SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM to
COMMISSION FILE NUMBER: 33-16163-LA
NASHVILLE SUPER 8 LTD., A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 33-0249749
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3145 Sports Arena Blvd.
San Diego, CA 92110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(619) 226-1212
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
State the number of limited partnership interests outstanding as
of the latest practicable date: 3,975
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial
information:
Balance Sheet as of September 30, 1995 and December 31,
1994.
Statement of Operations for the three-month and nine-month
periods ended September 30, 1995 and September 30, 1994.
Statement of Cash Flows for the three-month and nine-month
periods ended September 30, 1995 and September 30, 1994.
Notes to Financial Statements.
2
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
(Unaudited)
(Part 1)
September 31, December 31,
1995 1994
ASSETS
Current Assets:
Cash and cash equivalents $ 184,822 $ 411,064
Accounts receivable 25,840 4,355
Operating supplies 15,455 15,655
Prepaid expenses 20,743 12,550
Due from affiliates (note 4) 0 5,771
---------- ----------
Total current assets 246,860 449,395
Investment property, at cost:
Land 711,092 711,092
Building and improvements 2,788,608 2,162,117
Furniture, fixtures and equipment 599,016 535,210
---------- ----------
4,098,716 3,408,419
Less accumulated depreciation 863,680 760,620
---------- ----------
Investment property, net of
accumulated depreciation 3,235,036 2,647,799
---------- ----------
Deferred organization costs and
Franchise fee, net (note 3) 13,667 14,417
Construction in progress 0 219,133
---------- ----------
$3,495,563 $3,330,744
---------- ----------
---------- ----------
See accompanying notes to financial statements.
3
NASHVILLE SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
(Unaudited)
(Part 2)
September 31, December 31,
1995 1994
LIABILITIES AND
PARTNER'S CAPITAL ACCOUNTS
Current liabilities:
Notes Payable (note 5) $ 5,871 $ 0
Accounts payable and accrued expenses 94,004 142,846
Due to affiliates (note 4) 23,413 5,134
---------- ----------
Total current liabilities 123,288 147,980
---------- ----------
Long-term debt, less
current portion (note 5) 173,388 0
---------- ----------
Total liabilities 296,676 147,980
---------- ----------
Partners' capital accounts (deficit):
General Partners:
Cumulative net earnings 15,355 (1,257)
Cumulative cash distributions (40,450) (25,450)
---------- ----------
(25,095) (26,707)
Limited partners:
Capital contributions,
net of offering costs 3,449,823 3,449,823
Cumulative net earnings 138,204 (11,307)
Cumulative cash distributions (364,045) (229,045)
---------- ----------
3,223,982 3,209,471
---------- ----------
Total partners' capital accounts 3,198,887 3,182,764
---------- ----------
$3,495,563 $3,330,744
---------- ----------
---------- ----------
See accompanying notes to financial statements.
4
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statement of Operations
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Revenues:
Room revenues $ 376,552 $ 334,925 $ 911,216 $ 748,709
Phone revenues 7,400 8,711 16,301 19,799
Interest income 869 2,061 3,332 4,745
Other income 705 593 1,875 1,440
---------- ---------- ---------- ----------
385,526 346,290 932,724 774,693
---------- ---------- ---------- ----------
Expenses:
Property operating expenses 145,741 118,214 354,110 283,673
Depreciation 34,467 33,441 103,060 100,412
General and administrative 40,172 33,675 115,059 110,590
Amortization 250 250 750 750
Management fees 23,080 20,654 55,759 46,207
Royalties 22,594 20,119 54,656 45,072
Real estate taxes 6,144 8,435 23,814 25,555
Marketing 15,250 18,544 50,904 51,925
Interest expense 3,548 0 8,489 0
---------- ---------- ---------- ----------
291,246 253,332 766,601 664,184
---------- ---------- ---------- ----------
Net earnings $ 94,280 $ 92,958 $ 166,123 $ 110,509
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings per limited
partnership interest $ 21.35 $ 21.05 $ 37.61 $ 25.02
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
5
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statement of Cash Flows
Three Months and Nine Months
Ended September 30, 1995 and September 30, 1994
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Cash flows from operating activities:
Net earnings $ 94,280 $ 92,958 $ 166,123 $ 110,509
Adjustments to reconcile net earnings to cash:
Depreciation and amortization 34,717 33,691 103,810 101,162
Changes in assets and liabilities:
(Increase) decrease in other assets: (6,668) 3,926 (29,478) (9,673)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 2,413 12,407 (48,842) 12,424
Due to/from Affiliates 8,346 4,922 24,050 1,180
---------- ---------- ---------- ----------
Net cash provided by operating activities 133,088 147,904 215,663 215,602
---------- ---------- ---------- ----------
Cash flows used in or provided
from investing activities:
Acquisition and construction costs
of investment property (18,384) (35,854) (471,164) (57,343)
---------- ---------- ---------- ----------
Net cash provided from investing activities (18,384) (35,854) (471,164) (57,343)
---------- ---------- ---------- ----------
Cash flows from financing activities:
Increase (decrease) to Notes payable (5,000) 0 179,259 0
Cash distributions to partners (150,000) 0 (150,000) 0
---------- ---------- ---------- ----------
Net cash (used in) financing activities (155,000) 0 29,259 0
---------- ---------- ---------- ----------
Net increase (decrease) in cash (40,296) 112,052 (226,242) 158,261
Cash and cash equivalents at beginning of period 225,118 330,660 411,064 284,451
---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 184,822 $ 442,712 $ 184,822 $ 442,712
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
6
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements
September 30, 1995
(Unaudited)
Readers of this quarterly report should refer to the partnership audited
financial statements and annual report Form 10-KSB (File No. 33-16163-LA) for
the period ended December 31, 1994, as certain footnote disclosures which
would substantially duplicate those contained in such financial reports have
been omitted from this report.
