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 0-10134
SUPER 8 MOTELS III, LTD
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(Exact name of registrant as specified in its charter
CALIFORNIA 94 - 2664921
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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 III, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1995 and December 31, 1994 2
Statement of Operations - Six Months Ended
June 30, 1995 and 1994 3
Statement of Changes in Partners' Equity -
Six Months Ended June 30, 1995 and 1994 4
Statement of Cash Flows - Six Months Ended
June 30, 1995 and 1994 5
Notes to Financial Statements 6
Management Discussion and Analysis 7 - 9
Other Information and Signatures 10 - 11
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
BALANCE SHEET
JUNE 30, 1995 AND DECEMBER 31,1994
1995 1994
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ASSETS
Current Assets: ------
Cash and temporary investments $ 331,510 $ 403,176
Accounts receivable 82,613 101,960
Prepaid expenses 18,455 8,765
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Total current assets 432,578 513,901
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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 780,616 726,984
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5,753,790 5,700,158
Accumulated depreciation and amortization (2,668,300) (2,420,603)
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Property and equipment, net 3,085,490 3,279,555
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Total Assets $3,518,068 $3,793,456
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LIABILITIES AND PARTNERS' EQUITY
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Current Liabilities:
Current portion of note payable $ 66,642 $ 28,700
Accounts payable and accrued liabilities 80,050 99,175
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Total current liabilities 146,692 127,875
Long - Term Liabilities:
Note payable 194,931 595,214
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Total liabilities 341,623 723,089
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 19,228 18,167
Limited Partners 3,157,217 3,052,200
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Total partners' equity 3,176,445 3,070,367
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Total Liabilities and Partners' Equity $3,518,068 $3,793,456
========== ==========
The accompanying notes are an integral part of the financial statements.
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SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Three Month Six Months Three Month Six Months
Ended Ended Ended Ended
6/30/95 6/30/95 6/30/94 6/30/94
Income: ------- ------- ------- -------
Motel room income $ 409,347 $ 803,092 $ 433,516 $ 844,323
Telephone and
vending 5,951 13,962 8,852 16,978
Interest 1,977 4,129 2,037 4,153
Other 612 1,102 286 1,065
------- ------- ------- -------
Total Income 417,887 822,285 444,691 866,519
------- ------- ------- -------
Expenses:
Motel operating expenses
(Note 2) 293,571 574,257 336,561 659,012
General and administrative 10,951 35,753 8,949 32,545
Depreciation and amortization 41,673 83,424 36,951 73,712
Interest 7,086 16,408 14,027 39,114
Property management fees 20,804 40,216 22,087 43,054
Total Expenses 374,085 750,058 418,575 847,437
------- ------- ------- -------
Net Income (Loss) $ 43,802 $ 72,227 $ 26,116 $ 19,082
======= ======= ======= =======
Net Income (Loss) Allocable
to General Partners $438 $722 $261 $191
======= ======= ======= =======
Net Income (Loss) Allocable
to Limited Partners $43,364 $71,505 $25,855 $18,891
======= ======= ======= =======
Net Income (Loss) per
Partnership Unit $7.37 $12.16 $4.40 $3.21
======= ======= ======= =======
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.
-3-
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
1995 1994
General Partners: ---- ----
Balance at beginning of year $ 18,506 $ 18,167
Net income (loss) 722 191
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Balance at end of period 19,228 18,358
Limited Partners:
Balance at beginning of year 3,085,712 3,052,200
Net income (loss) 71,505 18,891
Less: Cash distributions - -
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Balance at end of period 3,157,217 3,071,091
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Total balance at end of period $3,176,445 $3,089,449
========== ==========
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 SIX MONTHS ENDED JUNE 30, 1995 AND 1994
1995 1994
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Cash Flows From Operating Activities:
Received from motel revenues $ 822,025 $ 869,794
Expended for motel operations
and general and administrative expenses (666,346) (749,086)
Interest received 3,530 4,114
Interest paid (17,883) (34,462)
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Net cash provided (used) by operating activities 141,326 90,360
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Cash Flows From Investing Activities:
Purchases of property and equipment (2,906) (13,931)
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Net cash provided (used) by investing activities (2,906) (13,931)
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Cash Flows From Financing Activities:
Payments on notes payable (177,017) (65,638)
Distributions paid to Limited Partners - -
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Net cash provided (used) by financing activities (177,017) (65,638)
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Net increase (decrease) in cash
and temporary investments (38,597) 10,791
Cash and temporary investments:
Beginning of year 370,107 403,176
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End of period $ 331,510 $ 413,967
========= =========
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net income (loss) $ 72,227 $ 19,082
Adjustments to reconcile net income to --------- ---------
net cash provided by operating activities:
Depreciation and amortization 83,424 73,712
(Increase) decrease in accounts receivable 3,270 7,390
(Increase) decrease in prepaid expenses (7,733) (8,926)
Increase (decrease) in accounts payable
and accrued liabilities (9,862) (898)
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Total adjustments 69,099 71,278
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Net cash provided by operating activities $ 141,326 $ 90,360
========= =========
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
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 December 31, 1994
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 to the General Partners
or affiliates for the period.
