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 June 30, 2000
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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: 33-20614
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SHOPCO REGIONAL MALLS, L.P.
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Exact Name of Registrant as Specified in its Charter
Delaware 13-3217028
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State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
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Address of Principal Executive Offices Zip code
(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
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<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
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CONSOLIDATED BALANCE SHEETS
At June 30, At December 31,
2000 1999
(unaudited) (audited)
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<S> <C> <C>
Assets
Real estate assets held for disposition $ -- $32,440,000
Cash and cash equivalents 2,361,298 7,605,884
Construction escrow -- 491,246
Accounts receivable, net of allowance of $68,000
in 2000 and $13,390 in 1999 57,878 116,555
Other receivables -- 5,444
Prepaid expenses 4,814 317,801
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Total Assets $ 2,423,990 $40,976,930
================================================================================================
Liabilities, Minority Interest and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 157,821 $ 232,431
Other liabilities 188,111 168,960
Mortgages payable -- 31,025,000
Due to affiliates 34,000 45,500
Security deposits payable -- 10,021
Deferred income -- 302,466
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Total Liabilities 379,932 31,784,378
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Minority interest -- (133,180)
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Partners' Capital:
General Partner (86,531) (88,201)
Limited Partners (70,250 limited partnership units authorized
issued and outstanding) 2,130,589 9,413,933
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Total Partners' Capital 2,044,058 9,325,732
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Total Liabilities, Minority Interest and Partners' Capital $ 2,423,990 $40,976,930
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
For the six months ended June 30, 2000
General Limited
Partner Partners Total
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<S> <C> <C> <C>
Balance at December 31, 1999 $ (88,201) $ 9,413,933 $ 9,325,732
Distributions -- (7,422,591) (7,422,591)
Net Income 1,670 139,247 140,917
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Balance at June 30, 2000 $ (86,531) $ 2,130,589 $ 2,044,058
================================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements. 2
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended June 30, For the six months ended June 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Income
Rental income $ 8,238 $ 1,049,177 $ 942,479 $ 1,974,076
Escalation income 167,496 440,519 750,758 1,072,968
Interest income 160,918 89,915 273,052 173,288
Miscellaneous income -- 12,103 -- 38,421
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Total Income 336,652 1,591,714 1,966,289 3,258,753
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Expenses
Interest expense 18,745 562,328 581,073 1,124,656
Property operating expenses 57,818 521,839 701,158 968,601
Loss on write-down of real estate -- 1,830,000 -- 1,830,000
Real estate taxes 5,281 189,907 163,684 379,814
General and administrative 73,133 101,583 220,239 226,443
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Total Expenses 154,977 3,205,657 1,666,154 4,529,514
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Income (loss) before loss on sale
of real estate 181,675 (1,613,943) 300,135 (1,270,761)
Loss on sale of real estate (26,038) -- (26,038) --
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Income before minority interest 155,637 (1,613,943) 274,097 (1,270,761)
Minority interest (128,871) 30,956 (133,180) 22,192
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Net Income (Loss) $ 26,766 $(1,582,987) $ 140,917 $(1,248,569)
================================================================================================
Net Income Allocated:
To the General Partners $ 528 $ (15,830) $ 1,670 $ (12,486)
To the Limited Partners 26,238 (1,567,157) 139,247 (1,236,083)
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$ 26,766 $(1,582,987) $ 140,917 $(1,248,569)
================================================================================================
Per limited partnership unit
(70,250 outstanding) $ .37 $ (22.31) $ 1.98 $ (17.60)
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</TABLE>
See accompanying notes to the consolidated financial statements. 3
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30,
2000 1999
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<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 140,917 $(1,248,569)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Minority interest 133,180 (22,192)
Loss on write-down of real estate -- 1,830,000
Loss on sale of real estate 26,038 --
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Accounts receivable 58,677 109,986
Other receivable 5,444 296,601
Prepaid expenses 312,987 376,656
Accounts payable and accrued expenses (74,610) 13,707
Other liabilities 19,151 (20,577)
Due to affiliates (11,500) 7,851
Deferred income (302,466) (69,023)
Security deposit (10,021) (3,250)
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Net cash provided by operating activities 297,797 1,271,190
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Cash Flows From Investing Activities:
Additions to real estate assets held for disposition -- (50,000)
Proceeds from sale of real estate 32,413,962 --
Construction escrows 491,246 (9,000)
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Net cash provided by (used for) investing activities 32,905,208 (59,000)
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Cash Flows From Financing Activities:
Principal payments on long-term debts (31,025,000) --
Cash distributions (7,422,591) --
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Net cash used for financing activities (38,447,591) --
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Net increase (decrease) in cash and cash equivalents (5,244,586) 1,212,190
Cash and cash equivalents, beginning of period 7,605,884 5,952,659
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Cash and cash equivalents, end of period $ 2,361,298 $ 7,164,849
=====================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 581,073 $ 1,124,656
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</TABLE>
See accompanying notes to the consolidated financial statements. 4
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1999 audited consolidated financial
statements within Form 10-K.
The unaudited interim consolidated financial statements include all normal and
recurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of June 30, 2000 and the
results of operations for the three and six months ended June 30, 2000 and 1999,
cash flows for the six months ended June 30, 2000 and 1999 and the consolidated
statement of partners' capital (deficit) for the six months ended June 30, 2000.
Results of operations for the period are not necessarily indicative of the
results to be expected for the full year.
