<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1999
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Commission file number 0-13563
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DAMSON/BIRTCHER REALTY INCOME FUND - I
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(Exact name of registrant as specified in its charter)
Pennsylvania 13-3264491
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27611 La Paz Road, P.O. Box 30009, Laguna Niguel, California 92607-0009
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(Address of principal executive offices) (Zip Code)
(949) 643-7700
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(Registrant's telephone number, including area code)
N/A
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(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 12(g), 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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DAMSON/BIRTCHER REALTY INCOME FUND-I
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Net Assets in Liquidation - September 30, 1999
(Unaudited)and December 31, 1998 (Audited)............................. 3
Statements of Changes of Net Assets in Liquidation -
Three and Nine months Ended September 30, 1999 and 1998 (Unaudited).... 4
Notes to Financial Statements (Unaudited).............................. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......................... 12
Item 3. Quantitative and Qualitative Market Risk Disclosures................... 18
PART II. OTHER INFORMATION...................................................... 18
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
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<S> <C> <C>
ASSETS (Liquidation Basis): (unaudited)
- ---------------------------
Properties $13,929,000 $34,431,000
Cash and cash equivalents 15,599,000 351,000
Cash held in escrow 512,000 --
Accounts receivable, net 70,000 171,000
Other assets 44,000 121,000
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Total Assets 30,154,000 35,074,000
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LIABILITIES (Liquidation Basis):
- --------------------------------
Accounts payable and accrued liabilities 389,000 896,000
Secured loan payable -- 2,509,000
Accrued expenses for liquidation (including
prepayment penalty at December 31, 1998) 173,000 873,000
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Total Liabilities 562,000 4,278,000
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Net Assets in Liquidation $29,592,000 $30,796,000
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net assets in liquidation
at beginning of period $ 29,344,000 $ 29,922,000 $ 30,796,000 $ 32,026,000
Increase (decrease) during period:
Operating activities:
Property operating income, net 979,000 922,000 2,445,000 2,514,000
Interest income 36,000 3,000 43,000 9,000
General and administrative
expenses (252,000) (240,000) (704,000) (748,000)
Interest expense on mortgage
payable (49,000) (59,000) (160,000) (179,000)
Leasing commissions (13,000) (48,000) (78,000) (266,000)
------------ ------------ ------------ ------------
701,000 578,000 1,546,000 1,330,000
------------ ------------ ------------ ------------
Liquidating activities:
Loss from sale of real estate (425,000) -- (425,000) --
Adjustment to the carrying
value of real estate -- -- (1,717,000) (2,600,000)
Decrease in accrued liquidation
expenses 316,000 -- 316,000 --
Distributions to partners (344,000) -- (924,000) (256,000)
------------ ------------ ------------ ------------
(453,000) -- (2,750,000) (2,856,000)
------------ ------------ ------------ ------------
Net increase (decrease) in assets
in liquidation 248,000 578,000 (1,204,000) (1,526,000)
------------ ------------ ------------ ------------
Net assets in liquidation at
end of period $ 29,592,000 $ 30,500,000 $ 29,592,000 $ 30,500,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
(1) Accounting Policies
The financial statements of Damson/Birtcher Realty Income Fund-I (the
"Partnership") included herein have been prepared by the General
Partner, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements include
all adjustments which are of a normal recurring nature and, in the
opinion of the General Partner, are necessary for a fair presentation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to the
rules and regulations of the Securities and Exchange Commission. These
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1998.
Liquidation Basis of Accounting
On February 18, 1997, the Partnership mailed a Consent Solicitation to
the Limited Partners which sought their consent to dissolve the
Partnership and sell and liquidate all of its remaining properties as
soon as practicable, consistent with selling the Partnership's
properties to the best advantage under the circumstances. A majority in
interest of the Limited Partners consented by March 14, 1997. As a
result, the Partnership adopted the liquidation basis of accounting as
of March 31, 1997. The liquidation basis of accounting is appropriate
when liquidation appears imminent, the Partnership can no longer be
classified as a going concern and the net realizable values of the
Partnership's assets are reasonably determinable. The difference
between the adoption of the liquidation basis of accounting as of March
14, 1997 and March 31, 1997 was not material.
Under the liquidation basis of accounting, assets are stated at their
estimated net realizable values and liabilities are stated at their
anticipated settlement amounts. The valuation of assets and liabilities
necessarily requires many estimates and assumptions, and there are
substantial uncertainties in carrying out the dissolution of the
Partnership. The actual values upon dissolution and costs associated
therewith could be higher or lower than the amounts recorded.
Segment Reporting
The Partnership adopted Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 requires, among other items, that a
public business enterprise report a measure of segment profit or loss,
certain specific revenue and expense items, segment assets, information
about the revenues derived from the enterprise's products or services
and major customers. SFAS 131 also requires that the enterprise report
descriptive information about the way that the operating segments were
determined and the products and services provided by the operating
segments. Given that the Partnership is in the process of liquidation,
the Partnership has identified only one operating business segment
which is the business of asset liquidation. The adoption of SFAS 131
did not have an impact on the Partnership's financial reporting.
5
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
Segment Reporting (Cont'd.)
Rental income from FISERV, Inc. (formerly d.b.a. Citicorp CIR, Inc.)
totaled $160,000 and $147,000 for the three months ended September 30,
1999 and 1998, or approximately 15% and 9%, respectively, of the
Partnership's total rental income. For the nine months ended September
30, 1999 and 1998, rental income totaled $470,000 and $431,000, or 12%
and 10% of the Partnership's total rental income, respectively.