Property Management Fees $ 40,216
Franchise Fees $ 15,790
Partnership management fees and subordinated incentive
distributions are contingent in nature and none have been accrued or
paid during the current period.
Note 2:
The following table summarizes the major components of motel
operating costs for the periods reported:
Three Month Six Months Three Month Six Month
Ended Ended Ended Ended
6/30/95 6/30/95 6/30/94 6/30/94
-------- -------- -------- --------
Salaries and related costs $ 111,138 $ 226,131 $ 135,359 $ 263,517
Utilities 28,401 54,326 28,578 56,633
Allocated costs, mainly indirect
salaries 44,551 86,814 40,659 80,499
Other operating expenses 109,481 206,986 131,965 258,363
-------- -------- -------- --------
Total motel operating expenses $ 293,571 $ 574,257 $ 336,561 $ 659,012
======== ======== ======== ========
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
JUNE 30, 1995
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's current assets of $432,578 exceed its current
liabilities of $146,692 by $285,886. This excess of current
assets over current liabilities is approximately equal to the
$297,050 operating reserve requirement in the Partnership
Agreement. The Partnership had a negative cash flow of $38,597
during the nine month period covered by this report. During
that period the Partnership has made $150,000 in mortgage
principal payments in excess of those required under the
mortgage as discussed in the next paragraph.
The Partnership's Bakersfield Motel is encumbered by a mortgage
calling for a $108,215 balloon payment on September 11, 1997.
Rather than accumulate funds to make this balloon payment, the
General Partners have decided to make additional principal
payments on the mortgage, thus saving on interest expense. The
General Partners have also decided to suspend quarterly
distributions to the Limited Partners in order to accumulate the
funds necessary for these extra principal payments.
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 six months
ended June 30, 1995, the Partnership has expended $10,669 in
such expenditures ($2,906 of which was capitalized) which is
equal to 1.3% of guest room revenue. The General Partners
anticipate that renovation and repair expenditures will not
substantially exceed 3% of guest room revenue during the current
fiscal year.
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 December 31, 1996.
The Partnership does not expect to make any disclosures about
impairment of long-lived assets under SFAS No. 121.
-7-
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
JUNE 30, 1995
RESULTS OF OPERATIONS
The following is a comparison of the first six months of the
fiscal year ending December 31, 1995 with the corresponding
period of the preceding fiscal year.
Occupancy Percentage
1995 1994
Current Year to Current Year to
Quarter Date Quarter Date
San Bernardino 58.6% 61.0% 61.5% 61.7%
Bakersfield 90.9% 88.2% 94.6% 92.6%
Combined 75.6% 75.3% 79.1% 78.0%
Average Room Rate
1995 1994
Current Year to Current Year to
Quarter Date Quarter Date
San Bernardino $40.73 $40.23 $42.13 $41.03
Bakersfield $31.33 $30.86 $31.19 $31.34
Combined $34.78 $34.45 $35.22 $34.98
Total revenues decreased $44,234 (or 5.1%) for the six month
period covered by this report as compared to the previous fiscal
year. The decrease in total revenue was due primarily to a
$41,231 or 4.9% decrease in room revenue. The San Bernardino
lodging market conditions are least favorable in the country
according to current industry trade magazines. The decline in
both revenue and room rates at the Bakersfield motel is
associated reduction in patronage by Amtrak train crews. Amtrak
has reduced the crew size and number of trains, thus reducing
the demand for rooms, and it has insisted that the Partnership
match a competing bid, thereby reducing the room rates from $22
to $20 per room night.
The Partnership's expenses decreased $97,379 or 11.5% . The
Partnership achieved the expenses reductions by a vigorous cost
control program in addition to the savings from reduced
occupancy.
-8-
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
JUNE 30, 1995
FUTURE TRENDS
The General Partners expect that overall occupancy for the
fiscal year ending December 31, 1995 will be equal to or less
than that achieved in 1994. The General Partners expect income
for the current fiscal year to be equal to the previous fiscal
year or to reflect a slight decrease. However, due to expense
reductions, discussed above, the General Partners anticipate net
income equal to the previous fiscal year or slightly better than
that achieved in 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.
-9-
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
-10-
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
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
-11-