UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
-------------
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: 0-20625
-------
DUKE REALTY LIMITED PARTNERSHIP
State of Incorporation: IRS Employer ID Number:
Indiana 35-1898425
- ----------------------- -----------------------
Address of principal executive offices:
8888 Keystone Crossing, Suite 1200
----------------------------------
Indianapolis, Indiana 46240
-----------------------------
Telephone: (317) 846-4700
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
The number of Limited Partnership Units outstanding as of August 7, 1998
was 91,849,876.
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP
INDEX
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
as of June 30, 1998 (Unaudited) and
December 31, 1997 2
Condensed Consolidated Statements of
Operations for the three months and
six months ended June 30, 1998 and 1997
(Unaudited) 3
Condensed Consolidated Statements of
Cash Flows for the six months ended
June 30, 1998 and 1997 (Unaudited) 4
Condensed Consolidated Statement of
Partners' Equity for the six months
ended June 30, 1998 (Unaudited) 5
Notes to Condensed Consolidated
Financial Statements (Unaudited) 6-7
Independent Accountants' Review Report 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9-17
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote
of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 19
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
1998 1997
---------- -----------
ASSETS (Unaudited)
------
<S> <C> <C>
Real estate investments:
Land and improvements $ 271,079 $ 231,614
Buildings and tenant improvements 1,890,930 1,591,604
Construction in progress 102,455 107,242
Investments in unconsolidated companies 125,771 106,450
Land held for development 145,905 139,817
--------- ---------
2,536,140 2,176,727
Accumulated depreciation (146,350) (116,604)
--------- ---------
Net real estate investments 2,389,790 2,060,463
Cash 21,908 10,372
Accounts receivable from tenants,
net of allowance of $511 and $420 6,898 5,932
Straight-line rent receivable, net
of allowance of $841 17,874 14,746
Receivables on construction contracts 17,161 22,700
Deferred financing costs, net of
accumulated amortization of $10,720
and $9,101 11,784 12,289
Deferred leasing and other costs, net
of accumulated amortization of $12,828
and $9,251 42,060 34,369
Escrow deposits and other assets 24,243 16,303
--------- ---------
$2,531,718 $2,177,174
========= =========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Indebtedness:
Secured debt $ 363,584 $ 367,119
Unsecured notes 590,000 340,000
Unsecured line of credit - 13,000
--------- ---------
953,584 720,119
Construction payables and amounts
due subcontractors 33,062 40,786
Accounts payable 5,413 1,342
Accrued expenses:
Real estate taxes 28,775 25,203
Interest 9,245 6,883
Other expenses 14,975 13,851
Other liabilities 17,270 11,720
Tenant security deposits and
prepaid rents 18,242 14,268
--------- ---------
Total liabilities 1,080,566 834,172
Minority interest 283 222
--------- ---------
Partners' equity:
General partner:
Common equity 1,123,023 1,016,733
Preferred equity (liquidation
preference of $225,000) 218,906 218,906
--------- ---------
1,341,929 1,235,639
Limited partners' common equity 108,940 107,141
--------- ---------
Total partners' equity 1,450,869 1,342,780
--------- ---------
$2,531,718 $2,177,174
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 2 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
RENTAL OPERATIONS:
Revenues:
Rental income $80,503 $49,802 $157,338 $ 98,860
Equity in earnings of
unconsolidated companies 2,576 1,784 5,417 3,644
------ ------ ------- -------
83,079 51,586 162,755 102,504
------ ------ ------- -------
Operating expenses:
Rental expenses 13,839 8,793 27,684 18,022
Real estate taxes 8,053 4,673 15,887 9,115
Interest expense 14,346 9,695 27,225 18,641
Depreciation and amortization 16,525 10,052 30,785 19,551
------ ------ ------- -------
52,763 33,213 101,581 65,329
------ ------ ------- -------
Earnings from rental
operations 30,316 18,373 61,174 37,175
------ ------ ------- -------
SERVICE OPERATIONS:
Revenues:
Property management,
maintenance and leasing
fees 3,597 3,214 6,634 5,855
Construction management and
development fees 3,131 1,645 4,690 2,711
Other income 294 270 598 502
------ ------ ------- -------
7,022 5,129 11,922 9,068
------ ------ ------- -------
Operating expenses:
Payroll 3,804 2,545 6,687 4,885
Maintenance 594 528 1,198 916
Office and other 804 344 1,322 1,093
------ ------ ------- -------
5,202 3,417 9,207 6,894
------ ------ ------- -------
Earnings from service
operations 1,820 1,712 2,715 2,174
------ ------ ------- -------
General and administrative
expense (3,103) (1,383) (5,443) (2,492)
------ ------ ------- -------
Operating income 29,033 18,702 58,446 36,857
OTHER INCOME (EXPENSE):
Interest income 412 182 589 433
Earnings from property sales 368 102 954 382
Other expense (30) (376) (61) (419)
Minority interest in earnings
of unitholders (254) (440) (254) (425)
------ ------ ------- -------
Net income 29,529 18,170 59,674 36,828
Dividends on preferred units (4,703) (1,706) (9,406) (3,412)
------ ------ ------- -------
Net income available for common
units $24,826 $16,464 $ 50,268 $ 33,416
====== ====== ======= =======
Net income per common unit:
Basic $ .27 $ .24 $ .56 $ .49
====== ====== ======= =======
Diluted $ .27 $ .23 $ .56 $ .47
====== ====== ======= =======
Weighted average number of
common units outstanding 90,930 69,854 89,299 69,308
====== ====== ======= =======
Weighted average number of
common and dilutive
potential common units 91,830 70,576 90,222 70,081
====== ====== ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 3 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 59,674 $ 36,828
