1
FORM 10-Q
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Period Ended: June 30, 1996
Commission File Number: 2-67456
SUPER 8 MOTELS NORTHWEST I
Washington 91-1101310
PART 1
Financial Information
Item 1. Financial Statements
See attached unaudited June 30, 1996 Financial Statements and the partnership's
balance sheet for the year ended December 31, 1995. The Statement of Cash
Flows is omitted from the attachment and is presented as follows:
PERIOD ENDED JUNE 30,
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $1,307,540 $1,001,873
Operating expenses paid in cash (741,727) (536,385)
Interest paid (64,702) (20,324)
---------- ----------
Net cash provided by operating activities 501,111 445,164
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, equipment, and construction in
progress, net (89,669) (713,248)
---------- ----------
Net cash used by investing activities (89,669) (713,248)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase of appraisal and loan fees -- (8,055)
Principal (payments) proceeds on long-term debt and
construction financing, net (20,599) 448,842
Distributions to partners (303,030) (303,030)
---------- ----------
Net cash provided (used) by financing
activities (323,629) 137,757
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
87,813 (130,327)
CASH AND CASH EQUIVALENTS, beginning of period 222,146 258,321
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $309,959 $127,994
========== ==========
2
PERIOD ENDED JUNE 30,
1996 1995
-------- --------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Net income $395,011 $252,933
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 59,917 44,345
Change in assets and liabilities
Accounts receivable 3,647 (5,843)
Inventory (63) 4,208
Prepaid expenses (13,891) (34,867)
Deposits 1,282 25,058
Accounts payable 64,367 175,179
Accrued expenses (9,159) (15,849)
-------- --------
106,100 192,231
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $501,111 $445,164
======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
See attached Second Quarter (6/30/96) Update from the Issuer delivered to its
limited partners.
PART 2
Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
None.
3
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.
SUPER 8 MOTELS NORTHWEST I
a Washington limited partnership
By: Date: August 9, 1996
----------------------------------------
Gerald L. Whitcomb, General Partner
4
VOL. 16 NO. 2/JULY 31, 1996
SUPER 8 MOTELS NORTHWEST I
SECOND QUARTER 1996
NATIONAL NEWS
1400 AND GROWING
This past June the Super 8 System observed the opening of Super 8 Motel
number 1,400. However, Super 8 is not stopping at that benchmark as there are
currently 193 new Super 8's under construction, continuing the system's
aggressive growth and development. The only two states in which a Super 8
Motel has not opened remain Rhode Island and Hawaii. Also of note, six
Canadian provinces now are able to boast of the presence of Super 8 Motels.
4 MILLION VIP'S
At this printing, the number of loyal VIP members will have reached, or
possibly surpassed, the 4,000,000 mark. The Peninsula Group, and its
properties, continues to enjoy playing a leadership role in the sale of VIP
memberships to its customers-with over 2O% of its rooms being sold to new VIP
members. Further, the Peninsula Management staff enjoys the ongoing benefit of
selling another 50%-60% of its rooms to guests who already carry a permanent
VIP Card.
D.K. SHIFFLET REPORT
The independent market research firm D.K. Shifflet reports that frequent
travelers are currently rating Super 8 Motels superior to the entire economy
segment. Their most up-to-date numbers document Super 8 as the segment leader
in both service and value ratings. Also verified in recent reports is the
public's perception of Super 8 as having better prices than the segment
competition.
PREFERRED VENDORS SAVE $$$
Super 8 Motels, Inc. has worked diligently to increase both the quantity and
quality of the preferred vendors made available to regional franchisees such as
The Peninsula Group. This hard work is paying off with more than 60
manufacturers from which our purchasing department may now order. Companies
and products range from soft drink vendors which stock the vending machines, to
companies such as Zenith and Sealy that supply televisions and mattresses for
the guest rooms. Over the past two years, HFS vendor programs have returned
more than $11 million in savings and incremental revenues to Super 8
franchisees.
5
TOUGH STAND ON Q.A.
While the average Quality Assurance score nationwide does continue to improve,
Super 8 President Robert Weller has announced a firm stand with those few
properties who fail inspection scores. Quick and decisive action has been, and
will be, taken against these properties, including an immediate cut-off from
the reservation system. Additionally, a Q.A. Manager has been assigned to
analyze and work with border-line properties to improve overall scores even
further. Vice President of Marketing Tom McNulty summarized, "By enforcing
these standards, it makes our message of cleanliness and consistency more
powerful and believable to consumers."
REGIONAL NEWS
PILOT PROGRAM TESTED IN NORTHWEST
A new VIP program developed by the Marketing Department at Peninsula
Management Northwest has gained recognition and attention at the national level
by Super 8 Motels, Inc. The VIP EXPRESS CHECK-IN has drawn so much interest at
Super 8 Inc., that they have made offers to assist in defraying some of the
expenses incurred in the development of the program's training, signage, and
promotion.
