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, 1997
Commission file number 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 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
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PART I
Item l. BUSINESS
General Development of Business
Famous Host Lodging V, L.P. (the "Partnership") is a limited partnership which
was organized under the Uniform Limited Partnership Act of the State of
California on January 17, 1984.
An amendment to the Certificate of Limited Partnership was executed on February
13, 1991 which changed the Partnership's name from Super 8 Lodging V, Ltd.
The Managing General Partner of the Partnership is Grotewohl Management
Services, Inc., a California corporation organized and fifty percent owned by
Philip B. Grotewohl. The Associate General Partner of the Partnership is Robert
J. Dana. The Managing General Partner and the Associate General Partner are
sometimes hereinafter referred to collectively as the "General Partners." The
Associate General Partner does not have general responsibility in connection
with the management of the business and affairs of the Partnership.
Through two public offerings of units of limited partnership interest in the
Partnership (the "Units"), the Partnership sold 9,022 Units at a price of $1,000
per Unit.
Substantially all of the net proceeds of the public offerings were expended for
or committed to the acquisition and/or development of two lodging/restaurant
properties, located in Barstow, California and San Francisco, California,
respectively. The Partnership retains its interest in the Barstow property. See
Item 2 hereof. The Partnership sold its interest and development rights in its
San Francisco property to another developer rather than completing the purchase
and development of the property itself.
Narrative Description of Business
(a) Franchise Agreements
Through February 4, 1991, the Partnership operated its Barstow hotel as a
franchisee of Super 8 Motels, Inc. The Partnership now operates its Barstow
hotel and restaurant as a franchise of Holiday Inns, Inc. under the name
"Holiday Inn." The property began operations under such name on February 27,
1991.
Holiday Inns offer accommodations in the mid-range of the lodging industry in
terms of facilities and prices. Holiday Inns compete with hotels with brand
names such as Ramada, Quality Inn, Courtyard by Marriott and certain upscale
Best Westerns.
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(b) Operation of the Hotel and Restaurant
Brown and Grotewohl, a California general partnership which is an affiliate of
the Managing General Partner (the "Manager"), manages and operates the
Partnership's hotel and restaurant. The Manager's responsibilities include, but
are not limited to, supervision and direction of the Partnership's employees
having direct responsibility for the operation of hotel and restaurant,
establishment of room rates and direction of the promotional activities of the
Partnership's employees. In addition, the Manager directs 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 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 the hotel and restaurant, including all collections and all disbursements
to be paid out of funds generated by hotel operations or otherwise supplied by
the Partnership.
As of December 31, 1997, the Partnership employed a total of 49 persons, either
full or part-time at the Barstow hotel and restaurant, including eight desk
clerks, 16 housekeeping and laundry personnel, four maintenance personnel, one
general manager, four cooks and dishwashers, 11 servers and bus persons, four
bartenders and one restaurant manager.
In addition, and as of the same date, the Partnership employed 11 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, sales and marketing and hotel supervisory personnel, an
attorney, secretarial personnel, and purchasing personnel. Employed by the
Partnership on a part-time basis are David and Mark Grotewohl, relatives of
Philip Grotewohl, chairman of the Managing General Partner. David Grotewohl, an
attorney, is the Partnership's general counsel and is the Director of
Operations. Mark Grotewohl is the Director of Marketing and Sales
(c) Property Acquisition and Development
The net proceeds of the offering of the Units were expended in connection with
the acquisition (by lease) and development of the 148-room property in Barstow,
California and for the partial development of a hotel site in the Fisherman's
Wharf area of San Francisco, California.
It is the present intention of the Managing General Partner that the proceeds of
any sale or refinancing of the Barstow property be distributed to the Limited
Partners rather than reinvested.
(d) Competition
As discussed in greater detail below, the Partnership faces competition from
hotels and motels of varying quality and size, including other mid-range hotels
and motels which are part of nationwide chains and which have access to
nationwide reservation systems.
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Item 2. PROPERTIES
Barstow
On May 10, 1984, the Partnership entered into a long-term lease of 3.05 acres of
unimproved land located on East Main Street in Barstow, California. The
leasehold is located within a 15-acre parcel which was developed as a lodging,
restaurant, retail and theater complex known as "Barstow Station Too!". The
Barstow hotel is the only hotel or motel to be included in the complex. The
original term of the lease is for 50 years with lessee's option to renew for
three additional 10-year periods.
The Barstow hotel, which consists of 148 guestrooms, was placed in service on
December 31, 1985, at which date 96 guestrooms were available for occupancy. The
remaining 52 guestrooms became available for occupancy on March 15, 1986.
On June 15, 1987 the Partnership commenced operation of a family restaurant and
cocktail lounge immediately adjacent to the Barstow hotel. The Partnership
leases the restaurant facility from Fred Rosenberg, the lessor of the hotel
site.