Adjustment to the Carrying Value of Real Estate
During the three months ended June 30, 1999, the General Partner
determined that the carrying values of Ladera-I Shopping Center and
Oakpointe were in excess of their respective estimated net realizable
values, net of estimated selling costs. As a result, their carrying
values were adjusted by $1,217,000 and $500,000, to $4,203,000, and
$5,812,000, respectively.
Earnings Per Unit
The Partnership Agreement does not designate investment interests in
units. All investment interests are calculated on a "percent of
Partnership" basis, in part to accommodate original reduced rates on
sales commissions for subscriptions in excess of certain specified
amounts.
A Limited Partner who was charged a reduced sales commission or no
sales commission was credited with proportionately larger Invested
Capital and therefore had a disproportionately greater interest in the
capital and revenues of the Partnership than a Limited Partner who paid
commissions at a higher rate. As a result, the Partnership has no set
unit value as all accounting, investor reporting and tax information is
based upon each investor's relative percentage of Invested Capital.
Accordingly, earnings or loss per unit is not presented in the
accompanying financial statements.
(2) Transactions with Affiliates
The Partnership has no employees and, accordingly, the General Partner
and its affiliates perform services on behalf of the Partnership in
connection with administering the affairs of the Partnership. The
General Partner and affiliates are reimbursed for their general and
administrative costs actually incurred and associated with services
performed on behalf of the Partnership. For the three months ended
September 30, 1999 and 1998, the Partnership incurred approximately
$26,000 and $25,000, respectively.
Such costs were $112,000 and $115,000 for the nine months there ended.
An affiliate of the General Partner provides property management
services with respect to the Partnership's properties and receives a
fee for such services not to exceed 3% of the gross receipts from the
properties under management. Such fees amounted to approximately
$37,000 and $47,000 for the three months ended September 30, 1999 and
1998, and $122,000 and $133,000, respectively for the nine
6
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(2) Transactions with Affiliates (Cont'd.)
months there ended. In addition, an affiliate of the General Partner
received $71,000 and $76,000 for the three months ended September 30,
1999 and 1998, respectively, as reimbursement of costs of on-site
property management personnel and other reimbursable costs. For the
nine months there ended, such reimbursements were $242,000 and
$236,000, respectively.
As previously reported, on June 24, 1993, the Partnership completed its
solicitation of written consents from its Limited Partners. A majority
in interest of the Partnership's Limited Partners approved each of the
proposals contained in the Information Statement dated May 5, 1993.
Those proposals were implemented by the Partnership as contemplated by
the Information Statement as amendments to the Partnership Agreement,
and are reflected in these financial statements as such.
The amended Partnership Agreement provides for the Partnership's
payment to the General Partner of an annual asset management fee equal
to .45% for 1999 and .55% for 1998 of the aggregate appraised value of
the Partnership's properties as determined by independent appraisal
undertaken in January of 1998 and by the General Partner's estimate of
fair value for 1999. Such fees for the three months ended September 30,
1999 and 1998, amounted to $37,000 and $52,000, respectively. For the
nine months there ended, these fees amounted to $116,000 and $157,000,
respectively.
In addition, the amended Partnership Agreement provides for payment to
the General Partner of a leasing fee for services rendered in
connection with leasing space in a Partnership property after the
expiration or termination of leases. Fees for leasing services for the
three months ended September 30, 1999 and 1998, amounted to $2,000 and
$8,000, respectively. For the nine months there ended, such fees were
$20,000 and $43,000, respectively.
(3) Commitments and Contingencies
Litigation
So far as is known to the General Partner, neither the Partnership nor
its properties are subject to any material pending legal proceedings,
except for the following:
Bigelow/Diversified Secondary Partnership's Fund 1990 Litigation
----------------------------------------------------------------
On March 25, 1997, a limited partner named Bigelow/Diversified
Secondary Partnership Fund 1990 filed a purported class action lawsuit
in the Court of Common Pleas of Philadelphia County against
Damson/Birtcher Partners, Birtcher Investors, Birtcher/Liquidity
Properties, Birtcher Investments, L.F. Special Fund II, L.P., L.F.
Special Fund I, L.P., Arthur Birtcher, Ronald Birtcher, Robert
Anderson, Richard G. Wollack and Brent R. Donaldson alleging breach of
fiduciary duty and breach of contract and seeking to enjoin the Consent
Solicitation dated February 18, 1997. On April 18, 1997, the court
denied the plaintiff's motion for a preliminary injunction. On June 10,
1997, the court dismissed the plaintiff's complaint on the basis of
lack of personal jurisdiction and forum non conveniens.
7
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(3) Commitments and Contingencies (Cont'd.)
Litigation (Cont'd.)
Bigelow/Diversified Secondary Partnership's Fund 1990 Litigation
-----------------------------------------------------------------
(Cont'd.)
On June 13, 1997, the Partnership's affiliated partnerships,
Damson/Birtcher Realty Income Fund-II and Real Estate Income Partners
III, and their general partner, Birtcher/Liquidity Properties, filed a
complaint for declaratory relief in the Court of Chancery in Delaware
against Bigelow/Diversified Secondary Partnership Fund 1990 L.P. The
complaint seeks a declaration that the vote that the limited partners
of Damson/Birtcher Realty Income Fund-II and Real Estate Income
Partners III took pursuant to the respective consent solicitations
dated February 18, 1997 was effective to dissolve the respective
partnerships and complied with applicable law, that the actions of the
General Partner in utilizing the consent solicitations to solicit the
vote of the limited partners did not breach any fiduciary or
contractual duty to such limited partners, and an award of costs and
fees to the plaintiffs. The defendant has answered the complaint. The
parties have initiated discovery. No motions are pending at this time.
