February 11, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Shelter Properties IV
Form 10-KSB
File No. 0-10884
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended October 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
Corporate General Partner.
Please do not hesitate to contact the undersigned with any questions or
comments that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
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FORM 10-KSB--Annual or Transitional Report Under
Section 13 or 15(d)
FORM 10-KSB
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]
For the fiscal year ended October 31, 1999
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the transition period_________to_________
Commission file number 0-10884
SHELTER PROPERTIES IV
(Name of small business issuer in its charter)
South Carolina 57-0721760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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 ___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $11,667,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of October 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
-----------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Shelter Properties IV (the "Partnership" or "Registrant") was organized as a
limited partnership under the laws of the State of South Carolina on August 21,
1981. The general partner responsible for management of the Partnership's
business is Shelter Realty IV Corporation, a South Carolina corporation (the
"Corporate General Partner"). The only other general partner of the Partnership
was N. Barton Tuck, Jr. Mr. Tuck was not an affiliate of the Corporate General
Partner and was effectively prohibited by the Partnership's partnership
agreement (the "Partnership Agreement") from participating in the management of
the Partnership. In June 1999, Mr. Tuck's general partnership interest in the
Registrant was purchased by AIMCO Properties, L.P., an affiliate of the
Corporate General Partner. The Corporate General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"). The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2022 unless
terminated prior to such date.
The Registrant is engaged in the business of operating and holding real estate
properties for investment. In 1982 and 1983, during its acquisition phase, the
Registrant acquired five existing apartment properties. The Registrant continues
to own and operate three of these properties. See "Item 2. Description of
Properties".
Commencing June 8, 1982, the Registrant offered pursuant to a Registration
Statement filed with the Securities and Exchange Commission up to 49,900 Units
of Limited Partnership Interest (the "Units") at a purchase price of $1,000 per
Unit with a minimum purchase of 5 Units ($5,000) or 2 Units ($2,000) for an
Individual Retirement Account. An additional 100 Units were purchased by the
Corporate General Partner.
The offering terminated on December 15, 1982. Upon termination of the offering,
the Registrant had accepted subscriptions for 50,000 Units, including 100 Units
purchased by the Corporate General Partner, for an aggregate of $50,000,000. The
Registrant invested approximately $38,000,000 of such proceeds in five existing
apartment properties. Since its initial offering, the Registrant has not
received, nor are limited partners required to make, additional capital
contributions.
The Registrant has no employees. Management and administrative services are
performed by the Corporate General Partner and by agents retained by the
Corporate General Partner. An affiliate of the Corporate General Partner has
been providing such property management services.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
<PAGE>
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Registrant's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Corporate General
Partner in such market area, could have a material effect on the rental market
for the apartments at the Registrant's property and the rents that may be
charged for such apartments. While the Corporate General Partner and its
affiliates are a significant factor in the United States in the apartment
industry, they own an insignificant percentage of total apartment units in the
United States and competition for apartments is local.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
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 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 Corporate General Partner. The Corporate
General Partner does not believe that this transaction has had or will have a
material effect on the affairs and operations of the Partnership.
<PAGE>
Item 2. Description of Properties
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Baymeadows Apartments 9/30/82 Fee ownership subject Apartment
Jacksonville, Florida to first and second 904 units
mortgages
Quail Run Apartments 1/03/83 Fee ownership subject Apartment
Columbia, South Carolina to first and second 332 units
mortgages (1)
Countrywood Village Apartments 3/31/83 Fee ownership subject Apartment
Raleigh, North Carolina to first and second 384 units
mortgages
(1) Property is held by a Limited Partnership which the Registrant owns a 99.99%
interest in.
Schedule of Properties
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
-------- ----- ------------ ---- ------ ---------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Baymeadows Apartments $34,988 $20,162 5-36 yrs S/L $4,929
Quail Run Apartments 13,830 7,323 5-34 yrs S/L 1,878
Countrywood Village
Apartments 13,838 8,842 5-30 yrs S/L 1,682
------ ------ -----
Total $62,656 $36,327 $8,489
====== ====== =====
</TABLE>
See "Note A" to the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy and "Note I - Change in Accounting
Principle".
<PAGE>
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
October 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity(2)
-------- ---- ---- --------- ---- -----------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Baymeadows
1st mortgage $13,247 7.60% (1) 11/15/02 $11,555
2nd mortgage 493 7.60% (1) 11/15/02 493
Quail Run
1st mortgage 5,343 7.60% (1) 11/15/02 4,660
2nd mortgage 199 7.60% (1) 11/15/02 199
Countrywood Village
1st mortgage 4,139 7.60% (1) 11/15/02 3,610
2nd mortgage 154 7.60% (1) 11/15/02 154
------ ------
23,575 $20,671
======
Less unamortized
discounts (715)
------
Total $22,860
======
</TABLE>
(1) The principal balance is being amortized over 257 months with a balloon
payment due November 15, 2002.
(2) See "Item 7, Financial Statements - Note C" for information with respect
to the Registrant's ability to repay these loans and other specific
details about the loans.
Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for each property:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
-------- ---- ---- ---- ----
Baymeadows $7,613 $7,389 93% 94%
Quail Run 7,897 7,729 93% 94%
Countrywood Village 7,363 7,073 93% 93%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The Corporate General Partner
believes that all of the properties are adequately insured. Each property is an
apartment complex which leases units for lease terms of one year or less. As of
October 31, 1999, no residential tenant leases 10% or more of the available
rental space. All of the properties are in good condition subject to normal
depreciation and deterioration as is typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
------- ----
(in thousands)
Baymeadows $ 491* 2.07%
Quail Run 186* 1.75%
Countrywood Village 117* 1.33%
*These properties have a fiscal year end different than the real estate tax
year; therefore, tax expense as stated in the Partnership's Statement of
Operations does not agree to the 1999 billing.
