<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999 Commission File Number 0-13493
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2833662
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
---------------------------
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
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<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited) (Note 1)
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<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
-------------------------------------
<S> <C> <C>
REVENUES:
Interest income........................................... $ 6,938 $ 6,352
EXPENSES:
Interest.................................................. 2,388,676 2,163,491
Amortization.............................................. 101,157 101,157
Related party management fee.............................. 75,000 75,000
General and administrative................................ 13,995 5,629
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2,578,828 2,345,277
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Loss from Operations............................................. (2,571,890) (2,338,925)
Equity in Losses of Operating Partnerships....................... (1,730,978) (1,786,029)
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Net Loss ........................................................ $ (4,302,868) $ (4,124,954)
============== ==============
Net Loss Allocated to General Partners........................... $ (43,029) $ (41,250)
============== ==============
Net Loss Allocated to Limited Partners........................... $ (4,259,839) $ (4,083,704)
============== ==============
Net Loss per Unit of Limited Partnership Interest................ $ (7,100) $ (6,806)
============== ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
2
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEETS
(UNAUDITED)
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<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
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<S> <C> <C>
ASSETS:
Cash and cash equivalents............................................. $ 624,692 $ 629,887
Deferred financing costs, net of accumulated
amortization of $48,608 and $47,775 respectively................... 1,392 2,225
--------------- ---------------
TOTAL ASSETS.................................................... $ 626,084 $ 632,112
=============== ===============
LIABILITIES:
Purchase Money Note, net of unamortized discount...................... $ 68,029,793 $ 66,029,049
Notes payable......................................................... 9,873,978 9,873,978
Accrued interest on operating deficit notes........................... 21,164,241 20,776,310
Investments in Operating Partnerships................................. 15,903,461 14,072,159
Accrued expenses...................................................... 1,863 -
Due to affiliate...................................................... 1,375,000 1,300,000
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116,348,336 112,051,496
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PARTNERS' DEFICIT:
Limited partners - Units of Limited Partnership Interest,
$96,250 stated value per unit; authorized, issued
and outstanding - 600 Units........................................ (114,038,748) (109,778,909)
General partners...................................................... (1,683,504) (1,640,475)
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(115,722,252) (111,419,384)
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TOTAL LIABILITIES AND PARTNERS' DEFICIT............................... $ 626,084 $ 632,112
=============== ===============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
3
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
(UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................................ $ (4,302,868) $ (4,124,954)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization.................................................... 101,157 101,157
Equity in losses of Operating Partnerships...................... 1,730,978 1,786,029
Interest added to loan principal on Purchase
Money Note................................................... 2,000,744 1,775,560
Increase in accrued interest on operating deficit notes......... 387,931 387,931
Increase (decrease) in accrued expenses......................... 1,863 (304)
Increase (decrease) in due to affiliate......................... 75,000 (1,725,000)
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Net cash used in operating activities........................... (5,195) (1,799,581)
Cash and cash equivalents, beginning of period....................... 629,887 2,012,003
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Cash and cash equivalents, end of period............................. $ 624,692 $ 212,422
============= =============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
4
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
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<TABLE>
<CAPTION>
Units of
Limited Investor
Partnership Limited General
Interest Partners Partners Total
-------- -------- -------- -----
<S> <C> <C> <C> <C>
Balance, December 31, 1998........... 600 $(109,778,909) $ (1,640,475) $(111,419,384)
Net loss............................. (4,259,839) (43,029) (4,302,868)
-------------- ------------- ------------ -------------
Balance, March 31, 1999.............. 600 $(114,038,748) $ (1,683,504) $(115,722,252)
============== ============== ============= ==============
Balance, December 31, 1997........... 600 $ (94,590,468) $ (1,487,056) $ (96,077,524)
Net loss............................. (4,083,704) (41,250) (4,124,954)
-------------- ------------- ------------ -------------
Balance, March 31, 1998.............. 600 $ (98,674,172) $ (1,528,306) $(100,202,478)
============== ============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
5
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
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1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The
Registrant's accounting and financial reporting policies are in
conformity with generally accepted accounting principles and include
adjustments in interim periods considered necessary for a fair
presentation of the results of operations. 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 such rules and
regulations. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and
the notes thereto included in the Registrant's annual report on Form
10-KSB for the period ended December 31, 1998.
