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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 94-3028298
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(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
1341 West Robinhood, B-9, Stockton, CA 95207
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (209) 478-0140
N/A
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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__
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TABLE OF CONTENTS
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PAGE
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Part I. Financial Information
Item 1: Statement of net assets - June 30, 1999 . . . . . . 3
Balance sheet - December 31, 1999 . . . . . . . . . 3
Statement of changes in net assets for the three
months ended June 30, 1999 . . . . . . . . . . . . 4
Statements of operations for the three months ended
March 31, 1999 and for the three and six months
ended June 30, 1998 . . . . . . . . . . . . . . . . 4
Statement of changes in partners' equity (deficit)
for the three months ended March 31, 1999 . . . . . 5
Statements of cash flows for the three months ended
March 31, 1999 and for the six months ended
June 30, 1998 . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 10
Part II. Other Information . . . . . . . . . . . . . . . . . 11
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2
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PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF NET ASSETS (UNAUDITED)
June 30, 1999
(in process of liquidation)
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<S> <C>
ASSETS
Cash and cash equivalents $ 3,493,069
Post closing escrow account 1,650,000
Other assets 54,437
---------
Total assets 5,197,506
---------
LIABILITIES
Accounts payable 276,688
Accounts payable, affiliate 39,642
Estimated liquidation expenses 75,000
Withholding taxes payable 732,188
---------
Total liabilities 1,123,518
---------
Net assets available to limited, special limited
and general partners $ 4,073,988
=========
Limited partnership units issued and outstanding 64,660
=========
</TABLE>
BALANCE SHEET (UNAUDITED)
December 31, 1999
(going concern basis)
<TABLE>
<S> <C>
ASSETS
Property, net $ 65,344,609
Cash and cash equivalents 6,386,116
Accounts receivable, affiliate 163,476
Other assets 348,882
----------
$ 72,243,083
==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Mortgage loans payable $ 56,917,509
Accounts payable 512,015
Accounts payable, affiliate 205,900
Accrued distributions 412,373
Accrued interest 402,819
Accrued property taxes 442,283
Unearned rent and tenant deposits 513,654
----------
59,406,553
----------
Partners' equity (deficit):
Limited partners' equity (64,660 units
authorized and outstanding) 6,996,693
Special limited partners' equity (7,749.5
units authorized and outstanding) 6,862,188
General partners' equity (deficit) (1,022,351)
----------
12,836,530
----------
$ 72,243,083
==========
</TABLE>
See notes to financial statements.
3
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PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
(in process of liquidation)
<TABLE>
<CAPTION>
Special
Limited Limited General
Total Partners Partners Partners
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net assets -
April 1, 1999 $ 13,336,858 $ 7,487,014 $ 6,862,188 $ (1,012,344)
Gain on property sale 40,654,202 38,818,652 -0- 1,835,550
Legal fees re
Settlement Agreement (3,283,537) (3,283,537) -0- -0-
Net income from
liquidating activities 298,244 292,279 -0- 5,965
Distributions (46,931,779) (39,765,900) (6,411,722) (754,157)
----------- ----------- ----------- -----------
Net assets -
June 30, 1999 $ 4,073,988 $ 3,548,508 $ 450,466 $ 75,014
=========== =========== ========== ==========
</TABLE>
STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended March 31, 1999
and the three and six months ended June 30, 1998
(going concern basis)
<TABLE>
<CAPTION>
Six months
Three months ended ended
3/31/99 6/30/98 6/30/98
-------- -------- ----------
<S> <C> <C> <C>
Revenues:
Rental $ 4,102,750 $ 4,123,291 $ 8,133,429
Land/Lease rentals from affiliates 165,000 165,000 330,000
Interest 57,636 55,958 105,930
---------- ---------- ----------
4,325,386 4,344,249 8,569,359
---------- ---------- ----------
Expenses:
Property operating expenses 1,301,772 1,621,914 2,949,538
Property taxes 305,663 321,140 632,437
Property management fees to affiliates 123,633 122,905 243,328
General and administrative expense 71,616 13,473 88,075
Proxy solicitation costs -0- 267,625 267,625
Interest expense 1,150,211 1,210,948 2,400,965
Management fees to affiliates 164,110 164,933 325,338
Depreciation 708,053 708,053 1,416,106
---------- ---------- ----------
3,825,058 4,430,991 8,323,412
---------- ---------- ----------
Net income (loss) $ 500,328 $ (86,742)$ 245,947
========== ========== ==========
Net income (loss) allocated to
General Partners $ 10,007 $ (1,735)$ 4,919
========== ========== ==========
Net income (loss) allocated to
Limited Partners $ 490,321 $ (85,007)$ 241,028
========== ========== ==========
Net income (loss) allocated to
Special Limited Partners $ -0- $ -0- $ -0-
========== ========== ==========
Net income (loss) per unit of limited
partnership interest $ 7.58 $ (1.31)$ 3.73
========== ========== ==========
</TABLE>
See notes to financial statements.