Capital Improvements
Baymeadows Apartments: The Partnership completed approximately $745,000 in
capital expenditures at Baymeadows Apartments as of October 31, 1999, consisting
primarily of flooring, appliance and drapery replacement, swimming pool and air
conditioning improvements, landscaping, and plumbing work. These improvements
were funded primarily from replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or
approximately $271,000. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Quail Run Apartments: The Partnership completed approximately $409,000 in
capital expenditures at Quail Run Apartments as of October 31, 1999, consisting
primarily of appliance and flooring replacement, plumbing and air conditioning
improvements and a roofing project. These improvements were funded primarily
from replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or approximately $100,000.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Countrywood Village Apartments: The Partnership completed approximately $209,000
in capital expenditures at Countrywood Village Apartments as of October 31,
1999, consisting primarily of landscaping, electrical upgrades, parking area
improvements, flooring and appliance replacements and a roofing project. These
improvements were funded primarily from replacement reserves. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or approximately $115,000. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Corporate General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement ("Stipulation"), settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the Corporate
General Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The Corporate General Partner does not anticipate that costs
associated with this case will be material to the Partnership's overall
operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
During the fiscal quarter ended October 31, 1999, no matter was submitted to a
vote of unit holders through the solicitation of proxies or otherwise.
<PAGE>
PART II
Item 5. Market for Partnership Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, offered and sold 49,900
limited partnership units aggregating $49,900,000. An additional 100 units were
purchased by the Corporate General Partner. The Partnership currently has 2,195
holders of record owning an aggregate of 49,995 Units. Affiliates of the
Corporate General Partner owned 22,654 units or 45.31% at October 31, 1999. No
public trading market has developed for the Units, and it is not anticipated
that such a market will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended October 31, 1998 and 1999, as well as for the subsequent period from
November 1, 1999 to January 11, 2000.
Distributions
Aggregate Per Limited
(in thousands) Partnership Unit
11/1/97 - 10/31/98 $ 812,000 (1) $ 16.08
11/1/98 - 10/31/99 2,400,000 (1) 47.52
11/1/99 - 01/11/00 1,000,000 (1) 19.80
(1) Distributions were made from cash from operations.
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. The Partnership's distribution policy is
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations, after required
capital expenditures, to permit any additional distributions to its partners in
2000 or subsequent periods. See "Item 2. Description of Properties - Capital
Improvements" for information relating to anticipated capital expenditures at
the properties. In addition, the Partnership may be restricted from making
distributions if the amount in the reserve account for each property maintained
by the mortgage lender is less than $400 per apartment unit at such property. As
of October 31, 1999, the reserve account was fully funded with approximately
$888,000 on deposit with the mortgage lender.
Several tender offers were made by various parties, including affiliates of the
general partners, during the fiscal years ended October 31, 1999 and 1998. As a
result of these tender offers at October 31, 1999, AIMCO and its affiliates own
22,654 units of limited partnership units in the Partnership representing 45.31%
of the outstanding units. Subsequent to October 31, 1999, an affiliate of the
general partners acquired an additional 6,202 units, or 12.41%, pursuant to a
tender offer. It is possible that AIMCO or its affiliates 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. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Corporate
General Partner because of their affiliation with the Corporate General Partner.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB 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 operations. 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.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Registrant's net income for the year ended October 31, 1999 was
approximately $1,868,000 as compared to approximately $1,531,000 for the year
ended October 31, 1998. (See "Note D" of the financial statements for a
reconciliation of these amounts to the Registrant's federal taxable income). The
increase in net income was primarily due to an increase in total revenues and
the cumulative effect of a change in accounting principle. Total revenues
increased primarily 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 increases in average annual rental rates at all three of the
Registrant's investment properties which more than offset the slight decrease in
occupancy at Baymeadows and Quail Run.
Although total expenses remained relatively consistent for the corresponding
periods, operating and interest expenses decreased which offset increases in
general and administrative and depreciation expenses. Operating expense
decreased due to decreases in maintenance and insurance expense offset slightly
by an increase in property administrative expenses. Maintenance expense
decreased for the year ended October 31, 1999 due to the completion of various
projects performed to enhance the appearance of all three investment properties
and window covering replacements, swimming pool and parking lot repairs and
interior decorating at Baymeadows during the year ended October 31, 1998.
Insurance expense decreased due to a change in insurance carriers late in 1998.
Property administrative expenses increased due to increased legal fees at
Baymeadows. Interest expense decreased for the year ended October 31, 1999 due
to the reduction in mortgage balances encumbering the properties as a result of
scheduled principal payments. The increase in general and administrative expense
is primarily the result of an increase in partnership legal fees due to the
settlement of a legal case, which was previously disclosed. Depreciation expense
increased due to increased capital improvements and replacements made at the
properties over the past year.
Included in general and administrative expenses at both October 31, 1999 and
1998 are management reimbursements to the Corporate 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 and appraisals required by the Partnership Agreement are also
included.
Effective November 1, 1998, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping. The Partnership
believes that this accounting principle change is preferable because it provides
a better matching of expenses with the related benefit of the expenditures and
it is consistent with industry practice and the policies of the Corporate
General Partner. The effect of the change in 1999 was to decrease income before
the change by approximately $59,000. The cumulative effect adjustment of
approximately $403,000, is the result of applying the aforementioned change in
accounting principle retroactively and is included in net income for 1999. The
accounting principle change will not have an effect on cash flow, funds
available for distributions or fees payable to the Corporate General Partner or
affiliates.
