SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________to ___________
Commission file number 0-11512
SUPER 8 ECONOMY LODGING IV, LTD.
(Exact name of registrant as specified in its charter)
California 94-2827163
(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. [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 Economy Lodging IV, Ltd. (the "Partnership") is a limited
partnership which was organized under the Uniform Limited Partnership Act of the
State of California on February 5, 1982.
The Managing General Partner of the Partnership is Grotewohl Management
Services, Inc., a California corporation organized and 50% owned by Philip B.
Grotewohl. The Associate General Partner is Robert J. Dana. The Associate
General Partner does not have general responsibility in connection with the
management of the business and affairs of the Partnership. The Managing General
Partner and the Associate General Partner are sometimes referred to collectively
as the "General Partners."
Through two public offerings of units of limited partnership interest in
the Partnership ("Units"), the Partnership sold 10,000 Units at a price of
$1,000 each.
The net proceeds of the offerings were expended for the acquisition and
development of properties located in Pleasanton, California and Santa Ana,
California. Motel operations commenced on October 4, 1983 at the Pleasanton
property and on February 19, 1985 at the Santa Ana property. On April 30, 1992
the Partnership sold the Santa Ana motel. The Partnership's Pleasanton motel is
operated pursuant to franchises acquired from Super 8 Motels, Inc. under the
name "Super 8 Motel."
There is hereby incorporated by reference herein the information regarding
the Partnership's motel property contained in Part I, Item 2 of this report
under the caption "Properties."
Narrative Description of Business
The Partnership's business is to operate its motel property and to engage
in any and all general business activities related or incidental thereto. The
Partnership's motel is operated pursuant to a franchise originally acquired from
Super 8 Motels, Inc. through Super 8 Management Corporation as a subfranchisor,
under the name "Super 8 Motel."
Super 8 Motels, Inc. is a South Dakota corporation which was organized in
1972. Its first franchised motel commenced operation in 1974 and, as of November
30, 1997, it had a total of 1,619 franchised motels having an aggregate in
excess of 98,000 guest rooms in operation. On April 30, 1993, Super 8 Motels,
Inc. became a wholly-owned subsidiary of Hospitality Franchise Systems, Inc
("HFS"). In addition to Super 8 Motels, HFS is also the franchisor of
hospitality properties under the Howard Johnson, Ramada, Voyager Lodge, Knights
Inn, Travelodge and Days Inn tradenames.
-2-
Motels franchised by Super 8 Motels, Inc. are budget motels in that they
offer room rates near the lower end of the room rate scale in each area in which
they are located. Such lower rates are made possible by the elimination of
certain features present in many higher-priced facilities, such as meeting rooms
and large lobbies; by not operating restaurants or cocktail lounges in
connection with the motels; and by utilizing uniform construction methods
(adapted only slightly to fit specific locales) which have been developed by
Super 8 Motels, Inc. and a standardized design which facilitates maintenance and
minimizes overhead expense.
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 furniture and furnishings
than motels franchised under the tradenames Motel 6, Regal 8 and E-Z 8. Rates in
the Super 8 Motels tend to exceed those offered by the chains mentioned above.
By terms of the franchise agreement with Super 8 Motels, Inc., the
Partnership pays monthly franchise fees equal to 4% of its gross room revenues
and contributes an additional 1% of its gross room revenues to a fund
administered by Super 8 Motels, Inc. to finance the national advertising
program. The Partnership has no equity or other interest in Super 8 Motels, Inc.
Brown & Grotewohl (the "Manager"), a California general partnership which
is an affiliate of the Managing General Partner, directs the operation of the
Partnership's motel. The Manager supervises and directs the Partnership's
employees having direct responsibility for the operation of the motel,
establishes room rates, and directs the promotional activities of the
Partnership's employees. It directs the purchase of replacement equipment and
supplies, maintenance activity and the engagement or selection of all vendors,
suppliers and independent contractors. The motel staff, under the supervision of
the Manager, is responsible for, among other things, performing all service,
administrative and bookkeeping duties in connection with the motel, including
all collections and all disbursements to be paid out of funds generated by such
operations or otherwise supplied by the Partnership.
The Partnership employs (on a part-time basis) one secretarial employee,
four Partnership and motel administrative employees, one marketing employee, and
five accounting employees at its Sacramento, California office. Included in the
above list is David P. Grotewohl, son of Philip Grotewohl, whom the Partnership
employs as Director of Operations and as an attorney. Mark Grotewohl, son of
Philip Grotewohl, is employed as Director of Marketing.
