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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 Quarter Ended: March 31, 1998
Commission File Number: 2-67456
SUPER 8 MOTELS NORTHWEST I
Washington 91-1101310
PART 1
Financial Information
Item 1. Financial Statements
See attached unaudited March 31, 1998 Financial Statements and the partnership's
balance sheet for the year ended December 31, 1997. The Statement of Cash Flows
is omitted from the attachment and is presented as follows:
PERIOD ENDED MARCH 31,
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 621,501 $ 575,498
Operating expenses paid in cash (336,694) (362,431)
Interest paid (40,105) (23,544)
------------ ------------
Net cash provided by operating activities 244,702 189,523
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on debt (141,837) (10,869)
Distributions to partners (211,765) (151,513)
------------ ------------
Net cash used by financing activities (353,602) (162,382)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (108,900) 27,141
CASH AND CASH EQUIVALENTS, beginning of period 463,238 544,684
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 354,338 $ 571,825
============ ============
2
PERIOD ENDED MARCH 31,
1998 1997
------------ ------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 101,010 $ 128,215
------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 21,813 29,208
Change in assets and liabilities
Accounts receivable (6,686) 8,661
Prepaid expenses (66) 4,783
Deposits 34,993 --
Accounts payable 160,263 81,557
Accrued expenses (66,625) (62,901)
------------ ------------
143,692 61,308
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 244,702 $ 189,523
============ ============
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
See attached First Quarter 3/31/98 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: /s/ Gerald L. Whitcomb Date: May 12, 1998
--------------------------------------
Gerald L. Whitcomb, General Partner
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SUPER 8 MOTELS NORTHWEST I UPDATE
VOL. 18 NO. 1 /APRIL 30, 1998 FIRST QUARTER 1998
NATIONAL NEWS
CENDANT CORPORATION IS LAUNCHED
On December 17, 1997, the Super 8 Motels franchise owner, HFS Incorporated,
merged with CUC International, Inc., and officially became "Cendant
Corporation." With assets valued at $14 billion, Cendant is one of the world's
leading providers of consumer and business services.
Cendant will create innovative approaches to delivering value and convenience to
consumers and business partners. The company's three principal segments of
operation are travel, membership and real estate. With each of these business
units combined, Cendant is poised to make marketing history.
SUPER 8 MOTELS, INC. RECEIVES MARKETING AWARDS
On January 19,1998, Super 8 received four awards at the Hospitality Sales &
Marketing Association International Award Competition. This competition is the
largest and most prestigious in the hospitality and travel industry. Super 8
competed against thousands of entries from all over the world, winning:
* Gold Public Relations Award for the Super 8 "Rooms at the Inn"
Program
* Silver Public Relations Award for the Super 8 Bedmaking Championship
* Bronze Public Relations Award for the 1500th motel grand opening
campaign
* Bronze Advertising Award for the Bill Elliott television commercial
50TH SUPER 8 MOTEL NOW OPEN IN CANADA
Super 8 Motels' rapid growth has reached north to Canada, with its fiftieth
motel opening in the fourth quarter of 1997. In just one year, ten new motels
have opened in that country, bringing the year-end total to 52.
Calgary-based Royop Hospitality Corporation, the owner of development and
franchise rights for Canada, is focused on building the Super 8 name across
Canada. Plans are in place for the opening of another 48 Super 8 Motels within-
the next two years.
1998 NASCAR SPONSORSHIP ANNOUNCED
Super 8 Motels, Inc., recently announced the renewal of its NASCAR sponsorship
with Bill Elliott Racing. In 1997, Elliott appeared in a national Super 8
commercial praising the benefits of staying at Super 8 Motels. This television
campaign will continue in 1998 with the "Let's Look Inside Bill's Room"
commercial.
The sponsorship includes Elliott's #94 McDonald's Ford for the entire Winston
Cup Series. The series is covered on national television and radio, and reached
more than 188 million viewers in 1997.
