UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(a) of the
Securities Exchange Act of 1934
Commission File Number 0-15756
LIF
(Exact name of registrants as specified in its charter)
California 94-2969720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 130, Carbondale, Colorado 81623
(Address of principal executive offices)
(970) 963-8007
(Partnership's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
LIF
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
Item No. Name of Item
Part I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Part II
Item 5. Market for Registrant's Common Equity and Related
Shareholders Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure
Part III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
Signatures
Index to Consolidated Financial Statements and Supplemental
Consolidated Financial Statement Schedules included in the Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
LIF (the "Partnership") is a limited partnership which was organized under
the California Revised Limited Partnership Act on June 29, 1984. The
Partnership was organized to acquire real properties, including
commercial, residential and agricultural properties, located primarily
within the western portion of the United States, and to make short-term
loans and capital contributions to other limited partnerships formed to
acquire or develop and operate one or more income-producing real
properties. The Partnership was formed with the following principal
investment objectives: (i) to provide the maximum possible cash
distributions from operations, a substantial portion of which may not be
taxable to the holders of units of limited partnership interest in the
Partnership (the "Holders"); (ii) to provide for capital growth through
appreciation in values; and (iii) to protect the Partnership's capital. The
General Partner of LIF is Partners '85 (the "General Partner") a partnership
whose General Partner is Landsing Equities Corporation.
The Partnership's business consists of a single segment--acquisition and
operation of one or more income-producing real properties and making
short-term loans and capital contributions to operating entities formed to
acquire or develop real properties. For a schedule of the Partnership's
income and losses and assets, see Item 6, Selected Financial Data. The
Partnership will not be engaged in the production of goods or the
rendering of services. For a more specific discussion of the
Partnership's operations and financial condition, see Item 7,
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Partnership owns two retail rental properties, which in prior years
were owned by Cattle Creek Development Partners (CCDP). CCDP was
liquidated into LIF in 1997. For financial reporting purposes the
Partnership's investments are presented on a consolidated basis.
Results of the Partnership's operations depend primarily upon the
successful operation of its investments. The yields (return on capital)
available on equity ownership of investments in income-producing and
other types of real estate investments depend to a large extent upon the
ability to lease or rent the property, the geographic location of the
property, competition and other factors, none of which can be predicted
with any certainty.
The Partnership has not engaged in research activities relating to the
development or improvement of products or services. The Partnership has
not made, nor does it anticipate making, during the succeeding fiscal
year, any capital expenditures for environmental control facilities, nor
does it expect any material effects upon capital expenditures, earnings
or competitive position resulting from compliance with present federal,
state or local environmental control provisions. The Partnership has no
employees. All of the Partnership's operations are located in the United
States.
<PAGE>
<TABLE>
ITEM 2. PROPERTIES
A description of the income-producing properties which the Partnership
owned at December 31, 1999 is as follows:
<CAPTION>
Financial
Occupancy Average
Net For the Physical Effective
Rentable Year Ended Occupancy Rental
Name & Location Type Sq. Ft. 12/31/99 At 12/31/99 Rate
(1) (2) (3)
<S> <C> <C> <C> <C> <C>
Valley View
Business Center
Glenwood Springs, CO Retail 20,750 81% 81% $ 11
701 Cooper
Glenwood Springs, CO Commercial 2,937 0% 0% $ 0
(1) Expressed as a percentage, it compares the actual dollar amount of
rent received with the dollar amount of rent which would be received
if the property were fully leased.
(2) Physical occupancy denotes the percentage of net rentable square
footage leased as of a certain date.
(3) Represents the average effective rental rates, per square foot, for
the year ended December 31, 1999.
</TABLE>
Each of the Partnership's properties is subject to encumbrances.
Reference is made to Note 6 in the financial statements filed as part of
this annual report for information regarding such encumbrances.
WHISTLER POINT APARTMENTS
Whistler Point was placed under contract during the fourth quarter of
1998. The Property was sold on February 28, 1999. The sales price was
$9,600,000 resulting in a gain for income tax purposes of $3,562,000.
After repayment of the debt secured by the property and the selling costs,
the Partnership netted $3,600,000 in cash.
ITEM 3. LEGAL PROCEEDINGS
The 1996 lawsuit was resolved in March 1999. The plaintiff (tenant)
attained a $30,000 judgment against CCDP which was paid by State Farm
Insurance Company, the insurer for CCDP.
