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 September 30, 1998 Commission File 0-14540
FAMOUS HOST LODGING V, L.P.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2933595
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 J Street
Sacramento, California 95814
- - -------------------------------------- ----------
Address of principle 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 __
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - September 30, 1998 and December 31, 1997 2
Statement of Operations - Nine Months Ended
September 30, 1998 and 1997 3
Statement of Changes in Partners' Equity -
Nine Months Ended September 30, 1998 and 1997 4
Statement of Cash Flows - Nine Months Ended
September 30, 1998 and 1997 5
Notes to Financial Statements 6 - 7
Management Discussion and Analysis 8 - 9
Other Information and Signatures 10 - 11
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Balance Sheet
September 30, 1998 and December 31, 1997
9/30/98 12/31/97
---------- -----------
ASSETS
Current Assets:
Cash and temporary investments $ 455,904 $ 146,113
Accounts receivable 23,253 32,624
Prepaid expenses 46,524 37,862
---------- -----------
Total current assets 525,681 216,599
---------- -----------
Property and Equipment:
Buildings 4,077,604 4,077,604
Furniture and equipment 1,314,324 1,294,151
---------- -----------
5,391,928 5,371,755
Accumulated depreciation (3,377,016) (3,190,183)
---------- -----------
Property and equipment, net 2,014,912 2,181,572
---------- -----------
Other Assets: 32,294 32,294
---------- -----------
Total Assets $ 2,572,887 $ 2,430,465
========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities 224,186 176,765
---------- -----------
Total liabilities 224,186 176,765
---------- -----------
Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 5,165 3,385
Limited Partners: 10,000 units authorized,
9,022 issued and outstanding 2,343,536 2,250,315
---------- -----------
Total partners' equity 2,348,701 2,253,700
---------- -----------
Total Liabilities and Partners' Equity $ 2,572,887 $ 2,430,465
========== ===========
The accompanying notes are an integral part of the financial statements.
- 2 -
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Statement of Operations
For the Nine Months Ending September 30, 1998 and 1997
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
9/30/98 9/30/98 9/30/97 9/30/97
---------- ---------- ---------- ----------
Income:
Hotel room $ 742,075 $ 2,059,813 $ 635,960 $ 1,927,711
Restaurant 93,972 333,091 177,411 497,360
Telephone and vending 8,742 32,684 17,179 44,088
Interest 2,051 3,699 (428) 5,438
Other 16,750 46,395 10,003 32,820
---------- ---------- ---------- ----------
Total Income 863,590 2,475,682 840,125 2,507,417
---------- ---------- ---------- ----------
Expenses:
Hotel operating expenses
(Note 2) 515,455 1,450,936 474,088 1,386,327
Restaurant operations
(Note 2) 127,628 427,560 236,518 654,404
General and administrative 25,389 109,519 12,374 52,571
Depreciation and amortization 56,222 186,833 69,779 209,771
Property management fees 42,785 122,831 41,907 124,828
---------- ---------- ---------- ----------
Total Expenses 767,479 2,297,679 834,666 2,427,901
---------- ---------- ---------- ----------
Net Income (Loss) $ 96,111 $ 178,003 $ 5,459 $ 79,516
========== ========== ========== ==========
Net Income (Loss) Allocable
to General Partners $961 $1,780 $55 $795
========== ========== ========== ==========
Net Income (Loss) Allocable
to Limited Partners $95,150 $176,223 $5,404 $78,721
========== ========== ========== ==========
Net Income (Loss)
per Partnership Unit $10.55 $19.53 $0.60 $8.73
========== ========== ========== ==========
Distribution to Limited
Partners per Partnership Unit $0.00 $9.20 $9.20 $27.60
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
- 3 -
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Statement of Changes in Partners' Equity
For the Nine Months Ending September 30, 1998 and 1997
1998 1997
---------- ----------
General Partners:
Balance at beginning of year $ 3,385 $ 3,836
Net income (loss) 1,780 795
---------- ----------
Balance at end of period 5,165 4,631
---------- ----------
Limited Partners:
Balance at beginning of year 2,250,315 2,626,948
Net income (loss) 176,223 78,721
Distributions to limited partners (83,002) (249,007)
---------- ----------
Balance at end of period 2,343,536 2,456,662
---------- ----------
Total Partners' Equity $ 2,348,701 $ 2,461,293
========== ==========
The accompanying notes are an integral part of the financial statements.
