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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
-------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ -------------------------
Commission file number 0-16720
Commission file number 0-16721
PARTICIPATING INCOME PROPERTIES 1986, L.P.
and
FFCA INVESTOR SERVICES CORPORATION 86-B
- --------------------------------------------------------------------------------
(Exact Name of Co-Registrants as Specified in Their
Organizational Documents)
Delaware 86-0570015
- --------------------------------------------------------------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0557949
- --------------------------------------------------------------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (602) 585-4500
-------------------------
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>
PART 1 - FINANCIAL INFORMATION
- ------ ---------------------
Item l. Financial Statements.
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
September 30, December 31,
1997 1996
----------- -----------
ASSETS
------
CASH AND CASH EQUIVALENTS $ 2,439,252 $ 2,346,371
RECEIVABLES FROM LESSEES 178,718 149,803
SECURED NOTES RECEIVABLE 108,547 131,323
PROPERTY SUBJECT TO OPERATING LEASES, at cost
Land 6,773,272 6,773,272
Buildings 29,669,322 29,669,322
Equipment 626,781 626,781
----------- -----------
Total 37,069,375 37,069,375
Less-Accumulated depreciation 11,925,261 10,937,860
----------- -----------
25,144,114 26,131,515
----------- -----------
Total assets $27,870,631 $28,759,012
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 1,430,793 $ 1,321,426
PAYABLE TO GENERAL PARTNER - 10,304
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 49,660 49,704
RENTAL DEPOSITS 114,400 114,400
----------- -----------
Total liabilities 1,594,853 1,495,834
----------- -----------
MINORITY INTEREST (15,911) (14,923)
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General partner (167,922) (158,058)
Limited partners 26,459,611 27,436,159
----------- -----------
Total partners' capital 26,291,689 27,278,101
----------- -----------
Total liabilities and partners' capital $27,870,631 $28,759,012
=========== ===========
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
9/30/97 9/30/96 9/30/97 9/30/96
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental $1,072,248 $1,072,248 $3,216,742 $3,223,126
Participating rentals 529,171 481,911 1,421,282 1,408,249
Interest and other 28,033 25,627 82,666 72,960
Gain on sale of property - 59,548 - 75,958
---------- ---------- ---------- ----------
1,629,452 1,639,334 4,720,690 4,780,293
---------- ---------- ---------- ----------
EXPENSES:
General partner fees 142,900 139,026 412,855 411,592
Depreciation 329,133 401,444 987,401 1,230,709
Operating 40,058 33,479 128,734 126,404
---------- ---------- ---------- ----------
512,091 573,949 1,528,990 1,768,705
---------- ---------- ---------- ----------
MINORITY INTEREST
IN INCOME 1,285 1,239 3,685 3,536
---------- ---------- ---------- ----------
NET INCOME $1,116,076 $1,064,146 $3,188,015 $3,008,052
========== ========== ========== ==========
NET INCOME ALLOCATED TO:
General partner $ 11,161 $ 10,641 $ 31,880 $ 30,081
Limited partners 1,104,915 1,053,505 3,156,135 2,977,971
---------- ---------- ---------- ----------
$1,116,076 $1,064,146 $3,188,015 $3,008,052
========== ========== ========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on
51,687 units held by limited partners) $21.38 $20.38 $61.06 $57.62
====== ====== ====== ======
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General -----------------------------
Partner Number Total
Amount of Units Amount Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996 $ (158,058) 51,687 $ 27,436,159 $ 27,278,101
Net income 31,880 -- 3,156,135 3,188,015
Distributions to partners (41,744) -- (4,132,683) (4,174,427)
------------ ------------ ------------ ------------
BALANCE, September 30, 1997 $ (167,922) 51,687 $ 26,459,611 $ 26,291,689
============ ============ ============ ============
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,188,015 $ 3,008,052
Adjustments to net income:
Depreciation 987,401 1,230,709
Gain on sale of property - (75,958)
Minority interest in income 3,685 3,536
Change in assets and liabilities:
Increase in receivables from lessees (28,915) (13,817)
Decrease in payable to general partner (10,304) (17,705)
Decrease in accounts payable and
accrued liabilities (44) (8,174)
----------- -----------
Net cash provided by operating activities 4,139,838 4,126,643
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property - 811,442
Principal collections on secured notes receivable 22,776 19,366
----------- -----------
Net cash provided by investing activities 22,776 830,808
----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Partner distributions declared (4,174,427) (4,161,648)
Increase (decrease) in distribution payable 109,367 (2,046,745)
Distributions to minority interest (4,673) (4,694)
----------- -----------
Net cash used in financing activities (4,069,733) (6,213,087)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 92,881 (1,255,636)
CASH AND CASH EQUIVALENTS, beginning of period 2,346,371 3,649,977
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,439,252 $ 2,394,341
=========== ===========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
- --------------------------------
Item 2. Management's Discussion and Analysis of
- ------- Financial Condition and Results of Operations
---------------------------------------------
As of September 30, 1997, Participating Income Properties 1986, L.P., a
Delaware limited partnership, (the Registrant), had received $51,687,000
in gross proceeds from its offering of Units. Net funds available for
investment, after payment of sales commissions, organization costs and
acquisition fees, amounted to $45,232,790. The offering of Units is the
Registrant's sole source of capital, and since the final closing of
limited partnership units was held on April 16, 1987, the Registrant will
not receive additional funds from the offering. The Registrant was fully
invested in eleven travel plaza properties by September 1988 and does not
anticipate any further capital expenditures.
