UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] 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 (Partnership I.R.S.
Organization) Employer Identification
No.)
Delaware 86-0557949
- --------------------- -----------------------
(Corporation State of (Corporation I.R.S.
Incorporation) Employer Identification
No.)
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
Securities registered Pursuant to Section 12(b) of the Act: None
Securities pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of Class)
Limited Partnership Depository Units
------------------------------------
(Title of Class)
Indicate by check mark whether the Co-Registrants (1) have 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
Co-Registrants were required to file such reports), and (2) have 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 is not contained herein, and will not be contained,
to the best of the Co-Registrants' 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. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the Co-Registrants: Not applicable.
The limited partnership depository units (the "Units") are not
currently traded in any market. Therefore, there is no market price or average
bid and asked price for the Units within 60 days prior to the date of this
filing.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
ITEM 1. BUSINESS.
Participating Income Properties 1986, L.P., a Delaware limited
partnership (the "Partnership"), was organized on June 23, 1986 under the
Delaware Revised Uniform Limited Partnership Act. The Partnership serves as a
co-general partner of FFCA/PIP 1986 Property Company, a Delaware general
partnership (the "Company"), which was organized to acquire new and existing
travel plazas, including land, buildings and equipment, to be leased to Flying J
Inc. and to franchisees of Flying J Franchise Inc. The other co-general partner
of the Company is Perimeter Center Management Company ("PCMC"). The Partnership
invests in the travel plazas through the Company to avoid burdensome state
filing requirements. The Partnership is entitled to 99.9% of all of the profits,
losses and disbursable cash of the Company. Under the terms of the First
Restated Agreement of Partnership of the Company, PCMC is entitled to the
remaining 0.1% of the profits, losses and disbursable cash of the Company. The
general partner of the Partnership is FFCA Management Company Limited
Partnership, a Delaware limited partnership (the "General Partner").
FFCA Investor Services Corporation 86-B, a Delaware corporation and
wholly-owned subsidiary of PCMC, which is the corporate general partner of the
General Partner, was incorporated on June 23, 1986, to serve as the assignor and
initial limited partner of the Partnership and the owner of record of the
limited partnership interests in the Partnership. The limited partnership
interests are assigned by FFCA Investor Services Corporation 86-B to investors
in the Partnership. FFCA Investor Services Corporation 86-B conducts no other
business activity. The Partnership and FFCA Investor Services Corporation 86-B
are referred to collectively as the "Co-Registrants."
On October 10, 1986, the Co-Registrants commenced a public offering of
$75,000,000 in limited partnership depository units (the "Units") in the
Partnership pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended. The Co-Registrants sold a total of 51,687
Units to investors at $1,000 per Unit for a total of $51,687,000. Purchasers of
the Units (the "Holders") acquired the following number of Units from FFCA
Investor Services Corporation 86-B on each of the following dates: 19,865 Units
on January 15, 1987; and 31,822 Units on April 16, 1987. Subsequent to that
date, no Holder has made any additional capital contribution. The Holders share
in the benefits of ownership of the Partnership's assets, including its interest
in the Company's real and personal property investments, according to the number
of Units held, in substantially the same manner as limited partners of the
Partnership.
After deducting organizational and offering expenses, including sales
commissions, the net proceeds of the offering of the Units, $45,613,778, were
fully invested by the Partnership, through its investment in the Company, as of
September 1988, in eleven "Flying J Travel Plazas" located in nine states.
"Flying J Travel Plaza" facilities offer a full-service operation, generally
including fuel facilities, a restaurant, convenience store and other amenities
for use by the trucking industry and traveling public in general. As of December
31, 1998, seven of the travel plazas were leased to CFJ Properties, a general
partnership formed pursuant to a joint venture between Flying J Inc., through
its subsidiary, Big West Oil Company ("Big West"), and Douglas Oil Company of
California, a subsidiary of Conoco Inc. ("Douglas Oil"), one of the travel
plazas was leased to Flying J Inc. and the remaining two were leased to
franchisees of Flying J Franchise Inc. ("FJFI"), a subsidiary of Flying J Inc.
and the franchisor of Flying J Travel Plazas. The Partnership and the Company
are not affiliated with CFJ Properties, Flying J Inc. or FJFI.
<PAGE>
The Partnership entered into purchase agreements with Flying J Inc. on
September 4, 1998 to sell substantially all of the Partnership'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 investors holding a majority of the partnership units was achieved on
October 26, 1998. The sale transaction was completed on March 22, 1999 and the
Partnership 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 investors. The lessee of the Ellensburg, Washington
travel plaza has signed a purchase agreement dated March 30, 1999 related to the
remaining travel plaza for a sales price of $3,025,347, which will result in a
pro forma gain of approximately $1.8 million. 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 sold. A subordinated real estate disposition fee of approximately $1.5
million will be paid to the General Partner related to the sales of the travel
plazas. Upon consummation of the sale of the Ellensburg, Washington travel
plaza, the General Partner will begin the process of winding down the affairs of
the Partnership that includes liquidation and distribution of assets to the
investors in accordance with the Partnership agreement. The liquidation of the
Partnership is expected to be completed in June 1999.
As part of the sale of the travel plazas, approximately $320,000
(representing less than one percent of the aggregate sales price) may, at the
General Partner's discretion, 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, dissolution
and winding up of the affairs of the Partnership during a period of up to 36
months following the liquidation date. At the end of this period, final
decisions will be made in settlement of all disputed claims, if any, and the
remaining balance of the Trust Fund will be disbursed to the investors.
Real estate owned by the Company at December 31, 1998 was leased for a
term of 20 years. Lessees paid the Company annual rental payments (in monthly
installments) equal to 10% of the Company's total investment in properties. As
additional rent, the Company was entitled to receive a portion of the operating
revenues of the lessees equal to (a) 4% of annual gross receipts derived from
the travel plaza facility, excluding fuel sales; (b) 3/10 of $.01 per gallon of
fuel sold; and (c) 4% of all amounts received by the lessee for any lease year
pursuant to any sublease by the lessee of any part of its leased premises. All
leases, except for the lease on the Ellensburg, Washington travel plaza, were
terminated on March 22, 1999 upon sale of the related travel plazas.
During 1998, CFJ Properties and Flying J Inc. together contributed
approximately 88% of the Company's total rental and participating rental revenue
for the year. Flying J Inc., through its subsidiary Big West, entered into a
joint venture with Douglas Oil to form CFJ Properties in February 1991. Flying J
Inc. (and subsidiaries) is a fully integrated oil and gas company that is
engaged in the production, refining, transportation, wholesaling and retail
marketing of petroleum products and other services through its travel plazas and
gasoline stations. Flying J Inc. operates all of CFJ Properties' travel plazas
and related facilities, which included 78 interstate travel plaza properties as
2
<PAGE>
of January 31, 1998. As of December 31, 1998, the Company owned seven of these
properties. With the exception of the Butte, Montana travel plaza, Flying J Inc.
assigned its leasehold interests in the travel plazas owned by the Company to
CFJ Properties and was released by the Company with respect to its obligations
under those leases.
The Partnership's leases with CFJ Properties were with full recourse to
the assets of CFJ Properties, but without recourse to Big West or Douglas Oil. A
default on one lease constituted a default on all other leases to the same
lessee by the Partnership and two other partnerships sponsored by affiliates of
the General Partner, all of whose travel plazas were leased to CFJ Properties,
Flying J Inc. or franchisees of FJFI.
For the fiscal year ended January 31, 1998, CFJ Properties reported net
income of $16 million on revenues of $1.3 billion. Revenues rose 7% from $1.2
billion in the prior year. The higher revenues resulted from the opening of six
new units and increases in fuel prices. Net income increased from $1.8 million
in the prior year due to higher gross profit margins.
During the fiscal year ended January 31, 1998, CFJ Properties reported
$41.7 million in net cash provided by operating activities. This cash, along
with the cash provided by financing activities, was used to make capital
expenditures. As of January 31, 1998, CFJ Properties reported cash balances of
approximately $3.8 million, with liquidity supported by net cash provided by
operating activities and a $150 million revolving line of credit with a bank. As
of January 31, 1998, CFJ Properties reported partners' capital of $155.5 million
and total assets of $463.7 million.
