SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998
Commission file number 0-10134
SUPER 8 MOTELS III, LTD.
(Exact name of registrant as specified in its charter)
California 94-2664921
(State or other jurisdiction of (I.R.S. Employer Iden-
incorporation or organization) tification No.)
2030 J Street, Sacramento, California 95814
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (916) 442-9183
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered Pursuant to Section 12 (g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the registrant has
been required to file such reports) and (2) has been subject to the filing
requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.(X)
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE
None
1
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PART I
Item 1. BUSINESS
General Development of Business
Super 8 Motels III, Ltd. (the "Partnership") is a limited partnership which was
organized under the Uniform Limited Partnership Act of the State of California
on June 2, 1980.
The General Partner of the Partnership is Grotewohl Management Services, Inc., a
California corporation which is 50% owned by Philip B. Grotewohl.
Through two public offerings of units of limited partnership interest in the
Partnership (the "Units"), the Partnership sold 5,941 Units at a price of $1,000
per Unit.
The net proceeds of the offerings were expended for the acquisition in fee and
development of properties located in San Bernardino, California and Bakersfield,
California. Motel operations commenced on March 6, 1982 at the San Bernardino
property, and on September 20, 1982 at the Bakersfield property. Both properties
were sold on February 22, 1999.
Upon the sale of properties, the Partnership was dissolved. The Partnership is
now winding up its activities by identifying and paying its remaining
obligations and liabilities. Upon completion of its winding-up activities the
Partnership will distribute its then remaining cash to the General and Limited
Partners and will then cancel its certificate of limited partnership as filed
with the California Secretary of State and be terminated.
Narrative Description of Business
(a) Franchise Agreements
The Partnership operated each of its motel properties as a franchisee of Super 8
Motels, Inc. through sub-franchises obtained from Super 8 Management
Corporation. In March 1988, Brown & Grotewohl, a California general partnership
which is an affiliate of the General Partner (the "Manager"), became
sub-franchisor in the stead of Super 8 Management Corporation. As of September
30, 1998, Super 8 Motels, Inc. had franchised a total of 1,722 motels having an
aggregate of 103,888 guestrooms in operation. Super 8 Motels, Inc. is a
wholly-owned subsidiary of Hospitality Franchise Systems, Inc.
The objective of the Super 8 Motel chain is to maintain a competitive position
in the motel industry by offering to the public comfortable, no-frills
accommodations at a budget price. Each Super 8 Motel provides its guests with
attractively decorated rooms, free color television, direct dial telephone and
other basic amenities, but eliminates or modifies other items to provide
substantial cost reduction without seriously affecting comfort or convenience.
Some of these savings are accomplished by reductions in room size, elimination
of expensive lobbies, and by substantial economies in building construction.
2
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By the terms of each franchise agreement with Super 8 Motels, Inc., the
Partnership paid monthly franchise fees equal to 4% of its gross room revenues
(half of which was paid to the sub-franchisor) and contributed an additional 1%
of its gross room revenues to a fund administered by Super 8 Motels, Inc. to
finance the national reservation and promotions program.
(b) Operation of the Motels
The Manager managed and operated the Partnership's motels. The Manager's
responsibilities included, but were not limited to, the supervision and
direction of the Partnership's employees who operated each motel, the
establishment of room rates and the direction of the promotional activities of
the Partnership's employees. In addition, the Manager directed the purchase of
replacement equipment and supplies, maintenance activity and the engagement or
selection of all vendors, suppliers and independent contractors. The
Partnership's financial activities were and are performed by the individual
motel staffs and a centralized accounting staff, all of which work under the
direction of the Manager. Together, these staffs perform all bookkeeping duties
in connection with each motel, including all collections and all disbursements
to be paid out of funds generated by motel operations or otherwise supplied by
the Partnership.
As of December 31, 1998, the Partnership employed a total of 33 persons, either
full or part-time at its two motel properties, including ten desk clerks, 18
housekeeping and laundry personnel, three maintenance personnel and two motel
managers. In addition, and as of the same date, the Partnership employed 10
persons in administrative positions at its central office in Sacramento,
California, all of whom worked for the Partnership on a part-time basis. They
included accounting, investor service, motel supervisory personnel, secretarial
personnel, and purchasing personnel, including David Grotewohl, son of Philip
Grotewohl, whom the Partnership employs as Director of Operations and as an
attorney, and, until April 30, 1998, Mark Grotewohl, whom the Partnership
employed as marketing and sales director.
Item 2. Properties
As of March 24, 1999, the Partnership no longer owns any real property.
Item 3. LEGAL PROCEEDINGS
Inapplicable.
3
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During November 1998 the Partnership submitted to the limited partners of the
Partnership (the "Limited Partners") a consent solicitation statement soliciting
the consent of the Limited Partners to (i) the sale of the Partnership's motels
and related assets at an aggregate purchase price of $2,900,000, and (ii) the
dissolution and termination of the Partnership. The Limited Partners consented
to such sale by majority vote. No meeting was held in connection with the
solicitation of consents. The result of the solicitation was as follows: In
favor, 4,415; opposed, 570; and not voting, 956. As discussed above, the
Partnership's motels and related personal property have been sold and the
Partnership has been dissolved. See Item 1 above.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
The Units are not freely transferable and no public market for the Units has
developed or is expected to develop.
Holders
As of December 31, 1998 a total of 951 individuals (the "Limited Partners") held
Units in the Partnership.
Distributions
Cash distributions are made on a quarterly basis from Cash Available for
Distribution, defined in the Partnership's Certificate and Agreement of Limited
Partnership (the "Partnership Agreement") as Cash Flow, less adequate cash
reserves for obligations of the Partnership for which there is no provision.
