SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Period ended December 31, 1998 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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SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE>
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - December 31, 1998 and September 30, 1998 2
Statement of Operations - Three Months Ended
December 31, 1998 and 1997 3
Statement of Changes in Partners' Equity -
Three Months Ended December 31, 1998 and 1997 4
Statement of Cash Flows - Three Months Ended
December 31, 1998 and 1997 5
Notes to Financial Statements 6
Management Discussion and Analysis 7
Other Information and Signatures 8 - 10
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Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Balance Sheet
December 31, 1998 and September 30, 1998
12/31/98 9/30/98
---------- ----------
ASSETS
Current Assets:
Cash and temporary investments $705,586 $870,626
Accounts receivable 35,908 29,271
Prepaid expenses 7,426 14,200
---------- ----------
Total current assets 748,920 914,097
---------- ----------
Property and Equipment:
Land 799,312 799,312
Buildings 2,246,418 2,246,418
Furniture and equipment 576,904 551,089
---------- ----------
3,622,634 3,596,819
Accumulated depreciation (1,946,198) (1,918,235)
---------- ----------
Property and equipment, net 1,676,436 1,678,584
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Other Assets (Note 2)
Deposit of federal income tax 82,584 82,584
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Total Assets $2,507,940 $2,675,265
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $107,533 $132,726
---------- ----------
Total Liabilities 107,533 132,726
---------- ----------
Contingent Liabilities (See Note 1) - -
Partners' Equity:
Limited Partners; 10,000 units authorized,
issued and outstanding 2,394,286 2,537,497
General Partners 6,121 5,042
---------- ----------
Total partners' equity 2,400,407 2,542,539
---------- ----------
Total Liabilities and Partners' Equity $2,507,940 $2,675,265
========== ==========
The accompanying notes are an integral part of the financial statements.
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Super 8 Economy Lodging IV, Ltd.
(A California Limited Partnership)
Statement of Operations
For the Three Months Ending December 31, 1998 and 1997
Three Months Three Months
Ended Ended
12/31/98 12/31/97
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Income:
Guest room $374,709 $430,035
Telephone and vending 4,419 9,604
Interest 11,306 9,931
Other 6,440 69
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Total Income 396,874 449,639
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Expenses:
Motel operating expenses (Note 2) 206,297 214,960
General and administrative 35,787 32,872
Depreciation and amortization 27,963 27,355
Property management fees 18,959 21,976
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Total Expenses 289,006 297,163
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Net Income (Loss) $107,868 $152,476
=========== ===========
Net Income (Loss) Allocable
to General Partners $1,079 $1,525
=========== ===========
Net Income (Loss) Allocable
to Limited Partners $106,789 $150,951
=========== ===========
Net Income (Loss)
per Partnership Unit $10.68 $15.10
=========== ===========
Distribution to Limited Partners
per Partnership Unit $25.00 $25.00
=========== ===========
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, 1998 and 1997
12/31/98 12/31/97
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Limited Partners:
Balance, beginning of year 2,537,497 2,827,700
Net income (loss) 106,789 150,951
Distributions to Limited Partners (250,000) (250,000)
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Balance, End of Period 2,394,286 2,728,651
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General Partners:
Balance, beginning of year $5,042 ($2,128)
Net income (loss) 1,079 1,525
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Balance, End of period 6,121 (603)
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Total Partners' Equity $2,400,407 $2,728,048
============ ============
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, 1998 and 1997
12/31/98 12/31/97
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Cash Flows from Operating Activities:
Received from motel revenues $381,364 $448,972
Expended for motel operations and
general and administrative expenses (279,462) (300,274)
Interest received 8,873 12,339
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Net Cash Provided (Used) by Operating Activities 110,775 161,037
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Cash Flows from Investing Activities:
Purchases of property and equipment (25,815) (6,279)
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Net Cash Provided (Used) by Investing Activities (25,815) (6,279)
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Cash Flows from Financing Activities:
Distributions to limited partners (250,000) (250,000)
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Net Cash Provided (Used) by Financing Activities (250,000) (250,000)
Net Increase (Decrease) in Cash and
Temporary Investments (165,040) (95,242)
Cash and Temporary Investments:
Beginning of period 870,626 1,079,735
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End of period $705,586 $984,493