Objectives of the VIP EXPRESS CHECK-IN are:
* Special identity for VIP members at check-in time
* "Added value" to the VIP membership card
* Sales opportunity for desk staff to potential VIP members
VIP EXPRESS CHECK-IN was implemented at ALL Peninsula Management
properties in the Northwest and Alaska in June. Remembering that well over 50%
of all guests are VIP card holder, it is anticipated that all guests will
benefit this summer from a speedier check-in process for returning VIP's.
HUMAN RESOURCES DIRECTOR HIRED AT PMNW
The Peninsula Group and Peninsula Management Northwest are pleased to welcome
Joni Hower to the Management team. Ms. Hower comes to PMNW with ten years of
experience in the hospitality industry.
Ms. Hower brings both education and experience to the HR position, holding a
Bachelor of Arts in Communication and a Masters of Administration in
Organizational Management. Her job experience includes supervisor of Human
Resources and Training at a four-star Radisson Hotel in Northern California and
consultant to several companies, some of which include the New Jersey
Hotel/Motel Association and The Educational Institute.
Ms. Hower's responsibilities include reviewing and modifying PMNW hiring
practices, human resources policies and procedures, and Company job
descriptions. She will also be recruiting for General Manager and Assistant
General Manager positions. It is anticipated that Ms. Hower's skills will
assist in reducing employee turnover, improve employee communications and
reinforce career path objectives.
6
SUPER 8 MOTELS NORTHWEST I
The extensive remodel completed at the SeaTac Motel is beginning to have an
effect on occupancy. Year-to-date 1996 operational results for Super 8 Motels
Northwest I show Total Sales increased by $296,400 over the first half of 1995.
This is an increase of 30%. Adjusted Net Income for the partnership overall
increased to $395,011 from $252,933 in 1995, for an increase of $142,078, or
56%.
Northwest I increases were also as a result of Federal Way improving
occupancy by over eight occupancy points compared to 1995, for a year to date
occupancy of 69.39%. Average daily rate increased $.89 to $44.70. Federal Way's
total revenue increased over $77,000, while operating expenses were well
controlled. The result was that net income rose by over $45,000 after the
expenditure of over $30,000 for planned property renovations.
As noted, SeaTac is beginning to feel the results of the extensive 1995
renovation just completed. Year-to-date occupancy rose from 45% in 1995 to
over 56% in 1996 for an 11 occupancy point increase. Average daily rate
increased by $6.08 to $60.16 for an increase of 11 % over 1995. Total revenue
increased by over $212,000, or 38% over the same period in 1995. Operating
expenses were again well controlled resulting in an increase in 1996
year-to-date net income of $233,000 compared to $145,000 for the same time
period in 1995, after payment of interest and lease expenses which are a result
of the borrowing completed for the renovation.
If you have not had the opportunity to see the completed renovation at the
SeaTac Super 8 Motel, we encourage you to do so. We have received many good
comments on the "new look" as well as the functional contemporary design of the
lobby and common areas. Guests also enjoy the new elevator as well as the
brighter and more modern look in the rooms.
Second quarter distribution is in the amount of $25.00 per partnership unit.
This represents a 10% annualized return on your original partnership
investment. In addition, you will find occupancy and average daily room rate
comparison charts and year-to-date unaudited financial statements.
The official partnership meeting was held at the Corporate Offices of The
Peninsula Group in Tumwater on June 12, 1996. We appreciate the continued
interest of those limited partners who were able to attend.