Cash Flow means cash funds provided from operations of the Partnership, without
deduction for depreciation, but after deducting cash funds used to pay or
provide for the payment of debt service, capital improvements and replacements
and the operating expenses of the Partnership's property. Of the Cash Available
for Distribution in any year, the General Partner will receive 10% thereof, of
which 9% will constitute a fee for managing the Partnership and 1% will be
attributable to its interest in the profits of the Partnership. The balance will
be distributed to the Limited Partners. Notwithstanding the preceding, the
General Partner will not receive distributions of Cash Available for
Distribution in any year in which the Limited Partners do not receive
distributions of Cash Available for Distribution in an amount at least equal to
10% per annum cumulative on their adjusted capital contributions.
4
<PAGE>
In addition, the Partnership will promptly distribute net proceeds of the sale
and refinancing of its motel properties to the General Partner and the Limited
Partners. Of the sale or refinancing proceeds available for distribution in any
year, the General Partner will receive 15% thereof, and the balance will be
distributed to the Limited Partners. Notwithstanding the preceding, the General
Partner will not receive distributions of sale or refinancing proceeds until
each Limited Partner has received from all sources distributions equal to 100%
of his capital contributions plus 10% per annum cumulative on his adjusted
capital contribution.
The following distributions of Cash Available for Distribution were made to the
Limited Partners during the years 1997 and 1998:
Total Amount
Date Distribution Per Unit
-----------------------------------------
8/15/97 $74,263 $12.50
11/15/97 $74,263 $12.50
2/15/98 $74,263 $12.50
5/15/98 $74,263 $12.50
8/15/98 $74,263 $12.50
11/15/98 $74,263 $12.50
No distributions of Cash Available for Distribution were made to the General
Partner.
Item 6. SELECTED FINANCIAL DATA
Following are selected financial data of the Partnership for its last five
fiscal years ended December 31, 1998, 1997, 1996, 1995 and 1994.
5
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SUPER 8 MOTELS III, LTD.
Item 6. Selected Financial Data
Years Ended December 31:
-----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
Guest Room
Income $1,638,563 $1,592,209 $1,464,850 $1,526,742 $1,625,581 $1,734,535
Net Income $198,331 $117,093 $1,116 $68,750 $33,851 $49,083
Per Partnership
Unit: Cash dis-
tributions (1) $50.00 $25.00 $ - $ - $ - $ -
Net income $33.05 $19.52 $.19 $11.46 $5.64 $8.18
December 31:
-----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
Total Assets $3,100,397 $3,259,069 $3,237,869 $3,411,456 $3,632,719 $3,793,456
Long-Term Debt $ - $ - $ - $75,493 $390,484 $595,214
(1) On an annual basis, to the extent cash distributions exceed net income,
Limited Partners receive a return of capital rather than a return on capital.
However, an annual analysis will be misleading if the Limited Partners do not
receive their investment back upon liquidation of the Partnership. For investors
who purchased their Units directly from the Partnership, the original investment
was $1,000 per Unit, cumulative allocations of income through December 31, 1998
were approximately $376 per Unit, and cumulative distributions through December
31, 1998 were approximately $714 per Unit. Investors who did not purchase their
Units directly from the Partnership must consult with their own advisors in this
regard.
6
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resource
The General Partner believes that the Partnership's liquidity, defined as its
ability to generate cash to satisfy its cash needs, is adequate. As of December
31, 1998 the Partnership had current assets of $427,481 and current liabilities
of $56,464, providing an operating reserve of $371,017.
As of February 22, 1999, the Partnership's motels were sold. The Partnership is
currently in a winding-up phase, identifying its outstanding liabilities, and
after the payment thereof will distribute the balance of its cash to the Limited
Partners and General Partner in accordance with the terms of the Partnership
Agreement. Thereafter, the Partnership will be terminated.
During the fiscal year covered by this report, the Partnership expended $80,626
for renovations and replacements of which $30,316 was capitalized. This amount
included $21,676 for guestroom carpets, $18,917 for roof repairs, $3,330 for tub
refurbishing, $6,349 for replacement bedspreads, $5,253 for replacement air
conditioners and $5,264 for swimming pool refurbishment.
During the fiscal year ended December 31, 1997, the Partnership expended $66,721
for renovations and replacements of which $36,441 was capitalized. This amount
included $18,629 for guestroom carpets, $8,021 for two ice machines, $4,255 for
tub refurbishing, $5,099 for replacement bedspreads, $6,323 for replacement air
conditioners and $4,524 for replacement televisions.
Results of Operations
Combined Financial Results
The following tables summarize the operating results of the Partnership for the
fiscal years ended December 31, 1998, 1997 and 1996 on a combined basis. The
results of the individual properties follow in separate subsections. The income
and expense numbers in the following table are shown on an accrual basis and
other payments on a cash basis. Total expenditures and debt service include the
operating expense of the motels, together with the costs of capital improvements
and those Partnership expenses properly allocable to such motels.
Average Average
Occupancy Room
Fiscal Year Ended: Rate Rate
------------------------------------------------------
December 31, 1996 69.5% $33.66
December 31, 1997 70.0% $36.43
December 31, 1998 71.5% $36.70
7
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Total
Expenditures Partnership
Total and Cash Flow
Fiscal Year Ended: Revenues Debt Service (1)
---------------------------------------------------------------------------
December 31, 1996 $1,510,262 $1,515,375 $(5,113)
December 31, 1997 $1,641,860 $1,408,696 $233,164
December 31, 1998 $1,685,932 $1,373,076 $312,856
(1) While Partnership Cash Flow as it is used here is not an amount
found in the financial statements, the General Partner believes it
is the best indicator of the annual change in the amount, if any,
available for distribution to the Limited Partners, because it
tracks the definition of the term "Cash Flow" as it is used in the
Partnership Agreement. These calculations are reconciled to the
financial statements in the following table. Limited Partners should
not interpret Partnership Cash Flow as an alternative to net income
or as a measure of performance.
