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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: 2-76543
SUPER 8 MOTELS NORTHWEST II
Washington 91-1172558
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
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CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 2,583,010 $ 2,870,996
Operating expenses paid in cash (2,006,169) (2,237,713)
Interest paid (172,682) (183,982)
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Net cash provided by operating activities 404,159 449,301
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (934) (20,550)
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Net cash used by investing
activities (934) (20,550)
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on debt (106,847) (104,655)
Distributions to partners (357,528) (553,889)
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Net cash used by financing activities (464,375) (658,544)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (61,150) (229,793)
CASH AND CASH EQUIVALENTS, beginning of period 551,202 733,916
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CASH AND CASH EQUIVALENTS, end of period $ 490,052 $ 504,123
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PERIOD ENDED SEPTEMBER 30,
1997 1996
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RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 616,342 $ 933,669
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Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 131,524 131,449
Lease expense - deferred 5,771 12,100
Loss on the sale of assets -- 5,864
Change in assets and liabilities
Accounts receivable 3,322 (2,324)
Prepaid expenses (6,878) (13,931)
Accounts payable 18,423 24,532
Accrued expenses (15,297) 26,054
Accrued management fees (349,048) (668,112)
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(212,183) (484,368)
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 404,159 $ 449,301
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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 II
a Washington limited partnership
By: _______________________________________
Gerald L. Whitcomb, General Partner
Dated: November 11, 1997
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SUPER 8 MOTELS NORTHWEST II
STATEMENT OF INCOME
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
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SALES
Rooms $ 2,487,308 $ 2,785,281
Other 85,346 81,752
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Total sales 2,572,654 2,867,033
DIRECT OPERATING EXPENSES
Payroll and related expenses 508,128 497,099
Supplies and maintenance 177,101 129,257
Utilities 146,296 146,918
Other 22,386 27,623
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Total direct operating expenses 853,911 800,897
INDIRECT OPERATING EXPENSES
Advertising and promotion 66,750 60,040
Bank and credit card charges 35,622 34,099
Insurance 27,295 27,925
Property and business taxes 112,073 110,104
Other 9,710 12,140
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Total indirect operating expenses 251,450 244,308
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 155,665 155,400
Franchise fees 99,492 111,073
Management fees 128,633 143,093
Professional services 24,525 30,962
Other 24,092 14,085
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Total administrative and general
expenses 432,407 454,613
FIXED CHARGES
Amortization 3,628 3,478
Depreciation 127,896 127,971
Interest 172,682 183,982
Lease expense 109,725 106,438
Deferred land lease 11,647 12,100
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Total fixed charges 425,578 433,969
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INCOME FROM OPERATIONS 609,308 933,246
OTHER INCOME
Gain (loss) on sale of equipment 0 (5,864)
Interest income 7,034 6,287
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Total other income 7,034 423
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NET INCOME (LOSS) $ 616,342 $ 933,669
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SUPER 8 MOTELS NORTHWEST II
BALANCE SHEET
SEPTEMBER 30, 1997 AND 1996
(Unaudited)
ASSETS
1997 1996
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CURRENT ASSETS
Cash $ 490,052 $ 504,123
Accounts receivable 17,284 81,131
Inventory 58,319 57,853
Prepaid expenses 18,491 28,931
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Total current assets 584,146 672,038
PROPERTY AND EQUIPMENT
Land 714,301 714,301
Buildings 4,097,106 4,097,106
Equipment, furniture and fixtures 1,242,261 1,241,326
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Subtotal 6,053,668 6,052,733
Less accumulated depreciation (2,866,559) (2,695,801)
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Total property and equipment, net 3,187,109 3,356,932
OTHER ASSETS
Franchise fees 45,000 45,000
Organization costs 6,000 6,000
Deposits and bank fees 26,375 26,375
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Subtotal 77,375 77,375
Less accumulated amortization (49,841) (44,853)
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Total other assets 27,534 32,522
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Total assets $ 3,798,789 $ 4,061,492
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LIABILITIES AND PARTNER'S CAPITAL EQUITY
1997 1996
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CURRENT LIABILITIES
Accounts payable - trade $ 107,886 $ 66,974
Accounts payable - affiliates 41,222 44,350
Accrued expenses 111,181 141,930
Current portion of long-term debt 159,594 150,948
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Total current liabilities 419,883 404,202
NONCURRENT LIABILITIES
Accrued rent under lease agreement 142,792 133,138
Long-term debt, net of current portion shown above 2,234,360 2,386,217
Accrued property management fees 350,000 699,048
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Total noncurrent liabilities 2,727,152 3,218,403
PARTNER'S CAPITAL EQUITY
General partner 16,167 (60,189)
Limited partners 635,587 499,076
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Total partner's capital equity 651,754 438,887
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$ 3,798,789 $4,061,492
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SUPER 8 MOTEL UPDATE
SUPER 8 MOTELS VOL. 17 NO. 3
NORTHWEST II 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 II
Despite a fairly strong third quarter at all three motels in the
partnership, total revenues year to date continue to trail 1996. The vast
majority of this shortfall is due to the Bremerton property no longer hosting a
large contingent of Navy personnel. All properties in the partnership have
continued to exercise good cost control, and Net Income has risen from 18.7%
through the first six months to 24.0% year to date as of September 30.
Referencing the enclosed occupancy and average daily room rate
comparisons, you will note that in Bremerton, because there is no longer a large
Navy contract, occupancy dropped heavily in both July and September-but, the
property had a pretty good August due to the hard work of the onsite manager and
staff. On the other hand, average daily rate for the quarter was up by $6.29
over that same period in 1996.
Despite having a weak September, Yakima continued to reverse its
downward occupancy trend, and year to date it is now down a total of 5.8
percentage points. Average daily rate remains essentially even with 1996.
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Portland occupancy, though down slightly year to date from the very high
1996 levels, increased to 90.7% for the quarter, compared to 90.4% for the third
quarter in 1996. Average daily rate increased by $3.05 for the quarter and $1.87
year to date.
Enclosed you will find the unaudited financial statements for the year
to date through September 30, 1997, as well as occupancy and average daily room
rate comparisons. Your third quarter 1997 distribution check is in the amount of
$25.00 per partnership unit. This distribution equals a 10% annualized return on
your original investment for the quarter and also year to date. The partnership
will begin its 1997 pre-audit work in November, with the goal of having your
partnership tax information mailed not later than February 28, 1998.
We appreciate your interest and continued support of Super 8 Motels
Northwest II. REMEMBER SUPER 8 if you are traveling-call 1-800-800-8000 for room
reservations at any Super 8 Motel located in the United States and Canada.
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