The accompanying financial statements reflect the Partnership's
results of operations for an interim period and are not necessarily
indicative of the results of operations for the year ending December
31, 1999.
2. TAX LOSS
The Partnership's taxable loss for 1999 is expected to differ from
that for financial reporting purposes primarily due to accounting
differences in the recognition of depreciation and certain
capitalized costs.
3. RELATED PARTY TRANSACTIONS
Expenses for the three months ended March 31, 1999 and 1998 include
a management fee of $75,000 earned by an affiliate of the General
Partner. Aggregate unpaid management fees to the affiliate amounted
to $1,375,000 and $1,300,000 at March 31, 1999 and December 31,
1998, respectively.
6
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
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4. INVESTMENTS IN OPERATING PARTNERSHIPS
The condensed statements of operations of the Operating Partnerships
(presented on a combined basis with all significant
inter-partnership transactions eliminated) are as follows:
Condensed Statements of Operations
----------------------------------
Three Months Ended March 31,
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Hotel:
Revenue......................................... $ 13,641,694 $ 13,618,641
Operating expenses.............................. (10,281,488) (10,193,167)
Depreciation and amortization................... (1,020,078) (1,020,078)
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Net hotel operations............................... 2,340,128 2,405,396
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Rental:
Revenues........................................ 3,672,683 3,235,093
Operating expenses.............................. (1,653,655) (1,493,603)
Depreciation and amortization................... (941,093) (977,694)
------------ -----------
Net rental operations.............................. 1,077,935 763,796
Interest........................................... (6,122,020) (5,934,090)
Other ........................................... 107,589 85,945
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Net loss........................................... $(2,596,368) $(2,678,953)
============ ============
Net loss allocated to Twelve AMH
Associates Limited Partnership.................. $(1,730,978) $(1,786,029)
============ ============
Net loss allocated to others....................... $ (865,390) $ (892,924)
============ =============
</TABLE>
7
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This Item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) The discussion of the Partnership'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 Partnership'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.
Liquidity and Capital Resources
-------------------------------
The Partnership's only assets consist of cash and its general
partnership interests in Square 254 Limited Partnership ("Square
254"), National Place Land Limited Partnership ("National Land") and
its company interest in The Shops LLC ("Shops"). Square 254 and
National Land own a multiple-use complex located in Washington D.C.
known as National Place, and the underlying land, respectively. The
Shops, in turn, leases the retail space at the complex. It is
anticipated that the Partnership's interest in Square 254, National
Land and The Shop's LLC will be foreclosed upon during the next two
years.
The Partnership's primary source of revenue is distributions from
Square 254, the Shops and National Land (collectively, the "Operating
Partnerships"). The Partnership requires cash to pay management fees
and general and administrative expenses and may require cash to
satisfy its obligations to fund any operating deficits of the
Operating Partnerships.
The Partnership received no cash distributions from the Operating
Partnerships during either of the three months ended March 31, 1999 or
March 31, 1998.
The Partnership's liquidity based on cash and cash equivalents
declined slightly from $629,887 at December 31, 1998 to $624,692 at
March 31, 1999. The Partnership's current reserves are expected to be
sufficient to fund administrative expenses in the foreseeable future.
All future distributions to the Partnership from the Operating
Partnerships will be applied first to pay administrative expenses of
the Partnership and then to repay unpaid asset management fees, which
at March 31, 1999 were $1,375,000.
8
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
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Liquidity and Capital Resources (continued)
-------------------------------------------
Based on the Partnership's current and expected cash flows, the
Partnership will not have sufficient funds to satisfy its indebtedness
which is scheduled to mature on August 31, 1999. In addition, it is
unlikely given the value of the Partnership's investment in the
Operating Partnerships that the Partnership will be able to refinance
or modify these notes on favorable terms, or sell its interest in the
Operating Partnerships for amounts sufficient to satisfy such
indebtedness. As a result, it is anticipated that the Partnership will
ultimately lose its interests in the Operating Partnerships through
foreclosure. Eventually, it is expected that investors in the
Partnership will recognize a significant gain for tax purposes (the
negative amount of such investor's capital account in the Partnership)
and will not receive a return of a significant portion, or any, of
their investment.
