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: September 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 September 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 SEPTEMBER 30,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 2,363,800 $ 1,804,888
Operating expenses paid in cash (1,378,829) (1,119,106)
Interest paid (96,711) (29,031)
----------- -----------
Net cash provided by operating activities 888,260 656,751
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, equipment, and construction in
progress, net (85,153) (932,695)
----------- -----------
Net cash used by investing activities (85,153) (932,695)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase of appraisal and loan fees -- (10,799)
Principal (payments) proceeds on long-term debt and construction
financing, net (30,504) 834,329
Distributions to partners (454,543) (454,543)
----------- -----------
Net cash provided (used) by financing
activities (485,047) 368,987
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
318,060 93,043
CASH AND CASH EQUIVALENTS, beginning of period 222,146 258,321
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 540,206 $ 351,364
=========== ===========
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PERIOD ENDED SEPT. 30,
1996 1995
--------- ---------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 800,617 $ 551,068
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 90,625 66,474
Gain on sale of assets (1,445) --
Change in assets and liabilities
Accounts receivable (12,640) 2,096
Inventory (63) 6,463
Prepaid expenses (7,421) (28,524)
Deposits 11,059 10,359
Accounts payable 3,446 48,210
Accrued expenses 4,082 605
--------- ---------
87,643 105,683
========= =========
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 888,260 $ 656,751
========= =========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
See attached Third Quarter (9/30/96) 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.
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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: November 14, 1996
-----------------------------------
Gerald L. Whitcomb, General Partner
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
SEPTEMBER 30, 1996 AND 1995
(Unaudited)
ASSETS
1996 1995
---------- ----------
CURRENT ASSETS
Cash $ 540,206 $ 351,364
Accounts receivable 31,800 33,562
Inventory 42,340 42,478
Prepaid expenses 20,743 32,711
---------- ----------
TOTAL CURRENT ASSETS 635,088 460,114
PROPERTY AND EQUIPMENT
Land 2,053,409 2,053,409
Land improvements 79,671 79,671
Buildings 2,883,865 2,163,300
Equipment, furniture, and fixtures 1,021,107 1,017,992
Construction in progress 0 931,810
---------- ----------
Subtotal 6,038,053 6,246,162
Less accumulated depreciation (2,000,552) (1,895,491)
---------- ----------
TOTAL PROPERTY AND EQUIPMENT, NET 4,037,501 4,350,691
OTHER ASSETS
Franchise fees 30,000 30,000
Appraisal fees and loan fees 15,000 15,750
---------- ----------
Subtotal 45,000 45,750
Less accumulated amortization (27,375) (23,429)
---------- ----------
Subtotal 17,625 22,321
Deposits 22,651 22,111
---------- ----------
TOTAL OTHER ASSETS 40,276 44,432
TOTAL ASSETS $4,712,864 $4,855,237
========== ==========
LIABILITIES AND PARTNER'S CAPITAL EQUITY
1996 1995
---------- ----------
CURRENT LIABILITIES
Accounts payable - trade $ 91,399 $ 77,833
Accounts payable - Affiliates 37,851 22,785
Accrued expenses 88,381 83,472
Current portion of long-term debt 43,028 40,049
---------- ----------
TOTAL CURRENT LIABILITIES 260,660 224,139
NONCURRENT LIABILITIES
Long-term debt, net of current
portion shown above 1,344,917 1,299,720
Property management fees 605,348 605,348
---------- ----------
TOTAL NONCURRENT LIABILITIES 1,950,265 1,905,068
PARTNER'S CAPITAL EQUITY
General partner 308,336 179,952
Limited partners 2,193,605 2,546,077
---------- ----------
TOTAL PARTNER'S CAPITAL EQUITY 2,501,940 2,726,029
---------- ----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL EQUITY $4,712,864 $4,855,237
========== ==========
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SUPER 8 MOTELS NORTHWEST I
STATEMENT OF INCOME
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
