<PAGE>
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 June 30, 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: 0-16861
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS
L.P., I
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware
94-3028296
- ---------------------------------------------------------------------------
(State or other jurisdiction of I.R.S. Employer
Identification No.)
incorporation or organization)
1341 West Robinhood, B-9, Stockton, CA
95207
- ---------------------------------------------------------------------------
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code (209) 478-0140
N/A
- ---------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since
last report
Indicate by check CK 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 such shorter period
that the
registrant was required to file such reports), and (2) has been
subject to
such filing requirement for the past 90 days. Yes _CK_ No__
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ------
<S> <C> <C>
Part I. Financial Information
Item 1: Balance Sheets - June 30, 1998 and
December 31, 1997 . . . . . . . . . . . . . . . . .
3
Statements of operations for the six months ended
June 30, 1998 and 1997 . . . . . . . . . . . . . .
4
Statements of operations for the three months ended
June 30, 1998 and 1997 . . . . . . . . . . . . . .
5
Statement of changes in partners' equity (deficit)
for the six months ended June 30, 1998 . . . . . .
6
Statements of cash flows for the six months
ended June 30, 1998 and 1997 . . . . . . . . . . .
7
Notes to Financial Statements . . . . . . . . . . .
8
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . .
11
Part II. Other Information . . . . . . . . . . . . . . . . .
12
</TABLE>
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P.,
I
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30,
December 31,
1998
1997
----------
- ----------
<S> <C>
<C>
ASSETS
Property, net $66,760,715
$68,176,821
Cash and cash equivalents 6,185,814
5,323,329
Accounts receivable, affiliate 163,476
163,476
Other assets 187,120
230,760
----------
- ----------
$73,297,125
$73,894,386
----------
- ----------
----------
- ----------
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Mortgage loans payable $57,436,690
$57,927,235
Accounts payable 657,487
449,811
Accounts payable, affiliate 378,684
203,626
Accrued distributions 412,373
412,373
Accrued interest 404,469
409,443
Accrued property taxes 553,220
453,016
Unearned rent and tenant deposits 514,331
520,212
----------
- ----------
60,357,254
60,375,716
----------
- ----------
Partners' equity (deficit):
Limited partners' equity (64,660 units
authorized and outstanding) 7,097,966
7,665,188
Special limited partners' equity (7,749.5 units
authorized and outstanding) 6,862,188
6,862,188
General partners' deficit (1,020,283)
(1,008,706)
----------
- ----------
12,939,871
13,518,670
----------
- ----------
$73,297,125
$73,894,386
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
3
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P.,
I
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998
1997
----------
- ----------
<S> <C>
<C>
Revenues:
Rental $ 8,133,429 $
7,720,679
Land/Lease rentals from affiliates 330,000
330,000
Interest 105,930
88,437
----------
- ----------
8,569,359
8,139,116
----------
- ----------
Expenses:
Property operating expenses 2,949,538
2,951,763
Property taxes 632,437
638,044
Property management fees to affiliates 243,328
231,113
General and administrative expense 88,075
81,976
Proxy solicitation costs 267,625
-0-
Interest expense 2,400,965
2,407,913
Management fees to affiliates 325,338
308,828
Depreciation 1,416,106
1,416,106
----------
- ----------
8,323,412
8,035,743
----------
- ----------
Net income $ 245,947 $
103,373
----------
- ----------
----------
- ----------
Net income allocated to General Partners $ 4,919 $
2,067
----------
- ----------
----------
- ----------
Net income allocated to Limited Partners $ 241,028 $
101,306
----------
- ----------
----------
- ----------
Net income allocated to Special
Limited Partners $ -0- $
-0-
----------
- ----------
----------
- ----------
Net income per unit of limited
partnership interest $ 3.73 $
1.57
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P.,
I