Pleasanton, California
The Pleasanton motel, which consists of 102 guest rooms, commenced
operations on October 4, 1983. The average occupancy rates and average room
rates for the period from October 1, 1994 through September 30, 1997 are as
follows:
1994 - 1995 1995-1996 1996-1997
----------- --------- ---------
Annual Average Occupancy 75.4% 76.6% 79.9%
Annual Average Room Rate $51.62 $56.44 $62.51
-3-
Patrons of the Partnership's Pleasanton motel are primarily commercial or
business travelers, and leisure business. The Pleasanton motel has no single
customer the loss of which would, in the opinion of the Managing General
Partner, have a material adverse effect on the motel's operations.
The following lodging facilities provide direct and indirect competition to
the Partnership's Pleasanton motel:
NUMBER OF APPROXIMATE DISTANCE FROM
FACILITY ROOMS PARTNERSHIP'S MOTEL
------------------------ --------- -------------------------
Sheraton Hotel 216 300 Yards
Marriott Courtyard 145 0.75 Mile
Best Western Dublin Park 230 1.0 Mile
Wyndom Hotel 171 1.5 Miles
Hilton Hotel 300 2.0 Miles
Holiday Inn 248 2.0 Miles
Springtown Inn 127 9.0 Miles
All Star Motel 102 9.0 Miles
Holiday Inn 124 10.0 Miles
As of December 1, 1997 the Partnership employed (on a full or part-time
basis) one manager, eleven desk clerks, one maintenance worker and twelve
housekeeping and laundry employees at the Pleasanton motel.
Item 2. PROPERTIES
On October 4, 1982, the Partnership acquired from Hopyard Associates, a
general partnership, a parcel of 2.037 acres of unimproved real property located
in Pleasanton, California.
The property is located immediately adjacent to Interstate Highway 580, on
the southeast quadrant of the Hopyard Road overpass approximately one mile east
of Interstate Highway 680 and approximately 40 miles east of San Francisco.
Construction of the 102-room motel commenced on October 18, 1982 and was
completed on October 4, 1983, at which point motel operations commenced.
-4-
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, Grotewohl Management
Services, Inc. (a general partner of the registrant) and four other limited
partnerships (together with the registrant, the "Partnerships") as to which
Grotewohl Management Services, Inc. serves as general partner (i.e., Super 8
Motels, Ltd., Super 8 Motels II, Ltd., Super 8 Motels III, Ltd., and Famous Host
Lodging V, L.P.), as plaintiffs. The complaint names 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 B. Enquist. The factual basis underlying the plaintiffs'
causes of actions pertains 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 requests the following relief: (i) a declaration
that each of the defendants has 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 have 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. The
plaintiffs have not yet received an answer of the defendants respecting the
complaint.
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 pertains
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. The complaint requests the following relief: (i) a
declaration that the action is 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. The defendants and nominal defendants have recently
been served and are formulating their response to the complaint.
-5-
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.
Holders
As of December 1, 1997 a total of 1,854 investors ("Limited Partners") held
Units in the Partnership.
Distributions
Cash Available for Distribution is defined as the cash funds provided from
operations without deduction for depreciation, but after deducting cash funds
used to pay or provide for payment of debt service, capital improvements and
replacements and the operating expenses of the property, also less adequate cash
reserves for obligations of the Partnership for which there is no provision.
Cash Available for Distribution shall be distributed quarterly in the
following manner:
(1) 90% to the Limited Partners
(2) 9% to the General Partners as a fee for managing the Partnership
(3) 1% to the General Partners on account of their Partnership interest.
Notwithstanding the foregoing, the General Partners shall receive no
distributions of Cash Available for Distribution until the Limited Partners have
received a cumulative 10% per annum return on their "Adjusted Capital
Contributions" (i.e., their original capital contributions, adjusted for
previous returns of capital or sale or refinancing proceeds). Inasmuch as the
Limited Partners have not received a cumulative 10% per annum return, the
General Partners have not received any share of the Cash Available for
Distribution since inception of the Partnership.
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 contribution 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 will
be distributed 15% to the General Partners and 85% to the Limited Partners.
