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 September 30, 1999
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or
Transition Report Pursuant to Section 13 or 15(d)
- --------- of the Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number: 33-9921
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SENIOR INCOME FUND L.P.
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Exact Name of Registrant as Specified in its Charter
Delaware 13-3392077
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State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn.: Andre Anderson -----
- ------------------------------------- Zip code
Address of Principal Executive Offices
(212) 526-3183
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Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
<PAGE>
2
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
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CONSOLIDATED BALANCE SHEETS
At September 30, At December 31,
1999 1998
(unaudited) (audited)
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<S> <C> <C>
Assets
Cash and cash equivalents $ 980,152 $1,060,585
Accounts receivable - other 96 --
Prepaid expenses -- 50,754
- --------------------------------------------------------------------------------------------------
Total Assets $ 980,248 $1,111,339
==================================================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 77,379 $ 92,716
Due to affiliates 11,989 22,000
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Total Liabilities 89,368 114,716
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Partners' Capital:
General Partner -- --
Limited Partners (4,827,500 units outstanding) 890,880 996,623
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Total Partners' Capital 890,880 996,623
- --------------------------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $ 980,248 $1,111,339
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)
For the nine months ended September 30, 1999
General Limited
Partner Partners Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1998 $ -- $ 996,623 $ 996,623
Net Loss -- (105,743) (105,743)
- --------------------------------------------------------------------------------------------------
Balance at September 30, 1999 $ -- $ 890,880 $ 890,880
==================================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
3
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended September 30, Nine months ended September 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Income
Rental $ -- $1,002,943 $ -- $3,003,164
Interest and other income 12,694 74,643 37,433 211,631
--------------------------------------------------------
Total Income 12,694 1,077,586 37,433 3,214,795
- --------------------------------------------------------------------------------------------------
Expenses
Payroll -- 293,660 -- 855,712
Rent and utilities -- 279,633 -- 831,929
General and administrative 12,699 154,951 143,176 487,032
Supplies -- 97,990 -- 278,454
Repairs and maintenance -- 74,719 -- 208,691
Real estate taxes -- 40,191 -- 116,565
Travel and entertainment -- 4,294 -- 13,012
--------------------------------------------------------
Total Expenses 12,699 945,438 143,176 2,791,395
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Net Income (Loss) $ (5) $ 132,148 $ (105,743) $ 423,400
==================================================================================================
Net Income (Loss) Allocated:
To the General Partner $ -- $ -- $ -- $ --
To the Limited Partners (5) 132,148 (105,743) 423,400
- --------------------------------------------------------------------------------------------------
$ (5) $ 132,148 $ (105,743) $ 423,400
==================================================================================================
Per limited partnership unit
(4,827,500 outstanding) $ (.00) $ .03 $ (.02) $ .09
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</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
4
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September 30,
1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income (Loss) $ (105,743) $ 423,400
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Prepaid expenses 50,754 2,368
Accounts receivable - other (96) --
Accounts payable and accrued expenses (15,337) (16,591)
Deferred rent payable -- 34,047
Due to affiliates (10,011) (39,973)
Security deposits payable -- 19
------------------------
Net cash provided by (used for) operating activities (80,433) 403,270
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (80,433) 403,270
Cash and cash equivalents, beginning of period 1,060,585 5,320,317
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 980,152 $5,723,587
==================================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
5
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1998 audited financial statements within Form 10-K.
The unaudited financial statements include all normal and reoccurring
adjustments which are, in the opinion of management, necessary to present a fair
statement of financial position as of September 30, 1999 and the results of
operations for the three and nine months ended September 30, 1999 and 1998, cash
flows for the nine months ended September 30, 1999 and 1998 and the statement of
changes in partners' capital for the nine months ended September 30, 1999.
Results of operations for the period are not necessarily indicative of the
results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1998, and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
<PAGE>
6
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
On June 9, 1997, the Partnership executed an agreement with an unaffiliated
third party, MBK Senior Properties, Ltd. (the "Buyer"), to sell the
Partnership's four properties (the "Sale") for $36,300,000, subject to
adjustments and prorations for closing costs, and a credit for the cost to
repair earthquake damage at the Ocean House property. On August 1, 1997, the
Partnership closed the Sale for three of the four properties - Prell Gardens,
Nohl Ranch and Pacific Inn, for net proceeds of $30,148,357 and a gain on the
sale of $11,839,814. The Partnership's fourth property, Ocean House, was sold on
October 13, 1998 to MBK Senior Living Communities, Ltd., formerly known as MBK
Senior Properties, Ltd. The gross selling price was $5,172,750, less a credit
for cost of repairs due to earthquake damages of $4,174,171, resulting in a net
selling price of $998,579 and a gain on the sale of $2,072,451, including the
assignment of the land lease obligation. The Partnership remains contingently
liable under the terms of the ground lease.
