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, 1997
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, 1997 Financial Statements and the partnership's
balance sheet for the year ended December 31, 1996. The Statement of Cash Flows
is omitted from the attachment and is presented as follows:
PERIOD ENDED JUNE 30,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 1,359,193 $ 1,307,540
Operating expenses paid in cash (1,002,870) (741,727)
Interest paid (60,584) (64,702)
----------- -----------
Net cash provided by operating activities 295,739 501,111
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment -- (89,669)
Sale of land 26,606 --
----------- -----------
Net cash provided by (used in) investing activities 26,606 (89,669)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long term debt (25,016) (20,599)
Distributions to partners (303,028) (303,030)
----------- -----------
Net cash used in financing activities (328,044) (323,629)
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,699) 87,813
CASH AND CASH EQUIVALENTS, beginning of period 544,684 222,146
=========== ===========
CASH AND CASH EQUIVALENTS, end of period $ 538,985 $ 309,959
=========== ===========
2
PERIOD ENDED JUNE 30,
1997 1996
----------- -----------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income $ 452,655 $ 395,012
----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 43,626 59,917
Change in assets and liabilities
Accounts receivable 2,888 3,646
Inventory -- (63)
Prepaid expenses (637) (13,891)
Deposits (3,898) 1,282
Accounts payable 56,683 64,367
Accrued expenses (5,578) (9,159)
Accrued management fees (250,000) --
----------- -----------
(156,916) 106,099
=========== ===========
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 295,739 $ 501,111
=========== ===========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
See attached Second Quarter (6/30/97) 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 8, 1997
-----------------------------------------
Gerald L. Whitcomb, General Partner
4
SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
JUNE 30, 1997 AND 1996
(Unaudited)
ASSETS
1997 1996
---------- ----------
CURRENT ASSETS
Cash $ 538,985 $ 309,959
Accounts receivable 18,630 15,513
Inventory 42,093 42,340
Prepaid expenses 7,849 27,213
---------- ----------
Total current assets 607,557 395,025
PROPERTY AND EQUIPMENT
Land 2,026,804 2,053,409
Land improvements 79,671 79,671
Buildings 2,836,155 2,882,913
Equipment, furniture, and fixtures 1,021,107 1,020,685
Construction in progress 0 0
---------- ----------
Subtotal 5,963,737 6,036,678
Less accumulated depreciation (2,063,793) (1,968,023)
---------- ----------
Total property and equipment, net 3,899,944 4,068,655
OTHER ASSETS
Franchise fees 30,000 30,000
Appraisal fees and loan fees 15,000 15,000
---------- ----------
Subtotal 45,000 45,000
Less accumulated amortization (27,750) (24,750)
---------- ----------
Subtotal 17,250 20,250
Deposits 38,241 32,428
---------- ----------
Total other assets 55,491 52,678
---------- ----------
Total assets $4,562,992 $4,516,358
========== ==========
LIABILITIES AND PARTNER'S CAPITAL EQUITY
1997 1996
---------- ----------
CURRENT LIABILITIES
Accounts payable - trade $ 86,134 $ 96,497
Accounts payable - Affiliates 37,661 93,673
Accrued expenses 82,729 75,140
Current portion of long-term debt 45,584 38,434
---------- ----------
Total current liabilities 252,108 303,744
NONCURRENT LIABILITIES
Long-term debt, net of current
portion shown above 1,307,191 1,359,416
Property management fees 355,348 605,348
---------- ----------
Total noncurrent liabilities 1,662,539 1,964,764
PARTNER'S CAPITAL EQUITY
General partner 393,934 193,709
Limited partners 2,254,411 2,054,141
---------- ----------
Total partner's capital equity 2,648,345 2,247,850
---------- ----------
Total liabilities and partner's
capital equity $4,562,992 $4,516,358
========== ==========