In June of 1999, CCDP filed a lawsuit to evict one of the tenants of
Valley View Business Park. There were three separate suits filed. The
outcome was in CCDP's favor, but an appeal has been filed. The appellate
court required the defendant to post a $25,000 bond during the appeal
process. The appeal is still pending as of December 31, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of the limited partners (the
"Limited Partners") through the solicitation of proxies or otherwise,
during the fourth quarter of 1999
<PAGE>
<TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED SHAREHOLDERS MATTERS
There is no established public trading market for the Units of Limited
Partnership interest of the Partnership and there are substantial
restrictions on the transferability of such Units imposed by federal
and state securities laws and by the Limited Partnership Agreement.
The approximate number of record holders of Units of the Partnership as
of December 31, 1999 is 889.
The Limited Partners of the Partnership are entitled to certain
distributions under the Amended and Restated Certificate and Agreement of
Limited Partnership of the Partnership. A cash distribution of $250 per
unit, to unit holders of record on June 1, 1999, was paid in June 1999.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per unit amount)
<CAPTION>
. . . . . . .DECEMBER 31 . . . . . . .
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total Revenues $ 199 $ 1,661 $ 1,781 $1,517 $1,567
Net Income (Loss) 3,337 (159) (127) (136) (52)
Net Income (Loss) Per Unit (1) 260 (12) (10) (11) (4)
Total Assets 2,723 9,950 10,293 9,864 9,076
Long-term Obligations - Net 1,427 8,470 7,679 7,960 6,897
Cash Distributions-Limited Partners 3,205 192 0 192 385
Paid Per Unit (1) 250 15 0 15 30
(1) Based on a weighted average of 12,820 limited partnership units
outstanding in 1999, 1998, 1997, 1996, and 1995.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
The Partnership was organized to acquire real properties, including
commercial, residential and agricultural properties, located primarily
within the western portion of the United States, and to make short-term
loans and capital contributions to other limited partnerships formed to
acquire or develop and operate one or more income-producing real
properties.
The Partnership currently has two retail rental properties, which were
formerly owned by CCDP. For financial reporting purposes the Partnership's
investments are presented on a consolidated basis.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Partnership's consolidated cash balance
totaled $884,000. Cash not required for current operations is placed in
federally insured bank accounts, certificates of deposit, and money
market funds which can be liquidated as needed. It is the Partnership's
intention to maintain adequate cash reserves for its operations.
As of December 31, 1999, cash and cash equivalents totaled $884,000 versus
$566,000 at December 31, 1998 for a net increase of $318,000.
On June 3, 1996, the Partnership made a Short-Term Loan in the principal
amount of $550,000 to Alpine Center Partners, a Colorado limited
partnership ("ACP"). ACP was organized to acquire one commercial
property located in Carbondale, Colorado. The Partnership also made a
capital contribution to ACP in the amount of $10,000 and became a Co-General
Partner of ACP.
On September 30, 1997, the Partnership's investment in ACP sold 40.20%
of the Alpine Center Building to Gary K. Barr (GKB). GKB is the
president of the General Partner of LIF. This sale resulted in cash to ACP
of $370,000. On September 30, 1997, ACP also sold 45.90% of the Alpine
Center Building to Open World Investors (OWI), of which Gary K. Barr is a
General Partner. This sale generated cash to ACP of $420,000. ACP deferred
a gain on sale from these two transactions of $69,000. ACP provided seller
financing to GKB and OWI in the amounts of $864,300 and $986,850
respectively.
On June 30, 1998, ACP sold its remaining 1.96% interest in the Alpine Center
Building to Gary K. Barr for $59,000. ACP received cash proceeds of $17,000
and provided seller financing in the amount of $42,000. ACP's short-term
note payable to LIF was paid off in June 1998. The notes were refinanced and
ACP closed in July of 1999.
RESULTS OF OPERATIONS
Rental revenues were $190,000 in 1999, a decrease of $1,445,000 or 88%
compared with 1998. Rental revenues were $1,635,000 in 1998, a decrease of
$94,000 or approximately 5% from 1997. The decline in rental revenues in
1999 versus 1998 was the result of the sale of P21. The decrease in
revenues in 1998 as compared to 1997 was the result of the lack of lease
revenues for 701 Cooper Avenue in 1998, which was leased for the entire year
in 1997.
