SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
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For the Period ended December 31, 1997
Commission File 0-11512
SUPER 8 ECONOMY LODGING IV, LTD
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(Exact name of registrant as specified in its charter
CALIFORNIA 94 - 2827163
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 J Street
Sacramento, California 95814
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Address of principal executive offices Zip Code
Registrant's telephone number,
including area code (916) 442 - 9183
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 for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes XX No
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<PAGE>
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
<PAGE>
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - December 31, 1997 and September 30, 1997 2
Statement of Operations - Three Months Ended
December 31, 1997 and 1996 3
Statement of Changes in Partners' Equity -
Three Months Ended December 31, 1997 and 1996 4
Statement of Cash Flows - Three Months Ended
December 31, 1997 and 1996 5
Notes to Financial Statements 6
Management Discussion and Analysis 7
Other Information and Signatures 8 - 10
<PAGE>
Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Balance Sheet
December 31, 1997 and September 30, 1997
12/31/97 9/30/97
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ASSETS
Current Assets:
Cash and temporary investments $ 984,493 $ 1,079,735
Accounts receivable 42,618 54,290
Prepaid expenses 7,067 13,463
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Total current assets 1,034,178 1,147,488
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Property and Equipment:
Land 799,311 799,311
Buildings 2,246,419 2,246,419
Furniture and equipment 521,798 519,267
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3,567,528 3,564,997
Accumulated depreciation (1,849,338) (1,824,868)
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Property and equipment, net 1,718,190 1,740,129
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Other Assets: 63,975 63,975
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Total Assets $ 2,816,343 $ 2,951,592
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 88,295 $ 126,020
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Total current liabilities 88,295 126,020
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Total liabilities 88,295 126,020
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Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners (601) (2,128)
Limited Partners 2,728,649 2,827,700
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Total partners' equity 2,728,048 2,825,572
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Total Liabilities and Partners' Equity $ 2,816,343 $ 2,951,592
========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Statement of Operations
For the Three Months Ending December 31, 1997 and 1996
Three Months Three Months
Ended Ended
12/31/97 12/31/96
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Income:
Guest room $ 430,035 $ 427,216
Telephone and vending 9,604 13,054
Interest 9,931 9,170
Other 69 296
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Total Income 449,639 449,736
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Expenses:
Motel operating expenses (Note 2) 214,960 206,149
General and administrative 32,872 27,478
Depreciation and amortization 27,355 28,038
Property management fees 21,976 22,005
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Total Expenses 297,163 283,670
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Net Income (Loss) $ 152,476 $ 166,066
========== ==========
Net Income (Loss) Allocable
to General Partners $1,525 $1,661
======== ========
Net Income (Loss) Allocable
to Limited Partners $150,951 $164,405
======== ========
Net Income (Loss)
per Partnership Unit $15.10 $16.44
======= ========
Distribution to Limited Partners
per Partnership Unit $25.00 $18.75
======= ========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Statement of Partners' Equity
For the Three Months Ending December 31, 1997 and 1996
12/31/97 12/31/96
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General Partners:
Balance, beginning of year $ (2,128) $ (10,707)
Net income (loss) 1,525 1,661
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Balance, End of period (603) (9,046)
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Limited Partners:
Balance, beginning of year 2,827,700 2,740,835
Net income (loss) 150,951 164,405
Distributions to Limited Partners (250,000) (187,500)
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Balance, End of Period 2,728,651 2,717,740
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Total Partners' Equity $ 2,728,048 $ 2,708,694
========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Statement of Cash Flows
For the Three Months Ending December 31, 1997 and 1996
12/31/97 12/31/96
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Cash Flows from Operating Activities:
Received from motel revenues $ 448,972 $ 440,383
Expended for motel operations and
general and administrative expenses (300,274) (273,769)
Interest received 12,339 8,536
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Net Cash Provided (Used) by Operating Activities 161,037 175,150
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Cash Flows from Investing Activities:
Purchases of property and equipment (6,279) (16,324)
Proceeds from sale of land - 500
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Net Cash Provided (Used) by Investing Activities (6,279) (15,824)
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Cash Flows from Financing Activities:
Distributions to limited partners (250,000) (187,500)
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Net Cash Provided (Used) by Financing Activities (250,000) (187,500)
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Net Increase (Decrease) in Cash and
Temporary Investments (95,242) (28,174)
Cash and Temporary Investments:
Beginning of period 1,079,735 938,477
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End of period $ 984,493 $ 910,303
========== ==========
Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by
Operating Activities:
Net Income (Loss) $ 152,476 $ 166,066
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Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 27,355 28,038
(Gain) loss on disposition of property
and equipment 863 (500)
(Increase) decrease in accounts receivable 11,672 (817)
(Increase) decrease in prepaid expenses 6,396 4,887
Increase (decrease) in accounts payable (37,725) (22,524)
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Total Adjustments 8,561 9,084
Net Cash Provided (Used) by Operating Activities $ 161,037 $ 175,150
========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997 and 1996
Note 1:
The attached interim financial statements include all adjustments which are, in
the opinion of management, necessary to a fair statement of the results for the
period presented.