As part of the ongoing business plan of the Registrant, the Corporate 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 Registrant from increases in
expense. As part of this plan, the Corporate General Partner attempts to protect
the Registrant 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 Corporate General Partner will be able to sustain such a
plan.
Liquidity and Capital Resources
At October 31, 1999, the Registrant had cash and cash equivalents of
approximately $3,614,000 as compared to approximately $3,181,000 at October 31,
1998. The increase in cash and cash equivalents is due to approximately
$4,082,000 of cash provided by operating activities, which was partially offset
by approximately $421,000 of cash used in investing activities and approximately
$3,228,000 of cash used in financing activities. Cash used in investing
activities consisted of property improvements and replacements, which was
partially offset by net withdrawals from restricted escrow accounts maintained
by the mortgage lender. Cash used in financing activities consisted primarily of
partner distributions and, to a lesser extent, payments of principal made on the
mortgages encumbering the Registrant's properties. The Registrant invests its
working capital reserves in a money market account.
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 investment properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, local, legal, and regulatory requirements. The Partnership is
currently evaluating the capital improvement needs of the properties for the
upcoming year. The minimum to be budgeted is expected to be $300 per unit or
approximately $486,000. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the properties.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $22,860,000, net of discount, is amortized over
257 months with a balloon payment of approximately $20,671,000 due on November
15, 2002. The Corporate General Partner will attempt to refinance such
indebtedness or sell the properties prior to such maturity date. If the
properties cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such properties through foreclosure.
A cash distribution from operations of approximately $2,400,000 was paid during
the year ended October 31, 1999, of which approximately $2,376,000 was paid to
limited partners ($47.52 per limited partnership unit). A cash distribution of
approximately $812,000 was made from operations during the year ended October
31, 1998, of which approximately $804,000 was paid to limited partners ($16.08
per limited partnership unit). During January 2000, subsequent to the
Partnership's fiscal year end, a distribution from operations of approximately
$1,000,000 was paid, of which approximately $990,000 was paid to limited
partners ($19.80 per limited partnership unit). 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. The Partnership's distribution policy is reviewed on a quarterly basis.
There can be no assurance, however, that the Partnership will generate
sufficient funds from operations, after required capital expenditures, to permit
any additional distributions to its partners in the year 2000 or subsequent
periods. In addition, the Partnership may be restricted from making
distributions if the amount in the reserve account for each property is less
than $400 per apartment unit at such property. As of October 31, 1999, the
reserve account was fully funded with approximately $888,000 on deposit with the
mortgage lender.
Tender Offer
Several tender offers were made by various parties, including affiliates of the
general partners, during the fiscal years ended October 31, 1999 and 1998. As a
result of these tender offers at October 31, 1999, AIMCO and its affiliates own
22,654 units of limited partnership units in the Partnership representing 45.31%
of the outstanding units. Subsequent to October 31, 1999, an affiliate of the
general partners acquired an additional 6,202 units, or 12.41%, pursuant to a
tender offer. It is possible that AIMCO or its affiliates 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. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Corporate
General Partner because of their affiliation with the Corporate General Partner.
Subsequent Event
On January 3, 2000 the Partnership elected to change its fiscal year end from
October 31 to December 31, effective for the period ending December 31, 1999.
Year 2000 Compliance
General Description
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 Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted 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.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. As of February 7, 2000, no material failure or erroneous results have
occurred in the Managing Agent's computer applications related to the failure to
reference the Year 2000.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
SHELTER PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - October 31, 1999
Consolidated Statements of Operations - Years ended October 31, 1999
and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years
ended October 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended October 31, 1999 and
1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Shelter Properties IV
We have audited the accompanying consolidated balance sheet of Shelter
Properties IV as of October 31, 1999, and the related consolidated statements of
operations, changes in partners' (deficit) capital and cash flows for each of
the two years in the period ended October 31, 1999. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Shelter Properties
IV at October 31, 1999, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended October 31, 1999, in
conformity with accounting principles generally accepted in the United States.
