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 June 30, 1995
Commission File 0-9218
SUPER 8 MOTELS II, LTD
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(Exact name of registrant as specified in its charter
CALIFORNIA 94 - 2574309
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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 II, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1995 and September 30, 1994 2
Statement of Operations - Nine Months Ended
June 30, 1995 and 1994 3
Statement of Changes in Partners' Equity -
Nine Months Ended June 30, 1995 and 1994 4
Statement of Cash Flows - Nine Months Ended
June 30, 1995 and 1994 5
Notes to Financial Statements 6
Management Discussion and Analysis 7 - 8
Other Information and Signatures 9 - 10
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
BALANCE SHEET
JUNE 30, 1995 AND SEPTEMBER 30, 1994
6/30/95 9/30/94
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ASSETS
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Current Assets:
Cash and temporary investments $ 357,252 $ 338,374
Accounts receivable 10,724 15,641
Prepaid expenses 8,868 26,027
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Total Current Assets 376,844 380,042
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Property and Equipment:
Capital Improvements 34,947 34,947
Buildings 1,845,878 1,845,878
Furniture and equipment 467,918 455,847
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2,348,743 2,336,672
Accumulated depreciation and amortization (1,664,973) (1,594,608)
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Property and Equipment, Net 683,770 742,064
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Total Assets $1,060,614 $1,122,106
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LIABILITIES AND PARTNERS' EQUITY
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Current Liabilities:
Accounts payable and accrued liabilities $ 60,193 $ 64,554
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Total Liabilities 60,193 64,554
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Partners' Equity:
General Partners 45,463 46,034
Limited Partners 954,958 1,011,518
Total Partners' Equity 1,000,421 1,057,552
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Total Liabilities and Partners' Equity $1,060,614 $1,122,106
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The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1995 AND 1994
Three Month Nine Months Three Month Nine Month
Ended Ended Ended Ended
6/30/95 6/30/95 6/30/94 6/30/94
Income: ---------- ---------- ---------- ----------
Guest room $ 213,769 $ 535,093 $ 210,206 $ 519,098
Telephone and vending 2,175 6,277 2,692 7,629
Interest 2,515 6,615 1,700 4,340
Other 225 798 79 639
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Total Income 218,684 548,783 214,677 531,706
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Expenses:
Motel operating expenses
(Note 2) 177,299 505,006 178,536 527,192
General and administrative 5,325 28,690 6,742 31,935
Depreciation and amortization 23,323 72,218 24,323 72,077
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Total Expenses 205,947 605,914 209,601 631,204
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Net Income (Loss) $ 12,737 $ (57,131) $ 5,076 $ (99,498)
========== ========= ========= =========
Net Income (Loss) Allocable to
General Partners $127 $(571) $51 $(995)
========== ========= ========= =========
Net Income (Loss) Allocable to
Limited Partners $12,610 ($56,560) $5,025 ($98,503)
========== ========= ========= =========
Net Income (Loss) per Partner-
ship Unit $1.82 $(8.16) $0.73 $(14.21)
========== ========= ========= =========
Distribution to Limited Partners
per Partnership Unit $0.00 $0.00 $0.00 $0.00
========== ========= ========= =========
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY
NINE MONTHS ENDED JUNE 30, 1995 AND 1994
1995 1994
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General Partners:
Balance at beginning of year $ 46,034 $ 46,350
Net income (loss) (571) (995)
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Balance at End of Period 45,463 45,355
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Limited Partners:
Balance at beginning of year 1,011,518 1,042,766
Net income (loss) (56,560) (98,503)
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Balance at End of Period 954,958 944,263
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Total Partners' Equity $1,000,421 $ 989,618
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The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1995 AND 1994
1995 1994
Cash flows from operating activities: ---------- -------
Received from motel revenues $ 547,612 $ 531,325
Expended for motel operations and
general and administrative expenses (520,897) (555,904)
Interest received 6,087 4,287
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Net Cash Provided (Used) by Operating Activities 32,802 (20,292)
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Cash flows from investing activities:
Purchases of property and equipment (13,924) (10,883)
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(13,924) (10,883)
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Cash flows from financing activities:
Net Increase (Decrease) in Cash and Temporary
Investments 18,878 (31,175)
Cash and Temporary Investments:
Beginning of Period 338,374 294,092
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End of Period $ 357,252 $ 262,917
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Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ (57,131)$ (99,498)
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 72,218 72,077
(Increase) decrease in accounts receivable 4,917 3,907
(Increase) decrease in prepaid expense 17,160 15,197
Increase (decrease) in accounts payable
and accrued liabilities (4,362) (11,975)
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Total Adjustments 89,933 79,206
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Net Cash Provided (Used) by Operating $ 32,802 $ (20,292)
========= =========
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
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 September 30, 1994 for a
complete disclosure of significant accounting policies and practices and
other detail necessary for a fair presentation of the financial statement
In accordance with the partnership agreement, the following information
presented related to fees paid to the General Partners or affiliates for
period.
