FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] 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 0-8639
CONSOLIDATED CAPITAL GROWTH FUND
(Exact name of small business issuer as specified in its charter)
California 94-2382571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 12 months (or for such shorter period
that the Partnership was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL GROWTH FUND
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1999
Assets
Cash and cash equivalents $ 1,514
Receivables and deposits 731
Restricted escrows 509
Other assets 559
Investment properties:
Land $ 4,610
Buildings and related personal property 39,803
44,413
Less accumulated depreciation (26,317) 18,096
$ 21,409
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 109
Tenant security deposit liabilities 266
Accrued property taxes 472
Other liabilities 407
Mortgage notes payable 30,690
Partners' Deficit
General partner $ (4,784)
Limited partners (49,196 units issued and
outstanding) (5,751) (10,535)
$ 21,409
See Accompanying Notes to Financial Statements
b)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues:
Rental income $2,777 $ 2,684 $ 8,291 $ 7,923
Other income 152 199 455 548
Total revenues 2,929 2,883 8,746 8,471
Expenses:
Operating 1,076 1,256 3,310 3,500
General and administrative 139 62 388 238
Depreciation 561 534 1,612 1,557
Interest 558 558 1,675 1,675
Property taxes 152 147 457 455
Total expenses 2,486 2,557 7,442 7,425
Net income $ 443 $ 326 $ 1,304 $ 1,046
Net income allocated to general
partner (1%) $ 4 $ 3 $ 13 $ 10
Net income allocated to limited
partners (99%) 439 323 1,291 1,036
$ 443 $ 326 $ 1,304 $ 1,046
Net income per limited
partnership unit $ 8.92 $ 6.57 $ 26.24 $ 21.06
Distribution per limited
partnership unit $ 13.86 $ 23.62 $ 29.47 $ 39.27
See Accompanying Notes to Financial Statements
c)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 49,196 $ 1 $49,196 $49,197
Partners' deficit at
December 31, 1998 49,196 $ (4,782) $(5,592) $(10,374)
Distribution to partners -- (15) (1,450) (1,465)
Net income for the nine months
ended September 30, 1999 -- 13 1,291 1,304
Partners' deficit
at September 30, 1999 49,196 $ (4,784) $ (5,751) $(10,535)
See Accompanying Notes to Financial Statements
d)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1999 1998
Cash flows from operating activities:
Net income $ 1,304 $ 1,046
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,612 1,557
Amortization of loan costs 58 58
Bad debt 86 111
Change in accounts:
Receivables and deposits (184) (244)
Other assets (76) 44
Accounts payable (55) 29
Tenant security deposit liabilities (45) 23
Accrued property taxes 297 290
Other liabilities (16) 19
Net cash provided by operating activities 2,981 2,933
Cash flows from investing activities:
Property improvements and replacements (1,106) (644)
Net withdrawals from restricted escrows 136 125
Net cash used in investing activities (970) (519)
Cash flows used in financing activities:
Distributions to partners (1,465) (895)
Net increase in cash and cash equivalents 546 1,519
Cash and cash equivalents at beginning of period 968 2,493
Cash and cash equivalents at end of period $ 1,514 $ 4,012
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,617 $ 1,617
Supplemental disclosure of non-cash activity
Distribution payable $ -- $ 1,351
See Accompanying Notes to Financial Statements
e)
CONSOLIDATED CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Consolidated Capital Growth
Fund (the "Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Article 310(b) of Regulation S-B.
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 ConCap Equities, Inc. (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1999, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1999. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998.
Certain reclassifications have been made to the 1998 information to conform to
the 1999 presentation.
NOTE B - TRANSFER OF CONTROL
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership Agreement provides for reimbursement to the General Partner and
its affiliates for costs incurred in connection with the administration of
partnership activities. The General Partner and its affiliates received
reimbursements and fees as reflected in the following table:
1999 1998
(in thousands)
Property management fees (included in operating expenses) $ 446 $ 428
Reimbursement for services of affiliates (included in
operating and general and administrative expense
and investment properties) 173 150
Partnership management fees (included in general
and administrative expense) 131 --
During the nine months ended September 30, 1999 and 1998, affiliates of the
General Partner were entitled to receive 5% of gross receipts from the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $446,000 and $428,000 for the
nine months ended September 30, 1999 and 1998, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $173,000 and $150,000 for the
nine months ended September 30, 1999 and 1998, respectively. Included in these
expenses for the nine months ended September 30, 1999 and 1998, is approximately
$16,000 and $2,000, respectively, of reimbursements for construction oversight
costs.