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NATIONAL CONVENTION KEYNOTES BOB DOLE
Keynote speaker at the 1998 Super 8 Motels International Convention, held March
6-8 in Orlando, Florida, was former U. S. Senate Majority Leader Bob Dole.
Although retired from elective office, Mr. Dole's public service record gives
him a solid perspective on political issues facing our nation, and insight into
the most pressing issues in our nation's future.
Other highlights of the convention included Super 8 President Bob Weller's
"State of the 8" address, a full presentation and update on the "Project Power
Up" computerization program, numerous business development seminars, and
national awards in VIP sales, marketing programs, and customer service. The
Peninsula Group's national awards are noted in the Regional News section of the
Update.
REGIONAL NEWS
PENINSULA MANAGEMENT NORTHWEST SELECTED AS BETA SITE
As mentioned in the January Update, Peninsula Management Northwest requested,
and subsequently received, permission to serve as a test site for the "Project
Power Up" computer program. Power Up is scheduled to go nationwide in 1999.
The Lacey Super 8 Motel was chosen for installation, as it is the official
training property for Peninsula Management. Its close proximity to the corporate
headquarters was also a factor, enabling daily hands-on training and
communication with key management, accounting, and staff development personnel.
Installation and training began in March, and though the first several weeks
were not without challenges, each was worked through to Peninsula's
satisfaction. Management continues to be enthusiastic about the program's short-
and long-term benefits to operations as follows:
* Integration of inventory management with central reservations
* Improved yield management
* On-line credit card processing
* Improved staffing allocations and room maintenance management
* Direct property-to-property reservations
* Access to customer profiles and databases
Equipment and training for Project Power Up are being provided to all 1,600
Super 8 Motels nationwide at no cost by the Cendant Corporation. A schedule for
installation at the balance of Super 8s operated by Peninsula Management
Northwest will be announced in the fall of 1998.
NORTHWEST MOTELS NATIONAL AWARD WINNERS
Several properties managed by Peninsula Management Northwest received national
awards at the 1998 Super 8 Motels International Convention as noted below:
* Golden Pineapple Hospitality Awards for Customer Service: Denise
Johnson, Regional Director, PMNW; Jeanne Wilson and Robin Shaw,
Redmond Super 8 Motel; and Jean Gesh, Lacey Super 8 Motel
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* Super Sales Award in Marketing-. Esin Davis, Sales and Marketing
Director, PMNW
* National 1997 VIP Challenge Award: Tom Zett, General Manager,
Portland Super 8 Motel, and Ron Ehli, General Manager, SeaTac Super
8 Motel
In addition to these honors, 16 PMNW motels were added to the 1997 National "VIP
Club All Stars" Hall of Fame.
ROSEBURG CONSTRUCTION PROGRESSING ON SCHEDULE
Since the January announcement of the Roseburg site acquisition, actual
construction has commenced. Foundation work is complete, and summer travelers on
the 1-5 corridor will observe its progress towards completion.
The total development plan includes sites for the construction, by third
parties, of both a family-style restaurant and a fuel and food mart, as well as
a Phase II addition of 16 rooms to the Super 8 Motel. Future Update news will
keep readers informed as to project process.
The 88-room Roseburg Super 8 Motel is scheduled to open Thursday, November 12,
1998. It will feature all the traditional Peninsula amenities, including an
enclosed pool, meeting room, and continental breakfast bar in the lobby area.
SUPER 8 MOTELS NORTHWEST I
First Quarter 1998 operational results for Super 8 Motels Northwest I show Total
Sales increased by $62,562, or 11 %, over the first quarter of 1997. The Net
Income line shows a decrease relative to 1997, but this is principally a result
of the costs resulting from the major renovation going on at the Federal Way
property. The majority of these costs are traditionally expensed, thus the
Supplies and Maintenance line item in Direct Operating Expenses is about $70,000
higher than 1997. Most of the other expenses were well controlled.
