item 14 exhibits financial statement schedules reports form 8k exhibits incorporated reference 12 subscription agreement filed exhibit b prospectus 31 certificate agreement limited partnership registrant filed exhibit prospectus 61 opinion counsel partnership exhibits filed herewith financial statements registrant years ended december 31 1997 1996 1995 financial statements supplemental schedules include report independent public accountants balance sheet statement income statement changes partners equity statement cash flows notes financial statements january 1998 partnership newsletter mailed limited partners reports filed form 8k 1997 financial data schedule year ended december 31 1997 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized gerald l whitcomb gerald l whitcomb date general partner super 8 motels northwest independent auditors report financial statements december 31 1997 1996 1995 contents independent auditors report general limited partners super 8 motels northwest audited accompanying balance sheets super 8 motels northwest december 31 1997 1996 related statements income changes partners equity cash flows three years ended december 31 1997 1996 1995 financial statements responsibility partnerships management responsibility express opinion financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects financial position super 8 motels northwest december 31 1997 1996 results operations cash flows three years ended december 31 1997 1996 1995 conformity generally accepted accounting principles tacoma washington january 29 1998 super 8 motels northwest balance sheet 2 accompanying notes integral part financial statements super 8 motels northwest balance sheet accompanying notes integral part financial statements 3 super 8 motels northwest statement income 4 accompanying notes integral part financial statements super 8 motels northwest statement changes partners equity year ended december 31 1997 1996 1995 accompanying notes integral part financial statements 5 super 8 motels northwest statement cash flows 6 accompanying notes integral part financial statements super 8 motels northwest statement cash flows accompanying notes integral part financial statements 7 super 8 motels northwest notes financial statements december 31 1997 1996 1995 note 1 partnership operations super 8 motels northwest washington limited partnership owns operates two motels one federal way washington one vicinity seattletacoma international airport note 2 summary significant accounting policies cash equivalents cash equivalents investments maturity date purchase three months less inventory consists various operating supplies valued cost property equipment property equipment stated cost depreciated using straightline accelerated methods estimated useful lives follows loan fees loan fees incurred connection financing remodeling seatac motel amortized 5 year period franchise fees initial franchise fees stated cost amortization amount provided using straightline method 20 years accrued vacation partnerships policy expense vacation pay paid rather earned required generally accepted accounting principles effect upon financial statements significant income taxes provision made accompanying financial statements federal state income taxes taxable income loss partnership allocated included taxable income partners see note 5 additional discussion income per limited partnership unit net income per limited partnership unit computed dividing limited partners share net income limited partners units outstanding year super 8 motels northwest notes financial statements december 31 1997 1996 1995 note 2 summary significant accounting policies continued concentration credit risk partnership bank deposits excess federal deposit insurance limits partnerships management anticipate adverse effect financial position resulting credit risk use estimates preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported financial statements accompanying notes actual results could differ estimates note 3 distributions allocations profits losses distributions partnership agreement quarterly basis general partner determines amount cash available distribution distributes cash follows 1 general partner 99 limited partners limited partners received cumulative pretax return adjusted capital investment equal 10 per year end partnership year distribution made payment unpaid balance property management fees see note 6 remaining cash distributed 15 general partner 85 limited partners profit losses profits losses allocated 1 general partner 99 limited partners limited partners received cumulative pretax return 10 per year adjusted capital investment thereafter 15 general partner 85 limited partners years ended december 31 1997 1996 1995 limited partners received cumulative pretax return 10 partnerships net income years allocated 15 general partner 85 limited partners super 8 motels northwest notes financial statements december 31 1997 1996 1995 note 4 longterm debt longterm debt december 31 1997 1996 consists following based december 31 1997 interest rates principal payments required notes next five years thereafter follows super 8 motels northwest notes financial statements december 31 1997 1996 1995 note 5 income taxes cost certain assets amount certain expenses reported federal income tax purposes different amounts reported generally accepted accounting principles accompanying financial statements differences arise primarily depreciating land improvements buildings financial reporting purposes using straightline method 30 year life federal income tax purposes using straightline method 15 18 315 year life depreciating furniture equipment financial reporting purposes using accelerated straightline methods 5 7 year life federal income tax purposes using accelerated cost recovery method modified accelerated cost recovery method 5 7 year life deducting sales tax incurred prior 1987 