In September 1998, Bigelow/Diversified Secondary Partnership 1990
informed the Partnership that it was filing suit in the Delaware
Chancery Court against Damson/Birtcher Partners, Birtcher Investors,
Birtcher Liquidity Properties, Birtcher Investments, BREICORP, LF
Special Fund I, LP, LF Special Fund II. LP, Arthur Birtcher, Ronald
Birtcher, Robert Anderson, Richard G. Wollack and Brent R. Donaldson
alleging a purported class action on behalf of the limited partners of
Damson/Birtcher Realty Income Fund-I, Damson/Birtcher Realty Income
Fund-II and Real Estate Income Partners III alleging breach of
fiduciary duty and incorporating the allegations set forth in the
previously dismissed March 25, 1997 complaint filed in the Court of
Chancery of Philadelphia County. Plaintiff has engaged in preliminary
discovery and the parties have held settlement discussions. No motions
are pending at this time.
Rex Garton, et al. v. Damson/Birtcher Partners, et al.
------------------------------------------------------
This action was filed on September 25, 1998 in the District Court of
Oklahoma County for the State of Oklahoma against the Partnership's
general partner, Damson/Birtcher Partners, other related defendants and
numerous unrelated defendants. Damson/Birtcher Partners and other
related defendants were brought into the action in late December 1998,
when they were served with the Second Amended Petition. The other
related defendants are Birtcher Partners, Birtcher Properties, The
Birtcher Group, Birtcher American Properties, Arthur B. Birtcher,
Ronald E. Birtcher, LF Special Fund II, L.P., and Liquidity Fund Asset
Management Inc., but The Birtcher Group and Birtcher American
Properties have not been served with process and have not appeared in
the action. The Partnership itself is not named as a defendant. The
case is a class action brought on behalf of investors in the
Partnership who purchased limited partnership interests from May 7,
1984 to September 17, 1985. The Second Amended Petition alleges breach
of contract, intentional and negligent misrepresentation, breach of
fiduciary
8
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(3) Commitments and Contingencies (Cont'd.)
Litigation (Cont'd.)
Rex Garton, et al. v. Damson/Birtcher Partners, et al. (Cont'd.)
------------------------------------------------------
duties, and violations of various Oklahoma and federal statutes in
connection with the sale of the limited partnership interests.
Plaintiff seeks unspecified compensatory damages and $10 million in
punitive damages.
Damson/Birtcher Partners and the related defendants have removed the
case to the United States District Court for the Western District of
Oklahoma, and have filed a motion to dismiss the case for lack of
personal jurisdiction or, alternatively, to transfer the action to the
United States District Court for the Central District of California,
for the convenience of the parties and witnesses and in the interests
of justice. Plaintiff's motion to remand the case back to the Oklahoma
state court was denied. The motion to dismiss or transfer is pending.
Damson/Birtcher Partners and the related defendants intend to present a
vigorous defense on the merits of plaintiff's claims, should this be
necessary.
Madison Partnership and ISA Partnership Litigation
--------------------------------------------------
On April 2, 1999, Madison Partnership Liquidity Investors XVI, LLC and
ISA Partnership Liquidity Investors filed a purported class and
derivative action in the California Superior Court in Orange County,
California against Damson Birtcher Partners, Birtcher/Liquidity
Properties, Birtcher Partners, Birtcher Investors, Birtcher
Investments, Birtcher Limited, Breicorp LP Special Fund II, L.P.,
Liquidity Fund Asset Management, Inc., Robert M. Anderson, Brent R.
Donaldson, Arthur B. Birtcher, Ronald E. Birtcher, and Richard G.
Wollack, Defendants, and Damson/Birtcher Realty Income Fund-I,
Damson/Birtcher Realty Income Fund-II, and Real Estate Income Partners
III, Nominal Defendants. The complaint asserts claims for breach of
fiduciary duty and breach of contract. The gravamen of the complaint is
that the General Partners of these limited partnerships have not
undertaken all reasonable efforts to expedite liquidation of the
Partnerships' properties and to maximize the returns to the
Partnerships' limited partners. The complaint seeks unspecified
monetary damages, attorneys' fees and litigation expenses, and an order
for dissolution of the Partnerships and appointment of an independent
liquidating trustee. The Partnership has moved to dismiss the case on
the grounds that the pending Bigelow class action, discussed above,
raises essentially the same claims. If the case is not stayed or
dismissed, the Partnership intends to present a vigorous defense.
(4) Accrued Expenses for Liquidation
Accrued expenses for liquidation as of September 30, 1999, include
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal
fees (exclusive of litigation costs), accounting fees, tax preparation
and filing fees, and other professional services. During the three
months ended September 30, 1999, a pre-payment penalty of $384,000
associated with the early retirement of a mortgage loan secured by the
Certified Distribution Center was incurred. The portion previously
accrued as an estimate of the pre-payment
9
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(4) Accrued Expenses for Liquidation (Cont'd.)
penalty was eliminated as a result of the sale of that property. The
difference between the estimated and actual pre-payment penalty
incurred ($316,000) has been reflected as a decrease in accrued
expenses for liquidation for the period ended September 30, 1999.