========== ==========
Reconciliation of Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities:
Net Income (Loss) $107,868 $152,476
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Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 27,963 27,355
(Gain) loss on disposition of property and equipment - 863
(Increase) decrease in accounts receivable (6,637) 11,672
(Increase) decrease in prepaid expenses 6,774 6,396
Increase (decrease) in accounts payable (25,193) (37,725)
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Total Adjustments 2,907 8,561
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Net Cash Provided (Used) by Operating Activities $110,775 $161,037
========== ==========
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, 1998 and 1997
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, 1998 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 $18,959
Franchise Fees $7,494
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
12/31/98 12/31/97
----------- -----------
Salaries and related costs $71,814 $89,396
Franchise and advertising fees 18,735 21,529
Utilities 16,011 17,168
Allocated costs,
mainly indirect salaries 25,108 26,837
Maintenance expenses 19,283 1,896
Repairs and minor renovations 12,264 7,618
Property taxes 11,847 11,489
Property insurance 6,121 5,725
Other operating expenses 25,114 33,302
----------- -----------
Total motel operating expenses $206,297 $214,960
=========== ===========
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 SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
DECEMBER 31, 1998
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998, the Partnership's current assets of $748,920 exceeded
its current liabilities of $107,533 providing an operating reserve of $641,387,
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. Renovation
and replacement expenditures during the first three months of the fiscal year
which will end on September 30, 1999, were $45,099 or 12.0% of room revenues.
Included in the expenditures was $20,456 for a replacement voice mail system and
$14,280 for painting the building.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the three month periods
ended December 31, 1998 and December 31, 1997.
Total revenues decreased $52,765 or 11.7% for the three months ended December
31, 1998 as compared to the corresponding period of the preceding fiscal year.
Guest room revenue decreased $55,326 or 12.9% for the current period as compared
to the corresponding period of the previous fiscal year. This decrease is due to
a decrease in occupancy from 70.8% in last quarter of 1997 to 52.4% in last
quarter of 1998 which was partially offset by an increase in average room rate
from $64.69 in 1997 to $76.18 in 1998. The decreased occupancy is due to the
opening of five motels containing approximately 500 guestrooms in the Pleasanton
area, all of which are competitive with our motel.
Total expenditures decreased $8,157 or 2.7% during the three months covered by
this report as compared to the previous fiscal year. Most operating expenses
decreased due to the decreased occupancy and the resulting lower rental income.
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<PAGE>
SUPER 8 SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
DECEMBER 31, 1998 (Continued)
FUTURE TRENDS
On May 15, 1998, the Partnership and four other limited partnerships managed by
the Managing General Partner entered into a contract to sell all of their motel
assets. Escrow for the sale opened in June 1998. By majority vote the limited
partners of the Partnership and the four other partnerships have approved the
sale pursuant to such contract. 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 $7,186,000. 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.
The General Partners expect the Pleasanton motel to continue its 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
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matter to the Vote of Security Holders
None
Item 5. Other Information
See Notes to Financial Statements
Item 6. Exhibits and Reports on Form 8-K
None
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<PAGE>
SIGNATURES
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.
2-12-99 By /S/ Philip B. Grotewohl
- --------- ---------------------------
Date Philip B. Grotewohl,
Chairman of Grotewohl Management
Services, Inc.,
Managing General Partner
2-12-99 By /S/ Philip B. Grotewohl
- --------- ---------------------------
Date Philip B. Grotewohl,
Chief executive officer,
chief financial officer,
chief accounting officer and sole
director of Grotewohl Management
Services, Inc.,
Managing General Partner
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 708,586
<SECURITIES> 0
<RECEIVABLES> 35,908
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 748,920
<PP&E> 3,622,634
<DEPRECIATION> 1,946,198
<TOTAL-ASSETS> 2,507,940
<CURRENT-LIABILITIES> 107,533
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,400,407
<TOTAL-LIABILITY-AND-EQUITY> 2,507,940
<SALES> 379,128
<TOTAL-REVENUES> 396,874
<CGS> 206,297
<TOTAL-COSTS> 206,297
<OTHER-EXPENSES> 82,709
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 107,868
<INCOME-TAX> 0
<INCOME-CONTINUING> 107,868
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,868
<EPS-PRIMARY> 10.68
<EPS-DILUTED> 10.68
</TABLE>
