UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 2-68727
Krupp Associates 1980-1
Massachusetts 04-2708956
(State or other jurisdiction of (IRS employer
incorporation or organization) identification
no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip
Code)
(617) 423-2233
(Registrant's telephone number, including area code)
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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. 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.
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
Multi-family apartment complex, net of
accumulated depreciation of $2,636,598
<S> <C> <C>
and $2,549,375, respectively $ 2,125,002 $ 2,180,147
Cash 78,859 11,153
Cash restricted for tenant security deposits 34,657 37,288
Escrow for property replacements 49,110 45,427
Prepaid expenses and other assets 92,869 79,852
Deferred expenses, net of accumulated
amortization of $35,260 and $33,165,
respectively 111,365 113,460
Total assets $ 2,491,862 $ 2,467,327
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable $ 2,223,493 $ 2,231,009
Notes payable 1,257,385 1,257,385
Accounts payable 110,320 117,977
Accrued expenses and other liabilities 238,119 230,299
Accrued interest due to affiliate (Note 3) 578,396 519,325
Total liabilities 4,407,713 4,355,995
Partners' deficit (Note 2):
Class A Limited Partners
(4,000 Units outstanding) (201,110) (176,645)
Original Limited Partner (429,061) (426,615)
General Partners (1,285,680) (1,285,408)
Total Partners' deficit (1,915,851) (1,888,668)
Total liabilities and Partners' deficit $ 2,491,862 $ 2,467,327
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Revenue:
<S> <C> <C> <C> <C>
Rental $282,092 $259,133 $556,073 $509,972
Other income 843 536 1,276 728
Total revenue 282,935 259,669 557,349 510,700
Expenses:
Operating 93,131 81,139 194,711 174,805
Maintenance 19,365 18,103 29,599 30,696
Real estate taxes 34,523 23,679 69,701 58,713
Depreciation and amortization 45,201 45,487 89,318 89,517
General and administrative 2,881 15,706 19,600 22,001
Interest (Note 3) 90,610 93,392 181,603 185,992
Total expenses 285,711 277,506 584,532 561,724
Net loss $ (2,776) $(17,837) $(27,183) $(51,024)
Allocation of net loss (Note 2):
Class A Limited Partners $ (2,499) $(16,054) $(24,465) $(45,922)
Per Unit of Class A Limited
Partner Interest (4,000
Units outstanding) $ (0.63) $ (4.01) $ (6.12) $ (11.48)
Original Limited Partner $ (249) $ (1,605) $ (2,446) $ (4,592)
General Partners $ (28) $ (178) $ (272) $ (510)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1996 1995
Operating activities:
<S> <C> <C>
Net loss $(27,183) $ (51,024)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 89,318 89,517
Decrease in cash restricted for
tenant security deposits 2,631 2,342
Increase in prepaid expenses and other
assets (13,017) (5,984)
Increase (decrease) in accounts payable (7,657) 13,334
Increase (decrease) in accrued expenses
and other liabilities 7,820 (9,391)
Increase in interest due to affiliate 59,071 62,678
Net cash provided by operating
activities 110,983 101,472
Investing activities:
Additions to fixed assets (32,078) (31,384)
Decrease (increase) in escrow for
property replacements (3,683) 131
Net cash used in investing activities (35,761) (31,253)
Financing activity:
Principal payments on mortgage notes payable (7,516) (6,770)
Net increase in cash 67,706 63,449
Cash, beginning of period 11,153 44,832
Cash, end of period $ 78,859 $ 108,281
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Accounting Policies
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this report on
Form 10-Q pursuant to the Rules and Regulations of the Securities and
Exchange Commission. In the opinion of the General Partners of Krupp
Associates 1980-1 and Subsidiary (the "Partnership"), the disclosures
contained in this report are adequate to make the information presented
not misleading. See Notes to Consolidated Financial Statements included
in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1995 for additional information relevant to significant
accounting policies followed by the Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited consolidated financial statements reflect all
adjustments (consisting of only normal recurring accruals) necessary to
present fairly the Partnership's consolidated financial position as of
June 30, 1996, its results of operations for the three and six months
ended June 30, 1996 and 1995, and its cash flows for the six months
ended June 30, 1996 and 1995. Certain prior year balances have been
reclassified to conform with current year consolidated financial
statement presentation.
The results of operations for the three and six months ended June 30,
1996 are not necessarily indicative of the results which may be expected
for the full year. See Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
(2) Summary of Changes in Partners' Deficit
A summary of changes in Partners' deficit for the six months ended June
30, 1996 is as follows:
<TABLE>
<CAPTION>
Class A Original Total
General Limited Limited Partners'
Partners Partners Partner Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1995 $(1,285,408) $(176,645) $(426,615) $(1,888,668)
Net loss (272) (24,465) (2,446) (27,183)
Balance at
June 30, 1996 $(1,285,680) $(201,110) $(429,061) $(1,915,851)
</TABLE>
(3) Related Party Transactions
Interest on borrowings accrued to the General Partners or their
affiliates was $29,400 and $59,071 for the three and six months ended
June 30, 1996, respectively, and $31,785 and $62,678 for the three and
six months ended June 30, 1995, respectively.
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management s Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements including those
concerning Management s expectations regarding the future financial
performance and future events. These forward-looking statements involve
significant risk and uncertainties, including those described herein.
Actual results may differ materially from those anticipated by such
forward-looking statements.