On May 30, 1990, the Partnership entered into a written agreement with the
lessor for the amendment of the hotel and restaurant facility leases. The
restaurant facility lease term was extended from January 1, 1991 to December 31,
2010; however, the Partnership has the option of terminating the lease after
January 1, 2001 if the Partnership should terminate its license to operate the
hotel as a franchise of Holiday Inns, Inc. Additional rent for the hotel site
and restaurant facility was changed so as to be the amount by which 9% of the
combined annual gross sales from the hotel and restaurant facility exceeds the
combined annual minimum rent ($275,556 as of December 31, 1997; $280,116 as of
December 31, 1998) under the hotel site and restaurant facility leases.
In 1997, the Partnership incurred a total of $285,302 in rent expense for its
Barstow hotel site and restaurant facility. In addition, the Partnership pays
all property taxes and assessments for each leaseshold site.
The Barstow hotel achieved the following average occupancy rates and average
room rates during 1997, 1996 and 1995.
Annual Averages
1997 1996 1995
--------------------------------------
Average Occupancy Rate 68.6% 71.1% 74.9%
Average Room Rate $66.30 $64.63 $60.95
The following lodging facilities provide direct and indirect competition to the
Partnership's Barstow hotel:
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APPROXIMATE
NUMBER DISTANCE
FACILITY OF ROOMS FROM THE HOTEL
--------------------- -------- --------------
Quality Inn 100 Adjacent
Days Inn 113 0.25 miles
Comfort Inn 62 0.50 miles
Vagabond Inn 67 0.50 miles
Best Western 79 0.50 miles
Holiday Inn Express 65 3.00 miles
The Barstow hotel's major sources of patronage are generated by local military
bases, with civilian Federal employees, military personnel and Federal
government contractors generating approximately 26% of the hotel's room revenue.
The Barstow area also attracts traveling salespeople and other commercial
travelers.
For a discussion of the revenue received by the Partnership from the restaurant
and lounge see Item 7 hereof.
Item 3. 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.
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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.
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 ending
December 31, 1998.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
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 in the Units has
developed or is expected to develop.
Holders
As of December 31, 1997 a total of 1,861 investors (the "Limited Partners") held
Units in the Partnership.
6
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Distributions
Cash distributions are made from Cash Available for Distribution, defined in the
Partnership's Amended and Restated 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 each property and the Partnership. Of the Cash Available for
Distribution fin any year, the General Partners will receive 10% thereof, of
which 9% will constitute a fee for managing the Partnership and 1% will be
attributable to their interest in the profits of the Partnership.
Notwithstanding the preceding, the General Partners will not receive any
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 a 14% cumulatve return on their adjusted capital
contributions.
The Partnership's distributions of Cash Available for Distribution during the
two most recent fiscal years were as follows:
Total Amount
Date Distribution Per Unit
-------- ------------ --------
02/15/96 $83,002 $9.20
05/15/96 $83,002 $9.20
08/15/96 $83,002 $9.20
11/15/96 $83,002 $9.20
02/15/97 $83,002 $9.20
05/15/97 $83,002 $9.20
08/15/97 $83,002 $9.20
11/15/97 $83,002 $9.20
No distributions of Cash Available for Distribution were made to the General
Partners.
Cash distributions are also made from Sale or Refinancing Proceeds, defined in
the Partnership Agreement as the cash proceeds from a sale or refinancing of a
Partnership property remaining after retirement of mortgage debt, all expenses
related to the transaction, and any fees payable to the General Partners. Of the
Sale or Refinancing Proceeds available for distribution in any year, the General
Partners will receive 15% thereof, of which 14% will constitute a subordinated
incentive fee and 1% will be attributable to their interest in the Partnership.
Notwithstanding the preceding, the General Partners will not receive
distributions of Sale or Refinancing Proceeds until each Limited Partner has
received from cumulative distributions of Sale or Refinancing Proceeds an amount
equal to 100% of his capital contributions and has received additional
distributions from all sources equal to 10% per annum cumulative on his adjusted
capital contributions.
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Item 6. SELECTED FINANCIAL DATA
Following are selected financial data for the Partnership for the fiscal years
ended December 31, 1997, 1996, 1995, 1994 and 1993.
8
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FAMOUS HOST LODGING V, L.P.
Item 6. Selected Financial Data
Years Ended December 31:
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Guest room income $2,458,115 $2,489,982 $2,466,338 $2,526,730 $2,458,535
Restaurant income $690,622 $655,746 $636,141 $701,900 $775,129
Interest income $6,938 $9,131 $11,825 $13,899 $11,802
Net income (loss) ($45,074) $14,787 $78,676 $188,470 $82,208
Per Partnership Unit:
Cash distributions $36.80 $36.80 $36.80 $34.40 $16.00
Net income (loss) $(4.95) $1.62 $8.63 $20.68 $9.02
December 31:
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Total assets $2,430,463 $2,815,123 $3,127,918 $3,411,671 $3,523,707
Long-term debt - - - - -
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity and Capital Resources
The Managing General Partner believes that the Partnership's liquidity, defined
as its ability to generate sufficient cash to satisfy its cash needs, is
adequate. The Partnership's primary source of liquidity is its cash flow from
operations. The Partnership had as of December 31, 1997 current assets of
$216,599, current liabilities of $176,765 and, therefore, an operating reserve
of $39,834. The Partnership Agreement requires reserves equal to 5% of the
adjusted capital accounts, which are approximately $5,536,000. Current reserves
are below this $276,800 required reserve as in 1996 the Managing General Partner
decided to pay for capitalized renovations and replacement from cash on hand
rather than incur debt. The reserve should be replenished during the coming
fiscal year to the extent made possible by operations.