Results of Operations
---------------------
Loss from operations increased from $2,338,925 for the three months
ended March 31, 1998 to $2,571,890 for the three months ended March
31, 1999. This increase is due to increases in Partnership expenses of
$233,551, which were partially offset by an increase in revenues of
$586. The increase in expenses resulted primarily from an increase of
$225,185 in interest expense on the loans made to the Partnership to
acquire its interests in the Operating Partnerships. All interest on
such loans is accrued and will be due and payable upon the maturities
in August 1999 of such loans. All other expenses remained relatively
constant.
The Operating Partnerships' net loss decreased from $2,678,953 for the
three months ended March 31, 1998 to $2,596,368 for the three months
ended March 31, 1999. The decrease in net loss is attributable to an
increase in net rental operating income and an increase in other
income, which were partially offset by a decrease in net hotel
operations and an increase in interest expense. Rental operations
revenue increased by $437,590 and rental operations expense increased
by $160,052 primarily as a result of the commencement of operations
for The Shops in April 1998. Hotel operations revenue increased by
$23,053 for the three months ended March 31, 1999 as compared to March
31, 1998 as a result of increased room rental and other income which
was largely offset by a decrease in food and beverage sales. The
increase in hotel revenues was more than offset by an increase in
hotel operations expenses of $88,321 for the same period. The increase
in hotel expenses was due primarily to an increase in room costs and
cost of sales which were only partially offset by decreases in food
and beverage costs and real estate taxes.
9
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
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Results of Operations (continued)
---------------------
Operating results for National Land decreased by $196,233 for the
three months ended March 31, 1999 compared to the three months ended
March 31, 1998 primarily as a result of an increase in interest
expense.
Year 2000
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. The
Registrant is dependent upon the Managing General Partner and its
affiliates for management and administrative services. Any computer
programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result 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.
During the first half of 1998, the Managing General Partner and its
affiliates completed their assessment of the various computer software
and hardware used in connection with the management of the Registrant.
This review indicated that significantly all of the computer programs
used by the Managing General Partner and its affiliates are
off-the-shelf "packaged" computer programs which are easily upgraded
to be Year 2000 compliant. In addition, to the extent that custom
programs are utilized by the Managing General Partner and its
affiliates, such custom programs are Year 2000 compliant.
Following the completion of its assessment of the computer software
and hardware, the Managing General Partner and its affiliates began
upgrading those systems which required upgrading. To date,
significantly all of these systems have been upgraded. The Registrant
has to date not borne, nor is it expected that the Registrant will
bear any significant cost, in connection with the upgrade of those
systems to requiring remediation. It is expected that all systems will
be remedied, tested and implemented during the first half of 1999.
To date, the Managing General Partner is not aware of any external
agent with a Year 2000 issue that would materially impact the
Registrant's results of operations, liquidity or capital resources.
However, the Managing General Partner has no means of ensuring that
external agents will be Year 2000 compliant. The Managing General
Partner does not believe that the inability of external agents to
complete their Year 2000 resolution process in a timely manner will
have a material impact on the financial position or results of
operations of the Registrant. However, the effect of non-compliance by
external agents is not readily determinable.
10
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
- -------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
A. Exhibits.
Exhibit 27, Financial Data Schedule
B. Reports on Form 8-K.
No reports on Form 8-K were filed during the three months ended
March 31, 1999.
11
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
SIGNATURES
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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.
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
(Registrant)
By: Two Winthrop Properties, Inc.
Managing General Partner
By: /s/ Michael L. Ashner
--------------------------
Michael L. Ashner
Chief Executive Officer
By: /s/ Thomas C. Staples
--------------------------
Thomas C. Staples
Chief Financial Officer
DATED: May 14, 1999
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from unaudited
financial statements for the three month period ending March 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 624,692
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 626,084
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (115,722,252)
<TOTAL-LIABILITY-AND-EQUITY> 626,084
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 176,157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,388,676
<INCOME-PRETAX> (4,302,868)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,302,868)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,302,868)
<EPS-PRIMARY> (7,099.73)
<EPS-DILUTED> (7,099.73)
</TABLE>