1998 1997 1996
---------- ---------- ----------
Total Expenditures and Debt Service $1,373,076 $1,408,696 $1,515,375
Principal Payments on Financial Obligations - - (153,456)
Additions to Fixed Assets (30,316) (36,441) (24,711)
Depreciation and Amortization 144,841 151,769 162,569
Other Items - 742 9,369
---------- ---------- ----------
Net Income $1,487,601 $1,524,766 $1,509,146
========== ========== ==========
A reconciliation of Partnership Cash Flow (included in the chart above) to Net
Income as shown on the Statements of Operations (in the financial statements) is
as follows:
1998 1997 1996
---------- ---------- ----------
Partnership Cash Flow $312,856 $233,164 $(5,113)
Principal Payments on Financial Obligations - - 153,456
Additions to Fixed Assets 30,316 36,441 24,711
Depreciation and Amortization (144,841) (151,769) (162,569)
Other Items - (743) (9,369)
---------- ---------- ----------
Net Income $198,331 $117,093 $1,116
========== ========== ==========
8
<PAGE>
Following is a reconciliation of the Partnership Cash Flow (shown above) to the
aggregate total of Cash Flow from Property Operations for the Partnership's two
motels which are segregated in the tables below under the captions "San
Bernardino Motel" and "Bakersfield Motel".
1998 1997 1996
---------- ---------- ----------
San Bernardino Motel $133,004 $82,590 $20,090
Bakersfield Motel 163,154 134,412 (34,512)
---------- ---------- ----------
Aggregate Cash Flow from Property Operations $296,158 $217,002 ($14,422)
Interest on Cash Reserves 10,335 13,116 8,288
Other Partnership Income (net of Other
Expenses) not allocated to the properties 6,363 3,046 1,019
---------- ---------- ----------
Partnership Cash Flow $312,856 $233,164 $(5,113)
========== ========== ==========
The Partnership achieved a $44,072 or 2.7% increase in total revenues during the
fiscal year covered by this report as compared to the previous fiscal year. The
increase in revenue is due to the net effect of slightly increased occupancy
rates at both motels and significantly higher room rates at the San Bernardino
motel. The San Bernardino market has improved in 1998 as compared to the
previous fiscal year.
The Partnership achieved a $131,598 or 8.7% increase in total revenues during
the fiscal year ended December 31, 1997 as compared to the previous fiscal year.
The increase in revenue is due to the net effect of slightly increased room
rates at both motels and significantly reduced occupancy rates at the
Bakersfield motel. The San Bernardino market improved in 1997 as compared to the
previous fiscal year.
The Partnership achieved a $35,620 or 2.5% decrease in the total expenditures
and debt service during the fiscal year covered by this report as compared to
the previous fiscal year. The decrease was due to the waiver of an incorrectly
applied late tax filing penalty.
The Partnership achieved a $106,679 or 7.0% decrease in the total expenditures
and debt service during the fiscal year ended December 31, 1997 as compared to
the previous fiscal year. This decrease is due primarily to the liquidation of
the Bakersfield motel's loan during 1996.
San Bernardino Motel
Average Average
Occupancy Room
Fiscal Year Ended: Rate Rate
-----------------------------------------------------------
December 31, 1996 49.9% $40.23
December 31, 1997 53.8% $43.57
December 31, 1998 54.8% $45.17
9
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Total Cash Flow
Expenditures from
Total and Property
Fiscal Year Ended: Revenues Debt Service Operations
--------------------------------------------------------------------------
December 31, 1996 $615,471 $595,381 $20,090
December 31, 1997 $717,895 $635,305 $82,590
December 31, 1998 $753,239 $620,235 $133,004
The Partnership's San Bernardino motel achieved a $35,344 or 4.9% increase in
total revenues during the fiscal year covered by this report as compared to the
previous fiscal year. Guest room revenue increased $39,237 or 5.7%. This
increase was achieved in the leisure market segment and was partially offset by
a decrease in patronage from the corporate market segment.
The Partnership's San Bernardino motel achieved a $102,424 or 16.6% increase in
total revenues during the fiscal year ended December 31, 1997 as compared to the
previous fiscal year. The increased revenue was primarily in guestroom revenue
and was realized by increased business in the corporate market segment.
The San Bernardino motel achieved a $15,070 or 2.4% decrease in total
expenditures during the fiscal year covered by this report as compared to the
previous fiscal year. The tax waiver mentioned above resulted in a $55,083
comparative reduction of expenditures. This reduction was partially offset by
$17,563 in increased personnel costs and $5,918 in increased renovations and
replacements. Legal fees associated with the sale of the property raised
comparative legal fees by $22,397.
The San Bernardino motel experienced a $39,924 or 6.7% increase in total
expenditures during the fiscal year ended December 31, 1997 as compared to the
previous fiscal year. These expenditure increases included $14,184 in increased
resident manager costs reflecting a management change, $9,987 in increased
franchise and management fees costs associated with the increased guestroom
revenue and $6,808 in increased renovation expenses.
Bakersfield Motel
Average Average
Occupancy Room
Fiscal Year Ended: Rate Rate
---------------------------------------------------------
December 31, 1996 87.2% $30.28
December 31, 1997 84.6% $32.35
December 31, 1998 86.6% $31.88
10
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Total Cash Flow
Expenditures from
Total and Property
Fiscal Year Ended: Revenues Debt Service Operations
--------------------------------------------------------------------------
December 31, 1996 $885,403 $919,915 $(34,512)
December 31, 1997 $910,849 $776,437 $134,412
December 31, 1998 $915,994 $752,840 $163,154
The Bakersfield motel achieved a $5,145 or 0.6% increase in total revenues
during the fiscal year covered by this report as compared to the previous fiscal
year. Guestroom revenue increased $7,116 or 0.8% due to increased average
occupancy rates from 84.6% in 1997 to 86.6% in 1998. This increased revenue was
partially offset by a decrease in average daily room rate from $32.35 in 1997 to
$31.88 in 1998. Amtrak provided a higher share of the rooms sold. This
relatively low rate business reduced the average room rate.
