<PAGE>
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, 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 0-10404
Winthrop Partners 81 Limited Partnership
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2720480
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, Massachusetts 02110
----------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
Indicate by check mark whether 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_____
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Balance Sheets (Unaudited)
September 30, December 31,
(In Thousands, Except Unit Data) 1996 1995
--------------------- ---------------------
<S> <C> <C>
Assets
Real Estate Leased to Others:
Accounted for under the operating method, at
cost, net of accumulated depreciation of $845 (1996)
and $808 (1995) $ 1,414 $ 1,451
Accounted for under the financing method 194 220
--------------------- ---------------------
1,608 1,671
Other Assets:
Cash and cash equivalents 337 234
Other 2 2
--------------------- ---------------------
Total Assets $ 1,947 $ 1,907
===================== =====================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and other liabilities $ 41 $ 11
Distributions payable to partners - 76
--------------------- ---------------------
Total Liabilities 41 87
--------------------- ---------------------
Partners Capital:
Limited Partners -
Units of Limited Partnership Interest,
$500 stated value per Unit; authorized -
70,010 Units; issued and outstanding - 25,109 Units 2,192 2,119
General Partners (Deficit) (286) (299)
--------------------- ---------------------
Total Partners' Capital 1,906 1,820
--------------------- ---------------------
Total Liabilities and Partners' Capital $ 1,947 $ 1,907
===================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
For the Three Months Ended For the Nine Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income
Rental income from real estate leases accounted
for under the operating method $ 73 $ 72 $ 227 $ 215
Interest on short-term investments 3 2 9 60
Interest income on real estate leases accounted
for under the financing method 5 5 14 16
Gain on sale of property - - - 11
----------------- ----------------- ---------------- -----------------
81 79 250 302
----------------- ----------------- ---------------- -----------------
Expenses:
Depreciation 12 12 37 52
Management fees 1 1 4 4
General and administrative 10 4 42 28
----------------- ----------------- ---------------- -----------------
Total expenses 23 17 83 84
----------------- ----------------- ---------------- -----------------
Net income $ 58 $ 62 $ 167 $ 218
================= ================= ================ =================
Net income allocated to general partners $ 5 $ 5 $ 13 $ 17
================= ================= ================ =================
Net income allocated to limited partners $ 53 $ 57 $ 154 $ 201
================= ================= ================ =================
Net income per Unit of Limited Partnership Interest $ 2.11 $ 2.27 $ 6.13 $ 8.01
================= ================= ================ =================
Distributions per Unit of Limited Partnership Interest $ - $ 3.23 $ 3.23 $ 126.08
================= ================= ================ =================
</TABLE>
See notes to financial statements.
3 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data) Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
------------------- ------------------- -----------------------------------------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 25,109 $ (299) $ 2,119 $ 1,820
Distributions - (81) (81)
Net income 13 154 167
------------------- ------------------- ------------------ --------------------
Balance - September 30, 1996 25,109 $ (286) $ 2,192 $ 1,906
=================== =================== ================== ====================
</TABLE>
See notes to financial statements.
4 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Statements of Cash Flows (Unaudited)
For the Nine Months Ended
(In Thousands) September 30, September 30,
1996 1995
--------------------- ---------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 167 $ 218
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 37 52
Minimum lease payments received, net of interest income
earned, on leases accounted for under the financing method 26 27
Gain on property sold - (11)
Changes in assets and liabilities:
Increase (decrease) in accounts payable and other liabilities 30 (16)
Decrease in other assets - 1
--------------------- ---------------------
Net cash provided by operating activities 260 271
--------------------- ---------------------
Cash Flows From Investing Activities:
Net proceeds from sale of property - 2,883
--------------------- ---------------------
Cash provided by investing activities - 2,883
--------------------- ---------------------
Cash Flows From Financing Activities:
Cash distributions (157) (3,109)
--------------------- ---------------------
Cash used in financing activities (157) (3,109)
--------------------- ---------------------
Net increase in cash and cash equivalents 103 45
Cash and cash equivalents, beginning of period 234 179
--------------------- ---------------------
Cash and cash equivalents, end of period $ 337 $ 224
===================== =====================
</TABLE>
See notes to financial statements.
5 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussions
should be read in conjunction with the financial statements,
related footnotes and discussions contained in the Partnership's
annual report on Form 10-K for the year ended December 31, 1995.
The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair
presentation of such financial information have been included. All
adjustments are of a normal recurring nature, except as described
in Note 4. Certain amounts have been reclassified to conform to the
September 30, 1996 presentation. The balance sheet at December 31,
1995 was derived from audited financial statements at such date.
The results of operations for the three and nine months ended
September 30, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
2. Accounting Change
On January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of ", which requires impairment losses to be recognized
for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not
sufficient to recover the asset's carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its
carrying amount. The adoption of the SFAS had no effect on the
Partnership's financial statements.
3. Related Party Transactions
Management fees paid by the Partnership to an affiliate of the
Managing General Partner totaled $4,000 during each of the nine
months ended September 30, 1996 and 1995.