During the fiscal year covered by this report, the Partnership expended $103,300
for renovations and replacements, of which $50,387 was capitalized. The
expenditures included $25,714 for desk chairs, chairs and sleep sofas, $19,721
for parking lot repairs, $12,341 for guestroom carpet, $6,200 for security
equipment, $7,478 for lamp and ballast upgrades, $5,700 for roof repairs and
$7,132 for restaurant signage.
During the fiscal year ended December 31, 1996, the Partnership expended $70,569
for renovations and replacements, of which $29,643 was capitalized. The
expenditures included $11,148 for computer systems, $9,103 for replacement
chairs, $5,797 for carpet, $5,195 for tub refinishing, $4,745 for roof repairs
and $4,000 for pool replastering.
The properties may be sold pusuant to Item 3, "Legal Proceedings."
Results of Operations
Combined Financial Results
The following tables summarize the Partnership's operating results for the
fiscal years ended December 31, 1995, 1996 and 1997 on a combined basis.
Individual hotel and restaurant results 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.
Average Average
Hotel Hotel
Occupancy Room
Fiscal Year Ended: Rate Rate
------------------ --------- -------
December 31, 1995 74.9% $60.95
December 31, 1996 71.1% $64.63
December 31, 1997 68.6% $66.30
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Total Partnership
Total Expenditures Cash Flow
Fiscal Year Ended: Revenues and Debt Service (1)
------------------ ---------- ---------------- -----------
December 31, 1995 $3,213,820 $3,158,485 $55,335
December 31, 1996 $3,257,416 $2,961,860 $295,556
December 31, 1997 $3,250,726 $3,063,793 $186,933
(1) While Partnership Cash Flow as it is used here is not an amount found in the
financial statements, it is the best indicator of the annual change in the
amount, if any, available for distribution to the Limited Partners. These
calculations are reconciled to the financial statements in the following table.
Reconciliation of Partnership Cash Flow from the chart above to Net Income as
shown on the Statements of Operations in the financial statements is as follows:
1997 1996 1995
---------- ---------- ----------
Partnership Cash Flow $186,933 $295,556 $55,335
Additions to Fixed Assets 50,387 29,643 306,084
Depreciation and Amortization (281,791) (299,764) (278,574)
Other Items (603) (10,648) (4,169)
---------- ---------- ----------
Net Income (Loss) ($45,074) $14,787 $78,676
========== ========== ==========
The following is a reconciliation of the Partnership Cash Flow shown above to
the aggregate total of Cash Flow from Hotel Operations (shown in the seceding
subsection) and the Total Restaurant Net Loss (shown in the second seceding
subsection).
1997 1996 1995
---------- ---------- ----------
Cash Flow from Hotel Operations $408,473 $467,476 $251,271
Total Restaurant Net Loss (231,552) (182,081) (207,886)
---------- ---------- ----------
Aggregate Cash Flow from Property Operations $176,921 285,395 43,385
Interest on Cash Reserves 6,938 9,131 11,825
Other Income (net of Other Expenses) not
allocated to the property 3,074 1,030 125
---------- ---------- ----------
Partnership Cash Flow $186,933 $295,556 $55,335
========== ========== ==========
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Hotel Operations
The following table summarizes the operating results of the hotel for the fiscal
years ended December 31, 1997, 1996, and 1995. Total expenditures include the
operating expenses of the hotel, together with the cost of capital improvements
and those Partnership expenses properly allocable to such hotel.
Cash Flow
from
Total Total Hotel
Fiscal Year Ended: Revenues Expenditures Operations
------------------ ---------- ------------ ----------
December 31, 1995 $2,565,636 $2,314,365 $251,271
December 31, 1996 $2,591,465 $2,123,989 $467,476
December 31, 1997 $2,553,167 $2,144,694 $408,473
The Partnership's hotel experienced a $38,298 or 1.5% decrease in total revenues
during the fiscal year covered by this report as compared to the previous fiscal
year. The decrease in average occupancy rate from 71.1% in 1996 to 68.6% in 1997
was partially offset by an increase in the average daily rate from $64.63 in
1996 to $66.30 in 1997. The occupancy generated by the group market segments
declined while occupancy by the other market segments stayed about the same. The
average room rate for all market segments increased due to rate increases.
The Partnership's hotel achieved a $25,829 or 1.0% increase in total revenues
during the fiscal year ended December 31, 1996 as compared to the previous
fiscal year. The 3.8 percentage point decline in the average occupancy rate was
offset by the $3.68 increase in the average room rate. The occupancy generated
by the government and corporate market segments declined while occupancy by the
other market segments increased. The average room rate for all market segments
increased due to rate increases.