4
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PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT) (UNAUDITED)
For the three months ended March 31, 1999
(going concern basis)
<TABLE>
<CAPTION>
Special
Limited Limited General
Total Partners Partners Partners
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<S> <C> <C> <C> <C>
Partners' equity
(deficit)-
December 31, 1998 $ 12,836,530 $ 6,996,693 $ 6,862,188 $ (1,022,351)
Net income 500,328 490,321 -0- 10,007
----------- ----------- ----------- -----------
Partners' equity
(deficit)-
March 31, 1999 $ 13,336,858 $ 7,487,014 $ 6,862,188 $ (1,012,344)
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
5
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PRUDENTIAL-BACHE/A.G. SPANOS GENESIS INCOME PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31, 1999 and
and the six months ended June 30, 1998
(going concern basis)
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<CAPTION>
Three months Six months
ended ended
3/31/99 6/30/98
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 500,328 $ 245,947
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 708,053 1,416,106
Change in other assets 43,062 43,640
Change in accounts receivable, affiliate (165,000) -0-
Change in accounts payable, affiliate (1,837) 175,058
Change in accrued liabilities 18,627 302,906
Change in unearned rent and tenant deposits 5,094 (5,881)
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Total adjustments 607,999 1,931,829
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Net cash provided by operating activities 1,108,327 2,177,776
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Cash flows from financing activities:
Mortgage loan principal amortization (265,102) (490,545)
Distributions to partners (412,373) (824,746)
---------- ----------
Net cash used in financing activities (677,475) (1,315,291)
---------- ----------
Net increase in cash and cash equivalents 430,852 862,485
Cash and cash equivalents, beginning of period 6,386,116 5,323,329
---------- ----------
Cash and cash equivalents, end of period $ 6,816,968 $ 6,185,814
========== ==========
</TABLE>
See notes to financial statements.
6
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PRUDENTIAL-BACHE/A. G. SPANOS GENESIS INCOME PARTNERS L.P., I
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE A - FINANCIAL STATEMENT PREPARATION
As a result of its pending liquidation, the Partnership changed its method
of accounting from the going-concern basis by adopting the liquidation basis
of accounting effective April 1, 1999. Accordingly, the net assets of the
Partnership at June 30, 1999 are stated at liquidation value, whereby the
assets have been valued at their estimated net realizable values and the
liabilities include estimated amounts to be incurred through the date of
liquidation of the Partnership. The actual remaining net proceeds from
liquidation will depend upon a variety of factors and are likely to differ
from the estimated amounts reflected in the accompanying financial
statements. The Partnership intends to liquidate in 1999 after all
distributions have been paid to the partners. Prior to April 1, 1999, the
books and records of the Partnership were maintained on a going concern
accrual basis of accounting.
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments necessary to
present fairly such information subject to the effects of any further
liquidation accounting adjustments that would have been required had the
current realizable values of assets and the amounts of liabilities been
known when the Partnership first adopted the liquidation basis of
accounting. Net assets at June 30, 1999 have been adjusted to properly
reflect the allocation of limited partners' and General Partners' capital in
anticipation of the liquidation of the Partnership.