The actual costs could vary significantly from the related provisions
due to the uncertainty related to the length of time required to
complete the liquidation and dissolution and the complexities which may
arise in disposing of the Partnership's remaining assets.
(5) Loss on Sale of Real Estate
Loss from sale of real estate represents the net gains and losses from
the sales of Washington Technical Center, Ladera-I shopping center,
Oakpointe and Certified Distribution Center. Gains were generated by
the sales of Washington Technical Center ($459,000) and Ladera-I
shopping center ($20,000). Losses were generated by the sales of
Oakpointe ($280,000) and Certified Distribution Center ($624,000).
During the three month period ended September 30, 1999, the Partnership
sold four of its six properties in two separate transactions, as set
forth below:
Ladera-I
--------
On September 22, 1999, the Partnership sold Ladera-I shopping center,
in Albuquerque, New Mexico to CA New Mexico, LLC, a wholly-owned
subsidiary of CenterAmerica Trust ("CenterAmerica"), a Houston-based
real estate investment trust that is not affiliated in any way with the
Partnership, its General Partner or any of its principals or
affiliates. The sale price was $4,424,000.
CenterAmerica and the Partnership were each represented by third-party
brokers in the transaction. The brokers were paid an aggregate $186,803
from the sale proceeds. The General Partner was not paid a disposition
fee in connection with the transaction. CenterAmerica did not hire the
General Partner or any affiliate to perform asset management or
property management services for this property.
The Rubin Pachulsky Dew Transaction
-----------------------------------
On September 23, 1999, the Partnership sold Certified Warehouse and
Distribution Center, in Salt Lake City, Utah, Oakpointe Business
Center, in Arlington Heights, Illinois, and Washington Technical
Center, in Renton, Washington to Rubin Pachulsky Dew Properties, LLC
("Rubin Pachulsky Dew") for $5,100,000, $5,600,000 and $3,950,000,
respectively, or an aggregate purchase price of $14,650,000. Rubin
Pachulsky Dew is a third-party real estate investment entity that is
not affiliated in any way with the Partnership, its General Partner or
any of its principals or affiliates.
Rubin Pachulsky Dew was represented by a third-party broker in the
transaction. The broker was paid $146,500 from the sale proceeds. Since
the sale price of
10
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(5) Loss on Sale of Real Estate
Washington Technical Center exceeded the January 1, 1993 appraised
value ($3,400,000), pursuant to the 1993 Amendment of the Partnership
Agreement, the General Partner earned and was paid a property
disposition fee of $98,750 in connection with the sale of that
property.
Rubin Pachulsky Dew has hired an affiliate of Birtcher as property
manager for the properties for a fee that is approximately the same as
the fee the Partnership previously paid to the General Partner for
property management. In addition, Rubin Pachulsky Dew has hired an
affiliate of Birtcher to provide certain asset management services for
the properties, and will pay an incentive fee approximately equal to
10% of the profits, if any, after Rubin Pachulsky Dew has received a
15% cumulative annual return on its investment. The incentive fee, if
earned, is not payable until the last property is sold or four years
from date of purchase, whichever comes first. The property management
agreement is cancelable at any time upon 60 days notice, but the
incentive fee will survive termination of the contract.
A portion of the proceeds from the sale of the properties to Rubin
Pachulsky Dew continues to be held in escrow. A sum equal to two and
one-half percent of the purchase price has been held back as a
potential source of payment for any claims that may arise related to a
Partnership breach of certain representations and warranties related to
the sale and for any litigation costs that may arise for a one-year
period. The remaining cash held in escrow relates to holdbacks for
tenant improvements and tax prorations.
(6) Subsequent Event
On October 15, 1999, Damson/Birtcher Realty Income Fund-I (the
"Partnership") sold The Cornerstone shopping center, in Tempe, Arizona
to GDA Real Estate Services, LLC ("GDA"), a Denver-based real estate
developer and operator that is not affiliated in any way with the
Partnership, its General Partner or the General Partner's affiliates,
for a sale price of $8,500,000.
GDA was represented by two third-party brokers in the transaction. The
brokers were paid $170,000 from the sale proceeds. The General Partner
was not paid a disposition fee in connection with the transaction. GDA
will not hire the General Partner or any affiliate to perform asset
management or property management services for this property.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
-------------------------------
Since the completion of its acquisition program in September 1985, the
Partnership has been engaged in the operation of its properties. The
Partnership's original objective had been to hold its properties as
long-term investments. However, an Information Statement, dated May 5,
1993, mandated that the General Partner seek a vote of the Limited
Partners no later than December 31, 1996, regarding prompt liquidation
of the Partnership in the event that properties with appraised values
as of January 1993 which constituted at least one half of the aggregate
appraised values of all Partnership properties as of that date were not
sold or under contract for sale by the end of 1996. Given the mandate
of the May 5, 1993 Information Statement, as of December 31, 1995, the
General Partner decided to account for the Partnership's properties as
assets held for sale, instead of for investment. In a Consent
Solicitation dated February 18, 1997, the Partnership solicited and
received the consent of the Limited Partners on March 14, 1997 to
dissolve the Partnership and sell and liquidate all of its remaining
properties as soon as practicable, consistent with selling the
Partnership's properties to the best advantage under the circumstances.
The Partnership's properties were held for sale throughout 1998 and
continue to be held for sale.