Users of these interim financial statements should refer to the audited
financial statements for the year ended September 30, 1997 for a complete
disclosure of significant accounting policies and practices and other detail
necessary for a fair presentation of the financial statements.
In accordance with the partnership agreement, the following information is
presented related to fees paid to the General Partners or affiliates for the
period.
Property Management Fees $ 21,976
Franchise Fees $ 8,611
Partnership management fees and subordinated incentive distributions are
contingent in nature and none have been accrued or paid during the current
period.
Note 2:
The following table summarizes the major components of motel operating expenses
for the following periods:
Three Months Three Months
Ended Ended
12/31/97 12/31/96
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Salaries and related costs $ 89,396 $ 76,202
Franchise and advertising fees 21,529 21,388
Utilities 17,168 16,252
Allocated costs,
mainly indirect salaries 26,837 24,547
Replacements and renovations 1,896 5,651
Other operating expenses 58,134 62,109
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Total motel operating expenses $ 214,960 $ 206,149
========== ==========
The following additional material contingencies are required to be stated in the
interim reports under federal securities law: None.
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<PAGE>
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
DECEMBER 31, 1997
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's current assets of $1,034,178 exceeded its current
liabilities of $88,295 providing an operating reserve of $945,883, which is
greater than the $455,000 target set by the General Partners.
In the unlikely event that the Partnership's reserves do not meet
operating needs, the Partnership's Pleasanton, California motel will provide
substantial collateral against additional debt.
The Partnership has no material commitments for capital expenditures.
The Partnership's guideline for replacements and renovation expenditures is
approximately 3% of room revenues. Applicable expenditures during the first
three months of the fiscal year which will end on September 30, 1998, were
$8,175 or 1.9% of room revenues. Expenditures of this type are not expected to
exceed the General Partners' 3% guideline on a yearly basis.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the three month
periods ended December 31, 1997 and December 31, 1996.
Total revenues were virtually unchanged. Guest room revenue increased
$2,819 or 0.7% for the current period. Although the occupancy rate decreased
from 76.2% in 1996 to 70.8% in 1997, its effect on room revenue was offset by an
increase in the average room rate from $59.71 in 1996 to $64.64 in 1997.
Total expenditures increased $13,494 or 4.8% during the three months
covered by this report as compared to the previous fiscal year.
FUTURE TRENDS
The General Partners expect the Pleasanton motel to continue its
improved performance if the current improvement in the general economic climate
continues.
In the opinion of management, these financial statements reflect all
adjustments which were necessary to a fair statement of results for the interim
periods presented. All adjustments are of a normal recurring nature.
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<PAGE>
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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On October 27, 1997 a complaint was filed in the United States District
Court, Eastern District of California by the registrant, Grotewohl Management
Services, Inc. (a general partner of the registrant) and four other limited
partnerships (together with the registrant, the "Partnerships") as to which
Grotewohl Management Services, Inc. serves as general partner (i.e., Super 8
Motels, Ltd., Super 8 Motels II, Ltd., Super 8 Motels III, Ltd., and
Famous Host Lodging V, L.P.), as plaintiffs. The complaint names as defendants
Everest/Madison Investors, LLC, Everest Lodging Investors, LLC, Everest
Properties, LLC, Everest Partners, LLC, Everest Properties II, LLC, Everest
Properties, Inc., W. Robert Kohorst, David I. Lesser, The Blackacre Capital
Group, L.P., Blackacre Capital Management Corp., Jeffrey B. Citron, Ronald J.