CFJ Properties leases travel plazas and equipment under non-cancelable
operating leases, which generally expire at various dates over the next 9 to 15
years. Payments under these leases were $17.5 million in fiscal 1998 and $17.3
million in fiscal 1997, including percentage lease payments.
The nine properties operated by CFJ Properties and Flying J Inc., and
leased from the Partnership, generated a combined fuel and non-fuel gross profit
(including other income) of approximately $27.5 million during the fiscal year
ended January 31, 1998 as compared to $24.4 million in fiscal year 1997. Total
travel plaza unit-level income for these nine properties (before depreciation
and allocated corporate overhead) totaled approximately $2.8 million in 1998
with five of the nine properties reporting positive unit-level income. The
remaining four properties reported net losses primarily due to higher expenses.
The combined result of the travel plaza unit-level income before depreciation
and allocated corporate overhead was up from $700,000 in the prior year due
largely to an increase in fuel and non-fuel sales volumes and an increase in
fuel prices. Volumes and margins were reduced in 1997 due to CFJ's curtailment
of its relationship with a third party billing company in June 1996. For CFJ
Properties' fiscal year ended January 31, 1998, the average unit-level base and
participating rents approximated 14.4% of the original cost of these properties.
Those properties that each represent over 10% of the Partnership's
total assets at December 31, 1998 are located in Eloy, Arizona; Clive, Iowa;
Truxton, Missouri; Amarillo, Texas; and Cheyenne, Wyoming.
3
<PAGE>
As of December 31, 1998, the Partnership, through its investment in the
Company, had invested in real estate located in nine states in the western and
central portions of the United States, and no real estate investments are
located outside of the United States. A presentation of revenues or assets by
geographic region is not applicable and would not be material to an
understanding of the Partnership's business taken as a whole.
The Partnership does not believe that any aspect of its business is
significantly seasonal in nature. No portion of the Partnership's business is
subject to renegotiation of profits or termination of contracts or subcontracts
at the election of the United States Government. The Partnership does not
manufacture any products and therefore does not require any raw materials in
order to conduct its business.
The Partnership is managed by the General Partner and therefore has no
employees of its own. FFCA Investor Services Corporation 86-B has no employees
because it does not conduct any business operations.
The Partnership has completed its assessment of its Year 2000
preparedness and has determined that any potential consequences of Year 2000
issues will not have a material effect on the partnership's business, results of
operation or financial condition. On March 22, 1999, the Partnership sold
substantially all of its assets to a third party. The sale of substantially all
of its assets will lead to the prompt liquidation of the partnership and the
distribution of net assets to the limited partners. The General Partner
anticipates that the partnership liquidation will be accomplished during 1999
and, accordingly, does not expect the Partnership to be in existence when the
year 2000 arrives.
The statements contained in this Annual Report on Form 10-K, regarding
the planned dissolution and liquidation of the Partnership, are forward-looking
statements and involve risks and uncertainties that could cause actual results
to differ materially from the results, financial or otherwise, or other
expectations described in the forward-looking statements. Although the General
Partner believes that the estimated timing and amounts of the liquidating
distributions are reasonable, the actual costs of the liquidation and
dissolution of the Partnership may vary from the estimates and that variation
could be material. In addition, the actual timing of the liquidating
distribution could vary from the estimate; therefore, forward-looking statements
should not be relied upon as a prediction of actual future results or
occurrences.
ITEM 2. PROPERTIES.
As of December 31, 1998, the Partnership, through its investment in the
Company, had ten travel plaza properties located in nine states, without
borrowings by the Company or the Partnership. The properties were acquired by
the Company during 1987 and 1988 with the net proceeds received by the
Partnership from the public offering of the Units.
On September 4, 1998, the Partnership entered into purchase agreements
with Flying J Inc. to sell substantially all of the Partnership'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 investors holding a majority of the partnership units was achieved in
October 1998. The sale transaction was completed on March 22, 1999. The lessee
of the Ellensburg, Washington travel plaza has signed a purchase agreement dated
March 30, 1999 related to the remaining travel plaza for a sales price of
$3,025,347. 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 the travel plazas sold.
4
<PAGE>
The travel plazas, divided into sections which serve both the
commercial and non-commercial traveler, generally offer a multi-use,
full-service operation including fuel facilities for the storage and sale of
automotive and diesel fuels, a 24-hour restaurant, a convenience store, restroom
facilities with private showers, and other amenities designed to meet the needs
of the trucking industry and the traveling public in general. Five of the
Company's properties represented over 10% of the Partnership's total assets at
December 31, 1998, as follows:
Approximate % of
Location Total Assets
-------- ------------
Eloy, Arizona 10%
Clive, Iowa 15%
Truxton, Missouri 10%
Amarillo, Texas 12%
Cheyenne, Wyoming 11%
The following is a description of the properties owned by the Company
at December 31, 1998.
BOISE, IDAHO. The Boise travel plaza was a completely renovated
full-service travel plaza, built on a parcel consisting of approximately 21
acres approximately 1/5 of a mile south of Interstate 84. During 1994, the
lessee of this travel plaza exercised its option to purchase the motel portion
of the travel plaza comprising two and one-half acres of land, the motel
building and motel equipment. In addition, approximately one-half acre of land
was sold to the State of Idaho Transportation Department, leaving the Boise
travel plaza with approximately 18 acres, which was sold to CFJ Properties in
February 1998.
POST FALLS, IDAHO. The Post Falls travel plaza is a full-service travel
plaza, built on a parcel consisting of approximately 8 acres of land, located at
the northeast off-ramp of Interstate Highway 90.
BUTTE, MONTANA. The Butte travel plaza was a pre-existing Husky truck
stop, renovated in 1988, and is located on a parcel consisting of approximately
9.01 acres of land along the north side of I-15 and I-90.
ELLENSBURG, WASHINGTON. The Ellensburg travel plaza was a pre-existing
Husky truck stop, renovated in 1987, and is located on a parcel consisting of
approximately 8.06 acres of land just south of I-90 and one mile west of I-82.
This travel plaza is expected to be sold in April 1999.
AMARILLO, TEXAS. The Amarillo travel plaza was a pre-existing Husky
truck stop, renovated in 1989, and is located on a parcel consisting of 16.32
acres of land five miles west of the I-27 and I-40 interchange and four miles
east of downtown Amarillo.
5
<PAGE>
CLIVE, IOWA. The Clive travel plaza is a full-service travel plaza,
built on a parcel consisting of 26.6 acres of land, located at the southwest
corner of I-35/80. Clive, Iowa is located northwest of Des Moines.
ELOY, ARIZONA. The Eloy travel plaza is a full-service travel plaza,
built on a 15-acre parcel of land, located three miles south of the I-8 and I-10
junction. Eloy, Arizona is located 60 miles south of Phoenix and 53 miles north
of Tucson.
THOUSAND PALMS, CALIFORNIA. The Thousand Palms travel plaza is a
full-service travel plaza, built on a 5.01-acre parcel of land north of I-10.
Thousand Palms is situated midway between the Arizona/California border and Los
Angeles.
TRUXTON, MISSOURI. The Truxton travel plaza is a full-service travel
plaza, built on a parcel of land of approximately 15 acres located south of the
I-70 and Highway B junction. Truxton, Missouri is located 55 miles northwest of
St. Louis.
CHEYENNE, WYOMING. The Cheyenne travel plaza is a full-service travel
plaza, built on a 15.2-acre parcel of land west of I-25. Downtown Cheyenne is
located three miles north of the site.
EVANSTON, WYOMING. The Evanston travel plaza is located on a 5.42-acre
parcel of land along the north side of Highway 30 and north of I-80. Evanston is
approximately two miles from the Utah border.
FFCA Investor Services Corporation 86-B has no interest in any real or
personal property independent of the Partnership.
ITEM 3. LEGAL PROCEEDINGS.
Neither the Co-Registrants nor their properties are parties to, or
subject to, any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
A proposal to sell substantially all of the Company's assets was
submitted to a vote of the security holders during the fourth quarter of fiscal
year 1998. A Consent Solicitation Statement dated September 11, 1998 relating to
the proposal was sent to the security holders. Voting was completed on October
26, 1998 without a meeting. The results of the voting are as follows: FOR,
32,591 votes; AGAINST, 4,124 votes, and ABSTAIN, 1,354 votes.
PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED SECURITY HOLDER MATTERS.
MARKET INFORMATION. During 1998, there was no established public
trading market for the Units, and it is not anticipated that an established
public trading market for the Units will develop.
HOLDERS. As of March 9, 1999, there were 4,087 record holders of the
Units.
DISTRIBUTIONS. For the two most recent fiscal years, the Partnership
made the following cash distributions to the Holders:
6
<PAGE>
1998
Per Unit
Distribution Total Annualized
------------------- -------------------- Cash
Date of Number Cash from Cash from Yield from
Distribution of Units Operations Capital Operations Capital Operations
- ------------ -------- ---------- ------- ---------- ------- ----------
December 31 51,687 $24.80 -- $1,281,838 -- 11.1%
September 30 51,687 26.45 -- 1,367,121 -- 11.8%
June 30 51,687 25.52 -- 1,319,052 -- 11.4%
March 31 51,687 26.02 $65.50 1,344,896 $3,385,499 10.8%
1997
Per Unit
Distribution Total Annualized
------------------- -------------------- Cash
Date of Number Cash from Cash from Yield from
Distribution of Units Operations Capital Operations Capital Operations
- ------------ -------- ---------- ------- ---------- ------- ----------
December 31 51,687 $26.43 -- $1,366,087 -- 11.0%
September 30 51,687 27.68 -- 1,430,696 -- 11.5%
June 30 51,687 26.81 -- 1,385,728 -- 11.2%
March 31 51,687 25.47 -- 1,316,468 -- 10.6%
Cash from operations, defined as disbursable cash in the agreement of
limited partnership which governs the Partnership, is distributed to the
Holders. Any variations in the amount of distributions from quarter to quarter
are due to fluctuations in net cash provided by operating activities. Reference
is made to Item 7 below for a discussion and analysis of such fluctuations. Cash
proceeds from the sale of property are distributed to the Holders as a return of
capital. The Adjusted Capital Contribution of a Holder is generally the Holder's
initial capital contribution reduced by the cash distributions to the Holders of
proceeds from the sale of Partnership properties and reduced by any other cash
distributions other than from operations. The Adjusted Capital Contribution per
Unit of the Holders, as defined in the agreement of limited partnership which
governs the Partnership, was $894.83 as of December 31, 1998. At December 31,
1995, the Partnership declared a return of capital of $2,050,000 ($39.66 per
Unit) related to the 1994 sale of the Boise, Idaho lodging premises and
equipment, which was distributed in January 1996. At March 31, 1998, the
Partnership declared a return of capital of $3,385,784 ($65.50 per Unit) related
to the 1998 sale of the remainder of the Boise, Idaho travel plaza, which was
distributed in April 1998. Any differences in the amounts of distributions set
forth in the above tables from the information contained in Item 6 below are due
to rounding the amount of distributions payable per Unit down to the nearest
whole cent and carrying any fractional cents forward from one period to the
next.
The Partnership expects to make cash distributions from operations to
the Holders through the date of the sale of the nine travel plazas on March 22,
1999, and on the Ellensburg, Washington travel plaza until it is sold. The
7
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liquidation of the Partnership is expected to be completed in June 1999. The
General Partner estimates that the liquidating distribution will be
approximately $924 per limited partnership unit. Although the General Partner
believes that the amount of the liquidating distribution is reasonable, the
actual costs of the liquidation and dissolution of the Partnership may vary from
the estimates and that variation could be material. As part of the sale of the
travel plazas, approximately $320,000 (representing less than one percent of the
aggregate sales price) may, at the General Partner's discretion, 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, dissolution and winding up of the affairs of the
Partnership during a period of up to 36 months following the liquidation date.
At the end of this period, final decisions will be made in settlement of all
disputed claims, if any, and the remaining balance of the Trust Fund will be
disbursed to the Holders.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction
with the Consolidated Financial Statements and the related notes attached as an
exhibit to this Report.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $ 7,813,299 $ 6,297,173 $ 6,289,831 $ 6,563,996 $7,179,846
Net Income 5,798,859 4,239,903 4,013,518 3,944,780 4,375,249
Net Income Per Unit 111.07 81.21 76.87 75.56 83.80
Total Assets 24,589,017 27,480,329 28,759,012 32,378,912 34,094,240
Distributions of Cash from
Operations to Holders 5,312,684 5,499,084 5,440,957 5,592,710 5,674,532
Distributions of Cash from
Operations Per Unit 102.79 106.39 105.27 108.20 109.79
Return of Capital to
Holders 3,385,784 -- -- 2,050,000 --
Return of Capital Per Unit 65.51 -- -- 39.66 --
</TABLE>
The 1994 and 1998 results of operations include gains totaling $653,477
and $1,725,741 on the sale of the motel portion of the Boise, Idaho travel plaza
in 1994 and the sale of the remainder of the travel plaza in 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership received $51,687,000 in gross proceeds from its public
offering of the Units. After deducting organizational and offering expenses,
8
<PAGE>
including sales commissions, the Partnership, through the Company, invested the
net offering proceeds of $45,613,778 in 11 travel plazas. The rental payments
from lessees of the properties have been the Partnership's primary source of
income. As of December 31, 1998, the Partnership had cash and marketable
securities aggregating $2,202,940 of which $1,281,838 was paid out to the
Holders in January 1999 as their fourth quarter distribution for 1998.
The Partnership entered into purchase agreements with Flying J Inc. on
September 4, 1998 to sell substantially all of the Partnership'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 investors holding a majority of the partnership units was achieved on
October 26, 1998. The sale transaction was completed on March 22, 1999 and the
Partnership 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 investors. The lessee of the Ellensburg, Washington
travel plaza has signed a purchase agreement dated March 30, 1999 related to the
remaining travel plaza for a sales price of $3,025,347, which will result in a
pro forma gain of approximately $1.8 million. 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 sold. A subordinated real estate disposition fee of approximately $1.5
million will be paid to the General Partner related to the sales of the travel
plazas. Upon consummation of the sale of the Ellensburg, Washington travel
plaza, the General Partner will begin the process of winding down the affairs of
the Partnership that includes liquidation and distribution of assets to the
investors in accordance with the Partnership agreement. The liquidation of the
Partnership is expected to be completed in June 1999.
As part of the sale of the travel plazas, approximately $320,000
(representing less than one percent of the aggregate sales price) may, at the
General Partner's discretion, 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, dissolution
and winding up of the affairs of the Partnership during a period of up to 36
months following the liquidation date. At the end of this period, final
decisions will be made in settlement of all disputed claims, if any, and the
remaining balance of the Trust Fund will be disbursed to the investors.
In February 1998, the Partnership sold the Boise, Idaho travel plaza
(the Boise Plaza) to CFJ Properties for a cash sales price of $3,385,784. The
Boise Plaza was a full-service travel plaza, built on a parcel consisting of
approximately 21 acres. Proceeds from the Boise Plaza sale of $65.50 per limited
partnership unit were distributed to the limited partners in April 1998 as a
partial return of their adjusted capital contribution. The Partnership accrued a
subordinated real estate disposition fee equal to three percent of the selling
price of the Boise Plaza (amounting to $101,574) payable to the General Partner
of the Partnership.
FFCA Investor Services Corporation 86-B has no capital resources and
conducted no operations in 1998.
9
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RESULTS OF OPERATIONS
FISCAL YEAR ENDED DECEMBER 31, 1998
COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 1997
The Partnership's total revenues increased to $7,813,299 for the year
ended December 31, 1998 from $6,297,173 for the year ended December 31, 1997
primarily due to the gain on the sale of the Boise, Idaho travel plaza of
$1,725,741. Participating rental revenues also increased from $1,897,489 in 1997
to $1,935,301 in 1998 due to higher travel plaza fuel and non-fuel sales
volumes. Partially offsetting the increase in revenues, was a decrease in rental
revenues due to the Boise, Idaho travel plaza sale in February 1998, which
resulted in a monthly reduction of $26,049 in rental revenue.
