<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT)
For the quarter ended September 30, 1998
------------------
Commission file number 1-11059
------------------
AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.
-----------------------------------------------------------------
(Exact name of registrant as specified in charter)
California 13-3257662
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
(301) 816-2300
----------------------------------------------------------------
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
As of September 30, 1998, 12,079,514 depositary units of limited
partnership interest were outstanding.
<PAGE>2
The following supplements and, to the extent inconsistent therewith, amends
and supercedes the information under the following caption in the Quarterly
Report originally filed November 16, 1998.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year 2000
- ---------
The Year 2000 issue is a computer programming issue that may affect
many electronic processing systems. Until relatively recently, in order to
minimize the length of data fields, most date-sensitive programs eliminated the
first two digits of the year. This issue could affect information technology
("IT") systems and date sensitive embedded technology that controls certain
systems (such as telecommunications systems, security systems, etc.) leaving
them unable to properly recognize or distinguish dates in the twentieth and
twenty-first centuries. This treatment could result in significant
miscalculations when processing critical date-sensitive information relating to
dates after December 31, 1999.
The General Partner is currently in the process of assessing and testing Year
2000 compliance of its IT systems, which include software systems to administer
and manage mortgage assets, and for internal accounting purposes. A majority of
the IT systems used by the Partnership is licensed from third parties. These
third parties have either provided upgrades to existing systems or have
indicated that their systems are Year 2000 compliant. The General Partner has
applied upgrades and has completed a substantial amount of compliance testing as
of March 31, 1999. There can be no assurance, however, that the Partnership's IT
systems will be Year 2000 compliant by December 31, 1999.
The Year 2000 issue may also affect the Partnership's date-sensitive
embedded technology, which controls systems such as the telecommunications
systems, security systems, etc. The General Partner does not believe that the
cost to modify or replace such technology to make it Year 2000 compliant will be
material. The failure of any such systems to be Year 2000 compliant could be
material to the Partnership.
The potential impact of the Year 2000 issue depends not only on the
corrective measures the General Partner has undertaken and will undertake, but
also on the ways in which the Year 2000 issue is addressed by third parties with
whom the Partnership directly interfaces or whose financial condition or
operations are important to the Partnership. The Partnership has initiated
communications with third parties with which it directly interfaces to evaluate
the risk of their failure to be Year 2000 compliant and the extent to which the
Partnership may be vulnerable to such failure. There can be no assurance that
the systems of these third parties will be Year 2000 compliant by December 31,
1999. The failure of these third parties to be Year 2000 compliant could have a
material adverse effect on the operations of the Partnership.
The Partnership believes that its greatest risk with respect to the Year
2000 issue relates to failures by third parties to be Year 2000 compliant. In
addition to risks posed by third parties with which the Partnership interfaces
directly, risks are created by third parties providing services to large
segments of society. The failure of third parties to be
<PAGE>3
Year 2000 compliant could, among other things, cause disruptions in the
capital and real estate markets and borrower defaults on real estate loans and
mortgage-backed securities as well as the pools of mortgage loans underlying
such securities. The Partnership believes that its greatest exposure to the Year
2000 issue involves the loan servicing operations of an affiliate of the
Partnership. CMSLP currently services approximately 21% of the total mortgage
investments in the AIM Funds. CMSLP has applied a vendor upgrade and has
substantially completed compliance testing on the upgrade.
Currently the Partnership estimates the cost of system upgrades related to
Year 2000 issues to be immaterial.
Although the General Partner has substantially completed its compliance
testing and remediation, it is also in the process of developing contingency
plans for the risks of the failure of the Partnership or third parties to be
Year 2000 compliant. The General Partner intends to complete contingency plans
for the Year 2000 issue by May 31, 1999. Due to the inability to predict all of
the potential problems that may arise from the Year 2000 issue, there can be no
assurance that all contingencies will be adequately addressed by such plans.
<PAGE>4
SIGNATURE
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.
AMERICAN INSURED MORTGAGE
INVESTORS - SERIES 85, L.P.
(Registrant)
By: CRIIMI, Inc.
General Partner
/s/ /s/ Cynthia O. Azzara
- ---------------------- -------------------------
Date Cynthia O. Azzara
Principal Financial and
Accounting Officer