The Bakersfield motel achieved a $25,446 or 2.9% increase in total revenues
during the fiscal year ended December 31, 1997 as compared to the previous
fiscal year. Guestroom revenue increased $30,045 due to increased average daily
rates from $30.28 in 1996 to $32.35 in 1997. This increased revenue was
partially offset by a decrease in occupancy from 87.2% in 1996 to 84.6% in 1997.
The railroad contracts were essentially unchanged, while rate increases were
achieved in other market segments with a slight decline in rooms sold.
The Partnership's Bakersfield motel achieved a $23,597 or 3.0% decrease in total
expenses and debt service during the fiscal year covered by this report as
compared to the previous fiscal year. The waiver of the tax penalty resulted in
a $55,082 reduction in expenditures. This was offset by $24,036 in increased
legal fees and $7,986 in increased renovations and replacments.
The Partnership's Bakersfield motel experienced a $143,478 or 15.6% decrease in
total expenses and debt service during the fiscal year ended December 31, 1997
as compared to the previous fiscal year. The loan that was secured by the
Bakersfield property was liquidated in 1996.
11
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Future Trends
The Partnership's motel properties were sold effective February 22, 1999. The
Partnership will be terminated after it completes its winding-up activities. As
a result, "Y2K" problems are irrelevant to the Partnership.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Inapplicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements attached hereto at
pages F-1 through F-13.
12
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ANNUAL REPORT ON FORM 10-K
ITEM 8
FINANCIAL STATEMENTS
SUPER 8 MOTELS III, LTD.
SACRAMENTO, CALIFORNIA
DECEMBER 31, 1998
F-1
<PAGE>
Item 8: Financial Statements
SUPER 8 MOTELS III, LTD.
INDEX OF FINANCIAL STATEMENTS
Pages
Report of Independent Certified Public Accountants F-3
Balance Sheets, December 31, 1998 and 1997 F-4
Statements of Operations for the years ended December 31, 1998,
1997 and 1996 F-5
Statements of Partners' Equity for the years ended December 31,
1998, 1997 and 1996 F-6
Statements of Cash Flows for the years ended December 31, 1998,
1997 and 1996 F-7 to
F-8
Notes to Financial Statements F-9 to
F-13
Note: All schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedules or because the information required is included in the financial
statements or notes thereto.
F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Super 8 Motels III, Ltd.
We have audited the accompanying balance sheets of Super 8 Motels III, Ltd., a
California limited partnership, as of December 31, 1998 and 1997, and the
related statements of operations, partners' equity, and cash flows for each of
the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Super 8 Motels III, Ltd. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
As discussed in Note 10 in the financial statements, on February 22, 1999, the
Partnership was dissolved as a result of the sale of all of its properties.
VOCKER KRISTOFFERSON AND CO.
February 4, 1999
(except for Note 10 as to which the date is February 22, 1999)
San Mateo, California
F-3
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1998 and 1997
ASSETS
1998 1997
---------- ----------
Current Assets:
Cash and temporary investments (Notes 1, 3 and 7) $271,625 $ 362,215
Accounts receivable 110,652 100,184
Other receivables (Note 9) 36,286 -
Prepaid expenses 8,918 9,229
---------- ----------
Total Current Assets 427,481 471,628
---------- ----------
Property and Equipment (Notes 2 and 4):
Land 1,670,129 1,670,129
Capital improvements 26,175 26,175
Buildings 3,276,870 3,276,870
Furniture and equipment 809,802 782,439
---------- ----------
5,782,976 5,755,613
Accumulated depreciation and amortization (3,110,060) (2,968,172)
---------- ----------
Property and Equipment, Net 2,672,916 2,787,441
---------- ----------
Total Assets $3,100,397 $3,259,069
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 48,148 $ 105,668
Due to related parties 8,316 10,749
---------- ----------
Total Current Liabilities 56,464 116,417
---------- ----------
Total Liabilities 56,464 116,417
---------- ----------
Partners' Equity:
Limited Partners 3,021,574 3,122,276
General Partner 22,359 20,376
---------- ----------
Total Partners' Equity 3,043,933 3,142,652
---------- ----------
Total Liabilities and Partners' Equity $3,100,397 $3,259,069
========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31:
----------------------------------
1998 1997 1996
---------- ---------- ----------
Income:
Guest room $1,638,563 $1,592,209 $1,464,850
Telephone and vending 26,760 33,356 34,128
Interest 10,335 13,116 8,288
Other 10,274 3,178 2,996
---------- ---------- ----------
Total Income 1,685,932 1,641,859 1,510,262
---------- ---------- ----------
Expenses:
Motel operations (exclusive of depreciation
shown separately below) (Notes 5 and 6) 1,185,995 1,164,112 1,189,294
General and administrative (exclusive
of depreciation shown separately below)
(Note 5) 77,300 72,722 74,474
Depreciation and amortization (Note 2) 144,841 151,769 162,569
Penalties assessed (waived) (54,766) 54,766 -
Interest - - 7,765
Legal settlement and related legal fees 21,368 - -
Legal fees related to pending sale 29,401 - -
Property management fees (Note 5) 83,462 81,437 75,044
---------- ---------- ----------
Total Expenses 1,487,601 1,524,766 1,509,146
---------- ---------- ----------
Net Income $ 198,331 $ 117,093 $ 1,116
========== ========== ==========
Net Income Allocable to Limited Partners $196,348 $115,922 $1,105
======== ======== ======
Net Income Allocable to General Partner $1,983 $1,171 $11
====== ====== ======
Net Income Per Partnership Unit (Note 1) $33.05 $19.52 $.19
====== ====== ======
Distributions to Limited Partners Per
Partnership Unit (Note 1) $50.00 $25.00 $ -
