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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
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FORM 10-Q
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[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 2000
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 0-12538
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-1
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-2197264
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
TWO NORTH RIVERSIDE PLAZA,
SUITE 700,
CHICAGO, ILLINOIS 60606-2607
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
(312) 207-0020
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated October 25, 1982,
included in the Registrant's Registration Statement on Form S-11 (Registration
No. 2-79092), is incorporated herein by reference in Part I of this report.
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BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
March 31,
2000 December 31,
(Unaudited) 1999
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 230,100 $ 220,800
Investments in debt
securities 3,727,800 3,727,800
Other assets 6,900 6,700
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$3,964,800 $3,955,300
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and
accrued expenses $ 25,400 $ 48,500
Due to Affiliates 200 3,000
Other liabilities 2,500 2,500
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28,100 54,000
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Partners' capital:
General Partners 613,500 613,100
Limited Partners (60,000
Units issued and
outstanding) 3,323,200 3,288,200
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3,936,700 3,901,300
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$3,964,800 $3,955,300
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 2000 (Unaudited)
and the year ended December 31, 1999
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Partners' capital, January 1, 1999 $611,900 $3,167,600 $3,779,500
Net income for the year ended December 31, 1999 1,200 120,600 121,800
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Partners' capital, December 31, 1999 613,100 3,288,200 3,901,300
Net income for the quarter ended March 31, 2000 400 35,000 35,400
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Partners' capital, March 31, 2000 $613,500 $3,323,200 $3,936,700
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</TABLE>
The accompanying notes are an integral part of the financial statements
2
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STATEMENTS OF INCOME AND EXPENSES
For the quarters ended March 31, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Income:
Interest $64,600 $44,100
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Expenses:
General and administrative:
Affiliates 2,500 4,700
Nonaffiliates 26,700 (2,100)
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29,200 2,600
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Net income $35,400 $41,500
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Net income allocated to General Partners $ 400 $ 400
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Net income allocated to Limited Partners $35,000 $41,100
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Net income allocated to Limited Partners per Unit (60,000
Units outstanding) $ 0.58 $ 0.69
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</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 35,400 $ 41,500
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in assets and liabilities:
(Increase) in other assets (200)
(Decrease) in accounts payable and accrued expenses (23,100) (29,000)
(Decrease) in due to Affiliates (2,800) (1,800)
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Net cash provided by operating activities 9,300 10,700
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Cash flows from investing activities:
(Increase) in investments in debt securities -- (1,370,000)
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Net cash (used for) investing activities -- (1,370,000)
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Net cash from financing activities -- --
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Net increase (decrease) in cash and cash equivalents 9,300 (1,359,300)
Cash and cash equivalents at the beginning of the
period 220,800 3,846,100
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Cash and cash equivalents at the end of the period $230,100 $ 2,486,800
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</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ACCOUNTING POLICIES:
The Partnership has disposed of its real estate properties. Upon resolution of
the environmental matter disclosed in Note 3 and other post closing matters
related to the sale of the Partnership's properties, the Partnership will make
a liquidating distribution to Partners and dissolve.
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States ("GAAP"). The Partnership
utilizes the accrual method of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the three months ended March 31, 2000 are not necessarily indicative of the
operating results for the year ending December 31, 2000.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Investments in debt securities are comprised of obligations of the United
States government and are classified as held-to-maturity. These investments are
carried at their amortized cost basis in the financial statements which
approximated fair value. All of these securities had maturity dates of less
than one year from the date purchased.
The Partnership has one reportable segment as the Partnership is in the
disposition phase of its life cycle, wherein it is seeking to resolve post-
closing matters related to the properties sold by the Partnership.
Reference is made to the Partnership's annual report for the year ended
December 31, 1999, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim or as otherwise
disclosed herein.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to March 31, 1983, the
Termination of the Offering, the General Partners are entitled to 10% of Cash
Flow (as defined in the Partnership Agreement) as their Subordinated
Partnership Management Fee, provided that Limited Partners first receive
specified non-cumulative annual rates of return on their Capital Investment.