The Barstow hotel's total expenditures increased $20,705 or 1.0% during the
fiscal year covered by this report as compared to the previous fiscal year. This
included increases of $7,855 for additional billboards, $9,139 for central
overhead allocation, $8,776 for travel agent commissions, $8,145 for legal fees
and $43,879 for renovations and replacements. These increases were partially
offset by reductions of $34,243 in security services.
The Barstow hotel's total expenditures and debt service decreased $190,376 or
8.2% during the fiscal year ended December 31, 1996 as compared to the previous
fiscal year. This decrease is primarily attributable to the reduction in
renovations and replacements between this fiscal year and the previous one. This
decrease was partially offset by increased expenditures of $69,170 for security
services, of $9,858 for front desk wages and salaries, of $8,589 in workers'
compensation insurance, of $7,311 for print advertising, of $16,780 for
commissions and of $7,250 for appraisal fees.
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Restaurant Operations
The following table summarizes the operating results of the restaurant for the
fiscal years ended December 31, 1997, 1996, and 1995:
1997 1996 1995
--------------- --------------- ---------------
Food Sales $533,750 100.0% $506,255 100.0% $496,097 100.0%
Cost of Food Sales (229,820)-43.1% (203,022)-40.1% (183,583)-37.0%
-------- -------- --------
Gross Profit from Food Sales $303,930 56.9% 303,233 59.9% 312,514 63.0%
Beverage Sales 156,871 100.0% 149,490 100.0% 140,044 100.0%
Cost of Beverages Sold (50,488)-32.2% (50,866)-34.0% (47,772)-34.1%
-------- -------- --------
Gross Profit from
Beverage Sales $106,383 67.8% 98,624 66.0% 92,272 65.9%
-------- -------- --------
Combined Gross Profit $410,313 59.4% 401,857 61.3% 404,786 63.6%
Restaurant Operating Expenses (641,865)-92.9% (583,938)-89.0% (612,672)-96.3%
-------- -------- --------
Total Restaurant Net Loss $(231,552)-33.5% $(182,081)-27.8% $(207,886)-32.7%
======== ======== ========
The Partnership's restaurant at the Barstow Holiday Inn experienced a $49,471 or
27.2% increase in its net loss during the fiscal year covered by this report as
compared to the previous fiscal year. There was an effort to increase restaurant
sales, but the costs rose faster than revenue. Holiday Inn has modified its
standards so that the restaurant can be reduced from a 16 hours per day
operation to a six hour per day operation. Effective February 23, 1998, the
restaurant hours were reduced to seven hours per day. Financial projections of
the modified operation indicate that future restaurant operating losses will be
much lower than those experienced during the last three fiscal years.
The Partnership's restaurant at the Barstow Holiday Inn achieved a $25,805 or
12.4% decrease in its net loss during the fiscal year ended December 31, 1996 as
compared to the previous fiscal year. The improved performance is attributable
to the elimination of $20,000 in professional fees and some renovations paid in
the previous year.
Future Trends
The Managing General Partner expects that the hotel's occupancy rates, room
rates and restaurant revenues (and hence profits) will be negatively impacted
should the present reduced military activity continue. The Managing General
Partner anticipates that improved restaurant revenues, occupancy rates and
perhaps room rates would result from expanded activity associated with the Fort
Irwin National Training Center. None of the federal government installations in
the Barstow area are scheduled for closure.
The Managing General Partner anticipates that any increases in operating costs
and expenses due to inflation during the period in which the Partnership is
operating its hotel and restaurant will be met, to the extent possible, by an
upward adjustment in room rates and restaurant prices.
The properties may be sold pursuant to Item 3 above.
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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.
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ANNUAL REPORT ON FORM 10-K
ITEM 8
FINANCIAL STATEMENTS
FAMOUS HOST LODGING V, L.P.
SACRAMENTO, CALIFORNIA
DECEMBER 31, 1997
F-1
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Item 8: Financial Statements
FAMOUS HOST LODGING V, L.P.
INDEX OF FINANCIAL STATEMENTS
Pages
-----
Report of Independent Certified Public Accountants F-3
Balance Sheets, December 31, 1997 and 1996 F-4
Statements of Operations for the years ended
December 31, 1997, 1996 and 1995 F-5
Statements of Partners' Equity for the years ended
December 31, 1997, 1996 and 1995 F-6
Statements of Cash Flows for the years ended F-7 to
December 31, 1997, 1996 and 1995 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
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Famous Host Lodging V, L.P.
We have audited the accompanying balance sheets of Famous Host Lodging V,L.P., a
California limited partnership, as of December 31, 1997 and 1996, and the
related statements of operations, partners' equity, and cash flows for each of
the years in the three year period ended December 31, 1997. 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 Famous Host Lodging V, L.P. as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three year period ended December 31, 1997, in
conformity with generally accepted accounting principles.
VOCKER KRISTOFFERSON AND CO.