In November 1998, the Partnership entered into a definitive Purchase
and Sale Agreement with Abbey Investments, Inc. to sell all the
Partnership's properties for a range between $34,500,000 and
$36,000,000, depending on final occupancy rates at the time of closing.
However, in January 1999, the agreement was terminated because Abbey
had requested a material reduction in the purchase price (approximately
11%), which the Partnership did not agree to.
On April 30, 1999, the Partnership and Praedium Performance Fund IV
("Praedium") executed a Purchase and Sale Agreement to sell all of the
Partnership's properties except Terracentre to Praedium for
$31,700,000. Praedium deposited $243,100 into escrow, pending
completion of its due diligence inspection and review. Praedium's
contingency period expired on June 14, 1999. During and after the
contingency period, Praedium, in a series of negotiations with the
Partnership, sought reductions in the purchase price of each of the
properties and declined to include the Cornerstone, Ladera-I and
Certified in its offers. During this time, the General Partner
negotiated with Praedium, and also sought other purchasers for the
properties, both individually and as a group. Finally, in late July
1999, the Partnership declined Praedium's offer to purchase only
Cornerstone, Oakpointe and Washington Tech for a materially reduced
purchase price and terminated its dealings with Praedium.
Sale of the Properties
During the three month period ended September 30, 1999, the Partnership
sold four of its six properties in two separate transactions, and
subsequently sold The Cornerstone in another transaction on October 15,
1999, as set forth below:
12
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DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
-------------------------------
Sale of the Properties (Cont'd)
Ladera-I
--------
On September 22, 1999, the Partnership sold Ladera-I shopping center,
in Albuquerque, New Mexico to CA New Mexico, LLC, a wholly-owned
subsidiary of CenterAmerica Trust ("CenterAmerica"), a Houston-based
real estate investment trust that is not affiliated in any way with the
Partnership, its General Partner or any of its principals or
affiliates. The sale price was $4,424,000.
CenterAmerica and the Partnership were each represented by third-party
brokers in the transaction. The brokers were paid an aggregate $186,803
from the sale proceeds. The General Partner was not paid a disposition
fee in connection with the transaction. CenterAmerica did not hire the
General Partner or any affiliate to perform asset management or
property management services for this property.
The Rubin Pachulsky Dew Transaction
-----------------------------------
On September 23, 1999, the Partnership sold Certified Warehouse and
Distribution Center, in Salt Lake City, Utah, Oakpointe Business
Center, in Arlington Heights, Illinois, and Washington Technical
Center, in Renton, Washington to Rubin Pachulsky Dew Properties, LLC
("Rubin Pachulsky Dew") for $5,100,000, $5,600,000 and $3,950,000,
respectively, or an aggregate purchase price of $14,650,000. Rubin
Pachulsky Dew is a third-party real estate investment entity that is
not affiliated in any way with the Partnership, its General Partner or
any of its principals or affiliates.
Rubin Pachulsky Dew was represented by a third-party broker in the
transaction. The broker was paid $146,500 from the sale proceeds. Since
the sale price of Washington Technical Center exceeded the January 1,
1993 appraised value ($3,400,000), pursuant to the 1993 Amendment of
the Partnership Agreement, the General Partner earned and was paid a
property disposition fee of $98,750 in connection with the sale of that
property.
Rubin Pachulsky Dew has hired an affiliate of Birtcher as property
manager for the properties for a fee that is approximately the same as
the fee the Partnership previously paid to the General Partner for
property management. In addition, Rubin Pachulsky Dew has hired an
affiliate of Birtcher to provide certain asset management services for
the properties, and will pay an incentive fee approximately equal to
10% of the profits, if any, after Rubin Pachulsky Dew has received a
15% cumulative annual return on its investment. The incentive fee, if
earned, is not payable until the last property is sold or four years
from date of purchase, whichever comes first. The property management
agreement is cancelable at any time upon 60 days notice, but the
incentive fee will survive termination of the contract.
A portion of the proceeds from the sale of the properties to Rubin
Pachulsky Dew continues to be held in escrow. A sum equal to two and
one-half percent of the purchase price has been held back as a
potential source of payment for any claims that may arise related to a
Partnership breach of certain representations and warranties related to
the sale and for any litigation costs that may arise for a one-year
period. The remaining cash held in escrow relates to holdbacks for
tenant improvements and tax prorations. The cash held in escrow has
been included in the calculation of loss on sale of real estate.
13
<PAGE> 14
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
-------------------------------
Sale of the Properties (Cont'd)
The Cornerstone
---------------
On October 15, 1999, Damson/Birtcher Realty Income Fund-I (the
"Partnership") sold The Cornerstone shopping center, in Tempe, Arizona
to GDA Real Estate Services, LLC ("GDA"), a Denver-based real estate
developer and operator that is not affiliated in any way with the
Partnership, its General Partner or the General Partner's affiliates,
for a sale price of $8,500,000.
GDA was represented by two third-party brokers in the transaction. The
brokers were paid $170,000 from the sale proceeds. The General Partner
was not paid a disposition fee in connection with the transaction. GDA
will not hire the General Partner or any affiliate to perform asset
management or property management services for this property.
Summary of Sale Proceeds
------------------------
The Partnership realized approximately $22,744,000, or approximately
$234 per $1,000 originally invested in the Partnership, in
distributable cash proceeds from the sale of the four properties during
the three months ended September 30, 1999 and from the sale of
Cornerstone in October 1999, after paying off the Certified loan
(approximately $2,747,000 including accrued interest and pre-payment
penalty) and deducting for holdbacks associated with the Rubin
Pachulsky Dew transaction (approximately $512,000), a parking lot
repair associated with the GDA transaction (approximately $230,000),
and closing costs and prorations totaling approximately $1,341,000.