Operating expenses were $99,000 in 1999, a decrease of $613,000 or 86%
from 1998. Operating expenses were $712,000 in 1998, an increase of
$46,000 or 7% from 1997. The decrease of operating expenses in 1999 versus
1998 was the result of the sale of P21. The increase in operating expenses
in 1998 over 1997 was the result of writing off accounts receivable.
Maintenance and repairs decreased 9%, and general and administrative costs
decreased 5%. Operating costs remained constant with 1997 levels.
Net operating income of properties (rental revenue less operating
expenses) was $91,000 in 1999, a decrease of $832,000 or 90% from 1998.
Management believes net operating income is the best indication of the
properties' performance.
Interest income decreased 65% from $26,000 in 1998 to $9,000 in 1999. The
decrease was due to the decrease in the Partnership's short-term investments
and cash equivalents.
Interest expense decreased $423,000 from 1998 to 1999. The decrease was due
to lower average outstanding loan balances in 1999 and the sale of P21.
Interest income and interest expense on loans by and between LIF and its
investment, CCDP, were eliminated in the consolidation of the Company's
financial statements. Entity level general and administrative expenses,
exclusive of that at the property level, increased $75,000 in 1999 compared
to 1998. The increase was due to the disposition of P21 fees. Portfolio
management fees remained unchanged.
Net income for 1999 was $3,337,000. The net loss for 1998 was $159,000.
The increase was due to the sale of Whistler Point Apartments.
PROPERTY OPERATIONS
Commercial Property - The 701 Cooper Building was not occupied during 1999.
The Valley View Business Center had stable occupancy during 1999. Valley
View Business Center and 701 Cooper are currently listed for sale. The
Properties are valued at the lower of cost or market.
<PAGE>
OCCUPANCY
Occupancy at the Partnership's properties remained stable in 1999, with
the exception of the 701 Cooper Building. As of December 31, 1999,
occupancy at the Valley View Business Center ended the year at 80% occupancy.
DISTRIBUTIONS
The General Partner declared a cash distribution of $250 per unit to unit
holders of record on June 1, 1999, that was paid in June 1999.
INFLATION
The effect of inflation on the Partnership's operations have been no greater
than the effect on the economy as a whole. Because of competitive
conditions, market rate rents may increase or decrease disproportionately
with inflation while property operating costs continue to follow
inflationary trends. Inflationary conditions are not expected to have a
major impact on the Partnership during 2000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is contained at page F-1 following in
this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership is Partners '85, which has sole
responsibility for all aspects of the Partnership's operations. Partners
'85 is a limited partnership, whose General Partner is Landsing Equities
Corporation, a California corporation.
Landsing Equities Corporation was incorporated in California in 1983. It
is a wholly owned subsidiary of The Landsing Corporation which has
acted as a sponsor of real estate investment programs, providing property
acquisition and management services.
Gary K. Barr is the Director and President of Landsing Equities
Corporation. His principal occupation during the last five years or more,
and certain other affiliations are set forth below:
Gary K. Barr. Mr. Barr serves as Chairman and Chief Executive Officer
of Pacific Coast Capital and served as President and Director of
Landsing Pacific Fund from its inception in November, 1988 to July, 1992.
Mr. Barr received a Bachelor of Science degree in Mechanical Engineering
from Oklahoma State University in 1967 and a Master of Business
Administration degree from the Stanford University Graduate School of
Business in 1972. Mr. Barr served on the Board of Governors of the
National Association of Real Estate Investment Trusts and on its Editorial
Board. Mr. Barr has also served as President of the California Chapter of
the Real Estate Securities and Syndication Institute of the National
Association of Realtors ("RESSI"), which has awarded him the designation of
Specialist in Real Estate Securities. Since 1983, he has served on the
Board of Directors of Silicon Valley Bancshares. In 1989 he authored the
book J.K. Lasser's "Real Estate Investment Guide" published by Prentice
Hall.
ITEM 11. EXECUTIVE COMPENSATION
The Director and President of Landsing Equities Corporation do not
receive compensation from the Partnership. However, the General Partner,
Partners '85, has contracted with Pacific Coast Capital, an affiliate, for
the provision of certain asset management and administrative services.
