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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, 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 September 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 SEPTEMBER 30,
1997 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 2,386,891 $ 2,363,800
Operating expenses paid in cash (1,851,054) (1,378,829)
Interest paid (94,402) (96,711)
----------- -----------
Net cash provided by operating activities 441,435 888,260
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (270) (85,153)
Sale of Land 26,606 --
----------- -----------
Net cash provided (used) by investing
activities 26,336 (85,153)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long term debt (35,236) (30,504)
Distributions to partners (454,545) (454,543)
----------- -----------
Net cash used by financing activities (489,781) (485,047)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (22,011) 318,060
CASH AND CASH EQUIVALENTS, beginning of period 544,684 222,146
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 522,673 $ 540,206
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PERIOD ENDED SEPTEMBER 30,
1997 1996
--------- ---------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 929,104 $ 800,617
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 65,439 90,625
Gain on the sale of assets -- (1,445)
Change in assets and liabilities
Accounts receivable (15,939) (12,640)
Inventory -- (63)
Prepaid expenses (2,826) (7,421)
Deposits (10,778) 11,059
Accounts payable 60,981 3,446
Accrued expenses 20,802 4,082
Accrued management fees (605,348) --
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(487,669) 87,643
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 441,435 $ 888,260
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
See attached Second Quarter (9/30/97) 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.
Financial Data Schedule
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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 11, 1997
--------------------------------------
Gerald L. Whitcomb, General Partner
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
SEPTEMBER 30, 1997 AND 1996
(Unaudited)
ASSETS
1997 1996
----------- -----------
CURRENT ASSETS
Cash $ 522,673 $ 540,206
Accounts receivable 37,457 31,800
Inventory 42,093 42,340
Prepaid expenses 10,038 20,743
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TOTAL CURRENT ASSETS 612,261 635,089
PROPERTY AND EQUIPMENT
Land 2,027,074 2,053,409
Land improvements 79,671 79,671
Buildings 2,836,155 2,883,865
Equipment, furniture and fixtures 1,021,107 1,021,107
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Subtotal 5,964,007 6,038,052
Less accumulated depreciation (2,084,480) (2,000,552)
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TOTAL PROPERTY AND EQUIPMENT, NET 3,879,527 4,037,500
OTHER ASSETS
Franchise fees 30,000 30,000
Appraisal fees and loan fees 15,000 15,000
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Subtotal 45,000 45,000
Less accumulated amortization (28,875) (27,375)
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Subtotal 16,125 17,625
Deposits 45,121 22,651
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TOTAL OTHER ASSETS 61,246 40,276
TOTAL ASSETS $ 4,553,034 $ 4,712,865
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LIABILITIES AND PARTNERS' CAPITAL EQUITY
1997 1996
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CURRENT LIABILITIES
Accounts payable - trade $ 80,304 $ 91,399
Accounts payable - affiliates 47,789 37,850
Accrued expenses 109,109 88,382
Current portion of long-term debt 46,489 43,028
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TOTAL CURRENT LIABILITIES 283,691 260,659
NONCURRENT LIABILITIES
Long-term debt, net of current
portion shown above 1,296,066 1,344,917
Property management fees 0 605,348
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TOTAL NONCURRENT LIABILITIES 1,296,066 1,950,265
PARTNERS' CAPITAL EQUITY
General partner 463,886 308,336
Limited partners 2,509,391 2,193,605
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TOTAL PARTNERS' CAPITAL EQUITY 2,973,277 2,501,941
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TOTAL LIABILITIES AND
PARTNERS' CAPITAL EQUITY $4,553,034 $4,712,865
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SUPER 8 MOTELS NORTHWEST I
STATEMENT OF INCOME
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
---------- ----------
SALES
Rooms $2,288,637 $2,281,493
Other 93,754 86,697
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TOTAL SALES 2,382,391 2,368,190
DIRECT OPERATING EXPENSES
Payroll and related expenses 418,814 378,064
Supplies and maintenance 95,179 229,103
Utilities 119,365 117,701
Other 21,195 25,836
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TOTAL DIRECT OPERATING EXPENSES 654,553 750,704
INDIRECT OPERATING EXPENSES
Advertising and promotion 55,908 52,800
Bank and credit card charges 36,324 36,457
Insurance 23,421 21,371
Property and business taxes 101,444 96,152
Other 12,079 8,928
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TOTAL INDIRECT OPERATING EXPENSES 229,176 215,708
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 129,958 129,897
Franchise fees 91,545 91,170
Property management fees 119,120 118,125
Professional services 25,227 32,345
Other 34,001 21,855
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TOTAL ADMINISTRATIVE AND GENERAL
EXPENSES 399,851 393,392
FIXED CHARGES
Amortization 3,375 6,375
Depreciation 62,064 84,250
Interest 94,402 96,711
Lease expense 30,305 30,128
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TOTAL FIXED CHARGES 190,146 217,464
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INCOME FROM OPERATIONS 908,665 790,922
OTHER INCOME
Interest income 11,189 4,200
Gain on sale of asset 0 1,445
Rental income 9,250 4,050
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TOTAL OTHER INCOME 20,439 9,695
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NET INCOME $ 929,104 $ 800,617
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SUPER 8 MOTELS SUPER 8 MOTEL UPDATE
NORTHWEST I VOL. 17 NO. 3/OCTOBER 31, 1997 THIRD QUARTER 1997
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NATIONAL NEWS
RECENT SUPER 8 STRIDES DOCUMENTED
Early 1997 reports from market researchers D. K. Shifflet & Associates
reveal that Super 8 again leads the way in several categories.
