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 March 31, 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
- -------------------------------------- -----
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 March 31, At December 31,
2000 1999
(unaudited) (audited)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets held for disposition $32,440,000 $32,440,000
Cash and cash equivalents 8,093,567 7,605,884
Construction escrow 491,246 491,246
Accounts receivable, net of allowance of $13,390
in 2000 and 1999 138,526 116,555
Other receivables 1,605 5,444
Prepaid expenses 164,746 317,801
- --------------------------------------------------------------------------------------
Total Assets $41,329,690 $40,976,930
======================================================================================
Liabilities, Minority Interest and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 620,459 $ 232,431
Other liabilities 125,630 168,960
Mortgages payable 31,025,000 31,025,000
Due to affiliates 47,418 45,500
Security deposits payable 9,271 10,021
Deferred income 190,900 302,466
-----------------------------
Total Liabilities 32,018,678 31,784,378
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Minority interest (128,871) (133,180)
-----------------------------
Partners' Capital:
General Partner (87,059) (88,201)
Limited Partners (70,250 limited partnership
units authorized issued and outstanding) 9,526,942 9,413,933
-----------------------------
Total Partners' Capital 9,439,883 9,325,732
- --------------------------------------------------------------------------------------
Total Liabilities, Minority Interest and
Partners' Capital $41,329,690 $40,976,930
======================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
For the three months ended March 31, 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
Net Income 1,142 113,009 114,151
- --------------------------------------------------------------------------------------
Balance at March 31, 2000 $ (87,059) $ 9,526,942 $9,439,883
======================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements. 2
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended March 31,
2000 1999
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<S> <C> <C>
Income
Rental income $ 934,241 $ 924,899
Escalation income 583,262 632,449
Interest income 112,134 83,373
Miscellaneous income -- 26,318
--------------------------
Total Income 1,629,637 1,667,039
--------------------------
Expenses
Interest expense 562,328 562,328
Property operating expenses 643,340 446,762
Real estate taxes 158,403 189,907
General and administrative 147,106 124,860
--------------------------
Total Expenses 1,511,177 1,323,857
- --------------------------------------------------------------------------------------
Income before minority interest 118,460 343,182
Minority interest (4,309) (8,764)
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Net Income $ 114,151 $ 334,418
======================================================================================
Net Income Allocated:
To the General Partner $ 1,142 $ 3,344
To the Limited Partners 113,009 331,074
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$ 114,151 $ 334,418
======================================================================================
Per limited partnership unit
(70,250 outstanding) $ 1.61 $ 4.71
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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>
- --------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31,
2000 1999
- --------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 114,151 $ 334,418
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest 4,309 8,764
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable (21,971) 227,572
Other receivable 3,839 300,000
Prepaid expenses 153,055 213,945
Accounts payable and accrued expenses 388,028 9,038
Other liabilities (43,330) (10,250)
Due to affiliates 1,918 (8,849)
Deferred income (111,566) (73,853)
Security deposit (750) (5,000)
--------------------------
Net cash provided by operating activities 487,683 995,785
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Cash Flows From Investing Activities:
Construction escrows -- (4,500)
--------------------------
Net cash used for investing activities -- (4,500)
- --------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 487,683 991,285
Cash and cash equivalents, beginning of period 7,605,884 5,952,659
- --------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 8,093,567 $ 6,943,944
======================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 374,885 $ 562,328
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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 March 31, 2000 and the
results of operations for the three months ended March 31, 2000 and 1999, cash
flows for the three months ended March 31, 2000 and 1999 and the consolidated
statement of partners' capital (deficit) for the three months ended March 31,
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 an unaffiliated entity for a gross sales price of $33,500,000. The
sale proceeds were used to pay off the Partnership's mortgage notes and accrued
interest payable, which totaled $31,231,187. The General Partner intends to
distribute the net sale proceeds and a portion of the Partnership's cash
reserves to investors during the second quarter and then terminate the
Partnership later this year. Certain cash reserves have been set aside 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
- -------------------------------
The Mall was sold to an unaffiliated entity for a gross sales price of
$33,500,000 on April 3, 2000. The sale proceeds were used to pay off the
Partnership's mortgage notes and accrued interest payable, which totaled
$31,231,187. The General Partner intends to distribute the net sale proceeds and
a portion of the Partnership's cash reserves to investors during the second
quarter and then terminate the Partnership later this year. Certain cash
reserves have been set aside 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 March 31, 2000, the Partnership had cash and cash equivalents totaling
$8,093,567, compared with $7,605,884 at December 31, 1999. The increase is due
to net cash provided by operating activities.