4. Sale of Property
On January 12, 1995, the Partnership sold the property located in
Oklahoma City, Oklahoma, for $3,100,000. The Partnership recorded a
gain on sale of $11,000. The sale provided $2,883,000 of net
proceeds, which have been distributed to limited partners.
6 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation.
This Item should be read in conjunction with the financial statements and other
items contained elsewhere in the report.
Liquidity and Capital Resources
The Partnership's two remaining properties include a retail store and a
warehouse which are each leased to a single tenant pursuant to a triple net
lease. The lease with GTE North Incorporated (the "GTE Lease") expires in April
1997 and the lease with Frank's Nursery and Crafts, Inc. expires in January
1998, subject to extension. Upon expiration of tenant leases the Partnership
will be required to either sell the properties or procure new tenants. The
Partnership receives rental income from its properties which is its primary
source of liquidity. Pursuant to the terms of the leases, the tenants are
responsible for substantially all of the operating expenses with respect to the
properties including maintenance, capital improvements, insurance and taxes. The
Partnership would be responsible for similar expenses if the properties were to
become vacant upon the expiration of such leases.
The level of liquidity based on cash and cash equivalents experienced a $103,000
increase at September 30, 1996 as compared to December 31, 1995. The
Partnership's $260,000 of cash provided by operating activities was only
partially offset by $157,000 of cash used for partner distributions (financing
activities). Cash provided by investing activities declined significantly at
September 30, 1996 as compared to September 30, 1995 due to the receipt of sale
proceeds during the first quarter of 1995.
The Partnership requires cash primarily to pay management fees and general and
administrative expenses. In addition, if the Partnership is unable to sell its
remaining properties prior to their lease expiration, extend the current leases
or re-let the properties upon the expiration of the lease terms, the Partnership
would be responsible for operating expenses, such as real estate taxes,
insurance and utility expenses associated with the properties. The Partnership's
rental and interest income was sufficient for the nine months ended September
30, 1996, and is expected to be sufficient until the expiration of the GTE
Lease, to satisfy the Partnership's obligations. It is likely that the GTE lease
will not be renewed and therefore, the General Partner has decided to suspend
cash distributions in order to maintain cash reserves. The Partnership has
engaged a local broker to attempt to procure a new tenant for this property. The
Partnership maintains cash reserves to enable it to make potential capital
improvements required in connection with the re-letting of the properties. The
Partnership invests its working capital reserves in a money market mutual fund.
7 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation. (Continued)
Results of Operations
Net income decreased by $51,000 for the nine months ended September 30, 1996, as
compared to 1995, due to a decrease in revenues and remained relatively constant
for the three months ended September 30, 1996 as compared to 1995.
Revenues decreased for the nine months ended September 30, 1996, as compared to
1995, due to a decrease in interest on short term investments of $51,000 and an
$11,000 gain on the sale of property during 1995 which were partially offset by
an increase in rental income of $12,000. The increase in rental income is
primarily attributable to an increase in rent under the GTE Lease and an
increase in percentage rent paid by Frank's Nursery. The decrease in interest on
short-term investments was due to the interest income earned from investing the
proceeds received from the sale of the Partnership's Oklahoma City property in
January 1995. The proceeds were distributed in May 1995 to the Partnership's
limited partners.
Expenses decreased by $1,000 for the nine months ended September 30, 1996, as
compared to 1995, due to a decrease in depreciation expense of $15,000 which was
partially offset by an increase in general and administrative expenses of
$14,000. The increase in general and administrative expenses was the result of
the payment of certain professional fees. Management fees remained constant.
8 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement.
(b) Reports on Form 8-K:
On September 23, 1996 a current report on Form 8-K was filed
with respect to the Registrant's change of Independent
Auditors.
9 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP - FORM 10-QSB
SEPTEMBER 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
--------------------------------
Michael L. Ashner
Chief Executive Officer and Director
BY: /s/ Edward V. Williams
--------------------------------
Edward V. Williams
Chief Financial Officer
Dated: November 6, 1996
10 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
SEPTEMBER 30, 1996
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
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Exhibit 99
WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
SEPTEMBER 30, 1996
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three months
ended September 30, 1996:
Net Income $ 58,000
Add: Depreciation charged to income not
affecting cash available for distribution 12,000
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 9,000
Prepaid rent (21,000)
Less: Cash to reserves (58,000)
--------
Cash Available for Distribution $ 0
========
2. Fees and other compensation paid or accrued by the Partnership
to the General Partners, or their affiliates, during the three
months ended September 30, 1996:
Entity Receiving Form of
Compensation Compensation Amount
------------ --------------------------------------- ------
Winthrop
Management Property Management Fees $ 1,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for $ 23
Distribution
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Partners 81 Limited Partnership and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 337,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,453,000
<DEPRECIATION> (845,000)
<TOTAL-ASSETS> 1,947,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,906,000
<TOTAL-LIABILITY-AND-EQUITY> 1,947,000
<SALES> 0
<TOTAL-REVENUES> 241,000
<CGS> 0
<TOTAL-COSTS> 41,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 167,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 167,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 167,000
<EPS-PRIMARY> 6.13
<EPS-DILUTED> 6.13
</TABLE>