- 4 -
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Statement of Cash Flows
For the Nine Months Ending September 30, 1998 and 1997
1998 1997
----------- -----------
Cash flows from operating activities:
Received from hotel and restaurant revenues $ 2,481,354 $ 2,503,228
Expended for hotel and restaurant operation
and general and administrative expenses (2,072,087) (2,180,831)
Interest received 3,699 7,151
----------- -----------
Net cash provided (used) by operating activities 412,966 329,548
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (20,173) (27,818)
Proceeds from sale of equipment - 230
----------- -----------
Net cash provided (used) by investing activities (20,173) (27,588)
----------- -----------
Cash flows from financing activities:
Distributions paid to limited partners (83,002) (249,007)
----------- -----------
Net cash provided (used) by operating activities (83,002) (249,007)
----------- -----------
Net increase (decrease) in cash
and temporary investments 309,791 52,953
Cash and Temporary Investments:
Beginning of year 146,113 246,283
----------- -----------
End of Period $ 455,904 $ 299,236
=========== ===========
Reconciliation of net income (loss) to net cash provided (used) by operating
activities:
Net income (loss) $ 178,003 $ 79,516
----------- -----------
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 186,833 209,771
(Gain) loss on disposition of property
and equipment - (230)
(Increase) decrease in accounts receivable 9,371 2,962
(Increase) decrease in prepaid expenses (8,662) (13,793)
Increase (decrease) in accounts payable
and accrued liabilities 47,421 51,322
----------- -----------
Total adjustments 234,963 250,032
----------- -----------
Net cash provided (used) by
operating activities $ 412,966 $ 329,548
=========== ===========
The accompanying notes are an integral part of the financial statements.
- 5 -
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Notes to Financial Statements
September 30, 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 December 31, 1997 for a complete
disclosure of significant accounting policies and practices and other detail
necessary for a fair presentation of the financial statements.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstatnces 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.
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 $122,831
In February, 1991 the Partnership terminated its franchise and its affiliation
with Super 8 Motels, Inc. and began operating as a Holiday Inn. Accordingly, no
franchise or advertising fees have been paid to the General Partners or their
affiliates for the period.
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 hotel operating expenses
for the periods reported:
- 6 -
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Notes to Financial Statements (Continued)
September 30, 1998 and 1997
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
9/30/98 9/30/98 9/30/97 9/30/97
---------- ---------- ---------- ----------
Hotel operating costs:
Salaries and related expenses $ 124,057 $ 372,985 $ 117,271 $ 361,159
Rent 70,806 197,257 60,991 184,586
Franchise, advertising and
reservation fees 52,333 143,909 45,383 137,479
Utilities 48,493 110,747 54,594 121,026
Allocated costs, mainly
indirect salaries 49,964 147,481 43,878 132,302
Maintenance, repairs and
replacements 51,575 140,490 49,215 118,310
Property taxes 15,894 47,943 16,028 47,768
Property insurance 10,269 31,333 9,168 32,184
Other operating expenses 92,064 258,791 77,560 251,513
---------- ---------- ---------- ----------
Total hotel
operating expenses $ 515,455 $ 1,450,936 $ 474,088 $ 1,386,327
========== ========== ========== ==========
Restaurant operating costs:
Salaries and related expenses $ 50,124 $ 176,099 $ 102,794 $ 291,574
Cost of food and beverage 37,065 121,995 76,845 207,861
Rent 9,168 32,063 16,662 47,421
Utilities 14,739 34,752 15,949 38,581
Property taxes 2,550 7,810 2,632 7,876
Property insurance 2,286 6,809 2,061 6,716
Other operating expenses 11,696 48,032 19,575 54,375
---------- ---------- ---------- ----------
$ 127,628 $ 427,560 $ 236,518 $ 654,404
========== ========== ========== ==========
There are certain administrative expenses allocated between the Partnership and
other partnerships managed by the General Partner and its affiliates. These
expenses, which are based on usage, are telephone, data processing, rent of
administrative office and administrative salaries. Management believes that the
methods used to allocate shared administrative expenses are accurate.
The following additional material contingencies are required to be restated in
interim reports under federal securities law: None.
- 7 -
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
SEPTEMBER 30, 1998
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Partnership has current assets of
$525,681 and current liabilities of $224,186 creating an operating reserve of
$301,495. Distributions to the limited partners have been suspended to replenish
the operating reserves.
The Partnership expended for renovations and replacements $71,679 which
is equal to 3.5% of guest room revenue (of which $20,173 was capitalized) during
the period covered by this report. Included in these expenditures was $15,173
for guest room carpet replacement, $5,000 for new faces on the restaurant signs,
$6,660 for replacement air-conditioners, $5,200 for pool deck repairs, $5,491
for replacement chairs and $18,915 for roof repairs.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the nine month
periods ended September 30, 1998 and September 30, 1997.
Total income decreased $31,735 or 1.3%. Hotel room revenues increased
$132,102 or 6.9%, due to a slight increase in guest room occupancy from 72.0% in
1997 to 73.0% in 1998 and an increase in the average room rate from $66.23 in
1997 to $69.88 in 1998. The $164,269 or 33.0% decrease in restaurant revenue was
due to a reduction in the restaurant hours of operations from 16 hours daily to
7 hours daily.