First, Super 8 was one of the major economy chains that increased its
market share in 1996, rising to 8%. Further, Super 8's focused advertising
efforts resulted in higher brand awareness among frequent business travelers, up
nine points. Super 8 also moved up to be the leading brand for consumers'
opinions of a "friendly, helpful staff." Most noteworthy, however, is that
compared to all major economy brands, Super 8 has the highest percentage (43%)
of reservations booked through its toll-free 800 number.
INTERNET SITE IS A HIT
Super 8 received a significant increase in the number of hits to its web
site, www.super8.com. In July, 1997, almost 100,000 people visited the site,
which resulted in a 91% increase compared to June of 1997.
On August 1, individual Super 8 Motel pages went live on the Internet
with 1,142 of the 1,600 motels represented. Online reservations for Super 8
properties were optional, and 337 motels went live with the opportunity of
booking rooms as of August 13, 1997.
HFS, INC. ANNOUNCES PROJECT POWER UP
Super 8 is soon to enter the fast lane--on the information superhighway.
HFS, Inc. recently announced "project Power UP," a $75 million project of the
HFS Hospitality Division, which is the single largest investment in the history
of HFS, other than acquisitions.
New computer systems will be provided to each motel at no cost to the
franchisees. This will not only help speed the reservation process from
Superline, but will also provide each franchisee with an unprecedented number of
services that cannot be offered by any other lodging franchisor.
Super 8 is constantly pursuing ways to add value to franchisees and
guests, while still maintaining its basic "clean and friendly" philosophy. Some
highlights of the new computer system include smoother front desk operations,
enhanced communications, property-to-property reservations, and targeted
marketing to customers worldwide.
CANADIAN MARKET HEATS UP
With the importance of the Canadian market to Peninsula's northwest
locations, Super 8's stepped-up expansion in Canada is welcome news. Currently
there are 50 Super 8 properties operating in Canada, with dozens more on the
drawing board in the next two years.
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REGIONAL NEWS
NEW RESER-V-8 PROGRAM PRODUCING QUICK RESULTS
The second quarter edition of Update announced Peninsula Management
Northwest's newest promotional program aptly called, "Reser-v-8." Installed in
early July, the program enables all Peninsula guests to make confirmed
reservations at their next Super 8 northwest destination-either at the moment of
check-in, or later in the comfort of their room.
Three hundred reservations were booked in the first three weeks, and as
the program built-up and caught on, over 800 rooms were sold via this new
technique by the end of September. The Reser-v-8 system will be continued
through the winter months, and is viewed as a key ingredient in sales success
for the 1998 tourism season.
PENINSULA'S 26TH SUPER 8 TO OPEN IN WOODBURN, OREGON SPECIAL INTRODUCTORY RATE
OF $39.88
November 21, 1997, will mark the Grand Opening Ceremonies for the
Woodburn, Oregon, Super 8 Motel. Three weeks prior to the opening, a special
opening team from Peninsula Management Northwest will be on site to complete
room inspections, train front desk and housekeeping staff, and conduct detailed
sales work in the community and surrounding market area.
Conveniently located just off the 1-5 corridor at 821 Evergreen Road,
the motel will feature 81 spacious guest rooms and suites, indoor heated pool
and spa, conference/ meeting room, and guest laundry. There is ample truck or
large vehicle parking available, and there are several restaurants and shopping
opportunities within easy walking distance. The motel will also join several
other Peninsula Super8s in offering a fresh, attractive free continental
breakfast in the lobby each morning.
Peninsula Management Northwest has packaged a Special Opening Holiday
Rate of $39.88, single or double occupancy, when utilized in conjunction with
VIP Club membership.
SUPER 8 MOTELS NORTHWEST I
Operational results for the first nine months of 1997 for Super 8 Motels
Northwest I show Total Sales remain ahead of the same period in 1996 by about
$14,000. Net Income is also up about $130,000 over the same period in 1996.
Despite having year-to-date sales ahead of 1996, the third quarter was
not a strong quarter for either property owned by Super 8 Motels Northwest I
limited partnership. As reflected in the occupancy and average daily rate
comparisons, both SeaTac and Federal Way suffered declines in occupancy
percentages compared to third quarter 1996. The good news is that the change in
on-site management which took place in Federal Way in July seems to be having a
positive effect with the month-to-month variances shrinking every month. On the
plus side, both properties had strong average daily room rates, with SeaTac
averaging $3.76 per rented room more in the third quarter 1997 compared to the
same period in 1996. Overall, the average daily rate increases helped, but did
not eliminate, the revenue lost due to decreased occupancy.
Planning continues for extensive renovations to update and upgrade both
the interior and exterior of the Federal Way Super 8 Motel. Approximately 45
rooms, or half of the total, will be completely
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renovated with new paint, carpets, drapes and furnishings. The hallways will be
redone and an extensive redecoration of the front office and lobby will be
completed. In the spring, the exterior will be redone similar to that of SeaTac.
This renovation is needed at the Federal Way Super 8 to remain competitive in
the market area. In addition, about 20 rooms will be refurbished in SeaTac over
the winter.
Third quarter distribution is in the amount of $25.00 per partnership
unit. This represents a 10% annualized return on your original partnership
investment. Pre-audit of the partnership books commences in November in order to
meet our target of February 28, 1998, for the mailing of your partnership tax
information.
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 motel 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 interest and support of Super 8 Motels Northwest 1.
THINK SUPER 8 when you travel-and call 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