Thank you for your support of Super 8 Motels Northwest 1. If your summer
plans include any travel, be sure to make your room reservations for any Super
8 Motel in the United States and Canada with SUPERLINE at 1-800-800-8000.
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
JUNE 30, 1996 AND 1995
(UNAUDITED)
ASSETS
1996 1995
---------- ----------
CURRENT ASSETS
Cash $ 309,959 $ 127,994
Accounts receivable 15,513 41,501
Inventory 42,340 44,733
Prepaid expenses 27,213 39,054
---------- ----------
TOTAL CURRENT ASSETS 395,025 253,282
PROPERTY AND EQUIPMENT
Land 2,053,409 2,053,409
Land improvements 79,671 79,671
Buildings 2,882,913 2,163,300
Equipment, furniture, and fixtures 1,020,685 1,017,107
Construction in progress 0 713,249
---------- ----------
Subtotal 6,036,678 6,026,736
Less accumulated depreciation (1,968,023) (1,873,915)
---------- ----------
TOTAL PROPERTY AND EQUIPMENT, NET 4,068,655 4,152,821
OTHER ASSETS
Franchise fees 30,000 30,000
Appraisal fees and loan fees 15,000 13,006
---------- ----------
Subtotal 45,000 43,006
Less accumulated depreciation (24,750) (22,875)
---------- ----------
Subtotal 20,250 20,131
Deposits 32,428 7,412
---------- ----------
TOTAL OTHER ASSETS 52,678 27,542
TOTAL ASSETS $4,516,358 $4,433,645
========== ==========
LIABILITIES AND PARTNER'S CAPITAL EQUITY
1996 1995
---------- ----------
CURRENT LIABILITIES
Accounts payable - trade $ 96,498 $ 187,438
Accounts payable - Affiliates 93,673 40,149
Accrued expenses 75,140 67,018
Current portion of long-term debt 38,434 57,703
---------- ----------
TOTAL CURRENT LIABILITIES 303,744 352,308
NONCURRENT LIABILITIES
Long-term debt net of current
portion shown above 1,359,416 896,579
Property management fees 605,348 605,348
---------- ----------
TOTAL NONCURRENT LIABILITIES 1,964,764 1,501,927
PARTNER'S CAPITAL EQUITY
General partner 193,709 178,486
Limited partners 2,054,141 2,400,923
---------- ----------
TOTAL PARTNER'S CAPITAL
EQUITY 2,247,850 2,579,409
---------- ----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL EQUITY $4,516,358 $4,433,645
========== ==========
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SUPER 8 MOTELS NORTHWEST I
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDING JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
---------- ----------
SALES
Rooms $1,247,036 $ 962,058
Other 53,259 41,837
---------- ----------
TOTAL SALES 1,300,295 1,003,895
DIRECT OPERATING EXPENSES
Payroll and related expenses 230,418 227,106
Supplies and maintenance 80,851 56,614
Utilities 72,746 65,088
Other 15,966 14,377
---------- ----------
TOTAL DIRECT OPERATING EXPENSES 399,981 363,185
INDIRECT OPERATING EXPENSES
Advertising and promotion 31,671 47,434
Bank and credit card charges 20,645 14,607
Insurance 14,730 12,850
Property and business taxes 62,727 61,297
Other 6,505 4,149
---------- ----------
TOTAL INDIRECT OPERATING EXPENSES 136,277 140,337
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 85,987 64,489
Franchise fees 49,689 38,491
Property management fees 64,906 50,485
Professional services 14,220 20,555
Other 13,118 12,573
---------- ----------
TOTAL ADMINISTRATIVE AND GENERAL
EXPENSES 227,920 186,592
FIXED CHARGES
Amortization 3,750 1,121
Depreciation 56,167 43,224
Interest 64,702 20,324
Lease expense 20,085 0
---------- ----------
TOTAL FIXED CHARGES 144,704 64,668
---------- ----------
INCOME FROM OPERATIONS 391,412 249,112
OTHER INCOME
Interest income 900 1,121
Gain on sale of asset 0 0
Rental Income 2,700 2,700
TOTAL OTHER INCOME 3,600 3,821
---------- ----------
NET INCOME (LOSS) $ 395,011 $ 252,933
========== ==========
This statement subject to change after audit to be
performed by Moss Adams, CPA's.
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET___________________________________________________________________
ASSETS
DECEMBER 31,
----------------------------
1995 1994
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 222,146 $ 258,321
Accounts receivable, trade 15,718 13,295
Accounts receivable, affiliates 3,442 22,363
Inventory 42,277 48,941
Prepaid expenses 13,322 4,187
----------- -----------
Total current assets 296,905 347,107
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land 2,053,409 2,053,409
Land improvements 79,671 79,671
Buildings 2,818,164 2,163,300
Equipment, furniture and fixtures 1,017,991 1,017,107
----------- -----------
5,969,235 5,313,487
Less accumulated depreciation (1,934,081) (1,830,691)
----------- -----------
4,035,154 3,482,796
----------- -----------
OTHER ASSETS
Franchise fees 30,000 30,000
Appraisal fees and loan fees 15,000 4,951
----------- -----------
45,000 34,951
Less accumulated amortization (21,000) (21,754)
----------- -----------
24,000 13,197
Deposits 33,710 32,470
----------- -----------
Total other assets 57,710 45,667
----------- -----------
$ 4,389,769 $ 3,875,570
=========== ===========
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SUPER 8 MOTELS NORTHWEST I
__________________________________________________________________ BALANCE SHEET
LIABILITIES AND PARTNERS' EQUITY
DECEMBER 31,
---------------------------
1995 1994
------------ -----------
CURRENT LIABILITIES
Accounts payable, trade $ 49,240 $ 25,235
Accounts payable, affiliates 76,564 27,173
Accrued expenses 84,299 82,867
Current portion of long-term debt 38,000 87,000
----------- -----------
Total current liabilities 248,103 222,275
----------- -----------
NONCURRENT LIABILITIES
Long-term debt, net of current
portion shown above 1,380,449 418,440
----------- -----------
ACCRUED PROPERTY MANAGEMENT FEES 605,348 605,348
----------- -----------
COMMITMENTS
PARTNERS' EQUITY
General partner equity 192,789 178,987
Limited partners (authorized and
outstanding, 6,000 units) 1,963,080 2,450,520
----------- -----------
2,155,869 2,629,507
----------- -----------
$ 4,389,769 $ 3,875,570
=========== ===========