---------- ----------
SALES
Rooms $2,281,493 $1,729,129
Other 86,697 67,723
---------- ----------
TOTAL SALES 2,368,190 1,796,852
DIRECT OPERATING EXPENSES
Payroll and related expenses 378,064 351,778
Supplies and maintenance 229,103 141,973
Utilities 117,701 101,993
Other 25,834 20,589
---------- ----------
TOTAL DIRECT OPERATING EXPENSES 750,703 616,332
INDIRECT OPERATING EXPENSES
Advertising and promotion 52,800 73,324
Bank and credit card charges 36,457 26,508
Insurance 21,371 20,480
Property and business taxes 96,152 95,707
Other 8,927 10,682
---------- ----------
TOTAL INDIRECT OPERATING EXPENSES 215,708 226,701
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 129,897 103,929
Franchise fees 91,170 69,241
Property management fees 118,125 90,147
Professional services 32,345 33,855
Other 21,856 16,014
---------- ----------
TOTAL ADMINISTRATIVE AND GENERAL EXPENSES 393,393 313,186
FIXED CHARGES
Amortization 6,375 1,674
Depreciation 84,250 64,800
Interest 96,711 29,031
Lease expense 30,128 0
---------- ----------
TOTAL FIXED CHARGES 217,464 95,505
---------- ----------
INCOME FROM OPERATIONS 790,922 545,128
OTHER INCOME
Interest income 4,200 1,890
Gain on sale of asset 1,445 0
Rental Income 4,050 4,050
TOTAL OTHER INCOME 9,695 5,940
---------- ----------
NET INCOME (LOSS) $ 800,617 $ 551,068
========== ==========
This statement subject to change after audit to be performed by
Moss Adams, CPA's.
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VOL. 16 NO. 3/OCTOBER 31, 1996 THIRD QUARTER 1996
UPDATE
SUPER 8 MOTELS NORTHWEST I
NATIONAL & REGIONAL NEWS
V.I.P. CLUB HITS 4 MILLION MARK
Super 8's frequent traveler program, the V.I.P. Club, has reached an all-time
high of 4 million members. It is now the largest frequent traveler program in
the entire economy lodging market. Super 8 Motels President Bob Weller recently
reported, "Our V.I.P. Club is one of the strongest marketing tools in the
industry. More than 50% of all reservations made through Superline are made
with the V.I.P. Card, and club members account for more than 50% of room nights
booked through Superline.''
Super 8's V.I.P. Club began in 1976 with the intent of building a guest program
that offered discounts to the frequent traveler, thus ensuring their return. By
1986, membership increased to just over 200,000. The club reached one million
members in 1990, two million in 1992, and 4 million in September of this year.
Peninsula Management Northwest is marking the achievement of this important
milestone with a continued emphasis on the importance of V.I.P. guests.
Management and front desk training programs currently being utilized
significantly highlight V.I.P. sales-and incentive programs reward staff
quarterly for their efforts. As a consistent leader nationally, Peninsula
Management now receives an even greater percentage of its business from the
V.I.P. cardholder than the 53% national figure noted above.
FALL MARKS NATIONAL HOUSEKEEPER AND CUSTOMER SERVICE WEEKS
National Housekeeper Week, September 8-14, was celebrated for the first year
within Peninsula properties with special recognition and expressions of
appreciation. Each of the 142,000 clean and comfortable guest rooms rented this
summer was made so by one of the 260 housekeepers, laundry workers, and
housemen working on behalf of Peninsula Management. Also of importance was the
ongoing maintenance work accomplished by this same staff during the busy third
quarter season.
National Customer Service Week, October 6-12, is being celebrated at Super 8
headquarters with a departmental open house and posters promoting awareness. In
the Northwest Region, CUSTOMER SERVICE constituted the primary theme at the
individual motel Employee Appreciation Meetings, during which time regular
guests were thanked and exceptional guest service providers on staff were
honored.
NASCAR SPONSORSHIP HEATS UP
New print advertisements featuring Winston Cup Champion Bill Elliott premiered
August 26 in USA Today. In the ad, Elliott commends Super 8 Motels' consistent
quality, service and value. "If Super 8 were a race car driver, I'd be looking
over my shoulder all the time," Elliott states.
