<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Sections 13 or 15(d) of the
Securities and Exchange Act of 1934
For the Quarter ended March 31, 2000 Commission File No. 33-3377-LA
WHITEHALL INCOME FUND-86, A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 86-0543325
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6418 E. TANQUE VERDE, SUITE 105, TUCSON, AZ 85715
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (520)750-0500
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
The registrant is a limited partnership and issues limited partnership interest,
the economic attributes of which are represented by "Units".
<PAGE> 2
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
31-Mar-00 31-Dec-99
ASSETS
<S> <C> <C>
Cash in Bank $ 346,518 $ 377,529
Tenant Accounts Receivable 13,659 19,077
Other Receivables 148,063 149,546
Investment Properties - Net 3,055,562 3,079,805
Organization Costs and loan closing
costs (net of accumulated amortization) 26,187 27,007
-------------- ----------------
TOTAL ASSETS $ 3,589,989 $ 3,652,964
============== ================
LIABILITIES AND PARTNERS' CAPITAL
Accounts Payable $ 20,386 $ 19,222
Accrued Property Taxes 40,664 22,273
Due to Related Parties 21,116 28,328
Other Liabilities 10,565 14,250
Notes Payable 1,497,252 1,505,010
-------------- ----------------
TOTAL LIABILITIES 1,589,983 1,589,083
TOTAL PARTNERS' CAPITAL 2,000,006 2,063,881
-------------- ----------------
TOTAL LIABILITIES AND EQUITY $ 3,589,989 $ 3,652,964
============== =================
</TABLE>
See accompanying notes to these financial statements
<PAGE> 3
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
31-Mar-00 31-Mar-99
----------------- --------------------
<S> <C> <C>
REVENUE:
Rents $ 141,062 $ 152,262
Interest Income 7,253 7,834
OPERATING EXPENSES:
General & Administrative 91,606 73,630
Amortization & Depreciation 25,062 25,163
Interest 33,834 34,310
Rental Operating Expenses 61,688 46,292
----------------- --------------------
212,190 179,395
NET (LOSS) $ -63,875 $ -19,299
================= ====================
</TABLE>
See accompanying notes to these financial statements
<PAGE> 4
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
31-Mar-00 31-Mar-99
<S> <C> <C>
Net Loss $ -63,875 $ -19,299
Adjustments
Depreciation & Amortization 24,243 23,934
Amortization of Loan Closing Costs 820 1,229
(Increase)/Decrease in
Accounts Receivable 5,418 11,916
Notes Receivable 1,483 1,349
Increase/(Decrease) in
Accounts Payable 1,164 6,452
Accrued Real Estate Taxes 18,391 17,465
Other Accrued Liabilities -3,685 614
Due to Related Party -7,212 -93,242
-------------- --------------
Net Cash from Operating Activities -23,253 -49,582
Cash Flow from Investing Activities
Additions to PP&E 0 0
Proceeds from PP&E 0 0
-------------- --------------
0 0
Cash Flow from Financing Activities
Principal Payments -7,758 -5,644
-------------- --------------
-7,758 -5,644
Net Decrease in Cash -31,011 -55,226
Cash, at Beginning of Period 377,529 500,005
-------------- --------------
Cash, at End of Period $ 346,518 $ 444,779
============== ==============
</TABLE>
See accompanying notes to these financial statements
<PAGE> 5
WHITEHALL INCOME FUND-86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONDENSED FINANCIAL STATEMENT
March 31, 2000
(UNAUDITED)
Note 1 - Condensed Financial Statements
The condensed balance sheets as of March 31, 2000, and the related condensed
statements of operations and cash flows for the three months ended March 31, 200
and 1999, have been prepared by the Company without audit. In the opinion of
management, the condensed financial statements contain adjustments, consisting
of normal recurring accruals, necessary to present fairly the financial position
of Whitehall Income Fund - 86 (the "Partnership") as of March 31, 2000, and the
results of its operations and cash flows for the three months ended March 31,
2000 and 1999. The results of operations for the three months ended March 31,
2000 are not necessarily indicative of the results to be expected for the entire
fiscal year ending December 31, 2000.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements are read in conjunction with the financial statements and notes
thereto included in the Company's report on Form 10-K for the year ended
December 31, 1999.