At March 31, 2000, the Partnership's accounts receivable, net of allowance for
doubtful accounts, increased to $138,526 from $116,555 at December 31, 1999,
primarily due to the timing of rental payments.
Prepaid expenses decreased to $164,746 at March 31, 2000 from $317,801 at
December 31, 1999, primarily due to the timing of real estate tax payments.
Accounts payable and accrued expenses increased to $620,459 at March 31, 2000
from $232,431 at December 31, 1999, primarily due to higher unpaid operating
expenses incurred as a result of the sale of the Mall.
Deferred income decreased from $302,466 at December 31, 1999 to $190,900 at
March 31, 2000, primarily due to timing differences in the billing of tenants
for their share of real estate taxes.
Results of Operations
- ---------------------
For the three months ended March 31, 2000, the Partnership generated net income
of $114,151, compared to net income of $334,418, for the corresponding period in
1999. The decrease is primarily due to increased operating and general and
administrative expenses as a result of the sale of the Mall.
For the three months ended March 31, 2000, the Partnership's rental income
totaled $934,241, which is comparable to rental income of $924,899, for the
corresponding period in 1999.
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 $583,262 for the three months ended March 31, 2000,
compared to $632,449 for the corresponding period in 1999. The decrease in
escalation income is primarily due to a decrease in real estate taxes.
Interest income totaled $112,134 for the three months ended March 31, 2000,
compared with $83,373 for the same period in 1999. The increase is attributed to
higher average cash balances in 2000.
6
<PAGE>
SHOPCO REGIONAL MALLS, L.P.
AND CONSOLIDATED PARTNERSHIP
Property operating expenses totaled $643,340 for the three months ended March
31, 2000, compared with $446,762 for the corresponding period in 1999. The
increase is primarily due to additional costs incurred with the sale of the
Mall.
Depreciation and amortization expense totaled $-0- for the three months ended
March 31, 2000 and 1999. The Partnership suspended depreciation and amortization
on July 1, 1998, in accordance with FASB No. 121.
General and administrative expenses for the three months ended March 31, 2000
were $147,106, compared with $124,860 for the same period in 1999. The increase
reflects higher 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
-------------------
On March 8, 2000 a Form 8-K was filed reporting a special meeting
of the limited partners of Shopco Regional Malls, L.P. was held
on February 29, 2000. At this special meeting the Partnership
received the required approval from the limited partnership units
to sell Cranberry Mall and liquidate the Partnership in 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: May 15, 2000 BY: /s/Michael T. Marron
-------------------------------------
Name: Michael T. Marron
Title: President and Chief Financial Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-END> Mar-31-2000
<CASH> 8,093,567
<SECURITIES> 000
<RECEIVABLES> 138,526
<ALLOWANCES> 13,390
<INVENTORY> 000
<CURRENT-ASSETS> 8,889,690
<PP&E> 32,440,000
<DEPRECIATION> 000
<TOTAL-ASSETS> 41,329,690
<CURRENT-LIABILITIES> 746,089
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 9,439,883
<TOTAL-LIABILITY-AND-EQUITY> 41,329,690
<SALES> 934,241
<TOTAL-REVENUES> 1,629,637
<CGS> 000
<TOTAL-COSTS> 801,743
<OTHER-EXPENSES> 147,106
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 562,328
<INCOME-PRETAX> 114,151
<INCOME-TAX> 000
<INCOME-CONTINUING> 114,151
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 114,151
<EPS-BASIC> 1.61
<EPS-DILUTED> 1.61
</TABLE>