In accordance with the Partnership Agreement, Net Profits (exclusive of
depreciation and Net Profits from the sale or disposition of Partnership
properties) are allocated: first, to the General Partners, in an amount equal
to the greater of the General Partners' Subordinated Partnership Management Fee
or 1% of such Net Profits; and second, the balance, if any, to the Limited
Partners. Net Profits from the sale or disposition of a Partnership property
are allocated: first, to the General Partners, in an amount equal to the
aggregate amount of depreciation previously allocated to them; second, to the
General Partners and the Limited Partners with negative balances in their
capital accounts pro rata in proportion to such respective negative balances,
to the extent of the total of such negative balances; third, to the General
Partners, in an amount necessary to make the aggregate amount of their capital
accounts equal to the greater of the Sale Proceeds to be distributed to the
General Partners with respect to the sale or disposition of such property or 1%
of such Net Profits; and fourth, the balance, if any, to the Limited Partners.
Net Losses (exclusive of depreciation and Net Losses from the sale, disposition
or provision for value impairment of Partnership properties) are allocated 1%
to the General Partners and 99% to the Limited Partners. All depreciation is
allocated 10% to the General Partners and 90% to the Limited Partners. Net
Losses from the sale, disposition or provision for value impairment of
Partnership properties are allocated: first, to the extent that the balance in
the General Partners' capital accounts exceeds their Capital Investment or the
balance in the capital accounts of the Limited Partners exceeds the amount of
their Capital Investment (collectively, the "Excess Balances"), to the General
Partners and the Limited Partners pro rata in proportion to such Excess
Balances until such Excess Balances are reduced to zero; second, to the General
Partners and the Limited Partners and among them (in the ratio which their
respective capital account balances bear to the aggregate of all capital
account balances) until the balance in their capital accounts shall be reduced
to zero; third, the balance, if any, 99% to the Limited Partners and 1% to the
General Partners. In all events there shall be allocated to the General
Partners not less than 1% of Net Profits and Net Losses from the sale,
disposition or provision for value impairment of a Partnership property. The
General Partners were not entitled to cash distributions for the three months
ended March 31, 2000 and 1999. For both of the three months ended March 31,
2000 and 1999, the General Partners were allocated Net Profits of $400.
Fees and reimbursements paid and payable by the Partnership to Affiliates as of
March 31, 2000 were as follows:
<TABLE>
<CAPTION>
Paid Payable
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<S> <C> <C>
Reimbursement of expenses, at cost
--Accounting $2,700 None
--Investor communications 2,700 $200
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$5,400 $200
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</TABLE>
3. ENVIRONMENTAL MATTER:
In 1996, the Managing General Partner became aware of the existence of
hazardous substances in the groundwater under Lakewood Square Shopping Center
("Lakewood"). In connection with the 1997 sale of Lakewood, the purchaser
assumed the obligation to remedy the hazardous substances in the manner
required by law, which includes, but is not limited to, payment of all costs in
connection with the remediation work. In addition, the purchaser provided the
Partnership with certain indemnification protection in relation to clean-up
costs and related expenses arising from the presence of these hazardous
substances. At the present time, the Managing General Partner is unaware of any
claims or other matters referred to above against the Partnership. During 1998,
the purchaser submitted its corrective action plan (the "Plan") for the site to
the California Regional Water Quality Control Board (the "Water Board"). The
Plan provided for the recommended method for clean up and the obtaining of
regulatory approval upon completion. The Water Board subsequently approved the
Plan subject to review of Purchaser's pilot study (the "Pilot Study"). In
February 2000, purchaser reported that the results of the Pilot Study indicated
that the plan may not adequately address some of the contamination in the soil
below Lakewood. In response, in February 2000, purchaser presented an outline
of its alternative plan (the "Alternative Plan") to the Water Board. Purchaser
is awaiting final approval from the Water Board to begin implementation of the
Alternative Plan. The timing of the completion of the remediation process is
contingent upon, among other things, the Water Board's issuance of this
approval. Accordingly, there can be no assurance as to the timing of the
completion of the remediation process. The Managing General Partner continues
to monitor the documentation delivered by the purchaser regarding the
purchaser's activities to remedy the hazardous substances at Lakewood.