During 1999, Pacific Coast Capital received management fees of $103,000,
which were determined based on expenses incurred in order to operate the
Partnership. See Item 13, Certain Relationships and Related
Transactions for further information.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No persons or groups are known by the Partnership to hold more than 5% of the
units of limited partnership of the Partnership. The General Partner is not
a direct or beneficial owner of Units of limited partnership. The General
Partner knows of no arrangement, including any pledge by any person of
securities of the Partnership, the operation of which may at a subsequent
date result in a change in control of the Partnership.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has agreements with The Landsing Corporation and one of
its affiliates, Pacific Coast Capital, pursuant to which the Partnership has
paid various fees and compensation to these companies.
The Partnership has retained Pacific Coast Capital to serve as advisor and
to manage the day-to-day operations of the Partnership. Pacific Coast
Capital is to perform these services based on reimbursement of costs
incurred but in no case are these to exceed those which the Partnership
would have to pay independent parties for comparable services. During
1999, the Partnership paid Pacific Coast Capital expense reimbursements
of $103,000.
For information concerning the agreements between the Partnership and
the affiliates of The Landsing Corporation, see Note 3 of Notes to
Financial Statements filed as part of this Annual Report.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
See the Index on page F-1.
2. Financial Statement Schedules
See the Index on page F-1.
3. Exhibits
See the Exhibit Index which immediately precedes the
Exhibits filed with this Report.
(b) No reports were filed by the Partnership on Form 8-K during
the fourth quarter ended December 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LIF
By: Partners '85
By: Landsing Equities Corporation,
General Partner
March 16, 2000 By: /s/ Gary K. Barr
GARY K. BARR, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Partnership and in the capacities and on the dates indicated.
March 16, 2000 /s/ Gary K. Barr
GARY K. BARR, President and Director
Landsing Equities Corporation
(Principal Executive Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the Act.
No Annual Report or Proxy material has been sent to Partnership's security
holders. An Annual Report will be furnished to such security holders
subsequent to the filing of Partnership's Annual Report on Form 10-K, and,
when so sent, Partnership shall furnish copies of such material to the
Commission.
<PAGE>
LIF
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES INCLUDED IN THE FORM 10-K
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets, December 31, 1999 and 1998
Consolidated Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Partners' Equity for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Supplemental Consolidated Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation
for the Year Ended December 31, 1999
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of LIF:
We have audited the accompanying consolidated financial statements and
consolidated financial statement schedule of LIF and subsidiaries listed in
the index on page F-1 of this Form 10-K as of December 31, 1999 and
1998, and the related consolidated statements of operations, changes in
partners' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of LIF and subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
consolidated financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
DALBY, WENDLAND & CO., P.C.
Glenwood Springs, Colorado
February 1, 2000
<PAGE>
<TABLE>
LIF
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1999 AND 1998
(In thousands except for Partnership Units)
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
INVESTMENT IN REAL ESTATE:
Rental property $ 2,102 $10,370
Accumulated depreciation (278) (2,958)
Rental property - net 1,824 7,412
CASH AND CASH EQUIVALENTS (including interest
bearing deposits of $872 in 1999 and $562 in 1998) 884 566
OTHER ASSETS:
Accounts receivable, net 0 84
Deferred loan costs, net of accumulated
amortization of $5 in 1999 and $242 in 1998 13 72
Prepaid expenses 2 23
Notes receivables 0 1,793
Total other assets 15 1,972
TOTAL $ 2,723 $ 9,950
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $ 1,427 $ 8,470
Accounts payable 9 24
Liability for future improvements 0 83
Other liabilities 49 267
Deferred gain on real estate 0 0
Total liabilities 1,485 8,844
PARTNERS' EQUITY
Limited Partners 1,238 1,281
General Partners 0 (175)
TOTAL $ 2,723 $ 9,950
Equity Units Authorized - Limited Partners 12,820 12,820
- General Partners 0 0
Equity Units Outstanding - Limited Partners 12,820 12,820
- General Partners 0 0
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LIF
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(In thousands except Partnership units)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
REVENUES:
Rental $ 190 1,635 $1,729
Interest 9 26 52
Total revenues 199 1,661 1,781
EXPENSES:
Interest 135 558 662
