<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 1999
-------------
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)
Five Cambridge Center, Cambridge, MA 02142-1493
---------------------------------------------- -----------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
---------------------------
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>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10-QSB JUNE 30, 1999
-------------------------
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
(In thousands, except unit data)
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1999 1998
--------------------- ---------------------
<S> <C> <C>
Cash and cash equivalents $ 100 $ 100
Restricted cash 2,038 1,691
Accounts receivable 143 82
Real estate tax escrow and other current assets 220 485
--------------------- ---------------------
Total current assets 2,501 2,358
Property and equipment, net of accumulated depreciation
of $7,359 (1999) and $7,176 (1998) 17,999 18,520
Deferred rent receivable 375 279
Deferred costs, net of accumulated amortization of
$1,003 (1999) and $933 (1998) 610 680
--------------------- ---------------------
Total assets $ 21,485 $ 21,837
===================== =====================
Liabilities and Partners' Equity
Accounts payable and other liabilities $ 826 $ 948
Current maturity of long-term debt 278 278
Related party note payable 1,300 1,300
--------------------- ---------------------
Total current liabilities 2,404 2,526
Long-term debt 11,604 11,746
--------------------- ---------------------
Total liabilities 14,008 14,272
--------------------- ---------------------
Commitments
Partners' equity:
Limited partners equity, 785 units authorized, issued,
and outstanding 18,612 18,813
General partners' (deficit) (11,135) (11,248)
--------------------- ---------------------
Total partners' equity 7,477 7,565
--------------------- ---------------------
Total liabilities and partners' equity $ 21,485 $ 21,837
===================== =====================
</TABLE>
See notes to consolidated financial statements.
2 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10-QSB JUNE 30, 1999
-------------------------
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
(In thousands, except unit data) For the Six Months Ended
June 30, 1999 June 30, 1998
--------------------- ---------------------
Revenue:
<S> <C> <C>
Hotel operations $ - $ 753
Restaurant operations - 409
Commercial rental operations 1,461 1,297
Boat basin operations - 160
--------------------- ---------------------
Total revenue 1,461 2,619
--------------------- ---------------------
Operating expenses:
Hotel - 440
Restaurant - 588
Commercial rental 160 146
Boat basin - 136
Other - 147
Real estate taxes and insurance 368 508
General and administrative 113 667
Marketing and promotion 8 288
Repairs and maintenance 85 834
Utilities 22 151
Management fees 166 193
Amortization 49 114
Depreciation 286 280
--------------------- ---------------------
Total operating expenses 1,257 4,492
--------------------- ---------------------
Income (loss) from operations 204 (1,873)
--------------------- ---------------------
Other income (expense):
Interest income 49 123
Other income - 180
Interest expense (464) (1,112)
Gain on sale of properties 123 2,994
--------------------- ---------------------
Total other income (expense), net (292) 2,185
--------------------- ---------------------
Net (loss) income before extraordinary loss (88) 312
Extraordinary loss on extinguishment of debt - (403)
--------------------- ---------------------
Net loss $ (88) $ (91)
===================== =====================
Net income (loss) allocated to general partners $ 113 $ (154)
===================== =====================
Net loss allocated to limited partners $ (201) $ (2,287)
===================== =====================
Net income allocated to preferred limited partners $ - $ 2,350
===================== =====================
Net loss per limited partnership unit:
Loss before extraordinary item $ (256.05) $ (2,532.49)
Extraordinary item - loss on extinguishment of debt - (380.89)
--------------------- ---------------------
Net loss $ (256.05) $ (2,913.38)
===================== =====================
Net income per preferred limited partnership unit:
Income before extraordinary item $ - $ 3,100.64
Extraordinary item - loss on extinguishment of debt - (107.01)
--------------------- ---------------------
Net income $ - $ 2,993.63
===================== =====================
</TABLE>
See notes to consolidated financial statements.