Franchise Fees $ 10,695
Upon the sale of the Ontario Motel property in February, 1990,
management felt that the payment of the property management fees and
partnership management fees became remote. Therefore, no property
management fees or partnership management fees have been accrued.
Note 2:
The following table summarizes the major components of motel operating
expenses for the periods reported:
Three Month Nine Months Three Month Nine Months
Ended Ended Ended Ended
6/30/95 6/30/95 6/30/94 6/30/94
------- ------- ------- -------
Salaries and related costs $ 46,682 $ 145,198 $ 58,850 $ 161,452
Rent 23,349 70,668 21,742 65,226
Utilities 19,451 50,383 21,932 53,166
Allocated costs, mainly indirect
salaries 22,276 66,800 20,330 64,424
Other operating expenses 65,541 171,957 55,682 182,924
-------- -------- -------- --------
Total motel operating
expenses $ 177,299 $ 505,006 $ 178,536 $ 527,192
======== ======== ======== ========
The following additional material contingencies are required to be restated
in interim reports under federal securities law: None.
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SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1995
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's current assets of $376,844 exceeded its current
liabilities of $60,193 thereby providing an operating reserve of #316,651.
The Partnership experienced a positive cash flow for the nine month period
ended June 30, 1995 of $18,878 which is an improvement of approximately
$50.053 from the results of the corresponding period of the previous fiscal
year. While the Partnership's operating reserve is $141,935 is excess of
the General Partners' reserve target of $174,716, the General Partners
believe that prudence requires that quarterly distributions remain suspended.
The Partnership has equity in its Santa Rosa motel that could provide
security for a loan against the property. The total annual cash flow for the
Santa Rosa property has been positive. This positive cash flow would support
a modest loan.
The Partnership has no material commitments for capital expenditures.
The Partnership's guideline for replacements and renovation is to spend
approximately 3% of room revenues. Applicable expenditures during the first
nine months of the fiscal year which will end on September 30, 1995 were
$41,110 (of which $13,924 was capitalized), or 7.7% of room revenues.
Although operational considerations have accelerated the timing of these
expenditures and the 7.7% figure is not reflective of anticipated year-end
expenditures, annual expenditures of this type may exceed the General
Partners' guideline due primarily to payment of $6,654 as the Partnership's
share of two replacement vehicles used by personnel employed jointly by the
Partnership and affiliated limited Partnerships, and for $4,147 spent on a
new key system for the motel.
NEW ACCOUNTING STANDARDS
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed OF, requires the Partnership to disclose
information about potential impairment to the value of long-lived assets.
The Partnership is not required to adopt and does not currently plan to adopt
SFAS No. 121 until its fiscal year ending September 30, 1997. The Partnership
does not expect to make any disclosures about impairment of long-lived assets
under SFAS No. 121.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the periods
ended June 30, 1995 and June 30, 1994.
1995 1994
Occupancy
Three months ended June 30 55.5% 56.7%
Nine months ended June 30 48.6% 49.5%
Average Room Rate
Three months ended June 30 $42.31 $40.71
Nine months ended June 30 $40.30 $38.41
-7-
SUPER 8 MOTELS II, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
JUNE 30, 1995
Total revenues increased $17,077 during the first nine months of fiscal
year ending September 30, 1995 as compared to the corresponding period of the
previous fiscal year. Room revenue increased $15,995 (or 3.1%), as the
decrease in occupancy rate for the nine month period was offset by a 4.9%
increase in the average room rate. The motel had more guests from the
leisure market segment and fewer guests in the corporate, group and discount
market segments. Room rates for the leisure market segment are generally
higher than for those segments that experienced a decline in occupancy.
Total expenses for the nine month period ended June 30, 1995 decreased
$25,290 (or 4.0%) from those incurred in the corresponding period of the
previous fiscal year. The General Partners have instituted a cost cutting
program which has reduced the motel operating expenses significantly.
FUTURE TRENDS
Commercial travel in the Santa Rosa lodging market continues its
lackluster performance, while there is an improvement in the leisure
market segment. The General Partners do not anticipate substantial
improvement in the property's fiscal performance until the commercial
travel segment rebounds. Intense competitive conditions in the Santa Rosa
market might place adverse pressure on the average room rates.
In the opinion of management, these financial statements reflect all
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 to Vote of Security Holders
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None
Item 5. Other Information
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See Notes to Financial Statements
Item 6. Exhibits and Reports on Form 8-K
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None
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SIGNATURES
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 II, LTD
8-10-95 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
8-10-95 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
-10-