Operating 99 712 666
Depreciation and amortization 72 382 386
General and administrative 212 190 194
Total expenses 518 1,842 1,908
Gain from sale of real estate 3,656 22 0
NET INCOME/LOSS $3,337 (159) $ (127)
Net gain - Limited Partners $3,162 $ (159) $ (127)
Net income (loss) - General Partners $ 175 $ 0 $ 0
NET INCOME/LOSS PER PARTNERSHIP UNIT
Limited Partners $ 247 $ (12) $ (10)
General Partners $ 0 $ 0 $ 0
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LIF
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(In thousands, except Partnership units)
<CAPTION>
LIMITED PARTNERS
NUMBER OF GENERAL TOTAL
PARTNERSHIP PARTNER PARTNERS'
UNITS AMOUNT AMOUNT EQUITY
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 12,820 $ 1,632 $(153) $ 1,479
Net loss December 31, 1998 $ (159) $ 0 (159)
Distribution - 1998 (192) (22) (214)
BALANCE, DECEMBER 31, 1998 12,820 $ 1,281 $(175) $ 1,106
Net income 1999 $ 3,162 $ 175 $ 3,337
Distribution 1999 (3,205) $ 0 (3,205)
BALANCE DECEMBER 31, 1999 12,820 $ 1,238 $ 0 $ 1,238
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LIF
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(In thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/loss $ 3,337 $ (159) $ (127)
Gain on sale of property (3,656) 22 0
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 72 382 389
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 84 (35) (40)
Decrease (increase) in prepaid expenses
and deposits 21 (4) 10
(Increase) in deferred costs 59 (19) 0
(Decrease) increase in accounts payable (15) 86 28
(Decrease) increase in other liabilities (301) (33) (13)
Net cash provided by operating activities (399) 196 247
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12) (102) (584)
Proceeds from sale of investment property 9,184 17 800
Investment in short-term investments 0 0 0
Payments on notes receivable 0 100 0
Net cash provided by investing activities 9,172 15 216
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from financing 0 137 0
Distributions (3,205) (214) 0
Payments on notes payable (5,250) (138) (281)
Net cash used in financing activities (8,455) (215) (281)
Increase (decrease) in cash and
cash equivalents 318 (4) 182
Cash and cash equivalents at beginning of year 566 570 388
Cash and cash equivalents at end of year 884 $ 566 $ 570
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
LIF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except Partnership unit amounts)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - LIF (the "Partnership") is a limited partnership organized
under the laws of the state of California for the purpose of investing in
income properties and making short-term loan and capital contributions to
operating entities formed to acquire or develop and operate one or more
income producing real properties. The General Partner is Partners '85 (the
"General Partner"), a California limited partnership, whose General Partner
is Landsing Equities Corporation. LIF was formed in June 1984, and shall
continue until December 31, 2034, unless sooner terminated.
Investment In Real Estate Partnership - At December 31, 1998, the
Partnership was invested in Landsing Private Fund ("P-21"), a 99%-owned
real estate partnership. During 1999, the Partnership was dissolved.
In 1997, Cattle Creek Development Partners (CCDP) was liquidated
into the Partnership. CCDP was originally formed in 1994. During
1996, the Partnership invested into 95% of a new entity - Alpine
Center Partners ("ACP"). ACP acquired rental real estate in Colorado
in 1996.
Consolidation of Investment in Real Estate Partnerships - For financial
reporting purposes, the Partnership consolidates the operations of it's
investment in real estate partnerships with that of the Partnership. All
significant intercompany transactions, including notes payable/receivable and
short-term loans/receivables, and balances have been eliminated. Minority
interest was insignificant at December 31, 1999 and 1998.
Rental Property - Rental property is stated at cost. Depreciation is
computed by the straight-line method over estimated useful lives ranging from
five to forty years. Major additions and betterments are capitalized at
cost, while maintenance and repairs which do not improve or extend the life
of the respective assets are expensed currently. When assets are retired or
otherwise disposed of, the costs and related accumulated depreciation are
removed from the accounts, and any gain or loss on disposal is included in
the results of operations. Rental property held for sale is valued at
lower of cost or market.
Deferred Loan Costs - Loan fees are deferred and amortized over the life of
the related note payable.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less at the time of purchase
to be cash equivalents.
Short-Term Investments - The Partnership invests in short-term federally
insured certificates of deposits which mature on a date in excess of three
months from the date of purchase. The cost of these investments approximate
market value.
Income Taxes - No provision for federal or state income taxes has been made
in the consolidated financial statements because these taxes are the
obligation of the partners.