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation of buildings and
tenant improvements 27,385 17,241
Amortization of deferred financing costs 656 690
Amortization of deferred leasing and
other costs 3,400 2,310
Minority interest in earnings 254 425
Straight-line rental income (3,107) (1,642)
Earnings from property sales (954) (382)
Construction contracts, net (2,185) 13,918
Other accrued revenues and expenses, net 18,482 5,863
Equity in earnings in excess of
distributions received from unconsolidated
companies (3,371) (3,046)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 100,234 72,205
------- -------
Cash flows from investing activities:
Rental property development costs (101,464) (79,808)
Acquisition of rental properties (194,703) (44,434)
Acquisition of land held for development
and infrastructure costs (19,377) (29,068)
Recurring costs:
Tenant improvements (5,216) (4,259)
Leasing commissions (2,528) (2,431)
Building improvements (894) (337)
Other deferred leasing costs (8,049) (6,439)
Other deferred costs and other assets (8,182) (1,745)
Proceeds from property sales, net 3,980 23,025
Net investment in and advances to
unconsolidated companies (15,468) (30,681)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (351,901) (176,177)
------- -------
Cash flows from financing activities:
Contributions from general partner 102,912 63,684
Payments on indebtedness including
principal amortization (5,730) (1,458)
Proceeds from indebtedness 250,000 -
Borrowings (repayments) on lines
of credit, net (20,000) 79,000
Distributions to partners (53,641) (35,476)
Distributions to preferred unitholders (9,406) (3,412)
Distributions to minority interest (193) (336)
Deferred financing costs (739) (285)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 263,203 101,717
------- -------
NET INCREASE (DECREASE) IN CASH 11,536 (2,255)
Cash and cash equivalents at beginning of period 10,372 5,346
------- -------
Cash and cash equivalents at end of period $ 21,908 $ 3,091
======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 4 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
General Partner Limited
----------------------- Partners'
Common Preferred Common
Equity Equity Equity Total
---------- --------- --------- --------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $1,016,733 $218,906 $107,141 $1,342,780
Net income 44,120 9,406 6,148 59,662
Capital contribution from
General Partner 103,559 - - 103,559
Acquisition of Partnership
interest for common stock
of Duke Realty Investments,
Inc. 5,704 - - 5,704
Acquisition of property in
exchange for Limited Partner
Units - - 2,199 2,199
Distributions to preferred
unitholders - (9,406) - (9,406)
Distributions to partners
($.60 per Common Unit) (47,093) - (6,548) (53,641)
--------- ------- ------- ---------
BALANCE AT JUNE 30, 1998 $1,123,023 $218,906 $108,940 $1,450,869
========= ======= ======= =========
COMMON UNITS OUTSTANDING AT
JUNE 30, 1998 80,970 10,851 91,821
========= ======= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 5 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. FINANCIAL STATEMENTS
The interim condensed consolidated financial statements included
herein have been prepared by Duke Realty Limited Partnership (the
"Partnership") without audit. The statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions for Form 10-Q and Rule 10-
01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been
included. These financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included
in the Partnership's Annual Financial Statements.
THE PARTNERSHIP
Duke Realty Limited Partnership (the "Partnership") was formed on October
4, 1993, when Duke Realty Investments, Inc. (the "Predecessor
Partnership" or the "General Partner") contributed all of its
properties and related assets and liabilities along with the net
proceeds from the issuance of an additional 14,000,833 units through a
common stock offering to the Partnership. Simultaneously, the
Partnership completed the acquisition of Duke Associates, a full-
service commercial real estate firm operating in the Midwest. The
General Partner was formed in 1985 and qualifies as a real estate
investment trust under provisions of the Internal Revenue Code. The
General Partner is the sole general partner of the Partnership and
owns 88.2% of the Partnership at June 30, 1998. The remaining limited
partnership interest ("Limited Partner Units") (together with the
units of general partner interests, the ("Common Units")) are mainly
owned by the previous partners of Duke Associates. The Limited Partner
Units are exchangeable for units of the General Partner's common stock
on a one-for-one basis subject generally to a one-year holding period.
The General Partner periodically acquires a portion of the minority
interest in the Partnership through the issuance of units of common
stock for a like number of Common Units. The acquisition of the
minority interest is accounted for under the purchase method with
assets acquired recorded at the fair market value of the General
Partner's common stock on the date of acquisition.
The service operations are conducted through Duke Realty Services
Limited Partnership and Duke Construction Limited Partnership, in
which the Partnership has an 89% profits interest (after certain
preferred returns on partners' capital accounts) and effective control
of their operations. The consolidated financial statements include the
accounts of the Partnership and its majority-owned or controlled
subsidiaries. The equity interests in these majority-owned or
controlled subsidiaries not owned by the Partnership are reflected as
minority interests in the consolidated financial statements.