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,
1998.
NOTE B - PROPERTY
Effective April 1, 1999, the Partnership reclassified the Properties from
held for use to held for sale and ceased depreciating them for financial
statement purposes in accordance with the liquidation basis of accounting.
7
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On March 11, 1999, the Partnership entered into an agreement to sell all the
Properties to WXI/SPN Real Estate Limited Partnership for $126,333,500.
Under the terms of the leases for the Land/Leases, approximately $20,117,000
of the sales price (which includes approximately $19,871,000 of existing
mortgage debt) is allocable to A.G. Spanos Construction, Inc., an affiliate
of the Spanos General Partner, as consideration for its sale of the Del Rio
and Cameron Creek improvements. (The Partnership owned the land underlying
Del Rio and Cameron Creek, but not the improvements.) The sale of seven of
the properties closed April 23, 1999. The sale of the other two closed May
12, 1999. The Partnership incurred selling expenses of approximately
$926,000 in connection with the sales, consisting of surveys, legal fees,
title charges, transfer taxes, an advisory fee paid to the sales agent, and
other miscellaneous items. The net sales price was in excess of the
carrying amount of the Properties and resulted in a gain on sale of
approximately $40,654,000 for financial reporting purposes. The net cash
proceeds were approximately $48,800,000 after repayment of outstanding
mortgage debt of approximately $56,490,000. Pursuant to the sale agreement,
an escrow account of $1,650,000 was established to secure the Partnership's
performance of its post closing obligations. Such funds are to be released
to the Partnership 90 days following the closing of the property sales.
Pursuant to the Settlement Agreement approved by the court in connection
with the Prudential Securities Incorporated Limited Partnership Litigation
(MDL Docket 1005), the counsel representing the Unitholders are expected to
be paid an estimated $3,300,000 in legal fees, $3,167,881 of which has been
paid at June 30, 1999.
NOTE C - NET INCOME FROM LIQUIDATING ACTIVITIES
Net income from liquidating activities for the three months ended June 30,
1999 consisted of:
Revenues:
Rental $ 991,067
Land/Lease rentals from affiliates 52,274
Interest 143,702
---------
1,187,043
---------
Expenses:
Property operating expenses 489,770
Property taxes 86,402
Property management fees to affiliates 43,611
General and administrative expense 1,433
Interest expense 152,941
Management fees to affiliates 39,642
Estimated liquidation expenses 75,000
---------
888,799
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Net income from liquidating activities $ 298,244
=========
8
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NOTE D - 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.
1999 1998
---- ----
Expensed to the General Partners:
Supervisory management fee $101,876 $162,669
Special distribution 58,176 118,969
Administrative expense reimbursements 43,700 43,700
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$203,752 $325,338
======= =======
Expensed to A.G. Spanos Management, Inc.:
Property management fees $167,244 $243,328
======= =======
Accrued to the Partnership:
Ground rent on Land/Leases $217,274 $330,000
======= =======
Accruals of $39,642 and $164,986 for the supervisory management fee, special
distribution and administrative expense reimbursements were outstanding at
June 30, 1999 and December 31, 1998, respectively. Accruals of $40,914 for
property management fees were outstanding at December 31, 1998. Ground rent
of $163,476 was receivable from affiliates of the Spanos General Partner at
December 31, 1998.
Fees and other amounts relating to transactions between the Partnership and
the General Partners and their affiliates for the period from April 1, 1999
through June 30, 1999 include $39,642 for the supervisory management fee,
special distribution and administrative expense reimbursements, $43,611 for
property management fees and $52,274 for ground rent.
In connection with the adoption of the liquidation basis of accounting, the
Partnership recorded an accrual of $75,000 as of June 30, 1999 for the
estimated costs expected to be incurred to liquidate the Partnership.
