<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 June 30, 1999 Commission File Number 0-13493
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
-----------------------------------------
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2833662
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. 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
---- ----
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS (UNAUDITED) (NOTE 1)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
PART I - FINANCIAL INFORMATION
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Interest income......................... $ 7,495 $ 2,383 $ 14,433 $ 8,735
------------ ----------- ----------- -----------
Expenses:
Interest................................ 2,449,302 2,217,293 4,837,978 4,380,784
Amortization............................ 101,158 101,158 202,315 202,315
Related party management fee............ 75,000 75,000 150,000 150,000
General and administrative.............. 32,353 21,710 46,347 27,339
------------ ----------- ----------- -----------
2,657,813 2,415,161 5,236,640 4,760,438
------------ ----------- ----------- -----------
Loss from Operations.......................... (2,650,318) (2,412,778) (5,222,207) (4,751,703)
Equity in Income (Losses) of
Operating Partnerships........................ (222,914) 111,999 (1,953,892) (1,674,030)
------------ ----------- ----------- -----------
Net Loss ..................................... $ (2,873,232) $(2,300,779) $(7,176,099) $(6,425,733)
============ =========== =========== ===========
Net Loss Allocated to
General Partners............................ $ ( 28,732) $ (23,008) $ (71,761) $ (64,257)
============ =========== =========== ===========
Net Loss Allocated to
Limited Partners............................ $ (2,844,500) $(2,277,771) $(7,104,338) $(6,361,476)
============ =========== =========== ===========
Net Loss per Unit of Limited Partnership
Interest.................................... $ (4,741) $ (3,796) $ (11,841) $ (10,602)
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEETS
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JUNE 30, 1999 AND DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
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<S> <C> <C>
ASSETS:
Cash and cash equivalents........................................ $ 101,494 $ 629,887
Deferred financing costs, net of accumulated
amortization of $49,442 and $47,775 respectively.............. 52,036 2,225
-------------- ------------
TOTAL ASSETS..................................................... $ 153,530 $ 632,112
============== ============
LIABILITIES:
Purchase Money Note, net of unamortized discount................. $ 70,091,164 $ 66,029,049
Notes payable.................................................... 9,873,978 9,873,978
Accrued interest on operating deficit notes...................... 21,552,172 20,776,310
Investments in Operating Partnerships............................ 16,226,699 14,072,159
Due to affiliate................................................. 1,005,000 1,300,000
-------------- ---------------
118,749,013 112,051,496
-------------- ---------------
PARTNERS' DEFICIT:
Limited partners - Units of Limited
Partnership Interest, $96,250
stated value per unit; authorized, issued
and outstanding - 600 Units............................... (116,883,247) (109,778,909)
General partners................................................ (1,712,236) (1,640,475)
-------------- ---------------
(118,595,483) (111,419,384)
Total liabilities and partners' deficit................. $ 153,530 $ 632,112
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
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<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.......................................................... $(7,176,099) $(6,425,733)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization................................................... 202,315 202,315
Equity in losses of Operating Partnerships..................... 1,953,892 1,674,030
Interest added to loan principal on Purchase
Money Note................................................. 4,062,115 3,604,922
Increase in accrued interest on operating deficit notes........ 775,862 775,862
Decrease in accrued expenses................................... - (12,403)
Decrease in due to affiliates.................................. (295,000) (1,650,000)
------------ ------------
Net cash used in operating activities.......................... (476,915) (1,831,007)
Cash flows used in financing activities:
Refinancing costs................................................. (51,478) -
------------- ------------
Net cash used in financing activities.......................... (51,478) -
Decrease in cash and cash equivalents............................. (528,393) (1,831,007)
Cash and cash equivalents, beginning of period.................... 629,887 2,012,003
----------- ------------
Cash and cash equivalents, end of period.......................... $ 101,494 $ 180,996
========== ============
</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 SIX MONTHS ENDED JUNE 30, 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................................. (7,104,338) (71,761) (7,176,099)
------------ -------------- ------------ --------------
Balance, June 30, 1999................... 600 $(116,883,247) $(1,712,236) $(118,595,483)
=========== ============== ============ ==============
Balance, December 31, 1997............... 600 $ (94,590,468) $(1,487,056) $ (96,077,524)
Net loss................................. (6,361,476) (64,257) (6,425,733)
------------ -------------- ------------ ---------------
Balance, June 30, 1998................... 600 $(100,951,944) $(1,551,313) $ (102,503,257)
=========== ============== ============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
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1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed financial statements included herein have been prepared
by Twelve AMH Associates (the "Partnership"), without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. The Partnership'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. The
balance sheet at December 31, 1998 was derived from audited financial
statements at such date. 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
Partnership's Annual Report on Form 10-KSB as of and for the year
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 six months ended June 30, 1999 and 1998 include a
management fee of $150,000 earned by an affiliate of the General
Partner. Aggregate unpaid management fees to the affiliate amounted
to $1,005,000 and $1,300,000 at June 30, 1999 and December 31, 1998,
respectively. A payment of $445,000 was made to this affiliate during
the second quarter of 1999.