2. LINES OF CREDIT
The Partnership has a $250 million unsecured revolving credit
facility which is available to fund the development and acquisition
of additional rental properties and to provide working capital. The
revolving line of credit matures in April 2001 and bears interest at
the 30-day London Interbank Offered Rate ("LIBOR") plus .80%. The
Partnership also has a demand $7 million secured revolving credit
facility which is available to provide working capital. This facility
bears interest at the 30-day LIBOR rate plus .65%.
-6-
<PAGE>
3. RELATED PARTY TRANSACTIONS
The Partnership provides property management, maintenance, leasing,
construction, and other tenant related services to properties in
which certain executive officers have continuing ownership interests.
The Partnership was paid fees totaling $1.1 million and $1.7 million
for such services for the six months ended June 30, 1998 and 1997,
respectively. Management believes the terms for such services are
equivalent to those available in the market. The Partnership has an
option to purchase the executive officers' interest in each of these
properties which expires October 2003. The option price of each
property was established at the date the option was granted.
4. NET INCOME PER COMMON UNIT
Basic net income per common unit is computed by dividing net income
available for common units by the weighted average number of common
units outstanding for the period. Diluted net income per unit is
computed by dividing the sum of net income available for common units
and minority interest in earnings of unitholders, by the sum of the
weighted average number of common units and dilutive potential common
units outstanding for the period.
The following table reconciles the components of basic and diluted
net income per common unit for the three and six months ended June
30:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic net income available for
common units $24,826 $16,464 $50,268 $33,416
====== ====== ====== ======
Weighted average partnership
units outstanding 90,930 69,854 89,299 69,308
Dilutive units for long-term
compensation plans 900 722 923 773
------ ------ ------ ------
Weighted average number of
common units and dilutive
potential common units 91,830 70,576 90,222 70,081
====== ====== ====== ======
</TABLE>
5.SUBSEQUENT EVENTS
On July 23, 1998, a quarterly distribution of $.34 per Common Unit
was declared payable on August 31, 1998, to common unitholders of
record on August 14, 1998.
On July 23, 1998, a quarterly distribution of $.56875 per depositary
unit of Series A Preferred Units which is payable on August 31, 1998
to preferred unitholders of record on August 17, 1998.
On July 23, 1998, a quarterly distribution of $.99875 per depositary
unit of Series B Preferred Units, payable on September 30, 1998 to
preferred unitholders of record on September 16, 1998.
-7-
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
- --------------------------------------
The Partners
DUKE REALTY LIMITED PARTNERSHIP:
We have reviewed the condensed consolidated balance sheet of Duke
Realty Limited Partnership and subsidiaries as of June 30, 1998, the
related condensed consolidated statements of operations for the three
and six months ended June 30, 1998 and 1997, the related condensed
consolidated statements of cash flows for the six months ended June
30, 1998 and 1997, and the related condensed consolidated statement
of partners' equity for the six months ended June 30, 1998. These
condensed consolidated financial statements are the responsibility of
the Partnership's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Duke Realty
Limited Partnership and subsidiaries as of December 31, 1997, and the
related consolidated statements of operations and cash flows for the
year then ended (not presented herein); and in our report dated
January 28, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as
of December 31, 1997 is fairly presented, in all material respects,
in relation to the consolidated balance sheet from which it has been
derived.
KPMG Peat Marwick LLP
Indianapolis, Indiana
August 5, 1998
- 8 -
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
- --------
The Partnership's operating results depend primarily upon income from
the rental operations of its industrial, office and retail properties
located in its primary markets. This income from rental operations is
substantially influenced by the supply and demand for the
Partnership's rental space in its primary markets. In addition, the
Partnership's continued growth is dependent upon its ability to
maintain occupancy rates and increase rental rates of its in-service
portfolio and to continue development and acquisition of additional
rental properties.
The Partnership's primary markets in the Midwest have continued to
offer strong and stable local economies and have provided attractive
new development opportunities because of their central location,
established manufacturing base, skilled work force and moderate labor
costs. Consequently, the Partnership's occupancy rate of its in-
service portfolio has exceeded 94% the last two years. The
Partnership expects to continue to maintain its overall occupancy at
comparable levels and also expects to be able to increase rental
rates as leases are renewed or new leases are executed. This stable
occupancy as well as increasing rental rates should improve the
Partnership's results of operations from its in-service properties.
The Partnership's strategy for continued growth also includes
developing and acquiring additional rental properties in its primary
markets and expanding into other attractive Midwestern markets.
The following table sets forth information regarding the
Partnership's in-service portfolio of rental properties as of June
30, 1998 and 1997 (in thousands, except percentages):
<TABLE>
<CAPTION>
Total Percent of
Square Feet Total Square Feet Percent Occupied
------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Type 1998 1997 1998 1997 1998 1997
- ---- ---- ---- ---- ---- ---- ----
INDUSTRIAL
Service Centers 5,296 3,051 10.98% 9.71% 93.58% 94.93%
Bulk 28,368 18,702 58.83 59.55 93.69% 95.64%
OFFICE
Suburban 11,819 7,244 24.51 23.07 96.21% 96.80%
CBD 699 699 1.45 2.23 92.67% 91.09%
RETAIL 2,041 1,710 4.23 5.44 95.67% 95.15%
------ ------ ------- -------
Total 48,223 31,406 100.00% 100.00% 94.37% 95.71%
====== ====== ======= =======
</TABLE>
Management expects occupancy of the in-service property portfolio to
remain stable because (i) only 5.3% and 11.8% of the Partnership's
occupied square footage is subject to leases expiring in the
remainder of 1998 and in 1999, respectively, and (ii) the
Partnership's renewal percentage averaged 81%, 80% and 65% in 1997,
1996 and 1995, respectively.
