SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
---------------------------------------------
For the Period ended March 31, 1997
Commission File 0-10134
SUPER 8 MOTELS III, LTD
------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94 - 2664921
------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 J Street
Sacramento, California 95814
-------------------------------------- --------------
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
---- ------
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - March 31, 1997 and December 31, 1996 2
Statement of Operations - Three Months Ended
March 31, 1997 and 1996 3
Statement of Changes in Partners' Equity -
Three Months Ended March 31, 1997 and 1996 4
Statement of Cash Flows - Three Months Ended
March 31, 1997 and 1996 5
Notes to Financial Statements 6
Management Discussion and Analysis 7
Other Information and Signatures 8 - 9
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Balance Sheet
March 31, 1997 and December 31, 1996
3/31/97 12/31/96
----------- -----------
ASSETS
Current Assets:
Cash and temporary investments $ 383,627 $ 254,782
Accounts receivable 70,542 68,114
Prepaid expenses 2,102 11,341
----------- -----------
Total current assets 456,271 334,237
----------- -----------
Property and Equipment:
Land 1,670,129 1,670,129
Capital improvements 26,175 26,175
Buildings 3,276,870 3,276,870
Furniture and equipment 756,837 756,837
----------- -----------
5,730,011 5,730,011
Accumulated depreciation (2,864,955) (2,826,379)
----------- -----------
Property and equipment, net 2,865,056 2,903,632
----------- -----------
Total Assets $ 3,321,327 $ 3,237,869
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities 94,356 63,785
----------- -----------
Total current liabilities 94,356 63,785
----------- -----------
Total liabilities 94,356 63,785
----------- -----------
Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 19,734 19,205
Limited Partners 3,207,237 3,154,879
----------- -----------
Total partners' equity 3,226,971 3,174,084
----------- -----------
Total Liabilities and Partners' Equity $ 3,321,327 $ 3,237,869
=========== ===========
The accompanying notes are an integral part of the financial statements.
- 2 -
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Statement of Operations
For the Three Months Ending March 31, 1997 and 1996
Three Months Three Months
Ended Ended
3/31/97 3/31/96
----------- -----------
Income:
Guest room $ 403,295 $ 355,413
Telephone and vending 8,408 7,719
Interest 1,362 2,534
Other 919 534
----------- -----------
Total Income 413,984 366,200
----------- -----------
Expenses:
Motel operating expenses (Note 2) 279,414 286,845
General and administrative 22,461 19,464
Depreciation and amortization 38,576 40,250
Interest - 3,524
Property management fees 20,646 18,192
----------- -----------
Total Expenses 361,097 368,275
----------- -----------
Net Income (Loss) $ 52,887 $ (2,075)
=========== ===========
Net Income (Loss) Allocable
to General Partners $529 ($21)
======== ========
Net Income (Loss) Allocable
to Limited Partners $52,358 ($2,054)
======== ========
Net Income (Loss)
per Partnership Unit $8.81 ($0.35)
======== ========
Distribution to Limited Partners
per Partnership Unit $0.00 $0.00
======== ========
The accompanying notes are an integral part of the financial statements.
- 3 -
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Statement of Partners' Equity
For the Three Months Ending March 31, 1997 and 1996
1997 1996
----------- -----------
General Partners:
Balance at beginning of year $ 19,205 $ 19,194
Net income (loss) 529 (21)
----------- -----------
Balance at end of period 19,734 19,173
----------- -----------
Limited Partners:
Balance at beginning of year 3,154,879 3,153,774
Net income (loss) 52,358 (2,054)
Less: Cash distributions - -
----------- -----------
Balance at end of period 3,207,237 3,151,720
----------- -----------
Total balance at end of period $ 3,226,971 $ 3,170,893
=========== ===========
The accompanying notes are an integral part of the financial statements.