1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nashville Super 8 Ltd., A California Limited Partnership (the Partnership),
(formerly Motels of America Series XI), a California Limited Partnership, was
formed on September 1, 1988 pursuant to the California Revised Uniform
Limited Partnership Act. The purpose of the Partnership is to construct,
own, and operate a 110-room "economy" motel under a Super 8 Franchise. The
motel was opened in April 1989.
The following is a summary of the Partnership's significant accounting
policies:
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents.
INVESTMENT PROPERTY
Investment property is recorded at cost. Depreciation is computed using the
straight-line method based on estimated useful lives of 5 to 35 years.
Maintenance and repair costs are expensed as incurred, while significant
improvements, replacements, and major renovation are capitalized.
FRANCHISE FEES
Franchise fees are amortized over the 20-year life of the franchise
agreement. Organization costs are amortized over a 60-month period.
INCOME TAXES
No provision for income taxes has been made as any liability for such taxes
would be that of the partners rather than the Partnership.
Net income per interest is based upon the 90% allocated to limited partners
divided by 3,975 limited partner interests outstanding throughout the year.
(Continued)
7
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
2. PARTNERSHIP AGREEMENT
Net income or loss and cash distributions from operations of the Partnership
are allocated 90% to the limited partners and 10% to the general partner.
Profits from the sale or other disposition of Partnership property are to be
allocated to the general partner until its capital account equals zero;
thereafter, to the limited partners until their capital accounts equal their
capital contributions reduced by prior distributions of cash from sale or
refinancing plus an amount equal to a cumulative but not compounded annual 8%
return thereon which cumulative return shall be reduced (but not below zero)
by the aggregate amount of prior distributions of cash available for
distribution; thereafter, gain shall be allocated 15% to the general partner
and 85% to the limited partners. Loss from sale shall be allocated 1% to the
general partner and 99% to the limited partners.
3. FRANCHISE AGREEMENT
The Partnership has entered into a twenty-year franchise agreement with Super
8 Motels, Inc. to provide the Partnership with consultation in the areas of
design, construction and operation of the motel. The agreement required the
payment of an initial fee of $20,000 and ongoing royalties equal to 4% of
gross room revenues and a chain-affiliated advertising fee equal to 2% of
gross room revenues.
During 1994, the franchise agreement was amended to reduce the Partnership's
area of protection in exchange for the franchisor reducing by one-half the
liquidated damages that would be payable by the Partnership in the event it
elects an early termination of the franchise agreement. In addition, if the
franchisor grants a franchise in the released area and the occupancy rate at
the Partnership's motel drops by three or more points for any twelve month
period, the Partnership may obtain a 1% of gross room sales reduction in
royalties payable for the balance of the franchise agreement or terminate the
franchise agreement upon payment of the reduced liquidated damages.
4. RELATED PARTY TRANSACTIONS
The motel is operated pursuant to a management agreement with GHG. The
agreement provides for the payment of monthly management fees of 6% of gross
revenues.
The Partnership has agreed to reimburse GHG for certain expenses related to
services performed in maintaining the books and administering the affairs of
the Partnership.
GHG and an affiliate, GMS Management Services, Inc. (GMS), allocate to the
Partnership certain marketing, accounting, and maintenance salaries and
certain other expenses directly related to the operation of the Partnership.