- 9 -
<PAGE>
The following table reflects the Partnership's in-service portfolio
lease expiration schedule as of June 30, 1998 by product type
indicating square footage and annualized net effective rents under
expiring leases (in thousands, except per square foot amounts):
<TABLE>
<CAPTION>
Industrial Office Retail Total Portfolio
-------------- ---------------- --------------- -----------------
Yr of Sq. Sq. Sq. Sq.
Exp. Ft. Rent Ft. Rent Ft. Rent Ft. Rent
- ----- ------ ------ ------- ------- ----- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 1,737 $ 7,346 637 $ 7,095 19 $ 212 2,393 $ 14,653
1999 3,814 16,265 1,476 16,213 113 1,177 5,403 33,655
2000 2,976 12,655 1,166 14,638 128 1,555 4,270 28,848
2001 3,527 14,444 1,653 20,079 90 1,076 5,270 35,599
2002 4,110 17,080 1,562 17,996 153 1,684 5,825 36,760
2003 2,751 11,972 1,012 12,852 109 1,223 3,872 26,047
2004 1,364 5,646 357 4,501 17 178 1,738 10,325
2005 2,698 8,573 964 13,407 176 1,513 3,838 23,493
2006 2,122 7,793 711 10,344 8 108 2,841 18,245
2007 2,352 7,687 571 7,887 76 760 2,999 16,334
2008 and
There-
after 4,113 14,472 1,933 26,585 1,126 9,405 7,172 50,462
------ ------- ------ ------- ----- ------ ------ -------
Total
Leased 31,564 $123,933 12,042 $151,597 2,015 $18,891 45,621 $294,421
====== ======= ====== ======= ===== ====== ====== =======
Total
Portfolio
Square
Feet 33,664 12,518 2,041 48,223
====== ====== ===== ======
Annualized
net
effective
rent per
square foot $ 3.93 $ 12.59 $ 9.38 $ 6.45
======= ======= ====== =======
</TABLE>
This stable occupancy, along with increasing rental rates in each of
the Partnership's markets, will allow the in-service portfolio to
continue to provide a comparable or increasing level of earnings from
rental operations. The Partnership also expects to realize growth in
earnings from rental operations through (i) the development and
acquisition of additional rental properties in its primary markets;
(ii) the expansion into other attractive Midwestern markets; and
(iii) the completion of the 4.2 million square feet of properties
under development at June 30, 1998 over the next four quarters. The
4.2 million square feet of properties under development is expected
to provide future earnings from rental operations growth for the
Partnership as they are placed in service as follows (in thousands,
except percent leased and stabilized returns):
<TABLE>
<CAPTION>
Anticipated
In-Service Square Percent Project Stabilized
Date Feet Leased Costs Return
- ------------ ------ ------- ------- -----------
<S> <C> <C> <C> <C>
3rd Quarter 1998 609 57% $ 47,467 11.6%
4th Quarter 1998 1,621 33% 89,484 11.7%
1st Quarter 1999 1,269 27% 70,589 11.1%
Thereafter 650 75% 74,523 11.0%
----- -------
4,149 41% $282,063 11.3%
===== =======
</TABLE>
-10-
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Following is a summary of the Partnership's operating results and
property statistics for the three and six months ended June 30, 1998 and 1997
(in thousands, except number of properties and per unit amounts):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Rental Operations revenue $83,079 $51,586 $162,755 $102,504
Service Operations revenue 7,022 5,129 11,922 9,068
Earnings from Rental Operations 30,316 18,373 61,174 37,175
Earnings from Service Operations 1,820 1,712 2,715 2,174
Operating income 29,033 18,702 58,446 36,857
Net income available for common
units $24,826 $16,464 $50,268 $33,416
Weighted average common units
outstanding 90,930 69,854 89,299 69,308
Weighted average common and
dilutive potential common units 91,830 70,576 90,222 70,081
Basic income per common unit $ 0.27 $ 0.24 $ 0.56 $ 0.49
Diluted income per common unit $ 0.27 $ 0.23 $ 0.56 $ 0.47
Number of in-service properties
at end of period 419 262 419 262
In-service square footage at
end of period 48,223 31,406 48,223 31,406
Under development square footage
at end of period 4,149 4,097 4,149 4,097
</TABLE>
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 TO THREE MONTHS ENDED JUNE
30, 1997
- --------------------------------------------------------------------------------
Rental Operations
- -----------------
The Partnership increased its in-service portfolio of rental
properties from 262 properties comprising 31.4 million square feet at
June 30, 1997 to 419 properties comprising 48.2 million square feet
at June 30, 1998 through the acquisition of 124 properties totaling
10.1 million square feet and the completion of 37 properties and 3
building expansions totaling 7.0 million square feet developed by the
Partnership. The Partnership also disposed of 4 properties totaling
approximately 300,000 square feet. These 157 net additional rental
properties primarily account for the $31.5 million increase in
revenues from Rental Operations from 1997 to 1998. The increase from
1997 to 1998 in rental expenses, real estate taxes and depreciation
and amortization expense is also a result of the additional 157 in-
service rental properties.