February 26, 1998
San Mateo, California
F-3
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
ASSETS
1997 1996
---------- ----------
Current Assets:
Cash and temporary investments (Notes 1, 3, 8 and 9) $ 146,113 $ 246,283
Accounts receivable 32,624 24,531
Prepaid expenses 37,862 39,762
---------- ----------
Total Current Assets 216,599 310,576
---------- ----------
Property and Equipment (Note 2):
Building 4,077,604 4,077,604
Furniture and equipment 1,294,151 1,253,417
Projects in progress - 58,444
---------- ----------
5,371,755 5,389,465
Accumulated depreciation and amortization (3,190,183) (2,917,212)
---------- ----------
Property and Equipment, Net 2,181,572 2,472,253
---------- ----------
Other Assets 32,294 32,294
---------- ----------
Total Assets $2,430,465 $2,815,123
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 165,909 $ 184,017
Due to related parties 10,856 322
---------- ----------
Total Liabilities 176,765 184,339
---------- ----------
Contingent Liabilities and Lease Commitments (Notes 4 and 5)
Partners' Equity:
General Partners 3,385 3,836
Limited Partners 2,250,315 2,626,948
---------- ----------
Total Partners' Equity 2,253,700 2,630,784
---------- ----------
Total Liabilities and Partners' Equity $2,430,465 $2,815,123
========== ==========
See accompanying notes to financial statements.
F-4
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31:
----------------------------------
1997 1996 1995
---------- ---------- ----------
Income:
Guest room $2,458,115 $2,489,982 $2,466,338
Restaurant 690,622 655,746 636,141
Telephone and vending 55,707 65,512 54,893
Interest 6,938 9,131 11,825
Other 39,344 37,045 44,624
---------- ---------- ----------
Total Income 3,250,726 3,257,416 3,213,821
---------- ---------- ----------
Expenses:
Hotel and restaurant operations
(Notes 4, 5 and 6) 2,774,813 2,701,717 2,634,845
General and administrative (Note 4) 77,356 78,787 61,637
Depreciation and amortization (Note 2) 281,791 299,764 278,574
Property management fees (Note 4) 161,840 162,361 160,089
---------- ---------- ----------
Total Expenses 3,295,800 3,242,629 3,135,145
---------- ---------- ----------
Net Income (Loss) $ (45,074) $ 14,787 $ 78,676
========== ========== ==========
Net Income (Loss) Allocable to
General Partners $(451) $148 $787
======= ======= =======
Net Income (Loss) Allocable to
Limited Partners $(44,623) $14,639 $77,889
======== ======== ========
Net Income (Loss) Per Partnership
Unit (Note 1) $4.95 $1.62 $8.63
======= ======= =======
Distributions to Limited Partners
Per Partnership Unit (Note 1) $36.80 $36.80 $36.80
======= ======= =======
See accompanying notes to financial statements.
F-5
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31:
----------------------------------
1997 1996 1995
---------- ---------- ----------
General Partners:
Balance, beginning of year $ 3,836 $ 3,688 $ 2,901
Net income (Loss) (451) 148 787
---------- ---------- ----------
Balance, End of Year 3,385 3,836 3,688
---------- ---------- ----------
Limited Partners:
Balance, beginning of year 2,626,948 2,944,319 3,198,440
Net income (Loss) (44,623) 14,639 77,889
Less: Cash distribution to limited partners (332,010) (332,010) (332,010)
---------- ---------- ----------
Balance, End of Year 2,250,315 2,626,948 2,944,319
---------- ---------- ----------
Total Partners' Equity $2,253,700 $2,630,784 $2,948,007
========== ========== ==========
See accompanying notes to financial statements.
F-6
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31:
----------------------------------
1997 1996 1995
---------- ---------- ----------
Cash Flows From Operating Activities:
Received from hotel and restaurant
operations $3,237,065 $3,255,807 $3,224,408
Expended for hotel and restaurant
operations and general and
administrative expenses (2,963,719) (2,942,661) (2,878,610)
Interest received 8,651 8,216 11,223
---------- ---------- ----------
Net Cash Provided by Operating
Activities 281,997 321,362 357,021
---------- ---------- ----------
Cash Flows From Investing Activities:
Proceeds from sale of property
and equipment 230 500 3,060
Purchases of property and equipment (50,387) (29,643) (306,084)
---------- ---------- ----------
Net Cash Used by Investing Activities (50,157) (29,143) (303,024)
---------- ---------- ----------
Cash Flows From Financing Activities:
Distributions paid to limited partners (332,010) (332,010) (332,010)
---------- ---------- ----------
Net Cash Used by Financing Activities (332,010) (332,010) (332,010)
---------- ---------- ----------
Net Increase (Decrease) in Cash
and Temporary Investments (100,170) (39,791) (278,013)
Cash and Temporary Investments:
Beginning of year 246,283 286,074 564,087
---------- ---------- ----------
End of Year $ 146,113 $ 246,283 $ 286,074
========== ========== ==========
See accompanying notes to financial statements.
