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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from   to
 Commission File Number: 000-51955
 SUMMIT HOTEL PROPERTIES, LLC
  South Dakota
 20-0617340
 2701 South Minnesota Avenue, Suite 6
Sioux Falls, SD 57105
 (605) 361-9566
  þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)Smaller reporting company o  o þ




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TABLE OF CONTENTS
 PagePART IItem 1.
    
    Financial Statements
    
    3Condensed Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and December
31, 2007
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2008 and 2007 (Unaudited)
    
    4Condensed Consolidated Statement of Changes in Members Equity for the three months
ended March 31, 2008 (Unaudited)
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2008 and 2007 (Unaudited)
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    23Item 4.
    
    Controls and Procedures
    
    24PART IIItem 1.
    
    Legal Proceedings
    
    25Item 1A.
    
    Risk Factors
    
    25Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    25Item 3.
    
    Defaults Upon Senior Securities
    
    25Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    25Item 5.
    
    Other Information
    
    25Item 6.
    
    Exhibits
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Certification of Chief Executive OfficerCertification of Chief Financial OfficerSection 1350 Certification of Chief Executive OfficerSection 1350 Certification of Chief Financial Officer
  2




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PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2008 AND DECEMBER 31, 2007
 2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    7,525,091
    
    
    $
    7,776,395Restricted cash
    
    
    2,030,693
    
    
    
    2,462,947Trade receivables
    
    
    4,795,323
    
    
    
    3,192,708Prepaid expenses and other
    
    
    1,361,945
    
    
    
    1,863,846Total current assets
    
    
    15,713,052
    
    
    
    15,295,896PROPERTY AND EQUIPMENT, NET
    
    
    433,222,119
    
    
    
    426,494,205OTHER ASSETSDeferred charges and other assets, net
    
    
    4,616,294
    
    
    
    4,998,923Restricted cash
    
    
    1,438,471
    
    
    
    1,201,183Total other assets
    
    
    6,054,765
    
    
    
    6,200,106TOTAL ASSETS
    
    $
    454,989,936
    
    
    $
    447,990,207LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    62,974,000
    
    
    $
    40,837,000Lines of credit
    
    
    22,993,864
    
    
    
    21,575,864Notes payable
    
    
    13,807,296
    
    
    
    12,700,557Accounts payable
    
    
    1,589,378
    
    
    
    4,862,128Related party accounts payable
    
    
    2,502,994
    
    
    
    1,137,985Accrued expenses
    
    
    10,252,463
    
    
    
    9,639,577Total current liabilities
    
    
    114,119,995
    
    
    
    90,753,111LONG-TERM DEBT, NET OF CURRENT PORTION
    
    
    247,094,073
    
    
    
    261,544,939COMMITMENTS AND CONTINGENCIESMINORITY INTERESTS
    
    
    (1,458,299
    )
    
    
    (1,702,732
    )MEMBERS EQUITYClass A, 1,166.62 units issued and outstanding
    
    
    80,995,068
    
    
    
    82,892,941Class A-1, 133.25 units issued and outstanding
    
    
    10,409,912
    
    
    
    10,672,761Class B, 81.36 units issued and outstanding
    
    
    4,108,213
    
    
    
    4,108,213Class C, 173.60 units issued and outstanding
    
    
    (279,026
    )
    
    
    (279,026
    )Total members equity
    
    
    95,234,167
    
    
    
    97,394,889TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    454,989,936
    
    
    $
    447,990,207
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SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 2008
    
    
    2007REVENUESRoom revenues
    
    $
    34,304,267
    
    
    $
    27,774,391Other hotel operations revenues
    
    
    581,052
    
    
    
    546,08034,885,319
    
    
    
    28,320,471COSTS AND EXPENSESDirect hotel operations
    
    
    10,641,053
    
    
    
    8,494,917Other hotel operating expenses
    
    
    3,910,244
    
    
    
    2,932,381General, selling and administrative
    
    
    6,209,473
    
    
    
    4,845,711Repairs and maintenance
    
    
    2,780,531
    
    
    
    2,514,533Depreciation and amortization
    
    
    5,874,772
    
    
    
    3,697,23529,416,073
    
    
    
    22,484,777INCOME FROM OPERATIONS
    
    
    5,469,246
    
    
    
    5,835,694OTHER INCOME (EXPENSE)Interest income
    
    
    51,971
    
    
    