Net Income (Loss) Per Partnership Unit - Net Income (Loss) per partnership
unit is based on weighted average units outstanding of 12,820 in 1999, 1998
and 1997, after giving effect to net income (loss) allocated to the General
Partner. Cash distributions of $250 per unit were paid to limited partnership
unit holders in 1999. Cash distributions of $15 per unit were paid in 1998.
No cash distributions were paid in 1997.
<PAGE>
Concentrations of Credit Risk - The Partnership's financial instruments that
are exposed to concentrations of credit risk consist primarily of its cash
and cash equivalents, and note receivables. The Partnership's cash and cash
equivalents are maintained in various accounts in FDIC insured institutions.
This investment policy limits the Partnership's exposure to concentrations of
credit risk. The note receivables outstanding are held by two related
parties (see note 4). Due to the related party nature of the receivables
and the intention of the related parties to obtain permanent financing
from a bank within the next six months credit risk is considered minimal.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Impairment of Long-Lived Assets - The Partnership adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of"
during 1996. SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used or disposed of by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. During 1999,
1998 and 1997, the Partnership determined that no impairment loss need be
recognized for applicable assets of continuing operations.
Accounting Pronouncements - In June 1996, the Financial Accounting Standards
Board issued Statement No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities" (SFAS No.125). This
Statement is effective for transactions occurring after December 31, 1996.
However, transactions such as securities lending, repurchase agreements,
dollar rolls, and similar secured financing arrangements are not subject to
the provisions of SFAS No. 125 until January 1, 1998. The standard provides
that, following a transfer of financial assets, an entity is to recognize the
financial and servicing assets it controls and the liabilities it has
incurred, derecognize financial assets when control has been surrendered and
derecognize liabilities when extinguished. The adoption of SFAS No. 125 had
no impact on the Partnership's consolidated financial statements.
Effective January 1, 1998, the Partnership adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement
and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial condition. However, the
Partnership had no items of comprehensive income at December 31, 1999 or
December 31, 1998.
Effective January 1, 1998, the Partnership adopted SFAS No. 131, "Disclosures
About Segments Of An Enterprise And Related Information." However, the
Partnership does not have any reportable segments at December 31, 1999 or
December 31, 1998.
Fair Value of Financial Instruments - The fair value of certain financial
assets carried at cost, including cash and cash equivalents and accounts
receivable, are considered to approximate their respective fair value. The
fair value of accrued liabilities is considered to approximate their
respective book values due to their short-term nature. The valuation of
notes receivables and notes payable with floating rates is estimated to be
the same as carrying value. Fair value of notes payable with fixed rates is
estimated based on quoted market prices for similar issues. At December 31,
1999 and 1998, fair value of notes payable approximates carrying value.
<PAGE>
<TABLE>
2. ACCOUNTS RECEIVABLE
Accounts Receivable consisted of the following at December 31, 1999:
<S> <C>
Tenant Receivables $ 0
Allowance for doubtful accounts 0
Net accounts receivable $ 0
</TABLE>
<TABLE>
3. RELATED PARTY TRANSACTIONS
The Partnership has entered into agreements with Pacific Coast Capital.
Advisory services for investment management, general, administrative and
property management are provided by Pacific Coast Capital. The General
Partner is an affiliate of Pacific Coast Capital. The related party
transactions delineated in the Partnership Agreement with affiliates of the
General Partner are as follows:
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
General and Administrative Support Fees $ 103 $ 112 $ 103
Property Management $ 0 $ 89 $ 36
Accounts Receivable $ 0 $ 0 $ 17
</TABLE>
<PAGE>
In addition, expenses related to the sale of Whistler Point in the
amount of $46 were paid to Pacific Coast Capital in 1999.
Bad debt of $33 from The Landsing Corporation was written off in 1999.
During 1999 and 1998, the Partnership had a sale transaction with the
President of the General Partner and another entity. (See Note 4).
4. NOTES RECEIVABLE
On June 30, 1998, Alpine Center Partnership sold its 1.96% investment in the
Alpine Center Building to Gary K. Barr. This sale transaction included the
exchange of cash and a note receivable.
At September 30, 1997, Alpine Center Partnership (ACP) sold 40.2% and 45.9%,
respectively, of the Alpine Center Building to Gary K. Barr, president of the
general partner of LIF, and to Open World Investors, Ltd., whose general
partner is Gary K. Barr. Open World Investors, Ltd. is also managed by PCC.