As discussed in Note I to the financial statements, the Partnership changed its
method of accounting to capitalize the cost of exterior painting and major
landscaping effective November 1, 1998.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 7, 2000
<PAGE>
SHELTER PROPERTIES IV
CONSOLIDATED BALANCE SHEET
(in thousands, except per unit data)
October 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 3,614
Receivables and deposits 1,151
Restricted escrows 888
Other assets 556
Investment properties (Notes C and F):
Land $ 3,442
Buildings and related personal property 59,214
-------
62,656
Less accumulated depreciation (36,327) 26,329
------- -------
$ 32,538
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 459
Tenant security deposit liabilities 246
Accrued property taxes 676
Other liabilities 331
Mortgage notes payable (Note C) 22,860
Partners' (Deficit) Capital
General partners $ (5)
Limited partners (49,995 units issued and
outstanding) 7,971 7,966
------- -------
$ 32,538
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
SHELTER PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended October 31,
1999 1998
---- ----
Revenues:
Rental income $ 11,174 $ 11,055
Other income 493 511
------- -------
Total revenues 11,667 11,566
------- -------
Expenses:
Operating 4,820 4,859
General and administrative 363 283
Depreciation 2,126 1,932
Interest 2,110 2,166
Property taxes 783 795
------- -------
Total expenses 10,202 10,035
------- -------
Income before cumulative effect of a change in
accounting principle 1,465 1,531
Cumulative effect on prior years of a change in
accounting for the cost of exterior painting and
major landscaping (Note I) 403 --
------- -------
Net income (Note D) $ 1,868 $ 1,531
======= =======
Net income allocated to general partners (1%) $ 19 $ 15
Net income allocated to limited partners (99%) 1,849 1,516
------- -------
$ 1,868 $ 1,531
======= =======
Net income per limited partnership unit:
Income before cumulative effect of a change in
accounting principle 29.00 30.32
Cumulative effect on prior years of a change in
accounting for the cost of exterior painting and
major landscaping 7.98 --
------- -------
Net income per limited partnership unit $ 36.98 $ 30.32
======= =======
Distributions per limited partnership unit $ 47.52 $ 16.08
======= =======
Proforma amounts assuming the new method was applied retroactively:
Net income $ 1,465 $ 1,500
======= =======
Net income per limited partnership unit $ 29.00 $ 29.70
======= =======
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
SHELTER PROPERTIES IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 50,000 $ 2 $50,000 $50,002
====== ====== ====== ======
Partners' (deficit) capital
at October 31, 1997 49,995 $ (7) $ 7,786 $ 7,779
Net income for the year ended
October 31, 1998 -- 15 1,516 1,531
Distributions to partners -- (8) (804) (812)
------ ------ ------ ------
Partners' (deficit) capital at
October 31, 1998 49,995 -- 8,498 8,498
Net income for the year
ended October 31, 1999 -- 19 1,849 1,868
Distributions to partners -- (24) (2,376) (2,400)
------ ------ ------- ------
Partners' (deficit) capital
at October 31, 1999 49,995 $ (5) $ 7,971 $ 7,966
====== ====== ====== ======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
SHELTER PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,868 $ 1,531
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,126 1,932
Amortization of discounts and loan costs 280 280
Cumulative effect on prior year of change in
accounting principle (403) --
Change in accounts:
Receivables and deposits 85 (7)
Other assets (241) 47
Accounts payable 296 59
Tenant security deposit liabilities (2) (29)
Accrued property taxes 16 30
Other liabilities 57 46
------- -------
Net cash provided by operating activities 4,082 3,889
------- -------
Cash flows from investing activities:
Property improvements and replacements (1,363) (894)
Net withdrawals from (deposits to) restricted escrows 942 (80)
------- -------
Net cash used in investing activities (421) (974)
------- -------
Cash flows from financing activities:
Payments on mortgage notes payable (828) (769)
Partners' distributions (2,400) (812)
------- -------
Net cash used in financing activities (3,228) (1,581)
------- -------
Net increase in cash and cash equivalents 433 1,334
Cash and cash equivalents at beginning of the period 3,181 1,847
------- -------
Cash and cash equivalents at end of period 3,614 3,181
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,829 $ 1,888
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
SHELTER PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Significant Accounting Policies
Organization: Shelter Properties IV (the "Partnership" or "Registrant") was
organized as a limited partnership under the laws of the State of South Carolina
on August 21, 1981. The general partner responsible for management of the
Partnership's business is Shelter Realty IV Corporation, a South Carolina
corporation (the "Corporate General Partner"). The only other general partner of
the Partnership was N. Barton Tuck, Jr. Mr. Tuck was not an affiliate of the
Corporate General Partner and was effectively prohibited by the Partnership's
partnership agreement (the "Partnership Agreement") from participating in the
management of the Partnership. In June 1999, Mr. Tuck's general partnership
interest in the Registrant was purchased by AIMCO Properties, L.P., an affiliate
of the Corporate General Partner. The Corporate General Partner is a subsidiary
of Apartment Investment and Management Company ("AIMCO"). The Partnership
Agreement provides that the Partnership is to terminate on December 31, 2022
unless terminated prior to such date. The Partnership commenced operations on
July 22, 1982, and completed its acquisition of apartment properties on March
31, 1983. The Partnership operates three apartment properties located in the
Southeast.
Principles of Consolidation: The financial statements include all the accounts
of the Partnership and its 99.99% owned partnership. The General Partner of the
consolidated partnership is the Corporate General Partner. The Corporate General
Partner may be removed by the Registrant; therefore, the consolidated
partnership is controlled and consolidated by the Registrant. All significant
interpartnership balances have been eliminated.
Uses of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated between general and limited partners in accordance with the provisions
of the Partnership Agreement. The Partnership Agreement provides that net cash
from operations means revenue received less operating expenses paid, adjusted
for certain specified items which primarily include mortgage payments on debt,
property improvements and replacements not previously reserved, and the effects
of other adjustments to reserves including reserve amounts deemed necessary by
the Corporate General Partner. In the following notes to financial statements,
whenever net cash from operations is used, it has the aforementioned meaning.
The following is a reconciliation of the subtotal in the accompanying
consolidated statements of cash flows captioned "net cash provided by operating
activities" to "net cash from operations", as defined in the Partnership
Agreement. However, "net cash from operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
<PAGE>
Years Ended October 31,
1999 1998
---- ----
(in thousands)
Net cash provided by operating activities $ 4,082 $ 3,889
Property improvements and replacements (1,363) (894)
Payments on mortgage notes payable (828) (769)
Changes in reserves for net operating
liabilities (211) (146)
Changes in restricted escrows, net 942 (80)
Additional operating reserves (1,622) --
------ ------
Net cash from operations $ 1,000 $ 2,000
====== ======
The Corporate General Partner reserved approximately $1,622,000 on October 31,
1999 to fund capital improvements and repairs at its properties. No amounts were
reserved in fiscal 1998 for such purposes.
Distributions made from reserves no longer considered necessary by the Corporate
General Partner are considered to be additional net cash from operations for
allocation purposes. Cash distributions of $2,400,000 and $812,000 were made
during the years ended October 31, 1999 and 1998, respectively. During December
1999, the Partnership made a distribution in the amount of $1,000,000 from
operations.
