SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
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For the Period ended March 31, 1996
Commission File 0-8913
SUPER 8 MOTELS, LTD
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94 - 2514354
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 J Street
Sacramento, California 95814
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Address of principal executive offices Zip Code
Registrant's telephone number,
including area code (916) 442 - 9183
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 XX No
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SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - March 31, 1996 and December 31, 1995 2
Statement of Operations - Three Months Ended
March 31, 1996 and 1995 3
Statement of Changes in Partners' Equity -
Three Months Ended March 31, 1996 and 1995 4
Statement of Cash Flows - Three Months Ended
March 31, 1996 and 1995 5
Notes to Financial Statements 6
Management Discussion and Analysis 7 - 8
Other Information and Signatures 9 - 10
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
BALANCE SHEET
MARCH 31, 1996 AND DECEMBER 31, 1995
3/31/96 12/31/95
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ASSETS
Current Assets:
Cash and temporary investments $ 633,877 $ 631,200
Accounts receivable 99,874 94,659
Prepaid expenses 4,927 22,662
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Total current assets 738,678 748,521
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Property and Equipment:
Buildings 5,223,252 5,223,252
Furniture and equipment 1,082,718 1,061,233
6,305,970 6,284,485
Accumulated depreciation and amortization (4,488,041) (4,438,559)
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Property and equipment, Net 1,817,929 1,845,926
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Other Assets: 22,869 23,663
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Total Assets $ 2,579,476 $ 2,618,110
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LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Current portion of note payable $ 26,415 $ 25,862
Accounts payable and accrued liabilities 178,650 151,535
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Total current liabilities 205,065 177,397
Long - Term Liabilities:
Note payable 953,894 960,709
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Total liabilities 1,158,959 1,138,106
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Partners' Equity:
General Partners 59,135 58,480
Limited Partners 1,361,382 1,421,524
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Total partners' equity 1,420,517 1,480,004
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Total Liabilities and Partners' Equity $ 2,579,476 $ 2,618,110
========== ==========
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
Income: ------ ------
Guest room $ 747,854 $ 724,343
Telephone and vending 17,469 13,874
Interest 5,101 3,046
Other 6,215 2,516
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Total Income 776,639 743,779
Expenses:
Motel operating expenses (Note 2) 546,902 526,344
General and administrative 26,475 31,127
Depreciation and amortization 64,403 66,126
Interest 20,876 21,388
Property management fees 38,581 37,053
Partnership management fees 13,889 13,889
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Total Expenses 711,126 695,927
Net Income (Loss) $ 65,513 $ 47,852
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Net Income (Loss) Allocable
to General Partners $655 $479
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Net Income (Loss) Allocable
to Limited Partners $64,858 $47,373
========= =========
Net Income (Loss)
per Partnership Unit $12.97 $9.47
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Distribution to Limited Partners
per Partnership Unit $25.00 $25.00
======== ========
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
General Partners: ------ ------
Balance at beginning of year $ 58,480 $ 53,172
Net income (loss) 655 479
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Balance at end of period 59,135 53,651
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Limited Partners:
Balance at beginning of year 1,421,524 1,396,049
Net income (loss) 64,858 47,373
Less: Cash distributions to
Limited Partners (125,000) (125,000)
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Balance at end of period 1,361,382 1,318,422
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Total balance at end of period $ 1,420,517 $ 1,372,073
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The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
Cash flows from operating activities: ------ ------
Received from motel revenues $ 767,664 $ 758,633
Expended for motel operations and
general and administrative expenses (580,509) (568,344)
Interest received 3,760 3,037
Interest paid (20,920) (21,429)
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Net cash provided by operating activities 169,995 171,897
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Cash flows from investing activities:
Purchases of property and equipment (36,056) (5,732)
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Net cash provided (used) by investing activities (36,056) (5,732)
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Cash flows from financing activities:
Principal payments on notes payable (6,262) (5,753)
Distributions paid to limited partners (125,000) (125,000)
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Net cash provided (used) by financing activities (131,262) (130,753)
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Net increase (decrease) in cash
and temporary investments 2,677 35,412
Cash and Temporary Investments:
Beginning of period 631,200 502,138
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End of period $ 633,877 $ 537,550
========== ==========
Reconciliation of net income to net cash provided by operating activities:
Net income (loss) $ 65,513 $ 47,852
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 64,403 66,126
(Gain) loss on sale of property 444 -
(Increase) decrease in accounts receivabl (5,215) 17,891
(Increase) decrease in prepaid expenses 17,734 15,836
Increase (decrease) in accounts payable
and accrued liabilities 27,116 24,192
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Total adjustments 104,482 124,045
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Net cash provided by
operating activities $ 169,995 $ 171,897
========== ==========
The accompanying notes are an integral part of the financial statements.