-6-
The following distributions (all from Cash Available for Distribution) were
made during the two most recent fiscal years:
Amount Amount
Distributed Distributed
Date Per Unit to General Partners
-------- ----------- -------------------
11/15/95 $13.65 - 0 -
02/15/96 $13.65 - 0 -
05/15/96 $16.00 - 0 -
08/15/96 $16.00 - 0 -
11/15/96 $18.75 - 0 -
02/15/97 $18.75 - 0 -
05/15/97 $18.75 - 0 -
08/15/97 $20.00 - 0 -
Item 6. SELECTED FINANCIAL DATA
Following are selected financial data of the Partnership for the fiscal
years ended September 30, 1997, 1996, 1995, 1994 and 1993.
-7-
SUPER 8 ECONOMY LODGING IV, LTD
Item 6. Selected Financial Data
Years Ended September 30:
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Total income $1,941,108 $1,686,738 $1,510,802 $1,415,308 $1,395,176
Motel room income $1,860,287 $1,613,817 $1,448,486 $1,354,227 $1,337,670
Interest income $36,351 $28,879 $22,379 $19,181 $18,138
Other income:
Gain on sale of
Pleasanton land
parcel - - - - $5,825
Net income $857,944 $665,100 $513,436 $419,009 $386,643
Per Partnership Unit:
Cash distributions: $76.25 $59.30 $54.60 $48.65 $40.00
Net income $84.94 $65.84 $50.83 $41.48 $38.28
Years Ended September 30:
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Total assets $2,951,592 $2,841,572 $2,769,469 $2,786,858 $2,864,030
Long-term debt - - - - -
-8-
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity
The Partnership's current assets of $1,147,488 exceed its current
liabilities of $126,020 by $1,021,468. This amount exceeds the Managing General
Partner's cash reserve target of $455,000. In the opinion of the Managing
General Partner, the Partnership's Pleasanton motel provides adequate liquidity
to satisfy the Partnership's financial obligations.
The Partnership's primary source of liquidity is its gross revenues from
operations. As noted below, the Partnership has a positive cash flow from motel
operations. In addition, the Partnership's equity in its Pleasanton motel, which
is presently unencumbered, would provide a potential source of liquidity through
financing in the event the Partnership's liquidity were impaired. There can be
no assurance, however, that the Partnership could borrow against such equity on
favorable terms should additional liquidity be required.
Capital Resources
The Partnership owns and operates one motel property, a 102-room lodging
facility located in Pleasanton, California.
The Partnership currently has no material commitments for capital
expenditures. Its motel property is in full operation, and no further property
acquisitions or extraordinary capital improvements are contemplated. Except as
described below, the Managing General Partner is aware of no material trends or
changes with respect to the mix or relative cost of the Partnership's capital
resources. Working capital is expected to be generated by revenues from
operations.
During the fiscal year covered by this report, the Partnership spent
$54,213 ($32,756 of which was capitalized) on the refurbishment of its motel and
its furnishings. The capitalized items included $14,165 for guest room carpet
and vinyl, $9,742 for game chairs and a sofa, $4,748 for five replacement
air-conditioning units, $2,632 for replacement televisions and $1,470 for guest
room lamps. The items not capitalized included $5,261 for bedspreads, $4,313 for
parking lot resealing and $4,300 for furniture repairs.
During the fiscal year ended September 30, 1996, the Partnership spent
$56,278 ($33,120 of which was capitalized) on the refurbishment of its motel and
its furnishings. The capitalized items included $16,241 for replacement guest
room carpet, $11,148 for central office computers, $3,653 for a replacement ice
machine and $2,077 for furniture for the manager's apartment. Included in the
$23,158 amount not capitalized were expenditures for tub repair, replacement
guest room lamps, bed sets and televisions and air-conditioning units,
landscaping upgrades and parking lot repairs.
The Managing General Partner anticipates the expenditure of an undetermined
amount during the next fiscal year on further refurbishment of the Partnership's
motel, such amount to be paid from operating cash flow or, if operating cash
flow is inadequate, from reserves.
-9-
Results of Operation
Partnerships Combined Financial Results
The following is a comparison of combined results for the twelve-month
periods ending September 30, 1995, 1996 and 1997. Comparative revenue and
expense data is included in the financial statements found in Item 8.
The Partnership achieved a 29.0% increase in net income for the fiscal year
covered by this report as compared to the previous fiscal year. This result was
achieved by an increase in total income $254,370 (or 15.1%) while limiting the
increase in total expenses to $61,526 (or 6.0%). The revenue increase was due
primarily to increased guest room occupancy to an annual average of 79.9% from
76.6% and by an increase in the average room rate to $62.51 from $56.44.
