-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FmvKo+s13KxTC1GzekIXe5PXTdzeqBUczASep0bw8e5OH6nGIFaK/yytsTQSGxpe 55gzwsxs5HjY+G7b1x3jgg== 0000810661-95-000010.txt : 19951119 0000810661-95-000010.hdr.sgml : 19951119 ACCESSION NUMBER: 0000810661-95-000010 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSION VALLEY COMFORT SUITES LTD CENTRAL INDEX KEY: 0000810661 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 330213497 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-18080 FILM NUMBER: 95590188 BUSINESS ADDRESS: STREET 1: 3145 SPORTS ARENA BLVD CITY: SAN DIEGO STATE: CA ZIP: 92110 BUSINESS PHONE: 6192261212 MAIL ADDRESS: STREET 1: 631 CAMINO DEL RICO SOUTH CITY: SAN DIEGO STATE: CA ZIP: 92108 FORMER COMPANY: FORMER CONFORMED NAME: MOTELS OF AMERICA SERIES X DATE OF NAME CHANGE: 19900418 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (MARK ONE) /X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 OR / / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM to COMMISSION FILE NUMBER: 33-11224-LA MISSION VALLEY COMFORT SUITES LTD., A CALIFORNIA LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) CALIFORNIA 33-0213497 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3145 Sports Arena Blvd. San Diego, CA 92110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(619) 226-1212 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- State the number of limited partnership interests outstanding as of the latest practicable date: 5,900 PART I. -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Incorporated herein is the following unaudited financial information: Balance Sheet as of September 30, 1995 and December 31, 1994. Statement of Operations for the three- and nine-month periods ended September 30, 1995 and September 30, 1994. Statement of Cash Flows for the three- and nine-month periods ended September 30, 1995 and September 30, 1994. Notes to Financial Statements. 2 MISSION VALLEY COMFORT SUITES LTD. A California Limited Partnership Balance Sheet September 30, 1995 and December 31, 1994 (Unaudited) (Part 1)
September 30, December 31, ASSETS 1995 1994 Cash and cash equivalents $ 212,014 $ 29,042 Accounts receivable 28,806 22,589 Operating supplies 15,994 14,718 Prepaid expenses 5,389 33,956 Due from Affiliates (note 4) 0 2,565 ---------- ---------- Total current assets 262,203 112,870 Investment property, at cost: Building and improvements 4,540,795 4,482,611 Furniture, fixtures & equipment 1,172,013 1,111,831 ----------- ----------- 5,712,808 5,594,442 Less accumulated depreciation 1,931,872 1,809,354 ----------- ----------- Total investment property, net of accumulated depreciation 3,780,936 3,785,088 Construction in progress 0 0 Franchise fees, net (note 3) 32,292 34,167 ----------- ----------- $ 4,075,431 $ 3,932,125 =========== ===========
See accompanying notes to financial statements. 3 MISSION VALLEY COMFORT SUITES LTD. A California Limited Partnership Balance Sheet September 30, 1995 and December 31, 1994 (Unaudited) (Part 2)
LIABILITIES AND September 30, December 31, PARTNER'S CAPITAL ACCOUNTS 1995 1994 Current liabilities: Notes payable (Note 5) $ 6,322 $ 6,322 Accounts payable and accrued expenses 58,614 49,673 Due to Affiliates (note 4) 18,106 5,879 ---------- ---------- Total current liabilities 83,042 61,874 ---------- ---------- Long-term debt, less current portion 239,064 243,758 Deferred rent liability (note 6) 1,520,679 1,542,933 ---------- ---------- Total liabilities 1,842,785 1,848,565 Partners' capital accounts: General partners: Capital contributions 31,210 31,210 Cumulative net earnings (141,150) (165,559) Cumulative cash distributions (143,140) (133,640) ---------- ---------- (253,080) (267,989) Limited partners: Capital contributions, net of offering costs 5,117,287 5,117,287 Cumulative net earnings (1,270,353) (1,490,030) Cumulative cash distributions (1,361,208) (1,275,708) ---------- ---------- 2,485,726 2,351,549 ---------- ---------- Total partners' capital accounts 2,232,646 2,083,560 ---------- ---------- $4,075,431 $3,932,125 ========== ==========