F-7
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31:
----------------------------------
1997 1996 1995
---------- ---------- ----------
Reconciliation of Net Income (Loss) to Net
Cash Provided by Operating Activities:
Net income (loss) $ (45,074) $ 14,787 $ 78,676
---------- ---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 281,791 299,764 278,574
(Gain) loss on disposition of property
and equipment 59,047 (500) 4,170
(Increase) decrease in accounts receivable (8,093) 6,607 21,810
(Increase) decrease in prepaid expenses 1,900 (3,724) 5,210
(Increase) decrease in other assets - - (1,000)
Increase (decrease) in accounts payable
and accrued liabilities (18,108) 4,106 (18,863)
Increase (decrease) in due to related
parties 10,534 322 (11,556)
---------- ---------- ----------
Total Adjustments 327,071 306,575 278,345
---------- ---------- ----------
Net Cash Provided By Operating
Activities $ 281,997 $ 321,362 $ 357,021
========== ========== ==========
See accompanying notes to financial statements.
F-8
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE PARTNERSHIP
Famous Host Lodging V, L.P. is a limited partnership organized under California
law on January 17, 1984, to acquire and/or develop and operate hotel properties
in the State of California. The term of the Partnership expires December 31,
2023, and may be dissolved earlier under certain circumstances. On February 13,
1991 the Partnership Agreement was amended to change the name of the Partnership
from "Super 8 Lodging V, Ltd." to "Famous Host Lodging V, L.P." The hotel in
Barstow, California was opened in December 1985. In 1987 the Partnership
commenced operation of a family restaurant and cocktail lounge immediately
adjacent to the hotel. The Partnership grants credit to customers, substantially
all of which are local businesses.
The managing general partner is Grotewohl Management Services, Inc., the fifty
percent stockholder and officer of which is Philip B. Grotewohl. In addition,
there is one individual associate general partner.
The net income or net loss of the Partnership is allocated 1% to the General
Partners and 99% to the Limited Partners. Net income (loss) and distributions
per partnership unit are based upon 9,022 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 gross proceeds of the public offering of units as
adjusted for distributions of sales proceeds ($276,799 at December 31, 1997). As
of December 31, 1997, the Partnership had working capital of only $39,834 due to
capital renovations made during 1996 and distributions to limited partners in
1996 and 1997.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Items of Partnership income or loss 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. At December 31, 1997, assets and liabilities on a
tax basis were approximately $750,000 lower than on a book basis due to
accelerated depreciation methods used for tax purposes.
Property and equipment are recorded at cost. Depreciation and amortization are
computed using the following estimated useful lives and methods:
------Description------ -------Methods-------- --Useful Lives--
Building and components 150% declining balance 10-25 years
and straight-line
Furniture and equipment 200% declining balance 4-7 years
and straight-line
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.
F-9
<PAGE>
FAMOUS HOST LODGING V, L.P.
(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, 1997 and 1996 consist of the
following:
1997 1996
-------- --------
Cash in bank $ 71,809 $ 57,133
Money market accounts 74,304 89,150
Certificates of deposit - 100,000
-------- --------
Total Cash and Temporary Investments $146,113 $246,283
======== ========
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 five months or less to be cash
equivalents for purposes of the statement of cash flows.
NOTE 4 - RELATED PARTY TRANSACTIONS
Property Management Fees
The General Partners, or their affiliates, handle the management of the hotel
property 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 $161,840 in 1997, $162,361 in 1996 and $160,089 in 1995.
Subordinated Distributions to General Partners
During the Partnership's operational stage, the General Partners are to receive
an aggregate of 10% of Partnership distributions from cash available for
distribution, of which 9% will constitute a fee for managing the Partnership and
1% will be on account of their interest in the income and losses of the
Partnership. These distributions are subordinated, however, to payment to each
Limited Partner during such year of distributions from cash available for
distribution equal to a 14% per annum non-cumulative return on his adjusted
capital contribution. Through December 31, 1997, the Limited Partners have not
received a 14% non-cumulative return in any year, therefore no distributions
have been made or have accrued to the General Partners.
F-10
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
Subordinated Incentive Distributions
Under the terms of the partnership agreement, the General Partners are to
receive an aggregate of 15% of Partnership distributions of net proceeds from
the sale or refinancing of Partnership properties. The aggregate distribution of
15% is composed of a 14% subordinated incentive fee as additional compensation
for services rendered by the General Partners and the 1% on account of their
interest in the income and losses of the Partnership. These distributions are
subordinated, however, to 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 10% per annum
cumulative return on their adjusted capital contributions. At December 31, 1997,
the Limited Partners had not received the 10% per annum cumulative return, and
accordingly, no such proceeds have been distributed to the General Partners.
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 Partners and their affiliates. These
expenses, which are allocated based on usage, are telephone, data processing,
rent of the administrative office, and administrative salaries. The
administrative expenses allocated to the Partnership were approximately $230,000
in 1997, $225,000 in 1996 and $223,000 in 1995 and are included in general and
administrative expenses and hotel and restaurant operations 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. (see Note
1), the General Partner.