Total Partnership expenses for 1998 increased to $2,007,855 from
$2,052,340 in 1997, mainly resulting from a decrease in depreciation expense of
$124,922 related to the sale of travel plaza equipment. Partially offsetting
this decrease was an increase in general partner fees of $82,952 primarily
resulting from the accrual of the subordinated real estate disposition fee of
$101,574 related to the Boise, Idaho travel plaza sale. Net income for 1998 was
$ 5,798,859 as compared to $4,239,903 for 1997, representing an increase of
approximately 37%, primarily due to the gain on sale of property.
FISCAL YEAR ENDED DECEMBER 31, 1997
COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 1996
The Partnership's total revenues increased to $6,297,173 for the year
ended December 31, 1997 from $6,289,831 for the year ended December 31, 1996.
The overall increase in revenues is due to an increase in participating rentals.
Participating rental revenues increased to $1,897,489 in 1997 from $1,818,632 in
1996 due to higher travel plaza sales volumes. Partially offsetting the increase
in participating rentals, was a decrease in rental revenues due to a partial
land sale in the first quarter of 1996, which resulted in a monthly reduction of
$2,128 in rental revenue.
Total Partnership expenses for 1997 were $2,052,340, representing a
decrease of approximately 10% from $2,271,611 in 1996, primarily resulting from
a decrease in depreciation expense of $243,800 related to the sale of travel
plaza equipment in 1996. Net income for 1997 was $4,239,903 as compared to
$4,013,518 for 1996, representing an increase of approximately 6%.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The financial instruments held by the Partnership and the Company at
December 31, 1998 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. These
financial instruments are short- term in nature and do not subject the
Partnership or the Company to a material exposure to changes in interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supporting schedules of the Co-Registrants
required by Regulation S-X are attached to this Report. Reference is made to
Item 14 below for an index to the financial statements and financial statement
schedules.
10
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
The Partnership, the General Partner and the Company have no directors
or executive officers. PCMC is the managing general partner and Morton H.
Fleischer is the individual general partner of the General Partner. PCMC,
through the General Partner, has responsibility for all of the Partnership's
operations. The directors and executive officers of PCMC and FFCA Investor
Services Corporation 86-B are as follows:
PCMC
DIRECTOR
Name Position Held Since
---- -------------------
Morton H. Fleischer 1993
OFFICERS
Associated
With PCMC
Name Positions Held Since
---- -------------- -----
Morton H. Fleischer President and Chief Executive Officer 1993
John R. Barravecchia Executive Vice President, Chief Financial 1993
Officer, Treasurer and Assistant Secretary
Christopher H. Volk Executive Vice President, Chief Operating 1993
Officer, Secretary and Assistant Treasurer
Dennis L. Ruben Executive Vice President, General Counsel 1994
and Assistant Secretary
Stephen G. Schmitz Executive Vice President, Chief Investment 1995
Officer and Assistant Secretary
Catherine F. Long Senior Vice President-Finance, Principal 1993
Accounting Officer, Assistant Secretary and
Assistant Treasurer
11
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 86-B
DIRECTOR
Name Position Held Since
---- -------------------
Morton H. Fleischer, Chairman 1986
OFFICERS
Position Held
Name Positions Held Since
---- -------------- -----
Morton H. Fleischer Chairman of the Board of Directors 1986
John R. Barravecchia President, Secretary and Treasurer 1990
Christopher H. Volk Vice President, Assistant Secretary and 1994
Assistant Treasurer
All of the foregoing directors and executive officers have been elected
to serve a one-year term and until their successors are elected and qualified.
There are no arrangements or understandings between or among any of the officers
or directors and any other person pursuant to which any officer or director was
selected as such. There are no family relationships among any directors and
officers.
BUSINESS EXPERIENCE
The business experience during the past five years of each of the above
directors and executive officers is as follows:
MORTON H. FLEISCHER, age 62, has served as a director, President and
Chief Executive Officer of PCMC since 1993, and as Chairman of the Board of FFCA
Investor Services Corporation 86-B since 1986. Mr. Fleischer also serves as
President, Chief Executive Officer and Chairman of the Board of Franchise
Finance Corporation of America, a Delaware corporation ("FFCA") having
previously served as a director, President and Chief Executive Officer of
Franchise Finance Corporation of America I ("FFCA I"), a predecessor of FFCA,
from 1980 to 1994. Mr. Fleischer is an individual general partner of the General
Partner, and is a general partner (or general partner of a general partner) of
the following public limited partnerships: Participating Income Properties II,
L.P.; Participating Income Properties III Limited Partnership; and Scottsdale
Land Trust Limited Partnership.
JOHN R. BARRAVECCHIA, age 43, has served as President, Secretary and
Treasurer of FFCA Investor Services Corporation 86-B since 1990. He has served
as Chief Financial Officer of PCMC since 1993 and as Senior Vice President and
Treasurer since 1994. In 1995, Mr. Barravecchia was named Executive Vice
President of PCMC. Mr. Barravecchia currently serves as Executive Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary of FFCA
and served in various capacities for FFCA I from 1984 to 1994. He was appointed
Vice President and Chief Financial Officer of FFCA I in December 1986, and
Senior Vice President in October 1989. Mr. Barravecchia was elected as a
director of FFCA I in March 1993 and Treasurer in December 1993. Prior to
joining FFCA I, Mr. Barravecchia was associated with the international public
accounting firm of Arthur Andersen LLP.
12
<PAGE>
CHRISTOPHER H. VOLK, age 42, has served as Vice President, Assistant
Secretary and Assistant Treasurer of FFCA Investor Services Corporation 86-B
since 1994, and has served as Secretary of PCMC since 1993 and Senior Vice
President-Underwriting and Research since 1994. In 1995, Mr. Volk was named
Executive Vice President and Chief Operating Officer of PCMC. Mr. Volk currently
serves as Executive Vice President, Chief Operating Officer, Secretary and
Assistant Treasurer of FFCA. He joined FFCA I in 1986 and served in various
capacities in FFCA I's capital preservation and underwriting areas prior to
being named Vice President-Research in October 1989. In December 1993, he was
appointed Secretary and Senior Vice President-Underwriting and Research of FFCA
I, and he was elected as a director of FFCA I in March 1993. Prior to joining
FFCA I, Mr. Volk was employed for six years with the National Bank of Georgia,
where his last position was Assistant Vice President and Senior Correspondent
Banking Credit Officer.
DENNIS L. RUBEN, age 46, has served as Senior Vice President and
General Counsel for PCMC since 1994. Mr. Ruben was named Executive Vice
President, General Counsel and Assistant Secretary of PCMC in February 1997. He
currently serves in the same capacity for FFCA and served as attorney and
counsel for FFCA I from 1991 to 1994. In December 1993, he was appointed Senior
Vice President and General Counsel of FFCA I. Prior to joining FFCA I, Mr. Ruben
was associated with the law firm of Kutak Rock from 1980 until March 1991. Mr.
Ruben became a partner of Kutak Rock in 1984.
STEPHEN G. SCHMITZ, age 44, has served as Senior Vice
President-Corporate Finance of PCMC since January 1996. He was named Executive
Vice President, Chief Investment Officer and Assistant Secretary of PCMC in
February 1997. He currently serves in the same capacity for FFCA. Mr. Schmitz
served in various positions as an officer of FFCA I from 1986 to June 1, 1994.
CATHERINE F. LONG, age 42, has served as Vice President-Finance and
Principal Accounting Officer of PCMC since 1994, and Vice President from 1993 to
1994. In February 1997 she was named Senior Vice President-Finance of PCMC. She
currently serves as Senior Vice President-Finance, Principal Accounting Officer,
Assistant Secretary and Assistant Treasurer of FFCA and served as Vice
President-Finance of FFCA I from 1990 to 1993. In December 1993, she was
appointed Principal Accounting Officer of FFCA I. Prior to joining FFCA I, Ms.
Long was associated with the international public accounting firm of Arthur
Andersen LLP.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Co-Registrants during fiscal year 1998 and Forms 5 and
amendments thereto furnished to the Co-Registrants with respect to fiscal year
ended December 31, 1998 (the "Forms"), and any written representations by the
directors and executive officers of FFCA Investor Services Corporation 86-B and
PCMC, the Co-Registrants have not identified herein any such person that failed
to file on a timely basis the Forms required by Section 16(a) of the Securities
Exchange Act of 1934 for fiscal year 1998.