6
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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
----------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Hotel Operations...................... $17,676,481 $18,299,150 $31,318,175 $31,917,791
Rental Operations..................... 4,029,375 3,924,552 7,702,058 7,159,645
Other................................. 135,576 186,914 249,207 280,894
----------- ----------- ----------- -----------
21,841,432 22,410,616 39,269,440 39,358,330
----------- ----------- ----------- -----------
Expenses:
Hotel Operations...................... 13,023,547 13,079,354 24,325,113 24,292,599
Rental Operations..................... 2,971,909 3,186,571 5,566,657 5,657,868
Interest.............................. 6,180,125 5,975,676 12,302,145 11,909,766
Other................................. 132 937 6,174 8,972
----------- ----------- ----------- -----------
22,175,713 22,242,538 42,200,089 41,869,205
----------- ----------- ----------- -----------
Net Income (Loss).......................... $ (334,281) $ 168,078 $(2,930,649) $(2,510,875)
=========== =========== =========== ===========
Net Income (Loss) Allocated to
Twelve AMH Associates
Limited Partnership................... $ (222,914) $ 111,999 $(1,953,892) $(1,674,030)
=========== =========== =========== ===========
Net Income (Loss) Allocated to
Other Partners........................ $ (111,367) $ 56,079 $ (976,757) $ (836,845)
=========== =========== =========== ===========
</TABLE>
7
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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"),
and 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.
The Partnership's primary source of revenue is distributions from
Square 254, National Land and the Shops (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 six months ended June 30, 1999 or
June 30, 1998.
The Partnership's liquidity based on cash and cash equivalents declined
from $629,887 at December 31, 1998 to $101,494 at June 30, 1999. This
decrease was primarily the result of a $445,000 payment to an affiliate
of the General Partner for accrued management fees (see Note 3). 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 June 30, 1999 were
$1,005,000.
8
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 Purchase
Money Note and Operating Deficit Notes (collectively, the "Maturing
Notes") which are scheduled to mature on August 31, 1999. In addition,
given the value of the Partnership's investment in the Operating
Partnerships, the Partnership has been unable to refinance or modify
these notes on favorable terms, or sell its interest in the Operating
Partnerships for amounts sufficient to satisfy such indebtedness. The
Partnership is currently negotiating with the lender and its Square 254
partners in an effort to enter into a transaction which would permit
the Partnership to make a small distribution to its partners and
pursuant to which the holder of the Maturing Notes would agree to
forebear from foreclosing on the Maturing Notes for a period of three
years. There can be no assurance that the Partnership will be
successful in completing these negotiations or what the final terms may
be. If the Partnership cannot satisfactorily complete the negotiations,
it is anticipated that the Partnership will lose its interests in the
Operating Partnerships through foreclosure prior to year end. If this
were to occur, 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 $4,751,703 for the six months ended
June 30, 1998 to $5,222,207 for the six months ended June 30, 1999.
This increase is due to increases in Partnership expenses of $476,202,
which was partially offset by an increase in revenues of $5,698. The
increase in expenses resulted primarily from an increase of $457,194 in
interest expense on the loans made to the Partnership to acquire its
interests in the Operating Partnerships and to a lesser extent, an
increase of $19,008 in general and administrative. All interest on the
loans is accrued and will be due and payable upon the maturities of
such loans. All other expenses remained constant.
The Operating Partnership's net loss increased from $2,510,875 for the
six months ended June 30, 1998 to $2,930,649 for the six months ended
June 30, 1999. The increase in net loss is attributable to decreases in
net hotel operations and other revenue and an increase in interest
expense, which were partially offset by an increase in net rental
operating income. Hotel operations revenue decreased from $31,917,791
for the six month period ended June 30, 1998 to $31,318,175 for the six
months ended June 30, 1999 as a result of a decrease in food and
beverage sales which were only partially offset by increased room
rental and other revenues. Rental operations revenue increased by
$542,413 for the six month period ended June 30, 1999 as compared to
the same period last year primarily due to increases in base office
rent and parking revenue which were only partially offset by decreases
to retail, theatre and other revenue.
9
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Results of Operations (continued)
---------------------
Operating results for National Land decreased by $346,385 for the six
months ended June 30, 1999 compared to the six months ended June 30,
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.
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:
27. Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the six months
ended June 30, 1999.
11
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
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.
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: August 19, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from unaudited
financial statements for the six month period ending June 30, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 101,494
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 153,530
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (118,595,483)
<TOTAL-LIABILITY-AND-EQUITY> 153,530
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 352,315
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,837,978
<INCOME-PRETAX> (7,176,099)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,176,099)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,176,099)
<EPS-BASIC> (11,840.56)
<EPS-DILUTED> (11,840.56)
</TABLE>