The Partnership Agreement provides that 99% of distributions of net cash from
operations are allocated to the limited partners until they receive net cash
from operations for such fiscal year equal to 7% of their adjusted capital
values (as defined in the Partnership Agreement), at which point the general
partners will be allocated all net cash from operations until they have received
distributions equal to 10% of the aggregate net cash from operations distributed
to partners for such fiscal year. Thereafter, the general partners will be
allocated 10% of any distributions of remaining net cash from operations for
such fiscal year.
All distributions of distributable net proceeds (as defined in the Partnership
Agreement) from property dispositions and refinancings will be allocated to the
limited partners until each limited partner has received an amount equal to a
cumulative 7% per annum of the average of the limited partners' adjusted capital
value, less any prior distributions of net cash from operations and
distributable net proceeds, and has also received an amount equal to the limited
partners' adjusted capital value. Thereafter, the general partners receive 1% of
the selling price of properties sold where they acted as a broker, and then the
limited partners will be allocated 85% of any remaining distributions of
distributable net proceeds and the general partners will receive 15%.
Distributions may be restricted by the requirement to deposit net operating
income (as defined in the mortgage note) into the Reserve Account until the
Reserve Account is funded in an amount equal to a minimum of $400 and a maximum
of $1,000 per apartment unit for each respective property for a total of
$648,000 to $1,620,000. As of October 31, 1999, the Partnership has deposits of
approximately $888,000 in its Reserve Account.
<PAGE>
Allocation of Profits, Gains, and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of the Partnership Agreement.
Profits, not including gains from property dispositions, are allocated as if
they were distributions of net cash from operations.
Any gain from property dispositions attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property over the Partnership's adjusted basis in the property shall be
allocated to each partner having a negative capital account balance, to the
extent of such negative balance. The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and shall be allocated to the general partners to the extent that
general partners would have received distributable net proceeds in connection
therewith; the balance shall be allocated to the limited partners. However, the
interest of the general partners will be equal to at least 1% of each gain at
all times during the existence of the Partnership.
All losses, including losses attributable to property dispositions, are
allocated 99% to the limited partners and 1% to the general partners.
Accordingly, net income as shown in the consolidated statements of operations
and consolidated changes in partners' (deficit) capital for 1999 and 1998 were
allocated 99% to the limited partners and 1% to the general partners. Net income
per limited partnership unit for each such year was computed as 99% of net
income divided by 49,995 units outstanding.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Other Reserves: The Corporate General Partner may designate a portion of cash
generated from operations as "other reserves" in determining net cash from
operations. The Corporate General Partner designated as other reserves an amount
equal to the net liabilities related to the operations of apartment properties
during the current fiscal year that are expected to require the use of cash
during the next fiscal year. The changes in other reserves during 1999 and 1998
were a decrease of approximately $211,000 and $146,000, respectively, which
amounts were determined by considering changes in the balances of receivables
and deposits, other assets, accounts payable, tenant security deposit
liabilities, accrued taxes and other liabilities. At this time, the Corporate
General Partner expects to continue to adjust other reserves based on the net
change in the aforementioned account balances.
Cash and Cash Equivalents: Includes cash on hand and in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Restricted Reserve Account: A general Reserve Account was established in 1992
with the refinancing proceeds for each mortgaged property. These funds were
established to cover necessary repairs and replacements of existing
improvements, debt service, out of pocket expenses incurred for ordinary and
necessary administrative tasks, and payment of real property taxes and insurance
premiums. The Partnership is required to deposit net operating income (as
defined in the mortgage note) from each refinanced property to the respective
reserve account until they equal a minimum of $400 per apartment unit or
$648,000 in total. The balance at October 31, 1999, is approximately $888,000,
which includes interest.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.
Effective November 1, 1998 the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping (Note I).
Loan Costs: Loan costs of approximately $849,000, less accumulated amortization
of approximately $588,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Corporate General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.
Investment Properties: Investment properties consist of three apartment
complexes and are stated at cost. Acquisition fees are capitalized as a cost of
real estate. In accordance with Financial Accounting Standards Board Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," the Partnership records impairment losses on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
Costs of apartment properties that have been permanently impaired have been
written down to appraised value. The Corporate General Partner relies on the
annual appraisals performed by the outside appraisers for the estimated value of
the Partnership's properties. There are three recognized approaches or
techniques available to the appraiser. When applicable, these approaches are
used to process the data considered significant to each to arrive at separate
value indications. In all instances the experience of the appraiser, coupled
with his objective judgment, plays a major role in arriving at the conclusions
of the indicated value for which the final estimate of value is made. The three
approaches commonly known are the cost approach, the sales comparison approach,
and the income approach. The cost approach is often not considered to be
reliable due to the lack of land sales and the significant amount of
depreciation and, therefore, is often not presented. Upon receipt of the
appraisals, any property which is stated on the books of the Partnership above
the estimated value given in the appraisal, is written down to the estimated
value given by the appraiser. The appraiser assumes a stabilized occupancy at
the time of the appraisal and, therefore, any impairment of value is considered
to be permanent by the Corporate General Partner. No adjustments for impairment
of value were recorded in the years ended October 31, 1999 and 1998.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $104,000 and $98,000 for the years ended
October 31, 1999 and 1998, respectively were charged to operating expense as
incurred.
Segment Reporting: Statement of Financial Standards ("SFAS") No. 131, Disclosure
about Segments of an Enterprise and Related Information ("Statement 131")
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note G"
for required disclosure.
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 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 Corporate General Partner. The Corporate
General Partner does not believe that this transaction has had or will have a
material effect on the affairs and operations of the Partnership.