5
SUPER 8 MOTELS NORTHWEST I
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDING JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
---------- ----------
SALES
Rooms $1,284,477 $1,247,036
Other 62,621 53,259
---------- ----------
Total sales 1,347,098 1,300,295
DIRECT OPERATING EXPENSES
Payroll and related expenses 247,999 230,418
Supplies and maintenance 59,358 80,851
Utilities 74,665 72,746
Other 12,694 15,966
---------- ----------
Total direct operating expenses 394,716 399,981
INDIRECT OPERATING EXPENSES
Advertising and promotion 34,199 31,671
Bank and credit card charges 19,894 20,645
Insurance 16,864 14,730
Property and business taxes 66,583 62,727
Other 4,458 6,505
---------- ----------
Total indirect operating expenses 141,998 136,278
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 89,762 85,987
Franchise fees 51,379 49,689
Property management fees 67,355 64,906
Professional services 16,806 14,220
Other 15,074 13,118
---------- ----------
Total administrative and general
expenses 240,376 227,920
FIXED CHARGES
Amortization 2,250 3,750
Depreciation 41,376 56,167
Interest 62,708 64,702
Lease expense 20,226 20,085
---------- ----------
Total fixed charges 126,560 144,704
---------- ----------
INCOME FROM OPERATIONS 443,448 391,412
---------- ----------
OTHER INCOME
Interest income 6,507 900
Gain on sale of asset 0
Rental income 2,700 2,700
---------- ----------
Total other income 9,207 3,600
---------- ----------
NET INCOME (LOSS) $ 452,655 $ 395,012
========== ==========
6
SUPER 8 MOTELS NORTHWEST I UPDATE
VOL. 17 NO. 2/JUNE 30, 1997 SECOND QUARTER 1997
NATIONAL NEWS
SUPER 8 ROOMS NEARING 100,000 MARK
Super 8 Motels President, Robert Weller, reminds us in the May issue of the
Super 8 newsletter StrEIGHTTalk that the chain continues to expand its services
nationwide in 1997. Currently, a new Super 8 Motel opens every 2.5 days, a new
franchise is sold every working day, and a guest joins the VIP Club every
minute!
Another benchmark will be reached this summer when the 101 motels now under
construction open their doors, bringing the number of guest rooms to over
100,000. This exposure of product, in combination with the VIP Club membership
rapidly approaching the five million mark, will assure Super8's position as the
finest franchise lodging chain in the industry.
Investors should note, further, that Super 8 continues to keep pace with design
and service developments within the industry--maintaining an edge in the
marketplace. Consider the following nationwide statistics:
- 95% of all Super 8 Motels now offer non-smoking rooms
- 90% of all Super 8 Motels offer fax machine services
- 66% of nationwide Super 8s offer a continental breakfast --and--
- Over one-third offer meeting rooms, swimming pools, and suites.
Of course, all motels comply with current standards to accommodate the
physically disabled guest, and the hearing and/or visually impaired guest. All
motels are in the process of converting to the newer security-conscious
electronic lock systems, and many newly constructed and renovated properties are
offering computer data ports in the guest rooms.
PENINSULA MANAGEMENT PROPERTIES SWEEP TOP VIP HONORS
During the 1996 National VIP Challenge, over 606,000 guests joined and began
receiving the benefits of VIP membership. The 1996 National Awards were
presented at the 1997 Regional Meetings by Super 8's Vice President of
Marketing, Tom McNulty. Peninsula Management Northwest properties competed in
four of the six size categories, and proudly took top honors in three of those
four categories:
- SeaTac Airport Super 8 Motel--First Prize 89-290 Room Category-over
6,000 VIPs
- Portland Airport Super 8 Motel--First Prize 66-88 Room Category-over
6,200 VIPs
- Klamath Falls Super 8 Motel--First Prize 57-61 Room Category-over 2,800
VI Ps
The staffs at the SeaTac and Portland Airport properties continue this
leadership role in 1997.