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs is
dependent primarily upon the operating performance of Riverside Apartments
("Riverside"). Such ability is also dependent upon the future sale of the
asset. These sources of liquidity could be used by the Partnership for
payment of expenses related to real estate operations, debt service and
expenses. Cash Flow and Capital Transaction Proceeds, if any, as
calculated under Section 8.2(a) ("Cash Flow") and 8.3(a) of the Partnership
Agreement would then be available for distribution to the Partners. The
Partnership has discontinued distributions due to insufficient operating
Cash Flow.
The Partnership has experienced Cash Flow deficiencies for several years
and currently has very limited liquidity. Expenditures are being monitored
closely and capital improvements are made on an as-needed basis. To date,
the General Partners have been able to arrange financing through
borrowings, from an affiliate of the General Partners, to cover a
substantial portion of these cash flow deficiencies. Also, one of the
General Partners, The Krupp Company Limited Partnership ("The Krupp
Company"), contributed an additional $100,000 to the Partnership during
1991. In January 1993, The Krupp Company loaned an additional $135,000 to
the Partnership in the form of a demand note to payoff a demand note from
an unaffiliated bank. In addition, the affiliate lender has been willing
to defer interest payments on the borrowings since late 1990. Furthermore,
the General Partners, through annual negotiations, have continued to
arrange for the waiver of property management fees and expense
reimbursements payable to the management agent, also an affiliate of the
General Partners.
The General Partners anticipate operating deficits to continue and cannot
guarantee that they will be able to take actions that will cover any future
deficits. If the property is unable to generate funds sufficient to cover
these deficits, the Partnership could default on its mortgage payments and
become subject to foreclosure proceedings. However, the Partnership is
current on its mortgage payments. In January 1996, the General Partners
entered into a purchase and sale agreement for the sale of Riverside to an
unaffiliated buyer scheduled in the second quarter of 1996 for the selling
price of $4,500,000. Two weeks before the scheduled sale date, the buyer
rescinded his offer. The General Partners continue to actively pursue other
opportunities for the sale of the property.
<PAGE>
Cash Flow
Shown below, as required by the Partnership Agreement, is the calculation
of Cash Flow of the Partnership for the six months ended June 30, 1996.
The General Partners provide certain of the information below to meet
requirements of the Partnership Agreement and because they believe that it
is an appropriate supplemental measure of operating performance. However,
Cash Flow (Deficit) should not be considered by the reader as a substitute
to net income (loss), as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
Rounded to $1,000
Net loss for tax purposes $(27,000)
Items not requiring or (requiring) the use of
operating funds:
Tax basis depreciation and amortization 90,000
Principal payments on mortgage (8,000)
Expenditures for capital improvements (32,000)
Additions to working capital reserves (23,000)
Cash Flow $ -0-
Operations
Cash Flow, before additions to working capital reserves, increased in the
first half of 1996 as compared to the same period in 1995. The increase is
attributable to improvements in net loss, as increases in revenue more than
offset the increase in expenses. In comparing the increase in revenue for
the three and six months ended June 30, 1995 to 1996, Riverside experienced
an 8% increase in rental revenue due to a rise in commercial occupancy from
an occupancy rate of 90% to 100% at June 30, 1995 and 1996, respectively.
For the three and six months ended June 30, 1996, total expenses increased
due to increases in operating and real estate tax expenses. The increase
in operating expense is related to an increase in utility expense. Real
estate tax expense increased due to an adjustment of 1994 taxes recorded in
the second quarter of 1995.
General
In accordance with Financial Accounting Standard No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which is effective for fiscal years beginning after December
15, 1995, the Partnership has implemented policies and practices for
assessing impairment of its real estate asset.
The investment in the property is carried at cost less accumulated
depreciation unless the General Partners believe there is a significant
impairment in value, in which case a provision to write down investment in
the property to fair value will be charged against income. At this time,
the General Partners do not believe that any assets of the Partnership are
significantly impaired.
<PAGE>
KRUPP ASSOCIATES 1980 -1 AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response: None
<PAGE>
SIGNATURE
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.
Krupp Associates 1980-1
(Registrant)
BY: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer of The Krupp
Corporation, a General Partner.
DATE: July , 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Associates 1980-1 Financial Statements for the six months ended June 30, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 78,859
<SECURITIES> 0
<RECEIVABLES> 1,040
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 175,596
<PP&E> 4,908,225<F1>
<DEPRECIATION> (2,671,858)<F2>
<TOTAL-ASSETS> 2,491,862
<CURRENT-LIABILITIES> 926,835
<BONDS> 3,480,878<F3>
0
0
<COMMON> (1,915,851)<F4>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,491,862
<SALES> 0
<TOTAL-REVENUES> 557,349<F5>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 402,929<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 181,603
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,183)
<EPS-PRIMARY> 0<F7>
<EPS-DILUTED> 0<F7>
<FN>
<F1>Includes multi-family complex of $4,761,600 and deferred expenses of $146,625.
<F2>Includes depreciation of $2,636,598 and amortization of deferred expenses of
$35,260.
<F3>Represents mortgage note payable of $2,223,493 and notes to an affiliated party
of $1,257,385.
<F4>Deficit of General Partners ($1,285,680) and Limited Partners ($630,171).
<F5>Includes all revenue of the Partnership.
<F6>Includes operating expenses of $243,910, real estate tax expense of $69,701 and
depreciation and amortization expense of $89,318.
<F7>Net loss allocated ($272) to the General Partners, ($2,446) to the Original
Limited Partner and ($24,465) to the Investor Limited Parters. Average net
loss is ($6.12) per Unit of Investor Limited Partner interest for 4,000 Units
outstanding.
</FN>
</TABLE>
