-----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, O3Vh2hyqPlXSqhM2pxaNaTGxz57ddSLcOdJN3gqUxefgEkNNkYPrP4jpo+Dw5t8e fjSIjAvEjXns6iZv871UXw== 0000820062-99-000026.txt : 19990817 0000820062-99-000026.hdr.sgml : 19990817 ACCESSION NUMBER: 0000820062-99-000026 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: SEC FILE NUMBER: 000-18080 FILM NUMBER: 99690055 BUSINESS ADDRESS: STREET 1: 1466 9TH AVE CITY: SAN DIEGO STATE: CA ZIP: 92101 BUSINESS PHONE: 6192261212 MAIL ADDRESS: STREET 1: 1466 9TH AVE CITY: SAN DIEGO STATE: CA ZIP: 92101 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-QSB - Quarterly or Transitional Report /X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 / / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 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) PMB 296, 3725 Talbot Street, San Diego, CA 92106 (Address of principal executive offices) (619) 294-9435 (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) Check whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Exchange Act during the last 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 June 30, 1999 and December 31, 1998. Statement of Operations for the three month and six month periods ended June 30, 1999 and June 30, 1998. Statement of Cash Flows for the three month ans six month periods ended June 30, 1999 and June 30, 1998. Notes to Financial Statements. MISSION VALLEY COMFORT SUITES LTD. A California Limited Partnership Balance Sheet June 30, 1999 and December 31, 1998 (Unaudited) (Part 1 of 2)
June 30, December 31, ASSETS 1999 1998 -------- ----------- ------------ Current Assets: Cash and cash equivalents $ 0 $ 256,005 Accounts receivable 0 0 Operating supplies 0 0 Prepaid expenses 0 0 Due from Affiliates (Note 4) 0 15,234 ----------- ----------- Total current assets 0 271,239 Investment property, at cost: Building and improvements 0 0 Furniture, fixtures & equipment 0 0 ----------- ----------- 0 0 Less accumulated depreciation 0 0 ------------ ----------- Total investment property, net of accumulated depreciation 0 0 Franchise fees, net (note 3) 0 0 ----------- ----------- $ 0 $ 271,239 =========== ===========
See accompanying notes to financial statements. Page 1 MISSION VALLEY COMFORT SUITES LTD. A California Limited Partnership Balance Sheet June 30, 1999 and December 31, 1998 (Unaudited) (Part 2 of 2)
LIABILITIES AND June 30, 1999 Dec 31, 1998 PARTNER'S CAPITAL ACCOUNTS -------------- --------------- - --------------------------- Current liabilities: Accounts payable and accrued expenses 0 66,133 Due to Affiliates (note 4) 0 0 ---------- ---------- Total current liabilities 0 66,133 ---------- ---------- Long-term debt (Note 5) 0 0 Deferred rent liability (note 6) 0 0 ----------- ------------ Total liabilities 0 66,133 ----------- ------------ Partners' capital accounts: General partners: Capital contributions 31,210 31,210 Cumulative net earnings 192,461 192,461 Cumulative cash distributions (223,671) (223,671) ------------- ---------- 0 0 ------------- ---------- Limited partners: Capital contributions,net of offering costs 5,117,287 5,117,287 Cumulative net earnings 1,627,933 1,620,168 Cumulative cash distributions (6,745,220) (6,532,349) ------------- -------------- 0 205,106 ------------- -------------- Total partners' capital accounts 0 205,106 ------------- -------------- $ 0 $ 271,239 ============ ==============
See accompanying notes to financial statements. Page 2 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Statement of Operations Three Months and Six Months Ended June 30, 1999 and June 30, 1998 (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED June 30, JUNE 30, 1999 1998 1999 1998 ----- ---- ---- ---- Revenues: Income from Discontinued operations $ 3,802 $101,355 $ 3,802 $144,723 Interest Income 1,958 598 3,967 1,514 --------- --------- -------- -------- 5,760 101,953 7,769 146,237 --------- --------- -------- -------- Net Earnings $ 5,760 $101,953 $ 7,769 $146,237 ========= ========= ======== ======== Net earnings per limited partnership interest $ .98 $15.55 $ 1.32 $22.31 ======== ======== ======= ======
See accompanying notes to financial statements. Page 3 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Statement of Cash Flows Three Months and Six Months Ended June 30, 1999 and June 30, 1998 (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED June 30, June 30, 1999 1998 1999 1998 ------- -------- ------ ------- Cash flows from operating activities: Net earnings (loss) $ 5,760 $ 101,953 $ 7,769 $146,237 Adjustments to reconcile net income to cash: Depreciation and amortization 0 51,308 0 102,626 Increase) decrease in: Accounts receivable 0 29,420 0 (5,422) Operating supplies 0 1,629 0 (947) Prepaid expenses 0 22,109 0 15,434 Increase (decrease) in: Accounts payable/accrued expenses (41,813) (219) (66,133) 11,730 Due to/from Affiliates 14,026 25,267 15,229 7,354 Deferred rent liability 0 (7,418) 0 (14,835) --------- ---------- -------- -------- Net cash provided by (used in) operating activities (22,027) 224,047 (43,133) 262,175 Cash flows from investing activities: Investment property expenditures 0 0 0 0 --------- ---------- -------- -------- Net cash used in investing activities 0 0 0 0 Cash flows from financing activities: Proceeds/(Payments) of notes payable 0 (9,149) 0 (18,116) Cash distributions to partners (212,872) (29,999) (212,872) (29,999) --------- ---------- -------- -------- Net cash provided by (used in) financing activities (212,872) (39,148) (212,872) (48,115) --------- ---------- -------- -------- Net increase in cash/cash equivalents (234,899) 184,899 (256,005) 169,288 Cash and cash equivalents, beginning of period 234,899 131,061 256,005 146,672 --------- --------- --------- -------- Cash/cash equivalents, end of period 0 315,959 0 315,959