NOTE 5 - LEASE COMMITMENTS
The Partnership leases 3.05 acres of land in Barstow, California for a term of
50 years beginning in 1984. The Partnership has the right to extend the lease
for three consecutive periods of ten years each. The base rent payments are
subject to annual upward or downward adjustments based on changes in the
Consumer Price Index. The Partnership also leases the site adjacent to its
Barstow hotel that contains a restaurant and lounge. The lease provides for a
20-year term ending December 31, 2010 with an option to terminate this lease
after termination of the Holiday Inn license agreement. The option cannot be
exercised before the tenth year of the renewal term and requires six months
written notice.
Both leases contain provisions requiring the lessee to pay all property taxes
and assessments. The leases provide for payment of the excess of percentage rent
over the base rent. The percentage rent is 9% of the combined gross hotel room
revenues and gross restaurant and lounge sales.
Rental expense under these leases incurred by the Partnership amounted to
$299,375 in 1997, $299,569 in 1996 and $297,167 in 1995. Such amounts are
included in hotel and restaurant operations expense in the accompanying
statements of operations.
F-11
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5 - LEASE COMMITMENTS (Continued)
Future lease commitments at December 31, 1997, using the current minimum monthly
amounts, are as follows:
Hotel Land Restaurant
Years Ended December 31: Lease Lease Total
------------------------ ---------- ---------- ----------
1998 $ 163,428 $ 116,688 $ 280,116
1999 163,428 116,688 280,116
2000 163,428 116,688 280,116
2001 163,428 116,688 280,116
2002 163,428 116,688 280,116
2003-2035 5,147,982 933,504 6,081,486
---------- ---------- ----------
Total minimum future lease payments $5,965,122 $1,516,944 $7,482,066
========== ========== ==========
NOTE 6 - HOTEL AND RESTAURANT OPERATING EXPENSES
The following table summarizes the major components of hotel and restaurant
operating expenses for the following years:
1997 1996 1995
---------- ---------- ----------
Salaries and related expenses $ 866,496 $ 808,586 $ 789,516
Cost of food and beverage 280,607 253,888 231,355
Rent 301,054 301,606 297,168
Franchise, advertising and reservation fees 175,932 179,762 177,711
Utilities 201,671 204,251 214,662
Allocated costs, mainly indirect salaries 186,004 184,064 181,607
Renovations and replacements 52,913 40,926 77,384
Other operating expenses 710,136 728,634 665,442
---------- ---------- ----------
Total hotel and restaurant
operating expenses $2,774,813 $2,701,717 $2,634,845
========== ========== ==========
NOTE 7 - COMMITMENTS
Franchise Fees
In February 1991, the Partnership obtained a ten-year franchise agreement with
Holiday Inns, Inc. to operate its Barstow hotel and restaurant under the name
"Holiday Inn." The Partnership pays monthly franchise fees of 4% of gross room
revenues of the hotel and makes monthly contributions of 1 1/2% and 1% of guest
room revenues to a marketing fund and reservation fund, respectively.
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and temporary investments approximates fair value
because of the short-term maturity of those investments.
F-12
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 9 - CONCENTRATION OF CREDIT RISK
The Partnership maintains its cash accounts in five 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
uninsured cash balances (not reduced by outstanding checks) as of December 31,
1997 follows:
Total cash in all California banks $177,077
Portion insured by FDIC (131,674)
--------
Uninsured cash balance $ 45,403
========
NOTE 10 - LEGAL PROCEEDINGS AND SUBSEQUENT EVENT
On October 27, 1997, a complaint was filed in the United States District Court
by the Managing General Partner naming as defendants Everest/Madison Investors,
LLC, Everest Lodging Investors, 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 complaint alleged that the defendants
violated certain provisions of the Securities Exchange Act of 1934 and sought
injunctive and declarative relief.
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 the General Partners of the
Partnership and four other partnerships which have common general partners as
nominal defendants. The complaint 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 Partnership's partnership agreement and California law.
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, the General Partner has agreed to proceed with the marketing for sale
of the properties of the Partnerships, among other things, 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 the
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 ended
December 31, 1998.
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
Dennis A. Brown and Grotewohl Management Services, Inc. were the original
managing general partners of the Partnership, and Robert J. Dana was the
original associate general partner of the Partnership. Upon the death of Mr.
Brown on February 25, 1988, Grotewohl Management Services, Inc. and Mr. Dana
elected to continue the Partnership as the Managing General Partner and
Associate General Partner, respectively.
Mr. Grotewohl, age 79, was 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
Mr. Robert J. Dana, age 69, was active in the securities industry through the
1980's. He is presently retired.
See Item 3, "Legal Proceedings."
Item 11. EXECUTIVE COMPENSATION
Although Mr. Brown ceased to be a general partner of the Partnership upon his
death, a trust of Mr. Brown shares in certain of the compensation otherwise
payable to the General Partners and their affiliates.
Property Management Fees
The Manager, a California general partnership which is owned equally by the
Brown trust and the Managing General Partner, is managing the Partnership's
hotel and restaurant. The fee for this service is 5% of the gross hotel and
restaurant revenue. During the fiscal year ended December 31, 1996, the
Partnership paid property management fees in the amount of $161,840 to the
Manager.
