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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: June 30, 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 June 30, 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 JUNE 30,
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Revenues and other income received in cash $ 1,426,691 $ 1,359,193
Operating expenses paid in cash (918,399) (1,002,870)
Interest paid (70,308) (60,584)
----------- -----------
Net cash provided by operating activities 437,984 295,739
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (6,250) --
Sale of land -- 26,606
----------- -----------
Net cash (used) provided by investing
activities (6,250) 26,606
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long term debt (83,560) (25,016)
Distributions to partners (476,471) (303,028)
----------- -----------
Net cash used by financing activities (560,031) (328,044)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (128,297) (5,699)
CASH AND CASH EQUIVALENTS, beginning of period 463,238 544,684
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 334,941 $ 538,985
=========== ===========
2
PERIOD ENDED JUNE 30,
1998 1997
--------- ---------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 278,702 $ 452,655
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 43,626 43,626
Change in assets and liabilities
Accounts receivable (585) 2,888
Prepaid expenses (844) (637)
Deposits 34,993 (3,898)
Accounts payable 109,932 56,683
Accrued expenses (27,840) (5,578)
Accrued management fees -- (250,000)
--------- ---------
159,282 (156,916)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 437,984 $ 295,739
========= =========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
See attached Second Quarter 6/30/98 Update from the Issuer delivered to its
limited partners.
As an update to the newsletter, the marketing efforts conducted by the
investment banking firm have not produced offers which the General Partner
believes would be acceptable to the Partnership and, accordingly, the General
Partner is actively examining alternate strategies to provide potential
liquidity to the 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.
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None.
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: August 6, 1998
-----------------------------------------
Gerald L. Whitcomb, General Partner
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SUPER 8 MOTEL UPDATE
VOL. 18 NO. 2/JULY 31, 1998 SUPER 8 MOTELS NORTHWEST I SECOND QUARTER 1998
NATIONAL NEWS
100,000TH ROOM OPENS IN SPRING
Super 8 Motels, Inc., recently announced the grand opening in Austin,
Texas, of its 100,000th guest room. The occasion was marked by Super 8 President
and CEO Bob Weller, "Our 100,000th room is a special milestone that indicates
our continuing strong growth. The quality of this motel is also indicative of
the impressive properties we are bringing into the system."
As of June, the room count had grown to 101,663. Indicative of Super 8's
continued efforts to meet guest expectations, 90% of all motels are now
designating a portion of their rooms as non-smoking rooms. Seventy percent of
motels offer a continental breakfast, and 90% accept all major credit cards and
have fax machine services available.
5,000,000TH VIP MEMBER WELCOMED AT CONVENTION
The 5,000,000th VIP Club member was welcomed on stage at this year's Super
8 Convention in Orlando. Bill Dyas, a school bus driver who frequently stays at
Super 8 Motels while driving athletic teams, joined the Club at the McCall,
Idaho, Super 8 Motel.
With 700,000 travelers joining the club in 1997, an average of one new
membership every 45 seconds, Super 8's VIP Club continues to grow at an
unprecedented rate. The VIP Club is the largest guest loyalty program in the
economy lodging segment. Its membership had climbed to 5,243,502 by June of this
year.
SUPER 8 MOTELS CREATES MANAGERS ADVISORY BOARD
Also announced at Convention was the formation of the industry's first
formalized Managers Advisory Board. During May, eight general managers were
chosen to join the Advisory Board, which will be meeting quarterly beginning in
August. This Board will complement the Franchisee Advisory Board, on which The
Peninsula Group's CEO Gerald Whitcomb serves, in order to receive input from
those responsible for day-to-day operations.
ON-LINE BOOKINGS TAKE A BOOST
Super 8's website continues to be a great success! As of May, a total of
618 Super 8 properties offered on-line booking. After viewing demonstrations at
the Convention, 113 properties chose to go on-line with the optional booking
capability. One of the most compelling reasons to go on-line is that the average
daily rate statistics for on-line reservations for 1997 show the Internet
average daily rate as $50.67. When compared to the Superline average daily rate
of $42.52, the Internet average daily rate is $8.15 higher.
There is also an 1126% increase in "page views" (the number of times the
website has been accessed) over the previous year, bringing the current number
to an all-time high of 785,269. New highlights on the Super 8 website include a
customer service Internet link for on-line guests, on-line registration for the
VIP Club, and a franchise sales page for information and application requests.
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SUPER 8 MOTELS NORTHWEST I
Operational results for the first six months of 1998 for Super 8 Motels
Northwest I show "Total Sales" increased by about $71,000 over the first half of
1998. This is an increase of 5% over 1997. On a property basis, Federal Way
occupancy was less than one percentage point lower than 1997, despite the fact
that throughout the quarter, extensive renovations were being completed at the
property. All hallways and common areas, as well as over 40 rooms, were
renovated. The average daily rate dropped by $.18 for the quarter. SeaTac
continued its strong performance, with average occupancy for the quarter
increasing by about two percentage points, while average daily rate remained
essentially even with 1997.