As a result of the Sale, the Partnership suspended the payment of quarterly cash
distributions beginning with the second quarter 1997 distribution which would
have been paid on or about August 15, 1997. On August 25, 1997, the Partnership
paid a cash distribution in the amount of $5.75 per Unit, representing proceeds
from the sale of Prell Gardens, Nohl Ranch, and Pacific Inn and cash flow from
operations for the second quarter of 1997. With the completion of the sale of
Ocean House, the Partnership made a special distribution of $1.11 per Unit, on
November 17, 1998, representing the net sales proceeds and a portion of the
Partnership's cash reserves.
Although the Partnership's leasehold interest in Ocean House was sold, the
General Partner has not obtained a release from the ground lessor of the
Partnership's continuing contingent liability associated with the ground lease.
The General Partner has explored various means by which to release or protect
the Partnership from this contingent liability, and will continue to do so.
However, until this is accomplished, the General Partner expects that the
Partnership will not be terminated, and the remaining cash will continue to be
held in reserve. While the General Partner will attempt to wind up the affairs
of the Partnership and terminate it, there can be no assurance as to when the
General Partner will be successful in doing so.
At September 30, 1999, the Partnership had cash and cash equivalents of $980,152
compared to $1,060,585 at December 31, 1998. The decrease is primarily due to
the sale of the Partnership's remaining property in October 1998, resulting in
no further cash flow from rental activities.
Accounts payable and accrued expenses were $77,379 at September 30, 1999
compared to $92,716 at December 31, 1998. The change is primarily due to the
timing of general and administrative expense payments, and a decrease in certain
expenses.
Year 2000 Initiatives
- ---------------------
The Year 2000 compliance issue concerns the ability of computerized information
systems to accurately calculate, store or use a date after 1999. This could
result in computer system failures or miscalculations causing disruptions of
operations. The Year 2000 issue affects almost all companies and organizations.
In the event that the Partnership is not liquidated prior to December 31, 1999,
potential Year 2000 issues relate primarily to outside vendors which provide the
Partnership's administrative services including accounting, tax preparation and
transfer agent services. Such services are heavily reliant on computer systems,
software products and equipment which may or may not be Year 2000 compliant. It
is anticipated that the cost of vendor compliance with Year 2000 problems will
be borne primarily by vendors. Although it is not possible at present to give an
estimate of the cost of this work to the Partnership, the General Partner does
not expect such costs to have a material adverse impact on the Partnership's
long term results of operations.
<PAGE>
7
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
Results of Operations
- ---------------------
Partnership operations resulted in net loss of $5 and $105,743 for the three and
nine months ended September 30, 1999, compared to net income of $132,148 and
$423,400 for the three and nine months ended September 30, 1998. The decrease is
primarily a result of the sale of the last property in October 1998.
There was no rental income for the three and nine months ended September 30,
1999, compared to $1,002,943 and $3,003,164 for the corresponding period in
1998. The decrease is due to the sale of the last property.
Primarily as a result of the sale of Ocean House, all expense categories
decreased from the 1998 periods to the 1999 periods.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27)Financial Data Schedule
(b) Reports on Form 8-K -
No reports on Form 8-K were filed during the three-month period
covered by this report.
<PAGE>
8
SENIOR INCOME FUND L.P.
AND CONSOLIDATED PARTNERSHIP
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.
SENIOR INCOME FUND L.P.
BY: SENIOR INCOME FUND INC.
General Partner
Date: November 12, 1999 BY: /s/Michael T. Marron
-------------------------------------
Name: Michael T. Marron
Title: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 980,152
<SECURITIES> 000
<RECEIVABLES> 96
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 980,248
<CURRENT-LIABILITIES> 77,379
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 890,880
<TOTAL-LIABILITY-AND-EQUITY> 980,248
<SALES> 000
<TOTAL-REVENUES> 37,433
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 143,176
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (105,743)
<INCOME-TAX> 000
<INCOME-CONTINUING> (105,743)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (105,743)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