========= ========= ========= ======== See accompanying notes to financial statements. Page 4 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 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, 1998, as certain footnote disclosures which would substantially duplicate those contained in such financial reports have been omitted from this report. Note 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 Partnership consists of a general partner which owns a 10% interest and 866 limited partners which collectively own a 90% interest. The purpose of the Partnership was to construct, own, and operate a 122-room "suites only" motel in San Diego, California under a franchise agreement with Choice International. The motel was opened in September 1988. On July 2, 1998, the Partnership sold its motel property and related assets to Piyal, LLC (the Purchaser) for $5,000,000 in cash. The sale was approved by limited partners holding a majority of the Partnership's limited partnership interests pursuant to a Consent Solicitation Statement dated June 18, 1998. The Partnership paid a liquidating distribution to the limited partners of $4,446,371 ($753.62 per interest) on July 21, 1998. The Partnership had retained cash to cover its remaining liabilities and any unexpected claims. In June 1999 the partnership paid all remaining expenses to close the partnership. The remaining funds totaling $212,872 ($36.08 per interest) was then paid to the limited partners as a final distribution. The partnership will be dissolved on or before August 31, 1999. Since the partnership was in existence in 1999 a final partnership tax reurn for 1999 will be filed and final K-1s for 1999 will be mailed to the partners before March 1, 2000. The liquidation and dissolution of the Partnership was approved by limited partners holding a majority of the Partnership's limited partnership interests pursuant to a Consent Solicitation Statement dated June 18, 1998. Page 5 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 The following is a summary of the Partnership's significant accounting policies: Discontinued Operations All of the Partnership's operations are related to the motel business which was sold on July 2, 1998. Accordingly, all of the revenues and expenses of the Partnership prior to the sale have been presented as discontinued operations in the accompanying statements of operations. 1998 Gain on disposal of discontinued operations was netted by estimated expenses of $120,709 to administer the affairs of the Partnership until its final liquidation and termination. Approximately $54,576 of the estimated expenses were incurred in 1998 and $62,331 were incurred in the six months ended June 30, 1999 totaling $116,907. The expenses to administer the affairs of the Partnership was over estimated in 1998 resulting in $3,802 shown as other income for the six months ended June 30, 1999. 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 repairs costs are expensed as incurred, while significant improvements, replacements, and major renovations are capitalized. Franchise Fees Franchise fees are amortized over the 20-year life of the franchise agreement which expires in 2008. 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. Page 6 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 Net Income Per Interest Net income per interest is based upon the amount allocated to limited partners pursuant to the partnership agreement divided by 5,900 limited partner interests outstanding throughout the year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 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. Note 3. FRANCHISE AGREEMENT The Partnership entered into a twenty-year franchise agreement expiring in 2008 with Choice International 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. The franchise agreement was terminated in connection with the sale of the motel. Page 7 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 Note 4. RELATED PARTY TRANSACTIONS The motel is operated pursuant to a management agreement with GHG Hospitality, Inc. (GHG), the general partner. 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), formerly Grosvenor Management Services, Inc., allocate to the Partnership certain marketing, accounting, and maintenance salaries and certain other expenses directly related to the operation of the Partnership. At June 30, 1999, balances due to/from GHG and GMS relating to the reimbursement of these operating expenses were paid in full. Note 5. LONG-TERM DEBT The Partnership had a note payable which was due in monthly installments of $2,175, including 8% interest, through April 2013. In March 1997, The Partnership voluntarily began making monthly payments of $4,350 in order to retire the note earlier that scheduled and reduce interest expense over the term of the note. The note was secured by a trust deed on the Partnership's motel. The note, which had a balance of $188,965 as of July 2, 1998, was paid in full in connection with the sale of the motel. Page 8 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 Note 6. LEASE The Partnership leased the land underlying its motel under an operating lease which expires in 2046. Prior to April 1, 1993, 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 were still subject to annual increases based on the increase in the Consumer Price Index, but the maximum annual increase was 5% and there is no minimum annual increase. Consequently, rent expense was recognized based on the amount due each month rather than on the straight-line basis. In addition, the deferred rent liability accrued prior to April 1, 1993 was credited to income on a straight-line basis