4
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's Annual Report for the year ended
December 31, 1999 for a discussion of the Partnership's business.
Statements contained in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical facts, may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from
those projected. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
The Partnership has substantially completed the disposition phase of its life
cycle. The Partnership has sold its remaining property investments and is
working toward resolution of post closing property sale matters.
OPERATIONS
Net income decreased by $6,100 for the three months ended March 31, 2000 when
compared to the three months ended March 31, 1999. The decrease was primarily
due to a 1999 adjustment of estimated overhead expenses to actual. This
adjustment resulted in lower than expected general and administrative expenses
for the quarter ended March 31, 1999. The decrease was partially offset by an
increase in interest earned on the Partnership's short-term investments, which
was due to an increase in interest rates on the Partnership's short-term
investments.
LIQUIDITY AND CAPITAL RESOURCES
The increase in the Partnership's cash position of $9,300 during the three
months ended March 31, 2000 was due to net cash provided by operating
activities. Liquid assets, including cash, cash equivalents and investments in
debt securities, as of March 31, 2000 were comprised of amounts reserved for
the Lakewood environmental matter (as hereafter discussed) and Partnership
liquidation expenses.
Net cash provided by operating activities decreased by $1,400 for the three
months ended March 31, 2000 when compared to the three months ended March 31,
1999. The decrease was primarily the result of the timing of the payment of
certain Partnership expenses.
The decrease in net cash used for investing activities of $1,370,000 for the
three months ended March 31, 2000 when compared to the three months ended
March 31, 1999 was primarily due to an increase in the amount of investments
in debt securities made during the first quarter of 1999. Investments in debt
securities are a result of the continued extension of the maturities of
certain of the Partnership's short-term investments in an effort to maximize
the return on these amounts while they are held for the Lakewood environmental
contingency and Partnership liquidation expenses. These investments are
investment-grade and mature less than one year from their date of purchase.
The Partnership has no financial instruments for which there are significant
market risks. Due to the timing of the maturities and liquid nature of the
Partnership's investments in debt securities, the Partnership does not believe
that it has material market risk.
As described in Note 3 of Notes to Financial Statements, the Partnership is
awaiting resolution of an environmental matter at Lakewood. The Managing
General Partner is continuing to monitor the documentation delivered by the
purchaser of Lakewood regarding the purchaser's activities to remedy the
hazardous substances at Lakewood. There can be no assurance as to the actual
timeframe for the remediation or that it will be completed without cost to the
Partnership. As a result of this, it will be necessary for the Partnership to
remain in existence. When the environmental matter at Lakewood is
satisfactorily remediated, Limited Partners will receive a final liquidating
distribution of the remaining cash held by the Partnership, less amounts
reserved for administrative expenses and any amounts deemed necessary to
resolve, or provide for, any post closing matters.
5
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K for the three months ended March 31,
2000.
6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE,
LTD.-1
By: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Date: May 12, 2000 /s/ DOUGLAS CROCKER II
By: ______________________________________
DOUGLAS CROCKER II
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: May 12, 2000 /s/ NORMAN M. FIELD
By: ______________________________________
NORMAN M. FIELD
VICE PRESIDENT--FINANCE AND TREASURER
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 230,100
<SECURITIES> 3,727,800
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,957,900
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,964,800
<CURRENT-LIABILITIES> 25,600
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,936,700
<TOTAL-LIABILITY-AND-EQUITY> 3,964,800
<SALES> 0
<TOTAL-REVENUES> 64,600
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 44,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,400
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,400
<EPS-BASIC> 0.58
<EPS-DILUTED> 0.58
</TABLE>