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the three months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998
1997
----------
- ----------
<S> <C>
<C>
Revenues:
Rental $ 4,123,291 $
3,900,954
Land/Lease rentals from affiliates 165,000
165,000
Interest 55,958
45,562
----------
- ----------
4,344,249
4,111,516
----------
- ----------
Expenses:
Property operating expenses 1,621,914
1,537,954
Property taxes 321,140
302,449
Property management fees to affiliates 122,905
116,564
General and administrative expense 13,473
14,021
Proxy solicitation costs 267,625
-0-
Interest expense 1,210,948
1,209,217
Management fees to affiliates 164,933
156,038
Depreciation 708,053
708,053
----------
- ----------
4,430,991
4,044,296
----------
- ----------
Net income (loss) $ (86,742) $
67,220
----------
- ----------
----------
- ----------
Net income (loss) allocated to General Partners $ (1,735) $
1,344
----------
- ----------
----------
- ----------
Net income (loss) allocated to Limited Partners $ (85,007) $
65,876
----------
- ----------
----------
- ----------
Net income (loss) allocated to Special
Limited Partners $ -0- $
-0-
----------
- ----------
----------
- ----------
Net income (loss) per unit of limited
partnership interest $ (1.31) $
1.02
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
5
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P.,
I
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
For the six months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Special
Limited Limited
General
Total Partners Partners
Partners
---------- ---------- ----------
- ----------
<S> <C> <C> <C>
<C>
Partners' equity
(deficit)-
December 31, 1997 $13,518,670 $ 7,665,188 $ 6,862,188
$(1,008,706)
Net income 245,947 241,028 -0-
4,919
Distributions (824,746) (808,250) -0-
(16,496)
---------- ---------- ----------
- ----------
Partners' equity
(deficit)-
June 30, 1998 $12,939,871 $ 7,097,966 $ 6,862,188
$(1,020,283)
---------- ---------- ----------
- ----------
---------- ---------- ----------
- ----------
</TABLE>
See notes to financial statements.
6
<PAGE>
PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P.,
I
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998
1997
----------
- ----------
<S> <C>
<C>
Cash flows from operating activities:
Net income $ 245,947 $
103,373
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,416,106
1,416,106
Change in other assets 43,640
(2,989)
Change in accounts payable, affiliate 175,058
(1,776)
Change in accrued liabilities 302,906
81,419
Change in unearned rent and tenant deposits (5,881)
28,818
----------
- ----------
Total adjustments 1,931,829
1,521,578
----------
- ----------
Net cash provided by operating activities 2,177,776
1,624,951
----------
- ----------
Cash flows from financing activities:
Mortgage loan principal amortization (490,545)
(477,877)
Distributions to partners (824,746)
(824,746)
----------
- ----------
Net cash used in financing activities (1,315,291)
(1,302,623)
----------
- ----------
Net increase in cash and cash equivalents 862,485
322,328
Cash and cash equivalents, beginning of period 5,323,329
4,997,867
----------
- ----------
Cash and cash equivalents, end of period $ 6,185,814 $
5,320,195
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
7
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A. G. SPANOS GENESIS INCOME PARTNERS
L.P., I
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS(Unaudited)
NOTE A - FINANCIAL STATEMENT PREPARATION
The June 30, 1998 financial statements have been prepared without
audit.
In the opinion of management, the financial statements contain
all
adjustments (consisting of normal recurring accruals) necessary
to present
fairly the Partnership's financial position, results of
operations and cash
flows. The operating results for the six months ended June 30,
1998 may
not necessarily be indicative of the results expected for the
full year.
Certain information and footnote disclosures normally included in
annual
financial statements prepared in accordance with generally
accepted
accounting principles have been omitted. These financial
statements must
be read in conjunction with the financial statements and notes
thereto
included in the Partnership's annual report for the year ended
December 31,
1997.
