UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 September 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 #0-16790
Inland's Monthly Income Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3525989
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60523
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 630-218-8000
N/A
(Former name, former address and former fiscal
year, if changed since last report)
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
-1-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Balance Sheets
September 30, 1999 and December 31, 1998
(unaudited)
Assets
------
1999 1998
Current assets: ---- ----
Cash and cash equivalents (Note 1).............. $ 762,318 681,003
Accounts and rents receivable................... 39,886 35,664
Mortgage interest receivable.................... 52,190 56,681
Current portion of mortgage loans receivable.... 71,819 79,187
Current portion of deferred rent receivable..... 4,818 4,818
Other assets.................................... 2,094 2,670
------------ ------------
Total current assets.............................. 933,125 860,023
------------ ------------
Investment properties (including acquisition fees
paid to Affiliates of $1,738,621) (Note 1):
Land............................................ 2,672,620 2,672,620
Buildings and improvements...................... 15,592,680 15,592,680
Tenant improvements............................. 775,947 775,947
------------ ------------
19,041,247 19,041,247
Less accumulated depreciation................... 5,900,687 5,522,909
------------ ------------
Net investment properties......................... 13,140,560 13,518,338
------------ ------------
Other assets:
Mortgage loans receivable, less current portion. 5,991,181 7,184,451
Deferred loan fees (net of accumulated
amortization of $50,923 and $32,019 at
September 30, 1999 and December 31, 1998,
respectively) (Note 1)........................ 50,987 14,269
Deferred leasing fees (including $219,451
paid to Affiliates) (net of accumulated
amortization of $227,059 and $211,287 at
September 30, 1999 and December 31, 1998,
respectively) (Note 1)........................ 117,328 133,100
Deferred rent receivable, less current portion
(Notes 1 and 2)............................... 354,053 396,387
------------ ------------
Total other assets................................ 6,513,549 7,728,207
------------ ------------
Total assets...................................... $20,587,234 22,106,568
============ ============
See accompanying notes to financial statements.
-2-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 1999 and December 31, 1998
(unaudited)
Liabilities and Partners' Capital
---------------------------------
1999 1998
Current liabilities: ---- ----
Accounts payable and accrued expenses........... $ 142 13,556
Accrued real estate taxes....................... 51,571 62,125
Distributions payable (Note 5).................. 172,028 192,030
Due to Affiliates (Note 3)...................... 7,039 472
Deposits held for others........................ 142,316 102,479
Prepaid rent.................................... 47,872 -
Current portion of long-term debt............... - 44,709
Current portion of deferred gain on sale of
investment property........................... 17,035 19,514
------------ ------------
Total current liabilities......................... 438,003 434,885
Deferred loan fees................................ 33,189 45,123
Long-term debt, less current portion (Note 4)..... 2,500,000 1,444,498
Deferred gain on sale of investment property,
less current portion............................ 1,837,361 2,120,485
------------ ------------
Total liabilities................................. 4,808,553 4,044,991
------------ ------------
Partners' capital (Notes 1 and 5):
General Partner:
Capital contribution.......................... 500 500
Supplemental Capital Contributions............ 2,095,863 2,095,863
Supplemental capital distributions to
Limited Partners............................ (2,095,863) (2,095,863)
Cumulative net loss........................... (36,743) (36,743)
------------ ------------
(36,243) (36,243)
Limited Partners: ------------ ------------
Units of $500. Authorized 60,000 Units,
59,286 Units outstanding (net of offering
costs of $3,289,242, of which $388,902 was
paid to Affiliates)......................... 26,353,582 26,353,582
Supplemental Capital Contributions from
General Partner............................. 2,095,863 2,095,863
Cumulative net income......................... 18,069,253 16,617,196
Cumulative distributions...................... (30,703,774) (26,968,821)
------------ ------------
15,814,924 18,097,820
------------ ------------
Total Partners' capital........................... 15,778,681 18,061,577
------------ ------------
Total liabilities and Partners' capital........... $20,587,234 22,106,568
============ ============
See accompanying notes to financial statements.