Interest expense increased by approximately $4.6 million from $9.7
million for the three months ended June 30, 1997 to $14.3 million for
the three months ended June 30, 1998 primarily due to additional
unsecured debt issued in the third quarter of 1997 and the first two
quarters of 1998 to fund the development and acquisition of
additional rental properties.
As a result of the above-mentioned items, earnings from rental
operations increased $11.9 million from $18.4 million for the three
months ended June 30, 1997 to $30.3 million for the three months
ended June 30, 1998.
Service Operations
- ------------------
Service Operations revenues increased to $7.0 million for the three
months ended June 30, 1998 as compared to $5.1 million for the three
months ended June 30, 1997 primarily as a result of increases in
construction management fee revenue because of an increase in third-
party construction volume.
-11-
<PAGE>
Service Operations operating expenses increased from $3.4 million to
$5.2 million for the three months ended June 30, 1998 as compared to
the three months ended June 30, 1997 primarily as a result of an
increase in construction activity and the overall growth of the
Partnership.
As a result of the above-mentioned items, earnings from Service
Operations increased from $1.7 million for the three months ended
June 30, 1997 to $1.8 million for the three months ended June 30,
1998.
General and Administrative Expense
- ----------------------------------
General and administrative expense increased from $1.4 million for
the three months ended June 30, 1997 to $3.1 million for the three
months ended June 30, 1998 primarily as a result of internal
acquisition costs which are no longer permitted to be capitalized
being charged to general and administrative expense as well as an
increase in state and local income taxes resulting from the overall
growth of the Partnership.
Other Income (Expense)
- ----------------------
Interest income increased from $182,000 for the three months ended
June 30, 1997 to $412,000 for the three months ended June 30, 1998
primarily as a result of interest income which was earned on short-
term investments during the three months ended June 30, 1998. Other
expense consists of costs incurred during the pursuit of various
build-to-suit development projects or the acquisition of real estate
assets. During the three months ended June 30, 1997, approximately
$312,000 of costs were expensed in connection with the decision to
abandon the acquisition of a large real estate portfolio.
Net Income Available for Common Units
- -------------------------------------
Net income available for common units for the three months ended June
30, 1998 was $24.8 million compared to net income available for
common units of $16.5 million for the three months ended June 30,
1997. This increase results primarily from the operating result
fluctuations in rental and service operations explained above.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 TO SIX MONTHS ENDED JUNE 30, 1997
- ------------------------------------------------------------------------------
Rental Operations
- -----------------
The Partnership increased its in-service portfolio of rental
properties from 262 properties comprising 31.4 million square feet at
June 30, 1997 to 419 properties comprising 48.2 million square feet
at June 30, 1998 through the acquisition of 124 properties totaling
10.1 million square feet and the completion of 37 properties and 3
building expansions totaling 7.0 million square feet developed by the
Partnership. The Partnership also disposed of 4 properties totaling
approximately 300,000 square feet. These 157 net additional rental
properties primarily account for the $60.3 million increase in
revenues from Rental Operations from 1997 to 1998. The Partnership
received approximately $4.0 million of lease termination payments
which are included in rental income for the six months ended June 30,
1998. Included in rental income for the six months ended June 30,
1997 are approximately $1.7 million of lease termination payments.
The increase from 1997 to 1998 in rental expenses, real estate taxes
and depreciation and amortization expense is also a result of the
additional 157 in-service rental properties.
-12-
<PAGE>
Interest expense increased by approximately $8.6 million from $18.6
million for the six months ended June 30, 1997 to $27.2 million for
the six months ended June 30, 1998 primarily due to additional
unsecured debt issued in the third quarter of 1997 and the first two
quarters of 1998 to fund the development and acquisition of
additional rental properties.
As a result of the above-mentioned items, earnings from rental
operations increased $24.0 million from $37.2 million for the six
months ended June 30, 1997 to $61.2 million for the six months ended
June 30, 1998.
Service Operations
- ------------------
Service Operations revenues increased to $11.9 million for the six
months ended June 30, 1998 as compared to $9.1 million for the six
months ended June 30, 1997 primarily as a result of increases in
construction management fee revenue because of an increase in third-
party construction volume. Service Operations operating expenses
increased from $6.9 million to $9.2 million for the six months ended
June 30, 1998 as compared to the six months ended June 30, 1997
primarily as a result of an increase in construction activity and the
overall growth of the Partnership.
As a result of the above-mentioned items, earnings from Service
Operations increased from $2.2 million for the six months ended June
30, 1997 to $2.7 million for the six months ended June 30, 1998.
General and Administrative Expense
- ----------------------------------
General and administrative expense increased from $2.5 million for
the six months ended June 30, 1997 to $5.4 million for the six months
ended June 30, 1998 primarily as a result of internal acquisition
costs which are no longer permitted to be capitalized being charged
to general and administrative expense as well as an increase in state
and local income taxes resulting from the overall growth of the
Partnership.