These sales were made for cash and notes receivable. In 1996, ACP sold
11.94% of the Alpine Center Building to an unrelated third party for cash.
The notes receivable generated from the sale to Barr and Open World
Investors, Ltd., were $806 and $987, respectively. The terms of the notes
receivable are the same as the financing terms ACP has with the bank and LIF
on loans secured by the Alpine Center Building. The notes receivable from
these sales are directly in proportion to the notes payable to Alpine Bank
and Barr. There is no equity built in to these notes. When these notes
payable are re-financed in the name of the new owners, these notes receivable
will be eliminated, as will the notes payable that they offset. See
discussion of credit risk at Note 1.
The sales agreements stipulate that each buyer assume debt that ACP has
related to the Alpine Center Building up to their respective percentage
ownership except for the sale to the unrelated third party, whose debt
assumption was capped at $256. Management does not expect the debt to
be assumed by the unrelated third party to exceed this amount.
At the dates of the sales, the Alpine Center Building consisted of land, one
existing commercial building and one commercial building (Phase II) planned
for construction after 1997. The liability for future improvements at
December 31, 1997 of $828 represents the estimated future costs of
constructing Phase II. The gain on the sale of the Alpine Center Building
was deferred at December 31, 1997. During 1998, the Phase II portion of the
building construction of the Alpine Center was completed. The Partnership
realized a net gain of $22 through the completion of Phase II and the sale of
the Alpine Center Building.
<PAGE>
<TABLE>
5. RENTAL PROPERTY
Rental property consists of the following at December 31:
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Land $ 252 $ 1,512 $ 1,520
Building and improvements 1,850 8,858 8,807
2,102 10,370 10,327
Accumulated depreciation (278) (2,958) (2,607)
$ 1,824 $ 7,412 $ 7,720
</TABLE>
Depreciation expense was $64, $351 and $325 for the years ended December 31,
1999, 1998 and 1997, respectively.
The residential leases are generally for a term of one year or less or are on
a month-to-month basis. Retail leases range from one to five years in
length.
<TABLE>
6. NOTES PAYABLE
Notes payable consists of the following at December 31:
<CAPTION>
1999 1998
<S> <C> <C>
First note payable collateralized by the Valley View
Business Park, with an interest rate of 9.00%, and
monthly payments of $11, matures December, 2000. 963 997
Second note payable collateralized by the Valley View
Business Park, with an interest rate of 8.5% and monthly
payments of $2, matures August, 2016. 158 160
First note payable collateralized by 701 Cooper commercial
building, with an interest rate of 9.99% and monthly
payments of $3, matures October, 2001. 306 313
TOTAL $1,427 $1,470
</TABLE>
<PAGE>
<TABLE>
The Partnership paid interest of $135 in 1999, $558 in 1998, and $658 in
1997.
Principal payments required in future years are as follows:
<S> <C>
2000 $ 972
2001 10
2002 11
2003 12
2004 161
Thereafter 261
Total $1,427
</TABLE>
<TABLE>
7. RENTAL PROPERTIES UNDER OPERATING LEASES
Minimum future rents from rental properties under operating leases having
initial or remaining noncancelable lease terms in excess of one year at
December 31, 1999, are as follows:
<S> <C>
2000 $ 120
2001 108
2002 77
2003 41
2004 36
Total $ 382
</TABLE>
<TABLE>
8. RECONCILIATION TO INCOME TAX BASIS OF ACCOUNTING
The difference at December 31, 1999, 1998 and 1997, between the basis of
accounting used in the accompanying consolidated financial statements and the
income tax basis used to file the Partnership's federal income tax return are
as follows:
<CAPTION>
Restated Restated
1999 1998 1997
<S> <C> <C> <C>
Net income (loss) $ 3,337 $ (159) $ (127)
Remove book (income) loss from partnership
investments (3,600) (137) 93
Difference in book vs. tax loss from
partnerships 6,580 (195) 26
Decrease from difference in basis and
use of accelerated depreciation methods 19 12 0
Allowance for doubtful accounts (54) 54 0
Difference on liquidation of P21 (1,378) 0 0
Audit-due to removal of investment
in Partnership (56) 0 0
Difference in sale of Alpine Center Building 0 82 0
Other 6 (3) 0
Net income (loss) - tax basis $ 4,854 $ (346) $ (8)
Partners' equity $ 1,238 $ 1,106 $1,479
Remove equity in partnership investments 0 0 0
Restatement of cumulative elimination 0 (383) (383)
Syndication costs 1,906 1,906 1,906
Liquidation of Cattle Creek Development Ptrs 0 0 29
Basis of Assets 1 1 0
Accumulated depreciation 56 37 0
Allowance for doubtful accounts (54) 54 0
Investment in partnerships 0 (1,220) (888)
Other 85 82 0
Partners' equity - tax basis $ 3,232 $ 1,583 $2,143
</TABLE>
<PAGE>
9. CONTINGENCIES
The 1996 lawsuit was resolved in March 1999. The plaintiff (tenant)
attained a $30,000 judgment against CCDP which was paid by the
insurer for CCDP.