-3-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 1999 and 1998
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
Income: ---- ---- ---- ----
Rental income (Notes 1 and 2).... $ 494,097 501,474 1,513,837 1,543,675
Additional rental income......... 8,911 32,096 28,547 61,379
Interest income.................. 140,789 182,435 469,615 548,513
Other income..................... - 2,240 9,175 4,491
---------- ---------- --------- ---------
643,797 718,245 2,021,174 2,158,058
Expenses: ---------- ---------- --------- ---------
Professional services to
Affiliates..................... 2,792 3,564 10,186 10,184
Professional services to
non-affiliates................. - - 35,339 29,349
General and administrative
expenses to Affiliates......... 6,345 8,230 27,302 26,160
General and administrative
expenses to non-affiliates..... 3,854 1,002 39,580 22,211
Property operating expenses to
Affiliates..................... 7,755 9,604 26,729 27,472
Property operating expenses to
non-affiliates................. 38,534 29,102 166,133 134,759
Interest expense to
non-affiliates................. 44,531 36,639 136,996 110,657
Depreciation..................... 125,926 125,926 377,778 377,778
Amortization..................... 8,039 6,415 34,677 19,244
---------- ---------- --------- ---------
237,776 220,482 854,720 757,814
---------- ---------- --------- ---------
Operating income................... 406,021 497,763 1,166,454 1,400,244
Gain on sale of investment
property......................... 4,259 69,768 285,603 145,110
---------- ---------- --------- ---------
Net income......................... $ 410,280 567,531 1,452,057 1,545,354
========== ========== ========= ==========
Net income allocated to:
General Partner.................. - - - -
Limited Partners................. 410,280 567,531 1,452,057 1,545,354
---------- ---------- --------- ---------
Net income......................... $ 410,280 567,531 1,452,057 1,545,354
========== ========== ========= ==========
Net income per weighted average
Limited Partner Units of
59,285.65........................ $ 6.92 9.57 24.49 26.07
========== ========== ========= ==========
See accompanying notes to financial statements.
-4-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 1999 and 1998
(unaudited)
1999 1998
---- ----
Cash flows from operating activities:
Net income...................................... $ 1,452,057 1,545,354
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of investment property........... (285,603) (145,110)
Depreciation.................................. 377,778 377,778
Amortization.................................. 34,676 19,244
Changes in assets and liabilities:
Accounts and rents receivable............... (4,222) (21,008)
Mortgage interest receivable................ 4,491 (482)
Other current assets........................ 576 (895)
Deferred rent receivable.................... 42,334 24,727
Accounts payable and accrued expenses....... (13,414) 1,153
Accrued real estate taxes................... (10,554) (14,742)
Due to Affiliates........................... 6,567 6,885
Unearned income............................. 35,938 32,322
------------ ------------
Net cash provided by operating activities......... 1,640,624 1,825,226
------------ ------------
Cash flows from investing activities:
Principal payments received on mortgage
loans receivable.............................. 1,200,638 504,905
------------ ------------
Net cash provided by investing activities......... 1,200,638 504,905
------------ ------------
Cash flows from financing activities:
Cash distributions.............................. (3,754,955) (1,757,347)
Deposits held for others........................ 39,837 (39,272)
Principal payments of long-term debt............ (1,489,207) (30,057)
Loan proceeds................................... 2,500,000 -
Loan fees....................................... (55,622) -
------------ ------------
Net cash used in financing activities............. (2,759,947) (1,826,676)
------------ ------------
Net increase in cash and cash equivalents......... 81,315 503,455
Cash and cash equivalents at beginning of period.. 681,003 1,090,891
------------ ------------
Cash and cash equivalents at end of period........ $ 762,318 1,594,346
============ ============
Supplemental disclosure of non-cash investing activities:
Cash paid for interest.......................... $ 149,096 110,901
============ ============
See accompanying notes to financial statements.