Total expenditures decreased $130,222 or 5.4%. Restaurant expenses
decreased $226,844 or 34.7%. This decrease is associated with the decrease in
restaurant hours of operation. Hotel operating expenses increased $64,609 or
4.7%. Maintenance and repair expenses increased due to Holiday Inn inspection
standards requirements. Allocated expenses increased due to legal fees
associated with the proposed sale of the hotel.
FUTURE TRENDS
The General Partners expect the hotel's performance during 1998 to be
substantially unchanged from 1997. Changes in restaurant personnel and
procedures are expected to continue bringing improved results. The General
Partners expect that these changes will result in a reduction in the net loss
experienced by the restaurant operation.
As discussed in more detail in the following section labeled "Legal
Proceedings," the General Partners have agreed to offer the motels for sale and
to present any offer that equal or exceeds 75% of the appraised value for the
approval of the Limited Partners.
- 8 -
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
SEPTEMBER 30, 1998 (Continued)
In 1996 the computers used by the Partnership at the Managing General
Partner's offices in Sacramento were updated. In the process of updating its
hardware and software, the Managing General Partner eliminated any potential
Year 2000 problem with respect to such computers. Similarly, the Managing
General Partner does not anticipate any material Year 2000 problem with the
computers in use at the motel. The Managing General Partner has not investigated
and does not know whether any Year 2000 problems may arise from its third party
vendors. Because the motel is a "budget" motel, the Partnership's most
significant vendors are its utility providers and banks. To the extent banking
services, utility services and other goods and services are unavailable as a
result of Year 2000 problems with the computer systems of such vendors or
otherwise, the ability of the Partnership to conduct business at its motels
would be compromised. No contingency plans have been developed in this regard.
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.
- 9 -
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On October 27, 1997 a complaint was filed in the United States District
Court, Eastern District of California by the registrant, the Managing General
Partner, and four other limited partnerships (together with the registrant, the
"Partnerships") as to which the Managing General Partner serves as general
partner (i.e., Super 8 Motels, Ltd., Super 8 Motels II, Ltd., Super 8 Motels
III, Ltd. and Super 8 Economy Lodging IV, Ltd.), as plaintiffs. The complaint
named 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 P. Enquist ( the "Everest Defendants"). The
factual basis underlying the plaintiffs' causes of actions pertained 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 requested the
following relief: (i) a declaration that each of the defendants had 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 had 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.
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 pertained
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 Partnerships' partnership
agreements and California law. The complaint requested the following relief: (i)
a declaration that the action has 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.
- 10 -
<PAGE>
PART II. OTHER INFORMATION (Continued)
On February 20, 1998, the parties entered into a settlement agreement
and both of the above complaints were dismissed. Pursuant to the terms of the
settlement agreement, among other things, the General Partner has agreed to
proceed with the marketing for sale of the properties of the Partnerships, if by
June 30, 1998, it receives an offer to purchase one or more properties for a
cash price equal to 75% or more of the appraised value. In addition, the General
Partner has agreed to submit the offer for approval to the limited partners as
required by the partnership agreements and applicable law. The General Partner
has also agreed that upon the sale of one or more properties, to distribute
promptly the proceeds of the sale after payment of payables and retention of
reserves to pay anticipated expenses. The Everest Defendants agreed not to
generally solicit the acquisition of any additional units of the Partnerships
without first filing necessary documents with the SEC. Under the terms of the
settlement agreement, the Partnerships have agreed to reimburse the Everest
Defendants for certain costs not to exceed $60,000, to be allocated among the
Partnerships. Of this amount, the Partnership will pay approximately $12,000
during the year covered by this report.
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
- 11 -
<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.
FAMOUS HOST LODGING V, L.P.
11-14-98 By /S/ Philip B. Grotewohl
- - -------- ----------------------------------
Date Philip B. Grotewohl,
Chairman of Grotewohl Management
Services, Inc.,
Managing General Partner
11-14-98 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 455,904
<SECURITIES> 0
<RECEIVABLES> 23,253
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 524,681
<PP&E> 5,391,928
<DEPRECIATION> 3,377,016
<TOTAL-ASSETS> 2,572,887
<CURRENT-LIABILITIES> 224,186
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,348,701
<TOTAL-LIABILITY-AND-EQUITY> 2,572,887
<SALES> 2,425,588
<TOTAL-REVENUES> 2,475,682
<CGS> 1,878,496
<TOTAL-COSTS> 1,878,496
<OTHER-EXPENSES> 491,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 178,003
<INCOME-TAX> 0
<INCOME-CONTINUING> 178,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178,003
<EPS-PRIMARY> 19.53
<EPS-DILUTED> 19.53
</TABLE>