<PAGE>
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
October 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
- -------- ---- -------- ---- ---- --------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Baymeadows
1st mortgage $13,247 $ 126 7.60% 11/15/02 $11,555
2nd mortgage 493 3 7.60% 11/15/02 493
Quail Run
1st mortgage 5,343 51 7.60% 11/15/02 4,660
2nd mortgage 199 1 7.60% 11/15/02 199
Countrywood Village
1st mortgage 4,139 39 7.60% 11/15/02 3,610
2nd mortgage 154 1 7.60% 11/15/02 154
------ ---- ------
23,575 $ 221 $20,671
==== ======
Less unamortized discounts (715)
------
Total $22,860
======
</TABLE>
The Partnership exercised interest rate buy-down options for the three
properties when the debt was refinanced in 1992, thereby, reducing the stated
rate from 8.76% to 7.6%. The fee for the interest rate reduction amounted to
approximately $1,964,000 and is being amortized as a loan discount on the
interest method over the life of the loans. The unamortized discount fee is
reflected as a reduction of the mortgage notes payable and increases the
effective rate of the debt to 8.76%.
The mortgage notes payable are non-recourse and are secured by a pledge of the
respective apartment properties and revenues generated by the properties. The
notes could not be prepaid prior to November 15, 1997, thereafter, prepayment
penalties are required if repaid prior to maturity. Further, the properties may
not be sold subject to existing indebtedness.
The estimated fair values of the Partnership's aggregate debt is approximately
$23,575,000. This estimate is not necessarily indicative of the amounts the
Partnership may pay in actual market transactions.
<PAGE>
Scheduled principal payments of mortgage notes payable subsequent to October 31,
1999 are as follows (in thousands):
2000 $ 896
2001 966
2002 1,042
2003 20,671
------
$23,575
Note D - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (in thousands, except per unit data):
1999 1998
---- ----
Net income as reported $ 1,868 $ 1,531
Add (deduct):
Amortization of present value
discounts -- (2)
Depreciation differences 1,443 897
Change in prepaid rental (110) (138)
Accrued expenses -- 33
Cumulative effect on prior
year of a change in
accounting principle (403) --
Other -- 14
------ ------
Federal taxable income $ 2,798 $ 2,335
====== ======
Federal taxable income per
limited partnership unit $ 55.41 $ 46.24
====== ======
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 7,966
Land and buildings 8,851
Accumulated depreciation (26,690)
Syndication 6,293
Other (9)
------
Net liabilities - tax basis $(3,589)
======
<PAGE>
Note E - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
made to the Corporate General Partner and affiliates during the years ended
October 31, 1999 and 1998:
1999 1998
---- ----
(in thousands)
Property management fees (included in
operating expense) $ 586 $ 576
Reimbursement for services of affiliates
(included in operating, general and
administrative expenses, and investment
properties) 210 214
During the years ended October 31, 1999 and 1998, affiliates of the Corporate
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties as compensation for providing property management
services. The Registrant paid to such affiliates approximately $586,000 and
$576,000 for the years ended October 31, 1999 and 1998, respectively.
Affiliates of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $210,000 and
$214,000 for the year ended October 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
general partners, during the fiscal years ended October 31, 1999 and 1998. As a
result of these tender offers as of October 31, 1999, AIMCO and its affiliates
own 22,654 units of limited partnership units in the Partnership representing
45.31% of the outstanding units. Subsequent to October 31, 1999, an affiliate of
the general partners acquired an additional 6,202 units, or 12.41%, pursuant to
a tender offer. It is possible that AIMCO or its affiliates 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. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the Corporate General Partner because of their affiliation with the
Corporate General Partner.
<PAGE>
Note F - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
--------------
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
----------- ------------ ---- -------- -----------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Baymeadows
Jacksonville, Florida $13,740 $ 1,884 $26,916 $ 6,188
Quail Run
Columbia, South Carolina 5,542 875 10,642 2,313
Countrywood Village
Raleigh, North Carolina 4,293 683 10,711 2,444
------ ------ ------ ------
Totals $23,575 $ 3,442 $48,269 $10,945
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At October 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
----------- ---- -------- ----- ------------ -------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Baymeadows $ 1,884 $33,104 $34,988 $20,162 09/30/82 5-36
Quail Run 875 12,955 13,830 7,323 01/03/83 5-34
Countrywood Village 683 13,155 13,838 8,842 03/31/83 5-30
------ ------ ------ ------
Totals $ 3,442 $59,214 $62,656 $36,327
====== ====== ====== ======
</TABLE>
<PAGE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended October 31,
1999 1998
---- ----
(in thousands)
Real Estate
Balance at beginning of year $60,890 $59,996
Property improvements 1,363 894
Cumulative effect on prior years of a
change in accounting principle 403 --
------ ------
Balance at end of year $62,656 $60,890
====== ======
Accumulated Depreciation
Balance at beginning of year $34,201 $32,269
Additions charged to expense 1,981 1,932
Cumulative effect on prior years of a
change in accounting principle 145 --
------ ------
Balance at end of year $36,327 $34,201
====== ======
The aggregate cost of the real estate for Federal income tax purposes at October
31, 1999 and 1998 is approximately $71,507,000 and approximately $70,146,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at October 31, 1999 and 1998 is approximately $63,017,000 and approximately
$62,305,000, respectively.
Note G - 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 consisting of
three apartment complexes located in Florida (1), South Carolina (1), and North
Carolina (1). 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
summary of significant accounting policies.
Factors management used to identify the Partnership'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.
<PAGE>
Segment information for the years ended October 31, 1999 and 1998 is shown in
the tables below (in thousands). The "Other" column includes Partnership
administration related items and income and expense not allocated to the
reportable segment.
