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 June 30, 1998 Commission File 2-88942
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 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 __
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
INDEX
Financial Statements: PAGE
Balance Sheet - June 30, 1998 and December 31, 1997 2
Statement of Operations - Six Months Ended
June 30, 1998 and 1997 3
Statement of Changes in Partners' Equity -
Six Months Ended June 30, 1998 and 1997 4
Statement of Cash Flows - Six Months Ended
June 30, 1998 and 1997 5
Notes to Financial Statements 6
Management Discussion and Analysis 7
Other Information and Signatures 8 - 10
<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Balance Sheet
June 30, 1998 and December 31, 1997
6/30/98 12/31/97
---------- ----------
ASSETS
Current Assets:
Cash and temporary investments $ 275,409 $ 146,113
Accounts receivable 37,987 32,624
Prepaid expenses 30,927 37,862
---------- ----------
Total current assets 344,323 216,599
---------- ----------
Property and Equipment:
Buildings 4,077,604 4,077,604
Furniture and equipment 1,308,121 1,294,151
---------- ----------
5,385,725 5,371,755
Accumulated depreciation (3,320,794) (3,190,183)
---------- ----------
Property and equipment, net 2,064,931 2,181,572
---------- ----------
Other Assets: 32,294 32,294
---------- ----------
Total Assets $ 2,441,548 $ 2,430,465
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 186,967 $ 176,765
---------- ----------
Total liabilities 186,967 176,765
---------- ----------
Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners 4,224 3,385
Limited Partners 2,250,357 2,250,315
---------- ----------
Total partners' equity 2,254,581 2,253,700
---------- ----------
Total Liabilities and Partners' Equity $ 2,441,548 $ 2,430,465
========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Statement of Operations
For the Six Months Ending June 30, 1998 and 1997
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
6/30/98 6/30/98 6/30/97 6/30/97
---------- ---------- ----------- ----------
Income:
Hotel room $ 664,962 $ 1,317,738 $ 587,612 $ 1,291,751
Restaurant 104,095 239,119 165,713 319,948
Telephone and vending 10,949 23,943 12,429 26,909
Interest 857 1,649 4,118 5,810
Other 16,353 29,645 12,936 22,816
---------- ---------- ----------- ----------
Total Income 797,216 1,612,094 782,808 1,667,234
---------- ---------- ----------- ----------
Expenses:
Motel operating expenses
(Note 2) 596,272 1,233,425 676,324 1,329,339
General and administrative (68,347) 84,130 17,442 40,198
Depreciation and
amortization 65,495 130,611 70,239 139,992
Property management fees 39,527 80,045 38,707 82,920
---------- ---------- ----------- ----------
Total Expenses 632,947 1,528,211 802,712 1,592,449
---------- ---------- ----------- ----------
Net Income (Loss) $ 164,269 $ 83,883 $ (19,904) $ 74,785
========== ========== =========== ==========
Net Income (Loss) Allocable
to General Partners $1,643 $839 ($199) $748
========== ========== =========== ==========
Net Income (Loss) Allocable
to Limited Partners $162,626 $83,044 ($19,705) $74,037
========== ========== =========== ==========
Net Income (Loss)
per Partnership Unit $18.03 $9.20 ($2.18) $8.21
========== ========== =========== ==========
Distribution to Limited Partners
per Partnership Unit $9.20 $18.40 $9.20 $18.40
========== ========== =========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Statement of Changes in Partners' Equity
For the Six Months Ending June 30, 1998 and 1997
1998 1997
---------- ----------
General Partners:
Balance at beginning of year $ 3,385 $ 3,836
Net income (loss) 839 748
---------- ----------
Balance at end of period 4,224 4,584
---------- ----------
Limited Partners:
Balance at beginning of year 2,250,315 2,626,948
Net income (loss) 83,044 74,037
Distributions to limited partners (83,002) (166,005)
---------- ----------
Balance at end of period 2,250,357 2,534,980
---------- ----------
Total Partners' Equity $ 2,254,581 $ 2,539,564
========== ==========
The accompanying notes are an integral part of the financial statements.
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<PAGE>
Famous Host Lodging V, L.P.
