FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission File
Number
June 28, 1996 0-9708
SUPER 8 MOTELS TEXAS, LTD.
(Exact name of registrant as specified in its charter)
State of Organization TEXAS IRS Identification No. 74-2062237
P. O. Box 969, Rockwall, TX 75087-0969
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 771-6783
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 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 X No
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
June 28, 1996
CONTENTS
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statement of Operations
Three Months ended June 28, 1996 and
June 30, 1995 4
Statement of Operations
Six Months ended June 28, 1996 and
June 30, 1995 5
Statement of Partners' Equity 6
Statement of Cash Flows
Six Months ended June 28, 1996 and
June 30, 1995 7
Notes of Financial Statements 8 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING 10
ITEM 2. CHANGES IN SECURITIES 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SUPER 8 MOTELS TEXAS. LTD.
(A Limited Partnership)
BALANCE SHEETS
June 28, 1996 and December 29, 1995
ASSETS
1996 1995
Unaudited
CURRENT ASSETS
Cash $ 89,053 $ 48,744
Accounts Receivable, net of allowance for
doubtful accounts of $3,950 in 1996
and $3,898 in 1995 61,702 59,923
Prepaid expenses 7,297 20,802
Total current assets 158,052 129,469
PROPERTY AND EQUIPMENT
Land 769,800 769,800
Building and improvements 2,539,443 2,539,443
Furniture and equipment 471,032 408,990
_________ _________
3,780,275 3,718,233
Accumulated Depreciation 1,106,442 1,038,302
2,673,833 2,679,931
OTHER ASSETS 28,379 38,272
$ 2,860,264 $ 2,847,672
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current portion of mortgage payable $ 45,000 $ 45,000
Accounts payable 89,569 64,701
Sales tax payable 39,251 34,953
Property taxes payable 18,644 37,060
Accrued compensation 26,245 22,735
Accrued interest payable 1,440 1,887
Total current liabilities 220,149 206,336
MORTGAGE PAYABLE, less current portion 304,338 326,838
PARTNERS' EQUITY 2,335,777 2,314,498
$ 2,860,264 $ 2,847,672
The accompanying notes are an integral part of this
statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
June 28, 1996 and June 30, 1995
(Unaudited)
1996 1995
AVERAGE ROOM RATE $ 36.63 $ 34.78
OCCUPANCY PERCENTAGE 83.5% 70.8%
Revenues
Room rentals 350,644 282,407
Other 13,239 13,671
363,883 296,078
Expenses
Departmental:
Rooms 114,527 98,027
Other 5,626 5,819
General and administrative 59,254 57,425
Sales 11,279 12,080
Franchise fees 29,789 22,699
Utilities 28,484 25,183
Maintenance & Repair 30,090 20,924
Management fees 18,626 13,461
Depreciation 34,070 34,811
Amortization 703 703
Property taxes 9,774 11,537
Insurance 7,560 8,680
Interest 10,183 11,623
359,965 322,972
NET INCOME (LOSS) $ 3,918 $(26,894)
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED
June 28, 1996 and June 30, 1995
(Unaudited)
1996 1995
AVERAGE ROOM RATE $ 37.65 $ 34.67
OCCUPANCY PERCENTAGE 83.1% 74.7%
Revenues
Room rentals 717,724 593,597
Other 30,348 26,504
748,072 620,101
Expenses
Departmental:
Rooms 220,029 195,234
Other 12,566 12,483
General and administrative 127,049 113,822
Sales 24,191 17,982
Franchise fees 61,120 47,782
Utilities 54,578 50,354
Maintenance & Repair 63,759 49,891
Management fees 38,781 30,178
Depreciation 68,140 69,622
Amortization 1,406 1,406
Property taxes 19,548 23,074
Insurance 15,120 17,360
Interest 20,506 23,389
726,793 652,577
NET INCOME (LOSS) $ 21,279 $ (32,476)
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
FOR THE SIX MONTH PERIODS ENDED
June 28, 1996 and June 30, 1995
(Unaudited)
General Limited
Partners Partners Total
Balance - December 30, 1994 $ (17,844) $ 2,392,618 $ 2,374,774
Net Income (Loss) - Three
Months Ended March 31, 1995 (56) (5,526) (5,582)
Net Income (Loss) - Three
Months Ended June 30, 1995 (269) (26,625) (26,894)
Balance - June 30, 1995 $ (18,169) $ 2,360,467 $ 2,342,298
Balance - December 29, 1995 $ (18,446) $ 2,332,944 $ 2,314,498
Net Income (Loss) - Three
Months Ended March 29, 1996 174 17,187 17,361
Net Income (Loss) - Three
Months Ended June 28, 1996 392 3,526 3,918