-5-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 1999
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1998, which are
included in the Partnership's 1998 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
Inland's Monthly Income Fund, L.P. (the "Partnership"), was formed on March 26,
1987 pursuant to the Delaware Revised Uniform Limited Partnership Act, to
invest in improved residential, retail, industrial and other income producing
properties. On August 3, 1987, the Partnership commenced an Offering of 50,000
(subject to an increase up to 60,000) Limited Partnership Units ("Units")
pursuant to a Registration Statement under the Securities Act of 1933. The
Offering terminated on August 3, 1988, with total sales of 59,999 Units at $500
per Unit, resulting in gross offering proceeds of $29,999,500, not including
the General Partner's contribution of $500. All of the holders of these Units
were admitted to the Partnership. Inland Real Estate Investment Corporation is
the General Partner. The Limited Partners of the Partnership share in the
benefits of ownership of the Partnership's real property investments in
proportion to the number of Units held. The Partnership has repurchased a total
of 713 Units for $356,676 from various Limited Partners through the Unit
Repurchase Program. There are no funds remaining for the repurchase of Units
through this program.
The preparation of 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 and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Statement of Financial Accounting Standards No. 121 ("SFAS 121") requires the
Partnership to record an impairment loss on its property to be held for
investment whenever its carrying value cannot be fully recovered through
estimated undiscounted future cash flows from their operations and sale. The
amount of the impairment loss to be recognized would be the difference between
the property's carrying value and the property's estimated fair value. The
adoption of SFAS 121 did not have any effect on the Partnership's financial
position, results of operations or liquidity. The Partnership has not
recognized any such impairment.
A presentation of information about operating segments as required in Statement
of Financial Accounting Standards No. 131 "Disclosures About Segments of an
Enterprise and Related Information" would not be material to an understanding
of the Partnership's business taken as a whole as the Partnership is engaged in
the business of real estate investment which management considers to be a
single operating segment.
-6-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1999
(unaudited)
Offering costs have been offset against the Limited Partners' capital accounts.
Depreciation expense is computed using the straight-line method. Depreciation
of buildings and improvements are based upon estimated useful lives of 30 to 40
years, while depreciation of furniture and fixtures are based upon estimated
useful lives of 5 to 12 years. Repair and maintenance expenses are charged to
operations as incurred. Significant improvements are capitalized and
depreciated over their estimated useful lives. Tenant improvements are
depreciated over the related lease term.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Such investments are
carried at cost which approximates market. Cash and cash equivalents are
approximately $762,000 and $681,000 at September 30, 1999 and December 31,
1998, respectively, of which approximately $130,100 and $92,300, respectively,
is included in cash and cash equivalents for the payment of real estate taxes
for Douglas and Hillside Living Centers.
Statement of Financial Accounting Standards No. 128 "Earnings per Share" was
adopted by the Partnership and has been applied to all prior earnings periods
presented in the financial statements. The Partnership has no dilutive
securities.
Deferred leasing fees are amortized on a straight-line basis over the term of
the related lease.
Loan fees relating to the mortgage loans receivable are deferred and amortized
as yield adjustments on a straight-line basis over the life of the related
mortgage loan receivable which approximates the effective interest rate method.
Rental income is recognized on a straight-line basis over the term of each
lease. The difference between rental income earned on the straight-line basis
and the cash rent due under the provisions of the lease agreements is recorded
as deferred rent receivable.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations for the periods
presented herein. Results of interim periods are not necessarily indicative of
results to be expected for the year.
-7-
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1999
(unaudited)
(2) Deferred Rent Receivable
Certain tenant leases contain provisions providing for stepped rent increases.
Generally accepted accounting principles require that rental income be recorded
for the period of occupancy on a straight-line basis. The accompanying
financial statements include decreases of $42,334 and $24,727 for 1999 and
1998, respectively, of rental income for the period of occupancy for which
stepped rent increases apply and $358,871 and $401,205 in related deferred rent
receivable as of September 30, 1999 and December 31, 1998, respectively. These
amounts will be collected over the terms of the related leases as scheduled
rent payments are made.
(3) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services and general and administrative expenses to Affiliates, of
which $7,039 and $472 was unpaid at September 30, 1999 and December 31, 1998,
respectively.