Note 2 - Restatement of Financial Statements
Subsequent to the filing of its Form 10-Q for the quarter ended March 31, 1999
with the Securities and Exchange Commission, the Company determined that the
information contained certain accounting errors resulting from errors in
recognition of revenues and accrual of certain liabilities. As a result of the
above, the statement of operations for three months ended March 31, 1999 have
been restated as follows:
<PAGE> 6
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
Previously
Restated Reported
<S> <C> <C>
Revenues
Rents $ 152,262 $ 143,146
Interest Income 7,834 9,183
------- -------
Total Income 160,096 152,329
------- -------
Operating expenses
General and administrative 73,630 34,998
Amortization and depreciation 25,163 24,905
Interest 34,310 34,310
Rental Operating Expenses 46,292 41,490
------- -------
Total Operating Expenses 179,395 135,703
Net Income (loss) $ (19,299) $ 16,626
------- -------
</TABLE>
Note 3 - Segment Information
Each rental property is an operating segment. The Partnership's management
evaluates the performance of each segment based on profit or loss from
operations before allocation of Partnership general and administrative expenses,
unusual and extraordinary items. Segment information is as follows:
<TABLE>
<CAPTION>
Pan
McRae American
Partnership Shopping Office Honey Capitol Self
Total Overhead Center Building Baked Ham Storage
<S> <C> <C> <C> <C> <C> <C>
March 31, 1999
- --------------
Rental Revenues $152,262 250 19,093 38,528 9,450 84,941
Net Income (Loss) $(19,299) (60,733) 9,860 21,236 3,971 6,367
March 31, 2000
- --------------
Rental Revenues $141,061 150 12,593 40,693 9,450 78,175
Net Income (Loss) $(63,875) (83,496) 3,828 21,454 1,759 (7,420)
</TABLE>
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(1) OPERATIONS
Whitehall Income Fund-86 commenced operations January 1, 1987, with the
acquisition of the McRae Shopping Center in McRae, Georgia. Since that time, the
Partnership has acquired five additional income producing properties. The
properties have been operating at projected levels. As of March 31, 2000, the
Partnership has distributed $2,978,943 to the Limited Partners and $9,763 to the
General Partner.
Rental revenues for the period ended March 31, 1999 have decrease by $11,200
from the period ended March 31, 2000. This is due primarily to the Family Dollar
vacancy at the McRae Shopping Center. Rental operating expenses for the period
ended March 31, 2000 have increased by $15,396 from the period ended March
31,1999. The increase was due primarily to improvements being made at the office
of Capitol Self-Storage.
Management does not foresee any significant changes in operating expenses for
the year ended December 31, 2000. The Partnership feels that they have adequate
cash reserves to meet working capital requirements as they arise.
(2) CAPITAL RESOURCES & LIQUIDITY
The cash position of the Partnership and distributions to the Limited Partners
will remain similar to 1999 during 2000 unless a sale or sales of real property
occurs. Excess cash flow from properties is being distributed every quarter to
the Limited Partners. Distributions to the Limited Partners in 2000 could be
more than 1999 although the time and amount is at the sole subjective discretion
of the General Partner.
Net cash flow used in operating activities was ($23,253) for the period ended
March 31, 2000 compared to ($49,582) for the period ended March 31, 1999.
The liquidity of the Partnership relies almost entirely on the financial market
fluctuation and availability of funds with regard to lending and investing in
commercial property. Funds appear to be more readily available and therefore may
provide greater liquidity to the Partnership in 2000 through the sale of
Partnership assets.
The Partnership believes that it has adequate cash reserves to meet working
capital requirements as they arise.
Inflation has historically been a contributing factor to the increase in capital
appreciation of income producing real estate and may continue to be a
contributing factor in the future. The Partnership's intention is to own and
operate the properties for a period of ten to fifteen years. At
<PAGE> 8
this time it is not possible to anticipate what the real estate market and
capital appreciation will be in the future. Currently, the properties are
generating sufficient cash flow to cover their own cash operating expenses.
(3) YEAR 2000 ISSUES
The company has experienced no disruptions in its operations that
management can attribute to Year 2000 software issue. In addition, the Company
has seen no Year 2000 related problems itself or received any reports of such
problems from its customers.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the Registrant
is a party or which the Registrant's property is subject.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibits - None
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: 5/1/00 By: /s/ Jack C. West
------------------- ---------------------------------
Jack C. West, Managing Partner
<PAGE> 10
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- ---------------------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 346,518
<SECURITIES> 0
<RECEIVABLES> 161,722
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,187
<PP&E> 3,055,562
<DEPRECIATION> 25,062
<TOTAL-ASSETS> 3,589,989
<CURRENT-LIABILITIES> 92,731
<BONDS> 1,497,252
0
0
<COMMON> 0
<OTHER-SE> 2,000,006
<TOTAL-LIABILITY-AND-EQUITY> 3,589,989
<SALES> 0
<TOTAL-REVENUES> 148,315
<CGS> 0
<TOTAL-COSTS> 61,688
<OTHER-EXPENSES> 91,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,834
<INCOME-PRETAX> (63,875)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,875)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