The General Partner's estimate of distributable cash proceeds does not
take into account the expenditure of Partnership cash reserves,
operating expenses or net income or loss of the Partnership for any
period prior to the time the remaining property is sold or, the ongoing
litigation, which could affect the amount of sales proceeds ultimately
available for distribution. Therefore, the actual proceeds to be
received by the limited partners may vary materially, up or down, from
the estimate.
Currently, three lawsuits are pending against the Partnership and its
General Partner and certain of its affiliates that seek, among things,
unspecified monetary damages. Since these cases are in the preliminary
discovery phase, there is unavoidable uncertainty regarding their
ultimate resolution. The Partnership Agreement mandates that the
General Partner provide for all of the Partnership's liabilities and
obligations, including contingent liabilities, before distributing
liquidation proceeds to its partners. Therefore, the Partnership will
not distribute liquidation proceeds until the uncertainty surrounding
these lawsuits is sufficiently resolved. The amount and timing of any
distribution of liquidation proceeds will be determined by the General
Partner in light of these and other relevant considerations.
Status of Terracentre
---------------------
On March 24, 1999, the Partnership signed a Purchase and Sale Agreement
to sell Terracentre for $6,450,000 to Halcyon Real Estate, Inc.
("Halcyon"), a local
14
<PAGE> 15
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
-------------------------------
Status of Terracentre (Cont'd.)
---------------------
Denver real estate development company. During its due diligence period
Halcyon asked to extend its contingency period to address zoning and
land-use changes with the city of Denver (it apparently wanted to
change the site from office to residential condominium use). The
General Partner did not accept the request for extension. Halcyon
thereupon asked to reduce the purchase price from $6,450,000 to
$4,500,000. The Partnership rejected this request and terminated its
dealings with Halcyon.
Other Matters
-------------
On June 18, 1999, the Partnership entered into a Purchase and Sale
Agreement to sell Terracentre to Charles Callaway ("Callaway"), an
unaffiliated Denver real estate developer and operator, for $6,450,000.
The purchaser deposited $200,000 into escrow on June 21, 1999, all but
$50,000 of which is refundable pending completion of its due diligence
investigation. Unfortunately, at a Denver city council meeting on
August 10, 1999, certain council members discussed condemning
Terracentre in order to expand the adjacent convention center. The
Callaway transaction was subsequently terminated and the deposit
returned. On November 2, 1999, Denver voters approved a referendum in
favor of expanding the convention center. The disposition of the
property is currently pending further action by the City of Denver.
Regular distributions through September 30, 1999 represent cash flow
generated from operations of the Partnership's properties and interest
earned on the temporary investment of working capital net of capital
reserve requirements.
On July 30, 1993, the Partnership obtained a loan secured by a First
Deed of Trust on the Certified Distribution Center in Salt Lake City,
Utah. The loan, in the amount of $3,500,000, carried a fixed interest
rate of 9% per annum over a 13-year fully amortizing term and a
prepayment penalty feature. The loan was retired on September 23, 1999
with the sale of the Certified Distribution Center. The actual
pre-payment penalty incurred amounted to approximately $384,000.
The Partnership is in the process of liquidating its remaining assets.
Only one of the Partnership's properties (Terracentre) is expected to
remain unsold at January 1, 2000, the balance of the Partnership's
assets are expected to consist primarily of cash and receivables. It is
the opinion of the General Partner that the value of those
15
<PAGE> 16
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
-------------------------------
Other Matters (Cont'd.)
-------------
assets is not subject to any valuation risk as a result of year 2000
issues, other than general economic climate issues that may arise.
Based on current information, the cost of addressing potential year
2000 problems is not expected to have a material adverse impact on the
Partnership's financial position, results of operations or cash flows
in future periods. As of September 30, 1999, the Partnership's
accounting systems and the investor services system used to track the
limited partners' interests, distributions and tax information have
been tested and appear to be free of year 2000 bugs. The Partnership's
remaining property is under review utilizing the Building Owners and
Managers Association ("BOMA") industry standards as a guideline for
necessary corrections. The cost of the upgrades to the Partnership's
accounting systems were borne by the General Partner and will not be
reimbursed by the Partnership. In addition, the General Partner has
made inquiries of its banks, all of which indicate that any problems
have been addressed adequately by those institutions.
Even if attempts to correct any deficiencies in the Partnership's
software were unsuccessful, the General Partner anticipates that in the
short term it could convert its systems to standard spreadsheet or data
base programs at nominal costs.
Results of Operations for the Three Months Ended September 30, 1999
-------------------------------------------------------------------
Because the Partnership is in the process of liquidating its remaining
assets, a comparison of the results of operations is not practical. As
the Partnership's assets (properties) are sold, the results of
operations will be generated from a smaller asset base, and are
therefore not comparable. The Partnership completed the sale of four of
its six remaining properties in two separate transactions during
September 1999. The Partnership's operating results have been reflected
on the Statements of Changes of Net Assets in Liquidation.
For the three months ended September 30, 1999, the Partnership
generated $979,000 of net operating income from operation of its
properties. The increase in net operating income for the three months
ended September 30, 1999 when compared to the same period in 1998, was
primarily attributable to a successful tax appeal at Oakpointe,
partially offset by reduced revenue from the properties which were sold
in September.