An Affiliate of the General Partner is entitled to receive Property Management
Fees for management and leasing services. The Partnership has incurred
property management fees of $26,729 and $27,472 for the nine months ended
September 30, 1999 and 1998.
(4) Long-Term Debt
On April 30, 1999, the Partnership refinanced the existing $1,700,000 loan
collateralized by the Rantoul Wal-Mart. The replacement loan is for $2,500,000
and is collateralized by the Rantoul Wal-Mart and the Duncan Wal-Mart. The
replacement loan bears an interest rate of 6.97% as compared to an interest
rate of 9.75% on the original loan. The replacement loan will require monthly
interest only payments and will mature on April 30, 2004. The Partnership
distributed excess refinancing proceeds to the limited partners on June 10,
1999. At September 30, 1999, the fair market value of the mortgage loan
payable approximated its carrying value.
(5) Subsequent Events
During October 1999, the Partnership paid a distribution of $172,028 to the
Limited Partners.
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this quarterly report on
Form 10-Q constitute "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. These forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the Partnership's actual results, performance, or
achievements to be materially different from any future results, performance,
or achievements expressed or implied by these forward-looking statements.
These factors include, among other things, competition for tenants; federal,
state, or local regulations; adverse changes in general economic or local
conditions; inability of borrower to meet financial obligations; uninsured
losses; and potential conflicts of interest between the Partnership and its
Affiliates, including the General Partner.
Liquidity and Capital Resources
On August 3, 1987, the Partnership commenced an Offering of 50,000 (increased
to 60,000) Limited Partnership Units pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933. The Offering terminated on August
3, 1988, with total sales of 59,999 Units at $500 per Unit, resulting in gross
offering proceeds of $29,999,500, not including the General Partner's
contribution of $500. All of the holders of these Units have been admitted to
the Partnership. The Partnership acquired seven properties utilizing
$25,831,542 of capital proceeds collected. During 1994 and 1995, the
Partnership sold the thirty-eight six-unit condominium buildings comprising the
Schaumburg Terrace condominium complex. Also, the Partnership sold one of the
three lots adjacent to the Hillside Living Center during September 1997. As of
September 30, 1999, cumulative distributions to Limited Partners totaled
$30,703,774, including $2,095,863 of Supplemental Capital Contributions from
the General Partner, which represents distributable cash flow from the
properties. The Partnership repurchased 713 Units for $356,676 from various
Limited Partners through the Unit Repurchase Program. There are no funds
remaining for the repurchase of Units through this program.
As of September 30, 1999, the Partnership had cash and cash equivalents of
$762,318, which includes approximately $130,100 for the payment of real estate
taxes for Douglas and Hillside Living Centers. Since December 1998, the
Partnership received prepayments on five of the thirty-two mortgage loans
receivable on the six-unit condominium buildings comprising the Schaumburg
Terrace condominium complex. Repayment proceeds from these prepayments totaled
approximately $1,165,000. A portion of these repayment proceeds was included
in the distribution to the limited partners on June 10, 1999. The Partnership
intends to use the remaining balance of such funds for future distributions and
working capital requirements.
The properties owned by the Partnership, along with the interest received on
the Schaumburg Terrace mortgage receivables, are generating sufficient cash
flow to meet the 8% annualized distributions to the Limited Partners (paid
monthly), in addition to covering all the operating expenses of the
Partnership. To the extent that the cash flow is insufficient to meet the
Partnership's needs, the Partnership may rely on Supplemental Capital
Contributions from the General Partner, advances from Affiliates of the General
Partner, other short-term financing, or may sell one or more of the properties.
-9-
On April 30, 1999, the Partnership refinanced the existing $1,700,000 loan
collateralized by the Rantoul Wal-Mart. The replacement loan is for $2,500,000
and is collateralized by the Rantoul Wal-Mart and the Duncan Wal-Mart. The
replacement loan bears an interest rate of 6.97% as compared to the interest
rate of 9.75% on the original loan. The replacement loan will require monthly
interest only payments and will mature on April 30, 2004. The Partnership
distributed excess refinancing proceeds to the limited partners on June 10,
1999.