15
<PAGE>
General Partners' 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 Partners. (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 Partners as Partnership management fees; and (3) 1% thereof is paid to
the General Partners in accordance with their interest in the income and losses
of the Partnership.
Notwithstanding the foregoing, however, distributions of Cash Available for
Distribution to the General Partners which would otherwise be paid to the
General Partners are deferred and paid only after payment to the Limited
Partners of distributions of Cash Available for Distribution in an amount equal
to a 14% per annum cumulative return on their adjusted capital contributions.
No such distributions were paid or accrued for the account of the General
Partners during the fiscal year covered by this report.
General Partners' Interest in Net Proceeds of Sales and Refinancing of
Partnership Properties
The proceeds from the sale or refinancing of properties not reinvested are to be
distributed first to the Limited Partners until they have received cumulative
payments from the sale or refinancing of properties equal to 100% of their
original capital contributions and cumulative payments from all sources equal to
a 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 will be distributed 15% to the General Partners and
85% to the Limited Partners.
No such distributions were paid or accrued for the account of the General
Partners during the fiscal year covered by this report.
Allocation of Compensation
Compensation to the General Partners and their affiliates is allocated as
follows:
(1) Mr. Dana receives annual amounts equal to 30% of total compensation to the
General Partners and their affiliates as a group reduced by all
Partnership-related business expenses of the General Partners and its
affiliates.
(2) All compensation to the General Partners which is not allocated to Mr. Dana
is divided equally between Grotewohl Management Services, Inc. and their
affiliates and the Brown trust.
16
<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
AMOUNT AND
TITLE NATURE OF
OF BENEFICIAL PERCENT
CLASS NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------------------------------------------------------------------
Units Everest Lodging Investors, LLC 261 Units 2.89%
Units Everest Madison Investors, LLC 298 Units 3.30%
------
Total 559 Units 6.19%
======
Security Ownership of Management
The General Partners are not the beneficial owners 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.
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 Partners, 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, dissolution, 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.
17
<PAGE>
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 Partners and their affiliates. These
expenses, which are allocated based on usage, are telephone, data processing,
rent of administrative offices and administrative salaries. The administrative
expenses allocated to the Partnership were approximately $230,000 in 1997 and
are included in general and administrative expenses and hotel and restaurant
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 chairman of the Managing General Partner.
18
<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, 1997 and 1996
Statements of Operations for the Years Ended December 31, 1997,
1996 and 1995 Statements of Partners' Equity for the Years Ended
December 31, 1997, 1996 and 1995 Statements of Cash Flow for the
Years Ended December 31, 1997, 1996 and 1995 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 Exhibit 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.
10.1 Ground Lease respecting the Barstow Hotel filed as Exhibit 10.1
to post-effective amendment no. 1 to the registration statement on
Form S-1 of the Partnership (File No.2-88942) is incorporated herein
by reference.
10.2 Motel Management Agreement between the Partnership and Super 8
Management Corporation filed as Exhibit 10.3 to the registration
statement on Form S-1 of the Partnership (File No. 33-3842) is
incorporated herein by reference.
10.3 Ground Lease respecting the Barstow Restaurant filed as Exhibit
10.9 to the annual report on Form 10-K of the Partnership for the
fiscal year ended December 31, 1989 is incorporated herein by
reference.
10.4 Amendment to Ground Leases filed as Exhibit 10.11 to the annual
report on Form 10-K of the Partnership for the fiscal year ended
December 31, 1990 is incorporated herein by reference.
10.5 Franchise Agreement between Partnership and Holiday Inns, Inc.
filed as Exhibit 10.6 to the annual report on Form 10-K of the
Partnership for the fiscal year ended December 31, 1994 is
incorporated herein by reference.
(b) Reports on Form 8-K
A current report on form 8-K dated November 13, 1997 was filed reporting an
"Other Event" under Item 5. No financial statements were included therein.
19
<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) FAMOUS HOST LODGING V, L.P.
By (Signature and Title) /s/ Philip B. Grotewohl
-------------------------
Philip B. Grotewohl,
Chairman of Grotewohl Management Services, Inc.,
General Partner
Date March 27, 1998
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. Grotewohl
-------------------------
Philip B. Grotewohl,
Chief executive officer, chief financial
officer, chief accounting officer and director
of Grotewohl Management Services, Inc.,
General Partner
Date March 27, 1998
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 146,113
<SECURITIES> 0
<RECEIVABLES> 32,624
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 216,599
<PP&E> 5,371,755
<DEPRECIATION> 3,190,183
<TOTAL-ASSETS> 2,430,465
<CURRENT-LIABILITIES> 176,765
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,253,700
<TOTAL-LIABILITY-AND-EQUITY> 2,430,465
<SALES> 3,204,444
<TOTAL-REVENUES> 3,250,726
<CGS> 2,774,813
<TOTAL-COSTS> 2,774,813
<OTHER-EXPENSES> 520,987
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (45,074)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45,074)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,074)
<EPS-PRIMARY> 4.95
<EPS-DILUTED> 4.95
</TABLE>