====== ====== ======
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31:
----------------------------------
1998 1997 1996
---------- ---------- ----------
Limited Partners:
Balance, beginning of year $3,122,276 $3,154,879 $3,153,774
Net Income 196,348 115,922 1,105
Cash Distributions (297,050) (148,525) -
---------- ---------- ----------
Balance, End of Year 3,021,574 3,122,276 3,154,879
---------- ---------- ----------
General Partner:
Balance, beginning of year $ 20,376 $ 19,205 $ 19,194
Net income 1,983 1,171 11
---------- ---------- ----------
Balance, End of Year 22,359 20,376 19,205
---------- ---------- ----------
Total Partners' Equity $3,043,933 $3,142,652 $3,174,084
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31:
----------------------------------
1998 1997 1996
---------- ---------- ----------
Cash Flows From Operating Activities:
Received from motel operations $1,665,129 $1,596,674 $1,505,571
Expended for motel operations and
general and administrative expenses (1,438,688) (1,317,510) (1,359,033)
Interest received 10,335 13,115 9,401
Interest paid - - (9,044)
---------- ---------- ----------
Net Cash Provided by Operating Activities 236,776 292,279 146,895
---------- ---------- ----------
Cash Flows From Investing Activities:
Proceeds from sale of equipment - 120 500
Purchases of property and equipment (30,316) (36,441) (24,711)
---------- ---------- ----------
Net Cash Used by Investing Activities (30,316) (36,321) (24,211)
---------- ---------- ----------
Cash Flows From Financing Activities:
Distributions paid to limited partners (297,050) (148,525) -
Payments on notes payable - - (153,456)
---------- ---------- ----------
Net Cash Used by Financing Activities (297,050) (148,525) (153,456)
---------- ---------- ----------
Net Increase (Decrease) in Cash and
Temporary Investments (90,590) 107,433 (30,772)
Cash and Temporary Investments:
Beginning of year 362,215 254,782 285,554
---------- ---------- ----------
End of Year $ 271,625 $ 362,215 $ 254,782
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31:
----------------------------------
1998 1997 1996
---------- ---------- ----------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $ 198,331 $ 117,093 $ 1,116
---------- ---------- ----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 144,841 151,769 162,569
(Gain) loss on disposition of property
and equipment - 743 (500)
(Increase) decrease in accounts
receivable (10,468) (32,070) 4,710
Increase in other receivables (36,286) - -
Decrease in prepaid expenses 311 2,112 247
Increase (decrease) in accounts payable
and accrued liabilities (57,520) 43,648 (23,012)
Increase (decrease) in due to
related parties (2,433) 8,984 1,765
---------- ---------- ----------
Total Adjustments 38,445 175,186 145,779
---------- ---------- ----------
Net Cash Provided by
Operating Activities $ 236,776 $ 292,279 $ 146,895
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE PARTNERSHIP
Super 8 Motels III, Ltd. is a limited partnership organized under California law
on June 2, 1980 to acquire and operate motel properties in San Bernardino and
Bakersfield, California. The term of the Partnership expires December 31, 2030,
and may be dissolved earlier under certain circumstances (see note 10). The San
Bernardino motel was opened in March, 1982, and the Bakersfield motel was opened
in September, 1982. The Partnership grants credit to customers, substantially
all of which are local businesses or government agencies in San Bernardino or
Bakersfield.
The general partner is Grotewohl Management Services, Inc., the fifty percent
stockholder and officer of which is Philip B. Grotewohl.
The net income or net loss of the Partnership is allocated 1% to the General
Partner and 99% to the Limited Partners. Net income and distributions per
Partnership unit are based on 5,941 units outstanding. All Partnership units are
owned by the Limited Partners.
The Partnership agreement requires that the Partnership maintain working capital
reserves for normal repairs, replacements, working capital and contingencies in
an amount of at least 5% of adjusted capital contributions ($297,050 at December
31, 1998). As of December 31, 1998 the Partnership had working capital of
$371,017.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Items of Partnership income are passed through to the individual partners for
income tax purposes, along with any income tax credits. Therefore, no federal or
California income taxes are provided for in the financial statements of the
Partnership.
Property and equipment are recorded at cost. Depreciation and amortization are
computed using the following estimated useful lives and methods:
Description Methods Useful Lives
----------------------- -------------------------- ------------
Capital improvements 150-200% declining balance 10-20 years
Buildings Straight-line and 10-25 years
150% declining balance
Furniture and equipment 200% declining balance 4-7 years
Costs incurred in connection with maintenance and repair are charged to expense.
Major renewals and betterments that materially prolong the lives of assets are
capitalized.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the fair
value and the carrying value of the asset.
F-9
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 3 - CASH AND TEMPORARY INVESTMENTS
Cash and temporary investments as of December 31, 1998 and 1997 consists of the
following:
1998 1997
--------- ---------
Cash in bank $ 42,462 $ 44,675
Money market accounts 229,163 317,540
--------- ---------
Total Cash and Temporary Investments $ 271,625 $ 362,215
========= =========
Temporary investments are recorded at cost, which approximates market value. The
Partnership considers temporary investments and all highly liquid marketable
securities with original maturities of three months or less to be cash
equivalents for purposes of the statement of cash flows.