The Registrant declared a cash distribution to the limited partners of
$1,430,432 for the quarter ended September 30, 1997 (the period), which,
combined with the first and second quarterly distributions of $2,702,251
amounts to $4,132,683 year to date. During the period, all net proceeds
not invested in real estate were invested in Government Agency discount
notes and bank repurchase agreements (which are secured by United States
Treasury and Government obligations).
During the period, base rental revenue from the travel plaza leases
amounted to $1,072,248, which remains unchanged from the prior year, while
the corresponding year-to-date period reflects a small decrease from 1996
due to the sale of a land parcel in 1996, as discussed in previous
reports. The Registrant received or accrued participating rentals of
$529,171 for the quarter ended September 30, 1997 representing an increase
over participating rentals of $481,911 for the comparable quarter of 1996.
On June 1, 1996, CFJ Properties (lessee of eight of the Registrant's
travel plazas) curtailed its relationship with a large third party billing
company for the trucking industry. The billing company requested changes
to its contract that were unacceptable to CFJ Properties' management due
to the significant long-term ramifications of the proposed change on CFJ
Properties' future business. This resulted in reduced volume and margins,
which contributed to low participating rental revenues in the quarter
ended September 30, 1996 as compared to the quarter ended September 30,
1997. Participating rentals for the corresponding year-to-date periods
were similarly affected, although to a lesser extent. For the quarter and
nine months ended September 30, 1997, total expenses decreased by $61,858
and $239,715, respectively, primarily due to a decrease in depreciation
expense related to the sale of travel plaza equipment.
The decrease in total assets reflected in the Registrant's financial
statements filed with this Report is mainly attributable to the
depreciation allowance, which is deducted for accounting purposes from the
cost of the assets on the Registrant's books.
In the opinion of management, the financial information included in this
report reflects all adjustments necessary for fair presentation. All such
adjustments are of a normal recurring nature.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 86-B
---------------------------------------
BALANCE SHEET - SEPTEMBER 30, 1997
----------------------------------
ASSETS
Cash $100
Investment in Participating Income Properties 1986, L.P., at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent $100
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
Note: FFCA Investor Services Corporation 86-B (86-B) was organized on June 23,
1986 to act as the assignor limited partner in Participating Income Properties
1986, L.P. (PIP-86).
The assignor limited partner is the owner of record of the limited
partnership units of PIP-86. All rights and powers of 86-B have been assigned to
the holders, who are the registered and beneficial owners of the units. Other
than to serve as assignor limited partner, 86-B has no other business purpose
and will not engage in any other activity or incur any debt.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.
PARTICIPATING INCOME PROPERTIES 1986, L.P.
By FFCA MANAGEMENT COMPANY LIMITED PARTNERSHIP
General Partner
By PERIMETER CENTER MANAGEMENT COMPANY
Corporate General Partner
Date: October 22, 1997 By /s/ John Barravecchia
----------------------------------------------
John Barravecchia, Chief Financial Officer
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 86-B
Date: October 22, 1997 By /s/ John Barravecchia
----------------------------------------------
John Barravecchia, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND
THE STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000797977
<NAME> PARTICIPATING INCOME PROPERTIES 1986, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,439,252
<SECURITIES> 0
<RECEIVABLES> 178,718
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 37,069,375
<DEPRECIATION> 11,925,261
<TOTAL-ASSETS> 27,870,631
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,291,689
<TOTAL-LIABILITY-AND-EQUITY> 27,870,631
<SALES> 0
<TOTAL-REVENUES> 4,720,690
<CGS> 0
<TOTAL-COSTS> 1,528,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,188,015
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,188,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,188,015
<EPS-PRIMARY> 61.06
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
BALANCE SHEET.
</LEGEND>
<CIK> 0000797978
<NAME> FFCA INVESTOR SERVICES CORPORATION 86-B
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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