property equipment acquisitions expense federal income tax purposes capitalizing financial reporting purposes following reconciliation net income financial reporting purposes net income federal income tax reporting purposes super 8 motels northwest notes financial statements december 31 1997 1996 1995 note 6 relatedparty transactions partnership general partner gerald l whitcomb affiliates general partner follows partnership management agreement affiliate general partner employ affiliate period 20 years manager motels owned partnership agreement provides payment property management fee affiliate equal 5 partnerships gross revenues motel operations addition reimbursement certain outofpocket cost incurred affiliate connection management property 5 base fees recorded property management fees reimbursements outofpocket costs recorded administrative service fees payment property management fees subordinated receipt limited partners cumulative pretax return adjusted capital investment 10 per annum 10 achieved 1992 effective july 1 1992 management began paying monthly current management fees unpaid management fees relating 1990 totaling 605348 paid 1997 note 7 commitments franchise agreements partnership purchased franchise rights provide motel services general public using system commonly known super 8 motels initial franchise fee 15000 paid motel partnership committed pay additional fees equal 4 gross room revenue 20 year term respective agreements addition 1 gross room revenue remitted super 8 motels advertising participation national reservation system amount included advertising promotion lease commitments partnership operating lease equipment seatac motel remaining term operating lease 15 years december 31 1997 super 8 motels northwest notes financial statements december 31 1997 1996 1995 note 7 commitments continued future minimum lease payments based current rents follows note 8 fair value financial instruments cash equivalents carrying amount approximates fair value shortterm maturity instruments longterm debt carrying amounts partnerships borrowings longterm revolving credit agreement notes payable approximate fair value note 9 year 2000 compliance currently motel reservations credit card approvals handled equipment software provided respectively super 8 motels inc individual banking institutions properties business currently internal accounting exception call accounting completed manually pursuant powerup program designed instituted paid super 8 motels inc motels provided pcbased property management system integrates reservations credit card approvals call accounting security motel accounting single system fully integrated system place every motel within super 8 system third quarter 1999 new equipment software designed developed franchisor franchisee required utilize partnership assured super 8 motels inc total system year 2000 compliant total cost conversion may borne motels owned partnership exceed 5000 per motel internally general partner affiliated management company undertaken task totally replacing current corporate accounting system ensure fully integrate new property management systems installed super 8 motels inc anticipated conversion completed year end 1998 part hardware software provided powerup initiative cost company systems purchased general partner affiliates software hardware systems vendors required certify products year 2000 compliant cost attributed motel partnership super 8 motels northwest notes financial statements december 31 1997 1996 1995 conversion exceed 5000 per motel item 14 exhibits financial statement schedules reports form 8k exhibits incorporated reference 12 subscription agreement filed exhibit b prospectus 31 certificate agreement limited partnership registrant filed exhibit prospectus 61 opinion counsel partnership exhibits filed herewith financial statements registrant years ended december 31 1996 1995 1994 financial statements supplemental schedules include report independent public accountants balance sheet statement income statement changes partners equity statement cash flows notes financial statements january 1997 partnership newsletter mailed limited partners reports filed form 8k 1996 financial data schedule year ended december 31 1996 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized gerald l whitcomb gerald l whitcomb date general partner super 8 motels northwest independent auditors report financial statements december 31 1996 1995 1994 contents independent auditors report general limited partners super 8 motels northwest audited accompanying balance sheets super 8 motels northwest december 31 1996 1995 related statements income changes partners equity cash flows three years ended december 31 1996 1995 1994 financial statements responsibility partnerships management responsibility express opinion financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects financial position super 8 motels northwest december 31 1996 1995 results operations cash flows three years ended december 31 1996 1995 1994 conformity generally accepted accounting principles tacoma washington february 8 1997 super 8 motels northwest balance sheet assets december 31 1996 1995 current assets cash equivalents 544684 222146 accounts receivable trade 21518 15718 accounts receivable affiliates 3442 inventory 42093 42277 prepaid expenses 7212 13322 total current assets 615507 296905 property equipment cost land 2053409 land improvements 79671 buildings 2836155 2818164 equipment furniture fixtures 1021108 1017991 5990343 5969235 less accumulated depreciation 2022417 1934081 total property equipment 3967926 4035154 assets loan fees 15000 franchise fees 30000 45000 less accumulated amortization 25500 21000 19500 24000 deposits 34343 33710 total assets 53843 57710 4637276 4389769 2 accompanying notes integral part financial statements super 8 motels northwest balance sheet liabilities partners equity