13
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The Partnership is required to pay an acquisition fee and a
subordinated real estate disposition fee to the General Partner, and the General
Partner is entitled to receive a share of cash distributions, when and as made
to the Holders, a share of profits and losses and a subordinated share of any
sale proceeds. Reference is made to Note (1) and Note (5) of the Notes to
Consolidated Financial Statements of the Partnership and the Company which are
filed with this Report for a description of the fees and distributions paid in
1998.
FFCA Investor Services Corporation 86-B serves as assignor and initial
limited partner without compensation from the Partnership. It is not entitled to
any share of the profits, losses or cash distributions of the Partnership. The
director and officers of FFCA Investor Services Corporation 86-B serve without
compensation from FFCA Investor Services Corporation 86-B or the Partnership.
PCMC is entitled to a one-tenth of one percent share of the profits and
losses of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of March 9, 1999, no person or group was known by the Partnership to
own directly or beneficially more than 5% of the outstanding Units of the
Partnership.
None of the General Partner of the Partnership and its general partners
owned any Units as of March 9, 1999. None of the directors and officers of the
General Partner's corporate general partner, PCMC, owned any Units as of March
9, 1999. PCMC is owned by Morton H. Fleischer.
FFCA Investor Services Corporation 86-B has an interest in the
Partnership as a limited partner and it serves as the owner of record of all of
the limited partnership interests assigned by it to the Holders. However, FFCA
Investor Services Corporation 86-B has no right to vote its interest on any
matter and it must vote the assigned interests as directed by the Holders. FFCA
Investor Services Corporation 86-B is a wholly-owned subsidiary of PCMC.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Since the beginning of the Co-Registrants' last fiscal year, there have
been no significant transactions or business relationships among the
Co-Registrants, the Company, and PCMC or their affiliates or their management,
other than as described in Items 1, 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
1. FINANCIAL STATEMENTS.
THE PARTNERSHIP AND THE COMPANY
Report of independent public accountants
Consolidated Balance Sheets as of December 31,
1998 and 1997
14
<PAGE>
Consolidated Statements of Income for the years
ended December 31, 1998, 1997 and 1996
Consolidated Statements of Changes In Partners'
Capital for the years ended December 31, 1998,
1997 and 1996
Consolidated Statements of Cash Flows for the
years ended December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
FFCA INVESTOR SERVICES CORPORATION 86-B
Report of independent public accountants
Balance Sheet as of December 31, 1998
Notes to Balance Sheet
2. FINANCIAL STATEMENT SCHEDULES.
Schedule III-Schedule of Real Estate and
Accumulated Depreciation as of December 31, 1998
All other schedules are omitted since they are not
required, are inapplicable, or the required
information is included in the financial
statements or notes thereto.
3. EXHIBITS.
The following is a complete list of exhibits filed
as part of this Form 10-K. For electronic filing
purposes only, this report contains Exhibit 27,
the Financial Data Schedule. Exhibit numbers
correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, the following
document, filed with the Securities and Exchange
Commission as Exhibit 4 to the Co-Registrants'
Form 10-K for the fiscal year ended December 31,
1989, Commission File No. 0-16720, is incorporated
herein by this reference.
Second Amended and Restated Certificate and
Agreement of Limited Partnership which
governs the Partnership, as filed with the
Secretary of State of Delaware on April 16,
1987.
Pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, the following
documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants' Form
10-K for the fiscal year ended December 31, 1986,
Commission File No. 0-16720, are incorporated
herein by this reference.
15
<PAGE>
1986 Form 10-K
Exhibit No.
-----------
Depositary Agreement of the Partnership. 3-C
The Certificate of Incorporation which 3-D
governs FFCA Investor Services Corporation
86-B, as filed with the Secretary of State of
Delaware on June 23, 1986.
Bylaws of FFCA Investor Services Corporation 3-E
86-B.
Pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, the following
document, filed with the Securities and Exchange
Commission on October 8, 1986 as Exhibit 10(e) to
the Co-Registrants' Registration Statement on Form
S-11, Registration No. 33-7502, is incorporated
herein by this reference.
Operating Agreement, dated October 7, 1986,
by and among FFCA Management Company, L.P.,
FFCA/PIP 1986 Property Company, Flying J Inc.
and Flying J Franchise Inc.
Pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, the following
documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrant's Form
8-K dated March 22, 1999, Commission File No.
0-16720, are incorporated herein by this
reference.
March 22, 1999,
Form 8-K
Exhibit No.
-----------
Purchase Agreement dated as of September 4, 10.01
1998, between FFCA/PIP 1986 Property Company
and CFJ Plaza Company III LLC
Purchase Agreement dated as of September 4, 10.02
1998, between FFCA/PIP 1986 Property Company
and FJI Plaza Company LLC
Purchase Agreement dated as of September 4, 10.03
1998, between FFCA/PIP 1986 Property Company
and Flying J Real Estate Enterprises Inc.,
including the First Amendment thereto dated
as of March 22, 1999
Purchase Agreement dated as of September 4, 10.04
1998, between FFCA/PIP 1986 Property Company
and CFJ Plaza Company II LLC
Purchase Agreement dated as of September 4, 10.05
1998, between FFCA/PIP 1986 Property Company
and CFJ Plaza Company I LLC
Extension Agreement dated March 22, 1999 10.06
Assignment of purchase agreement dated as of 10.07
March 22, 1999, between Flying J Real Estate
Enterprises Inc. and FJI Plaza Company LLC
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the Co-Registrants
during the last quarter of the fiscal year ended
December 31, 1998.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Partnership has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
PARTICIPATING INCOME PROPERTIES 1986, L.P.
By: FFCA MANAGEMENT COMPANY LIMITED
PARTNERSHIP, General Partner
Date: April 8, 1999 By /s/ Morton H. Fleischer
----------------------------------------
Morton H. Fleischer, General Partner
By: PERIMETER CENTER MANAGEMENT COMPANY,
Corporate General Partner
Date: April 8, 1999 By /s/ Morton H. Fleischer
----------------------------------------
Morton H. Fleischer, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Partnership and in the capacities and on the dates indicated.
SIGNATURES OF REQUIRED OFFICERS AND DIRECTORS OF PERIMETER CENTER
MANAGEMENT COMPANY, CORPORATE GENERAL PARTNER OF FFCA MANAGEMENT
COMPANY LIMITED PARTNERSHIP, GENERAL PARTNER OF PARTICIPATING
INCOME PROPERTIES 1986, L.P.
Date: April 8, 1999 By /s/ Morton H. Fleischer
----------------------------------------
Morton H. Fleischer, President, Chief
Executive Officer and Director
Date: April 8, 1999 By /s/ John Barravecchia
-----------------------------------------
John Barravecchia, Executive Vice
President, Chief Financial Officer,
Treasurer and Assistant Secretary
Date: April 8, 1999 By /s/ Catherine F. Long
-----------------------------------------
Catherine F. Long, Senior Vice President-
Finance, Principal Accounting Officer,
Assistant Secretary and Assistant
Treasurer
17
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, 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: April 8, 1999 By /s/ Morton H. Fleischer
-----------------------------------------
Morton H. Fleischer, Sole Director
Date: April 8, 1999 By /s/ John Barravecchia
-----------------------------------------
John Barravecchia, President, Secretary,
Treasurer, Principal Financial Officer and
Principal Accounting Officer
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Participating Income Properties 1986, L.P.:
We have audited the accompanying consolidated balance sheets of PARTICIPATING
INCOME PROPERTIES 1986, L.P. (a Delaware limited partnership) and affiliate as
of December 31, 1998 and 1997, and the related consolidated statements of
income, changes in partners' capital and cash flows for each of the three years
in the period ended December 31, 1998. These financial statements and the
schedule referred to below are the responsibility of the partnership's general
partner. Our responsibility is to express an opinion on these financial
statements and 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 financial statements referred to above present fairly, in
all material respects, the financial position of Participating Income Properties
1986, L.P. and affiliate as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of Real Estate and
Accumulated Depreciation is presented for purposes of complying with the
Securities and Exchange Commission's rule and is not a required part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
March 22, 1999.