3 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10-QSB JUNE 30, 1999
-------------------------
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
(In thousands, except unit data) For the Three Months Ended
June 30, 1999 June 30, 1998
--------------------- ---------------------
<S> <C> <C>
Revenue:
Hotel operations $ - $ 753
Restaurant operations - 409
Commercial rental operations 723 670
Boat basin operations - 123
--------------------- ---------------------
Total revenue 723 1,955
--------------------- ---------------------
Operating expenses:
Hotel - 393
Restaurant - 545
Commercial rental 88 90
Boat basin - 93
Other - 82
Real estate taxes and insurance 186 219
General and administrative 62 363
Marketing and promotion 7 184
Repairs and maintenance 65 413
Utilities 11 59
Management fees 83 111
Amortization 24 53
Depreciation 143 134
--------------------- ---------------------
Total operating expenses 669 2,739
--------------------- ---------------------
Income (loss) from operations 54 (784)
--------------------- ---------------------
Other income (expense):
Interest income 24 66
Other income - 153
Interest expense (231) (526)
Gain on sale of properties - 2,994
--------------------- ---------------------
Total other (expense) income, net (207) 2,687
--------------------- ---------------------
Net (loss) income before extraordinary loss (153) 1,903
Extraordinary loss on extinguishment of debt - (403)
--------------------- ---------------------
Net (loss) income $ (153) $ 1,500
===================== =====================
Net loss allocated to general partners $ (7) $ (74)
===================== =====================
Net loss allocated to limited partners $ (146) $ (1,108)
===================== =====================
Net income allocated to preferred limited partners $ - $ 2,682
===================== =====================
Net loss per limited partnership unit:
Loss before extraordinary item $ (185.99) $ (1,030.58)
Extraordinary item - loss on extinguishment of debt - (380.89)
--------------------- ---------------------
Net loss $ (185.99) $ (1,411.47)
===================== =====================
Net income per preferred limited partnership unit:
Income before extraordinary item $ - $ 3,523.57
Extraordinary item - loss on extinguishment of debt - (107.01)
--------------------- ---------------------
Net income $ - $ 3,416.56
===================== =====================
</TABLE>
See notes to consolidated financial statements.
4 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10 - QSB JUNE 30, 1999
---------------------------
Consolidated Statement of Changes in Partners' Equity (Deficit) (Unaudited)
(In thousands, except unit data)
<TABLE>
<CAPTION>
Units of Investor
Limited Limited General Total
Partnership Partners' Partners' Partners'
Interest Equity Deficit Equity
----------------- ---------------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
Balance - January 1, 1999 785 $ 18,813 $ (11,248) $ 7,565
Net income (loss) - (201) 113 (88)
----------------- ---------------------- ------------------- ----------------------
Balance - June 30, 1999 785 $ 18,612 $ (11,135) $ 7,477
================= ====================== =================== ======================
</TABLE>
See notes to consolidated financial statements
5 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10-QSB JUNE 30, 1999
-------------------------
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
(In thousands) For the Six Months Ended
June 30, 1999 June 30, 1998
--------------------- ---------------------
Cash Flows from Operating Activities:
<S> <C> <C>
Net loss $ (88) $ (91)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 356 463
Gain on sale of properties (123) (2,994)
Extraordinary loss on extinguishment of debt - 403
Provision for bad debts - (32)
Changes in assets and liabilities:
Accounts receivable (61) 29
Inventories - 35
Real estate tax escrow and other current assets 265 350
Deferred rent receivable (96) 108
Other assets - 563
Accounts payable and other liabilities (122) (878)
--------------------- ---------------------
Net cash provided by (used in) operating activities 131 (2,044)
--------------------- ---------------------
Cash Flows from Investing Activities:
Expenditures for property and equipment (32) (808)
(Increase) decrease in restricted cash reserves (347) 4,728
Net proceeds from sale of properties 390 36,540
--------------------- ---------------------
Net cash provided by investing activities 11 40,460
--------------------- ---------------------
Cash Flows from Financing Activities:
Related party note payable - 1,300
Satisfaction of mortgage payable - (23,140)
Proceeds from mortgage refinancing - 12,000
Principal payments on long-term debt (142) (199)
Deferred costs paid at refinancing - (188)
Distribution to partners - (27,538)
--------------------- ---------------------
Net cash (used in) financing activities (142) (37,765)
--------------------- ---------------------
Net increase in cash and cash equivalents - 651
Cash and cash equivalents, beginning of period 100 175
--------------------- ---------------------
Cash and cash equivalents, end of period $ 100 $ 826
===================== =====================
Supplemental Disclosure of Cash Flow Information -
- --------------------------------------------------
Cash paid for interest $ 410 $ 1,176
----------------------
===================== =====================
</TABLE>
See notes to consolidated financial statements.