The Partnership achieved a 29.5% increase in net income for the fiscal year
ended September 30, 1996 as compared to the previous fiscal year. This result
was achieved by increasing total income by $175,936 (or 11.6%) while limiting
the increase in total expenses to $24,272 (or 2.4%). The revenue increase was
due primarily to increased guest room revenue which was the result of both
improved occupancy rates and average room rates (as discussed below).
Pleasanton, California Motel
The following is a comparison of operating results at the Partnership's
Pleasanton motel for the fiscal years 1995, 1996 and 1997:
AVERAGE ROOM
PERIOD ENDED AVERAGE OCCUPANCY RATE RATE
------------------ ---------------------- ------------
September 30, 1995 75.4% $51.62
September 30, 1996 76.6% $56.44
September 30, 1997 79.9% $62.51
TOTAL TOTAL PARTNERSHIP
PERIOD ENDED REVENUES EXPENDITURES CASH FLOW (1)
------------------ ---------- ------------ -------------
September 30, 1995 $1,510,802 $947,078 $563,724
September 30, 1996 $1,686,738 $928,896 $757,842
September 30, 1997 $1,941,108 $1,003,191 $937,917
(1) While Partnership Cash Flow from operations 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 available,
if any, for distribution to the Limited Partners. This calculation
is reconciled to the financial statements in the following table.
-10-
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:
1994-1995 1995-1996 1996-1997
---------- ---------- ----------
Partnership Cash Flow $563,724 $757,842 $937,917
Net Additions to Fixed Assets 59,067 21,971 32,756
Depreciation and Amortization (109,175) (114,714) (113,229)
Other Items (180) - 500
---------- ---------- ----------
Net Income $513,436 $665,099 $857,944
========== ========== ==========
During the fiscal year covered by this report, the Partnership's Pleasanton
motel achieved a significant improvement in both its average room rate and its
average occupancy rate. The motel experienced decreased patronage from the
discount and corporate market segments which was offset by increased occupied
rooms from the leisure market segment.
During the fiscal year ended September 30, 1996, the Partnership's
Pleasanton motel achieved a significant improvement in its average room rate and
a slight increase in its average occupancy rate. The motel replaced
approximately 50% of its low-rate discount business with guests in the leisure
and corporate market segments.
During the fiscal year covered by this report as compared to the previous
fiscal year, the Partnership's Pleasanton motel experienced a $74,295 (or 8.0%)
increase in total expenditures due to rising occupancy rates. The motel
experienced increases of $9,963 in front desk wages and salaries, and $8,078 in
resident manager's salary due primarily to cost inflation and competition for
employees in the area. The motel experienced $12,254 in increased management
fees expenses and $9,859 in increased franchise fees due to the increased room
revenue. The Partnership spent $7,250 for appraisal services during the fiscal
year.
During the fiscal year ended September 30, 1996 as compared to the previous
fiscal year, the Partnership's Pleasanton motel achieved a decrease of $18,182
(or 1.9%) in expenditures notwithstanding increased occupancy. The motel
achieved reduced expenditures of $42,087 in renovations and replacements and
$5,250 in maintenance wages and salaries. The reductions were substantially
offset by increases of $15,149 in front desk wages and salaries, and in
proportionate increases in franchise and management fees.
Future Trends
The Managing General Partner anticipates that the Partnership will continue
to achieve favorable financial results. Future financial results will be
dependent upon the economic climate in the Pleasanton hospitality market. While
the market is presently strong, this area has been subjected to both favorable
and unfavorable cyclical business conditions.
The Manging General Partner expects the Partnership's occupancy rate (and
hence its revenues and profits) to benefit, in the long range, from economic
growth. The Managing General Partner anticipates lower occupancy rates and
perhaps lower room rates in the event of an economic downturn.
-11-
The Managing General Partner anticipates that, during the long range, any
increase in operating costs and expenses due to inflation will be met by an
upward adjustment in room rates. In the short range, however, competitive
conditions in the Partnership's market area may make such adjustments difficult
or impossible. The Managing General Partner is unable to predict when improved
competitive conditions would make such adjustments possible.
Item 7. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Inapplicable
-12-
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements at pages F-1
through F-12.
-13-
ANNUAL REPORT ON FORM 10-K
ITEM 8
FINANCIAL STATEMENTS
SUPER 8 ECONOMY LODGING IV, LTD.
