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 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1996
Commission file number 0-10134
SUPER 8 MOTELS III, LTD.
(Exact name of registrant as specified in its charter)
California 94-2664921
------------------------------- ----------------------
(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
1
PART I
Item 1. BUSINESS
General Development of Business
Super 8 Motels III, Ltd. (the "Partnership") is a limited partnership which was
organized under the Uniform Limited Partnership Act of the State of California
on June 2, 1980.
The General Partner of the Partnership is Grotewohl Management Services, Inc., a
California corporation which is 50% owned by Philip B. Grotewohl.
Through two public offerings of units of limited partnership interest in the
Partnership (the "Units"), the Partnership sold 5,941 Units at a price of $1,000
per Unit.
The net proceeds of the offerings have been expended for the acquisition in fee
and development of properties located in San Bernardino, California and
Bakersfield, California. Motel operations commenced on March 6, 1982 at the San
Bernardino property, and on September 20, 1982 at the Bakersfield property.
Narrative Description of Business
(a) Franchise Agreements
The Partnership operates each of its motel properties as a franchisee of Super 8
Motels, Inc. through sub-franchises obtained from Super 8 Management
Corporation. In March 1988, Brown & Grotewohl, a California general partnership
which is an affiliate of the General Partner (the "Manager"), became
sub-franchisor in the stead of Super 8 Management Corporation. As of December
31, 1995, Super 8 Motels, Inc. had franchised a total of 1,480 motels having an
aggregate of 89,678 guest rooms in operation.
The objective of the Super 8 Motel chain is to maintain a competitive position
in the motel industry by offering to the public comfortable, no-frills
accommodations at a budget price. Each Super 8 Motel provides its guests with
attractively decorated rooms, free color television, direct dial telephone and
other basic amenities, but eliminates or modifies other items to provide
substantial cost reduction without seriously affecting comfort or convenience.
Some of these savings are accomplished by reductions in room size, elimination
of expensive lobbies, and by substantial economies in building construction.
By the terms of each franchise agreement with Super 8 Motels, Inc., the
Partnership pays monthly franchise fees equal to 4% of its gross room revenues
(half of which is paid to the sub-franchisor) and contributes an additional 1%
of its gross room revenues to a fund administered by Super 8 Motels, Inc. to
finance the national reservation and promotions program.
2
(b) Operation of the Motels
The Manager manages and operates the Partnership's motels. 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
each motel, 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 each motel, including all collections and all disbursements to
be paid out of funds generated by motel operations or otherwise supplied by the
Partnership.
As of December 31, 1996, the Partnership employed a total of 31 persons, either
full or part-time at its two motel properties, including nine desk clerks, 17
housekeeping and laundry personnel, three maintenance personnel and two motel
managers.
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 personnel, motel supervisory personnel,
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 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, and financing in the amount of
$870,000 (which has since been repaid), was expended in connection with the
acquisition and development of two properties located in San Bernardino and
Bakersfield, California, respectively.
It is the present intention of the General Partner that the proceeds of any sale
or refinancing be distributed to the Limited Partners rather than reinvested.
(d) Competition
As discussed in greater detail below, in each area in which its motel properties
are located the Partnership faces intense competition from motels of varying
quality and size, including other budget motels which are part of nationwide
chains and which have access to nationwide reservation systems.
Super 8 Motels offer accommodations at the upper end, in terms of facilities and
prices, of the budget segment of the lodging industry. Generally, Super 8 Motels
offer larger rooms and higher quality furnishings at higher rates than motels
franchised under the trade-names Motel 6, Western 6, Econolodge, Red Roof Inns
and E-Z 8.
3
Item 2. Properties
(a) San Bernardino, California
The San Bernardino motel, which consists of 81 guest rooms on approximately 1.87
acres of land, commenced operations on March 6, 1982. The average monthly
occupancy rates and average monthly room rates during the three most recent
years are as follows:
Average Occupancy Rate
1996 1995 1994
--------- --------- ---------
Annual Average 49.9% 55.3% 59.1%
Average Room Rate
1996 1995 1994
--------- --------- ---------
Annual Average $40.23 $40.29 $41.07
The Partnership's San Bernardino motel provides accommodations to no one
customer, the loss of which could materially affect the Partnership's
operations.
The following lodging facilities provide direct and indirect competition to the
Partnership's San Bernardino motel:
APPROXIMATE
NUMBER DISTANCE
FACILITY OF ROOMS FROM MOTEL
--------------- -------- ---------------
Comfort Inn 50 Adjacent
Hilton Inn 200 Across street
La Quinta Motel 154 200 yards
Travelodge 90 200 yards
EZ-8 Motel 117 0.13 miles
4
(b) Bakersfield, California
The Bakersfield motel, which consists of 90 guest rooms on approximately 2.32
acres of land, commenced operations on September 20, 1982. The average monthly
occupancy rate and average monthly room rate for the three most recent years are
as follows:
Average Occupancy Rate
1996 1995 1994
--------- --------- ---------
Annual Average 87.2% 85.6% 89.9%
Average Room Rate
1996 1995 1994
--------- --------- ---------
Annual Average $30.28 $30.87 $30.73
From October 1, 1982 to January 31, 1993, an agreement was in effect granting
the Partnership the first opportunity to provide rooms to employees of Santa Fe
Railroad at a room rate of $20.00. Though expired according to its terms, the
contract continues to be observed by both parties, except that the agreed rate
is now $23.00 per room night. Revenue attributable to this agreement constituted
approximately 31%, 32%, and 20% of the motel's total guest revenues during 1996,
1995 and 1994, respectively.