NOTE 4 - PROPERTY AND EQUIPMENT
The following is a summary of the accumulated depreciation and amortization of
property and equipment:
1998 1997
---------- ----------
Capital improvements $ 24,388 $ 23,381
Buildings 2,364,738 2,256,608
Furniture and equipment 720,934 688,183
---------- ----------
$3,110,060 $2,968,172
========== ==========
The following is a summary of the federal income tax basis as of December 31,
1998:
Land $1,670,129
Capital improvements 26,175
Buildings 3,098,640
Furniture and equipment 809,802
----------
5,604,746
Less accumulated depreciation and amortization (3,829,178)
----------
$1,775,568
==========
F-10
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5 - RELATED PARTY TRANSACTIONS
Franchise Fees
Super 8 Motels, Inc., now a wholly-owned subsidiary of Hospitality Franchise
Systems, Inc., is franchisor of all Super 8 Motels. The Partnership pays to the
franchisor monthly fees equal to 4% of the gross room revenues of each motel and
contributes an additional 1% of its gross room revenues to an advertising fund
administered by the franchisor. In return, the franchisor provides the right to
use the name "Super 8," a national institutional advertising program, an advance
room reservation system, and inspection services. These costs ($81,928, $79,610
and $73,242 for the years ended December 31, 1998, 1997 and 1996, respectively)
are included in motel operations expense in the accompanying statements of
operations. The Partnership operates its motel properties as a franchisee of
Super 8 Motels, Inc., through a sub-franchise agreement with Brown & Grotewohl,
a California general partnership, of which Grotewohl Management Services, Inc.
(see Note 1) is a 50% owner. Under the sub-franchise agreement, Brown &
Grotewohl earned 40% of the above franchise fees, which amounted to $32,771,
$31,844 and $29,297 for the years ended December 31, 1998, 1997 and 1996,
respectively.
Property Management Fees
The General Partner, or its affiliates, handles the management of the motel
properties of the Partnership. The fee for this service is 5% of the gross
revenues from Partnership operations, as defined in the Partnership agreement,
and amounted to $83,462, $81,437 and $75,044 for the years ended December 31,
1998, 1997 and 1996, respectively.
Subordinated Partnership Management Fees
During the Partnership's operational stage, the General Partner is to receive 9%
of cash available for distributions for Partnership management services, along
with an additional 1% of cash available for distributions on account of its
interest in the profit and losses subordinated in each case, however, to receipt
by the Limited Partners of a 10% per annum cumulative pre-tax return on their
adjusted capital contributions. At December 31, 1998, the Limited Partners had
not received the 10% cumulative return, and accordingly, no Partnership
management fees are presently payable and therefore are not reflected in these
financial statements. Management believes it is not likely that these fees will
become payable in the future. This fee is payable only from cash funds provided
from operations of the Partnership, and may not be paid from the proceeds of
sale or a refinancing. As of December 31, 1998, the cumulative amount of these
fees was $471,296.
Subordinated Incentive Distributions
Under the terms of the Partnership agreement, the General Partner is to receive
15% of distributions of net proceeds from the sale or refinancing of Partnership
properties remaining after distribution to the Limited Partners of any portion
thereof required to cause distributions to the Limited Partners from all sources
to be equal to their capital contributions plus a cumulative 10% per annum
pre-tax return on their adjusted capital contributions. Through December 31,
1998, there had been no such sales or refinancings.
F-11
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)
Administrative Expenses Shared by the Partnership and Its Affiliates
There are certain administrative expenses allocated between the Partnership and
other partnerships managed by the General Partner and its affiliates. These
expenses, which are allocated based on usage are telephone, data processing,
rent of the administrative office, administrative salaries and duplication
expenses. Management believes that the methods used to allocate shared
administrative expenses are reasonable. The administrative expenses allocated to
the Partnership were approximately $247,000, $230,000 and $225,000 during the
years ended December 31, 1998, 1997 and 1996, respectively, and are included in
general and administrative and motel operating expenses in the accompanying
statements of operations. Included in administrative salaries are allocated
amounts paid to two employees who are related to Philip B. Grotewohl, the fifty
percent stockholder of Grotewohl Management Services, Inc., the General Partner.
One of these employees terminated his employment prior to May 1998.
NOTE 6 - MOTEL OPERATING EXPENSES
The following table summarizes the major components of motel operating costs for
the following years:
1998 1997 1996
---------- ---------- ----------
Salaries and related costs $ 466,639 $ 454,635 $ 447,181
Franchise and advertising fees 81,928 79,610 73,242
Utilities 107,831 111,274 111,366
Allocated costs, mainly
indirect salaries 197,696 186,004 184,064
Replacements and renovations 50,310 30,280 46,007
Maintenance expenses 54,359 68,121 73,715
Property taxes 58,001 57,738 53,058
Property insurance 31,616 33,433 37,215
Other operating expenses 137,615 143,017 163,446
---------- ---------- ----------
Total motel operating expenses $1,185,995 $1,164,112 $1,189,294
========== ========== ==========
NOTE 7 - CONCENTRATION OF CREDIT RISK
The Partnership maintains its cash accounts in four commercial banks located in
California. Accounts at each bank are guaranteed by the Federal Deposit
Insurance Corporation (FDIC) up to $100,000 per bank. A summary of the total
insured and uninsured cash balances (not reduced by outstanding checks) as of
December 31, 1998 follows:
Total cash in all California banks $301,019
Portion insured by the FDIC (279,939)
--------
Uninsured cash balances $ 21,080
========
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and temporary investments, accounts receivable,
other receivables, accounts payable, accrued liabilities and due to related
parties in the balance sheet approximates fair value.
F-12
<PAGE>
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 9 - PENDING SALE OF MOTEL ASSETS (SEE NOTE 10)
On May 15, 1998 the Partnership and four other limited partnerships managed by
the general partner entered into a contract to sell all their motel assets.
Escrow for the sales opened June 1998. By majority vote the limited partners of
the Partnership have approved the sale of the Partnership's motel assets
pursuant to such contract, and the limited partners of the four other limited
partnerships have also approved by majority vote the sale of their respective
limited partnership's motel assets. The sale of the Partnership's motel assets
and the motel assets of the other limited partnerships are subject to certain
contingencies. Because of these contingencies the Partnership has not yet
reclassified its motel assets as held for sale. If the sale occurs on the terms
approved by the limited partners, it is anticipated that the Partnership would
report a gain per books in the amount of approximately $140,000. Accordingly,
there has been no adjustment to the carrying value of the Partnership's motel
assets. If the sale is consummated the Partnership would be liquidated.