Kravit, and Stephen B. Enquist. The factual basis underlying the plaintiffs'
causes of actions pertains to tender offers directed by certain of the
defendants to limited partners of the Partnerships, and to indications of
interest made by certain of the defendants in purchasing the property of the
Partnerships. The complaint requests the following relief: (i) a declaration
that each of the defendants has violated Sections 13(d), 14(d) and 14(e) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and the rules and
regulations promulgated by the Securities and Exchange Commission thereunder;
(ii) a declaration that certain of the defendants have violated Section 15(a) of
the Exchange Act and the rules and regulations thereunder; (iii) an order
permanently enjoining the defendants from (a) soliciting tenders of or accepting
for purchase securities of the Partnerships, (b) exercising any voting rights
attendant to the securities already acquired, (c) soliciting proxies, and (d)
violating Sections 13 or 14 of the Exchange Act or the rules and regulations
promulgated thereunder; (iv) an order enjoining certain of the defendants from
violating Section 15(a) of the Exchange Act and the rules and regulations
promulgated thereunder; (v) an order directing certain of the defendants to
offer to each person who sold securities to such defendants the right to rescind
such sale; and (vi) a declaration that the Partnerships need not provide to the
defendants a list of limited partners in the Partnerships or any other
information respecting the Partnerships which is not publicly available. The
plaintiffs have not yet received an answer of the defendants respecting the
complaint.
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<PAGE>
On October 28, 1997 a complaint was filed in the Superior Court of the
State of California, Sacramento County by Everest Lodging Investors, LLC and
Everest/Madison Investors, LLC, as plaintiffs, against Philip B. Grotewohl,
Grotewohl Management Services, Inc., Kenneth M. Sanders, Robert J. Dana, Borel
Associates, and BWC Incorporated, as defendants, and the Partnerships, as
nominal defendants. The factual basis underlying the causes of action pertains
to the receipt by the defendants of franchise fees and reimbursement of
expenses, the indications of interest made by the plaintiffs in purchasing the
properties of the nominal defendants, and the alleged refusal of the defendants
to provide information required by the terms of the Partnership's partnership
agreement and California law. The complaint requests the following relief: (i) a
declaration that the action is a proper derivative action; (ii) an order
requiring the defendants to discharge their fiduciary duties to the Partnerships
and to enjoin them from breaching their fiduciary duties; (iii) disgorgement of
certain profits; (iv) appointment of a receiver; and (v) an award for damages in
an amount to be determined. The defendants and nominal defendants have recently
been served and are formulating their response to the complaint.
Item 2. Changes in Securities
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None
Item 3. Defaults upon Senior Securities
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None
Item 4. Submission of Matters
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None
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
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<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUPER 8 ECONOMY LODGING IV, LTD
2-12-98 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
President of Grotewohl
Management Services, Inc.,
Managing General Partner
2-12-98 By /S/ David P. Grotewohl
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Date David P. Grotewohl,
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 984,493
<SECURITIES> 0
<RECEIVABLES> 42,618
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,034,178
<PP&E> 3,567,528
<DEPRECIATION> 1,849,338
<TOTAL-ASSETS> 2,816,343
<CURRENT-LIABILITIES> 88,295
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,728,048
<TOTAL-LIABILITY-AND-EQUITY> 2,816,343
<SALES> 439,639
<TOTAL-REVENUES> 449,639
<CGS> 214,960
<TOTAL-COSTS> 214,960
<OTHER-EXPENSES> 82,203
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 152,476
<INCOME-TAX> 0
<INCOME-CONTINUING> 152,476
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,476
<EPS-PRIMARY> 15.10
<EPS-DILUTED> 15.10
</TABLE>