The following significant event occurred subsequent to fiscal year 1999, which
requires disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On April 3, 2000, the Partnership's final property, Cranberry Mall (the "Mall"),
was sold to Cranberry Mall Properties LLC, an unaffiliated entity, for a net
sales price of $32,413,962 and the Partnership recognized a loss of $26,038 on
the sale. The sale proceeds were used to pay off the Partnership's mortgage
notes and accrued interest payable, which totaled $31,231,187. The Partnership
paid a cash distribution totaling $7,422,591 or $105.66 per limited partner unit
from the net sale proceeds and from the Partnership's cash reserves to investors
on June 8, 2000 and intends to terminate the Partnership later this year.
Certain cash reserves have been set aside for customary representation and
warranties on the sale of the Mall, which are scheduled to expire on October 31,
2000, and to pay expenses associated with the wind-up and termination of the
Partnership. Any reserves remaining after the payment of, or provision for,
these liabilities will be distributed upon termination. The sale and subsequent
dissolution of the Partnership was approved by a majority in interest of the
Unitholders at a Special Meeting of the Limited Partners held on February 29,
2000.
5
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
Part 1, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
-------------------------------
On April 3, 2000, the Mall was sold to Cranberry Mall Properties LLC, an
unaffiliated entity, for a net sales price of $32,413,962 and the Partnership
recognized a loss of $26,038 on the sale. The sale proceeds were used to pay off
the Partnership's mortgage notes and accrued interest payable, which totaled
$31,231,187. The Partnership paid a cash distribution totaling $7,422,591 or
$105.66 per limited partner unit from the net sale proceeds and from the
Partnership's cash reserves to investors on June 8, 2000 and intends to
terminate the Partnership later this year. Certain cash reserves have been set
aside for representation and warranties on the sale of the Mall, which are
scheduled to expire on October 31, 2000, and to pay expenses associated with the
wind-up and termination of the Partnership. Any reserves remaining after the
payment of, or provision for, these liabilities will be distributed upon
termination. The sale and subsequent dissolution of the Partnership was approved
by a majority in interest of the Unitholders at a Special Meeting of the Limited
Partners held on February 29, 2000.
The first and second mortgage notes secured by Cranberry Mall, which totaled
$31,025,000 at March 31, 2000 and December 31, 1999, were originally scheduled
to mature on April 1, 1999. The mortgage lender, Metropolitan Life Insurance
Company, agreed to allow the Partnership to defer the payment of the principal
balance until the property was sold on April 3, 2000. The loan was repaid from
the Mall's sale proceeds.
At June 30, 2000, the Partnership had cash and cash equivalents totaling
$2,361,298, compared with $7,605,884 at December 31, 1999. The decrease is due
to distributions of $7,422,591 made to the Limited Partners in the second
quarter of 2000.
At June 30, 2000, the Partnership's accounts receivable, net of allowance for
doubtful accounts, amounted to $57,878, which represents funds collected by the
buyer on behalf of the Partnership.
Prepaid expenses decreased to $4,814 at June 30, 2000 from $317,801 at December
31, 1999, primarily due to the reimbursement of real estate taxes by the
purchaser of the property.
Accounts payable and accrued expenses decreased to $157,821 at June 30, 2000
from $232,431 at December 31, 1999, primarily due to payments of amounts accrued
for professional fees at December 31, 1999.
At June 30, 2000, other liabilities in the amount of $188,111 includes amounts
due to the Mall tenants for refunds of prior year escalation charges.
Results of Operations
---------------------
For the three and six months ended June 30, 2000, the Partnership generated net
income of $26,766 and $140,917, respectively, compared to net loss of $1,582,987
and $1,248,569, respectively, for the corresponding periods in 1999. The year
2000 amounts include a loss of $26,038 on the sale of the Mall. The increase in
net income is primarily due to a loss on write-down of real estate of $1,830,000
occurring in the second quarter 1999.
For the three and six months ended June 30, 2000, the Partnership's rental
income totaled $8,238 and $942,479, respectively, compared to rental income of
$1,049,177 and $1,974,076, respectively, for the corresponding periods in 1999.
The decrease is primarily due to the sale of the Mall in April 2000.
6
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
Escalation income represents the income received from Mall tenants for their
proportionate share of common area maintenance and real estate tax expenses.
Escalation income totaled $167,496 and $750,758, respectively, for the three and
six months ended June 30, 2000, compared to $440,519 and $1,072,968,
respectively, for the corresponding periods in 1999. The decrease in escalation
income is primarily due to the sale of the Mall.
Interest income totaled $160,918 and $273,052, respectively, for the three and
six months ended June 30, 2000, compared with $89,915 and $173,288,
respectively, for the same periods in 1999. The increase is attributed to higher
cash balances from the proceeds from the sale of the Mall.
Property operating expenses totaled $57,818 and $701,158, respectively, for the
three and six months ended June 30, 2000, compared with $521,839 and $968,601,
respectively, for the corresponding periods in 1999. The decrease is primarily
due to the sale of the Mall.
General and administrative expenses for the three and six months ended June 30,
2000 were $73,133 and $220,239, respectively, compared with $101,583 and
$226,443, respectively, for the same periods in 1999. The decrease reflects
lower Partnership administrative expenses as a result of the sale of the Mall.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
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(27) Financial Data Schedule
(b) Reports on Form 8-K
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No reports on Form 8-K were filed during the quarter ended
June 30, 2000.
7
<PAGE>
SHOPCO REGIONAL MALLS, 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.
SHOPCO REGIONAL MALLS, L.P.
BY: REGIONAL MALLS INC.
General Partner
Date: August 14, 2000 BY: /s/Rocco F. Andriola
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Name: Rocco F. Andriola
Title: President and Chief Financial Officer
8