1999 Residential Other Totals
---- ----------- ----- ------
Rental income $11,174 $ -- $11,174
Other income 448 45 493
Interest expense 2,110 -- 2,110
Depreciation 2,126 -- 2,126
General and administrative expense -- 363 363
Cumulative effect on prior years
of a change in accounting principle 403 -- 403
Segment profit (loss) 2,186 (318) 1,868
Total assets 31,722 816 32,538
Capital expenditures for investment
properties 1,363 -- 1,363
1998 Residential Other Totals
---- ----------- ----- ------
Rental income $11,055 $ -- $11,055
Other income 436 75 511
Interest expense 2,166 -- 2,166
Depreciation 1,932 -- 1,932
General and administrative expense -- 283 283
Segment profit (loss) 1,739 (208) 1,531
Total assets 30,593 2,743 33,336
Capital expenditures for investment
properties 894 -- 894
Note H - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group,
Inc.("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Corporate General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement ("Stipulation"), settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the Corporate
General Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The Corporate General Partner does not anticipate that costs
associated with this case will be material to the Partnership's overall
operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note I - Change in Accounting Principle
Effective November 1, 1998, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping. The Partnership
believes that this accounting principle change is preferable because it provides
a better matching of expenses with the related benefit of the expenditures and
it is consistent with industry practice and the policies of the Corporate
General Partner. The effect of the change in 1999 was to decrease income before
the change by approximately $59,000 ($1.17 per limited partnership unit). The
cumulative effect adjustment of approximately $403,000 is the result of applying
the aforementioned change in accounting principle retroactively and is included
in net income for 1999. The pro forma amounts shown on the income statement have
been adjusted for the effect of retroactive application of this change. The
accounting principle change will not have an effect on cashflow, funds available
for distributions or fees payable to the Corporate General Partner or
affiliates.
<PAGE>
The effect of the new method for each quarter of 1999 on net income and net
income per limited partnership unit before the cumulative effect is as follows:
Increase/Decrease Per Limited
Net Income Partnership Unit
First Quarter $(36,000) $(.71)
Second Quarter (16,000) (.32)
Third Quarter (10,000) (.20)
Fourth Quarter 3,000 .06
Note J - Subsequent Event
On January 3, 2000 the Partnership elected to change its fiscal year end from
October 31 to December 31, effective for the period ending December 31, 1999.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
----------------------------------------------------------------------
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
with Section 16(a) of the Exchange Act
The Registrant has no officers or directors. The Corporate General Partner is
Shelter Realty IV Corporation. The names and ages of, as well as the position
and offices held by, the present executive officers and director of the
Corporate General Partner are set forth below. There are no family relationships
between or among any officers or directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the Corporate
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Corporate
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Item 10. Executive Compensation
None of the directors and officers of the Corporate General Partner received any
remuneration from the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of October 31, 1999.
Entity Number of Units Percentage
Cooper River Properties, LLC
(an affiliate of AIMCO) 3,685 7.37%
Insignia Properties LP
(an affiliate of AIMCO) 16,052 32.11%
AIMCO Properties L.P. 2,917 5.83%
(an affiliate of AIMCO)
Cooper River Properties LLC and Insignia Properties LP are indirectly ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, South
Carolina 29602.
AIMCO Properties, L.P. is indirectly ultimately owned by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado.
No director or officer of the Corporate General Partner owns any Units. The
Corporate General Partner owns 100 Units as required by the terms of the
Partnership Agreement governing the Partnership. AIMCO Properties, L.P., the
other general partner, acquired 2,917 Units during the current fiscal year.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
made to the Corporate General Partner and affiliates during the years ended
October 31, 1999 and 1998:
1999 1998
---- ----
(in thousands)
Property management fees (included in
operating expense) $ 586 $ 576
Reimbursement for services of affiliates
(included in operating, general and
administrative expenses, and investment
properties) 210 214
During the years ended October 31, 1999 and 1998, affiliates of the Corporate
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties as compensation for providing property management
services. The Registrant paid to such affiliates approximately $586,000 and
$576,000 for the years ended October 31, 1999 and 1998, respectively.
Affiliates of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $210,000 and
$214,000 for the year ended October 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
general partners, during the fiscal years ended October 31, 1999 and 1998. As a
result of these tender offers at October 31, 1999, AIMCO and its affiliates own
22,654 units of limited partnership units in the Partnership representing 45.31%
of the outstanding units. Subsequent to October 31, 1999, an affiliate of the
general partners acquired an additional 6,202 units, or 12.41%, pursuant to a
tender offer. It is possible that AIMCO or its affiliates 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. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the Corporate General Partner because of their affiliation with the
Corporate General Partner.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES IV
By: Shelter Realty IV Corporation
Corporate 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:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/Patrick J. Foye Date:
- ------------------
Patrick J. Foye
Executive Vice President and
Director
/s/Martha L. Long Date:
- ------------------
Martha L. Long
Senior Vice President and
Controller
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
3 See Exhibit 4(a)
4 (a) Amended and Restated Certificate and Agreement of Limited Partnership
(included as Exhibit A to the Prospectus of Registrant dated June 8, 1982
contained in Amendment No. 1 to Registration Statement No. 2-77217, of
Registrant filed June 8, 1982 (the "Prospectus") and incorporated herein by
reference).
(b) Subscription Agreement and Signature Page (included as Exhibit 8 to the
Prospectus and incorporated herein by reference).
10(i) Contracts related to acquisition of properties:
(a) Real Estate Sales Agreement dated May 5, 1982, First Modification to Real
Estate Agreement dated June 18, 1982 (filed as Exhibit 12(b) to Amendment No. 1
to Registration Statement No. 2-77217 of Registrant filed June 8, 1982 and
incorporated herein by reference) and Second Modification to Real Estate Sales
Agreement dated September 30, 1982 between Baymeadows Associates and U.S.