In June of 1999, CCDP filed a lawsuit to evict one of the tenants of
Valley View Business Park. There were three separate suits filed. The
outcome was in CCDP's favor, but an appeal has been filed. The
appellate court required the defendant to post a $25,000 bond during
the appeal process. The appeal is still pending as of December 31, 1999.
<PAGE>
<TABLE>
SCHEDULE III
LIF
(A California limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(In thousands)
<CAPTION>
Initial Cost of Reserve for
Encumbrances Cost Improvements Total Depreciation
<S> <C> <C> <C> <C> <C>
Valley View Business Park 1,121 938 836 1,774 241
Glenwood Springs, CO
701 Cooper 306 320 8 328 37
Glenwood Springs, CO
1,427 1,258 844 2,102 278
</TABLE>
Life on Which
Date Date Depreciation
Description Constructed Acquired Is Computed
Valley View Business Park N/A 08/28/94 40 Years
Glenwood Springs, CO
701 Cooper N/A 06/30/94 40 Years
Glenwood Springs, CO
<PAGE>
SCHEDULE III
LIF
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(In thousands)
NOTES:
(1) The Partnership's policy is to invest in income producing real
properties and make short-term loans and capital contributions to
operating entities formed to acquire or develop and operate one or
more income producing real properties. Costs incurred before
completion of the development are included in building basis.
Costs incurred after completion of the development projects and
costs incurred subsequent to the purchase of completed projects
are included as improvements.
(2) Depreciation is computed by the straight-line method on lives of
five to forty years.
E X H I B I T I N D E X
Exhibit Number in Accordance
With 601 of Regulation S-K Exhibit Description
3.1 Amended and Restated Certificate and Agreement of
Limited Partnership of LIF, a California limited
partnership, filed as Exhibit 3 to Partnership's
Registration Statement No. 2-94509 on Form S-11, as
amended, is incorporated herein by reference.
3.2 Assignment Agreement, filed as Exhibit 10.1 to
Partnership's Registration Statement No. 2-94509 on
Form S-11, as amended, is incorporated herein by
reference.
10.1 Agreement of Limited Partnership for Cattle Creek
Development Partners, Ltd. (Incorporated by reference
to Form 8-K dated August 31, 1994)
10.2 Promissory Note to LIF. (Incorporated by reference to
Form 8-K dated August 31, 1994)
10.3 Bill of Sale, along with the Closing and Settlement
Agreement for the acquisition of Valley View Business
Park. (Incorporation by reference to Form 8-K dated
August 31, 1994)
10.4 Promissory Note to Alpine Bank, along with related Deed
of Trust. (Incorporated by reference to Form 8-K dated
August 31, 1994)
10.5 Promissory Note to Norman Overacker and Elaine
Overacker, along with related Deed of Trust.
(Incorporated by reference to Form 8-K dated
August 31, 1994)
10.6 Closing and Settlement Agreement for acquisition of 701
Cooper Avenue Building. (Incorporated by reference to
Form 8-K dated August 31, 1994)
10.7 Promissory Note to Alpine Bank, along with related Deed
of Trust. (Incorporated by reference to Form 8-K dated
August 31, 1994)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 884
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15
<PP&E> 2,102
<DEPRECIATION> 278
<TOTAL-ASSETS> 2,723
<CURRENT-LIABILITIES> 1,485
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,238
<TOTAL-LIABILITY-AND-EQUITY> 2,723
<SALES> 0
<TOTAL-REVENUES> 199
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 383
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (319)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