6 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
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FORM 10 - QSB JUNE 30, 1999
---------------------------
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 on Form
10-KSB for the year ended December 31, 1998.
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 except for as described in note 3. Certain
amounts have been reclassified to conform to the June 30, 1999
presentation. The balance sheet at December 31, 1998 was derived from
audited financial statements at such date.
Income and losses of the Partnership from operations are allocated 95%
to the limited partners and 5% to the General Partner. Income from a
non-terminating capital transaction is allocated first, to each partner
who has received or will receive a distribution out of capital
proceeds; and second, to any partner having a negative balance in their
capital account.
2. Related Party Transactions
The following transactions with affiliates of the General Partner were
charged to expense during the six month periods ended June 30, 1999 and
1998:
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
Asset management fee $ 142,000 $ 134,000
Management fee 24,000 28,000
Reimbursement for administration expenses 33,000 25,000
Interest expense 39,000 -
Rent - 9,000
</TABLE>
3. Sale of Property
On January 13, 1999 the Partnership sold to an unaffiliated third party
the property located at 82 Easton Street for approximately $400,000.
The Partnership incurred closing costs of approximately $10,000. The
carrying value of the property sold was approximately $267,000 and the
Partnership realized a gain of approximately $123,000.
7 of 14
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
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FORM 10 - QSB JUNE 30, 1999
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
4. Segment Information
The Partnership had two reportable segments, hotel operations and
commercial rental operations. The hotel properties were sold on June
10, 1998. The Partnership evaluates performance based on net operating
income, which is income from operations before depreciation,
amortization, interest, gain on sale of properties, extraordinary and
non-operating items.
Segment information for the periods ended June 30, 1999 and 1998, is
shown in the tables below (in thousands). The "Other" column includes
partnership administrative items and income and expense not allocated
to a reportable segment.
<TABLE>
<CAPTION>
Commercial Hotel
Operations Operations Other Total
---------------- ---------------- -------------- ---------------
Period Ended June 30, 1999:
---------------------------
<S> <C> <C> <C> <C>
Revenue $ 1,461 $ - $ - $ 1,461
Depreciation 286 - - 286
Amortization 49 - - 49
Asset management fees - - 142 142
Income (loss) from operations 346 - (142) 204
Identifiable assets 21,485 - - 21,485
Capital expenditures 32 - - 32
Period Ended June 30, 1998:
---------------------------
Revenue $ 1,297 $ 1,322 $ - $ 2,619
Depreciation 280 - - 280
Amortization 54 60 - 114
Asset management fees - - 134 134
Income (loss) from operations 157 (1,896) (134) (1,873)
Identifiable assets 21,056 - - 21,056
Capital expenditures 3 805 - 808
</TABLE>
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<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
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FORM 10 - QSB JUNE 30, 1999
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
5. Subsequent Event - Legal Proceedings
Frederic D. Nemer et al., v. Winthrop Securities Co., Inc., et al.,
Superior Court, Suffolk County, Massachusetts, Civil Action No.