NOTE B - PROPERTY
Property is comprised of the following:
<TABLE>
<CAPTION>
June 30, 1998 December
31, 1997
- ----------------------------------
<S> <C> <C>
Apartment buildings $ 77,245,362 $
77,245,362
Equipment 4,937,209
4,937,209
Land 17,147,732
17,147,732
Land held for lease 2,479,098
2,479,098
-----------
- -----------
101,809,401
101,809,401
Less: Accumulated depreciation (35,048,686)
(33,632,580)
-----------
- -----------
$ 66,760,715 $
68,176,821
-----------
- -----------
-----------
- -----------
</TABLE>
8
<PAGE>
<PAGE>
NOTE C - RELATED PARTY TRANSACTIONS
Set forth below are the fees and other amounts relating to
transactions
between the Partnership and the General Partners and their
affiliates for
the six months ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
1998
1997
- -----------------------
<S> <C> <C>
Expensed to the General Partners:
Supervisory management fee $162,669
$154,414
Special distribution 118,969
110,714
Administrative expense reimbursements 43,700
43,700
-------
- -------
$325,338
$308,828
-------
- -------
-------
- -------
Expensed to A.G. Spanos Management, Inc.:
Property management fees $243,328
$231,113
-------
- -------
-------
- -------
Accrued to the Partnership:
Ground rent on Land/Leases $330,000
$330,000
-------
- -------
-------
- -------
</TABLE>
Accruals of $164,932 and $161,414 for the supervisory management
fee,
special distribution and administrative expense reimbursements
and $41,085
and $42,212 for property management fees were outstanding at June
30, 1998
and December 31, 1997, respectively. Ground rent of $163,476 was
receivable from affiliates of the Spanos General Partner at June
30, 1998
and December 31, 1997. General Partners' capital account deficit
for
financial accounting purposes exceeds the amount the General
Partners would
be obligated to restore if the Partnership were to dissolve.
On May 15, 1998, the Spanos General Partner initiated a consent
solicitation for the Unitholders to consider a proposal to sell
the
Properties at a public auction and then distribute the sale
proceeds in
liquidation of the Partnership. The proposed auction and
liquidation are
part of an overall settlement of the Multidistrict Litigation
described in
Note D. The settlement includes a provision whereby an affiliate
of the
Spanos General Partner will open the auction with a bid of
$20,560,000 in
excess of the outstanding mortgage debt. The settlement also
provided for
the Spanos General Partner to pay the costs of the consent
solicitation
subject to reimbursement by the Partnership if a majority in
interest of the
Unitholders approved the proposal. As of July 1, 1998, the
Partnership had
received consent from the requisite number of Unitholders. On
July 20,
1998, the Partnership reimbursed the Spanos General Partner for
$172,667 of
solicitation costs. Such amount was accrued at June 30, 1998.
Prudential Securities Incorporated ("PSI"), an affiliate of the
Bache
General Partner, owned 1,920 Units at June 30, 1998.
9
<PAGE>
<PAGE>
NOTE D - CONTINGENCIES
On May 12, 1997, the Spanos General Partner and certain of its
affiliates
entered into a Stipulation of Settlement with legal counsel
representing
the plaintiff class in a number of actions pending before a
single judge of
the United States District Court for the Southern District of New
York.
The settlement contemplated, among other things, the sale of all
of the
Partnership Properties at public auction and the subsequent
liquidation and
dissolution of the Partnership. The settlement agreement was
preliminarily
approved by the Court on August 28, 1997. On July 1, 1998, a
majority
in interest of the Unitholders approved the proposed auction sale
of the
properties and the liquidation of the Partnership. On July 21,
1998, a
hearing before the Court was held to determine whether the
settlement is
fair and reasonable. After the hearing, the Court entered an
order and
final judgment approving the settlement, which includes the
auction of the
Partnership's properties and liquidation of the Partnership.
There can be
no assurance that the conditions to implementation of the
settlement will
be satisfied.
On or about April 15, 1994, a multiparty petition entitled
Schreiber et al.
v. Prudential Securities, Inc., et al. (Cause No. 94-17696) was
filed in
the 189th Judicial District Court of Harris County, Texas,
purportedly on
behalf of investors in the Partnership against the Partnership,
the General
Partners, PSI, The Prudential Insurance Company of America and a
number of
other defendants. The Petition alleges common law fraud, fraud
in the
inducement and negligent misrepresentation in connection with the
offering
of limited partnership interests and negligence, breach of
fiduciary duty,
civil conspiracy, and violations of the federal Securities Act of
1933
(sections 11 and 12) and of the Texas Securities and Deceptive
Trade
Practices statutes. The suit seeks, among other things,
compensatory and
punitive damages, costs and attorney's fees. Most of the
plaintiffs have
released their claims against the defendants in exchange for
monetary
payments by PSI. It is expected that the remaining claims will
be resolved
by PSI at no cost to the Partnership. Accordingly, no provision
for any
loss that may result upon resolution of this matter has been made
in the
accompanying financial statements.