See accompanying notes to financial statements. 4 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Statement of Operations (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------- ---------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Revenues: Room revenues $ 577,963 $ 537,816 $1,423,486 $1,292,551 Phone revenue 12,037 11,436 32,595 32,531 Interest income 451 544 505 1,057 Other income 11,216 7,691 21,370 15,702 ---------- ---------- ---------- ---------- 601,667 557,487 1,477,956 1,341,841 ---------- ---------- ---------- ---------- Expenses: Property operating expenses 171,164 173,749 450,579 454,089 Depreciation 42,839 38,493 122,518 115,480 General and administrative 45,022 38,974 139,913 131,448 Amortization 625 625 1,875 1,875 Management fees 36,073 33,417 88,643 80,447 Royalties and advertising 45,250 43,154 109,364 114,721 Real estate taxes 11,951 15,353 36,653 47,108 Interest expense 5,230 5,168 15,417 15,436 Lease expense 54,625 53,836 163,875 161,508 Marketing 18,494 14,838 41,112 41,710 Repairs & Maintenance 18,511 16,196 63,921 47,803 ---------- ---------- ---------- ---------- 449,784 433,803 1,233,870 1,211,625 ---------- ---------- ---------- ---------- Net earnings $ $151,883 $ 123,684 $ 244,086 $ 130,216 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net earnings per limited partnership interest $ 23.17 $ 18.87 $ 37.23 $ 19.86 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
See accompanying notes to financial statements. 5 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Statement of Cash Flows Three Months and Nine Months Ended September 30, 1995 and September 30, 1994 (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------- ---------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Cash flows from operating activities: Net earnings $ 151,883 $ 123,684 $ 244,086 $ 130,216 Adjustments to reconcile net income to cash: Depreciation and amortization 43,464 39,118 124,393 117,355 (Increase) decrease in: Accounts receivable 1,767 (6,472) (6,217) (11,420) Operating supplies (795) (193) (1,276) (520) Prepaid expenses 17,948 15,918 28,567 31,666 Increase (decrease) in: Accounts payable and accrued expenses (5,412) (23,863) 8,941 (20,671) Due to Affiliates 25,611 2,795 24,792 2,932 Deferred rent liability (7,418) (7,430) (22,254) (22,290) ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities 227,048 143,557 401,032 227,268 ---------- ---------- --------- ---------- Cash flows from investing activities: Investment property expenditures (13,671) 0 (118,366) (10,779) ---------- ---------- --------- ---------- Net cash used in investing activities (13,671) 0 (118,366) (10,779) ---------- ---------- --------- ---------- Cash flows from financing activities: Proceeds/(Payments) of notes payable (1,596) (1,474) (4,694) (4,334) Cash distributions to partners (65,000) (50,000 (95,000) (79,998) ---------- ---------- --------- ---------- Net cash provided by (used in) financing activities (66,596) (51,474) (99,694) (84,332) ---------- ---------- --------- ---------- Net increase in cash and cash equivalents 146,783 92,084 182,972 132,158 Cash and cash equivalents, beginning of period 65,231 81,434 29,042 41,360 ---------- ---------- --------- ---------- Cash and cash equivalents, end of period $ 212,014 $ 173,518 $ 212,014 $ 173,518 ---------- ---------- --------- ---------- ---------- ---------- --------- ----------
See accompanying notes to financial statements. 6 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements September 30, 1995 (Unaudited) Readers of this quarterly report should refer to the partnership audited financial statements and annual report Form 10-KSB (File No. 33-11224-LA) for the period ended December 31, 1994, as certain footnote disclosures which would substantially duplicate those contained in such financial reports have been omitted from this report. 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Mission Valley Comfort Suites Ltd., A California Limited Partnership (the Partnership), (formerly Motels of America Series X), a California Limited Partnership, was formed on September 18, 1987 pursuant to the California Revised Uniform Limited Partnership Act. The purpose of the Partnership is to construct, own, and operate a 122-room "suites only" motel under a franchise agreement with Quality Inns International, Inc. The motel was opened in September 1988. The following is a summary of the Partnership's significant accounting policies: Cash and Cash Equivalents The Partnership considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Investment Property Investment property is recorded at cost. Depreciation is computed using the straight-line method based on estimated useful lives of 5 to 35 years. Maintenance and repair costs are expensed as incurred, while significant improvements, replacements, and major renovation are capitalized. Franchise Fees Franchise fees are amortized over the 20-year life of the franchise agreement. Income Taxes No provision for income taxes has been made as any liability for such taxes would be that of the partners rather than the Partnership. (Continued) 7 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements, Continued Net Income per Interest Net income per interest is based upon the 90% allocated to limited partners divided by 5,900 limited partner interests outstanding throughout the year. 2. PARTNERSHIP AGREEMENT Net income or loss and cash distributions from