<PAGE>
FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period.........to.........
Commission file number 0-17646
UNITED INVESTORS INCOME PROPERTIES
(Exact name of small business issuer as specified in its charter)
Missouri 43-1483942
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) UNITED INVESTORS INCOME PROPERTIES
BALANCE SHEET
(Unaudited)
September 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash:
Unrestricted $ 778,316
Restricted-tenant security deposits 47,447
Accounts receivable 9,938
Escrows for taxes 89,280
Other assets 33,963
Investment properties:
Land $ 1,861,813
Buildings and related personal property 10,137,849
11,999,662
Less accumulated depreciation (2,164,518) 9,835,144
----------
Investment in Joint Venture 657,168
$11,451,256
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 54,045
Tenant security deposits 47,549
Accrued taxes 19,969
Other liabilities 61,021
Partners' Capital (Deficit)
General partner $ (20,651)
Limited partners (61,063 units
issued and outstanding) 11,289,323 11,268,672
----------- ----------
$11,451,256
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
1
<PAGE>
b) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Revenues:
Rental income $378,325 $381,843 $1,110,086 $1,189,644
Other income 35,358 27,002 87,223 75,312
------- ------- --------- ---------
Total revenues 413,683 408,845 1,197,309 1,264,956
------- ------- --------- ---------
Expenses:
Operating 94,690 92,188 290,150 279,461
General and administrative 22,047 15,912 57,755 48,144
Property management fees 19,155 22,054 57,519 67,406
Maintenance 74,322 52,191 176,544 143,230
Depreciation and
amortization 88,902 86,136 259,301 254,786
Property taxes 36,746 34,060 114,462 120,595
Tenant reimbursements (2,951) (12,623) (5,480) (36,267)
------- ------- --------- ---------
Total expenses 332,911 289,918 950,251 877,355
------- ------- --------- ---------
Equity in net income of
joint venture 2,723 11,892 21,683 27,426
------- ------- --------- ---------
Net income $ 83,495 $130,819 $ 268,741 $ 415,027
======= ======= ========= =========
Net income allocated to
general partner (1%) $ 835 $ 1,308 $ 2,687 $ 4,150
Net income allocated to
limited partners (99%) 82,660 129,511 266,054 410,877
------- ------- --------- ---------
$ 83,495 $130,819 $ 268,741 $ 415,027
======= ======= ========= =========
Net income per limited
partnership unit $ 1.35 $ 2.12 $ 4.36 $ 6.73
======= ======= ========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
2
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c) UNITED INVESTORS INCOME PROPERTIES
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 61,063 $ 100 $15,265,750 $15,265,850
====== ======= ========== ==========
Partners' capital (deficit) at
December 31, 1994 61,063 $(18,324) $11,519,621 $11,501,297
Partners' distributions -- (5,014) (496,352) (501,366)
Net income for the nine months
ended September 30, 1995 -- 2,687 266,054 268,741
------ ------- ---------- ----------
Partners' capital (deficit) at
September 30, 1995 61,063 $(20,651) $11,289,323 $11,268,672
====== ======= ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3
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d) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 268,741 $ 415,027
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (21,683) (27,426)
Depreciation and amortization 259,301 254,786
Change in accounts:
Restricted cash (639) 5,313
Accounts receivable 2,331 (733)
Escrows for taxes (40,079) (61,236)
Other assets (2,239) (968)
Accounts payable 35,736 4,016
Tenant security deposit liabilities (5,547) (5,363)
Accrued taxes 19,969 12,490
Other liabilities 13,347 9,842
-------- --------
Net cash provided by operating activities 529,238 605,748
-------- --------
Cash flows from investing activities:
Property improvements and replacements (121,827) (74,676)
Distributions from joint venture 4,276 40,950
-------- --------
Net cash used in investing activities (117,551) (33,726)
-------- --------
Cash flows from financing activities:
Partners' distributions (501,366) (688,963)
-------- --------
Net cash used in financing activities (501,366) (688,963)
-------- --------
Net decrease in cash (89,679) (116,941)
Cash at beginning of period 867,995 991,551
-------- --------
Cash at end of period $ 778,316 $ 874,610
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
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e) UNITED INVESTORS INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
NOTE B - BASIS OF ACCOUNTING
The financial statements include the Partnership's operating divisions,
Bronson Place Apartments, Defoors Crossing Apartments, Meadow Wood Apartments,
and Peachtree Corners Medical Building. In addition, the Partnership owns a 35%
interest in Corinth Square Associates ("Corinth"). The Partnership reflects its
interest in Corinth utilizing the equity method whereby the original investment
is increased by advances to Corinth and the Partnership's share of earnings of
Corinth. The investment is decreased by distributions from Corinth and the
Partnership's share of losses of Corinth.