19
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1998 AND 1997
1998 1997
------------ -----------
ASSETS
CASH AND CASH EQUIVALENTS $ 2,202,940 $ 2,402,680
RECEIVABLES FROM LESSEES 146,270 161,608
SECURED NOTES RECEIVABLE 66,595 100,569
DEFERRED COSTS (Note 6) 208,904 --
PROPERTY SUBJECT TO OPERATING LEASES (Note 3) 21,964,308 24,815,472
----------- -----------
Total assets $24,589,017 $27,480,329
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 1,282,310 $ 1,366,497
PAYABLE TO GENERAL PARTNER 177,582 --
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 20,328 52,297
RENTAL DEPOSITS 114,400 114,400
----------- -----------
Total liabilities 1,594,620 1,533,194
----------- -----------
MINORITY INTEREST (Note 1) (15,705) (16,239)
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General partner (166,879) (171,205)
Limited partners 23,176,981 26,134,579
----------- -----------
Total partners' capital 23,010,102 25,963,374
----------- -----------
Total liabilities and partners' capital $24,589,017 $27,480,329
=========== ===========
The accompanying notes are an integral part of
these consolidated balance sheets.
20
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
---------- ---------- ----------
REVENUES:
Rental $4,020,124 $4,288,989 $4,295,373
Participating rentals 1,935,301 1,897,489 1,818,632
Interest and other 132,133 110,695 99,868
Gain on sale of property 1,725,741 -- 75,958
---------- ---------- ----------
7,813,299 6,297,173 6,289,831
---------- ---------- ----------
EXPENSES:
General partner fees (Note 5) 632,311 549,359 543,553
Depreciation 1,191,121 1,316,043 1,559,843
Operating 184,423 186,938 168,215
---------- ---------- ----------
2,007,855 2,052,340 2,271,611
---------- ---------- ----------
MINORITY INTEREST IN INCOME (Note 1) 6,585 4,930 4,702
---------- ---------- ----------
NET INCOME $5,798,859 $4,239,903 $4,013,518
========== ========== ==========
NET INCOME ALLOCATED TO (Note 1):
General partner $ 57,989 $ 42,399 $ 40,135
Limited partners 5,740,870 4,197,504 3,973,383
---------- ---------- ----------
$5,798,859 $4,239,903 $4,013,518
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (based on 51,687 units held by
limited partners) $ 111.07 $ 81.21 $ 76.87
========== ========== ==========
The accompanying notes are an integral part of
these consolidated statements.
21
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
General Limited
Partner Partners Total
------- -------- -----
BALANCE, December 31, 1995 $(143,234) $28,903,733 $28,760,499
Net income 40,135 3,973,383 4,013,518
Distributions to partners,
cash from operations (54,959) (5,440,957) (5,495,916)
--------- ----------- -----------
BALANCE, December 31, 1996 (158,058) 27,436,159 27,278,101
Net income 42,399 4,197,504 4,239,903
Distributions to partners,
cash from operations (55,546) (5,499,084) (5,554,630)
--------- ----------- -----------
BALANCE, December 31, 1997 (171,205) 26,134,579 25,963,374
Net income 57,989 5,740,870 5,798,859
Distributions to partners,
cash from operations (53,663) (5,312,684) (5,366,347)
Return of capital to limited
partners (Note 1) -- (3,385,784) (3,385,784)
--------- ----------- -----------
BALANCE, December 31, 1998 $(166,879) $23,176,981 $23,010,102
========= =========== ===========
The accompanying notes are an integral part of
these consolidated statements.
22
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,798,859 $ 4,239,903 $ 4,013,518
Adjustments to net income:
Depreciation 1,191,121 1,316,043 1,559,843
Gain on sale of property (1,725,741) -- (75,958)
Minority interest in income 6,585 4,930 4,702
Change in assets and liabilities:
Decrease (increase) in receivables
from lessees 15,338 (11,805) (5,620)
Increase in deferred costs (208,904) -- --
Increase (decrease) in payable to
general partner 177,582 (10,304) (7,401)
Increase (decrease) in accounts
payable and accrued liabilities (31,969) 2,593 (11,384)
----------- ----------- -----------
Net cash provided by operating
activities 5,222,871 5,541,360 5,477,700
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 3,385,784 -- 811,441
Principal collections on secured notes
receivable 33,974 30,754 26,588
----------- ----------- -----------
Net cash provided by investing
activities 3,419,758 30,754 838,029
----------- ----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Partner distributions declared (Note 1) (5,366,347) (5,554,630) (5,495,916)
Return of capital to limited partners
declared (Note 1) (3,385,784) -- --
Increase (decrease) in distribution
payable (84,187) 45,071 (2,117,230)
Distributions to minority interest (6,051) (6,246) (6,189)
----------- ----------- -----------
Net cash used in financing
activities (8,842,369) (5,515,805) (7,619,335)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (199,740) 56,309 (1,303,606)
CASH AND CASH EQUIVALENTS, beginning
of year 2,402,680 2,346,371 3,649,977
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end
of year $ 2,202,940 $ 2,402,680 $ 2,346,371
=========== =========== ===========
The accompanying notes are an integral part of
these consolidated statements.
23
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
1) ORGANIZATION:
Participating Income Properties 1986, L.P. (the Partnership) was formed
on June 23, 1986 under the Delaware Revised Uniform Limited Partnership Act. The
Partnership invests as a co-general partner with Perimeter Center Management
Company (PCMC) in FFCA/PIP 1986 Property Company, a Delaware general partnership
(the Property Company). The general partner of the Partnership is FFCA
Management Company Limited Partnership (the General Partner) of which PCMC is a
general partner. The Property Company was organized to purchase new and existing
"Flying J Travel Plaza" facilities, including land, buildings and equipment to
be leased on a net basis to Flying J Inc. and certain franchisees of Flying J
Franchise Inc. At December 31, 1998, seven of the ten travel plazas owned by the
Partnership (eight of the eleven properties owned at December 31, 1997) were
leased to CFJ Properties (CFJ), an affiliate of Flying J Inc. (one property was
sold in 1998). One of the travel plazas was leased to Flying J Inc. in 1998 and
1997 and the remaining two were leased to franchisees that operate Flying J
Travel Plazas. "Flying J Travel Plaza" facilities offer a full-service
operation, generally including fuel facilities, a restaurant, convenience store
and other amenities for use by the trucking industry and traveling public in
general. The Partnership and the Property Company will expire December 31, 2029
and 2028, respectively, or sooner (see Note 6), in accordance with the terms of
their respective partnership agreements.
Investors acquired units of assigned limited partnership interest (the
limited partnership units) in the Partnership from FFCA Investor Services
Corporation 86-B (the Initial Limited Partner), a Delaware corporation
wholly-owned by PCMC. Holders of the units have all of the economic benefits and
substantially the same rights and powers of limited partners; therefore, they
are referred to herein as "limited partners."
The Partnership agreement provides for allocation of profits and losses
and cash distributions among its partners as follows:
Profits and Losses: Allocated 99% to the limited partners and 1% to the
General Partner.
Cash Distributions: All cash from operations, as defined, after payment
of fees to the General Partner is allocated 99% to the limited partners
and 1% to the General Partner. Cash proceeds from the sale of property
are not considered cash from operations but, when distributed,
represent a partial return of the limited partners' initial $1,000 per
unit capital contribution. There have been two such distributions to
date, therefore, the limited partner Adjusted Capital Contribution, as
defined in the Partnership agreement, at December 31, 1998 is $894.83
per unit.
The following is a reconciliation of net income to cash distributions
from operations as defined in the Partnership agreement:
1998 1997 1996
----------- ----------- -----------
Net income $ 5,798,859 $4,239,903 $4,013,518
Adjustments to reconcile net income
to cash distributions declared:
Depreciation 1,191,121 1,316,043 1,559,843
Gain on sale of property (1,725,741) -- (75,958)
Accrued disposition fee to
General Partner (Note 5) 101,574 -- --
Change in minority interest 534 (1,316) (1,487)
----------- ---------- ----------
Cash distributions declared
from operations $ 5,366,347 $5,554,630 $5,495,916
=========== ========== ==========
24
<PAGE>
The Property Company agreement provides for allocation of profits and
losses and cash distributions among its partners as follows:
Profits and Losses: Allocated 99.9% to the Partnership and .1% to PCMC.