operations of the Partnership are allocated 90% to the limited partners and 10% to the general partner. Profits from the sale or other disposition of Partnership property are to be allocated to the general partner until its capital account equals zero; thereafter, to the limited partners until their capital accounts equal their capital contributions reduced by prior distributions of cash from sale or refinancing plus an amount equal to a cumulative but not compounded annual 8% return thereon which cumulative return shall be reduced (but not below zero) by the aggregate amount of prior distributions of cash available for distribution; thereafter, gain shall be allocated 15% to the general partner and 85% to the limited partners. Loss from sale shall be allocated 1% to the general partner and 99% to the limited partners. 3. FRANCHISE AGREEMENT The Partnership has entered into a twenty-year franchise agreement with Quality Inns International, Inc. to provide the Partnership with consultation in the areas of design, construction and operation of the motel. The agreement required the payment of initial franchise fees of $50,000 and requires ongoing royalty and chain-affiliated advertising fees based on a percentage of gross room revenues. 4. RELATED PARTY TRANSACTIONS The motel is operated pursuant to a management agreement with GHG. The agreement provides for the payment of monthly management fees of 6% of gross revenues. The Partnership has agreed to reimburse GHG for certain expenses related to services performed in maintaining the books and administering the affairs of the Partnership. GHG and an affiliate, GMS Management Services, Inc. (GMS), allocate to the Partnership certain marketing, accounting, and maintenance salaries and certain other expenses directly related to the operation of the Partnership. Fees and reimbursements for partnership administration expenses paid to GHG and GMS for the three months ended September 30, 1995 and September 30, 1994 and for the nine months ended September 30, 1995 and September 30, 1994 are as follows: (Continued) 8 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements, Continued 4. RELATED PARTY TRANSACTIONS (Continued)
Three Months Ended Nine Months Ended ------------------ ------------------ 9/30/95 9/30/94 9/30/95 9/30/94 ------- ------- ------- ------- Management Fees $36,073 $33,417 $88,643 $80,447 Reimbursement for partnership admini- stration expenses $ 8,106 $ 8,550 $24,316 $25,650
In addition, all motel employees are paid by GMS. The Partnership reimbursed GMS $76,032 for the wages of these employees plus a one percent processing fee. At September 30, 1995, $18,106 was due to GHG and GMS relating to reimbursement for these operating expenses. 5. LONG-TERM DEBT The Partnership had a note payable to its land lessor with a principal balance of $200,000 which was due May 1, 1991. The note required monthly interest payments at 15%. As of April 1, 1993, the Partnership had not made monthly interest payments on this note since May 1, 1991, and accrued interest totalled $60,000. As of April 1, 1993, the note payable was amended to add the accrued interest to the principal balance so that the new principal balance was $260,000. This balance is payable over approximately 20 years in monthly installments of $2,175 including 8% interest. The note is secured by a trust deed on the Partnership's motel. Principal payments on this note are due as follows: 1995 $ 6,322 1996 6,847 1997 7,415 1998 8,031 1999 8,697 Thereafter 212,768 -------- $250,080 -------- -------- (Continued) 9 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements, Continued 6. LEASE The Partnership leases the land underlying its motel under an operating lease which expires in 2046. As of December 31, 1992, rents were subject to annual increases based on the greater of 2-1/2% or the increase in the Consumer Price Index. The total minimum rentals over the life of the lease, including the effects of the 2-1/2% minimum annual increases, were being recognized on the straight-line basis as required by generally accepted accounting principles. Effective April 1, 1993, the lease was amended to lower the rent payment to $20,000 per month. Rents are still subject to annual increases based on the increase in the Consumer Price Index, but the maximum annual increase is 5% and there is no minimum annual increase. As a result of this amendment to the lease agreement, deferred rent liability of $1,594,894, which was incurred prior to April 1, 1993, is being credited to income on a straight-line basis over the remaining term of the lease. The balance of deferred rent liability at September 30, 1995 is $1,520,679. The Partnership is required to pay real estate taxes, insurance, and maintenance for the leased land and improvements thereon. Future minimum land lease is to be expensed as follows: 1995 $ 248,172 1996 248,172 1997 248,172 1998 248,172 1999 248,172 Thereafter 11,643,403 ----------- $12,884,263 ----------- ----------- 7. ADJUSTMENTS In the opinion of the general partners, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation have been made to the accompanying figures as of and for the nine months ended September 30, 1995. 