accompanying notes integral part financial statements 3 super 8 motels northwest statement income 4 accompanying notes integral part financial statements super 8 motels northwest statement changes partners equity year ended december 31 1996 1995 1994 accompanying notes integral part financial statements 5 super 8 motels northwest statement cash flows 6 accompanying notes integral part financial statements super 8 motels northwest statement cash flows accompanying notes integral part financial statements 7 super 8 motels northwest notes financial statements december 31 1996 1995 1994 note 1 partnership operations super 8 motels northwest washington limited partnership owns operates two motels one federal way washington one vicinity seattletacoma international airport note 2 summary significant accounting policies cash equivalents cash equivalents investments maturity date purchase three months less inventory consists various operating supplies valued cost property equipment property equipment stated cost depreciated using straightline accelerated methods estimated useful lives follows loan fees loan fees incurred connection financing remodeling seatac motel amortized 5 year period franchise fees initial franchise fees stated cost amortization amount provided using straightline method 20 years accrued vacation partnerships policy expense vacation pay paid rather earned required generally accepted accounting principles effect upon financial statements significant income taxes provision made accompanying financial statements federal state income taxes taxable income loss partnership allocated included taxable income partners see note 5 additional discussion income per limited partnership unit net income per limited partnership unit computed dividing limited partners share net income limited partners units outstanding year super 8 motels northwest notes financial statements december 31 1996 1995 1994 note 2 summary significant accounting policies continued concentration credit risk partnership bank deposits excess federal deposit insurance limits partnerships management anticipate adverse effect financial position resulting credit risk use estimates preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported financial statements accompanying notes actual results could differ estimates note 3 distributions allocations profits losses distributions partnership agreement quarterly basis general partner determines amount cash available distribution distributes cash follows 1 general partner 99 limited partners limited partners received cumulative pretax return adjusted capital investment equal 10 per year end partnership year distribution made payment unpaid balance property management fees see note 6 remaining cash distributed 15 general partner 85 limited partners profit losses profits losses allocated 1 general partner 99 limited partners limited partners received cumulative pretax return 10 per year adjusted capital investment thereafter 15 general partner 85 limited partners years ended december 31 1996 1995 1994 limited partners received cumulative pretax return 10 partnerships net income years allocated 15 general partner 85 limited partners super 8 motels northwest notes financial statements december 31 1996 1995 1994 note 4 longterm debt longterm debt december 31 1996 1995 consists following based december 31 1996 interest rates principal payments required notes next five years thereafter follows super 8 motels northwest notes financial statements december 31 1996 1995 1994 note 5 income taxes cost certain assets amount certain expenses reported federal income tax purposes different amounts reported generally accepted accounting principles accompanying financial statements differences arise primarily depreciating land improvements buildings financial reporting purposes using straightline method 30 year life federal income tax purposes using straightline method 15 18 315 year life depreciating furniture equipment financial reporting purposes using accelerated straightline methods 5 7 year life federal income tax purposes using accelerated cost recovery method modified accelerated cost recovery method 5 7 year life amortizing capitalized interest federal income tax purposes using 10 year life financial reporting purposes amortizing life building deducting sales tax incurred prior 1987 property equipment acquisitions expense federal income tax purposes capitalizing financial reporting purposes following reconciliation net income financial reporting purposes net income federal income tax reporting purposes super 8 motels northwest notes financial statements december 31 1996 1995 1994 note 6 relatedparty transactions partnership general partner gerald l whitcomb affiliates general partner follows partnership management agreement affiliate general partner employ affiliate period 20 years manager motels owned partnership agreement provides payment property management fee affiliate equal 5 partnerships gross revenues motel operations addition reimbursement certain outofpocket cost incurred affiliate connection management property 5 base fees recorded property management fees reimbursements outofpocket costs recorded administrative service fees payment property management fees subordinated receipt limited partners cumulative pretax return adjusted capital investment 10 per annum 10 achieved 1992 effective july 1 1992 management began paying monthly current management fees however since partnership agreement states management fees paid operational cash flow paying 10 return limited partners payment management fees relating 1990 made unpaid management fees totaling 605348 paid sufficient operational cash flow experienced 1994 management fees accrued restatement prior years information see note 9 discussion note 7 commitments franchise agreements partnership purchased franchise rights provide motel services general public using system