Interest income resulted from the temporary investment of Partnership
working capital. For the three months ended September 30, 1999,
interest income was approximately $36,000. The increase in interest
income was reflective of the increased cash and cash equivalent
balances that were generated from the sale of the properties.
Loss from sale of real estate represents the net gains and losses from
the sales of Washington Technical Center, Ladera-I shopping center,
Oakpointe and Certified Distribution Center. Gains were generated by
the sale Washington Technical Center
16
<PAGE> 17
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended September 30, 1999
-------------------------------------------------------------------
(Cont'd.)
($459,000) and Ladera-I shopping center ($20,000). Losses were
generated by the sale of Oakpointe ($280,000) and Certified
Distribution Center ($624,000).
General and administrative expenses for the three months ended
September 30, 1999, include charges of $66,000 from the General Partner
and its affiliates for services rendered in connection with
administering the affairs of the Partnership and operating the
Partnership's properties.
Also included in general and administrative expenses for the three
months ended September 30, 1999, are direct charges of $570,000,
relating to audit fees, tax preparation fees, legal fees and
professional services, costs incurred in providing information to the
Limited Partners and other miscellaneous costs.
During the three months ended June 30, 1999, the General Partner
determined that the carrying values of Ladera-I Shopping Center and
Oakpointe were in excess of their respective estimated net realizable
values, net of estimated selling costs. As a result, their carrying
values were adjusted by $1,217,000 and $500,000, to $4,203,000, and
$5,812,000, respectively.
Accrued expenses for liquidation as of September 30, 1999, include
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal
fees, accounting fees, tax preparation and filing fees, and other
professional services. During the three months ended September 30,
1999, a pre-payment penalty of $384,000 associated with the early
retirement of a mortgage loan secured by the Certified Distribution
Center was incurred. The portion previously accrued as an estimate of
the pre-payment penalty was eliminated as a result of the sale of that
property. The difference between the estimated and actual pre-payment
penalty incurred ($384,000) has been reflected as a decrease in accrued
expenses for liquidation for the period ended September 30, 1999.
The actual costs could vary significantly from the related provisions
due to the uncertainty related to the length of time required to
complete the liquidation and dissolution and the complexities which may
arise in disposing of the Partnership's remaining assets.
Interest expense resulted from interest on the first deed of trust on
Certified Distribution Center. That mortgage was retired on September
23, 1999 with the sale of Certified Distribution Center to Rubin
Pachulsky Dew.
17
<PAGE> 18
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 3. QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES
Not applicable because the Partnership does not have any financial
instruments subject to market risk.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Bigelow Diversified Secondary Partnership Fund 1990 litigation
--------------------------------------------------------------
On March 25, 1997, a limited partner named Bigelow/Diversified
Secondary Partnership Fund 1990 filed a purported class action lawsuit
in the Court of Common Pleas of Philadelphia County against
Damson/Birtcher Partners, Birtcher Investors, Birtcher/Liquidity
Properties, Birtcher Investments, L.F. Special Fund II, L.P., L.F.
Special Fund I, L.P., Arthur Birtcher, Ronald Birtcher, Robert
Anderson, Richard G. Wollack and Brent R. Donaldson alleging breach of
fiduciary duty and breach of contract and seeking to enjoin the Consent
Solicitation dated February 18, 1997. On April 18, 1997, the court
denied the plaintiff's motion for a preliminary injunction. On June 10,
1997, the court dismissed the plaintiff's complaint on the basis of
lack of personal jurisdiction and forum non conveniens.
On June 13, 1997, the Partnership's affiliated partnerships,
Damson/Birtcher Realty Income Fund-II and Real Estate Income Partners
III, and their general partner, Birtcher/Liquidity Properties, filed a
complaint for declaratory relief in the Court of Chancery in Delaware
against Bigelow/Diversified Secondary Partnership Fund 1990 L.P. The
complaint seeks a declaration that the vote that the limited partners
of Damson/Birtcher Realty Income Fund-II and Real Estate Income
Partners III took pursuant to the respective consent solicitations
dated February 18, 1997 was effective to dissolve the respective
partnerships and complied with applicable law, that the actions of the
General Partner in utilizing the consent solicitations to solicit the
vote of the limited partners did not breach any fiduciary or
contractual duty to such limited partners, and an award of costs and
fees to the plaintiffs. The defendant has answered the complaint. The
parties have initiated discovery. No motions are pending at this time.
In September 1998, Bigelow/Diversified Secondary Partnership 1990
informed the Partnership that it was filing suit in the Delaware
Chancery Court against Damson/Birtcher Partners, Birtcher Investors,
Birtcher Liquidity Properties, Birtcher Investments, BREICORP, LF
Special Fund I, LP, LF Special Fund II. LP, Arthur Birtcher, Ronald
Birtcher, Robert Anderson, Richard G. Wollack and Brent R. Donaldson
alleging a purported class action on behalf of the limited partners of
Damson/Birtcher Realty Income Fund-I, Damson/Birtcher Realty Income
Fund-II and Real Estate Income Partners III alleging breach of
fiduciary duty and incorporating the allegations set forth in the
previously dismissed March 25, 1997 complaint filed in the Court of
Chancery of Philadelphia County. Plaintiff has engaged in preliminary
discovery and the parties have held settlement discussions. No motions
are pending at this time.
18
<PAGE> 19
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 1. LEGAL PROCEEDINGS (Cont'd.)