    89,338Interest (expense)
    
    
    (4,768,347
    )
    
    
    (3,137,007
    )Gain (loss) on disposal of assets
    
    
    (3,964
    )
    
    
    (46,110
    )(4,720,340
    )
    
    
    (3,093,779
    )INCOME BEFORE MINORITY INTERESTS
    
    
    748,906
    
    
    
    2,741,915MINORITY INTERESTS IN OPERATIONS OF
CONSOLIDATED PARTNERSHIPS
    
    
    244,433
    
    
    
    333,231INCOME FROM CONTINUING OPERATIONS
    
    
    504,473
    
    
    
    2,408,684INCOME (LOSS) FROM DISCONTINUED OPERATIONS
    
    
    
    
    
    
    (111,224
    )NET INCOME BEFORE INCOME TAXES
    
    
    504,473
    
    
    
    2,297,460STATE INCOME TAX (EXPENSE)
    
    
    
    
    
    
    (72,426
    )NET INCOME
    
    $
    504,473
    
    
    $
    2,225,034BASIC AND DILUTED EARNINGS PER
CAPITAL UNIT
    
    $
    324.46
    
    
    $
    1,431.05WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING FOR CALCULATION OF
BASIC AND DILUTED EARNINGS PER
CAPITAL UNIT
    
    
    1,554.83
    
    
    
    1,554.83
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SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS EQUITY
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 # of CapitalUnits
    
    
    Class A
    
    
    Class A-1
    
    
    Class B
    
    
    Class C
    
    
    TotalBALANCES, JANUARY 1, 2008
    
    
    1,554.83
    
    
    $
    82,892,941
    
    
    $
    10,672,761
    
    
    $
    4,108,213
    
    
    $
    (279,026
    )
    
    $
    97,394,889Net Income
    
    
    
    
    
    
    504,473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504,473Distributions to members
    
    
    
    
    
    
    (2,402,346
    )
    
    
    (262,849
    )
    
    
    
    
    
    
    
    
    
    
    (2,665,195
    )BALANCES, MARCH 31, 2008
    
    
    1,554.83
    
    
    $
    80,995,068
    
    
    $
    10,409,912
    
    
    $
    4,108,213
    
    
    $
    (279,026
    )
    
    $
    95,234,167
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SUMMIT HOTEL PROPERTIES, LLC  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    504,473
    
    
    $
    2,225,034Adjustments to reconcile net income to
net cash from operating activities:Depreciation and amortization
    
    
    5,874,772
    
    
    
    4,086,706Minority interests in operations of consolidated partnership
    
    
    244,433
    
    
    
    333,231(Gain) loss on disposal of assets
    
    
    3,964
    
    
    
    46,110Changes in current assets and liabilities:Trade receivables
    
    
    (1,602,615
    )
    
    
    (1,360,225
    )Prepaid expenses and other
    
    
    501,901
    
    
    
    686,951Accounts payable and related party accounts payable
    
    
    (3,906,543
    )
    
    
    779,901Accrued expenses
    
    
    612,883
    
    
    
    (254,513
    )NET CASH PROVIDED BY (USED IN)
    
    
    2,233,268
    
    
    
    6,543,195OPERATING ACTIVITIESINVESTING ACTIVITIESLand and hotel acquisitions and construction in progress
    
    
    
    
    
    
    Purchases of other property & equipment
    
    
    (3,625,707
    )
    
    
    (3,951,202
    )Proceeds from asset dispositions, net of closing costs
    
    
    
    
    
    
    212,030Restricted cash released (funded)
    
    
    194,966
    
    
    
    1,532,216NET CASH PROVIDED BY (USED IN)
    
    
    (3,430,741
    )
    
    
    (2,206,956
    )INVESTING ACTIVITIESFINANCING ACTIVITIESProceeds from issuance of long-term debt
    
    
    900,000
    
    
    
    1,913,669Principal payments on long-term debt
    
    
    (1,296,636
    )
    
    
    (1,301,466
    )Financing fees on long-term debt
    
    
    (132,390
    )
    
    
    (45,511
    )Net change in notes payable and line of credit
    
    
    4,140,390
    
    
    
    (2,805,895
    )Distributions to members
    
    
    (2,665,195
    )
    
    
    (2,665,195
    )Distributions to minority interests
    
    
    
    
    
    
    NET CASH PROVIDED BY (USED IN)
    