commonly known super 8 motels initial franchise fee 15000 paid motel partnership committed pay additional fees equal 4 gross room revenue 20 year term respective agreements addition 1 gross room revenue remitted super 8 motels advertising participation national reservation system amount super 8 motels northwest notes financial statements december 31 1996 1995 1994 included advertising promotion note 7 commitments continued lease commitments partnership operating lease equipment seatac motel remaining term operating lease 25 years december 31 1996 minimum lease payments based current rents follows note 8 fair value financial instruments cash equivalents carrying amount approximates fair value shortterm maturity instruments longterm debt carrying amounts partnerships borrowings longterm revolving credit agreement notes payable approximate fair value note 9 priorperiod adjustment discussed note 6 management previously accrue unpaid property management fees management believed fees probable payment 1994 partnership adopted accrual method accounting unpaid property management fees accordingly december 31 1993 financial statements restated record unpaid property management fees totaling 719525 super 8 motels northwest fourth quarter 1996 vol 16 4january 31 1997 national news new reservation system goes online december 1 1996 superline began operations new reservation system featuring enhancements front desk agents individual motels reservation agents superline features allow super 8 provide better service guests several ways new reservation system allow superline book rooms twelve months advance provide effective room inventory management system individual properties contribute addition individual property pages motel super 8 motel home page internet super 8 president bob weller recently thanked involved completing upgrade process stated something initiated 18 months ago weve come long way relatively short period time bedmaking championships every year super 8 motels inc holds international bedmaking competition housekeepers united states canada compete new car cash great prizes previous years final competition taken place super 8 motels international convention however year super 8 decided hold international convention want miss year bedmaking competition finals instead held mall america bloomington minnesota may 17 1997 first time finals held public venue provide even excitement contestants great media exposure super 8 large public audience sure attend put super 8 public spotlight provide public recognition outstanding work enthusiasm housekeepers regional competitions already underway across united states canada peninsula management northwest held regional competition late november eighteen housekeepers properties managed peninsula management northwest qualified next round competition held super 8 regional meetings spokane washington march wish luck regional news annual meeting peninsula management northwest annual managers meeting held first week december corporate office tumwater washington general managers assistant managers property attended threeday meeting included general sessions ceo gerald whitcomb coo sam polack well working meetings regional directors marketing director human resources director complete work property budgets organizational planning 1997 meeting culminated annual dinner awards presentation year held olympia golf country club award manager year went tom zett general manager portland super 8 jean gesh night auditor lacey super 8 motel awarded employee year taul watanabe award excellence service awarded gerald maryanne whitcomb larry knudsen executive vice president peninsula group awards highest occupancy highest average daily rate highest vip sales highest gop highest gop presented bremerton anchorage port angeles sea tac bremerton respectively best quality assurance score went corvallis oregon lowest turnover lowest expenses percentage total revenue awarded portland bremerton respectively finally wilsonville klamath falls tied properties lowest guest concerns 1996 northwest construction underway 85room property redmond oregon property located highway 97 16 miles north existing bend super 8 motel grand opening planned june 27 1997 january 27 1997 peninsula group held longawaited groundbreaking woodburn oregon super 8 motel construction property repeatedly delayed due development fee escalation discussed third quarter update however months negotiations produced desired results construction underway grand opening slated late summer 1997 stated third quarter update site roseburg oregon also acquired located new 15 interchange north end roseburg development site due begin summer 1997 include 100room super 8 motel also restaurants gas stationconvenience store super 8 motels northwest operations seatac super 8 motel ended year good fourth quarter see enclosed charts completing year almost 66 occupancy increase 14 occupancy points 1995 importantly average daily rate adr went 5679 6246 hike 568 10 combined factors improved net room sales 40 increase 520000 compared 1995 numbers somewhat affected fact 1995 remodel many times rooms service renovation even appears time money put remodel begun pay handsome returns fourth quarter federal way super 8 motel continued trend slight increases occupancy adr period 1995 year property rented 1761 rooms 1996 increase 802 ending year occupancy 696 adr increased 139 4613 overall net room sales increased 110000 116 growth net room revenue 1996 enclosed fourth quarter occupancy charts average daily room rate comparisons also enclosed unaudited yearend financial statements show total sales partnership increased 657900 28 1995 examining net income line inappropriate conclude 1996 net income increased 839424 must recognized extensive renovation expenses allocated supplies maintenance 1995 however adjusting 19951996 variance supplies maintenance would seem prudent conclude net income