NOTE C - REPURCHASE OF UNITS
The partnership agreement for the Partnership contains a provision which
states that the General Partner shall purchase up to 10% of the limited
partnership Units outstanding at the fifth anniversary date of the last
Additional Closing Date. Pursuant to this provision, the General Partner
accepted repurchase notices representing approximately 1.5% of the limited
partnership Units and during the third quarter of 1995 the transfer of 950 Units
was effected.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of three apartment
complexes and a commercial office building. The following table sets forth the
average occupancy of these properties for the nine months ended September 30,
1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
1995 1994
---- ----
<S> <C> <C>
Bronson Place Apartments
Mountlake Terrace, Washington 91% 93%
Meadow Wood Apartments
Medford, Oregon 91% 89%
Defoors Crossing Apartments
Atlanta, Georgia 98% 98%
Peachtree Corners Medical Building
Atlanta, Georgia 20% 73%
</TABLE>
The decrease in occupancy at Bronson Place resulted from the increasingly
competitive market conditions encountered in the first nine months of 1995. In
an attempt to increase occupancy, management has increased rental concessions at
this property resulting in increased occupancy of 96% at the end of the third
quarter of 1995. Although occupancy has remained stable at Meadow Wood and
Defoors, both markets are experiencing construction of new apartments. A new 392
apartment community near Defoors will be constructed with leasing to begin in
the summer of 1996. In an effort to improve marketability in increasingly
competitive areas, Meadow Wood and Defoors have both concentrated on exterior
building maintenance such as painting and exterior signage. At Peachtree
Medical, occupancy decreased in 1995 as a result of the move-out of two tenants
occupying 73% of the property. The property has initiated a more comprehensive
marketing and maintenance program in order to position the property to attract
quality, long-term tenants. A new tenant occupying 23% of the leasable space
moved into the property in the third quarter of 1995, and the Partnership is
negotiating a lease with another tenant who would increase occupancy to
approximately 50% in the first quarter of 1996.
The Partnership's net income for the nine months ended September 30, 1995
was $268,741, of which $83,495 was realized in the third quarter. The
corresponding net income for 1994 was $415,027 and $130,819, respectively. The
decrease in net income for the nine months ended September 30, 1995, was
primarily due to a decrease in rental revenue and increases in operating and
maintenance expenses. The rental revenue decrease resulted from declining
occupancy at Peachtree Corners in 1995. Tenant reimbursements also decreased in
the first quarter of 1995 due to a decrease in reimbursable expenses resulting
from the decreased occupancy at Peachtree Corners. These decreases in net income
were partially offset by an increase in other income resulting from higher
cleaning and damage fees created by increased tenant turnover at Bronson Place
in the first nine months of 1995. Also contributing to increased other income
was an increase in
6
<PAGE>
interest income resulting from higher interest rates earned as a result of
investments in short-term certificates of deposit.
Total expenses increased due to higher operating and maintenance costs in
1995 involving primarily exterior painting at Bronson and Defoors and plumbing
and parking lot repairs at Peachtree. General and administrative expenses
increased as a result of an increase in expense reimbursements in 1995.
Partially offsetting the increase in total expenses was a decrease in property
management fees resulting from the decrease in rental revenues. Property taxes
were lower for the nine months ended September 30, 1995, compared to the
corresponding period of 1994 due to a reduced tax assessment received on the
Meadow Wood property.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. Due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the General Partner will be able to sustain such a
plan.
At September 30, 1995, the Partnership had unrestricted cash of $778,316
compared to $867,995 at December 31, 1994. Net cash provided by operating
activities decreased as a result of the decreases in rental income and tenant
reimbursements discussed above. Net cash used in investing activities increased
due to building improvements made primarily at Peachtree and also from fewer
distributions received from the joint venture for the nine months ended
September 30, 1995, compared to the corresponding period of 1994. Net cash used
in financing activities decreased as a result of reduced partners'
distributions.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and meet other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. Future cash
distributions will depend on the levels of net cash generated from operations,
property sales and the availability of cash reserves. Cash distributions of
$882,021 were made during 1994 and cash distributions of $501,366 were made
during the first nine months of 1995.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1995.
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNITED INVESTORS INCOME PROPERTIES
(A Missouri Limited Partnership)
By: United Investors Real Estate, Inc., a
Delaware corporation, its General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 9, 1995
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties' 1995 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 778,316
<SECURITIES> 0
<RECEIVABLES> 9,938
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 11,999,662
<DEPRECIATION> 2,164,518
<TOTAL-ASSETS> 11,451,256
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 11,268,627
<TOTAL-LIABILITY-AND-EQUITY> 11,451,256
<SALES> 0
<TOTAL-REVENUES> 1,197,309
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 950,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268,741
<EPS-PRIMARY> 4.36
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