Results of Operations
As of September 30, 1999, the Partnership owned six operating properties. Five
of these properties were leased on a "triple-net" basis which means that all
expenses of the property are passed through to the tenant. The Partnership
also owns a shopping center, McHenry Plaza. The leases of the shopping center
provide that the Partnership be responsible for maintenance of the structure
and the parking lot and the tenants are required to reimburse the Partnership
for portions of insurance, real estate taxes and common area maintenance.
Since December, 1998, the Partnership received prepayments on five of the
thirty-two remaining mortgage loans receivable on the six-unit condominium
buildings comprising the Schaumburg Terrace condominium complex which the
Partnership had sold during 1994 and 1995.
Rental and additional income decreased for the three and nine months ended
September 30, 1999, as compared to the three and nine months ended September
30, 1998, due to a decrease in occupancy and rent abatements at McHenry Plaza.
As of September 30, 1999, approximately 20,218 square feet, representing 36% of
the total space at the center, remains to be leased. The General Partner
continues to pursue additional leases for this remaining space.
Interest income decreased for the three and nine months ended September 30,
1999, as compared to the three and nine months ended September 30, 1998, due to
decreases in interest income on the mortgage loans receivable as a result of
prepayments and due to a decrease in interest rates on investments.
Professional services to non-affiliates increased for the nine months ended
September 30, 1999, as compared to the nine months ended September 30, 1998,
due to an increase in legal services relating to the refinance. This increase
was partially offset by a decrease in accounting services.
General and administrative expenses to non-affiliates increased for the nine
months ended September 30, 1999, as compared to the nine months ended September
30, 1998, due to an increase in state taxes paid.
Property operating expenses to non-affiliates increased for the three and nine
months ended September 30, 1999, as compared to the three and nine months ended
September 30, 1998, due to an increase in repair and maintenance expenses at
McHenry Plaza Shopping Center.
-10-
The gain on the sale of investment property recorded for the nine months ended
September 30, 1999 is the result of deferred gain from the Schaumburg Terrace
condominium sales being recognized as cash is received on the related financing
extended by the Partnership to the individual purchasers. The increase in the
gain on the sale of investment property for the nine months ended September 30,
1999, as compared to the nine months ended September 30, 1998, is due to the
recognition of $281,344 of deferred gain from the prepayment of five of the
thirty-two mortgage loans receivable. None of these sales occurred in the
three months ended September 30, 1999.
The following is a list of approximate occupancy levels for the Partnership's
investment properties as of the end of each quarter during 1998 and 1999:
1998 1999
------------------------ ------------------------
at at at at at at at at
Properties 03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
---------- ----- ----- ----- ----- ----- ----- ----- -----
McHenry Plaza 81% 81% 81% 79% 79% 79% 79%
McHenry, Illinois
Douglas Living &
Retirement Center 100% 100% 100% 100% 100% 100% 100%
Mattoon, Illinois
Hillside Living Center 100% 100% 100% 100% 100% 100% 100%
Yorkville, Illinois
Scandinavian Health Spa 100% 100% 100% 100% 100% 100% 100%
Westlake, Ohio
Rantoul Wal-Mart 100% 100% 100% 100% 100% 100% 100%
Rantoul, Illinois
Duncan Wal-Mart 100% 100% 100% 100% 100% 100% 100%
Duncan, Oklahoma
Year 2000 Issues
GENERAL
- -------
Many computer operating systems and software applications were designed such
that the year 1999 is the maximum date that can be processed accurately. In
conducting business, the Partnership relies on computers and operating systems
provided by equipment manufacturers, and also on application software developed
internally and, to a limited extent, by outside software vendors. The
Partnership has assessed its vulnerability to the so-called "Year-2000 Issue"
with respect to its equipment and computer systems.