increased least 100 fourth quarter distribution check amount 2500 per partnership unit distribution equates 10 annualized distribution quarter brings total distributions 1996 10000 per partnership unit 10 per annum 1000 invested certified public accounting firm moss adams currently performing 1996 yearend audit partnership books audited financial statement sent april first quarter 1997 distribution packets tax information 1996 income tax information mailed later february 28 1997 directly cpa firm please call corporate office 3609438000 receive tax information march 5 need leave name current address phone number partnership interest receptionist forward information investor relations please call information date information mailed directly cpa firm available date recently moved please provide us current address february 15 avoid delay receipt tax information thank patience matter annual partnership meetings attendance welcomed annual partnership meetings meeting schedules follows appreciate support super 8 motels northwest planning spring summer vacation call superline 1800800 8000 reserve room super 8 motel located canada us item 14 exhibits financial statement schedules reports form 8k exhibits incorporated reference 12 subscription agreement filed exhibit b prospectus 31 certificate agreement limited partnership registrant filed exhibit prospectus 61 opinion counsel partnership exhibits filed herewith financial statements registrant years ended december 31 1995 1994 1993 financial statements include report independent public accountants balance sheet statement income statement changes partners equity statement cash flows notes financial statements january 1996 partnership newsletter mailed limited partners reports filed form 8k 1995 financial data schedule year ended december 31 1995 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized gerald l whitcomb march 28 1996 gerald l whitcomb date general partner super 8 motels northwest independent auditors report financial statements december 31 1995 1994 1993 contents independent auditors report general limited partners super 8 motels northwest audited accompanying balance sheets super 8 motels northwest december 31 1995 1994 related statements income changes partners equity cash flows three years ended december 31 1995 1994 1993 financial statements responsibility partnerships management responsibility express opinion financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects financial position super 8 motels northwest december 31 1995 1994 results operations cash flows three years ended december 31 1995 1994 1993 conformity generally accepted accounting principles described note 7 accompanying financial statements year ended december 31 1993 restated reflect accrual property management fees moss adams llp tacoma washington february 5 1996 1 super 8 motels northwest balance sheet assets accompanying notes integral part financial statements 2 super 8 motels northwest balance sheet liabilities partners equity accompanying notes integral part financial statements 3 super 8 motels northwest statement income accompanying notes integral part financial statements 4 super 8 motels northwest statement changes partners equity accompanying notes integral part financial statements 5 super 8 motels northwest statement cash flows accompanying notes integral part financial statements 6 super 8 motels northwest statement cash flows accompanying notes integral part financial statements 7 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 1 partnership operations description business super 8 motels northwest washington limited partnership owns operates two motels one federal way washington one vicinity seattletacoma international airport note 2 summary significant accounting policies cash equivalents cash equivalents investments maturity date purchase three months less b inventory consists various operating supplies valued cost c property equipment depreciation property equipment stated cost dep eciated using straightline accelerated methods estimated useful lives follows franchise fees initial franchise fees stated cost amortized 20 years using straightline method e income taxes provision made accompanying financial statements federal state income taxes taxable income loss partnership allocated included taxable income partners see note 5 additional discussion f income per limited partnership unit net income per limited partnership unit computed dividing limited partners share net income limited partners units outstanding year 8 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 2 summary significant accounting policies continued g accrued vacation partnerships policy expense vacation pay paid rather earned required generally accepted accounting principles effect upon financial statements significant h concentration credit risk partnership bank deposits excess federal deposit insurance limits partnerships management anticipate adverse effect financial position resulting credit risk use estimates preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported financial statements accompanying notes actual results could differ estimates j loan fees loan fees connection financing remodeling seatac motel amortized fiveyear period note 3 distributions allocations profits losses distributions partnership agreement quarterly basis general partner determines amount cash available distribution distributes cash follows 1 general partner 99 limited partners limited partners received cumulative pretax return adjusted capital investment equal 10 per year end partnership year distribution made payment unpaid balance property management fees see note 6 remaining cash allocated 15 general partner 85 limited partners profit losses profits losses allocated 1 general partner 99 limited partners limited partners received cumulative pretax return 10 per year adjusted capital investment thereafter 15 