Other Income (Expense)
- ---------------------
Interest income increased from $433,000 for the six months ended June
30, 1997 to $589,000 for the six months ended June 30, 1998 primarily
as a result of interest income which was earned on short-term
investments during the six months ended June 30, 1998. Other expense
consists of costs incurred in pursuit of unsuccessful development or
acquisition opportunities. During the six months ended June 30,
1997, approximately $312,000 of costs were written off in connection
with the decision to terminate the pursuit of the acquisition of a
large real estate portfolio
-13-
<PAGE>
Net Income Available for Common Units
- -------------------------------------
Net income available for common units for the six months ended June
30, 1998 was $50.3 million compared to net income available for
common units of $33.4 million for the six months ended June 30, 1997.
This increase results primarily from the operating result
fluctuations in rental and service operations explained above.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities totaling $100.2 million and
$72.2 million for the six months ended June 30, 1998 and 1997,
respectively, represents the primary source of liquidity to fund
distributions to unitholders, unitholders and the other minority
interests and to fund recurring costs associated with the renovation
and re-letting of the Partnership's properties. This increase is
primarily a result of, as discussed above under "Results of
Operations," the increase in net income resulting from the expansion
of the in-service portfolio through development and acquisitions of
additional rental properties.
Net cash used by investing activities totaling $351.9 million and
$176.2 million for the six months ended June 30, 1998 and 1997,
respectively, represents the investment of funds by the Partnership
to expand its portfolio of rental properties through the development
and acquisition of additional rental properties. In 1998, $315.5
million was invested in the development and acquisition of additional
rental properties and the acquisition of land held for development.
In 1997, the investment in the development and acquisition of
additional rental properties and land held for development was $153.3
million. Included in the $315.5 million of net cash used by investing
activities for the development and acquisition of rental properties
for the six months ended June 30, 1998 are acquisitions of five
portfolios consisting of twenty-one industrial buildings and fifteen
office buildings.
Net cash provided by financing activities totaling $263.2 million and
$101.7 million for the six months ended June 30, 1998 and 1997,
respectively, represents funds from equity and debt offerings and
borrowings under the lines of credit to fund the Partnership's
investing activities. Also included in financing activities is the
distribution of funds to unitholders and minority interests. In
January 1997, the Partnership received $56.7 million of net proceeds
from the General Partner's common equity offering which was used to
pay down amounts outstanding on the unsecured line of credit and to
fund current development activity. In 1998, the Partnership received
$86.8 million of net proceeds from the General Partner's common
equity offerings which was used to pay down amounts outstanding on
the unsecured line of credit and to fund current development and
acquisition activity. During the six months ended June 30, 1998, the
Partnership received $13.8 million of net proceeds from the issuance
of common stock under the General Partner's Direct Stock Purchase and
Dividend Reinvestment Plan compared to $7.0 million of net proceeds
received under the General Partner's Direct Stock Purchase and
Dividend Reinvestment Plan during the first six months of 1997. In
the first quarter of 1998, the Partnership received $100.0 million of
net proceeds from the offering of 7.05% Puttable Reset Securities due
March 1, 2006. In the second quarter of 1998, the Partnership
received $100.0 million of proceeds from the offering of 6.75% Senior
Notes due May 30, 2008. The Partnership also received $50.0 million
in proceeds from the issuance of 7.25% notes under the Partnership's
medium-term note program.
-14-
<PAGE>
The Partnership has a $250 million unsecured line of credit which
matures in April 2001 and bears interest at the 30-day LIBOR rate
plus .80%. The Partnership also has a demand $7 million secured
revolving credit facility which is available to provide working
capital. This facility bears interest at the 30-day LIBOR rate plus
.65%.
The General Partner and the Partnership currently have on file Form S-
3 Registration Statements with the Securities and Exchange Commission
("Shelf Registrations") which had remaining availability as of July
30, 1998 of approximately $1.2 billion to issue common stock,
preferred stock or unsecured debt securities. The General Partner and
the Partnership intend to issue additional equity or debt under these
Shelf Registrations as capital needs arise to fund the development
and acquisition of additional rental properties.
The total debt outstanding at June 30, 1998 consists of notes
totaling $953.6 million with a weighted average interest rate of
7.40% maturing at various dates through 2028. The Partnership has
$590.0 million of unsecured debt and $363.6 million of secured debt
outstanding at June 30, 1998.
