<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1996
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 Number 0-16865
Nantucket Island Associates Limited Partnership
-----------------------------------------------
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2948435
--------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
-------------------------------------- ------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
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 of 10
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10-QSB March 31, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
Assets 1996 1995
<S> <C> <C>
Cash and cash equivalents $ 333,000 $ 279,000
Restricted cash 479,000 1,116,000
Accounts receivable less allowance for doubtful
accounts of $41,000 (1996) and $49,000 (1995) 335,000 359,000
Receivable from related parties 114,000 124,000
Inventories 381,000 373,000
Prepaid expenses and other current assets 244,000 336,000
------------ ------------
Total current assets 1,886,000 2,587,000
Property and equipment, net of accumulated depreciaton
of $19,176,000 (1996) and $18,612,000 (1995) 48,906,000 49,450,000
Deferred rent receivable 365,000 346,000
Deferred costs, net of accumulated amortization of
$1,840,000 (1996) and $1,765,000 (1995) 1,682,000 1,757,000
Security deposits and other restricted cash 174,000 172,000
------------ ------------
Total assets $ 53,013,000 $ 54,312,000
============ ============
Liabilities and Partners' Equity
Accounts payable $ 447,000 $ 271,000
Accrued expenses 400,000 811,000
Advance deposits 1,310,000 247,000
Current maturity of long-term debt 715,000 736,000
Payables to related parties -- 59,000
Accrued interest 446,000 446,000
------------ ------------
Total current liabilities 3,318,000 2,570,000
------------ ------------
Long-term debt 26,279,000 26,279,000
------------ ------------
Total liabilities 29,597,000 28,849,000
------------ ------------
Commitments
Partners' equity (deficit):
Limited partners equity (785 units outstanding)
33,883,000 35,828,000
General partners' deficit (10,467,000) (10,365,000)
------------ ------------
Total partners' equity 23,416,000 25,463,000
------------ ------------
Total liabilities and partners' equity $ 53,013,000 $ 54,312,000
============ ============
</TABLE>
See notes to consolidated financial statements.
2 of 10
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10-QSB March 31, 1996
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
March 31, March 31,
1996 1995
Revenue:
Hotel operations $ -- $ 83,000
Restaurant operations -- 87,000
Commercial rental operations 570,000 472,000
Boat basin operations 37,000 39,000
----------- -----------
Total revenue 607,000 681,000
----------- -----------
Operating expenses:
Hotel 114,000 165,000
Restaurant 93,000 196,000
Commercial rental 58,000 31,000
Boat basin 47,000 48,000
Other 38,000 30,000
Real estate taxes and insurance 259,000 254,000
General and administrative 334,000 330,000
Marketing and promotion 149,000 132,000
Repairs and maintenance 228,000 188,000
Utilities 76,000 85,000
Management fees 72,000 72,000
Amortization 75,000 62,000
Depreciation 564,000 545,000
----------- -----------
Total operating expenses $ 2,107,000 $ 2,138,000
----------- -----------
Loss from operations (1,500,000) (1,457,000)
----------- -----------
Other income (expense):
Interest income 12,000 23,000
Other income 34,000 39,000
Other expense -- (71,000)
Interest expense (593,000) (643,000)
----------- -----------
Total other income (expense), net (547,000) (652,000)
----------- -----------
Net loss $(2,047,000) $(2,109,000)
=========== ===========
Net loss per limited partnership unit $ (2,477.71) $ (2,552.87)
=========== ===========
See notes to consolidated financial statements.
3 of 10
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB MARCH 31, 1996
Consolidated Statement of Partners' Equity (deficit) (Unaudited)
<TABLE>
<CAPTION>
Units of
Limited Limited General
Partnership Partners' Partners' Total
Interest Equity Deficit Equity
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 785 $ 35,828,000 $(10,365,000) $ 25,463,000
Net loss -- (1,945,000) (102,000) (2,047,000)
------------ ------------ ------------ ------------
Balance - March 31, 1996 785 $ 33,883,000 $(10,467,000) $ 23,416,000
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements
4 of 10
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10-QSB March 31, 1996
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended
March 31, March 31,
1996 1995
Cash Flows from Operating Activities:
Net loss $(2,047,000) $(2,109,000)
Adjustments to reconcile net loss to net cash
provided by (used) in operating activities:
Depreciation and amortization 639,000 607,000
Changes in assets and liabilities:
Restricted cash 637,000 --
Accounts receivable 24,000 586,000
Receivable from related parties 10,000 (23,000)
Inventories (8,000) (25,000)
Prepaid expenses and other current assets 92,000 96,000
Deferred rent receivable (19,000) --
Security deposits and other restricted cash (2,000) (1,000)
Accrued interest -- (2,000)
Accounts payable 176,000 (98,000)
Accrued expenses (411,000) (619,000)
Advance deposits 1,063,000 850,000
Payable to related parties (59,000) (48,000)
----------- -----------
Net cash provided by (used in) operating activities 95,000 (786,000)
----------- -----------
Cash Flows from Investing Activities:
Expenditures for property and equipment (20,000) (242,000)
----------- -----------
Cash used in investing activities (20,000) (242,000)
----------- -----------
Cash Flows from Financing Activities:
Principal payments on long-term debt (21,000) (19,000)
----------- -----------
Cash used in financing activities (21,000) (19,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents 54,000 (1,047,000)
Cash and cash equivalents, beginning of year 279,000 2,428,000
----------- -----------
Cash and cash equivalents, end of year $ 333,000 $ 1,381,000
=========== ===========
Supplemental Disclosure of Cash Flow Information -
Cash paid for interest $ 593,000 646,000
=========== ===========
See notes to consolidated financial statements.