Cash Distributions: All cash from operations, as defined, is allocated
99.9% to the Partnership and .1% to PCMC.
2) SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION AND FINANCIAL STATEMENTS - The accompanying consolidated
financial statements include the accounts of the Partnership and the Property
Company in which the Partnership holds a substantial interest, as discussed in
Note 1. All significant intercompany accounts and transactions have been
eliminated in consolidation. The consolidated financial statements are prepared
on the accrual basis of accounting. The preparation of the financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although management believes
its estimates are reasonable, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS - Investment securities that are highly
liquid and have maturities of three months or less at the date of purchase are
classified as cash equivalents. Cash equivalents include United States Treasury
securities of $1,560,172 and $2,091,603 at December 31, 1998 and 1997,
respectively, and bank repurchase agreements (which are collateralized by United
States Treasury and Government obligations) of $350,093 at December 31, 1998.
Short-term investments are recorded at cost plus accrued interest, which
approximates market value.
LEASES - The Partnership leases its property under long-term net leases
which are classified as operating leases. Rental revenue from operating leases
is recognized as it is earned.
DEPRECIATION - Depreciation on buildings is provided using the
straight-line method based upon an estimated useful life of 24 years. Equipment
is depreciated over an estimated useful life of eight years, assuming a 10%
salvage value at the end of its useful life. The cost of properties includes
miscellaneous acquisition and closing costs.
3) PROPERTY SUBJECT TO OPERATING LEASES:
The following is an analysis of the Partnership's investment, at cost,
in property subject to operating leases by major class at December 31, 1998 and
1997:
1998 1997
----------- -----------
Land $ 5,766,190 $ 6,773,272
Buildings 28,456,079 29,669,322
Equipment 626,781 626,781
----------- -----------
34,849,050 37,069,375
Less - Accumulated depreciation 12,884,742 12,253,903
----------- -----------
$21,964,308 $24,815,472
=========== ===========
Lease agreements provide for monthly base rentals equal to a percentage
of the property's cost. As additional rent, the Property Company receives a
portion of the operating revenues of the lessee equal to a percentage of gross
receipts (participating rentals) from travel plaza facilities and fuel sales.
The terms of the leases are eight years for equipment and 20 years for land and
buildings. During the year ended December 31, 1998, CFJ and Flying J Inc.,
accounting for 88% of total rental and participating rental revenue, operated a
total of nine Partnership properties in Idaho, Montana, California, Arizona,
Iowa, Missouri, Texas and Wyoming.
25
<PAGE>
Scheduled minimum future rentals (excluding participating rentals) under
noncancellable operating leases as of December 31, 1998, are $4 million per year
through the year 2007.
All of the Partnership's property comprising the travel plazas was
subject to agreements entered into with Flying J Inc. on September 4, 1998 in
which Flying J Inc. agreed to buy the property (subject to certain conditions)
for cash totaling approximately $48.5 million (see Note 6). The Partnership was
the beneficiary of a letter of credit from CFJ in the amount of $599,304 (to be
used as security for CFJ's lease payments), which was released on the date of
sale.
The General Partner, the Property Company, Flying J Inc. and Flying J
Franchise Inc. have entered into an operating agreement. In the event of a
default in the payment of any amount due and payable under the lease agreements,
and upon the General Partner's written request and delivery of the defaulting
lessee's property to Flying J Inc., Flying J Inc. has agreed to operate such
defaulted lessee's property for the maximum potential lease term.
4) INCOME TAXES:
The Partnership is not directly subject to income taxes; rather, each
partner is subject to income taxes on his distributable share of taxable income.
The Partnership tax returns and the amount of distributable partnership profits
or losses are subject to examination by Federal and state taxing authorities. If
examinations by taxing authorities result in changes to distributable
partnership profits or losses, the tax liabilities of the partners could be
changed accordingly.
The following is a reconciliation of net income for financial reporting
purposes to income reported for Federal income tax purposes for the years ended
December 31, 1998, 1997 and 1996:
1998 1997 1996
---------- ---------- ----------
Net income for financial
reporting purposes $5,798,859 $4,239,903 $4,013,518
Differences for tax purposes in:
Depreciation 460,584 554,950 765,189
Gain on sale and other (192,300) -- 17,534
---------- ---------- ----------
Taxable income to partners $6,067,143 $4,794,853 $4,796,241
========== ========== ==========
For Federal income tax reporting purposes, taxable income to partners is
reported on the accrual basis of accounting and is classified as ordinary
income.
At December 31, 1998, the tax bases of the Partnership's assets and
liabilities exceed the amounts recorded for financial reporting purposes by
$4,956,709. This difference results primarily from the use of different
depreciation methods for financial reporting and tax reporting purposes.
5) TRANSACTIONS WITH RELATED PARTIES:
Under the terms of the Partnership agreement, the General Partner is
entitled to compensation for certain services performed in connection with
managing the affairs of the Partnership. During 1998, 1997 and 1996, fees paid
to the General Partner were as follows:
1998 1997 1996
-------- -------- --------
Disbursable cash fee $530,737 $549,359 $543,553
Subordinated real estate
disposition fee 101,574 -- --
-------- -------- --------
$632,311 $549,359 $543,553
======== ======== ========
26
<PAGE>
The disbursable cash fee equals 9% of all cash received by the
Partnership (excluding sale proceeds) less Partnership operating expenses, only
to the extent the limited partners have received an annual return of 9%
(calculated quarterly) on their Adjusted Capital Contribution, as defined. A
subordinated real estate disposition fee equal to three percent of the selling
price on the disposition of any real property (subject to certain limitations)
is payable to the General Partner only after the limited partners have received
an amount equal to their Adjusted Capital Contribution, as defined, and a
cumulative, non-compounded return of 10% per annum on their Adjusted Capital
Contribution. A subordinated real estate disposition fee amounting to $101,574
has been accrued by the Partnership representing three percent of the selling
price of the Boise, Idaho travel plaza, which was sold in February 1998 for a
cash sales price of $3,385,784.
An affiliate of the General Partner incurs expenses on behalf of the
Partnership for maintenance of the books and records and for computer, investor
and legal services performed for the Partnership. These expenses are
reimbursable in accordance with the Partnership agreement and are less than the
amount that the Partnership would have paid to independent parties for
comparable services. The Partnership reimbursed the affiliate $67,381 in 1998,
$35,018 in 1997 and $30,001 in 1996 for such expenses.
6) SUBSEQUENT EVENT - SALE OF SUBSTANTIALLY ALL ASSETS:
The Partnership entered into purchase agreements with Flying J Inc. on
September 4, 1998 to sell substantially all of the Partnership'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 investors holding a majority of the partnership units was achieved on
October 26, 1998. The sale transaction was completed on March 22, 1999 and the
Partnership 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 investors. The lessee of the Ellensburg, Washington
travel plaza has signed a purchase agreement dated March 30, 1999 related to the
remaining travel plaza for a sales price of $3,025,347, which will result in a
pro forma gain of approximately $1.8 million. 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 sold. A subordinated real estate disposition fee of approximately $1.5
million will be paid to the General Partner related to the sales of the travel
plazas. Upon consummation of the sale of the Ellensburg, Washington travel
plaza, the General Partner will begin the process of winding down the affairs of
the Partnership that includes liquidation and distribution of assets to the
investors in accordance with the Partnership agreement. The liquidation of the
Partnership is expected to be completed in June 1999.
As part of the sale of the travel plazas, approximately $320,000
(representing less than one percent of the aggregate sales price) may, at the
General Partner's discretion, 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, dissolution
and winding up of the affairs of the Partnership during a period of up to 36
months following the liquidation date. At the end of this period, final
decisions will be made in settlement of all disputed claims, if any, and the
remaining balance of the Trust Fund will be disbursed to the limited partners.