On December 31, 1992, the Partnership entered into a written agreement with the
National Railroad Passenger Corporation (Amtrak) for the provision of lodging
services to its employees at a room rate of $25.75, which included a
transportation credit of $1.75 per room night payable to the Partnership for
providing transportation from the train terminal. Due to competitive bids, the
rate was lowered to $24.00 per room night effective October 1, 1994. Amtrak
provided approximately 22%, 26% and 19% of the motel's guest room revenue in
1996, 1995 and 1994, respectively.
Except as set forth above, the Bakersfield motel provides accommodations to no
one customer, the loss of which could materially affect the Partnership's
operations.
5
The following lodging facilities provide direct or indirect competition to the
Partnership's Bakersfield motel:
APPROXIMATE
NUMBER DISTANCE
FACILITY OF ROOMS FROM
MOTEL
--------------------------------- -------- -----------
California Inn 74 Adjacent
Motel 6 160 0.50 miles
EZ-8 Motel 100 0.50 miles
Travelodge Plaza 61 0.75 miles
Comfort Inn South 80 0.75 miles
Four Points Inn 199 1.00 mile
Best Western Kern River Motor Inn 200 1.00 mile
La Quinta Inn 150 1.00 mile
Days Inn 120 1.00 mile
Roderunner 49 1.50 miles
Economy Motels of America 140 1.50 miles
Rio Mirada 209 2.00 miles
Comfort Inn 60 2.00 miles
Econo Lodge 100 2.00 miles
Holiday Inn Express 100 6.00 miles
Item 3. LEGAL PROCEEDINGS
Inapplicable.
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 for the Units has
developed or is expected to develop.
6
Holders
As of December 31, 1996 a total of 988 individuals (the "Limited Partners") held
Units in the Partnership.
Distributions
Cash distributions are made on a quarterly basis from Cash Available for
Distribution, defined in the Partnership's Certificate and 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 the Partnership's property. Of the Cash Available
for Distribution in any year, the General Partner will receive 10% thereof, of
which 9% will constitute a subordinated fee for managing the Partnership and 1%
will be attributable to its interest in the profits of the Partnership. The
balance will be distributed to the Limited Partners. Notwithstanding the
preceding, the General Partner will not receive 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
10% per annum cumulative on their adjusted capital contributions.
In addition, the Partnership will promptly distribute net proceeds of the sale
and refinancing of its motel properties to the General Partner and the Limited
Partners, to the extent such proceeds are not reinvested in the acquisition of
additional properties. Of the sale or refinancing proceeds available for
distribution in any year, the General Partner will receive 15% thereof, and the
balance will be distributed to the Limited Partners. Notwithstanding the
preceding, the General Partner will not receive distributions of Sale or
Refinancing Proceeds until each Limited Partner has received from all sources
distributions equal to 100% of his capital contributions plus 10% per annum
cumulative on his adjusted capital contribution.
The Partnership has made no distributions during the two most recent fiscal
years.
7
Item 6. SELECTED FINANCIAL DATA
Following are selected financial data of the Partnership for its last five
fiscal years ended December 31, 1996, 1995, 1994, 1993 and 1992.
8
SUPER 8 MOTELS III, LTD.
Item 6. Selected Financial Data
Years Ended December 31:
-----------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
Guest Room
Income $1,464,850 $1,526,742 $1,625,581 $1,734,535 $1,622,825 $1,687,071
Net Income
(Loss) $1,116 $68,750 $33,851 $49,083 $(31,203) $97,596
Per Partnership Unit:
Cash
distributions $ - $ - $ - $ - $25.00 $25.00
Net income
(loss) $.19 $11.46 $5.64 $8.18 $(5.20) $16.26
Years Ended December 31:
-----------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
Total Assets $3,237,869 $3,411,456 $3,632,719 $3,793,456 $3,852,557 $4,045,669
Long-Term Debt $ - $75,493 $390,484 $595,214 $724,636 $741,069
9
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity
The General Partner believes that the Partnership's liquidity, defined as its
ability to generate cash to satisfy its cash needs, is adequate. The
Partnership's primary source of liquidity is its cash flow from operations. As
of December 31, 1996 the Partnership had current assets of $334,237 and current
liabilities of $63,785, providing an operating reserve of $270,452. This reserve
is below the $297,050 reserve target required by the Partnership Agreement
inasmuch as the Partnership made supplemental principal payments on its mortgage
debt in each of the last four years to retire the debt. The General Partner
authorized the pay-down as cash flow from operations has been increasing in each
of the three preceding 1996. The decrease in total cash during 1996 was also due
to the $150,000 in extraordinary loan repayments.