Scheduled principal amortization of such debt totaled $3.4 million
for the six months ended June 30, 1998. Following is a summary of the
scheduled future amortization and maturities of the Partnership's
indebtedness at June 30, 1998 (in thousands):
<TABLE>
<CAPTION>
Repayments
----------------------------------------------- Weighted Average
Scheduled Interest Rate of
Year Amortization Maturities Total Future Repayments
- ---- ------------ ---------- ------------ ---------------
<S> <C> <C> <C> <C>
1998 $ 3,524 $ 40,603 $ 44,127 7.13%
1999 5,905 30,450 36,355 6.69%
2000 6,288 64,850 71,138 7.14%
2001 5,954 74,560 80,514 8.31%
2002 6,462 50,000 56,462 7.39%
2003 4,519 66,141 70,660 8.46%
2004 3,509 177,035 180,544 7.41%
2005 3,800 100,000 103,800 7.49%
2006 4,117 100,000 104,117 7.07%
2007 3,653 14,939 18,592 7.75%
Thereafter 37,275 150,000 187,275 6.89%
------ ------- -------
Total $85,006 $868,578 $953,584 7.40%
====== ======= =======
</TABLE>
The Partnership intends to pay regular quarterly distributions from
net cash provided by operating activities. A quarterly distribution
of $.34 per Common Unit was declared on July 23, 1998 payable on
August 31, 1998 to unitholders of record on August 14, 1998, which
represents an annualized distribution of $1.36 per unit. A quarterly
distribution of $.56875 per depositary preferred unit of Series A
Preferred Units was declared on July 23, 1998 which is payable on
August 31, 1998 to preferred unitholders of record on August 17,
1998. A quarterly distribution of $.99875 per depositary preferred
unit on the Series B Preferred Units was declared on July 23, 1998
which is payable on September 30, 1998 to preferred unitholders of
record on September 16, 1998.
-15-
<PAGE>
FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO"), which is
defined by the National Association of Real Estate Investment Trusts
as net income or loss excluding gains or losses from debt
restructuring and sales of property plus depreciation and
amortization, and after adjustments for minority interest,
unconsolidated partnerships and joint ventures (adjustments for
minority interest, unconsolidated partnerships and joint ventures are
calculated to reflect FFO on the same basis), is the industry
standard for reporting the operations of real estate investment
trusts.
The following table reflects the calculation of the Partnership's FFO
for the three and six months ended June 30 as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
1998 1997 1998 1997
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net income available for common units $ 24,826 $ 16,464 $ 50,268 $ 33,416
Add back:
Depreciation and amortization 16,525 10,052 30,785 19,551
Share of joint venture adjustments 968 791 1,550 1,314
Earnings from property sales (368) (102) (954) (382)
------- ------- ------- -------
FUNDS FROM OPERATIONS $ 41,951 $ 27,205 $ 81,649 $ 53,899
======= ======= ======= =======
CASH FLOW PROVIDED BY (USED BY):
Operating activities $ 61,614 $ 43,326 $100,234 $ 72,205
Investing activities (242,850) (135,001) (351,901) (176,177)
Financing activities 174,380 81,864 263,203 101,717
</TABLE>
The increase in FFO for the six months ended June 30, 1998 compared
to the six months ended June 30, 1997 results primarily from the
increased in-service rental property portfolio as discussed above
under "Results of Operations."
While management believes that FFO is the most relevant and widely
used measure of the Partnership's operating performance, such amount
does not represent cash flow from operations as defined by generally
accepted accounting principles, should not be considered as an
alternative to net income as an indicator of the Partnership's
operating performance, and is not indicative of cash available to
fund all cash flow needs.
RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
In March 1998, the Emerging Issues Task Force of the Financial
Accounting Standards Board reached a consensus on Issue No. 97-11
"Accounting for Internal Costs Relating to Real Estate Property
Acquisitions" which requires the internal cost of pre-acquisition
activities incurred in connection with the acquisition of an
operating property be expensed as incurred. During the first three
months of 1998, prior to adopting Issue No. 97-11, the Partnership
capitalized approximately $275,000 of internal costs of pre-
acquisition activities which under Issue No. 97-11 would have been
expensed.
-16-
<PAGE>
YEAR 2000
The Partnership recognizes that the Year 2000 problem could effect its
operations as well as the proper functioning of the embedded systems
included in the Partnership's properties. In any particular property, the
problem could effect the functioning of elevators, heating and air
conditioning systems, security systems and other automated building
systems. The Partnership has begun to evaluate the Year 2000 readiness of
its operations and those of its properties, through identifying and
contacting suppliers of building systems and other critical business
partners to determine if the building systems are affected and whether
these entities have an effective plan in place to address the Year 2000
issue. The Partnership is also in the process of evaluating its own systems
to determine the impact of the Year 2000. The Partnership expects to
complete this process of inventorying and evaluating its and its properties
systems by September 1, 1998, and the process is currently approximately
80% completed. Thereafter the Partnership will develop a work plan
detailing the tasks and resources required to ready its and its properties'
operations and systems for the Year 2000. This work plan will likely
include a timetable for remediation and testing of systems, as well as
contingency plans if readiness cannot be achieved. In addition, in many
cases the Partnership will be relying on statements from outside vendors as
to the Year 2000 readiness of their systems, and will not, in most
circumstances, attempt any independent verification. Because the
Partnership is still in the preliminary stages of its work to address the
Year 2000 problem, it currently does not have complete estimates as to the
cost of achieving Year 2000 readiness and has not yet developed any
contingency plans. Based on the preliminary information received to date,
however, the Partnership currently expects that these costs will not be
material. The Partnership expects to pass on most of the costs to achieve
Year 2000 readiness in any particular property to the tenants, and will
otherwise expense the costs as incurred.
There can be no assurance that the Partnership will be able to identify
and correct all aspects of the Year 2000 problem that effect it in
sufficient time, that it will develop adequate contingency plans or that
the costs of achieving Year 2000 readiness will not be material. The
Partnership, however, does not currently expect the Year 2000 problem
will have a material impact on the Partnership's business, operations, or
financial condition.