In connection with the anticipated sale of the motel assets, the Partnership has
incurred reimbursable costs in the amount of $36,286 which are included as other
receivables in the accompanying balance sheet.
NOTE 10 - SUBSEQUENT EVENTS AND TERMINATION OF PARTNERSHIP
On February 22, 1999, the Partnership sold both motel properties and related
assets. The property was purchased by Tiburon Hospitality LLC, a California
limited liability company in which Mark Grotewohl has a 50% profits interest.
Mark Grotewohl is a former employee of the Partnership and the son of the two
owners of the Partnership's General Partner. The Partnership received cash of
approximately $2,810,800. These transactions resulted in a gain per books of
approximately $140,000.
As a result of the sale of all of its properties the Partnership was dissolved
on February 22, 1999. Upon completion of its winding-up activities and, after
payment of all expenses, the Partnership will make a final distribution to its
partners and will be terminated.
F-13
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Inapplicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The original general partners of the Partnership were Dennis A. Brown and Philip
B. Grotewohl, as the managing general partners, and Borel Associates (a
partnership of which Robert J. Dana was a partner), as the associate general
partner. Upon Mr. Brown's death on February 25, 1988, Mr. Grotewohl and Borel
Associates elected to continue the Partnership. During March 1988, Mr. Grotewohl
appointed Grotewohl Management Services, Inc., a California corporation, his
successor as General Partner. Upon the liquidation of Borel Associates in April
1990, Grotewohl Management Services, Inc., as the sole remaining General
Partner, elected to continue the Partnership.
The General Partner was organized in 1981 to serve as a general partner of
limited partnerships to be formed for the purpose of investing in Super 8
Motels. Mr. Grotewohl is a 50% shareholder, the sole director and the principal
executive officer of the General Partner.
Mr. Grotewohl, age 80, is an attorney-at-law and was engaged in the private
practice of law in San Mateo County, California, between 1967 and 1978. Since
1978, Mr. Grotewohl's principal occupation has been as a promoter and general
partner of Super 8 Motels limited partnerships.
Item 11. EXECUTIVE COMPENSATION
Although Mr. Brown ceased to be a general partner of the Partnership upon his
death, a trust established for Mr. Brown's heirs shares in certain of the
compensation otherwise payable to the General Partner and its affiliates.
Similarly, although Borel Associates ceased to have any interest in the
Partnership upon its dissolution, Mr. Dana continues to share in such
compensation.
The following is a description of the fees paid or payable to the General
Partner, the Brown trust and Mr. Dana.
Property Management Fees
The Manager managed all motel properties of the Partnership. The fee for this
service was 5% of the gross proceeds from the operations of each motel. This
compensation was in addition to the cost of compensating the Partnership's
employees and the cost of goods and services acquired for the Partnership from
independent contractors.
13
<PAGE>
The Partnership accrued and paid such fees to the Manager in the amount of
$83,462 during the year ended December 31, 1998.
Franchise Fees and Advertising Fees
The Partnership operated its motels as a franchisee of Super 8 Motels, Inc.,
pursuant to sub-franchises from the Manager. In connection with the operation of
each of its motels, the Partnership, as franchisee, paid 4% of its gross room
revenues to the franchisor. One-half of the franchise fee was paid to the
Manager. In addition to the franchise fee, the Partnership paid 1% of its gross
room revenues to the franchisor as an advertising fee. No part of this fee was
paid to the Manager.
The total of franchise fees accrued during the year ended December 31, 1998 to
Super 8 Motels, Inc. was $65,543, of which $32,771 accrued to the Manager. All
the above amounts have been paid.
General Partner's Interest in Cash Available for Distribution
At quarterly intervals, the total amount of the Partnership's Cash Available for
Distribution is determined at the discretion of the General Partner. (See Item 5
above.) Distributions therefrom are made as follows: (1) 90% of such
distributions are paid to the Limited Partners; (2) 9% thereof is paid to the
General Partner as Partnership management fees; and (3) 1% thereof is paid to
the General Partner in accordance with its interest in the income and losses of
the Partnership.
Notwithstanding the foregoing, however, distributions of Cash Available for
Distribution which would otherwise be paid to the General Partner are deferred
and paid only after payment to the Limited Partners of distributions of Cash
Available for Distribution in an amount equal to a 10% per annum cumulative
return on their adjusted capital contributions.
No such cash distributions were paid by the Partnership to the General Partner
during the fiscal year ended December 31, 1998 and no such distributions ever
will be paid to the General Partner.
General Partner's Interest in Net Proceeds of Sales, Financing and
Refinancing of Partnership Properties
The proceeds from the sale or refinancing of properties are distributed first to
the Limited Partners until they have received cumulative payments from all
distribution sources equal to 100% of their original capital contributions and a
cumulative 10% per annum return on their adjusted capital contributions. When
the foregoing requirement has been satisfied, any remaining funds from the sale
or refinancing of properties would be distributed 15% to the General Partner and
85% to the Limited Partners.
No such distributions were paid or accrued for the account of the General
Partner during the fiscal year covered by this report and no such fees ever will
paid in the future.
14
<PAGE>
Allocation of General Partners' Interest
Compensation to the General Partners and their affiliates in the form of
franchise fees and property management fees is allocated 1/3 each to the Brown
trust, the General Partner and Robert J. Dana.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
AMOUNT AND
TITLE NATURE OF
OF NAME AND ADDRESS OF BENEFICIAL BENEFICIAL PERCENT
CLASS OWNER OWNERSHIP OF CLASS
- ------------------------------------------------------------------------
Units Everest Lodging Investors, LLC 355 Units 5.98%
Units Everest Madison Investors, LLC 280 Units 4.71%
Units KM Investments 50 Units .84%
----- ------
Total 685 Units 11.53%
=====
Security Ownership of Management
The General Partner is not the beneficial owner of any Units.
