SECURITIES AND EXCHANGE COMMISSION
Washington, DC
-------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ----- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 0-17412
Secured Income L.P.
(Exact name of Registrant as specified in its charter)
Delaware 06-1185846
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
599 West Putnam Avenue
Greenwich, Connecticut 06830
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (203) 869-0900
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes X No
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SECURED INCOME L.P. AND SUBSIDIARIES
Part I - Financial Information
<S> <C>
Table of Contents
Item 1. Financial Statements Page Number
Consolidated Balance Sheets as
of March 31, 1996 (Unaudited) and
December 31, 1995 3
Consolidated Statements of Operations
for the three months ended March 31,
1996 (Unaudited) and March 31, 1995
(Unaudited) 4
Consolidated Statements of Cash Flows
for the three months ended March 31, 1996
(Unaudited) and March 31, 1995 (Unaudited) 5
Notes to Consolidated Financial Statements
as of March 31, 1996 (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
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SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1996
ASSETS (Unaudited) December 31, 1995
<S> <C> <C>
Property and equipment (net of
accumulated depreciation of
$11,811,432 and $11,431,970,
respectively) $32,189,273 $32,568,735
Cash and cash equivalents 803,374 776,227
Cash restricted for tenants'
security deposits 426,614 424,470
Restricted assets and funded
reserves 3,784,785 3,487,938
Investments - guaranteed
investment contracts 141,882 158,394
Interest and accounts
receivable 72,446 57,859
Prepaid expenses 187,085 425,513
Other assets, net of
accumulated amortization 2,442,853 2,559,539
----------- -----------
$40,048,312 $40,458,675
=========== ===========
LIABILITIES AND PARTNERS'
EQUITY (DEFICIT)
LIABILITIES
Mortgages payable $36,275,098 $36,589,220
Accounts payable and
accrued expenses 204,499 248,310
Tenants' security deposits
payable 427,837 421,946
Due to general partners
and affiliates 3,822,107 3,774,483
Deferred income 180,070 176,322
----------- -----------
40,909,611 41,210,281
----------- -----------
PARTNERS' EQUITY (DEFICIT)
Limited partners' equity - -
General partners' deficit (861,299) ( 751,606)
----------- -----------
(861,299) (751,606)
----------- -----------
$40,048,312 $40,458,675
=========== ===========
See notes to consolidated financial statements.
3
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SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
REVENUES <C> <C>
Rental $1,506,553 $ 1,447,615
Interest 31,605 29,739
---------- -----------
1,538,158 1,477,354
---------- -----------
EXPENSES
Administrative and management 155,290 132,276
Operating and maintenance 293,268 198,927
Taxes and insurance 273,019 249,276
Interest 430,126 489,531
Depreciation and amortization 496,148 498,115
---------- -----------
1,647,851 1,568,125
---------- -----------
NET LOSS $ (109,693) $ (90,771)
========== ===========
NET LOSS ATTRIBUTABLE TO
Limited partners $ - $ -
General partners (109,693) (90,771)
---------- -----------
$ (109,693) $ (90,771)
========== ===========
NET LOSS ALLOCATED PER UNIT OF
LIMITED PARTNERSHIP INTEREST $ - $ -
========== ===========
See notes to consolidated financial statements.
4
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SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (109,693) $ ( 90,771)
Adjustments:
Depreciation and amortization 496,148 498,115
Decrease (increase) in assets:
Restricted assets and
funded reserves (296,847) (424,182)
Tenants' security deposits (2,144) (1,643)
Interest and accounts receivable (14,587) 11,337
Prepaid expenses 238,428 218,272
(Decrease) increase in liabilities:
Accounts payable and accrued expenses (43,811) (54,908)
Tenants' security deposits payable 5,891 1,803
Due to general partners and affiliates 47,624 51,823
Deferred income 3,748 1,259
----------- -----------
Net cash provided by operating
activities 324,757 211,105
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal proceeds from guaranteed
investment contracts 16,512 226,014
Distribution of guaranteed investment
contract installments to partners (217,097)
Net cash provided by investing
activities 16,512 8,917
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of principal on permanent
financing (314,122) (112,588)
----------- -----------
Net cash used in financing
activities (314,122) (112,588)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 27,147 107,434
CASH AND CASH EQUIVALENTS,
beginning of period 776,227 660,578
----------- ------------
CASH AND CASH EQUIVALENTS,
end of period $ 803,374 $ 768,012
========== ===========
SUPPLEMENTAL INFORMATION
Interest paid $ 375,355 $ 443,471
============ ===========
See notes to consolidated financial statements.
5
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SECURED INCOME L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. They do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. The results of operations are impacted significantly
by the results of operations of the Carrollton and Columbia Partnerships,
which is provided on an unaudited basis during interim periods.
Accordingly, the accompanying consolidated financial statements are
dependent on such unaudited information. In the opinion of the General
Partners, the consolidated financial statements include all adjustments
necessary to reflect fairly the results of the interim period presented.
All adjustments are of a normal recurring nature. No significant events
have occurred subsequent to December 31, 1995 and no material contingencies
exist which would require additional disclosure in the report under
Regulation S-X, Rule 10-01 paragraph A-5, except as disclosed in Note 3
below.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the entire year.
2. Additional information, including the audited December 31, 1995
Consolidated Financial Statements and the Summary of Significant Accounting
Policies, is included in Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 on file with the Securities and
Exchange Commission.