(Continued)
8
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
Fees and reimbursements for partnership administration expenses paid to GHG
and GMS for the three months ended September 30, 1995 and September 30, 1994
are as follows:
Three Months Ended Nine Months Ended
9/30/95 9/30/94 9/30/95 9/30/94
Management Fees $23,080 $20,654 $55,759 $46,207
Reimbursement for
partnership admini-
stration expenses $ 5,415 $ 5,385 $16,238 $16,155
In addition, all motel employees are paid by GMS. The Partnership reimbursed
GMS $62,347 for the wages of these employees including a one percent
processing fee. At September 30, 1995, $23,413 was owed to GHG and GMS
relating to reimbursement for these operating expenses.
5. LONG-TERM DEBT
The Partnership borrowed $184,259 to partially fund the $601,500 spent on the
indoor swimming pool, workout center and spa, and renovation of the lobby and
certain guest rooms. The note is with First Bank & Trust of Tennessee. The
Partnership was approved for a credit line of $500,000 but only $184,259 was
used. As of September 30, 1995, the principal balance of $179,259 and
accrued interest of $1,564 to September 30, 1995 was due. This balance is
payable in monthly installments of approximately $2,154 including interest at
two points over the index which is the New York Consensus Prime as quoted in
the Wall Street Journal. The present interest rate is 10.75%. The final
balance is due August 2009. The note is secured by a first priority deed of
trust on the Partnership's motel.
6. COMMITMENTS AND CONTINGENCIES
Construction of an indoor swimming pool, workout center and spa, and
renovation of the lobby and certain guest rooms has been completed. The cost
of completing the project was $601,500 as of September 30, 1995. Payment for
construction and renovation costs was made from cash funds of the
Partnership, and a loan from First Bank & Trust of Tennessee in the amount of
$184,259.
7. ADJUSTMENTS
In the opinion of the general partners, all adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation have been
made to the accompanying figures as of and for the nine months ended
September 30, 1995.
(Continued)
9
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
8. SUBSEQUENT EVENT
In November 1995, the Partnership paid a distribution of $89,999.17 to the
limited partners.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Financial Condition:
On September 1, 1987, the Partnership commenced its public offering pursuant
to its Prospectus. On September 27, 1988, the Partnership completed the
public offering. The Partnership received $3,449,823 (net of offering costs
of $525,177) from the sale of limited partnership interests. These funds
were available for investment in property, to pay legal fees and other costs
related to the investments, to pay operating expenses, and for working
capital. The majority of the proceeds was used to acquire and construct the
110-room "economy" motel on approximately 2 acres of land.
The effect of current operations on liquidity was net cash provided from
operating activities of $215,663 for the nine months ending September 30,
1995. Investment property expenditures were $471,164 for the nine months
ended September 30, 1995, of which $184,259 was funded by a long-term note
with First Bank & Trust of Tennessee (see Note 5).
At September 30, 1995, the Partnership had cash and cash equivalents of
approximately $184,822. Such funds will be utilized to make distributions to
partners and for working capital requirements.
Results of Operations:
For the three months ended September 30, 1995, room revenues were $376,552,
the occupancy rate was 77.98% and the average daily rate was $49.05. This
compares to the three months ended September 30, 1994 when room revenues were
$334,925, the occupancy rate was 77.16% and the average daily rate was
$42.89.
For the nine months ended September 30, 1995, room revenues were $911,216,
the occupancy rate was 72.78% and the average daily rate was $43.04. This
compares to the nine months ended September 30, 1994, when the room revenues
were $748,709, the occupancy rate was 61.63% and the average daily rate was
$40.46.
The increase in room revenues in 1995 from 1994 shows an increase in the
occupancy rate and average rate. In 1993, 1994 and 1995, the Partnership
increased its sales efforts, which included close contact with area welcome
centers, groups and airport businesses and the use of billboards. As a
result, the occupancy rate increased. Increased occupancy caused property
operating expenses to increase to $354,110 for the nine months ended
September 30, 1995 from $283,673 for the nine months ended September 30,
1994.
The Nashville area has continued to gain new attractions. This and other
factors have increased tourist traffic to the area, and management believes
that the Partnership will continue to experience increased occupancy because
of the addition of a swimming pool and related facilities. The swimming pool
addition will increase the value of the property and has increased occupancy
and average daily rate.
(continued)
11
Results of Operations (Continued):
Seasonality:
The motel business is seasonal with the third quarter being the strongest due
to the tourist business and the last half of the fourth quarter and the first
half of the first quarter being the weakest.
(Continued)
12
SIGNATURES
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.
(REGISTRANT) NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
By: GHG Hospitality, Inc.
Corporate General Partner
BY (SIGNATURE) /s/ J. Mark Grosvenor
(NAME AND TITLE) J. Mark Grosvenor, President and Director
(DATE) November 10, 1995
BY (SIGNATURE) /s/ Sylvia Mellor Clark
(NAME AND TITLE) Controller
(DATE) November 10, 1995