This loan, in the original principal amount of $855,000 at a 10% per annum fixed
interest rate, had a maturity date of September 1997 when, according to the
loan's original terms, $648,230 would have been due. As a result of the
additional principal payments in 1993 through 1996, the loan has been paid in
full. When the reserve has been completely restored, the General Partner plans
to resume distributions.
The liquidity of the Partnership is enhanced by the fact that both the San
Bernardino and Bakersfield motels are presently unencumbered. Although the
General Partner knows of no trend likely to create a material deficiency in the
Partnership's liquidity, if the need arises, cash could be generated through
leveraging the properties.
During 1997, the General Partner anticipates making certain capital
expenditures, as noted below under the caption "Capital Resources," although the
amount of such expenditures will not be such as to compromise the Partnership's
liquidity. Other than as described below and above the General Partner foresees
no significant trends, demands, commitments, events or uncertainties which are
likely to affect the Partnership's liquidity, on either a long-term or
short-term basis.
Capital Resources
The Partnership has no material commitments for capital expenditures. However,
the General Partner anticipates that during 1997 the Partnership will spend an
as yet undetermined amount for the refurbishment of its motels and their
furnishings. In particular, the Bakersfield motel needs painting.
During the fiscal year covered by this report, the Partnership expended $70,718
of which $24,711 was capitalized. This amount included $21,900 for parking lot
resurfacing at the Bakersfield motel, $15,348 for computer systems, $7,345 for
guest room carpets, $6,218 for re-keying, $5,365 for tub refurbishing, $5,006
for replacement bedspreads and $3,702 for replacement televisions.
10
During the fiscal year ended December 31, 1995, the Partnership expended $81,620
for renovations and replacements, of which $45,880 was capitalized. The
capitalized items included $20,759 for guest room carpet, $4,314 for replacement
of televisions, $15,191 for Amtrak shuttle vehicles and $3,789 for a replacement
ice machine. The uncapitalized items include $8,351 for bedspreads, $7,325 for
guest room chairs, $5,827 for mattress sets, $5,081 for replacement lamps and
lamp shades, and $4,000 for major boiler repairs.
Other than as described above under "Liquidity," the General Partner knows of no
material trends likely to affect or to require a change in the mix of its
capital resources.
Results of Operations
Combined Financial Results
The following tables summarize the operating results of the Partnership for the
fiscal years ended December 31, 1996, 1995 and 1994 on a combined basis. The
results of the individual properties 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
Occupancy Room
Fiscal Year Ended: Rate Rate
------------------ --------- -------
December 31, 1994 75.3% $34.57
December 31, 1995 71.3% $34.33
December 31, 1996 69.5% $33.66
Total
Expenditures Partnership
Total and Cash Flow
Fiscal Year Ended: Revenues Debt Service (1)
------------------ ---------- ------------ -----------
December 31, 1994 $1,671,022 $1,715,903 $(44,881)
December 31, 1995 $1,571,111 $1,671,151 $(100,040)
December 31, 1996 $1,510,262 $1,515,375 $(5,113)
11
(1) While Partnership Cash Flow as it is used here is not an amount found in the
financial statements, this amount is the best indicator of the annual change in
the amount, if any, available for distribution to the Limited Partners. This
calculation is reconciled to the financial statement in the following table.
Reconciliation of Partnership Cash Flow (included in the chart above) to Net
Income as shown on the Statements of Operations (in the financial statements) is
as follows:
1996 1995 1994
---------- ---------- ---------
Partnership Cash Flow $(5,113) $(100,040) $(44,881)
Principal Payments on Financial Obligations 153,456 285,133 185,326
Additions to Fixed Assets 24,711 45,880 64,261
Depreciation and Amortization (162,569) (164,599) (172,398)
Other Items (9,369) 2,376 1,543
---------- ---------- ---------
Net Income $1,116 $68,750 $33,851
========== ========== =========
Following is a reconciliation of the Partnership Cash Flow (shown above) to the
aggregate total of Cash Flow from Property Operations for the Partnership's two
motels which are segregated in the tables below under the captions "San
Bernardino Motel" and "Bakersfield Motel".
1996 1995 1994
--------- --------- ---------
San Bernardino Motel $20,090 $41,110 $24,211
Bakersfield Motel (34,512) (159,959) (78,601)
--------- --------- ---------
Aggregate Cash Flow from Property Operations (14,422) (118,849) (54,390)
Interest on Cash Reserves 8,288 10,071 8,727
Other Partnership Income (net of Other
Expenses) not allocated to the properties 1,020 8,738 782
--------- --------- ---------
Partnership Cash Flow $(5,114) $(100,040) $(44,881)
========= ========= =========
The Partnership experienced a $60,849 or 3.9% decrease in total revenues during
the fiscal year covered by this report as compared to the previous fiscal year.
The decrease in revenue is due to slightly reduced room rates at both motels and
to significantly reduced occupancy at the San Bernardino motel. These conditions
are related to the high level of competition in the Bakersfield market and to
poor economic conditions in the San Bernardino market.