- 4 -
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Statement of Cash Flows
For the Three Months Ending March 31, 1997 and 1996
1997 1996
----------- -----------
Cash Flows From Operating Activities:
Received from motel revenues $ 410,194 $ 361,780
Expended for motel operations
and general and administrative expenses (282,831) (334,591)
Interest received 1,362 1,460
Interest paid - (3,680)
----------- -----------
Net cash provided (used) by operating activities 128,725 24,969
----------- -----------
Cash Flows From Investing Activities:
Purchases of property and equipment - (5,456)
Proceeds from sale of equipment 120 -
----------- -----------
Net cash provided (used) by investing activities 120 (5,456)
----------- -----------
Cash Flows From Financing Activities:
Payments on notes payable - (18,769)
Distributions paid to Limited Partners - -
----------- -----------
Net cash provided (used) by financing activities - (18,769)
----------- -----------
Net increase (decrease) in cash
and temporary investments 28,845 744
Cash and temporary investments:
Beginning of year 254,782 285,554
----------- -----------
End of period $ 383,627 $ 286,298
=========== ===========
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net income (loss) $ 52,887 $ (2,075)
----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 38,576 40,250
Gain on disposition of property (120) -
(Increase) decrease in accounts receivable (2,428) (2,960)
(Increase) decrease in prepaid expenses 9,239 9,595
Increase (decrease) in accounts payable
and accrued liabilities 30,571 (19,841)
----------- -----------
Total adjustments 75,838 27,044
----------- -----------
Net cash provided by operating activities $ 128,725 $ 24,969
=========== ===========
The accompanying notes are an integral part of the financial statements.
- 5 -
Super 8 Motels III, Ltd.
(A California Limited Partnership)
Notes to Financial Statements
March 31, 1997 and 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, 1996 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 $20,646
Franchise Fees $8,068
Note 2:
The following table summarizes the major components of motel operating expenses
for the periods reported:
Three Months Three Months
Ended Ended
3/31/97 3/31/96
----------- -----------
Salaries and related costs $ 109,729 $ 107,689
Franchise and advertising 20,171 17,776
Utilities 22,665 23,852
Allocated costs,
mainly indirect salaries 44,110 45,819
Replacements and renovations 12,040 7,305
Other operating expenses 70,699 84,404
----------- -----------
Total motel operating expenses $ 279,414 $ 286,845
=========== ===========
The following additional material contingencies are required to be restated in
interim reports under federal securities law: None.
- 6 -
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
MARCH 31, 1997
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's current assets of $456,271 exceed its current liabilities of
$94,356 by $361,915. This excess of current assets over current liabilities
constitutes an operating reserve that is greater than the $297,050 operating
reserve requirement in the Partnership Agreement. The General Partner
anticipates that the Partnership will begin quarterly distributions of
approximately $6.25 per unit with the distribution for the second calendar
quarter on or around August 15, 1997.
The Partnership has no major commitments for capital expenditures. The
Partnership has a replacement and renovation target equal to 3% of guest room
revenue. During the three months ended March 31, 1997, the Partnership expended
$11,720 in such expenditures which is equal to 2.9% of guest room revenue. The
General Partners anticipate that renovation and repair expenditures will not
exceed 3% of guest room revenue during the current fiscal year.
RESULTS OF OPERATIONS
The following is a comparison of the first three months of the fiscal year
ending December 31, 1997 with the corresponding period of the preceding fiscal
year.
Total revenues increased $47,784 (or 13.0%) for the three month period as
compared to the previous fiscal year. The increase in total revenue was due to a
$47,882 (or 13.5%) increase in room revenue. Motel occupancy increased from
67.2% to 74.3%, while the average room rate increased from $33.99 to $35.25. The
increase in guest room revenue occurred primarily at the Partnership's San
Bernardino motel and was due to increased patronage in the corporate and leisure
market segments.
The Partnership's expenses decreased by $7,178 or 1.9%. This reduction is due to
reduced interest expense and to reduced operating expenses.
FUTURE TRENDS
The General Partners expect that overall occupancy for the fiscal year ending
December 31, 1997 will be greater than that achieved in 1996. The General
Partners expect income for the current fiscal year to be greater than the
previous fiscal year. Expenses are subject to both cost inflation and to the
deferred maintenance associated with the effects of high occupancy in previous
years. The net effect should be net income greater than the previous fiscal
year.
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.
- 7 -
PART II. OTHER INFORMATION
----------------------------
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters
---------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
- 8 -
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 III, LTD
5/5/97 By /S/ David P. Grotewohl
-------- -------------------------
Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
5/5/97 By /S/ David P. Grotewohl
-------- -------------------------
Date David P. Grotewohl,
Chief Financial Officer
- 9 -