SACRAMENTO, CALIFORNIA
SEPTEMBER 30, 1997
F-1
Item 8: Financial Statements
SUPER 8 ECONOMY LODGING IV, LTD.
INDEX OF FINANCIAL STATEMENTS
Pages
-----
Financial Statements:
Report of Certified Public Accountants F-3
Balance Sheets, September 30, 1997 and 1996 F-4
Statements of Operations for the years ended
September 30, 1997, 1996 and 1995 F-5
Statements of Partners' Equity for the years ended
September 30, 1997, 1996 and 1995 F-6
Statements of Cash Flows for the years ended F-7 to
September 30, 1997, 1996 and 1995 F-8
Notes to Financial Statements F-9 to
F-11
Note: All 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 CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Super 8 Economy Lodging IV, Ltd.
We have audited the accompanying balance sheets of Super 8 Economy Lodging IV,
Ltd., a California limited partnership, as of September 30, 1997 and 1996 and
the related statements of operations, partners' equity and cash flows for each
of the three years in the period ended September 30, 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 Super 8 Economy Lodging IV,
Ltd. as of September 30, 1997 and 1996 and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1997,
in conformity with generally accepted accounting principles.
VOCKER KRISTOFFERSON AND CO.
San Mateo, California
F-3
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
BALANCE SHEETS
September 30, 1997 and 1996
ASSETS
1997 1996
---------- ----------
Current Assets:
Cash and temporary investments (Notes 1 and 3) $1,079,735 $ 938,477
Accounts receivable 54,290 21,563
Prepaid expenses 13,463 12,789
---------- ----------
Total Current Assets 1,147,488 972,829
---------- ----------
Property and Equipment (Notes 2 and 6):
Land 799,311 799,311
Buildings 2,246,419 2,246,419
Furniture and equipment 519,267 530,321
---------- ----------
3,564,997 3,576,051
Accumulated depreciation (1,824,868) (1,755,449)
---------- ----------
Property and Equipment, Net 1,740,129 1,820,602
---------- ----------
Other Assets (Note 2):
Deposit of federal income taxes 63,975 48,141
---------- ----------
Total Assets $2,951,592 $2,841,572
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 117,779 $ 106,979
Due to related parties (Note 4) 8,241 4,465
---------- ----------
Total Liabilities 126,020 111,444
---------- ----------
Partners' Equity:
General Partners (2,128) (10,707)
Limited Partners 2,827,700 2,740,835
---------- ----------
Total Partners' Equity 2,825,572 2,730,128
---------- ----------
Total Liabilities and Partners' Equity $2,951,592 $2,841,572
========== ==========
The accompanying notes are an integral part of these financial statements
F-4
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended September 30:
----------------------------------
1997 1996 1995
---------- ---------- ----------
Income:
Motel room $1,860,287 $1,613,817 $1,448,486
Telephone and vending 42,012 41,244 36,519
Interest 36,351 28,879 22,379
Other 2,458 2,798 3,418
---------- ---------- ----------
Total Income 1,941,108 1,686,738 1,510,802
---------- ---------- ----------
Expenses:
Motel operations (exclusive of depreciation
shown separately below) (Notes 4 and 5) 830,267 789,729 777,015
General and administrative (exclusive of
depreciation shown separately below)(Note 4) 44,522 34,302 36,760
Depreciation and amortization (Note 2) 113,229 114,714 109,175
Property management fees (Note 4) 95,146 82,893 74,416
---------- ---------- ----------
Total Expenses 1,083,164 1,021,638 997,366
---------- ---------- ----------
Net Income $ 857,944 $ 665,100 $ 513,436
========== ========== ==========
Net Income Allocable to General Partners $ 8,579 $ 6,651 $ 5,134
======== ======== ========
Net Income Allocable to Limited Partners $ 849,365 $ 658,449 $ 508,302
========== ========== ==========
Net Income Per Partnership Unit (Note 1) $ 84.94 $ 65.84 $ 50.83
======== ======== ========
Distributions to Limited Partners
Per Partnership Unit (Note 1) $ 76.25 $ 59.30 $ 54.60
======== ======== ========
The accompanying notes are an integral part of these financial statements
F-5
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended September 30:
----------------------------------
1997 1996 1995
---------- ---------- ----------
General Partners:
Balance at beginning of year $ (10,707) $ (17,358) $ (22,492)
Net income 8,579 6,651 5,134
---------- ---------- ----------
Balance at End of Year (2,128) (10,707) (17,358)
---------- ---------- ----------
Limited Partners:
Balance at beginning of year 2,740,835 2,675,386 2,713,084
Net income 849,365 658,449 508,302
Distributions to Limited Partners (762,500) (593,000) (546,000)
