ --------------
Net earnings $ (45,357) $ (51,164)
============= ===============
Net earnings per limited
partnership interest $ (10.27) $ (11.58)
======== ========
</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 Ended
March 31, 1998 and March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998 March 31, 1997
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (45,357) $ (51,164)
Adjustments to reconcile net income to cash:
Depreciation and amortization 27,540 42,407
Changes in assets and liabilities:
(Increase) decrease in other assets: 4,685 5,195
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (33,311) (19,454)
Due to/from Affiliates (2,901) (31,582)
------------ ------------
Net cash provided by operating activities (49,344) 8,566
------------ ------------
Cash flows used in or provided from investing
activities:
Acquisition & construction costs of
investment property (3,200) (46,055)
------------ ------------
Net cash (used in)/provided from
investing activities (3,200) (46,055)
------------ ------------
Cash flows from financing activities:
Increase(decrease) to Notes payable (2,154) (2,049)
Cash distributions to partners 0 0
----------- -----------
Net cash (used in) financing activities (2,154) (2,049)
----------- -------------
Net increase (decrease) in cash (54,698) (39,537)
Cash and cash equivalents,
beginning of period 159,319 79,268
----------- -------------
Cash and cash equivalents, end of period 104,621 39,730
=========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 4
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements
March 31, 1998
(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 March 31, 1998, 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 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 distri-
bution; 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 ended March 31 1998 and March 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Three months Ended
3/31/98 3/31/97
<S> <C> <C>
Management Fees $ 13,515 $11,472
Reimbursement for partnership
administration expenses $ 5,850 $ 5,598
Salaries and other
allocated expenses $ 10,405 $10,663
</TABLE>
In addition, all motel employees are paid by GMS. For the three months ended
March 31, 1998, the Partnership reimbursed GMS $78,626 for the wages of these
employees including a one percent processing fee. At March 31, 1998, $8,652
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 March 31, 1998) through August 2009. The note is secured by a
first priority deed of trust on the Partnership's motel and the unpaid
balance at March 31, 1998 was $162,130. 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>
Apr 1998 - Dec 1998 $ 6,587
1999 9,519
2000 10,594
2001 11,791
2002 13,122
Thereafter 110,517
----------
$162,130
========
</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 ended March 31,
1998.
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, 1998, a principal balance of $162,130 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 March 31, 1998 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.
Page 8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
Financial Condition:
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 March 31, 1998, the Partnership had cash and cash equivalents of $104,621.
Such funds will be utilized for working capital requirements and distributions
to partners.
For the three months ended March 31, 1998, room revenues were $217,847, the
occupancy rate was 53.17% and the average daily rate was $42.95. This
compares to the three months ended March 31, 1998 when room revenues were
$187,789, the occupancy rate was 40.53% and the average daily rate was
$48.56.
A comparison of first quarter figures from 1997 shows an increase in occupancy
of 12.64 percentage points with a decrease in Average Daily Rate of $5.61,
resulting in increased room revenue of $30,058.00. The motel received a
Certificate of excellence from Super 8 regarding it's last inspection.
As requested by the limited partners in an informal survey conducted by the
general partner now that the partnership is nearing its 10th year, the
majority of the limited partners want the motel to be sold and the partnership
dissolved. Consequently, the hotel brokerage firm of Hotel Partners
International has been engaged by the partnership to market the hotel for
sale to qualified buyers at the highest and best selling price. The initial
listing price is $3,7000,000. Marketing packages have been sent out to
hundreds of potential buyers and the level of interest is high. The general
partner will review all offers and select one or more offers to submit to the
limited partners for approval.
Nashville's new NHL Hockey Team, the Predators, will begin the season in October
1998 with 41 home games. Also, the NFL's Tennessee Oilers will be playing all
of their home games in Nashville instead of Memphis, which should bring
increased business for the fall and winter months.
Page 9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
The effect of current operations on liquidity was net cash used in operating
activities of $49,344 for the three months ending March 31, 1998. This
compares to net cash provided by operating activities of $8,566 for the three
months ended March 31, 1998. Investment property expenditures were $3,200.
for the three months ended March 31, 1998.
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 10
<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 / Stephen D. Burchett
(NAME AND TITLE) Stephen D. Burchett, Vice President
(DATE) May 14, 1998
By (SIGNATURE) / s / Sylvia Mellor Clark
(NAME AND TITLE) Sylvia Mellor Clark, Controller
(DATE) May 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 104,621
<SECURITIES> 0
<RECEIVABLES> 12,990
<ALLOWANCES> 0
<INVENTORY> 15,455
<CURRENT-ASSETS> 137,785
<PP&E> 4,203,017
<DEPRECIATION> 1,279,742
<TOTAL-ASSETS> 3,072,227
<CURRENT-LIABILITIES> 66,643
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,072,227
<SALES> 0
<TOTAL-REVENUES> 226,024
<CGS> 0
<TOTAL-COSTS> 267,085
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,296
<INCOME-PRETAX> (45,357)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45,357)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,357)
<EPS-PRIMARY> (10.27)
<EPS-DILUTED> (10.27)
</TABLE>
