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 27, 1997 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: (972)
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 27, 1997
CONTENTS
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statement of Operations
Three Months ended June 27, 1997 and
June 28, 1996 4
Statement of Operations
Six Months ended June 27, 1997 and
June 28, 1996 5
Statement of Partners' Equity 6
Statement of Cash Flows
Six Months ended June 27, 1997 and
June 28, 1996 7
Notes of Financial Statements 8 - 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS 11 -12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING 13
ITEM 2. CHANGES IN SECURITIES 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SUPER 8 MOTELS TEXAS. LTD.
(A Limited Partnership)
BALANCE SHEETS
June 27, 1997 and December 27, 1996
ASSETS 1997 1996
Unaudited
CURRENT ASSETS
Cash $ 180,127 $37,456
Accounts Receivable, net
of allowance for doubtful
accounts of $10,000 in 1997
and $10,046 in 1996 80,377 92,328
Prepaid expenses 7,341 20,503
Total current assets 267,845 150,287
PROPERTY AND EQUIPMENT
Land 769,800 769,800
Building and
improvements 2,539,443 2,539,443
Furniture and equipment 471,626 471,626
3,780,869 3,780,869
Accumulated Depreciation 1,259,684 1,183,972
2,521,185 2,596,897
OTHER ASSETS 25,568 26,943
$2,814,598 $2,774,127
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current portion of
mortgage payable $ 45,000 $ 45,000
Accounts payable 58,909 59,188
Sales tax payable 38,268 35,837
Property taxes payable 24,090 49,446
Accrued compensation 21,192 21,791
Accrued interest payable 1,165 1,251
Total current liabilities 188,624 212,513
MORTGAGE PAYABLE,
less current portion 259,338 281,838
PARTNERS' EQUITY 2,366,636 2,279,776
$2,814,598 $2,774,127
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 27, 1997 and June 28, 1996
(Unaudited)
1997 1996
AVERAGE ROOM RATE $38.91 $36.63
OCCUPANCY PERCENTAGE 91.5% 83.5%
Revenues
Room rentals 408,397 350,644
Other 15,438 13,239
423,835 363,883
Expenses
Departmental:
Rooms 109,381 114,527
Other 5,943 5,626
General and administrative 60,659 59,254
Sales 12,116 11,279
Franchise fees 34,625 29,789
Utilities 25,304 28,484
Maintenance & Repair 26,081 30,090
Management fees 26,416 18,626
Depreciation 37,856 34,070
Amortization 703 703
Property taxes 12,497 9,774
Insurance 7,633 7,560
Interest 8,603 10,183
367,817 359,965
NET INCOME (LOSS) $ 56,018 $ 3,918
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 27, 1997 and June 28, 1996
(Unaudited)
1997 1996
AVERAGE ROOM RATE $38.58 $37.65
OCCUPANCY PERCENTAGE 89.7% 83.1%
Revenues
Room rentals 793,676 717,724
Other 32,943 30,348
826,619 748,072
Expenses
Departmental:
Rooms 216,784 220,029
Other 11,551 12,566
General and administrative 127,433 127,049
Sales 24,384 24,191
Franchise fees 67,760 61,120
Utilities 55,902 54,578
Maintenance & Repair 51,825 63,759
Management fees 49,390 38,781
Depreciation 75,712 68,140
Amortization 1,406 1,406
Property taxes 25,016 19,548
Insurance 15,267 15,120
Interest 17,329 20,506
739,759 726,793
NET INCOME (LOSS) $ 86,860 $ 21,279
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 27, 1997 and June 28, 1996
(Unaudited)
General Limited
Partners Partners Total
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
Balance -
December 27, 1996 $(18,793) $2,298,569 $2,279,776
Net Income (Loss) -
Three Months Ended
March 28, 1997 308 30,534 30,842
Net Income (Loss) -
Three Months Ended
June 27, 1997 560 55,458 56,018
Balance -
June 27, 1997 $(17,925) $2,384,561 $2,366,636
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 27, 1997 and June 28, 1996
(Unaudited)
1997 1996
Cash flows from
operating activities
Net income (loss) $ 86,860 $ 21,279
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities
Depreciation and amortization 77,118 69,546
Change in operating assets and
liabilities
Accounts receivable 11,951 (1,779)
Prepaid expenses 13,162 13,505
Other assets (31) 8,487
Accounts payable (279) 24,868
Sales tax payable 2,431 4,298
Property taxes payable (25,356) (18,416)
Accrued compensation (599) 3,510
Accrued interest (86) (447)
Net cash provided by (used in)
operating activities 165,171 124,851
Cash flows from financing
activities
Payments made on
mortgage payable (22,500) (22,500)
Net cash provided by (used in)
financing activities (22,500) (22,500)
Cash flows from investing
activities
Property additions (62,042)
Net cash provided by (used in)
investing activities (62,042)
NET INCREASE (DECREASE) IN
CASH 142,671 40,309
Cash at beginning of year 37,456 48,744
Cash at end of period $180,127 $ 89,053
Interest paid during the period $17,415 $ 20,954
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 summmary 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 1997 and 1996 are comprised of
fifty-three and fifty-two week periods, respectively.
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 $67,760 and $61,120 for the six months ended June 27,
1997 and June 28, 1996, respectively.
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 27, 1997 and June 28,
1996, management fees were $49,390 and $38,781,
respectively. Additionally, accounting service fees paid to
another affiliate of a general partner were $14,000 for the
six months ended June 27, 1997 and June 28, 1996,
respectively. Expense reimbursements to a general partner
for expenses incurred were $8,904 and $7,418 for the six
months ended June 27, 1997 and June 28, 1996, respectively.
NOTE D - SIGNIFICANT CUSTOMER
The Partnership's revenues for the six months ended June 27,
1997 and June 28, 1996 include amounts from a single
customer of approximately $158,428 and $59,500,
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 27, 1997, the outstanding principal
balance was $304,338, 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 27, 1997 and June
28, 1996, 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 27,
1997, the Partnership had cash and other current assets in
the amount of $267,845 compared to $158,052 at June 28,
1996. Current liabilities were $188,624 at June 27,1997,
compared to $220,149 at June 28, 1996.
Capital Resources
The partnership spent approximately $62,636, $6,606 and
$451,000 in capital improvements to the hotel's facilities
in 1996, 1995 and 1994, respectively. The partnership has
not purchased any capital improvements for the hotel during
the first six months of 1997. The partnership expects to
spend an additional $40,000 in capital expenditures during
the balance of this year. 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 27, 1997, was 89.7% compared to
83.1% for the six month period ended June 28, 1996. The
average daily room rate for the six month period ended June
27, 1997, was $38.58 compared to $37.65 for the six month
period ended June 28,1996. Room Revenue for the six month
period ended June 27, 1997 was $793,676 compared to $717,724
for the six month period ended June 28, 1996.
The airline employee and airline related lodging resulted in
daily room rentals of approximately 51.0% of the hotel's 126
rooms for the six month period ended June 27, 1997, compared
to 44.0% for the six month period ended June 28, 1996.
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 27, 1997.
Item 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities and accordingly, there are no
defaults for the six months ended June 27, 1997.
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 27, 1997.
Item 5. OTHER INFORMATION
There is no other information to report for the six months
ended June 27, 1997.
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