Included in such amount is $15,000 expected to be payable to the General
Partners during the anticipated remaining liquidation period. The actual
charges to be incurred by the Partnership may differ from the amounts
accrued as of June 30, 1999.
Prudential Securities Incorporated ("PSI"), an affiliate of the Bache
General Partner, owned 1,920 Units at June 30, 1999.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Capital Resources and Liquidity
In July 1998, a majority in interest of the limited partners approved a
proposal to sell all the Partnership's properties at a public auction and
then distribute the sale proceeds in liquidation of the Partnership. The
auction and liquidation were part of an overall settlement of certain
litigation which had been pending in the United States District Court for
the Southern District of New York under the caption In re Prudential
Securities Incorporated Limited Partnerships Litigation (MDL Docket 1005).
In July 1998, the settlement, including the auction and liquidation, was
approved by the court. In March 1999, the Partnership entered into a
contract to sell the Properties. The sale closed in April and May 1999.
The Partnership paid distributions in 1999 totaling $615 per limited
partnership unit consisting of previously undistributed operating cash flow
and the net sales proceeds reduced by a contingency reserve and funds
required to meet the anticipated current and future operating costs until
the liquidation of the Partnership. The Partnership intends to liquidate in
1999 and will distribute any remaining funds at such time. In accordance
with the Partnership Agreement, such distributions to partners will be made
based upon each partner's capital account for Federal income tax purposes.
Estimated costs expected to be incurred through the date of liquidation of
the Partnership have been accrued in the accompanying financial statements.
Results of Operations
As a result of the Partnership adopting liquidation accounting in accordance
with generally accepted accounting principles as of April 1, 1999 and thus
not reporting results of operations thereafter, there is no management
discussion comparing the corresponding 1999 and 1998 periods.
Year 2000 Risk
As the Partnership is expected to be liquidating in 1999 and will not have
operations in the year 2000, the General Partners do not believe it is
appropriate to include a discussion of the Year 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
10
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(None)
Item 2. Changes in Securities
(None)
Item 3. Defaults Upon Senior Securities
(None)
Item 4. Submission of Matters to a Vote of Security Holders
(None)
Item 5. Other Information
(None)
Item 6. Exhibits and Reports on Form 8-K
Exhibits
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.
11
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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.
4(f) Amendment No. 14 dated August 12, 1998, to the
Amended and Restated Agreement of Limited Partnership
of Registrant, incorporated by reference to Exhibit 4(f)
of the Quarterly Report on Form 10-Q dated September 30,
1998, File No. 33-9139.
10 Agreement for Purchase and Sale of Real Property dated March
11, 1999 by and among the Partnership and A.G. Spanos
Construction, Inc. as Sellers and WXI/SPN Real Estate
Limited Partnership as Buyer, incorporated by
reference to Exhibit 10 of the Annual Report on Form
10-K dated December 31, 1998, File No. 33-9139.
27 Financial Data Schedule (filed herewith)
Reports on Form 8-K
(None)
12
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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 6, 1999
---------------------------------
Arthur J. Cole
President and Chief Accounting Officer
By: A.G. Spanos Realty, Inc., a general partner
By: /s/Arthur J. Cole Date: August 6, 1999
---------------------------------
Arthur J. Cole
Vice President and Chief Accounting Officer
13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<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-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Jun-30-1999
<PERIOD-TYPE> 6-Mos
<CASH> 3493069
<SECURITIES> 0
<RECEIVABLES> 1704437
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5197506
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5197506
<CURRENT-LIABILITIES> 1123518
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4073988
<TOTAL-LIABILITY-AND-EQUITY> 5197506
<SALES> <FN1>
<TOTAL-REVENUES> <FN1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> <FN1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> <FN1>
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> <FN1>
<EPS-BASIC> <FN1>
<EPS-DILUTED> 0
<FN>
<FN1> The Partnership adopted the liquidation basis of accounting as of
April 1, 1999, and, accordingly, does not reflect operations subsequent to
April 1, 1999. See Note A to the financial statements for further details.
</TABLE>
