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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended: September 30, 1999 Commission File Number: 0-16840
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PSH MASTER L.P.I
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(Exact Name of Registrant as Specified in its Charter)
Delaware 31-1204568
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(State of Organization) (IRS Employer Identification Number)
P.O. Box 18035, Columbus, OH 43218
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(Address of Principal Executive Offices, including Zip Code)
(614) 227-4235
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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.
X Yes No
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The number of outstanding Units of Limited Partner Interest in the Registrant,
as represented by Depository Receipts at September 30, 1999 was 3,110,000.
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PSH MASTER L.P. I
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
Index
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Page
Number
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Part I. Financial Information
Item 1: Financial Statements:
Balance Sheets 3
Statements of Operations 5
Statements of Cash Flows 7
Notes to Financial Statements 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operation 9
Part II. Other Information
Items 1 through 5 10
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures 11
2
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<TABLE>
PSH MASTER L.P.I
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
Assets September 30, 1999 December 31 ,1998
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<S> <C> <C>
Current assets:
Cash and cash equivalents $989,665 $1,023,997
Accounts receivable, General Partner 2,929
Accounts receivable, trade 3,406
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Total current assets 989,665 1,030,332
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Property and equipment:
Furniture, fixtures and equipment 7,695 7,695
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Total 7,695 7,695
Less accumulated depreciation and amortization (7,695) (7,640)
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Total property and equipment, net 0 56
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Total assets $989,665 $1,030,388
======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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<TABLE>
PSH MASTER L.P.I
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
Liabilities and Partners' Equity September 30, 1999 December 31 ,1998
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<S> <C> <C>
Current liabilities:
Accounts payable 2,891 32,176
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Total current liabilities 32,176
Partners' Equity
General Partner (10,249) (10,135)
Limited Partners (3,110,000 units outstanding) 997,023 1,008,346
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Total partners' equity 986,774 998,211
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Total liabilities and partners' equity $989,665 $1,030,388
======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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<TABLE>
PSH MASTER L.P.I
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Quarter Ended Quarter Ended
September 30, 1999 September 30, 1998
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<S> <C> <C>
Revenues:
Interest $11,215 $13,085
Other 432
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Total revenues 11,647 13,085
Operating costs and expenses:
Partnership administrative 18,188 13,043
Depreciation and amortization 98
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Total operating costs and expenses 18,188 13,141
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Net (Loss) $(6,541) $ (56)
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Net income per unit of
Limited partnership interest $ (0.02) $ 0.00
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</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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<TABLE>
PSH MASTER L.P.I
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1999 September 30, 1998
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<S> <C> <C>
Revenues:
Interest $ 32,700 $114,533
Other 19,678 33,665
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Total revenues 52,378 148,198
Operating costs and expenses:
Partnership administrative 63,759 169,750
Depreciation and amortization 56 296
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Total operating costs and expenses 63,815 170,046
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Net Loss $(11,437) $(21,848)
======== ========
Net loss per unit of
Limited partnership interest $ (0.02) $ (0.01)
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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<TABLE>
PSH MASTER L.P.I
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Cash provided (used) by operations:
Net Loss $(11,437) $ (21,848)
Changes not requiring cash:
Depreciation and amortization 56 296
Working capital changes:
Decrease in accounts receivable, trade 3,406 71,705
Decrease in accounts receivable, GP 2,929
Decrease in accounts payable and accrued expenses (29,287) (418,606)
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Cash used by operations: (34,332) (368,453)
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Financing and capital transactions:
Distributions to partners (15,707,071)
Guaranty Payments from General Partner 282,071
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Cash used by financing and capital transactions (15,425,000)
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Decrease in cash and cash equivalents $(34,332) $(15,793,453)
======== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
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NOTES TO THE FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION:
In the opinion of Management, the accompanying financial statements contain all
adjustments (all of which are normal and recurring in nature) necessary to
present fairly the financial position of the Partnership at September 30, 1999
and December 31, 1998 and the results of its operations for the three and nine
month periods ended September 30, 1999 and 1998. The Partnership sold its three
hotels in July, 1997. The Partnership has no operations and is retaining the
current cash balances pending the final outcome of the threatened litigation
described below.
(2) RELATED PARTIES
PC Development Limited Partnership, the General Partner, is generally empowered
by the Partnership Agreement to conduct, direct and exercise full control over
all activities of the Partnership.