-5-
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
Note 1:
The attached interim financial statements include all adjustments which
are, in the opinion of management, necessary to a fair statement of the results
for the period presented.
Users of these interim financial statements should refer to the audited
financial statements for the year ended December 31, 1995 for a complete
disclosure of significant accounting policies and practices and other detail
necessary for a fair presentation of the financial statements.
In accordance with the partnership agreement, the following information
is presented related to fees paid or accrued to the General Partner or
affiliates for the period.
Property Management Fees $ 38,581
Franchise Fees $ 14,963
Partnership Management Fees $ 13,889
Note 2:
The following table summarizes the major components of motel operating
expenses for the periods reported:
1996 1995
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Salaries and related costs $ 189,640 $ 187,966
Rent 46,198 46,389
Utilities 31,686 37,162
Allocated costs,
mainly indirect salaries 68,728 63,394
Replacements and renovations 10,594 16,481
Other operating expenses 200,056 174,952
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Total motel operating
expenses $ 546,902 $ 526,344
======== ========
The following additional material contingencies are required to be
restated in interim reports under federal securities law: None.
-6-
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
MARCH 31, 1996
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has current assets of $738,678 which exceed its current
liabilities of $205,065 by $533,613. This surplus provides an operating reserve
equal to 10.7% of the Partnership's original capital raised. While the
Partnership agreement has no reserve requirement, the General Partner has set a
$250,000 target (5% of the Partnership's original capitalization).
As shown on the Statement of Cash Flows for the three months ended March
31, 1996, the Partnership's cash resources increased by $2,677 during the period
covered by this report as compared with an increase of $35,412 during the
corresponding period of the preceding fiscal year. The reduction in net cash
flow is primarily due to a $30,324 increase in capitalized expenditures for
property and equipment, as discussed below. Other than operating cash flow,
additional borrowing against the properties is the only realistic source of cash
in the unlikely event that reserves do not satisfy the Partnership's future cash
requirements.
During the three month period covered by this report, the Partnership's
expenditures for replacements and renovation totaled $46,649 or 6.2% of guest
room revenues. The $36,056 capitalized portion of the total expenditure
included $22,241 in guest room carpet and $8,690 for partial exterior painting
of the South San Francisco property. Included in the $10,593 of uncapitalized
renovations was $2,219 for guest room chairs, $2,059 for sundeck repairs and
$1,625 for landscaping.
The Partnership will continue this policy while operational cash flow
can satisfy operating needs, the current level of distributions to Limited
Partners and the minor replacements and refurbishment necessary to maintain the
properties in acceptable condition.
RESULTS OF OPERATIONS
The following is a comparison of the first three months of the fiscal
year ending December 31, 1996 with the corresponding period of the preceding
fiscal year.
Total income increased $32,860 or 4.4%. The major revenue item, guest
room revenue, increased 3.2%, due to an average rate increase from $41.80 in
1995 to $43.16 in 1996. This increase was offset by a decrease in the occupancy
rate from 59.2% in 1995 to 58.6% in 1996. The San Francisco and Sacramento
motels both achieved increases in room revenue.
-7-
SUPER 8 MOTELS, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
MARCH 31, 1996 (Continued)
The Modesto property experienced a significant decrease in its
occupancy rate due to the decline in business from a railroad construction crew
who provided approximately $20,000 in business during the first calendar
quarter of 1995.
Total expenses increased $15,199 or 2.2% during the three months of the
fiscal quarter ended March 31, 1996 as compared to the corresponding quarter of
the previous fiscal year. This increase is primarily attributable the
cumulative increase in occupancy.
FUTURE TRENDS
The General Partners anticipate a slightly improved economic climate
for 1996 as compared with the previous fiscal year. The South San Francisco
market, which traditionally generated 40% of the Partnership's room revenue,
has recovered from its depressed condition. The General Partners have
determined that a continuing cost control strategy will provide the best
immediate return to the Partnership. The major components of the cost control
program were in place by December 31, 1993 and continue to benefit the
Partnership through the fiscal quarter covered by this report.
The Sacramento property has significant occupancy from the McClellan Air
Force Base. The facility was added to the 1995 base closing list. The room
nights generated from this source will decline as the base operations are phased
out through 1997. The actual closing activity and the future use of the facility
should generate some business for the Sacramento motel.
In the opinion of Management, these financial statements reflect all
adjustments which were necessary to a fair statement of results for the interim
periods presented. All adjustments are of a normal recurring nature.
-8-
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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None
Item 2. Changes in Securities
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None
Item 3. Defaults upon Senior Securities
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None
Item 4. Submission of Matters
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None
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
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None
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Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SUPER 8 MOTELS, LTD
5-2-96 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
5-2-96 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
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