general partner 85 limited partners years ended december 31 1995 1994 1993 limited partners received cumulative pretax return 10 partnerships net income years allocated 15 general partner 85 limited partners 9 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 4 longterm debt longterm debt december 31 1995 1994 consisted following 10 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 4 longterm debt continued based december 31 1995 interest rate principal payments required notes next five years thereafter follows note 5 income taxes cost certain assets amount certain expenses reported federal income tax purposes different amounts reported generally accepted accounting principles accompanying financial statements differences arise primarily depreciating land improvements buildings financial reporting purposes sing straightline method 30 year life federal income tax purposes using straightline method 15 18 315 year lives b depreciating furniture equipment financial reporting purposes using straightline method five year life federal income tax purposes using accelerated cost recovery method modified accelerated cost recovery method five seven year life c deducting sales tax incurred prior 1987 property equipment acquisitions expense federal income tax purposes capitalizing financial reporting purposes amortizing capitalized interest federal income tax purposes using ten year life financial reporting purposes amortizing lifeof building 11 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 5 income taxes continued following reconciliation net income financial reporting purposes net income federal income tax reporting purposes years ended december 31 1995 1994 1993 note 6 relatedparty transactions partnership general partner gerald l whitcomb partnership affiliates general partner follows partnership management agreement affiliate general partner employ affiliate period 20 years manager motels owned partnership agreement provides payment property management fee affiliate equal 5 partnerships gross revenues motel operations addition reimbursement certain outofpocket cost incurred affiliate connection management property 5 base fees property management fees reimbursements outofpocket costs recorded administrative service fees 12 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 6 relatedparty transactions continued payment property management fees subordinated receipt limited partners cumulative pretax return adjusted capital investment 10 per annum 10 achieved june 30 1992 effective july 1 1992 management began paying monthly current management fees prior december 31 1992 management determined based upon working capital needs northwest first six months 1992 1991 management fees paid management fees paid 1992 124403 1992 111973 1991 management fees paid 1993 115480 1993 management fees paid 1994 119617 1994 115594 1990 management fees paid 1995 115938 1995 however since partnership agreement states management fees paid operational cash flow paying 10 return limited partners payment management fees relating 1990 made unpaid management fees totaling 605348 paid sufficient operational cash flow experienced 1994 management fees accrued restatement prior years information see note 7 discussion note 7 priorperiod adjustment discussed last two paragraphs note 6 management previously accrue unpaid property management fees management believed fees probable payment 1994 partnership adopted accrual method accounting unpaid property management fees accordingly accompanying december 31 1993 financial statements restated summary effect restatement 1993 financial statements follows 13 super 8 motels northwest notes financial statements december 31 1995 1994 1993 note 8 commitment franchise agreement partnership purchased franchise rights provide motel services general public using system commonly known super 8 motels initial franchise fee 15000 paid motel partnership committed pay additional fees equal 4 gross room revenue 20 year term agreement franchise agreement super 8 motels inc pay 1 gross room revenue national advertising fund terminated december 31 1995 b lease commitments partnership operating lease equipment seatac motel term operating lease 35 years minimum lease payments based current rents follows note 9 fair value financial instruments cash equivalents carrying amount approximates fair value shortterm maturity instruments longterm debt carrying amounts partnerships borrowings longterm revolving credit agreement notes payable approximate fair value 14 item 7 managements discussion analysis financial condition results operations december 31 1997 partnerships current assets exceeded current liabilities 320855 93233 less difference current assets current liabilities december 31 1996 decrease largely attributable lower fourth quarter occupancy figures federal way motel additionally accrued property management fees attributable previous years paid 1997 recent past months january february march slowest season occupancy partnership must carefully manage cash months interest rate partnerships primary mortgage 85 1997 1996 adjustable rate loan provides interest rate adjustment year based amount equal monthly median cost funds index fslic insured savings loan associations plus 3575 less 1 plus amount interest rate long term loan funding seatac renovation variable based lenders prime rate plus 1 per annum payable monthly payments 9768 plus interest banks prime rate interest december 31 1997 850 per annum december 31 1997 seatac federal way properties completed fifteenth full years operation comparative operational statistics follow gross room rate defined total room revenue divided total rooms sold total 1997 room sales revenue decreased 2096 2857164 2859260 1996 decrease average occupancy level year largely offset increase room rates resulting relatively static revenue figures total rented rooms decreased 49294 decrease 2346 rented