UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1998 Commission File Number 2-93980
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FJS PROPERTIES FUND I, L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3252067
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
264 Route 537 East
Colts Neck, New Jersey 07722
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (908) 542-9209
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities and 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
Authorized 100,000 limited partnership interests of which 16,788 have been sold
as of August 3, 1998.
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FJS PROPERTIES FUND I, L.P.
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INDEX
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Part I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets as of June 30, 1998 [Unaudited]
and December 31, 1997 .................................... 1
Statements of Operations for the three and six months ended
June 30, 1998 and 1997 [Unaudited]........................ 2
Statement of Partners' Capital for the six months
ended June 30, 1998 [Unaudited]........................... 3
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997 [Unaudited]........................ 4
Notes to Financial Statements [Unaudited]................. 5
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 6
Part II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K.......................... 7
Signature ........................................................ 8
. . . . . . . .
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
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FJS PROPERTIES FUND I, L.P.
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BALANCE SHEETS
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June 30, December 31,
1 9 9 8 1 9 9 7
[Unaudited]
Assets:
Current Assets:
Cash and Cash Equivalents $ 505,783 $ 535,546
Cash - Escrow 195,161 97,661
Cash - Security Deposits 123,624 121,878
Other Current Assets 58,234 35,971
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Total Current Assets 882,802 791,056
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Property Investment:
Land 2,296,804 2,296,804
Buildings 6,569,125 6,569,125
Furniture, Fixtures and Building Improvements 1,878,086 1,818,365
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Totals - At Cost 10,744,015 10,684,294
Less: Accumulated Depreciation (4,636,373) (4,507,327)
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Property Investment - Net 6,107,642 6,176,967
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Other Assets 282,183 290,795
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Total Assets $7,272,627 $ 7,258,818
========== ===========
Liabilities and Partners' Capital:
Current Liabilities:
Accounts Payable $ 78,074 $ 97,300
Accrued Interest 36,864 38,944
Other Accrued Expenses 115,124 6,423
Accounts Payable - Related Party 9,313 26,138
Tenant Security Deposits 123,624 121,878
Mortgage Payable - Current Portion 73,960 70,455
Deferred Income - Current Portion 7,143 7,142
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Total Current Liabilities 444,102 368,280
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Long-Term Liabilities:
Mortgage Payable - Non-Current Portion 4,684,700 4,722,578
Deferred Income - Non-Current Portion 28,571 32,141
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Total Long-Term Liabilities 4,713,271 4,754,719
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Partners' Capital:
General Partner (1,214,707) (1,214,501)
Limited Partners 3,329,961 3,350,320
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Total Partners' Capital 2,115,254 2,135,819
---------- -----------
Total Liabilities and Partners' Capital $7,272,627 $ 7,258,818
========== ===========
See Accompanying Notes to These Financial Statements.
1
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FJS PROPERTIES FUND I, L.P.
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STATEMENTS OF OPERATIONS
[UNAUDITED]
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Three months ended Six months ended
June 30, June 30,
-------- --------
1 9 9 8 1 9 9 7 1 9 9 8 1 9 9 7
------- ------- ------- -------
Rental Income $ 530,643 $ 508,477 $ 1,057,208 $ 1,005,132
Cost of Rental Income 168,658 171,987 333,970 360,736
---------- ---------- ----------- -----------
Gross Profit 361,985 336,490 723,238 644,396
---------- ---------- ----------- -----------
Expenses:
Selling, General and
Administrative Expenses 162,724 167,358 335,928 324,706
Depreciation and Amortization 71,288 67,121 141,251 130,839
---------- ---------- ----------- -----------
Total Expenses 234,012 234,479 477,179 455,545
---------- ---------- ----------- -----------
Operating Income 127,973 102,011 246,059 188,851
---------- ---------- ----------- -----------
Other [Income] and Expenses:
Interest Income (6,509) (5,558) (12,982) (11,560)
Interest Expense 114,866 116,469 230,919 234,610
Other Expense -- -- 2,900 --
---------- ---------- ----------- -----------
Other Expenses - Net 108,357 110,911 220,837 223,050
---------- ---------- ----------- -----------
Net Income [Loss] $ 19,616 $ (8,900) $ 25,222 $ (34,199)
========== ========== =========== ===========
Income [Loss] Per Limited
Partnership Unit $ 1.16 $ (.52) $ 1.49 $ (2.02)
========== ========== =========== ===========
Distributions Per Limited
Partnership Unit $ 2.70 $ 1.30 $ 2.70 $ 1.30
========== ========== =========== ===========
Weighted Average Number of
Limited Partnership Units
Outstanding 16,788 16,788 16,788 16,788
========== ========== =========== ===========
See Accompanying Notes to Financial Statements.