1
7
Also at the national level, Peninsula Management Northwest was honored with the
newly created "Curb Appeal Award" on behalf of the Grants Pass, Oregon, Super 8,
for its outstanding exterior appearance.
REGIONAL NEWS
RESER-V-8 NOW INSTALLED in WASHINGTON, OREGON, AND ALASKA
One of the immediate results of PMNW's President H. Samuel Polack's newly formed
five-member President's Advisory Council, was the development of the innovative
"Reser-v-8 Now" system. This intracompany reservation concept was referred by
Polack's P.A.C. to the Marketing and Training Departments for co-design and
implementation. After being carefully tested at the Managers Training School
location in Lacey, Washington, the program was adjusted, then installed at all
Northwest locations by the 4th of July holiday weekend.
"Reser-v-8 Now" enables a guest to make a confirmed reservation at their next
Super 8 destination, at the moment of check-in, or, from the comfort of their
room. An incentive program rewarding the motel staff for assisting guests with
the reservations is paired to the promotion.
At this writing, with only preliminary reports available, it does appear that
both guests and staff alike are warming to the new service--one that likely will
continue, in some format, into the winter months.
PARTNER PROGRAM "FIRST CONCERN" LAUNCHED in JUNE
Handsome lapel jewelry--reminding guests in the Northwest that, "You, our Super
8 customer, are our FIRST CONCERN" will be appearing on the uniforms of many
stellar staff members in August and September. Jewelry will be awarded those
motels attaining training, sales, and VIP benchmarks for each month of the year.
REDMOND, OREGON GRAND OPENING A SUCCESS
After a three-day "Pineapple Kind of People" sales blitz in the
Redmond/Bend/Sisters area, and four days of rugged construction and housekeeping
inspections, the 25th PMNW Super 8 Motel opened in Redmond, Oregon on June 27th
as scheduled. Grand Opening festivities were attended by over 300 local area
residents and business persons, which began with a Chamber of Commerce
ribbon-cutting at 4:00 p.m. Tours of the facility were also offered, as were
refreshments, free VIP memberships, and a grand prize drawing.
The location is proving to be a solid one for PMNW. Over the opening weekend,
the motel completely sold out, and bookings are strong through August and into
the Fall. Further, with the Reser-v-8 Now program in place, the Redmond staff is
forwarding numerous referrals to its neighboring Super 8s in Bend, Klamath
Falls, Portland, and even SeaTac Airport.
WOODBURN GRAND OPENING SLATED FOR NOVEMBER 21
Woodburn construction is proceeding smoothly this summer. With assistance from
crews now concluded with the Redmond project, the job superintendent is
confident in the commitment to open prior to Thanksgiving.
2
8
Currently, aggressive pre-marketing and pre-sales work is being done in the
Woodburn area to assure a firm hold in this market for the winter of 1997-98.
Again, reservation and referrals are being crafted between PMNW's 26th new motel
and its I-5 corridor Super 8 partners in Wilsonville to the North, and Salem,
Grants Pass, and Ashland to the South.
SUPER 8 MOTELS NORTHWEST I
Operational results for the first six months of 1997 for Super 8 Motels
Northwest I show total sales increased by about $47,000 over the first half of
1996. This is an increase of 3.6% over 1996. Net income increased to $443,448
compared to $391,412 in 1996, for a 13% increase.
The increases were a net result of Federal Way occupancy decreasing by
approximately six occupancy points, while its average daily rate increased by
about $1.13 per rented room. These two factors combined to produce a year
to-date decline in revenue at Federal Way. In mid July a change was made in the
on-site management at Federal Way in an effort to reverse the occupancy trend.
In addition, during the Fall there will be extensive renovations done to update
and upgrade the property. The results of such a renovation are evident at
SeaTac, where occupancy grew by about two percentage points and average daily
rate increased by over $3.25 compared to the same period in 1996. This situation
created an increase in total sales of about 10% at the SeaTac Super 8. Operating
expenses were generally well controlled in both properties, allowing net income
to rise as noted.