rooms previous year figure 51640 gross room rates rose 5537 per room 1996 5796 1997 46 increase net income 1997 increased 140483 1089393 948910 1996 increase primarily due decrease supplies maintenance expenses major renovations undertaken 1997 supplies maintenance increase dramatically completion major renovation federal way scheduled begin february 1998 direct operating expenses 1997 decreased 103507 869464 972971 1996 higher payroll related expenses offset decrease supplies maintenance expenses indirect operating expenses remained relatively flat increasing 9445 289502 1997 increase labor rates washington coupled increased staffing levels resulted higher administrative service fees caused total administrative general expenses increase 12808 1997 519333 28364 decrease fixed charges resulted decreases depreciation interest expense discussed item 1 partnership operates motels franchise super 8 motels inc nationwide super 8 motel chain continues grow increasing name familiarity chain super 8 superline national reservation system vip club approximately 5000000 members continue improved prior 1985 partnership accruing motels property management fees even though obligation pay fees exists terms partnership agreement partnership allow paid time limited partners received cumulative annual 10 return adjusted capital investment previous filings united states securities exchange commission sec partnerships prior years financial statements partnerships accounting policy regarding fees expense paid instead incurred accrue unpaid property management fees liability face balance sheet 1994 partnership changed accounting policy property management fees reflect partnerships income statement expense obligation pay fee incurred accrue corresponding liability face partnerships balance sheet thus financial information contained report conforms reporting position previously incurred unpaid management fees totaling approximately 605000 paid 1997 attention directed note 6 partnerships financial statements discussion property management fees additionally see discussion part ii item 6 selected financial data report year 2000 compliance issue currently motel reservations credit card approvals handled equipment software provided respectively super 8 motels inc individual banking institutions properties business currently internal accounting exception call accounting completed manually pursuant powerup program designed instituted paid super 8 motels inc motels provided pcbased property management system integrates reservations credit card approvals call accounting security motel accounting single system fully integrated system place every motel within super 8 system third quarter 1999 equipment software new designed developed franchisor franchisee required utilize partnership assured super 8 motels inc total system year 2000 compliant total cost conversion may borne motels owned partnership exceed 5000 per motel internally general partner super 8 motels northwest affiliated management company undertaken task totally replacing current corporate accounting system ensure fully integrate new property management system installed super 8 motels inc anticipated conversion completed year end 1998 part hardware software provided powerup initiative cost company systems purchased general partner affiliates software hardware systems vendors required certify products year 2000 compliant cost attributed motel partnership conversion exceed 5000 per motel item 8 item 7 managements discussion analysis financial condition results operations december 31 1996 partnerships current assets exceeded current liabilities 414088 365286 greater difference current assets current liabilities december 31 1995 increase largely attributable strong fourth quarter occupancy figures federal way seatac motels recent past months january february march slowest season occupancy partnership must carefully manage cash months interest rate partnerships primary mortgage 85 75 1996 1995 respectively adjustable rate loan provides interest rate adjustment year based amount equal monthly median cost funds index fslic insured savings loan associations plus 375 less 1 plus amount interest rate long term loan funding seatac renovation variable based lenders prime rate plus 1 per annum payable interest payments march 31 1996 changing monthly payments 9768 plus interest banks prime rate interest december 31 1996 825 per annum december 31 1996 seatac federal way properties completed fourteenth full years operation comparative operational statistics follow gross room rate defined total room revenue divided total rooms sold total 1996 room sales revenue increased 639405 2859260 2219855 1995 completion renovation seatac motel early february 1996 largely responsible strong revenue increase renovation responsible well increase rented rooms increased 51640 increase 8046 rented rooms previous year figure 43594 gross room rates continued rise 5092 per room 1995 5537 1996 net income 1996 increased 816487 948910 132423 1995 increase primarily due growth room revenue coupled decrease direct operating expenses reflected majority renovation costs seatac motel 1995 direct operating expenses 1996 decreased 273822 972971 1246793 1995 decrease due renovation costs seatac motel largely incurred 1995 indirect operating expenses remained relatively flat increasing 9563 320313 1996 increases property management franchise fees reflect strong increase room revenue caused total administrative general expenses increase 62054 1996 506439 44809 increase fixed charges resulted increases depreciation interest expense discussed item 1 partnership operates motels franchise super 8 motels inc nationwide super 8 motel chain continues grow increasing name familiarity chain super 8 superline national reservation system vip club approximately 4300000 members continue improved prior 1985 partnership accruing motels property management fees even