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 March 31, 1999
----------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to ________________ 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 (480) 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 I. FINANCIAL STATEMENTS.
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED BALANCE SHEETS (Note 1)
MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
March 31, December 31,
1999 1998
----------- ------------
ASSETS
CASH AND CASH EQUIVALENTS $47,529,241 $ 2,202,940
RECEIVABLES FROM LESSEES 99,940 146,270
SECURED NOTES RECEIVABLE 63,938 66,595
DEFERRED COSTS -- 208,904
PROPERTY SUBJECT TO OPERATING LEASES, at cost
Land 533,040 5,766,190
Buildings 1,266,113 28,456,079
Equipment -- 626,781
----------- ------------
1,799,153 34,849,050
Less - Accumulated depreciation 575,957 12,884,742
----------- ------------
1,223,196 21,964,308
----------- ------------
Total assets $48,916,315 $ 24,589,017
=========== ============
LIABILITIES AND PARTNERS' CAPITAL
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 1,193,007 $ 1,282,310
PAYABLE TO GENERAL PARTNER 101,574 177,582
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 142,779 20,328
RENTAL DEPOSITS 38,019 114,400
----------- ------------
Total liabilities 1,475,379 1,594,620
----------- ------------
MINORITY INTEREST 8,963 (15,705)
----------- ------------
PARTNERS' CAPITAL (DEFICIT) (Note 1):
General partner 1,470,009 (166,879)
Limited partners 45,961,964 23,176,981
----------- ------------
Total partners' capital 47,431,973 23,010,102
----------- ------------
Total liabilities and partners' capital $48,916,315 $ 24,589,017
=========== ============
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF INCOME (Note 1)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
1999 1998
------------ -----------
REVENUES:
Rental $ 893,351 $ 1,037,825
Participating rentals 407,648 460,326
Interest and other 74,312 47,544
Gain on sale of property (Note 1) 24,870,572 1,725,741
------------ -----------
26,245,883 3,271,436
------------ -----------
EXPENSES:
General partner fees 119,134 235,910
Depreciation 202,243 300,940
Operating 50,231 51,537
------------ -----------
371,608 588,387
------------ -----------
OPERATING INCOME 25,874,275 2,683,049
LIQUIDATION COSTS (Note 1) (221,790) --
MINORITY INTEREST IN INCOME (26,034) (2,957)
------------ -----------
NET INCOME $ 25,626,451 $ 2,680,092
============ ===========
NET INCOME ALLOCATED TO (Note 1):
General partner $ 1,648,934 $ 26,801
Limited partners 23,977,517 2,653,291
------------ -----------
$ 25,626,451 $ 2,680,092
============ ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(based on 51,687 units held by limited
partners) (Note 1) $ 463.90 $ 51.33
============ ===========
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Note 1)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
Limited Partners
General ----------------------
Partner Number Total
Amount of Units Amount Amount
------ -------- ------ ------
BALANCE, December 31, 1998 $ (166,879) 51,687 $ 23,176,981 $ 23,010,102
Net income 1,648,934 -- 23,977,517 25,626,451
Distribution to partners,
cash from operations (12,046) -- (1,192,534) (1,204,580)
---------- ------- ------------ ------------
BALANCE, March 3l, 1999 $1,470,009 51,687 $ 45,961,964 $ 47,431,973
========== ======= ============ ============
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 1)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
1999 1998
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,626,451 $ 2,680,092
Adjustments to net income:
Depreciation 202,243 300,940
Gain on sale of property (24,870,572) (1,725,741)
Minority interest in income 26,034 2,957
Change in assets and liabilities:
Decrease in receivables from lessees 46,330 10,000
Decrease in deferred costs 208,904 --
Increase (decrease) in payable to general
partner (76,008) 101,574
Increase in accounts payable and accrued
liabilities 122,451 1,410
Decrease in rental deposits (76,381) --
------------ -----------
Net cash provided by operating activities 1,209,452 1,371,232
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 45,409,441 3,385,784
Principal collections on secured notes
receivable 2,657 8,179
------------ -----------
Net cash provided by investing activities 45,412,098 3,393,963
------------ -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Partner distributions declared (1,204,580) (1,358,287)
Return of capital to limited partners declared -- (3,385,784)
Increase (decrease) in distribution payable (89,303) 3,364,404
Distribution to minority interest (1,366) (1,533)
------------ -----------
Net cash used in financing activities (1,295,249) (1,381,200)
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 45,326,301 3,383,995
CASH AND CASH EQUIVALENTS, beginning of period 2,202,940 2,402,680
------------ -----------
CASH AND CASH EQUIVALENTS, end of period $ 47,529,241 $ 5,786,675
============ ===========
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
Note to Consolidated Financial Statements
March 31, 1999
1) SUBSEQUENT EVENT AND PARTNERSHIP LIQUIDATION:
On March 22, 1999, Participating Income Properties 1986 L.P. (the
Partnership) sold substantially all of the Partnership's assets (those assets
comprising nine of the ten travel plazas) and recognized a gain of approximately
$24.9 million on the sale. In April 1999, the Partnership sold the Ellensburg,
Washington travel plaza and recognized a gain of approximately $1.8 million on
the sale. The sale of the travel plazas represents the disposition of
substantially all of the Partnership's assets and the Partnership has no further
liability in connection with any of the travel plazas. Sale proceeds have been
allocated to the General Partner and the limited partners in accordance with the
partnership agreement.