Shelter Corporation to purchase Baymeadows Apartments (filed as Exhibit 10(a) to
Form 10-K of Registrant dated January 26, 1983 and incorporated herein by
reference).
(b) Agreement for Purchase and Sale dated May 14, 1982 between Lincoln
Spartanburg Corners Associates and U.S. Shelter Corporation to purchase The
Corners Apartments. (Filed as Exhibit 12(a) to Amendment No. 1 to Registration
Statement, No. 2-77217, of Registrant filed June 8, 1982 and incorporated herein
by reference.)
(c) Real Estate Purchase Agreement dated October 11, 1982 and Second Addendum to
Real Estate Purchase Agreement dated December 10, 1982 between Rushcreek Village
Apartments, Ltd. And U.S. Shelter Corporation to purchase Rushcreek Village
Apartments. (Filed as Exhibit 10(a) to Form 8-K of Registrant dated December 15,
1982 and incorporated herein by reference.)
(d) Real Estate Purchase Agreement dated December 3, 1982 between Quail Run
Apartments, a Limited Partnership and Percival Partnership and U.S. Shelter
Corporation to purchase Quail Run Apartments. (Filed as Exhibit 10(b) to Form
8-K of Registrant dated December 15, 1982 and incorporated herein by reference.)
(e) Real Estate Purchase Agreement dated March 13, 1983 between Europco
Management Company of America, Inc. and U.S. Shelter Corporation to purchase
Countrywood Village Apartments. (Filed as Exhibit 10 to Form 8-K of Registrant
dated March 31, 1983 and incorporated herein by reference.)
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
(ii) Form of Management Agreement with U.S. Shelter Corporation subsequently
assigned to Shelter Management Group, L.P. (now known as Insignia Management
Group, L.P.). (Filed with Amendment No. 1 of Registration Statement No. 2-86995
of Registrant filed March 21, 1984 and incorporation herein by reference.)
(iii) Contracts related to refinancing of debt:
(a) First Deeds of Trust and Security Agreements dated October 28, 1992 between
Shelter Properties IV and Joseph Philip Forte (Trustee) and First Commonwealth
Realty Credit Corporation, a Virginia Corporation, securing the following
properties: Baymeadows, Quail Run, and Countrywood Village.*
(b) Second Deeds of Trust and Security Agreements dated October 28, 1992 between
Shelter Properties IV and Joseph Philip Forte (Trustee) and First Commonwealth
Realty Credit Corporation, a Virginia Corporation, securing the following
properties: Baymeadows, Quail Run, and Countrywood Village.*
(c) First Assignments of Leases and Rents dated October 28, 1992 between Shelter
Properties IV and Joseph Philip Forte (Trustee) and First Commonwealth Realty
Credit Corporation, a Virginia Corporation, securing the following properties:
Baymeadows, Quail Run, and Countrywood Village.*
(d) Second Assignment of Leases and Rents dated October 28, 1992 between Shelter
Properties IV and Joseph Philip Forte (Trustee) and First Commonwealth Realty
Credit Corporation, a Virginia Corporation, securing the following properties:
Baymeadows, Quail Run, and Countrywood Village.*
(e) First Deeds of Trust Notes dated October 28, 1992 between Shelter Properties
IV and First Commonwealth Realty Credit Corporation, relating to the following
properties: Baymeadows, Quail Run, and Countrywood Village.*
(f) Second Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties IV and First Commonwealth Realty Credit Corporation, relating to the
following properties: Baymeadows, Quail Run, and Countrywood Village.*
*Filed as Exhibits 10 (iii) a through 10 (iii) f, respectively, to Form 10-KSB -
Annual or Transitional Report filed January 29, 1993 and incorporated herein by
reference.
18 Independent Accountants' Preferability Letter for Change in Accounting
Principle.
27 Financial Data Schedule.
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
28 (a) Agreement of Limited Partnership for Quail Run IV Limited Partnership
between Shelter IV GP Limited Partnership and Shelter Properties IV entered into
on February 12, 1992. (Filed as Exhibit 28 to Form 10QSB - Quarterly or
Transitional Report filed June 11, 1993 and incorporated herein by reference.)
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Shelter Realty IV Corporation
Corporate General Partner of Shelter Properties IV
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note I of Notes to the Financial Statements of Shelter Properties IV included in
its Form 10-KSB for the year ended October 31, 1999 describes a change in the
method of accounting to capitalize exterior painting and major landscaping,
which would have been expensed under the old policy. You have advised us that
you believe that the change is to a preferable method in your circumstances
because it provides a better matching of expenses with the related benefit of
the expenditures and is consistent with policies currently being used by your
industry and conforms to the policies of the Corporate General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/ Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Shelter
Properties IV 1999 annual 10-KSB and is qualified in its entirety by reference
to such 10-KSB filing.
</LEGEND>
<CIK> 0000702174
<NAME> Shelter Properties IV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<CASH> 3,614
<SECURITIES> 0
<RECEIVABLES> 1,151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 62,656
<DEPRECIATION> 36,327
<TOTAL-ASSETS> 32,538
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 22,860
0
0
<COMMON> 0
<OTHER-SE> 7,966
<TOTAL-LIABILITY-AND-EQUITY> 32,538
<SALES> 0
<TOTAL-REVENUES> 11,667
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,202
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,110
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 403
<NET-INCOME> 1,868
<EPS-BASIC> 36.98 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet.
<F2> Multiplier is 1.
</FN>
</TABLE>