STATE OF READINESS
- ------------------
The Partnership has identified the following three areas for "Year-2000"
compliance efforts:
-11-
Business Computer Systems: The majority of the Partnership's information
technology systems were developed internally and include accounting, lease
management, investment portfolio tracking, and tax return preparation. The
Partnership has rights to the source code for these applications and employs
programmers who are knowledgeable regarding these systems. The process of
testing these internal systems to determine year 2000 compliance is nearly
complete. The Partnership does not anticipate any material costs relating to
its business computer systems regarding year 2000 compliance since the
Partnership's critical hardware and software systems use four digits to
represent the applicable year. The Partnership does use various computers, so-
called "PC's", that may run software that may not use four digits to represent
the applicable year. The Partnership is in the process of testing the PC
hardware and software to determine year 2000 compliance, but it must be noted
that such PC's are incidental to the Partnership's critical systems. The
Partnership is considering independent testing of its critical systems.
Tenants and Suppliers: The Partnership is in the process of surveying tenants,
suppliers and other parties with whom the Partnership does a significant amount
of business to identify the Partnership's potential exposure in the event such
parties are not year 2000 compliant in a timely manner. At this time, the
Partnership is not aware of any party that is anticipating a material Year 2000
compliance issue. However, since this area involves some parties over which
the Partnership has no control, such as public utility companies, it is
difficult, at best, to judge the status of the outside companies' year 2000
compliance. The Partnership is working closely with all suppliers of goods and
services in an effort to minimize the impact of the failure of any supplier to
become year 2000 compliant by December 31, 1999. The Partnership's
investigations and assessments of possible year 2000 issues are ongoing, and
currently the Partnership is not aware of any material impact on its business,
operations or financial condition even if one or more parties is not Year 2000
compliant in a timely manner, due to the number and nature of the Partnership's
diverse tenant base.
Non-Information Technology Systems: In the operation of its properties, the
Partnership has acquired equipment with embedded technology such as
microcontrollers, which operate heating, ventilation, and air conditioning
systems, fire alarms, security systems, telephones and other equipment
utilizing time-sensitive technology. The Partnership has evaluated its
potential exposure and costs if such non-information technology systems are not
year 2000 compliant and does not expect any costs or exposure to be material.
YEAR 2000 RISKS
- ---------------
The most reasonable likely worst case scenario for the Partnership with respect
to the year 2000 non-compliance of its business computer systems would be the
inability to access information which could result in the failure to issue
financial reports. The most reasonable likely worst case scenario for the
Partnership with respect to the year 2000 non-compliance of its tenants is
failure to receive rental income which could result in the Partnership being
unable to meet cash requirements for monthly expenses. The most reasonable
likely worst case scenario for the Partnership with respect to the year 2000
non-compliance of its suppliers is the failure to supply necessary utilities;
including, but not limited to heating, as a result of a malfunctioning of non-
information technology systems in some of the Partnership's properties.
-12-
YEAR 2000 COSTS
- ---------------
The Partnership's General Partner and its Affiliates estimate that costs to
achieve year 2000 compliance will not exceed $100,000. However, only
approximately 1% of these costs will be directly allocated to and paid by the
Partnership. The balance of the year 2000 compliance costs, approximately 99%,
will be paid by the General Partner and its Affiliates. Total year 2000 costs
are not expected to be significant.
CONTINGENCY PLAN
- ----------------
The Partnership expects to be Year 2000 compliant in advance of the year 2000.
The Partnership will continue to monitor its progress and state of readiness,
and is in the process of formulating a contingency plan which the Partnership
will be prepared to adopt with respect to areas in which evidence arises that
it may not become Year 2000 compliant in sufficient time. With respect to its
tenants, suppliers and other parties with whom the Partnership conducts
business, the Partnership does not yet have sufficient information to identify
the types of problems it may encounter in the event these third parties are not
Year 2000 compliant. As information is obtained that may indicate such parties
may not become Year 2000 compliant in sufficient time, the Partnership is
prepared to develop contingency plans, accordingly.
PART II - Other Information
Items 1 through 5 are omitted because of the absence of conditions under which
they are required.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
None
-13-
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.
INLAND'S MONTHLY INCOME FUND, L.P.
By: Inland Real Estate Investment Corporation
General Partner
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: November 12, 1999
/S/ PATRICIA A. DELROSSO
By: Patricia A. DelRosso
Senior Vice President
Date: November 12, 1999
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: November 12, 1999
-14-
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