The Partnership experienced a $99,911 or 6.0% decrease in total revenues during
the fiscal year ended December 31, 1995 as compared to the previous fiscal year.
The decline in revenue is due to reduced average occupancy at both motels and a
reduced average room rate at the San Bernardino motel. Amplified discussion can
be found in the individual property subsections that follow.
12
The Partnership achieved a $155,776 or 9.3% reduction in the total expenditures
during the fiscal year covered by this report as compared to the previous fiscal
year. This reduction is due primarily to the comparatively smaller payments
necessary to liquidate the Bakersfield motel's loan and to lower payments for
renovations and replacements.
The Partnership achieved a $44,752 or 2.6% reduction in combined expenditures
and debt service during the fiscal year ended December 31, 1995 as compared to
the previous fiscal year. Debt service increased by $75,000. The increase in
debt service was offset by a $100,095 reduction in motel operating expenses, due
primarily to the reduced average occupancy.
San Bernardino Motel
Average Average
Occupancy Room
Fiscal Year Ended: Rate Rate
------------------ --------- -------
December 31, 1994 59.1% $41.07
December 31, 1995 55.3% $40.29
December 31, 1996 49.9% $40.23
Total Cash Flow
Expenditures from
Total and Property
Fiscal Year Ended: Revenues Debt Service Operations
------------------ -------- ------------ ----------
December 31, 1994 $741,564 $717,353 $24,211
December 31, 1995 $678,561 $637,451 $41,110
December 31, 1996 $615,471 $595,381 $20,090
The Partnership's San Bernardino motel experienced a $63,090 or 9.3% decrease in
total revenues during the fiscal year covered by this report as compared to the
previous fiscal year. Guest room revenue from the leisure market segment
decreased approximately $68,000 while the revenue from the other market segments
remained substantially unchanged.
The San Bernardino motel experienced a $63,003 or 8.5% decrease in total
revenues during the fiscal year ended December 31, 1995 as compared to the
previous fiscal year. Guest room revenue from the corporate and leisure market
segments decreased approximately $10,000. The number of guest room nights
generated from these two market segments remained substantially unchanged while
the average room rate received for the corporate market segment increased
slightly and the average room rate received from the leisure market declined
more substantially. Average occupancy from the discounted room and group
traveler market segments declined sharply resulting in a decrease of
approximately $50,000 in guest room revenue.
13
The San Bernardino motel achieved a $42,070 or 6.6% reduction in total
expenditures during the fiscal year covered by this report as compared to the
previous fiscal year. Theses expenditure reductions included $13,573 in reduced
property taxes from a property tax appeal, $14,602 in reduced resident manager
costs, $6,054 in lower housekeeping wages and $9,861 in reduced renovation
expenses. This reductions were partially offset by $7,250 in appraisal costs and
by $7,609 of increased workers' compensation insurance.
The San Bernardino motel achieved a $79,902 or 11.1% reduction in total expenses
and debt service during the fiscal year ended December 31, 1995 as compared to
the previous fiscal year. The motel achieved an $8,663 reduction in bad debts,
an $8,102 reduction in housekeeping wages, an $18,229 reduction in maintenance
wages and a $41,727 reduction in renovation and replacements. The previous year
was subject to an unusually high level of replacement and renovation expense.
Bakersfield Motel
Average Average
Occupancy Room
Fiscal Year Ended: Rate Rate
------------------ --------- -------
December 31, 1994 89.9% $30.73
December 31, 1995 85.6% $30.87
December 31, 1996 87.2% $30.28
Total Cash Flow
Expenditures from
Total and Property
Fiscal Year Ended: Revenues Debt Service Operations
------------------ -------- ------------ ----------
December 31, 1994 $919,367 $997,968 $(78,601)
December 31, 1995 $882,261 $1,042,220 $(159,959)
December 31, 1996 $885,403 $919,915 $(34,512)
14
The Bakersfield motel achieved a $3,142 (0.4%) increase in total revenues during
the fiscal year covered by this report as compared to the previous fiscal year.
Guest room revenue was substantially unchanged as the increase in occupancy was
mostly offset by the decrease in average room rate. Decreased corporate and
leisure market segment business was offset by increased contract rooms to the
Santa Fe Railroad and to Amtrak.
The Bakersfield motel experienced a $37,106 (4.0%) decrease in total revenues
during the fiscal year ended December 31, 1995 as compared to the previous
fiscal year. Decreased revenue generated from the corporate, group, discount and
trucker market segments was substantially, but not completely, offset by
increased revenue from the leisure market segment and the railroad accounts.
The Partnership's Bakersfield motel experienced a $122,305 (11.7%) decrease in
total expenses and debt service during the fiscal year covered by this report as
compared to the previous fiscal year. The $152,300 reduction in mortgage
payments was partially offset by increased expenditures of $7,250 for appraisal
fees, of $5,460 for workers' compensation insurance and $5,329 for increased
supplies.