2
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FJS PROPERTIES FUND I, L.P.
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STATEMENT OF PARTNERS' CAPITAL
[UNAUDITED]
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Total
General Limited Partners'
Partner Partners Capital
Partners' Capital - December 31, 1997 $(1,214,501) $3,350,320 $ 2,135,819
Net Income for the six months
ended June 30, 1998 252 24,970 25,222
Cash Distributions to Partners (458) (45,329) (45,787)
----------- ---------- -----------
Partners' Capital - June 30, 1998
[Unaudited] $(1,214,707) $3,329,961 $ 2,115,254
=========== ========== ===========
See Accompanying Notes to Financial Statements.
3
<PAGE>
FJS PROPERTIES FUND I, L.P.
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STATEMENTS OF CASH FLOWS
[UNAUDITED]
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Six months ended
June 30,
1 9 9 8 1 9 9 7
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Operating Activities:
Net Income [Loss] $ 25,222 $ (34,199)
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Adjustments to Reconcile Net Income [Loss]
to Net Cash Provided by Operating Activities:
Depreciation 129,047 118,635
Amortization 12,204 12,204
Changes in Assets and Liabilities:
[Increase] Decrease in:
Escrow (97,499) 19,753
Security Deposits (1,746) (10,147)
Other Current Assets (22,265) (79,471)
Other Assets (3,592) --
Increase [Decrease] in:
Accounts Payable (19,226) (16,342)
Accrued Interest (2,080) (1,539)
Other Accrued Expenses 108,700 104,585
Accounts Payable - Related Party (16,824) (10,691)
Tenant Security Deposits 1,746 10,147
Deferred Income (3,571) (3,571)
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Total Adjustments 84,894 143,563
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Net Cash - Operating Activities 110,116 109,364
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Investing Activities:
Capital Expenditures (59,720) --
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Financing Activities:
Principal Payments on Mortgages (34,372) (31,194)
Distributions to Partners (45,787) (22,045)
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Net Cash - Financing Activities (80,159) (53,239)
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Net [Decrease] Increase in Cash and Cash Equivalents (29,763) 56,125
Cash and Cash Equivalents - Beginning of Periods 535,546 493,597
---------- -----------
Cash and Cash Equivalents - End of Periods $ 505,783 $ 549,722
========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest during the six months ended June 30, 1998 and 1997 was
$232,329 and $236,150, respectively.
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
See Accompanying Notes to Financial Statements.
4
<PAGE>
FJS PROPERTIES FUND I, L.P.
NOTES TO FINANCIAL STATEMENTS
[UNAUDITED]
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[A] Significant Accounting Policies
Significant accounting policies of FJS Properties Fund I, L.P. are set forth in
the Partnership's Form 10-K for the year ended December 31, 1997, as filed with
the Securities and Exchange Commission.
[B] Basis of Reporting
The balance sheet as of June 30, 1998, the statements of operations for the
three and six months ended June 30, 1998 and 1997, the statement of partners'
capital for the six months ended June 30, 1998, and the statements of cash flows
for the six months ended June 30, 1998 and 1997 have been prepared by the
Partnership without audit. The accompanying unaudited financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the managing partner, such statements
include all adjustments [consisting only of normal recurring items] which are
considered necessary for a fair presentation of the financial position of the
Partnership at June 30, 1998, and the results of its operations for the three
and six months then ended and its cash flows for the six months then ended. It
is suggested that these financial statements be read in conjunction with Form
S-11 filed with the Securities and Exchange Commission on April 25, 1985 and
with the financial statements and notes contained in the Partnership's Form 10-K
for the year ended December 31, 1997.
. . . . . . . . . . .
5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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LIQUIDITY AND CAPITAL RESOURCES
As of the present date, the Partnership owns and operates one Property, the
Pavilion Apartments, and does not intend to acquire any other property.