over the remaining term of the lease. The Partnership was required to pay real estate taxes, insurance, and maintenance for the leased land and improvements thereon. The lease was assumed by the Purchaser in connection with the sale of the motel. The deferred rent liability, which had a balance of $1,439,082 as of July 2, 1998, was eliminated and was included in the 1998 gain on disposal of discontinued operations. Note 7. ADJUSTMENTS In the opinion of the general partner, 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 three months and six months ended June 30, 1999. Page 9 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 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. The majority of the proceeds were used to acquire and construct the property. At the time of the public offering in 1987 and 1988, the Prospectus stated that the general partner expected that the Partnership would consider selling or refinancing the motel after operating it for a period of approximately six to ten years. An informal survey conducted by the general partner of a number of limited partners in early 1998 indicated that a substantial majority would like the motel to be sold. For these reasons, the general partner decided in early 1998 to initiate the process which could possibly result in a sale of the motel. On March 3, 1998, the Partnership entered into an agreement with Hotel Partners, Inc., a real estate broker specializing in hotel and motel properties, to list the motel for sale. On July 2, 1998, the Partnership sold its motel property and related assets to Piyal, LLC (the Purchaser) for $5,000,000 in cash. The Purchaser also assumed the Partnership's obligations under the land lease. Net cash proceeds received by the Partnership from the sale were $4,647,699 after deducting the payment of the first trust deed of $188,965, sales commissions of $150,000 and net pro rations and other closing costs of $13,336. The sale was approved by limited partners holding a majority of the Partnership's limited partnership interests pursuant to a Consent Solicitation Statement dated June 18,1998. Page 10 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 The Partnership paid a liquidating distribution to the limited partners of $4,446,371 ($753.62 per interest) on July 21, 1998. At that time the Partnership retained some cash to cover its remaining liabilities and any unexpected claims. In June 1999 the partnership paid all remaining expenses and claims to close the Partnership. The remaining funds totaling $212,872 ($36.08 per interest) was paid to the limited partners on 6/25/99 as a final distribution. The partnership will be dissolved on or before August 31, 1999. Since the partnership was in existence in 1999 a final partnership tax return will be filed for 1999 and final K1s for 1999 will be mailed to the partners before March 1, 2000. The liquidation and dissolution of the Partnership was approved by limited partners holding a majority of the Partnership's limited partnership interests pursuant to a Consent Solicitation Statement dated June 18, 1998. The deferred rent liability represented 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, annual rent increases were based on the lesser of the increase in the Consumer Price Index or 5%, and there was no minimum annual increase. Consequently, rent expense was recognized based on the amount due each month rather than on the straight-line basis. In addition, the deferred rent liability accrued prior to April 1, 1993 was credited to income on a straight-line basis over the remaining term of the lease. The lease was assumed by the Purchaser in connection with the sale of the motel. The deferred rent liability, which had a balance of $1,439,082 as of July 2, 1998, was eliminated and was included in the 1998 gain on disposal of discontinued operations. Page 11 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 Results of Operations: All of the Partnership's operations are related to the motel business which was sold on July 2, 1998. The 19998 gain on disposal of discontinued operations ($2,668,165) was comprised of a gain of $1,365,117 on the sale of the motel and related assets, a gain of $1,439,082 related to the elimination of the deferred rent liability, costs of $15,325 associated with obtaining the consent of limited partners to sell the motel and liquidate and dissolve the Partnership, and estimated expenses of $120,709 to administer the affairs of the Partnership from the date of the sale until the final liquidation and dissolution. The expenses to administer the affairs of the Partnership until final liquidation and dissolution actually totaled $116,906 resulting in $3,802 shown as other income for the six months ended June 30, 1999. Year 2000 Issues: Many existing computer programs use only two digits to identify a year in the date field. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000. Based on the sale of substantially all of the Partnership's assets and the cessation of substantially all of the Partnership's operations, management believes that the Year 2000 issues will not have a material effect on the Partnership. Page 12 MISSION VALLEY COMFORT SUITES LTD., A California Limited Partnership Notes to Financial Statements June 30, 1999 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/ Stephen D. Burchett (NAME AND TILE) Stephen D. Burchett, Vice President (DATE) August 12, 1999 By (SIGNATURE) /s/ Sylvia Mellor Clark (NAME AND TITLE ) Sylvia Mellor Clark, Controller (DATE) August 12, 1999 Page 13 EX-27 2
5 6-MOS DEC-31-1999 JUN-30-1999 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,769 0 0 0 0 0 7,769 0 0 7,769 0 0 7,769 1.32 1.32
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