-17-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
--------------------------
None
Item 2. Changes in Securities
------------------------------
None
Item 3. Defaults upon Senior Securities
----------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
At the annual meeting of the shareholders of the General Partner held on
April 23, 1998, the following matters received the following votes:
<TABLE>
<CAPTION>
MATTER DESCRIPTION VOTES FOR VOTES AGAINST ABSTAINING
------------------ ----------- ------------- ----------
<S> <C> <C> <C>
1. Election of Directors:
Geoffrey Button 64,800,462 - 545,771
John D. Peterson 64,813,928 - 532,305
Ngaire E. Cuneo 64,811,460 - 534,773
Darell E. Zink, Jr. 64,815,528 - 530,705
2. Proposal to approve
amendment to
Articles of
Incorporation 63,971,813 1,205,897 168,523
3. Proposal to approve
amendment to
the 1995 Stock
Option Plan 63,944,439 1,117,027 284,767
4. Proposal to approve
amendment to
the 1995 Dividend
Increase Unit Plan 64,177,635 867,152 301,446
</TABLE>
Item 5. Other Information
--------------------------
When used in this Form 10-Q, the words "believes," "expects,"
"estimates" and similar expressions are intended to identify forward
looking-statements. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially.
In particular, among the factors that could cause actual results to
differ materially are continued qualification as a real estate
investment trust, general business and economic conditions,
competition, increases in real estate construction costs, interest
rates, accessibility of debt and equity capital markets and other
risks inherent in the real estate business including tenant
defaults, potential liability relating to environmental matters and
illiquidity of real estate investments. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Partnership undertakes no
obligation to publicly release the results of any revisions to these
-18-
<PAGE>
forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers are also advised to refer to the
Partnership's Form 8-K Report as filed with the U.S. Securities and
Exchange Commission on March 29, 1996 for additional information
concerning these risks.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
Exhibits
The following exhibits are filed or incorporated by reference as a part
of this report:
Exhibit 15. Letter regarding unaudited interim financial information
Exhibit 27. Financial Data Schedule (EDGAR Filing Only)
Reports on Form 8-K
The Partnership filed Form 8-K on May 27, 1998, to report the issuance
and sale of unsecured debt securities.
-19-
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
DUKE REALTY LIMITED PARTNERSHIP
-------------------------------
By: Duke Realty Investments, Inc.,
General Partner Registrant
Date: August 13, 1998 /s/ Thomas L. Hefner
--------------- -------------------------------
Thomas L. Hefner
President and
Chief Executive Officer
/s/ Darell E. Zink, Jr.
-------------------------------
Darell E. Zink, Jr.
Executive Vice President and
Chief Financial Officer
/s/ Dennis D. Oklak
-------------------------------
Dennis D. Oklak
Executive Vice President and
Chief Administrative Officer
- 20-
Exhibit 15
The Partners
Duke Realty Limited Partnership:
Gentlemen:
RE: Registration Statement No. 33-61361, 333-04695, and 333-26845
With respect to the subject registration statement, we
acknowledge our awareness of the use therein of our report dated
August 5, 1998 related to our review of interim financial
information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such
report is not considered a part of a registration statement
prepared or certified by an accountant, or a report prepared or
certified by an accountant within the meaning of sections 7 and
11 of the Act.
KPMG Peat Marwick LLP
Indianapolis, Indiana
August 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DUKE
REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES' JUNE 30, 1997 CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,091
<SECURITIES> 0
<RECEIVABLES> 27,581
<ALLOWANCES> (1,374)
<INVENTORY> 0
<CURRENT-ASSETS> 26,417
<PP&E> 1,459,765
<DEPRECIATION> (96,491)
<TOTAL-ASSETS> 1,552,867
<CURRENT-LIABILITIES> 81,855
<BONDS> 614,857
0
0
<COMMON> 0
<OTHER-SE> 855,656
<TOTAL-LIABILITY-AND-EQUITY> 1,552,867
<SALES> 0
<TOTAL-REVENUES> 112,387
<CGS> 57,183
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,837
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,951
<INCOME-PRETAX> 33,416
<INCOME-TAX> 0
<INCOME-CONTINUING> 33,416
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,416
<EPS-PRIMARY> $.49
<EPS-DILUTED> $.47
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DUKE
REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES' JUNE 30, 1998 CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 21,908
<SECURITIES> 0
<RECEIVABLES> 43,285
<ALLOWANCES> (1,352)
<INVENTORY> 0
<CURRENT-ASSETS> 70,210
<PP&E> 2,536,140
<DEPRECIATION> (146,350)
<TOTAL-ASSETS> 2,531,718
<CURRENT-LIABILITIES> 127,265
<BONDS> 953,584
0
0
<COMMON> 0
<OTHER-SE> 1,450,869
<TOTAL-LIABILITY-AND-EQUITY> 2,531,718
<SALES> 0
<TOTAL-REVENUES> 176,220
<CGS> 89,067
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,660
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,225
<INCOME-PRETAX> 50,268
<INCOME-TAX> 0
<INCOME-CONTINUING> 50,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,268
<EPS-PRIMARY> $.56
<EPS-DILUTED> $.56
</TABLE>