Rex Garton, et al. v. Damson/Birtcher Partners, et al.
------------------------------------------------------
This action was filed on September 25, 1998 in the District Court of
Oklahoma County for the State of Oklahoma against the Partnership's
general partner, Damson/Birtcher Partners, other related defendants and
numerous unrelated defendants. Damson/Birtcher Partners and other
related defendants were brought into the action in late December 1998,
when they were served with the Second Amended Petition. The other
related defendants are Birtcher Partners, Birtcher Properties, The
Birtcher Group, Birtcher American Properties, Arthur B. Birtcher,
Ronald E. Birtcher, LF Special Fund II, L.P., and Liquidity Fund Asset
Management Inc., but The Birtcher Group and Birtcher American
Properties have not been served with process and have not appeared in
the action. The Partnership itself is not named as a defendant. The
case is a class action brought on behalf of investors in the
Partnership who purchased limited partnership interests from May 7,
1984 to September 17, 1985. The Second Amended Petition alleges breach
of contract, intentional and negligent misrepresentation, breach of
fiduciary duties, and violations of various Oklahoma and federal
statutes in connection with the sale of the limited partnership
interests. Plaintiff seeks unspecified compensatory damages and $10
million in punitive damages.
Damson/Birtcher Partners and the related defendants have removed the
case to the United States District Court for the Western District of
Oklahoma, and have filed a motion to dismiss the case for lack of
personal jurisdiction or, alternatively, to transfer the action to the
United States District Court for the Central District of California,
for the convenience of the parties and witnesses and in the interests
of justice. Plaintiff's motion to remand the case back to the Oklahoma
state court was denied. The motion to dismiss or transfer is pending.
Damson/Birtcher Partners and the related defendants intend to present a
vigorous defense on the merits of plaintiff's claims, should this be
necessary.
Madison Partnership and ISA Partnership Litigation
--------------------------------------------------
On April 2, 1999, Madison Partnership Liquidity Investors XVI, LLC and
ISA Partnership Liquidity Investors filed a purported class and
derivative action in the California Superior Court in Orange County,
California against Damson Birtcher Partners, Birtcher/Liquidity
Properties, Birtcher Partners, Birtcher Investors, Birtcher
Investments, Birtcher Limited, Breicorp LP Special Fund II, L.P.,
Liquidity Fund Asset Management, Inc., Robert M. Anderson, Brent R.
Donaldson, Arthur B. Birtcher, Ronald E. Birtcher, and Richard G.
Wollack, Defendants, and Damson/Birtcher Realty Income Fund-I,
Damson/Birtcher Realty Income Fund-II, and Real Estate Income Partners
III, Nominal Defendants. The complaint asserts claims for breach of
fiduciary duty and breach of contract. The gravamen of the complaint is
that the General Partners of these limited partnerships have not
undertaken all reasonable efforts to expedite liquidation of the
Partnerships' properties and to maximize the returns to the
Partnerships' limited partners. The complaint seeks unspecified
monetary damages, attorneys' fees and litigation expenses, and an order
for dissolution of the Partnerships and appointment of an independent
liquidating trustee. The Partnership has moved to dismiss the case on
the grounds that the pending Bigelow class action, discussed above,
raises essentially the same claims. If the case is not stayed or
dismissed, the Partnership intends to present a vigorous defense.
19
<PAGE> 20
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
27 - Financial Data Schedule
b) Reports on Form 8-K:
Form 8-K filed on October 15, 1999 reporting the sales of
Certified Distribution Center, Oakpointe Business Center,
Ladera-I shopping center, Washington Technical Center,
incorporated by reference.
Form 8-K filed on October 19, 1999 reporting the sale of The
Cornerstone shopping center, incorporated by reference.
20
<PAGE> 21
DAMSON/BIRTCHER REALTY INCOME FUND-I
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.
<TABLE>
<S> <C>
DAMSON/BIRTCHER REALTY INCOME FUND-I
By: DAMSON/BIRTCHER PARTNERS By: BIRTCHER PARTNERS,
(General Partner) a California general partnership
By: BIRTCHER INVESTMENTS,
a California general partnership,
General Partner of Birtcher Partners
By: BIRTCHER LIMITED,
a California limited partnership,
General Partner of Birtcher Investments
By: BREICORP,
a California corporation,
formerly known as Birtcher
Real Estate Inc., General
Partner of Birtcher Limited
Date: November 15, 1999 By: /s/Robert M. Anderson
--------------------------
Robert M. Anderson
Executive Director
BREICORP
By: LF Special Fund II, L.P.,
a California limited partnership
By: Liquidity Fund Asset Management, Inc.,
a California corporation, General
Partner of LF Special Fund II, L.P.
Date: November 15, 1999 By: /s/ Brent R. Donaldson
-----------------------------
Brent R. Donaldson
President
Liquidity Fund Asset Management, Inc.
</TABLE>
21
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENT OF
NET ASSETS IN LIQUIDATION OF DAMSON BIRTCHER REALTY INCOME FUND I AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 16,111,000
<SECURITIES> 0
<RECEIVABLES> 70,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,225,000
<PP&E> 13,929,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,154,000
<CURRENT-LIABILITIES> 562,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,592,000
<TOTAL-LIABILITY-AND-EQUITY> 30,154,000
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0<F1>
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>STATEMENT OF OPERATION IS NOT PRESENTED IN LIQUIDATION BASIS OF ACCOUNTING.
</FN>
</TABLE>