Because of the renovations and upgrades completed at the Federal Way
property, "Supplies and Maintenance" increased significantly over 1997. These
costs, coupled with an increase in the cost of "Payroll and Related Expenses"
created a decrease in net income year to date, despite the fact that other
operating expenses were generally well controlled.
Second quarter distribution is in the amount of $37.50 per partnership
unit. This represents a 15% annualized return on your original partnership
investment. Enclosed are comparative occupancy and room rate charts and
year-to-date through June 30 unaudited financial statements.
During the second quarter of 1998, the General Partner engaged an
investment banking firm for the purpose of marketing The Peninsula Group, its
affiliates and subsidiaries, including the assets of Super 8 Motels Northwest I
Limited Partnership. This effort is being made in order to take advantage of
existing market conditions, and to provide liquidity for all investors. While to
date, no definitive agreements have been reached with any prospective purchaser,
efforts are continuing.
Once again, it should be noted that there continue to be offers made by
various liquidity funds to purchase units at what appear to be substantial
discounts. 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 take note of the efforts being made by the General Partner to
create liquidity and to gain maximum value for all investors. 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, when you are traveling - THINK SUPER 8 - and call 1-800-800-8000 for
reservations.
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SUPER 8 NORTHWEST I
BALANCE SHEET
JUNE 30, 1998 AND 1997
(Unaudited)
ASSETS
1998 1997
------------ -------------
CURRENT ASSETS
Cash $ 334,941 $ 538,985
Accounts receivable 17,140 18,630
Inventory 43,930 42,093
Prepaid expenses 6,001 7,849
------------ -------------
TOTAL CURRENT ASSETS 402,012 607,557
PROPERTY AND EQUIPMENT
Land 2,036,057 2,026,804
Land improvements 79,671 79,671
Buildings 2,836,155 2,836,155
Equipment, furniture and fixtures 1,027,358 1,021,107
------------ -------------
Subtotal 5,979,241 5,963,737
Less accumulated depreciation (2,146,544) (2,063,793)
------------ -------------
TOTAL PROPERTY AND EQUIPMENT, NET 3,832,697 3,899,944
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 (32,250) (27,750)
------------ -------------
Subtotal 12,750 17,250
Deposits 3,100 38,241
------------ -------------
TOTAL OTHER ASSETS 15,850 55,491
TOTAL ASSETS $ 4,250,559 $ 4,562,992
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LIABILITIES AND PARTNERS' CAPITAL EQUITY
1998 1997
------------ -------------
CURRENT LIABILITIES
Accounts payable - trade $ 121,793 $ 86,134
Accounts payable - affiliates 58,944 37,661
Accrued expenses 60,381 82,729
Current portion of long-term debt 145,077 45,584
------------ -------------
TOTAL CURRENT LIABILITIES 386,195 252,108
NONCURRENT LIABILITIES
Long-term debt, net of current portion shown above 1,105,038 1,307,191
Property management fees 355,348
------------ -------------
TOTAL NONCURRENT LIABILITIES 1,105,038 1,662,539
PARTNERS' CAPITAL EQUITY
General partner 431,794 393,934
Limited partners 2,327,532 2,254,411
------------ -------------
TOTAL PARTNERS' CAPITAL EQUITY 2,759,326 2,648,345
------------ -------------
$ 4,250,559 $ 4,562,992
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SUPER 8 NORTHWEST I
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDING JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
SALES
Rooms $1,358,916 $1,284,477
Other 59,350 62,621
---------- ----------
TOTAL SALES 1,418,266 1,347,098
DIRECT OPERATING EXPENSES
Payroll and related expenses 290,464 247,999
Supplies and maintenance 259,386 59,358
Utilities 72,875 74,665
Other 23,968 12,694
---------- ----------
TOTAL DIRECT OPERATING EXPENSES 646,693 394,716
INDIRECT OPERATING EXPENSES
Advertising and promotion 34,004 34,199
Bank and credit card charges 25,567 19,894
Insurance 14,302 16,864
Property and business taxes 63,438 66,583
Other 1,673 4,458
---------- ----------
TOTAL INDIRECT OPERATING EXPENSES 138,984 141,998
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative service fees 73,368 89,762
Franchise fees 54,357 51,379
Property management fees 70,916 67,355
Professional services 17,210 16,806
Other 14,482 15,074
---------- ----------
TOTAL ADMINISTRATIVE AND GENERAL
EXPENSES 230,333 240,376
FIXED CHARGES
Amortization 2,250 2,250
Depreciation 41,376 41,376
Interest 67,615 62,708
Lease expense 21,323 20,226
---------- ----------
TOTAL FIXED CHARGES 132,564 126,560
---------- ----------
INCOME FROM OPERATIONS 269,692 443,448
OTHER INCOME
Interest income 3,932 6,507
Gain on sale of asset 2,328 0
Rental income 2,750 2,700
---------- ----------
TOTAL OTHER INCOME 9,010 9,207
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NET INCOME (LOSS) $ 278,702 $ 452,655
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SUPER 8 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
----------- -----------
$ 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
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LONG-TERM DEBT, net of current portion
shown above 1,284,675 1,331,791
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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
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2,957,095 2,498,718
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$4,449,796 $4,637,276
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