8. SUBSEQUENT EVENT In November 1995, the Partnership paid a distribution of $130,501.42 to the limited partners. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition: On February 6, 1987, the Partnership commenced its public offering pursuant to its Prospectus. On March 21, 1988, the Partnership completed the public offering. The Partnership received $5,117,287 (net of offering costs of $782,713) from the sale of limited partnership interests. These funds were available for investment in property, to pay legal fees and other costs related to the investments, to pay operating expenses, and for working capital. A portion of the proceeds were used to acquire and construct the 122-room "suites only" motel on 1.93 acres of land, subject to a 60-year lease expiring in 2046. As a result of cost overruns related to the acquisition and construction of the motel, the Partnership borrowed $200,000 from the party that is the lessor under its land lease. The note is payable in monthly installments of $2,175, including interest at 8%, over a 20-year period. The deferred rent liability represents amounts accrued under the Partnership's land lease prior to April 1, 1993. Under the original land lease, annual rent increases were based on the greater of 2-1/2% or the increase in the Consumer Price Index. The Partnership was required by generally accepted accounting principles to record rent expense and a deferred rent liability based on projecting the 2-1/2% minimum annual rent increase over the 60-year term of the lease. Effective April 1, 1993, the land lease was amended. Under the amended land lease, monthly rent payments were reduced from $30,138 per month to $20,000 per month. Annual rent increases are based on the lesser of the increase in the Consumer Price Index or 5%, and there is no minimum annual increase. Rent expense under the amended lease is significantly lower than under the previous lease. In addition, the deferred rent liability accrued prior to April 1, 1993 is being credited to income on a straight-line basis over the remaining term of the lease. (Continued) 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Results of Operations: For the three months ended September 30, 1995, room revenues were $577,963, the occupancy rate was 83.56% and the average daily rate was $61.62. This compares to the three months ended September 30, 1994 when room revenues were $537,816, the occupancy rate was 81.06% and the average daily rate was $59.11. For the nine months ended September 30, 1995, room revenues were $1,423,486, the occupancy rate was 72.67% and average daily rate was $58.81. This compares to September 30, 1994 with room revenues of $1,292,551, occupancy rate of 67.64% and average daily rate of $57.38. Until March 31, 1993, rent expense on the land lease was based on a straight-line recognition of the total minimum rentals over the life of the lease including the effects of a 2-1/2% minimum annual increase. Due to changes in the lease agreement, effective April 1, 1993, rent expense is based on amounts currently payable, and there is no deferred rent expense. The deferred rent liability, which was incurred prior to April 1, 1993, is being credited to income over the remaining term of the lease. The effect of current operations on liquidity was net cash provided by operating activities of $401,032 for the nine months ended September 30, 1995 and $227,268 for the nine months ended September 30, 1994. Seasonality: The motel business is seasonal with the third quarter being the strongest due to the tourist business and the last half of the fourth quarter and the first half of the first quarter being the weakest. 12 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. (REGISTRANT) MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership By: GHG Hospitality, Inc. Corporate General Partner BY (SIGNATURE) /s/ J. Mark Grosvenor (NAME AND TITLE) J. Mark Grosvenor, President and Director (DATE) November 10, 1995 BY (SIGNATURE) /s/ Sylvia Mellor Clark (NAME AND TITLE) Controller (DATE) November 10, 1995 EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 212,014 0 28,806 0 15,994 262,203 5,712,808 1,931,872 4,075,431 83,042 0 0 0 0 0 4,075,431 0 1,477,956 0 1,218,453 0 0 15,417 244,086 0 0 0 0 0 244,086 37.23 37.23
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