Cash flow from Pavilion should be sufficient to permit the Partnership to
make the constant monthly payments due prior to maturity on the first mortgage
and to meet its monthly operating expenses. However, should there be a
significant decrease in Pavilion's occupancy or rental rates, there can be no
assurance that the Partnership would be able to obtain sufficient funds to make
such payments.
OPERATIONS
The Partnership has operated the Pavilion Apartments, located in West Palm
Beach, Florida since January 1985.
The project operated with occupancies in the low 90% range during the
second quarter of 1998. As of August 3, 1998, there were 32 vacant apartments
with 12 scheduled move-ins for August. 20 apartments were available for rent.
Physical occupancy therefore stands at 89.7%, with 93.6% of the apartments
rented.
Rental income for the comparable three and six month periods ended June 30,
1997 and 1998, showed increases as compared to the prior year, for both the
three month period from $508,477 to $530,643 and the six month period from
$1,005,132 to $1,057,208. The increases were primarily attributable to the
increased rental rates enjoyed by the Pavilion Apartments as well as a reduction
in rental allowances utilized to attract tenants to the project. Cost of Rental
Income, consisting mainly of real estate taxes, repairs and maintenance and
utilities decreased from $171,987 to $168,658 and from $360,736 to $333,970 for
the comparable three and six month periods of 1997 and 1998 respectively. The
decrease was principally from a decrease in Replacements as a result of capital
improvements incurred at the project. The cost of the capital improvements will
be amortized and expensed over the applicable period of years.
Selling, General and Administrative Expenses increased from $324,706 to
$335,928 for the comparable six month periods, and decreased from to $167,358 to
$162,724 for the comparable three month periods of 1997 and 1998. The increase
in the six month period resulted primarily from increased Professional Fees
resulting from the payments of fees incurred in connection with Real Estate Tax
appeals for the project as well as increased court costs in connection with
tenant collection and eviction proceedings in the first and second quarters of
1998. In addition higher management fees were incurred resulting from the
increased rental income at the property. The decreases during the second quarter
resulted principally from decreased insurance costs as a result of lower
premiums on the coverage for the project.
The Other Expense item of $2,900 under Other Income and Expenses for the
six month period of 1998, reflects the net cost to the Partnership of fees and
expenses in connection with the tender offer completed by an unaffiliated third
party in December 1997. Transfer fees of $10,300 were received and
administrative and legal fees of $13,200 were recorded during the first quarter
of 1998 in connection with the review of the documents and preparation of legal
filings required to be made by the Partnership.
Principally as a result of the increase in Rental Income, Operating Income
increased for both the three and six month periods to $127,973 and $246,059 from
$102,011 and $188,851 for the comparable periods of 1997.
The neighborhood surrounding the Pavilion Apartments is undergoing some
changes. The lot adjacent to the property which has been vacant since the
project was acquired is being developed. The building department has advised
that rental townhomes are planned for construction on this lot with completion
scheduled for 1999. While it would seem that rental townhomes would not be
direct competition for the Pavilion Apartments, and that new development could
bring increased traffic flow to the area which might be beneficial to the
Partnership, the Partnership is unable to predict the actual effect this
construction will have on the Pavilion Apartments.
INFLATION
As of the present date, inflation has not had a major impact on the
operations of the Partnership.
6
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PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
[a] Exhibits as required by Item 601 of Regulation S-K:
None Required
[b] Reports on Form 8-K:
None filed during the quarter for which this report is submitted
7
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SIGNATURE
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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.
FJS PROPERTIES FUND I, L.P.
Date: August 6, 1998 By: /s/ Andrew C. Alson
--------------------
Andrew C. Alson
(President and Chief Financial Officer)
FJS Properties, Inc.
General Partner
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Jun-30-1998
<CASH> 505,571
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 882,802
<PP&E> 10,744,015
<DEPRECIATION> 4,636,373
<TOTAL-ASSETS> 7,272,627
<CURRENT-LIABILITIES> 444,102
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,115,254
<TOTAL-LIABILITY-AND-EQUITY> 7,272,627
<SALES> 0
<TOTAL-REVENUES> 1,057,208
<CGS> 333,970
<TOTAL-COSTS> 477,179
<OTHER-EXPENSES> (10,082)
<LOSS-PROVISION> 230,919
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 25,222
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,222
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,222
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
</TABLE>