---------- ---------- ----------
Balance at End of Year 2,827,700 2,740,835 2,675,386
---------- ---------- ----------
Total Partners' Equity $2,825,572 $2,730,128 $2,658,028
========== ========== ==========
The accompanying notes are an integral part of these financial statements
F-6
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended September 30:
----------------------------------
1997 1996 1995
---------- ---------- ----------
Cash Flows From Operating Activities:
Received from motel operations $1,874,958 $1,658,578 $1,492,593
Expended for motel operations and
general and administrative expenses (972,367) (917,820) (877,067)
Interest received 33,423 28,940 20,953
---------- ---------- ----------
Net Cash Provided by Operating Activities 936,014 769,698 636,479
---------- ---------- ----------
Cash Flows From Investing Activities:
Purchases of property and equipment (32,756) (33,120) (60,317)
Proceeds from sale of equipment 500 - 1,250
---------- ---------- ----------
Net Cash Used by Investing Activities (32,256) (33,120) (59,067)
---------- ---------- ----------
Cash Flows From Financing Activities:
Distributions paid to limited partners (762,500) (593,000) (546,000)
---------- ---------- ----------
Net Cash Used by Financing Activities (762,500) (593,000) (546,000)
---------- ---------- ----------
Net Increase in Cash and Temporary
Investments 141,258 143,578 31,412
Cash and Temporary Investments:
Beginning of year 938,477 794,899 763,487
---------- ---------- ----------
End of Year $1,079,735 $ 938,477 $ 794,899
========== ========== ==========
The accompanying notes are an integral part of these financial statements
F-7
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
Years Ended September 30:
----------------------------------
1997 1996 1995
---------- ---------- ----------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $857,944 $665,100 $513,436
---------- ---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 113,229 114,714 109,175
Loss (gain) on disposition of property
and equipment (500) - 1,430
(Increase) decrease in accounts receivable (32,727) 780 2,745
Increase in prepaid expenses (674) (855) (475)
Increase in other assets (15,834) (10,044) (5,006)
Increase (decrease) in accounts payable
and accrued liabilities 10,800 (2,996) 15,174
Increase in due to related parties 3,776 2,999 -
---------- ---------- ----------
Total Adjustments 78,070 104,598 123,043
---------- ---------- ----------
Net Cash Provided by
Operating Activities $936,014 $769,698 $636,479
========== ========== ==========
The accompanying notes are an integral part of these financial statements
F-8
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE PARTNERSHIP
Super 8 Economy Lodging IV, Ltd., is a limited partnership organized under
California law on February 5, 1982, to acquire and operate motel properties in
Pleasanton and Santa Ana, California. The Pleasanton motel was opened in
October, 1983, and the Santa Ana motel was opened in February, 1985. The
Partnership grants credit to customers, substantially all of which are local
businesses in Pleasanton. The Santa Ana property was sold in April, 1992.
The Managing General Partner of the Partnership is Grotewohl Management
Services, Inc., the sole shareholder and officer of which is Philip B.
Grotewohl. The Associate General Partner of the Partnership is Robert J. Dana.
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 10,000 units outstanding. All partnership
units are owned by the Limited Partners.
The Partnership agreement requires that the Partnership maintain reserves for
normal repairs, replacements, working capital and contingencies in an amount of
at least 5% of adjusted capital contributions. As of September 30, 1997, the
Partnership had a combined balance in cash and temporary investments of
$1,079,735 , which was $624,735 in excess of the $455,000 required amount.
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, except for a deposit of federal income taxes which is required of
partnerships with fiscal year ends other than a calendar year. The amount of the
deposit is based upon the taxable income of the partnership in the prior year.
Property and equipment are recorded at cost. Depreciation and amortization are
computed using the following estimated useful lives and methods:
Description Methods Useful Lives
----------------------- ------------------------- ------------
Buildings 150% declining balance
and straight-line 10-25 years
Furniture and equipment 200% and 150% declining
balance and straight-line 3-7 years
Costs incurred in connection with maintenance and repair are charged to expense.