The Partnership's Bakersfield motel experienced a $44,252 (4.4%) increase in
total expenses and debt service during the fiscal year ended December 31, 1995
as compared to the previous fiscal year. Excluding the $75,000 comparative
increase in debt service, the motel achieved a $30,748 reduction in other
expenditures. Included in this reduction were savings of $10,242 in front desk
wages, $10,120 in maintenance wages, $8,780 in housekeeping wages, $6,635 in
resident manager expense and $5,653 in workers' compensation insurance. These
reduced expenditures were partially offset by increased costs associated with
transporting railroad employees from the train station to the motel. The cost
savings was due to adjustments to staffing levels and to a lessor extent to
reduced average occupancy.
Future Trends
The General Partner believes that competitive conditions in the San Bernardino
and Bakersfield markets are such as to prevent the Partnership from reflecting
inflation in increased room rates at its motels. Accordingly, an increase in the
inflation rate could have a deleterious effect on Partnership operations.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements attached hereto at
pages F-1 through F-12.
15
ANNUAL REPORT ON FORM 10-K
ITEM 8
FINANCIAL STATEMENTS
SUPER 8 MOTELS III, LTD.
SACRAMENTO, CALIFORNIA
DECEMBER 31, 1996
F-1
Item 8: Financial Statements
SUPER 8 MOTELS III, LTD.
INDEX OF FINANCIAL STATEMENTS
Pages
-----
Report of Independent Certified Public Accountants F-3
Balance Sheets, December 31, 1996 and 1995 F-4
Statements of Operations for the years ended December 31, 1996,
1995 and 1994 F-5
Statements of Partners' Equity for the years ended December 31,
1996, 1995 and 1994 F-6
Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994 F-7 to
F-8
Notes to Financial Statements F-9 to
F-12
Note: All other schedules have been omitted since the required information is
not present or not present in amounts sufficient to require submission of the
schedule or because the information required is included in the financial
statements or notes thereto.
F-2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Super 8 Motels III, Ltd.
We have audited the accompanying balance sheets of Super 8 Motels III, Ltd., a
California limited partnership, as of December 31, 1996 and 1995, and the
related statements of operations, partners' equity, and cash flows for each of
the three years in the period ended December 31, 1996. 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 Super 8 Motels III, Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
VOCKER KRISTOFFERSON AND CO.
February 20, 1997
San Mateo, California
F-3
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
---------- ----------
Current Assets:
Cash and temporary investments (Notes 1, 3 and 7) $ 254,782 $ 285,554
Accounts receivable 68,114 72,824
Prepaid expenses 11,341 11,588
---------- ----------
Total Current Assets 334,237 369,966
---------- ----------
Property and Equipment (Note 2):
Land 1,670,129 1,670,129
Capital improvements 26,175 26,175
Buildings 3,276,870 3,276,870
Furniture and equipment 756,837 742,531
---------- ----------
5,730,011 5,715,705
Accumulated depreciation and amortization (2,826,379) (2,674,215)
---------- ----------
Property and Equipment, Net 2,903,632 3,041,490
---------- ----------
Total Assets $3,237,869 $3,411,456
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Current portion of note payable (Note 5) $ - $ 77,963
Accounts payable and accrued liabilities 62,020 85,032
Due to related parties 1,765 -
---------- ----------
Total Current Liabilities 63,785 162,995
Long-term Liabilities, Net of Current Portion:
Note payable (Note 5) - 75,493
---------- ----------
Total Liabilities 63,785 238,488
---------- ----------
Partners' Equity:
General Partner 19,205 19,194
Limited Partners 3,154,879 3,153,774
---------- ----------
Total Partners' Equity 3,174,084 3,172,968
---------- ----------
Total Liabilities and Partners' Equity $3,237,869 $3,411,456
========== ==========
See accompanying notes to financial statements.
F-4
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31:
----------------------------------
1996 1995 1994
---------- ---------- ----------
Income:
Guest room $1,464,850 $1,526,742 $1,625,581
Telephone and vending 34,128 32,654 33,352
Interest 8,288 10,071 8,727
Other 2,996 1,644 3,363
---------- ---------- ----------
Total Income 1,510,262 1,571,111 1,671,023
---------- ---------- ----------
Expenses:
Motel operations (Notes 4 and 6) 1,189,294 1,174,475 1,274,570
General and administrative (Note 4) 74,474 57,956 54,428
Depreciation and amortization (Note 2) 162,569 164,599 172,398
Interest 7,765 27,290 52,932
Property management fees (Note 4) 75,044 78,041 82,844
---------- ---------- ----------
Total Expenses 1,509,146 1,502,361 1,637,172
---------- ---------- ----------
Net Income $ 1,116 $ 68,750 $ 33,851
========== ========== ==========
Net Income Allocable to General Partner $11 $688 $339
======= ======= =======
Net Income Allocable to Limited Partners $1,105 $68,062 $33,512
======= ======= =======
Net Income Per Partnership Unit (Note 1) $.19 $11.46 $5.64
======= ======= =======
Distributions to Limited Partners Per
Partnership Unit (Note 1) $ - $ - $ -
======= ======= =======
See accompanying notes to financial statements.