In April 1999, the General Partner began the Partnership liquidation
process, which includes the distribution of assets to the limited partners in
accordance with the partnership agreement. The liquidation of the Partnership is
expected to be completed in June 1999 and an estimate of the cost of the
liquidation has been included in the Partnership's consolidated statement of
operations. The net amount ultimately available for distribution to the limited
partners depends on various factors, such as the actual cost of the liquidation
and the amount of interest income from temporary investments received by the
Partnership until completely liquidated. The General Partner estimates that the
liquidating distribution will approximate $924 per limited partnership unit of
which approximately $6 per unit will be deposited in a trust (the Trust Fund)
with a bank. The Trust Fund, including interest income, would be available to
satisfy claims made directly or indirectly with respect to the liquidation of
the Partnership for a period of up to 24 months following the effective date of
the trust agreement, at which time, as long as there are no unresolved claims,
the remaining balance of the Trust Fund will be disbursed to the limited
partners.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Participating Income Properties 1986, L.P., a Delaware limited partnership, (the
Registrant), entered into purchase agreements with Flying J Inc. on September 4,
1998 to sell substantially all of the Registrant's assets (those assets
comprising the travel plazas) for cash of $45,508,869 (the original sales price
of $48,534,216 for the ten travel plazas, less the Ellensburg, Washington travel
plaza referred to below). The limited partners received a consent solicitation
statement describing the proposed transaction and an affirmative vote of the
limited partners holding a majority of the partnership units was achieved on
October 26, 1998. The sale transaction was completed on March 22, 1999 and the
Registrant recognized a gain of approximately $24.9 million on the sale. The net
cash proceeds from this sale are being held in U.S. government securities
pending distribution to the limited partners. In April 1999, the Partnership
sold the Ellensburg, Washington travel plaza to its lessee for a sales price of
$3,025,347, which resulted in a gain of approximately $1.8 million. The sale of
the travel plazas represents the disposition of substantially all of the
Registrant's assets and the Registrant has no further liability in connection
with any of the travel plazas. In April 1999, the General Partner began the
Registrant liquidation process that includes the distribution of assets to the
limited partners in accordance with the partnership agreement. The liquidation
of the Registrant is expected to be completed in June 1999 and an estimate of
the cost of the liquidation has been included in the Registrant's consolidated
statement of operations.
The net amount ultimately available for distribution to the limited partners
depends on various factors, such as the actual cost of the liquidation and the
amount of interest income from temporary investments received by the Registrant
until completely liquidated. The General Partner estimates that the liquidating
distribution will approximate $924 per limited partnership unit of which
approximately $6 per unit will be deposited in a trust (the Trust Fund) with a
bank. The Trust Fund, including interest income, would be available to satisfy
claims made directly or indirectly with respect to the liquidation of the
Registrant for a period of up to 24 months following the effective date of the
trust agreement, at which time, as long as there are no unresolved claims, the
remaining balance of the Trust Fund will be disbursed to the limited partners.
The Registrant declared a cash distribution from operations to the limited
partners of $1,192,534 for the quarter ended March 31, 1999 (the period). 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, the Registrant received base rental revenue pursuant to its
travel plaza lease arrangements in the amount of $893,351. Rental revenue was
lower in 1999 because all but one of the travel plazas were sold prior to the
end of the quarter. The Registrant received or accrued participating rentals of
$407,648 for the period representing a decrease from participating rentals of
$460,326 for the comparable period of 1998, primarily related to the sale of the
travel plaza properties.
Operating expenses for the quarter ended March 31, 1999, decreased $216,779 from
the comparable period of the prior year primarily due to the decrease in the
general partner fee and depreciation expense. The General Partner's management
fee was higher in 1998 due to the Registrant's sale of the Boise, Idaho travel
plaza in February 1998 which resulted in a $101,574 subordinated real estate
disposition fee payable to the General Partner. Depreciation expense was lower
this period due to the sale of the travel plaza property.
The increase in total assets reflected in the Registrant's consolidated
financial statements filed with this Report is attributable to the cash proceeds
received from the sale of travel plaza property (prior to distribution of the
proceeds to the limited partners).
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, except those adjustments related to the
liquidation and dissolution of the Registrant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The financial instruments held by the Registrant at March 31, 1999 consist of
cash equivalents (primarily investments in U.S. Treasury securities or
repurchase agreements that are collateralized by U.S. Treasury and government
obligations) and receivables from lessees that are short- term in nature and do
not subject the Registrant to a material exposure to changes in interest rates.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 86-B
BALANCE SHEET - MARCH 31, 1999
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 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: May 5, 1999 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 caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 86-B
Date: May 5, 1999 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 MARCH 31, 1999 AND THE STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 797977
<NAME> PARTICIPATING INCOME PROPERTIES 1986, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 47,529,241
<SECURITIES> 0
<RECEIVABLES> 163,878
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,799,153
<DEPRECIATION> 575,957
<TOTAL-ASSETS> 48,916,315
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 47,431,973
<TOTAL-LIABILITY-AND-EQUITY> 48,916,315
<SALES> 0
<TOTAL-REVENUES> 26,245,883
<CGS> 0
<TOTAL-COSTS> 371,608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 25,626,451
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,626,451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,626,451
<EPS-PRIMARY> 463.90
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE
</LEGEND>
<CIK> 797978
<NAME> FFCA INVESTOR SERVICES CORPORATION 86-B
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<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
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<EXTRAORDINARY> 0
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</TABLE>