The Partnership Agreement provides for a fee equal to 9% of the total
distributions made to the limited partners from "cash available for
distribution" to the limited partners (as defined in the Agreement) to be paid
to the General Partner for executive and administrative management services.
During the nine months ended September 30, 1999 affiliates of the General
Partner received $131,000 for providing these services. There was no such cost
incurred for the nine months ended September 30, 1998.
On June 9, 1999, AIMCO Properties, L.P., an affiliate of the Managing General
Partner commenced a tender offer to purchase up to 12,224.71 units of limited
partnership interest in the Partnership (approximately 24.85% of the total
outstanding units) for a purchase price of $310 per unit. The offer expired on
July 14, 1999. Pursuant to the offer, AIMCO Properties, L.P. acquired 828.50
units. As a result, AIMCO and its affiliates currently own 23,082.15 units of
limited partnership interest in the Partnership representing 46.92% of the total
outstanding units. It is possible that AIMCO or its affiliate will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO.
NOTE D - SEGMENT REPORTING
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of four apartment complexes
located in Florida, Kentucky (2), and North Carolina. The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on net income. The accounting
policies of the reportable segment are the same as those described in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1998.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the nine month periods ended September 30, 1999 and 1998
is shown in the tables below. The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
1999 Residential Other Totals
(in thousands)
Rental income $ 8,291 $ -- $ 8,291
Other income 439 16 455
Interest expense 1,675 -- 1,675
Depreciation 1,612 -- 1,612
General and administrative expense -- 388 388
Segment profit (loss) 1,676 (372) 1,304
Total assets 21,079 330 21,409
Capital expenditures for
investment properties 1,106 -- 1,106
1998 Residential Other Totals
(in thousands)
Rental income $ 7,923 $ -- $ 7,923
Other income 454 94 548
Interest expense 1,675 -- 1,675
Depreciation 1,557 -- 1,557
General and administrative expense -- 238 238
Segment profit (loss) 1,190 (144) 1,046
Total assets 20,751 3,916 24,667
Capital expenditures for
investment properties 644 -- 644
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time.
The discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1999 and 1998:
Average Occupancy
Property 1999 1998
Breckinridge Square 95% 92%
Louisville, Kentucky
Churchill Park 97% 92%
Louisville, Kentucky
The Lakes 92% 91%
Raleigh, North Carolina
Doral Springs (formerly Tahoe Springs) 95% 93%
Miami, Florida
The General Partner attributes the increase in occupancy at Breckinridge Square
and Churchill Park to aggressive and effective marketing campaigns during the
last part of 1998 and into 1999. The increase in occupancy at Breckinridge
Square and Churchill Park is also attributable to improved conditions in the
apartment industry in the Louisville area.
Results of Operations
The Partnership's net income for the three and nine months ended September 30,
1999 was approximately $443,000 and $1,304,000 as compared to approximately
$326,000 and $1,046,000 for the three and nine months ended September 30, 1998.
The increase in net income for the three and nine months ended September 30,
1999 is due primarily to an increase in total revenue. Total revenue increased
due to an increase in rental income, which was partially offset by a decrease in
other income. The increase in rental income is primarily attributable to an
increase in average rental rates and the increase in occupancy at all four of
the Partnership's properties.
The increase in net income for the nine months ended September 30, 1999 was
partially offset by an increase in total expenses. Total expenses increased for
the nine months ended September 30, 1999 primarily due to an increase in general
and administrative expenses and to a lesser extent, an increase in depreciation
expense. These increases were partially offset by a decrease in operating
expense. The increase in net income for the three months ended September was
partially due to a decrease in total expenses. Total expenses decreased due to
a decrease in operating expense which was partially offset by an increase in
general and administrative expense and depreciation expenses. Operating expense
decreased primarily due to a decrease in maintenance and insurance expense.