F-5
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31:
----------------------------------
1996 1995 1994
---------- ---------- ----------
General Partner:
Balance, beginning of year $ 19,194 $ 18,506 $ 18,167
Net income 11 688 339
---------- ---------- ----------
Balance, End of Year 19,205 19,194 18,506
---------- ---------- ----------
Limited Partners:
Balance, beginning of year 3,153,774 3,085,712 3,052,200
Net income 1,105 68,062 33,512
---------- ---------- ----------
Balance, End of Year 3,154,879 3,153,774 3,085,712
---------- ---------- ----------
Total Partners' Equity $3,174,084 $3,172,968 $3,104,218
========== ========== ==========
See accompanying notes to financial statements.
F-6
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31:
----------------------------------
1996 1995 1994
---------- ---------- ----------
Cash Flows From Operating Activities:
Received from motel operations $1,505,571 $1,575,015 $1,678,452
Expended for motel operations and
general and administrative expenses (1,359,033) (1,313,408) (1,419,657)
Interest received 9,401 9,154 8,649
Interest paid (9,044) (29,666) (54,476)
---------- ---------- ----------
Net Cash Provided by Operating Activities 146,895 241,095 212,968
---------- ---------- ----------
Cash Flows From Investing Activities:
Proceeds from sale of equipment 500 5,366 3,550
Purchases of property and equipment (24,711) (45,880) (64,261)
---------- ---------- ----------
Net Cash Used by Investing Activities (24,211) (40,514) (60,711)
---------- ---------- ----------
Cash Flows From Financing Activities:
Payments on notes payable (153,456) (285,134) (185,326)
---------- ---------- ----------
Net Cash Used by Financing Activities (153,456) (285,134) (185,326)
---------- ---------- ----------
Net Increase (Decrease) in Cash and
Temporary Investments (30,772) (84,553) (33,069)
Cash and Temporary Investments:
Beginning of year 285,554 370,107 403,176
---------- ---------- ----------
End of Year $ 254,782 $ 285,554 $ 370,107
========== ========== ==========
See accompanying notes to financial statements.
F-7
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31:
---------------------------------
1996 1995 1994
---------- ---------- ---------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $ 1,116 $ 68,750 $ 33,851
---------- ---------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 162,569 164,599 172,398
(Gain) loss on disposition of property
and equipment (500) 433 1,860
Decrease in accounts receivable 4,710 13,058 16,078
(Increase) decrease in prepaid expenses 247 (866) (1,957)
Increase (decrease) in accounts payable
and accrued liabilities (23,012) 3,033 (8,246)
Increase (decrease) in due to
related parties 1,765 (7,912) (1,016)
---------- ---------- ---------
Total Adjustments 145,779 172,345 179,117
---------- ---------- ---------
Net Cash Provided by
Operating Activities $ 146,895 $ 241,095 $ 212,968
========== ========== =========
See accompanying notes to financial statements.
F-8
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE PARTNERSHIP
Super 8 Motels III, Ltd. is a limited partnership organized under California law
on June 2, 1980 to acquire and operate motel properties in San Bernardino and
Bakersfield, California. The term of the Partnership expires December 31, 2030
and may be dissolved earlier under certain circumstances. The San Bernardino
motel was opened in March, 1982, and the Bakersfield motel was opened in
September, 1982. The Partnership grants credit to customers, substantially all
of which are local businesses in San Bernardino or Bakersfield.
The general partner is Grotewohl Management Services, Inc., fifty percent
stockholder and officer of which is Philip B. Grotewohl.
The net income or net loss of the Partnership is allocated 1% to the General
Partner and 99% to the Limited Partners. Net income and distributions per
Partnership unit are based on 5,941 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 adjusted capital contributions ($297,050 at December
31, 1996). As of December 31, 1996 the Partnership had working capital of
$270,452. During the year ended December 31, 1996, $26,598 ($297,050 less
$270,452) of the reserves, plus additional amounts, were used to make loan
repayments on the mortgage payable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Items of Partnership income 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.
Property and equipment are recorded at cost. Depreciation and amortization are
computed using the following estimated useful lives and methods:
Description Methods Useful Lives
----------------------- -------------------------- ------------
Capital improvements 150-200% declining balance 10-20 years
Buildings Straight-line and 10-25 years
150% declining balance
Furniture and equipment 200% declining balance 4-7 years
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.
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.
F-9
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3 - CASH AND TEMPORARY INVESTMENTS
Cash and temporary investments as of December 31, 1996 and 1995 consists of the
following: 1996 1995
Cash in bank $ 43,305 $ 45,031
Money market accounts 211,477 140,523
Certificates of deposit and commercial paper - 100,000
-------- --------
Total Cash and Temporary Investments $254,782 $285,554
======== ========
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 three months or less to be cash
equivalents for purposes of the statement of cash flows.