(A California Limited Partnership)
Statement of Cash Flows
For the Six Months Ending June 30, 1998 and 1997
1998 1997
---------- ----------
Cash flows from operating activities:
Received from hotel and restaurant revenues $ 1,605,082 $ 1,662,323
Expended for hotel and restaurant operation
and general and administrative expenses (1,380,463) (1,421,142)
Interest received 1,649 5,379
---------- ----------
Net cash provided (used) by operating activities 226,268 246,560
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (13,970) (27,818)
Proceeds from sale of equipment - 230
---------- ----------
Net cash provided (used) by investing activities (13,970) (27,588)
---------- ----------
Cash flows from financing activities:
Distributions paid to limited partners (83,002) (166,005)
---------- ----------
Net cash provided (used) by operating activities (83,002) (166,005)
---------- ----------
Net increase (decrease) in cash
and temporary investments 129,296 52,967
Cash and Temporary Investments:
Beginning of year 146,113 246,283
---------- ----------
End of Period $ 275,409 $ 299,250
========== ==========
Reconciliation of net income (loss) to net cash provided (used) by operating
activities:
Net income (loss) $ 83,883 $ 74,785
---------- ----------
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 130,611 139,992
(Gain) loss on disposition of
property and equipment - (230)
(Increase) decrease in accounts receivable (5,363) 468
(Increase) decrease in prepaid expenses 6,935 3,976
Increase (decrease) in accounts payable
and accrued liabilities 10,202 27,569
---------- ----------
Total adjustments 142,385 171,775
---------- ----------
Net cash provided (used) by
operating activities $ 226,268 $ 246,560
========== ==========
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
June 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.
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 $80,045
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:
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
6/30/98 6/30/98 6/30/97 6/30/97
---------- ---------- ----------- ----------
Salaries and related
expenses $ 174,270 $ 374,902 $ 218,151 $ 431,881
Cost of food and beverage 37,454 85,093 69,111 129,659
Rent 74,024 149,345 72,537 154,354
Franchise, advertising and
reservation fees 45,044 91,577 42,249 92,095
Utilities 39,361 82,268 47,222 90,922
Allocated costs, mainly
indirect salaries 47,755 97,516 44,313 88,423
Renovations and replacements 24,813 28,610 15,482 19,562
Other operating expenses 153,551 324,114 167,259 322,443
----------- ---------- ---------- ----------
Total hotel and restaurant
operating expenses $ 596,272 $ 1,233,425 $ 676,324 $ 1,329,339
========== ========== ========== ==========
The following additional material contingencies are required to be restated in
interim reports under federal securities law: None.
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<PAGE>
FAMOUS HOST LODGING V, L.P.
(A California Limited Partnership)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
JUNE 30, 1998
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Partnership has current assets of $344,323 and current
liabilities of $186,967 creating an operating reserve of $157,356. Distributions
to the limited partners have been suspended to replenish the operating reserves.
The Partnership expended for renovations and replacements $42,580 (of which
$13,9670 was capitalized) during the period covered by this report. Included in
these expenditures was $8.970 for guest room carpet replacement, $5,000 for new
faces on the restaurant signs and $18,915 for roof repairs.
RESULTS OF OPERATIONS
The following is a comparison of operating results for the six month periods
ended June 30, 1998 and June 30, 1997.
Total income decreased $55,140 or 3.3%. Hotel room revenues increased $25,987 or
2.0%, due to an increase in the average room rate from $66.11 in 1997 to $68.77
in 1998 notwithstanding a decrease in guest room occupancy from 72.9% in 1997 to
71.5% in 1998. The decrease in occupancy was due primarily to reduced military
activity at Fort Irwin in 1998 as compared to the same period in 1997. The
$80,829 or 25.3% 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 $64,238 or 4.0%. This decrease in expenses is due
to reduced restaurant costs and to a reduction in the accrual of anticipated
partnership liquidation expenses.
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.
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.
- 7 -
<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.
- 8 -
<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
- 9 -
<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.
8-13-98 By /S/ Philip B. Grotewohl
- ------- -------------------------
Date Philip B. Grotewohl,
Chairman of Grotewohl Management
Services, Inc.,
Managing General Partner
8-13-98 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
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 275,409
<SECURITIES> 0
<RECEIVABLES> 37,987
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 344,323
<PP&E> 5,385,725
<DEPRECIATION> 3,320,794
<TOTAL-ASSETS> 2,441,548
<CURRENT-LIABILITIES> 186,967
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,254,581
<TOTAL-LIABILITY-AND-EQUITY> 2,441,548
<SALES> 1,580,800
<TOTAL-REVENUES> 1,612,094
<CGS> 1,233,425
<TOTAL-COSTS> 1,233,425
<OTHER-EXPENSES> 294,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 83,883
<INCOME-TAX> 0
<INCOME-CONTINUING> 83,883
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,883
<EPS-PRIMARY> 9.20
<EPS-DILUTED> 9.20
</TABLE>