(3) PARTNERSHIP ALLOCATIONS AND DISTRIBUTIONS
For financial statement reporting purposes, net income or loss is allocated 99
percent to the Unitholders and 1 percent to the General Partner. The net income
allocated to the Unitholders for the quarters ended September 30, 1999 and 1998
was $(3,651) or $(0.01) per unit, and $(56) or $0.00 per unit, respectively. Net
losses allocated for the nine months ended September 30, 1999 and 1998 were
$(8,547) or $(0.01) per unit, and $(21,848) or $(00.1) per unit, respectively.
(4) PENDING LITIGATION
On October 17, 1997, Mr. James Pickett and Mr. Stephen Denz (Chairman and
Secretary, respectively, of PH Management Company) and two affiliated companies,
PC Development Limited Partnership (the General Partner of the Partnership) and
Nuho Company, notified the Partnership that they had been named as defendants in
a complaint filed in Superior Court of the Commonwealth Massachusetts. Equity
Resource Pilgrim Fund, the plaintiff, is the owner of 131,225 units of limited
partnership interest of the Partnership, which it acquired during May through
September of 1997, in part through a written offer to purchase which it
delivered to other Limited Partners of the Partnership in March, 1997. The
complaint alleges that the defendants breached their fiduciary duties by
negotiating a "super premium" buyout of Nuho Company's interest in the
management fees paid to Doubletree and obtained an inadequate purchase price for
the Partnership's hotels. The case was removed to the United States District
Court for the District of Massachusetts. A motion to dismiss was filed and the
court granted that motion. Equity Resource did not appeal that decision, but
could refile the suit with a court having proper jurisdiction. Equity Resource
has taken no further action since the dismissal.
8
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Contrary to the allegations in the complaints, the General Partner, on behalf of
the Partnership, and the Partnership's lender each obtained an independent
appraisal in connection with the sale of the hotels. Further, the purchase and
sale agreement negotiated with FelCor provided the Partnership with the right to
terminate the sale of the hotels if the purchase price was less than 97% of the
appraised value of the hotels, as agreed to by the Partnership and the lender.
In fact, the purchase price was in excess of 99% of the average value of the two
appraisals. Finally, the purchase price of Nuho Company's interest in future
management fees was based upon reasonable and customary valuation methods.
The defendants maintain that the complaint is based upon inaccurate assumptions
and incomplete factual information and is without merit. The defendants intend
to vigorously defend themselves against the complaint and have availed
themselves to the indemnification and hold-harmless provisions of the
Partnership Agreement of the Partnership. Accordingly, the final distribution of
cash to the Limited Partners, the liquidation of the Partnership and delivery of
final tax information to the Limited Partners have been delayed indefinitely
until such time as the costs of defending the complaint have been determined.
The Partnership is retaining its remaining assets as a reserve for legal and
accounting expense associated with the liquidation of the Partnership and to
satisfy possible indemnification claims by affiliates of the General Partner for
legal costs resulting from the lawsuit discussed above. Any remaining cash in
the Partnership after the resolution of this lawsuit and payment of all
liquidation expenses will be paid to the partners in a final liquidating
distribution.
Due to the uncertainty of the lawsuit, no estimate of a final distribution can
be made at this time and no costs have been accrued for this at September 30,
1999.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The Partnership conducts no business operations and is retaining the current
cash balances pending the final outcome of the threatened litigation described
above. Therefore, an analysis of liquidity and capital resources and the results
of operations for the quarter ended September 30, 1999 is not presented herein.
9
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PART II. OTHER INFORMATION
ITEMS 1 THROUGH 5
Information required in Items 1 through 5 is not applicable to the Registrant
for the quarter ended September 30, 1999.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended September 30, 1999.
Exhibit 27 - Financial Data Schedule is located on page 11.
10
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SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PSH MASTER L. P. I
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(Registrant)
By: PC Development Limited Partnership,
General Partner
By: PH Management Company,
General Partner
By: /s/ James V. Pickett 11/15/99
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James V. Pickett, Chairman Date
By: /s/ Stephen C. Denz 11/15/99
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Stephen C. Denz, Controller Date
(Principal Financial Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ James V. Pickett 11/15/99
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James V. Pickett, Chairman of the Date
Board of Directors and President
of PH Management Company
/s/ Stephen C. Denz 11/15/99
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Stephen C. Denz, Secretary and Date
Director of PH Management Company
11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000813897
<NAME> PSH MASTER L.P.I
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 989,655
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 989,665
<PP&E> 7,695
<DEPRECIATION> 7,695
<TOTAL-ASSETS> 989,665
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 989,665
<TOTAL-LIABILITY-AND-EQUITY> 989,665
<SALES> 0
<TOTAL-REVENUES> 11,647
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,188
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,541)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,541)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,541)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