NOTE 4 - RELATED PARTY TRANSACTIONS
Franchise Fees
Super 8 Motels, Inc., now a wholly-owned subsidiary of Hospitality Franchise
Systems, Inc., is franchisor of all Super 8 Motels. The Partnership pays to the
franchisor monthly fees equal to 4% of the gross room revenues of each motel and
contributes an additional 1% of its gross room revenues to an advertising fund
administered by the franchisor. In return, the franchisor provides the right to
use the name "Super 8," a national institutional advertising program, an advance
room reservation system, and inspection services. These costs ($73,242, $76,337
and $81,077 for the years ended December 31, 1996, 1995 and 1994, respectively)
are included in motel operations expense in the accompanying statements of
operations. The Partnership operates its motel properties as a franchisee of
Super 8 Motels, Inc., through a sub-franchise agreement with Brown & Grotewohl,
a California general partnership, of which Grotewohl Management Services, Inc.
(see Note 1) is a 50% owner. Under the sub-franchise agreement, Brown &
Grotewohl earned 40% of the above franchise fees, which amounted to $29,297,
$30,535 and $32,431 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Property Management Fees
The General Partner, or its affiliates, handles the management of the motel
properties 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 $75,044, $78,041 and $82,844 for the years ended December 31,
1996, 1995 and 1994, respectively.
Subordinated Partnership Management Fees
During the Partnership's operational stage, the General Partner is to receive 9%
of cash available for distributions for Partnership management services, along
with an additional 1% of cash available for distributions on account of its
interest in the profit and losses subordinated in each case, however, to receipt
by the Limited Partners of a 10% per annum cumulative pre-tax return on their
adjusted capital contributions. At December 31, 1996, the Limited Partners had
not received the 10% cumulative return, and accordingly, no Partnership
management fees are presently payable and therefore are not reflected in these
financial statements. Management believes it is not likely that these fees will
become payable in the future. This fee is payable only from cash funds provided
from operations of the Partnership, and may not be paid from the proceeds of
sale or a refinancing. As of December 31, 1996, the cumulative amount of these
fees was $421,787. F-10
SUPER 8 MOTELS III, LTD.
(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 Partner is to receive
15% of distributions of 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 a cumulative 10% per annum
pre-tax return on their adjusted capital contributions. Through December 31,
1996, there had been no such sales or refinancings.
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 Partner and its 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
$225,000, $223,000 and $207,000 during the years ended December 31, 1996, 1995
and 1994, respectively, and are included in general and administrative and motel
operating expenses in the accompanying statements of operations. Included in
administrative salaries are allocated amounts paid to three employees who are
related to Philip B. Grotewohl, a fifty percent stockholder of Grotewohl
Management Services, Inc., the General Partner.
NOTE 5 - NOTE PAYABLE
The note payable consisted of a note due to a bank and was collateralized by a
first deed of trust on real property in Bakersfield, California. During 1995,
the note, which was held in trust by Wells Fargo Bank for Mr. Bruce J. Bailey,
was split into two notes, one due to Wells Fargo and the other due to Mr.
Bailey. The combined balances of the new notes were equal to the prior balance
of the original Wells Fargo note.
During 1996, the Partnership paid off the balances of the two notes payable.
F-11
SUPER 8 MOTELS III, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6 - MOTEL OPERATING EXPENSES
The following table summarizes the major components of motel operating costs for
the following years:
1996 1995 1994
---------- ---------- ----------
Salaries and related costs $ 447,181 $ 441,334 $ 514,133
Franchise and advertising fees 73,242 76,337 78,077
Utilities 111,366 121,969 130,871
Allocated costs, mainly
indirect salaries 184,064 181,607 169,656
Renovations and replacements 46,007 35,740 50,906
Other operating expenses 327,434 317,488 330,927
---------- ---------- ----------
Total motel operating expenses $1,189,294 $1,174,475 $1,274,570
========== ========== ==========
NOTE 7 - CONCENTRATION OF CREDIT RISK
The Partnership maintains its cash accounts in four 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
insured and uninsured cash balances (not reduced by outstanding checks) as of
December 31, 1996 follows:
Total cash in all California banks $ 264,771
Portion insured by the FDIC (238,087)
---------
Uninsured cash balances $ 26,684
=========
F-12
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
The original general partners of the Partnership were Dennis A. Brown and Philip
B. Grotewohl, as the managing general partners, and Borel Associates (a
partnership of which Robert J. Dana was a partner), as the associate general
partner. Upon Mr. Brown's death on February 25, 1988, Mr. Grotewohl and Borel
Associates elected to continue the Partnership. During March 1988, Mr. Grotewohl
appointed Grotewohl Management Services, Inc., a California corporation, his
successor as General Partner. Upon the liquidation of Borel Associates in April
1990, Grotewohl Management Services, Inc., as the sole remaining General
Partner, elected to continue the Partnership.
The General Partner was organized in 1981 to serve as a general partner of
limited partnerships to be formed for the purpose of investing in Super 8
Motels. A 50% shareholder, director and the principal officer of the General
Partner is Mr. Grotewohl.
Mr. Grotewohl, age 78, is 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.
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 Partner and its affiliates. Similarly, although Borel
Associates ceased to have any interest in the Partnership upon its dissolution,
Mr. Dana continues to share in such compensation.