Major renewals and betterments that materially prolong the life 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 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3 - CASH AND TEMPORARY INVESTMENTS
Cash and temporary investments as of September 30, 1997 and 1996 consist of the
following: 1997 1996
--------- ---------
Cash in bank, non-interest bearing $ 74,738 $ 26,184
Money market accounts 704,997 512,293
Certificates of deposit 300,000 400,000
--------- ---------
Total Cash and Temporary Investments $1,079,735 $938,477
========= =========
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 six 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 the motel and
contributes an additional 1% of the 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 ($93,014 in 1997,
$80,691 in 1996 and $72,424 in 1995) are included in motel operations expense in
the accompanying statements of operations. The Partnership operates its motel
property 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 $37,206, $32,276 and $28,970 in 1997, 1996 and 1995,
respectively.
Property Management Fees
The General Partner, or its affiliates, handles the management of the motel
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 $95,146, $82,893 and $74,416 in 1997, 1996 and 1995, respeively.
Subordinated Partnership Management Fees
During the Partnership's operational stage, the General Partners are to receive
9% of cash available for distribution for Partnership management services, along
with an additional 1% of cash available for distribution on account of their
interest in the profit and losses, subordinated, however, to receipt by the
Limited Partners of a 10% per annum cumulative pre-tax return on their adjusted
capital contributions. At September 30, 1997 the Limited Partners had not
received the 10% cumulative return, and as no Partnership management fees are
presently payable they 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 sales or a refinancing. As
of September 30, 1997 the cumulative amount of these fees was $516,715.
F-10
SUPER 8 ECONOMY LODGING IV, 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 Partners are to
receive 15% of distributions of net proceeds from the sale or refinancing of
Partnership property 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.
Expenses Shared by the Partnership and its Affiliates
There are certain expenses which are allocated between the Partnership and
affiliated Super 8 partnerships. These expenses, which are allocated based on
usage, are telephone, data processing, rent of the administrative office,
administrative salaries and duplication expenses. The expenses allocated to the
Partnership were approximately $113,000 in 1997, $113,000 in 1996 and $110,000
in 1995 and are included in motel and restaurant operations and general and
administrative 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 sole shareholder of Grotewohl Management
Services, Inc., a General Partner of the Partnership.
NOTE 5 - MOTEL OPERATING EXPENSES
The following table summarizes the major components of motel operating expenses
for the years ended September 30, 1997, 1996 and 1995:
1997 1996 1995
-------- -------- --------
Salaries and related costs $322,022 $308,314 $282,994
Franchise and advertising fees 93,015 80,691 72,424
Utilities 68,243 66,664 70,349
Allocated costs,
mainly indirect salaries 90,713 92,355 89,327
Repairs and minor renovations 21,457 23,158 38,047
Other operating expenses 234,817 218,547 223,874
-------- -------- --------
Total Motel Operating Expenses $830,267 $789,729 $777,015
======== ======== ========
NOTE 6 - PROPERTY AND EQUIPMENT
The following is a summary of the accumulated depreciation of property and
equipment:
1997 1996
---------- ----------
Buildings $1,381,389 $1,288,266
Furniture and equipment 443,479 467,183
---------- ----------
Accumulated depreciation $1,824,868 $1,755,449
========== ==========
F-11
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7 - CONCENTRATION OF CREDIT RISK
The Partnership maintains its cash accounts in nine 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
September 30, 1997 follows:
Total cash in all California banks $1,098,989
Portion insured by FDIC (800,000)
----------
Uninsured cash balances $ 298,989
==========
NOTE 8 - SUBSEQUENT EVENTS
On October 27, 1997 a complaint was filed in the United States District Court by
Grotewohl Management Services, Inc. (a general partner of the Partnership)
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 B. Enquist. The
complaint pertains 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 Partnership. The
complaint alleges that the defendants violated certain provisions of the
Security and Exchange Act of 1934 and seeks injunctive and declarative relief.
Defendants have yet to respond to the complaint.
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 Partnership, along with
four other partnerships of which have common general partners, as nominal
defendants. The complaint pertains 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. The complaint
requests the follow relief: a declaration that the action is a proper derivative
action; an order requiring the defendants to discharge their fiduciary duties to
the Partnerships and to enjoin them from breaching their fiduciary duties;
return of certain profits; appointment of a receiver; and an award for damages
in an amount to be determined. The defendants and nominal defendants have
recently been served and are formulating their response to the complaint.
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 Managing General Partners of the Partnership were Dennis A.