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 charts, and
year to date through June 30 unaudited financial statements.
Once again, it should be noted that there continue to be offers made by various
liquidity funds to purchase units at far below the original unit cost of $1,000.
The partnership has assets which were appraised in August, 1996. These
appraisals indicated values of $7,400,000 for the SeaTac property, and
$3,500,000 for the Federal Way property. While there can be no assurance as to
the actual value which may be realized upon sale of the assets and/or
liquidation of the partnership, each investor should be aware of the value of
the assets in order to make an informed decision as to the disposition of their
respective units. If you find a need to dispose of your units, you are urged to
call your NASD registered securities representative or the partnership office so
that you may be assisted in disposing of your units.
Thank you for your continued support of Super 8 Motels Northwest I and remember,
if travel plans are in your future, CALL SUPER 8 at 1-800-800-8000 for
reservations.
The official Publication of THE PENINSULA GROUP, INC.
7515 Terminal St. SW, Tumwater, WA 98501 / (360) 943-8000
Owners and operators of America's finest economy lodging serving 25
convenient Northwest locations:
ALASKA: Anchorage - Fairbanks - Juneau - Ketchikan
OREGON: Ashland - Bend - Corvallis - Grants Pass - Klamath Falls- Portland
International Airport - Redmond - *Roseburg - Salem - Wilsonville - *Woodburn
WASHINGTON: Bremerton - Ellensburg - Federal Way -Ferndale - Kelso -
Kennewick - Moses Lake - Olympia/Lacey - Port Angeles - Sea-Tac International
Airport - Walla Walla - Yakima
*Coming soon
3
9
SUPER 8 NORTHWEST I
BALANCE SHEET
ASSETS
DECEMBER 31,
-------------------------------
1996 1995
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 544,684 $ 222,146
Accounts receivable, trade 21,518 15,718
Accounts receivable, affiliates -- 3,442
Inventory 42,093 42,277
Prepaid expenses 7,212 13,322
----------- -----------
Total current assets 615,507 296,905
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land 2,053,409 2,053,409
Land improvements 79,671 79,671
Buildings 2,836,155 2,818,164
Equipment, furniture and fixtures 1,021,108 1,017,991
----------- -----------
5,990,343 5,969,235
Less accumulated depreciation (2,022,417) (1,934,081)
----------- -----------
Total property and equipment 3,967,926 4,035,154
----------- -----------
OTHER ASSETS
Loan fees 15,000 15,000
Franchise fees 30,000 30,000
----------- -----------
45,000 45,000
Less accumulated amortization (25,500) (21,000)
----------- -----------
19,500 24,000
Deposits 34,343 33,710
----------- -----------
Total other assets 53,843 57,710
----------- -----------
$ 4,637,276 $ 4,389,769
=========== ===========
10
SUPER 8 NORTHWEST I
BALANCE SHEET
LIABILITIES AND PARTNERS' EQUITY
DECEMBER 31,
----------------------------
1996 1995
---------- ----------
CURRENT LIABILITIES
Accounts payable, trade $ 37,503 $ 49,240
Accounts payable, affiliates 29,609 76,564
Accrued expenses 88,307 84,299
Current portion of long-term debt 46,000 38,000
---------- ----------
Total current liabilities 201,419 248,103
---------- ----------
LONG-TERM DEBT, net of current portion shown above 1,331,791 1,380,449
---------- ----------
ACCRUED PROPERTY MANAGEMENT FEES 605,348 605,348
---------- ----------
PARTNERS' EQUITY
General partner's equity 329,065 192,789
Limited partners' equity (authorized, issued and
outstanding 6,000 units) 2,169,653 1,963,080
---------- ----------
2,498,718 2,155,869
---------- ----------
$4,637,276 $4,389,769
========== ==========