NOTE E - SUBSEQUENT EVENT
The Partnership paid second quarter cash distributions of
$404,125 to the
Unitholders and $8,248 to the General Partners in August 1998.
10
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations
Capital Resources and Liquidity
The Partnership had cash of $6,186,000 at June 30, 1998. There
are no
proposed programs for renovation, improvement or development of
the
Properties other than maintenance and repairs (including major
repairs) in
the ordinary course which will be paid from operations, and the
Partnership's liquidity position is considered satisfactory.
The Partnership's operating activities provided cash of
$2,178,000 in the
first half of 1998, of which $516,000 reflects timing differences
related
to current assets and liabilities. Of the balance, $491,000 was
applied to
scheduled principal amortization on the Partnership's mortgage
debt,
$825,000 was paid in cash distributions, and $346,000 was
retained.
On July 1, 1998, a majority in interest of the Unitholders
approved a proposal
to sell the Properties at a public auction and then distribute
the sale
proceeds in liquidation of the Partnership. The proposed auction
and
liquidation are part of an overall settlement of the
Multidistrict
Litigation described in Note D to the financial statements. The
settlement
includes a provision whereby an affiliate of the Spanos General
Partner
will open the auction with a bid of $20,560,000 in excess of the
outstanding mortgage debt. On July 21, 1998, the settlement,
including the
auction and liquidation, was approved by the court overseeing the
litigation. Although there can be no assurance that the
conditions to
implementation of the settlement will be satisfied, it appears
likely that
the affairs of the Partnership will begin to be wound down in
early 1999.
Results of Operations
Rental revenue was $8,133,000 for the first half of 1998, an
increase of
5.3% compared to the same period last year, primarily due to
increased
occupancy and effective rental rates at MacArthur Park, Cypress
Pointe and
Mission Trails. The average occupancy of the seven Apartment
Projects was
95.7% for the first half of 1998 compared to 94.2% for the first
half of
1997.
Property operating expenses were $2,950,000 for the first six
months of
1998, reflecting very little change from the comparable period
last year.
Property management fees, which are 3% of property revenue,
increased with
the increase in revenue. Operations for the second quarter of
1998 reflect
$268,000 of nonrecurring costs incurred with respect to the
solicitation of
consents for the proposed auction and liquidation. Any future
costs with
respect to the solicitation are not expected to be material.
Second
quarter 1998 operating expenses increased $84,000 over second
quarter 1997,
principally because of increased major repair costs. The General
Partners do
not expect that any costs related to year 2000 compliance will be
material
to the financial statements of the Partnership.
11
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
This information is incorporated by reference to Note D to the
financial
statements filed herewith in Item 1 of Part I of the Registrant's
Quarterly Report.
Item 2. Changes in Securities
(None)
Item 3. Defaults Upon Senior Securities
(None)
Item 4. Submission of Matters to a Vote of Security Holders
On May 15, 1998, the Spanos General Partner initiated a consent
solicitation for the Unitholders to consider a plan of action
(the "Plan")
involving: (i) the sale of substantially all of the assets of the
Partnership in a public auction (the "Auction"), (ii) the
amendment of the
Amended and Restated Agreement of Limited Partnership of the
Partnership to
permit an affiliate of one of the general partners of the
Partnership to
bid for, and if successful to purchase, one or more of the
Partnership's
real properties (the "Amendment") and (iii) the subsequent
complete
termination and liquidation of the Partnership (the "Plan of
Liquidation").
The Plan was proposed in connection with, and pursuant to the
terms of, a
proposed settlement by the Spanos General Partner and its
affiliates (the
"Settlement") of certain class action litigation (the
"Litigation") then
pending in the United States District Court for the Southern
District of
New York (the "Court").
Set forth below is a summary of the tabulation of the forms of
Consents
received through the close of business on July 10, 1998, the
extended
termination date of the solicitation, showing that the consents
of
Unitholders holding a majority of the outstanding Units have been
received
with respect to all three proposals.