The increase in revenues was largely attributable to the good growth at SeaTac
where occupancy for the quarter increased by 9%, while average daily rate
increased $.47 as compared to the first quarter 1997. The Federal Way property
experienced relatively flat occupancy, but had an increase of average daily rate
of $.64. These figures kept Federal Way essentially even with the same period of
1997. If we were to adjust for the increase in expenses arising from the
renovation, Net Income would be up about 30% year to date over 1997.
Enclosed are occupancy and room rate comparisons for each property, first
quarter unaudited financial statements, and a copy of the December 31, 1997
year-end audited financial statements as prepared by the CPA firm of Moss Adams.
Your first quarter 1998 distribution check is in the amount of $37.50 per
partnership unit. This represents a 15% annualized return on your original
investment.
Please be reminded that the offers to purchase units by various liquidity funds
are normally far below the original cost of $1,000 per unit, and less than the
consolidated appraised value of the motels owned by the partnership as completed
in August of 1996. This information has been reported to you in past
newsletters, but we again want to remind you that if you find a need to dispose
of your units, you are
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encouraged to call your NASD registered securities representative, or the
partnership office, so that you may be assisted in transferring your units at a
fair value.
IMPORTANT NOTICE: Due to scheduling conflicts, the Annual Informational Meeting
for the partnership has been RESCHEDULED. Please note the NEW dates below:
DATE: Tuesday, June 23, 1998
TIME: 7:00 p.m.
LOCATION: SeaTac Super 8 Motel
3100 South 192nd
SeaTac, Washington
-- OR --
DATE: Thursday, June 25, 1998
TIME: 8:00 p.m.
LOCATION: Portland Airport Super 8 Motel
11011 N.E. Holman
Portland, Oregon
Thank you for your continued support of Super 8 Motels Northwest 1, and
remember, wherever your summer travel leads you-THINK SUPER 8-and call
1-800-800-8000 for reservations.
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The Official Publication of
THE PENINSULA GROUP INCORPORATED
7515 Terminal St. SW, Tumwater, WA 98501 / (360) 943-8000
Owners and operators of America's finest economy lodging serving
26 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
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
MARCH 31, 1998 AND 1997
(Unaudited)
ASSETS
1998 1997
------------ ------------
CURRENT ASSETS
Cash $ 354,338 $ 571,825
Accounts receivable 23,241 12,857
Inventory 43,931 42,093
Prepaid expenses 5,223 2,428
------------ ------------
TOTAL CURRENT ASSETS 426,733 629,203
PROPERTY AND EQUIPMENT
Land 2,036,057 2,053,409
Land improvements 79,671 79,671
Buildings 2,836,155 2,836,155
Equipment, furniture, and fixtures 1,021,108 1,021,107
------------ ------------
Subtotal 5,972,991 5,990,342
Less accumulated depreciation (2,125,856) (2,050,500)
------------ ------------
TOTAL PROPERTY AND EQUIPMENT, NET 3,847,135 3,939,842
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 (31,125) (26,625)
------------ ------------
Subtotal 13,875 18,375
Deposits 3,100 34,343
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TOTAL OTHER ASSETS 16,975 52,718
TOTAL ASSETS $ 4,290,843 $ 4,621,763
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LIABILITIES AND PARTNER'S CAPITAL EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 176,380 $ 117,961
Accounts payable - affiliates 54,688 30,706
Accrued expenses 21,596 25,406
Current portion of long-term debt 48,572 46,269
------------ ------------
TOTAL CURRENT LIABILITIES 301,236 220,342
NONCURRENT LIABILITIES
Long-term debt, net of current portion shown above 1,143,266 1,320,653
Property management fees -- 605,348
------------ ------------
TOTAL NONCURRENT LIABILITIES 1,143,266 1,926,001
PARTNER'S CAPITAL EQUITY
General partner 444,847 346,784
Limited partners 2,401,494 2,128,636
------------ ------------
TOTAL PARTNER'S CAPITAL EQUITY 2,846,341 2,475,420