Balance - June 28, 1996 $ (17,880) $ 2,353,657 $ 2,335,777
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENT OF CASH FLOWS
Six Months Ended June 28, 1996 and June 30, 1995
(Unaudited)
1996 1995
Cash flows from operating activities
Net income (loss) $ 21,279 $ (32,476)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities
Depreciation and amortization 69,546 71,028
Change in operating assets and
liabilities
Accounts receivable (1,779) 15,567
Prepaid expenses 13,505 8,441
Other assets 8,487 2,298
Accounts payable 24,868 (14,067)
Sales tax payable 4,298 1,135
Property taxes payable (18,416) (11,770)
Accrued compensation 3,510 (3,247)
Accrued interest (447) (22)
Net cash provided by (used
in) operating activities 124,851 36,887
Cash flows from financing activities
Payments made on mortgage payable (22,500) (22,500)
Net cash provided by (used
in) operating activities (22,500) (22,500)
Cash flows from investing activites
Property additions
(62,042)
(6,228)
Collections on note receivable 7,189
Net cash provided by (used in)
investing activities (62,042) 961
NET INCREASE (DECREASE)IN CASH 40,309 15,348
Cash at beginning of year 48,744 803
Cash at end of period $ 89,053 $ 16,151
Interest paid during the period $ 20,954 $ 23,411
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements follows.
Depreciation
Depreciation is provided in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives by
the straight-line method. Accelerated methods of depreciation are used
for tax purposes.
Federal Income Taxes
Federal income taxes (benefits) are not reflected in the financial statements
as the partners individually report their distributive shares of the
taxable income or loss of the Partnership.
Fiscal Year
The Partnership's fiscal year ends on the Friday nearest December 31.
Fiscal years 1996 and 1995 are comprised of fifty-two week periods.
NOTE B - PARTNERSHIP AGREEMENT
The Partnership was formed under the laws of the State of Texas in September
1979. The Partnership was organized to develop and operate nonspecified
"budget" hotels in Texas.
Allocation of cash distributions and income (losses) are 99% and 1%,
respectively, to limited partners and general partners.
The general partners have an option which expires in 1999 to purchase a
special 20% limited partner interest for $500,000.
Franchise Fees
Effective June 30, 1994, the partnership received approval from Ramada
Franchise Systems, Inc. to operate the facility as a Ramada Limited hotel
for a term of fifteen years subject to Ramada having the right to
terminate the license without cause effective on the fifth anniversary
of the license. Prior to June 30, 1994, the Partnership paid to Super 8
Motels, Inc. monthly fees equal to 4% of its gross room revenue and
contributed an additional 1% of its gross room revenues to an
advertising fund administered by the franchisor. Effective June 30, 1994,
the Partnership will pay to Ramada Franchise Systems, Inc. monthly fees
equal to 3.5% of its gross room revenue for the first twelve months
from the effective date of the Ramada license and 4% of its gross room
revenue beginning in the thirteenth month through the balance of the
license term. In addition, the partnership must contribute 4.5% of its
gross room revenue to Ramada Inter-National Association for marketing,
reservation systems and other assessments. Franchise fees were $61,120
and $47,782 for the six months ended June 28, 1996 and June 30, 1995,
respectively.
SUPER 8 MOTELS TEXAS, LTD.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - RELATED PARTY TRANSACTIONS
Management Fees
An affiliate of one of the former General Partners managed the hotel for
the Partnership until May 31, 1989. The fee for this service was 5% of
gross operating revenues from Partnership operations. This management
fee was payable monthly; however, three-fifths of the management fee
was deferred until receipt by the Limited Partners of a cumulative 10%
per annum pre-tax return on their adjusted capital contributions.
During 1994 this obligation was written off because it was determined
that it was unlikely to require payment in the future.