Driver Bill Elliott is a NASCAR legend with 40 career victories to his name. He
has been voted Most Popular Driver of the Year by NASCAR fans ten times, most
recently in 1995. Tom McNulty, national Marketing Director, in reporting to the
Franchise Advisory Board, stated, "With Bill Elliott, we're
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working with one of NASCAR's premier drivers. He and his car are actively
followed by motor sports fans, and we are thrilled to be associated with him."
NATIONAL QUALITY ASSURANCE ANNOUNCES MORE TERMINATIONS
Continuing to take a tough stand on properties with multiple Quality Assurance
failures, Super 8 Motels, Inc. has terminated franchises in three more
locations. The Quality Assurance Department works diligently to analyze
properties with deficiencies, and strives to help owners and managers improve
overall scores in order to maintain the outstanding quality and service of the
chain.
NORTHWEST DEVELOPMENT AND CONSTRUCTION NOTES
The 78-room Ferndale, Washington, Super 8 Motel opened as scheduled on October
18. A Ribbon Cutting and Grand Open House was well attended that afternoon by
city and county officials, business leaders and Chamber of Commerce members
from numerous neighboring feeder cities. This property is notable as the first
Super 8 to be located north of Seattle on the I-5 corridor, and, as such, is
viewed as a visible link to the important Canadian market.
The construction start in Woodburn, Oregon, mentioned in the second quarter
Update, experienced delays this summer due to development fee escalation. After
months of fee negotiations, a new schedule begins construction December 1,
1996, and opening is anticipated just in time to benefit from the 1997 summer
travel season.
Additional site acquisitions have been made in Oregon. The first of these is
located in Redmond, 16 miles north of the existing Bend Super 8 Motel. This
development is moving rapidly, with opening slated for May, 1997. The second
Oregon site is in Roseburg on a newly constructed I-5 freeway interchange at
the northerly end of the city limits. Both of these properties will feature all
the traditional Super 8 Northwest amenities, and will have the capability of
handling continental breakfast should future market conditions demand that
service.
SUPER 8 MOTELS NORTHWEST I
As the enclosed charts depict, both the Federal Way and SeaTac motels had
strong third quarter operating results.
Federal Way increased occupancy by about four occupancy points, with a daily
room rate increase of over $2.00. SeaTac increased occupancy from 69% to 94%,
with an average daily rate increase of over $6.00. While it should be
remembered that at times during the renovation rooms were not available to
rent, nevertheless, it appears that the time and money invested in the remodel
of the SeaTac property is indeed paying off.
Increased occupancy and room rate is only exciting if it transfers to an
increased bottom line for ownership. In this case, it most certainly does.
Through the end of September, partnership revenues were up by $571,338 or 32%
over the same period in 1995. During the same period, net income rose from
$551,068 to $800,617, for an increase of $249,549 or 45%. The unaudited
financial statements through September 30, 1996 are enclosed for your review.
Third quarter distribution is in the amount of $25.00 per partnership unit.
This represents a 10% annualized return on your original partnership investment.
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During the third quarter we had both the SeaTac and Federal Way properties
appraised by an independent third-party appraiser. We were quite pleased with
the results. SeaTac appraised at a total of $7,400,000 and Federal Way for a
value of $3,500,000. These values serve to confirm the advice of your general
partner that sale or disposition of your partnership units should not be at a
discounted price. If you have questions about the value or desire to divest
your interests, we suggest you call your broker, tax or financial advisor, or
the partnership office.
Year-end tax audits and partnership tax information will be prepared by the
certified public accounting firm of Moss Adams. Tax information will be
forwarded to you on or before February 28, 1997. Please advise us of any change
of address information by January 1, 1997, so that we can get this information
to you in a timely manner.
Thank you for your continued support of Super 8 Motels Northwest I. We hope you
have a joyous holiday season. If you plan to travel, call 1-800-800-8000 to
reserve your room at Super 8 Motels anywhere in the United States and Canada.
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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
========== ==========