5 of 10
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB MARCH 31, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's Annual Report for the year
ended December 31, 1995.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. Certain amounts have been reclassified to conform to the
March 31, 1996 presentation. The balance sheet at December 31, 1995 was
derived from audited financial statements at such date.
The results of operations for the three months ended March 31, 1996 and
1995 are not necessarily indicative of the results to be expected for the
full year.
2. Related Party Transactions
The partnership paid a partnership administration fee of $60,000 and a
management fee of $11,000 to affiliates of the General Partner during the
three months ended March 31, 1996.
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB MARCH 31, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation
This item should be read in conjunction with the financial statements and other
items contained elsewhere in the report.
Liquidity and Capital Resources
The Registrant requires cash to pay operating expenses, debt service payments
and capital improvements. The seasonal nature of the Registrant's business
results in the Registrant having to supplement deficiencies in its cash flows
with its reserves during the first and second quarters of each year.
The level of liquidity based upon the Registrant's cash and cash equivalents
experienced a $54,000 increase at March 31, 1996 as compared to December 31,
1995. The increase was due to $95,000 provided by operating activities, which
was partially offset by $20,000 used in investing activities and $21,000 used in
financing activities. Investing activities consisted of $20,000 of expenditures
for property and equipment and financing activities consisted of $21,000 of
mortgage principal repayments. At March 31, 1996, the Registrant's unrestricted
cash reserves were $333,000. The Registrant also has a restricted cash reserve
account held by its lender, Bankers Trust. At March 31, 1996, the balance in the
account was $479,000. All other increases (decreases) in certain assets and
liabilities are the result of the timing of receipt and payment of various
operating activities.
Registrant's properties do not generate sufficient cash flow to pay for required
capital improvements and debt service payments. The Registrant expects to incur
approximately $4,000,000 to $5,000,000 for capital improvements during 1996.
Approximately $2,500,000 to $3,000,000 relates to bulkhead replacement and
dredging at the boat basin. In order to fund the needed capital improvements the
Registrant will be required to obtain additional funds through debt financing,
equity contributions, and/or sales of properties.
Based on the current operating results of the Registrant's real estate
assets and in connection with the implementation of SFAS No. 121,
management is in the process of reassessing the value of the
Partnership's properties. As a result of this analysis, it is possible
that a write-down may be taken during the second quarter of 1996 which
would have a significant effect on the Registrant's consolidated
financial statements.
The Registrant's $26,600,000 mortgage loan matures in February 1997, with an
extension option through October 1997. The loan requires principal payments of
$600,000 in September 1996 and September 1997. Prior to maturity, the Registrant
will attempt to extend the due date of this loan or find replacement financing.
If the loan is not refinanced or extended, or properties are not sold, the
Registrant could lose these properties through foreclosure.
7 of 10
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB MARCH 31, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Results of Operations
Three Months Ended March 31, 1996 Vs. March 31, 1995
Net loss decreased by $62,000 for the three months ended March 31, 1996, as
compared to 1995, due to decreases in expenses of $136,000 and revenues of
$74,000.
Revenues decreased by $74,000 because there was no income generated from hotel
and restaurant operations (as all hotel and related restaurant operations were
closed for business due to their seasonal nature), which was partially offset
by an increase in commercial rental operating revenue. During the same period
in 1995, the Registrant continued to operate one of the hotels and the
restaurant in that hotel during the entire first quarter. Expenses decreased
due to decreases in hotel and restaurant operating expenses which were
partially offset by increases in repairs and maintenance and commercial rental
expense.
The results of operations in future quarters will differ from the results of
operations for the quarter ended March 31, 1996, due to the seasonal nature of
the Registrant's business. Inflation and changing economic conditions, could
also affect occupancy levels, rental rates and operating expenses.
8 of 10
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB MARCH 31, 1996
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 8K: No report on Form 8-K was filed during the period.
9 of 10
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB MARCH 31, 1996
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: THREE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /S/ Michael L. Ashner
----------------------------
Michael L. Ashner
Chief Executive Officer
BY: /S/ Edward V. Williams
----------------------------
Edward V. Williams
Chief Financial Officer
Dated: May 13, 1996
10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Nantucket
Island Associates Limited Partnership and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 812,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 490,000 <F2>
<ALLOWANCES> (41,000)
<INVENTORY> 381,000
<CURRENT-ASSETS> 1,886,000
<PP&E> 68,082,000
<DEPRECIATION> (19,176,000)
<TOTAL-ASSETS> 53,013,000
<CURRENT-LIABILITIES> 3,318,000
<BONDS> 26,279,000
0
0
<COMMON> 0
<OTHER-SE> 23,416,000
<TOTAL-LIABILITY-AND-EQUITY> 53,013,000
<SALES> 0
<TOTAL-REVENUES> 641,000
<CGS> 0
<TOTAL-COSTS> 1,773,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 593,000
<INCOME-PRETAX> (2,047,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,047,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,047,000)
<EPS-PRIMARY> (2,477.71)
<EPS-DILUTED> (2,477.71)
<FN>
<F1>Cash includes $479,000 of restricted cash
<F2>Includes $114,000 of receivable from related parties
</FN>
</TABLE>