    
    946,169
    
    
    
    (4,904,398
    )FINANCING ACTIVITIESNET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (251,304
    )
    
    
    (568,159
    )CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD
    
    
    7,776,395
    
    
    
    7,999,443END OF PERIOD
    
    $
    7,525,091
    
    
    $
    7,431,284
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SUMMIT HOTEL PROPERTIES, LLC  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 2008
    
    
    2007SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:Cash payments for interest
    
    $
    4,738,348
    
    
    $
    3,470,201Cash payments for state income taxes
    
    $
    129,322
    
    
    $
    142,426SUPPLEMENTAL DISCLOSURE OF
NON-CASH FINANCIAL INFORMATION:Acquisitions of hotel properties and land through issuance
of debt
    
    $
    1,212,116
    
    
    $
    12,284,570Construction in progress financed through related party
accounts payable
    
    $
    1,998,802
    
    
    $
    1,211,574Construction in progress financed through issuance
of debt
    
    $
    5,255,003
    
    
    $
    16,188,695Issuance of long-term debt to refinance existing
long-term debt
    
    $
    
    
    
    $
    3,286,331
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SUMMIT HOTEL PROPERTIES, LLC  NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  MARCH 31, 2008
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS
 Basis of Presentation
   Use of Estimates
  Fair Value
 Fair Value
Measurement
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SUMMIT HOTEL PROPERTIES, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008
 Assets Held for Sale
   Discontinued Operations
   2008
    
    
    2007REVENUES
    
    $
    
    
    
    $
    2,899,779COSTS AND EXPENSESDirect hotel operations
    
    
    
    
    
    
    1,072,628Other hotel operating expenses
    
    
    
    
    
    
    432,039General, selling and administrative
    
    
    
    
    
    
    542,538Repairs and maintenance
    
    
    
    
    
    
    234,482Depreciation and amortization
    
    
    
    
    
    
    389,471
    
    
    
    2,671,158INCOME FROM OPERATIONS
    
    
    
    
    
    
    228,621OTHER INCOME (EXPENSE)Interest income
    
    
    
    
    
    
    (6,651
    )Interest (expense)
    
    
    
    
    
    
    (333,194
    )
    
    
    
    (339,845
    )(LOSS) INCOME FROM
DISCONTINUED OPERATIONS
    
    $
    
    
    
    $
    (111,224
    )
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SUMMIT HOTEL PROPERTIES, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008
 Acquisitions
 Business Combinations
  Accrued Expenses
  2008
    
    
    2007Accrued taxes
    
    $
    4,726,948
    
    
    $
    5,071,618Accrued salaries and benefits
    
    
    1,593,178
    
    
    
    1,581,180Accrued interest
    
    
    1,300,779
    
    
    
    1,361,653Other accrued expenses
    
    
    2,631,558
    
    
    
    1,625,126$
    10,252,463
    
    
    $
    9,639,577
 Note Obligations
 
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SUMMIT HOTEL PROPERTIES, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008
 Commitments/Agreements
     11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
  Overview
   12




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Critical Accounting Policies
 Property and Equipment
  Capitalized Development and Interest Costs
  Impairment of Long-Lived Assets
    13




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Consolidation Policy
   Revenue Recognition
  Results of Operations
    14




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Three Months Ended March 31, 2008 Compared with Three Months Ended March 31, 2007
 Revenues
   Three Months Ended
    
    Three Months EndedMarch 31,
    
    March 31,2008
    
    2007
    
    Increase/(Decrease)All Company HotelsRevPAR
    
    $
    64.30
    
    
    $
    63.06
    
    
    $
    1.24Average Daily Rate
    
    $
    102.69
    
    
    $
    96.92
    
    
    $
    5.77Occupancy Rate
    
    
    62.62
    %
    
    
    65.06
    %
    
    
    (2.44
    )%
  Hotel Operating Expenses
  15




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Depreciation
  Management Expense
  Repairs and Maintenance
  16




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Net Income
  Seasonality and Diversification
  Liquidity and Capital Resources
 Cash From Operating Activities
   Cash From Investing Activities
  17




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Cash From Financing Activities
   1 2 3 4
   18




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19




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Uses of Cash
   20




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Additional Information Concerning Sources and Uses of Cash
     21




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Acquisition
    
    OpeningLocation
    
    # Rooms
    
    Franchise
    
    Status
    
    Date
    
    Date (1)Baton Rouge, LA(1)(2)
    