3. Commitments and Contingencies
A holder of the bonds issued in connection with the original Carrollton
mortgage served a complaint on or about March 22, 1994 against the
Carrollton Partnership, the Carrollton Operating General Partners and the
trustee alleging damages in the amount of $1,015,000 arising from the
redemption of such bonds. The Carrollton Operating General Partners are
vigorously contesting the allegations in the complaint and no provision for
such claim is reflected in the consolidated financial statements. Discovery
on this case has been completed and the parties have filed cross motions
for summary judgment. The court has not yet ruled on these motions.
6
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SECURED INCOME L.P. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material changes in financial condition and results of operations.
The results of operations of Secured Income L.P. and Subsidiaries (the
"Partnership") for the first quarter of 1996 were comparable to the first
quarter of 1995. Changes in assets and liabilities are comprised of periodic
quarterly transactions and adjustments, including payments from the remaining
guaranteed investment contract and depreciation and amortization. During the
three month period ended March 31, 1996, the Complexes generated net cash flow
before scheduled principal reduction on the mortgages and, in the case of the
Columbia Partnership, prior to mandatory deposits to the Pledged Cap Account and
the Bond Retirement Escrow of approximately $432,000. Such amount reflects cash
flow after replacement reserve activity and capital expenditures and excludes
proceeds from the remaining guaranteed investment contract. Mortgage principal
payments during the period for the Columbia Partnership and the Carrollton
Partnership were approximately $288,000 and $26,000, respectively. During the
three months ended March 31, 1996, the Columbia Partnership deposited
approximately $130,000 to the Pledged Cap Account and approximately $126,000 to
the Bond Retirement Escrow. Restricted assets and funded reserves as of March
31, 1996 include Columbia Partnership deposits in the Pledged Cap Account,
Operating Deficit Escrow and Bond Retirement Escrow of approximately $1,394,000,
approximately $503,000 and approximately $196,000, respectively. To the extent
the future cash flow of the Columbia Partnership is not utilized to fund the
Operating Deficit Reserve or Pledged Cap Account, such cash flow, under the
Citibank loan terms, will be deposited to the Bond Retirement Escrow to make
additional mortgage principal payments. Such additional payments amounted to
$200,000 during the three months ended March 31, 1996. Prepaid expenses
decreased in the ordinary course of operations. Due to general partners and
affiliates increased principally due to accrued interest on advances provided by
the Columbia General Partners and the accrual of investor service fees.
Operating and maintenance expenses increased for the three month period ended
March 31, 1996 as compared to the three month period ended March 31,1995,
partially due to a harsher winter in 1996 and also due to an increase in planned
improvements and repairs in 1996 as compared to 1995. Interest expense decreased
for the three month period ended March 31, 1996 as compared to the three month
period ended March 31, 1995 due to a decrease in the low floater rate on the
Columbia Partnership's mortgage and lower outstanding balances on the mortgages.
Although the properties are currently generating cash flow, the General Partners
do not anticipate significant future cash flow distributions from the properties
given the distribution restriction on the Columbia Partnership resulting from
the restructuring of its debt.
The 1993 mortgage modification of the Columbia Partnership has substantially
improved the financial condition of that partnership; however, there can be no
assurance that interest rates on the adjustable rate bonds underlying the
Columbia Partnership's mortgage will remain at current low levels. Also, for so
long as a letter of credit issued by Citibank, N.A. for the account of the
Columbia Partnership in connection with the mortgage refinancing remains
outstanding, the Columbia Partnership is prohibited from making cash
distributions to the Partnership. The weighted average interest rate on the
Columbia Partnership debt was approximately 3.10% and approximately 3.52% during
the three months ended March 31, 1996 and 1995, respectively.
As of March 31, 1996, the occupancy of the Fieldpointe Complex (owned by the
Carrollton Partnership) was approximately 97% and the occupancy of the Westmont
Complex (owned by the Columbia Partnership) was approximately 99% as to
residential units and 100% as to commercial space. Rental revenue of the
Complexes increased by approximately 4% due to higher average residential
occupancy during the first quarter of 1996 and the commencement of lease
payments on commercial space that was vacant during the first quarter of 1995.
The future operating results of the Complexes will be extremely dependent on
market conditions and interest rate fluctuations and therefore may be subject to
significant volatility.
7
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SECURED INCOME L.P. AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
A holder of the bonds issued in connection with the original Carrollton
mortgage served a complaint on or about March 22, 1994 against the
Carrollton Partnership, the Carrollton Operating General Partners and
the trustee alleging damages in the amount of $1,015,000 arising from
the redemption of such bonds. The Carrollton Operating General Partners
are vigorously contesting the allegations in the complaint and no
provision for such claim is reflected in the consolidated financial
statements. Discovery on this case has been completed and the parties
have filed cross motions for summary judgment. The court has not yet
ruled on these motions.
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
None
8
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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.
SECURED INCOME L.P.
By: Wilder Richman Resources Corporation
General Partner
Date: May 15, 1996 /s/ Richard Paul Richman
----------------------------------
Richard Paul Richman
President, Chief Executive Officer
and Director
9
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<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the quarter ended
March 31, 1996 Form 10-Q Consolidated Balance Sheets and Consolidated
Statements of Operations as of March 31, 1996 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000804217
<NAME> Neal Ludeke
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1.000
<CASH> 803,374
<SECURITIES> 0
<RECEIVABLES> 72,446
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 32,189,273
<DEPRECIATION> 11,811,432
<TOTAL-ASSETS> 40,048,312
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (861,299)
<TOTAL-LIABILITY-AND-EQUITY> 40,048,312
<SALES> 1,506,553
<TOTAL-REVENUES> 1,538,158
<CGS> 0
<TOTAL-COSTS> 1,217,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 430,126
<INCOME-PRETAX> 109,693
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 109,693
<EPS-DILUTED> 0
</TABLE>