Maintenance expense decreased due to interior and exterior building improvements
which were incurred during 1998. Insurance expense decreased at all four of the
investment properties due to a change in the hazard insurance policy carrier
during the third quarter of 1998. The decrease in operating expense is
partially offset by an increase in advertising costs incurred to increase
occupancy at all four of the Partnership's properties. The increase in
depreciation expense resulted from an increase in capital improvements performed
at all the investment properties during the past two years to improve the
overall appearance and quality of the properties.
General and administrative expense increased for the three and nine months ended
September 30, 1999 due to Partnership management fees paid as a result of the
May and September 1999 distributions from operations, as required by the
Partnership Agreement. Included in general and administrative expenses at both
September 30, 1999 and 1998 are management reimbursements to the General Partner
allowed under the Partnership Agreement. In addition, costs associated with the
quarterly and annual communications with investors and regulatory agencies and
the annual audit required by the Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions there is no guarantee that the
General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
The Partnership had cash and cash equivalents of approximately $1,514,000 at
September 30, 1999, compared to approximately $4,012,000 at September 30, 1998.
The increase in cash and cash equivalents of approximately $546,000 for the nine
months ended September 30, 1999 from the Partnership's year end is primarily due
to approximately $2,981,000 of cash provided by operating activities, which was
partially offset by approximately $1,465,000 of cash used in financing
activities and approximately $970,000 of cash used in investing activities.
Cash used in financing activities consisted of partner distributions. Cash used
in investing activities consisted primarily of property improvements and
replacements, which was partially offset by net withdrawals from escrow accounts
maintained by the mortgage lender. The Partnership invests its working capital
reserves in money market accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements. Capital
improvements planned for each of the Registrant's properties are detailed below.
Breckinridge Square
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the General Partner on
interior improvements, it is estimated that the property requires approximately
$280,000 of capital improvements over the next few years. The Partnership has
budgeted, but is not limited to, capital improvements of approximately $401,000
for 1999 at this property which includes certain of the required improvements
and consist of interior and exterior building improvements. During the nine
months ended September 30, 1999, the Partnership spent approximately $282,000 on
capital improvements consisting primarily of roof replacements, structural and
HVAC upgrades and floor covering and appliance replacements. The roof
replacements are substantially complete at September 30, 1999. These
improvements were funded from Partnership reserves and operations.
Churchill Park
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the General Partner on
interior improvements, it is estimated that the property requires approximately
$280,000 of capital improvements over the next few years. The Partnership has
budgeted, but is not limited to, capital improvements of approximately $226,000
for 1999 at this property which includes certain of the required improvements
and consist of electrical upgrades along with parking lot, roof, appliance,
floor covering, and sidewalk replacements. During the nine months ended
September 30, 1999, the Partnership spent approximately $291,000 on capital
improvements consisting primarily of floor covering and appliance replacement
and HVAC, swimming pool and roof replacements. Both the HVAC improvements and
swimming pool improvements are fully completed as of September 30, 1999. These
improvements were funded from Partnership reserves and operations.
The Lakes
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the General Partner on
interior improvements, it is estimated that the property requires approximately
$279,000 of capital improvements over the next few years. The Partnership has
budgeted, but is not limited to, capital improvements of approximately $587,000
for 1999 at this property which includes certain of the required improvements
and consist of electrical, HVAC and plumbing upgrades, floor covering,
appliance and roof replacements. During the nine months ended September 30,
1999, the Partnership spent approximately $282,000 on capital improvements
consisting primarily of floor covering and appliance replacement and HVAC
improvements. These improvements were funded from Partnership reserves and
operations.
Doral Springs
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the General Partner on
interior improvements, it is estimated that the property requires approximately
$279,000 of capital improvements over the next few years. The Partnership has
budgeted, but is not limited to, capital improvements of approximately $313,000
for 1999 at this property which includes certain of the required improvements
and consist of improved exterior lighting, floor covering replacement, parking
lot and stairwell improvements and landscape upgrades including new pool
fencing. During the nine months ended September 30, 1999, the Partnership
spent approximately $251,000 on capital improvements consisting primarily of
swimming pool and parking lot improvements, landscaping, and floor covering
replacement. The parking lot improvements are complete at September 30, 1999.