------------ ------------
TOTAL LIABILITIES AND PARTNER'S CAPITAL EQUITY $ 4,290,843 $ 4,621,763
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SUPER 8 MOTELS NORTHWEST I
STATEMENT OF INCOME
FOR THE THREE MONTHS ENDING MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
------------ ------------
SALES
Rooms $ 597,741 $ 535,832
Other 26,345 25,692
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TOTAL SALES 624,086 561,524
DIRECT OPERATING EXPENSES
Payroll and related expenses 133,414 124,337
Supplies and maintenance 99,141 28,714
Utilities 37,431 40,730
Other 12,833 6,080
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TOTAL DIRECT OPERATING EXPENSES 282,819 199,861
INDIRECT OPERATING EXPENSES
Advertising and promotion 16,504 15,294
Bank and credit card charges 11,946 7,765
Insurance 7,199 7,633
Property and business taxes 32,102 30,324
Other 1,152 2,929
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TOTAL INDIRECT OPERATING EXPENSES 68,903 63,945
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 35,702 42,513
Franchise fees 23,910 21,433
Property management fees 31,196 28,076
Professional services 9,132 8,403
Other 5,793 4,095
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TOTAL ADMINISTRATIVE AND GENERAL EXPENSES 105,733 104,520
FIXED CHARGES
Amortization 1,125 1,125
Depreciation 20,688 28,084
Interest 37,662 31,044
Lease expense 10,247 10,043
------------ ------------
TOTAL FIXED CHARGES 69,722 70,296
INCOME FROM OPERATIONS 96,909 122,902
OTHER INCOME
Interest income 2,451 3,963
Rental income 1,650 1,350
------------ ------------
TOTAL OTHER INCOME 4,101 5,313
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NET INCOME (LOSS) $ 101,010 $ 128,215
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
- --------------------------------------------------------------------------------
ASSETS
DECEMBER 31,
----------------------------------
1997 1996
------------ ------------
CURRENT ASSETS
Cash $ 463,238 $ 544,684
Accounts receivable, trade 10,623 21,518
Accounts receivable, affiliates 5,932 --
Inventory 43,931 42,093
Prepaid expenses 5,157 7,212
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Total current assets 528,881 615,507
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Land 2,036,056 2,053,409
Land improvements 79,671 79,671
Buildings 2,836,155 2,836,155
Equipment, furniture, and fixtures 1,021,108 1,021,108
------------ ------------
5,972,990 5,990,343
Less accumulated depreciation (2,105,168) (2,022,417)
------------ ------------
Total property and equipment 3,867,822 3,967,926
------------ ------------
OTHER ASSETS
Loan fees 15,000 15,000
Franchise fees 30,000 30,000
------------ ------------
45,000 45,000
Less accumulated amortization (30,000) (25,500)
------------ ------------
15,000 19,500
Deposits 38,093 34,343
------------ ------------
Total other assets 53,093 53,843
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$ 4,449,796 $ 4,637,276
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SUPER 8 MOTELS NORTHWEST I
BALANCE SHEET
LIABILITIES AND PARTNERS' EQUITY
DECEMBER 31,
--------------------------------
1997 1996
------------ ------------
CURRENT LIABILITIES
Accounts payable, trade $ 34,373 $ 37,503
Accounts payable, affiliates 36,432 29,609
Accounts payable, partners 88,221 88,307
Current portion of long-term debt 49,000 46,000
------------ ------------
Total current liabilities 208,026 201,419
------------ ------------
LONG-TERM DEBT, net of current portion
shown above 1,284,675 1,331,791
------------ ------------
ACCRUED PROPERTY MANAGEMENT FEES -- 605,348
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COMMITMENTS (Notes 7 and 9)
PARTNERS' EQUITY
General partner's equity 461,460 329,065
Limited partners' equity (authorized, issued and
outstanding 6,000 units) 2,495,635 2,169,653
------------ ------------
2,957,095 2,498,718
------------ ------------
$ 4,449,796 $ 4,637,276
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EXHIBIT INDEX
Exhibit Number Description
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27 Financial Data Schedule