Brown and Grotewohl Management Services, Inc., a 50% shareholder of which is
Philip B. Grotewohl. The original Associate General Partners were BWC
Incorporated and Robert J. Dana.
Upon Mr. Brown's death on February 25, 1988, Mr. Grotewohl, as president of
Grotewohl Management Services, Inc., and Mr. Dana elected to continue the
Partnership. BWC Incorporated was dissolved in 1989.
Grotewohl Management Services, Inc. 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.
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 Motel limited partnerships.
Mr. Dana, age 69, was a registered representative of Brown, Brosche
Securities, Inc. between 1982 and 1988. Between 1976 and 1982 he served as a
registered representative of several stock and investment brokers. Mr. Dana has
also served as marketing consultant for various real estate limited partnership
and other direct participation investment programs.
See Item 3, "Legal Proccedings."
Item 11. EXECUTIVE COMPENSATION
The following discussion contains certain information regarding aggregate
direct or indirect compensation paid or accrued by the Partnership during the
fiscal year ended September 30, 1997 to the General Partners and the Estate of
Dennis A. Brown, and/or their affiliates. Although Mr. Brown ceased to be a
general partner of the Partnership upon his death, his estate shares in certain
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
Estate of Dennis A. Brown and the Managing General Partner, is managing the
Partnership's motel. The fee for this service is 5% of the gross proceeds from
the operation of the 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.
During the fiscal year covered by this report the Partnership accrued such
fees in the amount of $95,146, all of which were paid.
-14-
Franchise Fees and Advertising Fees
The Partnership operates its motel as a franchisee of Super 8 Motels, Inc.,
through a sub-franchise obtained from Super 8 Management Corporation. In March
1988 the shareholders of Super 8 Management Corporation transferred their
interests in the sub-franchise agreement to the Manager. The Partnership, as
franchisee, pays to the franchisor monthly franchise fees equal to 4% of its
gross room revenue and contributes 1% of its gross room revenue to an
advertising fund administered by the franchisor to finance institutional
advertising. The Manager is entitled to one-half of the 4% franchise fee.
The total of franchise fees accrued during the fiscal year covered by this
report was $74,412, of which $37,206 accrued to the Manager. All of the above
sums have been paid.
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 Managing
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 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 10% per annum cumulative on their Adjusted Capital Contributions. During the
fiscal year covered by this report, $762,500 in distributions of Cash Available
for Distribution were paid to the Limited Partners. A total of $516,715
representing the General Partners' Interest in Cash Available for Distribution
has been deferred and remains unpaid since commencement of the Partnership. The
Limited Partners must receive $9,145,855 (calculated through September 30, 1997)
and $910,000 each year thereafter in additional distributions before any of the
accrued amounts will be paid to the General Partners. Accordingly, the General
Partners consider the payment of these deferred amounts to be unlikely.
General Partner's Interest in Sale or Refinancing Proceeds
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 contribution 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 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.
-15-
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 Estate
of Dennis A. Brown, the Managing General Partner and the Associate General
Partner.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
TITLE
OF AMOUNT AND NATURE OF PERCENT
CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
----- ------------------------------ -------------------- --------
Units Everest Lodging Investor, LLC 182 Units 1.82%
Units Everest Madison Investors, LLC 497 Units 4.97%
-----------
TOTAL 679 Units 6.79%
===========
Security Ownership of Management
The General Partners do not beneficially own 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, 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.
-16-
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 affiliated Super 8 partnerships. 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 $113,000 in the fiscal year ended September 30,
1997 and are included in general and administrative expenses and motel 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, a 50% shareholder of the Managing
General Partner.
-17-
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, September 30, 1997 and 1996
Statement of Operations for the Years Ended September 30,
1997, 1996 and 1995 Statements of Partners' Equity for the
Years Ended September 30, 1997, 1996 and 1995 Statements of
Cash Flows for the Years Ended September 30, 1997, 1996 and
1995 Notes to Financial Statements
2. Financial Statement Schedules Included in Part IV of the Report
None
3. Exhibits
3. and 4. The Partnership Agreement is incorporated herein as an
exhibit from the annual report on Form 10-K for the fiscal
year ended September 30, 1994
(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.
-18-
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 ECONOMY LODGING IV, LTD.
By (Signature and Title) /s/ Philip B. Grotewohl
-------------------------
Philip B. Grotewohl,
Chairman of Grotewohl Management
Services, Inc.,
Managing General Partner
Date: December 22, 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., Managing General
Partner
Date: December 22, 1997
-19-