These improvements were funded from Partnership reserves and operations.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $30,690,000 requires monthly interest only
payments. These notes require balloon payments on November 1, 2003, and
December 1, 2005. The General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity date. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
may risk losing such properties through foreclosure.
Cash distributions of approximately $1,465,000 ($1,450,000 of which was paid to
the limited partners, $29.47 per limited partnership unit) were paid from
operations during the nine months ended September 30, 1999. Subsequent to the
nine months ended September 30, 1999, cash distributions of approximately
$689,000 ($682,000 of which was paid to the limited partners, $13.86 per limited
partnership unit) was paid from operations. During the nine months ended
September 30, 1998, the Partnership distributed approximately $2,246,000
($1,932,000 of which was paid to the limited partners, $39.27 per limited
partnership unit) from surplus cash to the limited partners. Payments were made
by the Partnership to the Georgia Department of Revenue and the North Carolina
Department of Revenue for withholding taxes related to income generated by the
Partnership's investment properties located in these states. These payments
were treated as distributions to the partners and are included in the
distribution amounts above. The Partnership's distribution policy is reviewed
on a semi-annual basis. Future cash distributions will depend on the levels of
net cash generated from operations, the availability of cash reserves, and the
timing of debt maturities, refinancings, and/or property sales. There can be no
assurance, however, that the Partnership will generate sufficient funds from
operations, after planned capital improvement expenditures, to permit further
distributions to its partners in 1999 or subsequent periods.
Tender Offer
On June 9, 1999, AIMCO Properties, L.P., an affiliate of the Managing General
Partner commenced a tender offer to purchase up to 12,224.71 units of limited
partnership interest in the Partnership (approximately 24.85% of the total
outstanding units) for a purchase price of $310 per unit. The offer expired on
July 14, 1999. Pursuant to the offer, AIMCO Properties, L.P. acquired 828.50
units. As a result, AIMCO and its affiliates currently own 23,082.15 units of
limited partnership interest in the Partnership representing 46.92% of the total
outstanding units. It is possible that AIMCO or its affiliate will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the Corporate General Partner and its affiliates for
management and administrative services ("Managing Agent"). Any of the computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made, or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the main computer system used by the Managing Agent became fully
functional. In addition to the main computer system, PC-based network servers,
routers and desktop PCs were analyzed for compliance. The Managing Agent has
begun to replace each of the non-compliant network connections and desktop PCs
and, as of September 30, 1999, had virtually completed this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date.
Computer Software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
In April 1999 the Managing Agent embarked on a data center consolidation project
that unifies its core financial systems under its Year 2000 compliant system.
The estimated completion date for this project is October 1999.
During 1998, the Managing agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and testing process was
completed in June 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded virtually all of the server operating systems.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally.
A pre-assessment of the properties by the Managing Agent has indicated virtually
no Year 2000 issues. A complete, formal assessment of all the properties by the
Managing Agent was virtually completed by September 30, 1999. Any operating
equipment that is found non-compliant will be repaired or replaced.
The total cost incurred for all properties managed by the Managing Agent as of
September 30, 1999 to replace or repair the operating equipment was
approximately $75,000. The Managing Agent estimates the cost to replace or
repair any remaining operating equipment is approximately $125,000.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within its enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent has banking relationships with three major financial
institutions, all of which have designated their compliance. The Managing Agent
has updated data transmission standards with all of the financial institutions.
All financial institutions have communicated that they are Year 2000 compliant
and accordingly no accounts were required to be moved from the existing
financial institutions.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date, the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.9 million ($0.7 million expenses
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL GROWTH FUND
By: CONCAP EQUITIES, INC.
the General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Consolidated
Capital Growth Fund Third Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000201529
<NAME> CONSOLIDATED CAPITAL GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,514
<SECURITIES> 0
<RECEIVABLES> 731
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 44,413
<DEPRECIATION> 26,317
<TOTAL-ASSETS> 21,409
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 30,690
0
0
<COMMON> 0
<OTHER-SE> (10,535)
<TOTAL-LIABILITY-AND-EQUITY> 21,409
<SALES> 0
<TOTAL-REVENUES> 8,746
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,675
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,304
<EPS-BASIC> 26.24<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