27
<PAGE>
SCHEDULE III
Page 1 of 2
PARTICIPATING INCOME PROPERTIES 1986, L. P. AND AFFILIATE
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1998
Initial Cost to Partnership and
Gross Amount at December 31, 1998
-------------------------------------------
Travel Plaza Location Land Buildings Equipment Total
- --------------------- ---- --------- --------- -----
Eloy, Arizona $ 458,740 $ 3,558,260 $ -- $ 4,017,000
Thousand Palms, California 809,050 2,757,950 -- 3,567,000
Post Falls, Idaho 351,320 1,818,680 -- 2,170,000
Clive, Iowa 307,250 6,191,750 -- 6,499,000
Truxton, Missouri 403,600 3,803,400 -- 4,207,000
Butte, Montana 242,710 1,631,290 259,000 2,133,000
Amarillo, Texas 1,326,000 2,814,000 -- 4,140,000
Ellensburg, Washington 533,040 1,266,113 -- 1,799,153
Evanston, Wyoming 622,640 1,188,476 367,781 2,178,897
Cheyenne, Wyoming 711,840 3,426,160 -- 4,138,000
---------- ----------- --------- -----------
TOTAL $5,766,190 $28,456,079 $ 626,781 $34,849,050
========== =========== ========= ===========
Accumulated Depreciation
---------------------------------
Date
Travel Plaza Location Buildings Equipment Total Acquired
- --------------------- --------- --------- ----- --------
Eloy, Arizona $ 1,544,384 $ -- $ 1,544,384 Aug. 1988
Thousand Palms, California 1,206,603 -- 1,206,603 Jul. 1988
Post Falls, Idaho 909,340 -- 909,340 Jan. 1987
Clive, Iowa 2,708,891 -- 2,708,891 Jul. 1988
Truxton, Missouri 1,663,988 -- 1,663,988 Jul. 1988
Butte, Montana 745,466 233,099 978,565 Jul. 1987
Amarillo, Texas 1,108,821 -- 1,108,821 Jun. 1988
Ellensburg, Washington 562,681 -- 562,681 Sep. 1987
Evanston, Wyoming 346,639 367,781 714,420 Dec. 1987*
Cheyenne, Wyoming 1,487,049 -- 1,487,049 Aug. 1988
----------- --------- -----------
TOTAL $12,283,862 $ 600,880 $12,884,742
=========== ========= ===========
* Restaurant reconstructed during 1991
28
<PAGE>
SCHEDULE III
Page 2 of 2
PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1998
NOTES:
(1) There are no encumbrances on the properties. The properties are subject
to a purchase agreement whereby Flying J Inc. has agreed, subject to
certain conditions, to purchase the properties for an aggregate cash
price of approximately $48.5 million.
(2) Cost for Federal income tax purposes is the same as cost for financial
reporting purposes.
(3) All buildings and equipment are depreciated over estimated useful lives
of 24 and eight years, respectively. Substantially all of the buildings
and equipment were purchased as new properties.
(4) Transactions in real estate, equipment and accumulated depreciation
during 1998, 1997 and 1996 are summarized as follows:
Accumulated
Cost Depreciation
------------ ------------
Balance, December 31, 1995 $ 40,660,542 $ 12,233,701
Cost of land sold (248,645) --
Cost of equipment sold (3,342,522) (2,855,684)
Depreciation expense -- 1,559,843
------------ ------------
Balance, December 31, 1996 37,069,375 10,937,860
Depreciation expense -- 1,316,043
------------ ------------
Balance, December 31, 1997 37,069,375 12,253,903
Cost of real estate sold (2,220,325) (560,282)
Depreciation expense -- 1,191,121
------------ ------------
Balance, December 31, 1998 $ 34,849,050 $ 12,884,742
============ ============
29
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To FFCA Investor Services Corporation 86-B:
We have audited the accompanying balance sheet of FFCA INVESTOR SERVICES
CORPORATION 86-B (a Delaware corporation) as of December 31, 1998. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. 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
audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of FFCA Investor Services Corporation
86-B as of December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
March 22, 1999.
30
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 86-B
BALANCE SHEET - DECEMBER 31, 1998
ASSETS
Cash $100
Investment in Participating Income Properties 1986, L.P., at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent (Note 2) $100
----
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
The accompanying notes are an integral part of this balance sheet.
31
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 86-B
NOTES TO BALANCE SHEET
DECEMBER 3l, l998
(l) Operations:
FFCA Investor Services Corporation 86-B (a Delaware corporation)
(86-B) was organized on June 23, l986 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.
(2) Related Parties:
Perimeter Center Management Company (a Delaware corporation) (PCMC) is
the sole stockholder of 86-B. The general partner of PIP-86 is an affiliate of
PCMC.
32
<PAGE>
PARTICIPATING INCOME PROPERTIES 1986, L.P.
AND
FFCA INVESTOR SERVICES CORPORATION 86-B
-----------------------------
EXHIBIT INDEX
The following is a complete list of exhibits filed as part of this Form 10-K.
For electronic filing purposes only, this report contains Exhibit 27, the
Financial Data Schedule. Exhibit numbers correspond to the numbers in the
Exhibit Table of Item 601 of Regulation S-K.
Exhibit
-------
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following document, filed with the Securities and Exchange
Commission as Exhibit 4 to the Co-Registrants' Form 10-K for the fiscal year
ended December 31, 1989, Commission File No. 0-16720, is incorporated herein by
this reference.
Second Amended and Restated Certificate and
Agreement of Limited Partnership which governs
the Partnership, as filed with the Secretary of
State of Delaware on April 16, 1987.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants' Form 10-K for the fiscal year
ended December 31, 1986, Commission File No. 0-16720, are incorporated herein by
this reference.
1986 Form 10-K
Exhibit No.
-----------
Depositary Agreement of the 3-C
Partnership.
The Certificate of Incorporation 3-D
which governs FFCA Investor
Services Corporation 86-B, as
filed with the Secretary of State
of Delaware on June 23, 1986.
Bylaws of FFCA Investor Services 3-E
Corporation 86-B.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following document, filed with the Securities and Exchange
Commission on October 8, 1986 as Exhibit 10(e) to the Co-Registrants'
Registration Statement on Form S-11, Registration No. 33-7502, is incorporated
herein by this reference.
Operating Agreement, dated October 7, 1986, by
and among FFCA Management Company, L.P.,
FFCA/PIP 1986 Property Company, Flying J Inc.
and Flying J Franchise Inc.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrant's Form 8-K dated March 22, 1999,
Commission File No. 0-16720, are incorporated herein by this reference.
March 22, 1999,
Form 8-K
Exhibit No.
-----------
Purchase Agreement dated as of September 4, 10.01
1998, between FFCA/PIP 1986 Property Company
and CFJ Plaza Company III LLC
Purchase Agreement dated as of September 4, 10.02
1998, between FFCA/PIP 1986 Property Company
and FJI Plaza Company LLC
Purchase Agreement dated as of September 4, 10.03
1998, between FFCA/PIP 1986 Property Company
and Flying J Real Estate Enterprises Inc.,
including the First Amendment thereto dated
as of March 22, 1999
Purchase Agreement dated as of September 4, 10.04
1998, between FFCA/PIP 1986 Property Company
and CFJ Plaza Company II LLC
Purchase Agreement dated as of September 4, 10.05
1998, between FFCA/PIP 1986 Property Company
and CFJ Plaza Company I LLC
Extension Agreement dated March 22, 1999 10.06
Assignment of purchase agreement dated as of 10.07
March 22, 1999, between Flying J Real Estate
Enterprises Inc. and FJI Plaza Company LLC
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 31, 1998 AND THE STATEMENT OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1998 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> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,202,940
<SECURITIES> 0
<RECEIVABLES> 212,865
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 34,849,050
<DEPRECIATION> 12,884,742
<TOTAL-ASSETS> 24,589,017
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,010,102
<TOTAL-LIABILITY-AND-EQUITY> 24,589,017
<SALES> 0
<TOTAL-REVENUES> 7,813,299
<CGS> 0
<TOTAL-COSTS> 2,007,855
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,798,859
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,798,859
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,798,859
<EPS-PRIMARY> 111.07
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH BALANCE SHEET.
</LEGEND>
<CIK> 797978
<NAME> FFCA INVESTOR SERVICES CORPORATION 86-B
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<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>