On June 1, 1989, an affiliate of one of the current General Partners assumed
management of the hotel. For its services, the management company
receives a base management fee equal to the greater of three percent
(3%) of the Gross Revenues of the hotel or $36,000 per year. In
addition to the base management fee, the management company receives an
incentive management fee equal to ten percent (10%) of Gross Operating
Profit. For the six months ended June 28, 1996 and June 30, 1995,
management fees were $38,781 and $30,178, respectively. Additionally,
accounting service fees paid to another affiliate of a general partner
were $14,000 and $13,000 for the six months ended June 28, 1996 and
June 30, 1995, respectively. Expense reimbursements to a general
partner for expenses incurred were $7,418 and $4,428 for the six months
ended June 28, 1996 and June 30, 1995, respectively.
NOTE D - SIGNIFICANT CUSTOMER
The Partnership's revenues for the six months ended June 28, 1996 and
June 30, 1995 include amounts from a single customer of approximately
$59,500 and $58,000, respectively.
NOTE E - MORTGAGE PAYABLE
In April 1994, the partnership entered into a mortgage note agreement to
borrow $450,000 from a financial institution. The proceeds of this
loan were used to complete the renovation of the facility to comply with
the Ramada license requirements. Under terms of the agreement, the
partnership is required to make monthly principal installments of
$3,750 and interest on the outstanding principal balance at 2% above
the financial institution's prime lending rate. The mortgage
note is collateralized by the hotel's property and equipment. As of
June 28, 1996, the outstanding principal balance was $349,338, with a
current portion of $45,000. All unpaid principal is due in 2004.
The payee may demand payment of the outstanding balance of the note on
the six year, seven year, eight year and nine year anniversary dates of
the note.
SUPER 8 MOTELS TEXAS, LTD.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Opinion of Management
In the opinion of management, the accompanying unaudited financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position as of June 28, 1996 and
June 30, 1995, and the results of operation and its cash flows for the
periods then ended.
Liquidity
The General Partners believe that the Partnership's liquidity, defined as
its ability to generate adequate amounts of cash to meet its cash needs,
is satisfactory. The Partnership's primary source of liquidity is its
revenue from operations, the cash provided from the sale of its
restaurant in 1990 and the proceeds of the mortgage note incurred to
finance the renovation of the hotel. The Partnership actively
negotiated with the lessee of the restaurant building to sell the
building to such lessee. Such sale took place on September 14, 1990.
The contract sale price was $500,000. This sale provided a cash
infusion to the property of $445,000 which was used to pay off
delinquent taxes of $137,605, current taxes on the restaurant
through September 14, 1990 of $14,160 and a $22,000 bank loan secured
by the lease. As of June 28, 1996, the Partnership had cash and other
current assets in the amount of $158,052 compared to $83,447 at June 30,
1995. Current liabilities were $220,149 at June 28, 1996, compared to
$170,331 at June 30, 1995.
Capital Resources
The partnership spent approximately $6,600, $451,000 and $5,900 in
capital improvements to the hotel's facilities in 1995, 1994 and 1993,
respectively. The partnership has spent $62,042 in capital improvements
to the hotel during the first six months of 1996. The partnership
expects to spend an additional $40,000 in capital expenditures during
the balance of this year if cash flow is available to fund the
expenditures. The hotel is now operating in full compliance with the
Ramada Limited standards.
Results of Operations
The Partnership's hotel average occupancy rate for the six month period
ended June 28, 1996, was 83.1% compared to 74.7% for the six month period
ended June 30, 1995. The average daily room rate for the six month period
ended June 28, 1996, was $37.65 compared to $34.67 for the six month
period ended June 30, 1995. Room Revenue for the six month period ended
June 28, 1996 was $717,724 compared to $593,597 for the six month period
ended June 30, 1995.
The airline employee and airline related lodging resulted in daily
room rentals of approximately 44.0% of the hotel's 126 rooms for the
six month period ended June 28, 1996, compared to 45.0% for the six
month period ended June 30, 1995.
SUPER 8 MOTELS TEXAS, LTD.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
Item 2. CHANGES IN SECURITIES
There have been no changes in securities for the six months ended June 28,
1996.
Item 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities and accordingly, there are no defaults for
the six months ended June 28, 1996.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders for the six months
ended June 28, 1996.
Item 5. OTHER INFORMATION
There is no other information to report for the six months ended June 28,
1996.
Item 6. EXHIBITS AND REPORT OF FORM 8-K
There are no exhibits or reports on Form 8-k to be filed with this Form
10-Q.
SIGNATURE
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.
SUPER 8 MOTELS TEXAS, LTD.
(REGISTRANT)
S/S
Martin J. Cohen, General Partner