Changes in Control
With the consent of all other General Partners and Limited Partners holding more
than 50% of the Units, a General Partner may designate a successor or additional
general partner, in each case with such participation in such General Partner's
interest as such General Partner and successor or additional general partner may
agree upon, provided that the interests of the Limited Partners are not affected
thereby.
A General Partner may withdraw from the Partnership at any time upon 60 days'
prior written notice to the Limited Partners and any other General Partners, or
may transfer his interest to an entity controlled by him; provided, however,
that in either such event, if it is determined that the Partnership business is
to be continued rather than dissolved and liquidated upon the happening thereof,
the withdrawal or transfer will be effective only after receipt by the
Partnership of an opinion of counsel to the effect that such withdrawal or
transfer will not cause the Partnership to be classified as an association
taxable as a corporation rather than as a partnership for federal income tax
purposes.
15
<PAGE>
The Limited Partners shall take no part in the management of the Partnership's
business; however, a majority in interest of the Limited Partners, without the
concurrence of the General Partner, shall have the right to amend the
Partnership Agreement, dissolve the Partnership, remove a General Partner or any
successor general partner, elect a new general partner or general partners upon
the removal, retirement, death, insanity, insolvency or bankruptcy of a General
Partner, and approve or disapprove the sale, exchange or pledge in a single
transaction of all or substantially all of the properties acquired by the
Partnership.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Administrative Expenses Shared by the Partnership and its Affiliates
There are certain administrative expenses allocated between the Partnership and
other partnerships managed by the General Partner and its affiliates. These
expenses, which are allocated based on usage, are telephone, data processing,
rent of administrative offices, administrative salaries and depreciation
expenses. The administrative expenses allocated to the Partnership were
approximately $247,000 in 1998 are included in general and administrative
expenses and motel operations expenses in the Partnership's financial
statements. Included in administrative salaries are allocated amounts paid to
two employees who are related to Philip B. Grotewohl, the 50% shareholder of the
General Partner.
16
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report
1. Financial Statements Included in Part II of this Report
Report of Independent Certified Public Accountants
Balance Sheets, December 31, 1998 and 1997
Statements of Operations for the Years Ended December 31, 1998, 1997 and
1996 Statements of Partners' Equity for the Years Ended December 31,
1998, 1997 and 1996 Statements of Cash Flow for the Years Ended December
31, 1998, 1997 and 1996 Notes to Financial Statements
2. Financial Statement Schedules Included in this Report
None
3. Exhibits
3.1 and 4.1 The Partnership Agreement filed as Exhibits 3.1 and 4.1 to
the annual report on Form 10-K for the fiscal year ended December 31,
1994 is incorporated herein by reference.
3.2 & 4.2 The Amendment to Partnership Agreement, included as Exhibit 3.2
& 4.2 to the annual report on Form 10-K for the fiscal year ended
December 31, 1989 is incorporated herein by reference.
Exhibits 10.1 through 10.4, filed as Exhibits 10.1 through 10.4,
respectively, to the annual report on Form 10-K for the fiscal year ended
December 31, 1989 are hereby incorporated herein by reference.
10.1 Santa Fe Railway Agreement with the Partnership's Bakersfield Motel.
10.2 Amtrak Contract with the Partnership's Bakersfield Motel. 10.3
Franchise Agreement for the Bakersfield Property. 10.4 Franchise
Agreement for the San Bernardino Property. 10.5 Amtrak Contract Amendment
filed as Exhibit 10.5 to the annual report on Form 10-K for the fiscal
year ended December 31, 1994 is incorporated herein by reference. 10.5
Amtrak Contract Amendment filed as Exhibit 10.5 to the annual report on
Form 10-K for the fiscal year ended December 31, 1994 is incorporated
herein by reference.
Exhibits 10.6 and 10.7 are hereby incorporated herein by reference from
Schedule 14A filed by the registrant on November 3, 1998.
10.6 Purchase and Sale Agreement dated April 30, 1998.
17
<PAGE>
10.7 Agreement dated April 21, 1998 and Exclusive Sales Agency contract
dated May 8, 1998.
Exhibits 10.8 and 10.9 are hereby incorporated herein by reference from
the Rule 13E-3 Transaction Statement filed by the registrant on November
16, 1998.
10.8 First Amendment dated May 15, 1998 to Agreement dated April 21,1998.
10.9 Second Amendment dated October 29, 1998 to Agreement dated April 21,
1998.
(b) Reports on Form 8-K
Inapplicable
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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) SUPER 8 MOTELS III, LTD.
By (Signature and Title) /s/ Philip B. Grotewohl
------------------------------------------------
Philip B. Grotewohl,
Chairman of Grotewohl Management Services, Inc.,
General Partner
Date April 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By (Signature and Title) /s/ Philip B. Philip B. Grotewhl
------------------------------------------------
Philip B. Grotewohl,
Chief financial officer, chief accounting officer
and director of Grotewohl Management Services, Inc.,
General Partner
Date April 12, 1999
19
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 271,625
<SECURITIES> 0
<RECEIVABLES> 146,938
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 427,481
<PP&E> 5,782,976
<DEPRECIATION> 3,110,060
<TOTAL-ASSETS> 3,100,397
<CURRENT-LIABILITIES> 56,464
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,043,933
<TOTAL-LIABILITY-AND-EQUITY> 3,100,397
<SALES> 1,665,323
<TOTAL-REVENUES> 1,685,932
<CGS> 1,185,995
<TOTAL-COSTS> 1,185,995
<OTHER-EXPENSES> 301,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 198,331
<INCOME-TAX> 0
<INCOME-CONTINUING> 198,331
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 198,331
<EPS-PRIMARY> 33.05
<EPS-DILUTED> 33.05
</TABLE>