    
    127
    
    
    Cambria Suites
    
    Under Construction
    
    7/11/06
    
    07/08San Antonio, TX (1)(2)
    
    
    126
    
    
    Cambria Suites
    
    Under Construction
    
    1/22/07
    
    01/09Houston, TX (1)(2)
    
    
    118
    
    
    SpringHill Suites
    
    Under Construction
    
    2/15/07
    
    06/09Jacksonville, FL(1)(2)
    
    
    136
    
    
    Aloft
    
    Under Construction
    
    11/29/06
    
    05/09Jacksonville, FL(1)(2)
    
    
    119
    
    
    TBA
    
    Future Construction
    
    11/29/06
    
    TBDFlagstaff, AZ (2)
    
    
    150
    
    
    Courtyard by Marriott
    
    Future Construction
    
    4/5/06
    
    TBDPortland, OR (2)(3)
    
    
    124
    
    
    Residence Inn
    
    Future Construction
    
    6/13/07
    
    TBDPortland, OR (2)(3)
    
    
    136
    
    
    Hyatt Place
    
    Future Construction
    
    6/13/07
    
    TBDEl Paso, TX (2)
    
    
    101
    
    
    Hampton Inn & Suites
    
    Future Construction
    
    7/16/07
    
    TBDEl Paso, TX (2)
    
    
    121
    
    
    Courtyard by Marriott
    
    Future Construction
    
    7/16/07
    
    TBDFt. Myers, FL (2)
    
    
    150
    
    
    Hyatt Place
    
    Future Construction
    
    8/30/07
    
    TBDBoise, ID(2)
    
    
    120
    
    
    Holiday Inn Express &Suites
    
    Future Construction
    
    10/1/04
    
    TBDTwin Falls, ID(2)
    
    
    93
    
    
    Holiday Inn Express & Suites
    
    Future Construction
    
    2/1/08
    
    TBDSan Antonio, TX
    
    TBD
    
    Aloft
    
    Future Construction
    
    1/22/07
    
    TBDSan Antonio, TX
    
    TBD
    
    TBD
    
    Future Construction
    
    1/22/07
    
    TBD
 
 (1)
    
    The opening date is estimated and is subject to change.(2)
    
    Number of units and franchise indicate our plans as of May 2, 2008, which are subject
to change.(3)
    
    Real estate is subject to a ground lease.   22




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Recent Developments
 Acquisitions and Dispositions
  Location
    
    # Rooms(2)
    
    Franchise(2)
    
    Property Sold/Purchased
    
    Status
    
    Closing Date (1)Ft. Myers, FL(3)
    
    
    N/A
    
    
    N/A
    
    Land
    
    Under Contract to Sell
    
    6/01/08Spokane, WA
    
    
    108
    
    
    Courtyard by Marriott
    
    Land
    
    Under Contract to Purchase
    
    6/15/2008Spokane, WA
    
    
    108
    
    
    SpringHill Suites
    
    Land
    
    Under Contract to Purchase
    
    6/15/2008Twin Falls, ID
    
    
    93
    
    
    Courtyard by Marriott
    
    Land
    
    Under Contract to Purchase
    
    11/1/2008Missoula, MT
    
    
    100
    
    
    Fairfield Inn & Suites
    
    Land
    
    Under Contract to Purchase
    
    7/21/2008
 
 (1)
    
    For properties under contract, the closing date is estimated.(2)
    
    Number of units and franchise indicate our plans as of May 2, 2008, which are subject
to change.(3)
    
    We are selling unneeded vacant land to General Electric.  Commitments and Contingencies
   Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  23




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Item 4. Controls and Procedures
   
 24




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PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  25




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ExhibitNumber
    
    Description of Exhibit31.1
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 
Chief Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Financial Officer.32.1
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Executive Officer.32.2
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Financial Officer.
 26




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SIGNATURES
  SUMMIT HOTEL PROPERTIES, LLCDate: May 14, 2008
    By:
    /s/ Kerry W. BoekelheideKerry W. BoekelheideChief Executive Officer and ManagerDate: May 14, 2008
    By:
    /s/ Daniel P. HansenDaniel P. HansenChief Financial Officer and Manager 27




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EXHIBIT INDEX
 31.1
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 
Chief Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Financial Officer.32.1
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Executive Officer.32.2
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Financial Officer.
 28