though obligation pay fees exists terms partnership agreement partnership allow paid time limited partners received cumulative annual 10 return adjusted capital investment previous filings united states securities exchange commission sec partnerships prior years financial statements partnerships accounting policy regarding fees expense paid instead incurred accrue unpaid property management fees liability face balance sheet 1994 partnership changed accounting policy property management fees reflect partnerships income statement expense obligation pay fee incurred accrue corresponding liability face partnerships balance sheet thus financial information contained report conforms reporting position currently previously incurred unpaid management fees total approximately 605000 attention directed note 6 partnerships financial statements discussion property management fees additionally see discussion part ii item 6 selected financial data report item 8 item 7 managements discussion analysis financial condition results operations december 31 1995 partnerships current assets exceeded current liabilities 48802 76030 less difference current assets current liabilities december 31 1994 drop largely attributable funds partnership expended renovating seatac property see discussion loss available rooms renovation recent past months january february march slowest season occupancy partnership must carefully manage cash months nevertheless partnership able make distribution limited partners january 31 1996 150000 interest rate partnerships primary mortgage 75 1995 1994 adjustable rate loan provides interest rate adjustment january determined lesser 1 per annum amount equal monthly median cost funds index fslic insured savings loan associations plus 375 per annum rate effect 1996 85 per annum interest rate long term loan funding seatac renovation variable based lenders prime rate plus 1 per annum payable interest payments march 31 1996 banks prime rate interest december 31 1995 85 per annum december 31 1995 seatac federal way properties completed thirteenth full years operation comparative operational statistics follow gross room rate defined total room revenue divided total rooms sold seatac motel renovation contributed significant decrease rooms rented property number rented rooms partnership decreased 46138 1994 43594 1995 decrease 2544 rooms slight increase gross room rate enough offset drop occupancy caused seatac renovation total revenues partnership decreased 96232 2415274 1994 2319042 1995 net income partnership decreased 650953 1995 prior year 783376 year ended december 31 1994 132423 year ended december 31 1995 increases direct operating expenses fixed charges coupled decreased revenues largely contributed decrease net income partnership direct operating expenses increased 444939 result increase maintenance repairs supplies due renovation seatac location indirect operating expenses grew 14336 primarily result increases advertising promotion insurance expenses increases professional services administrative fees resulted 47292 rise administrative general costs 1995 compared 1994 48679 increase fixed charges resulted increases depreciation interest expense february 16 1993 board directors super 8 motels inc partnerships franchiser announced agreement sell company hospitality franchise systems inc sale consummated 1993 hospitality franchise systems inc worlds largest franchiser hotel rooms publiclyheld company whose stock traded new york stock exchange symbol hfs company 4400 franchised super 8 motels days inn howard johnson ramada motel brands 300000 rooms united states canada mexico india europe hfs operates franchise business manner respects separate identity brand maintain separate marketing campaigns additional general franchise services separate reservation systems 800 numbers 4200 properties worldwide provides enormous opportunities marketing purchasing technology transaction made available super 8 franchisees hfss operational marketing franchise sales experience nationwide super 8 motel chain continues grow increasing name familiarity chain super 8 superline national reservation system vip club approximately 3000000 members continue improved prior 1985 partnership accruing expense liability motels property management fees even though obligation pay fees exists terms partnership agreement partnership allow paid time limited partners received cumulative annual 10 return adjusted capital investment previous filings united states securities exchange commission sec partnerships prior years financial statements partnerships accounting policy regarding fees expense paid instead earned accrue unpaid property management fees liability face balance sheet 1994 partnership changed accounting policy property management fees reflect partnerships income statement expense obligation pay fee incurred accrue corresponding liability face partnerships balance sheet thus financial information contained report conforms reporting position currently previously incurred unpaid management fees total approximately 605000 attention directed note 7 partnerships financial statements discussion property management fees additionally see discussion part ii item 6 selected financial data report item 8  item 8 financial statements supplementary data see independent auditors report financial statements pages 2 13 financial statements incorporated herein reference item 14 list financial statement schedules filed part report item 9 item 8 financial statements supplementary data see independent auditors report financial statements pages 2 13 financial statements incorporated herein reference item 14 list financial statement schedules filed part report item 9 item 8 financial statements see independent auditors report financial statements pages 2 14 financial statements incorporated herein reference item 14 list financial statement schedules filed part report item 9 