12<PAGE>
<PAGE>
Units % of % of
Units
Proposal Voted Units Voted
Outstanding
1. The Auction
Consents: 37,113 89.4%
57.4%
Does Not Consent: 2,153 5.2%
3.3%
Abstains: 2,260 5.4%
3.5%
-------
Total Votes 41,526
2. The Amendment
Consents: 35,117 84.6%
54.3%
Does Not Consent: 2,126 5.1%
3.3%
Abstains: 4,283 10.3%
6.6%
-------
Total Votes 41,526
3. The Plan of Liquidation
Consents: 37,633 90.6%
58.2%
Not Consent: 1,758 4.2%
2.7%
Abstains: 2,135 5.2%
3.3%
-------
Total Votes 41,526
Item 5. Other Information
(None)
Item 6. Exhibits and Reports on Form 8-K
Exhibits
4(a) Certificate of Limited Partnership of Registrant
as filed
with the Secretary of State of Delaware,
incorporated by
reference to Exhibit 4(a) to Amendment No. 1 to
Registration Statement on Form S-11, File No.
33-9139,
filed with the Securities and Exchange Commission
on
January 28, 1987.
4(b) Amendment to Certificate of Limited Partnership
of
Registrant as filed with the Secretary of State
of
Delaware, incorporated by reference to Exhibit
4(b) to
Amendment No. 2 to Registration Statement on Form
S-11,
File No. 33-9139, filed with the Securities and
Exchange
Commission on February 20, 1987.
4(c) Amended and Restated Agreement of Limited
Partnership of
Registrant, incorporated by reference to Exhibit
4(c) to
Amendment No. 2 to Registration Statement on Form
S-11,
File No. 33-9139, filed with the Securities and
Exchange
Commission on February 20, 1987.
13
<PAGE>
<PAGE>
4(d) Amendments No. 1 through 6 dated June 3, July 2,
August 3
and 20, September 10 and October 2, 1987,
respectively, to
the Amended and Restated Agreement of Limited
Partnership
of Registrant, incorporated by reference to
Exhibit 4(d)
to Post-Effective Amendment No. 1 to Registration
Statement on Form S-11, File No. 33-9139, filed
with the
Securities and Exchange Commission on November
12, 1987.
4(e) Amendments No. 7 through 13 dated December 4 and
18, 1987
and February 1, March 8 and 25, April 27 and
August 12,
1988, respectively, to the Amended and Restated
Agreement
of Limited Partnership of Registrant,
incorporated by
reference to Exhibit 4(e) of the Annual Report on
Form
10-K dated December 31, 1988, File No. 33-9139.
27 Financial Data Schedule (filed herewith)
Reports on Form 8-K
(None)
14
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the
Registrant has duly caused this report to be signed on its behalf
by the
undersigned, thereunto duly authorized.
PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS, L.P., I
(Registrant)
By: A.G. Spanos Residential Partners-86, General Partner
By: AGS Financial Corporation, a general partner
By: /s/Arthur J. Cole Date: August 13,
1998
---------------------------------
Arthur J. Cole
President and Chief Accounting Officer
By: A.G. Spanos Realty, Inc., a general partner
By: /s/Arthur J. Cole Date: August 13,
1998
---------------------------------
Arthur J. Cole
Vice President and Chief Accounting Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> The Schedule contains summary
financial
information extracted from the
financial
statements for Prudential-Bache/A.G.
Spanos
Genesis Income Partners L.P., I, and
is
qualified entirely by reference to
such
financial statements.
</LEGEND>
<RESTATED>
<CIK> 000803399
<NAME> Prudential-Bache/AG Spanos Genesis
Income
Partners LP I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Jun-30-1998
<PERIOD-TYPE> 6-Mos
<CASH> 6185814
<SECURITIES> 0
<RECEIVABLES> 350596
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6536410
<PP&E> 101809401
<DEPRECIATION> 35048686
<TOTAL-ASSETS> 73297125
<CURRENT-LIABILITIES> 2920564
<BONDS> 57436690
0
0
<COMMON> 0
<OTHER-SE> 12939871
<TOTAL-LIABILITY-AND-EQUITY> 73297125
<SALES> 8463429
<TOTAL-REVENUES> 8569359
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5922447
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2400965
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 245947
<EPS-PRIMARY> 3.73
<EPS-DILUTED> 0
</TABLE>