The following is a description of the fees paid or payable to the General
Partner, the Brown trust and Mr. Dana.
Property Management Fees
The Manager is managing and will manage all motel properties of the Partnership.
The fee for this service is 5% of the gross proceeds from the operations of each
motel. This compensation is in addition to the cost of compensating the
Partnership's employees and the cost of goods and services acquired for the
Partnership from independent contractors.
The Partnership accrued and paid such fees to the Manager in the amount of
$75,044 during the year ended December 31, 1996.
16
Franchise Fees and Advertising Fees
The Partnership operates its motels as a franchisee of Super 8 Motels, Inc.,
pursuant to sub-franchises from the Manager. In connection with the operation of
each of its motels, the Partnership, as franchisee, pays 4% of its gross room
revenues to the franchisor. One-half of the franchise fee is paid to the
Manager. In addition to the franchise fee, the Partnership pays 1% of its gross
room revenues to the franchisor as an advertising fee. No part of this fee is
paid to the Manager.
The total of franchise fees accrued during the year ended December 31, 1996 to
Super 8 Motels, Inc. was $58,594, of which $29,297 accrued to the Manager. The
total advertising fees paid to Super 8 Motels, Inc. was $14,648. All the above
amounts have been paid.
General Partner's 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 Partner. (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 Partner as Partnership management fees; and (3) 1% thereof is paid to
the General Partner in accordance with its interest in the income and losses of
the Partnership.
Notwithstanding the foregoing, however, distributions of Cash Available for
Distribution which would otherwise be paid to the General Partner are deferred
and paid only after payment to the Limited Partners of distributions of Cash
Available for Distribution in an amount equal to 10% per annum cumulative on
their adjusted capital contributions.
No such cash distributions were paid by the Partnership to the General Partner,
the Brown Trust, Robert J. Dana, or their affiliates during the fiscal year
ended December 31, 1996. A total of $421,787 has been accrued to such persons
since commencement of the Partnership, but is not set forth as a liability in
the Partnership's financial statements due to the uncertainty of payment. In
order for this amount to be payable the Limited Partners must receive $5,190,589
in prior years' preference distributions and $594,100 in each future year before
any payments can be made to management.
General Partner's Interest in Net Proceeds of Sales, Financing 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 all distribution sources equal to 100% of their original capital
contributions and a cumulative 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 is to be distributed 15% to the
General Partner and 85% to the Limited Partners.
No such distributions were paid or accrued for the account of the General
Partner, the Brown trust, Robert J. Dana or their affiliates during the fiscal
year covered by this report.
17
Allocation of General Partners' Interest
Compensation to the General Partners and their affiliates in the form of
franchise fees and property management fees is allocated 1/3 each to the Brown
trust, the General Partner and Robert J. Dana.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
No person is known by the Partnership to be the beneficial owner of more than 5%
of the Units.
Security Ownership of Management
The General Partner is not the beneficial owner 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 Partner, 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, 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.
18
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 Partner and its 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 $225,000 in 1996 are
included in general and administrative expenses and motel operations expenses in
the Partnership's financial statements. Included in administrative salaries are
allocated amounts paid to three employee who are related to Philip B. Grotewohl,
the 50% shareholder of the General Partner. The Partnership purchased motel
supplies for approximately $8,000 from one of these employees.
19
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, 1996 and 1995
Statements of Operations for the Years Ended December 31, 1996,
1995 and 1994
Statements of Partners' Equity for the Years Ended December 31, 1996,
1995 and 1994
Statements of Cash Flow for the Years Ended December 31, 1996,
1995 and 1994
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 Exhibits 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.
3.2 & 4.2 The Amendment to Partnership Agreement, included as Exhibit
3.2 & 4.2 to the annual report on Form 10-K for the fiscal year ended
December 31, 1989 is incorporated herein by reference.
Exhibits 10.1 through 10.4, filed as Exhibits 10.1 through 10.4,
respectively, to the annual report on Form 10-K for the fiscal year
ended December 31, 1989 are hereby incorporated herein by reference.
10.1 Santa Fe Railway Agreement with the Partnership's Bakersfield
Motel.
10.2 Amtrak Contract with the Partnership's Bakersfield Motel.
10.3 Franchise Agreement for the Bakersfield Property.
10.4 Franchise Agreement for the San Bernardino Property.
10.5 Amtrak Contract Amendment filed as Exhibit 10.5 to the annual
report on Form 10-K for the fiscal year ended December 31, 1994 is
incorporated herein by reference.
(b) Reports on Form 8-K
Inapplicable.
20
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) SUPER 8 MOTELS III, LTD.
By (Signature and Title) /s/ Philip B. Grotewohl
---------------------------
Philip B. Grotewohl,
Chairman of Grotewohl Management Services, Inc.,
General Partner
Date March 28, 1997
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 sole director of
Grotewohl Management Services, Inc.,
General Partner
Date March 28, 1997
21
EXHIBIT INDEX
Exhibit Sequentially
Number Exhibit Numbered Page
------- ---------- -------------
28.1 Prospectus
22