98-5536C. In October 1998, plaintiffs filed an action in Massachusetts
state court as a purported class and derivative action on behalf of
themselves and limited partners in the Partnership against the
Partnership and certain affiliates. The October 1998 complaint was
never served upon any of the defendants. In July 1999, plaintiffs filed
and served an Amended Class Action Complaint which purports to allege
class and derivative claims against the Partnership and its affiliates
[the "Partnership Defendants"], as well as certain unaffiliated
defendants, seeking damages and equitable relief. The Amended Class
Action Complaint purports to allege claims for unjust enrichment,
violation of the Massachusetts securities laws, breach of fiduciary
duty, gross negligence, fraud and deceit, civil conspiracy, intentional
and negligent misrepresentation, violation of the Massachusetts
consumer protection statute, breach of contract and breach of covenant,
all in connection with a 1996 offering of preferred limited partnership
units in the Partnership and a 1998 sale of Sherburne's hotel,
restaurant and boat basin properties. Plaintiffs also allege that
events and information occurring in 1996 and 1998 caused them to be
misled as to the terms of the original 1987 offering of limited
partnership units in the Partnership. The Partnership Defendants'
response is not yet due nor has discovery commenced. The Partnership
Defendants believe that the claims are without merit and intend to
contest this action, including a possible counterclaim for waste of
Partnership assets.
Lewis Jacobs et al., v. Winthrop Financial Associates, et al., United
States District Court for the District of Massachusetts, Civil Action
No. 99CV11363WGY. In June 1999, plaintiffs filed an action in the
United States District Court for the District of Massachusetts as a
purported class action on behalf of themselves and limited partners in
the Partnership against certain affiliates of the Partnership.
Plaintiffs' complaint purports to allege class claims for fraud under
the federal securities laws, breach of fiduciary duty, breach of
contract, and unjust enrichment, all in connection with a 1996 offering
of preferred limited partnership units in the Partnership and a 1998
sale of property. Plaintiffs seek an unspecified amount of damages and
an accounting. The defendants' response is not yet due nor has
discovery commenced. The defendants believe that the claims
are without merit and intend to contest this action, including a
possible counterclaim for waste of Partnership assets.
9 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10 - QSB JUNE 30, 1999
---------------------------
Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosures contained in this Form
10-QSB and the other filings with the Securities and Exchange
Commission made by the Registrant from time to time. The discussion
of the Registrant's liquidity, capital resources and results of
operations, including forward-looking statements pertaining to such
matters, does not take into account the effects of any changes to the
Registrant's operations. Accordingly, actual results could differ
materially from those projected in the forward-looking statements as
a result of a number of factors, including those identified herein.
This item should be read in conjunction with 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.
On January 13, 1999 the Registrant sold to an unaffiliated third
party the property located at 82 Easton Street for approximately
$400,000. The Registrant incurred closing costs of approximately
$10,000. The carrying value of the property sold was approximately
$267,000 and the Registrant realized a gain of approximately
$123,000. The rest of the commercial rental properties owned by the
Registrant are not currently being marketed for sale, as the General
Partner believes that the Nantucket retail market will continue to
improve and that marketing the commercial rental properties today
would be premature.
The level of liquidity based upon the Registrant's cash and cash
equivalents experienced no changes as compared to December 31, 1998,
due to restrictions imposed by the lender on the amount of
unrestricted cash available. The Registrant's $131,000 provided by
operating activities and $11,000 provided by investing activities was
offset by $142,000 used in financing activities. Investing activities
consisted of $390,000 of proceeds from the sale of a property, a
$347,000 increase in restricted reserves used for capital
improvements and operating deficits and $32,000 of improvements to
real estate. Financing activities consisted of principal payments on
long term debt of $142,000. At June 30, 1999 the Registrant's
unrestricted cash reserves were $100,000 and the restricted cash
balance was $2,038,000, as compared to, $100,000 of cash and
$1,691,000 of restricted cash at December 31, 1998. The unrestricted
cash and restricted cash reserves are invested in money market
accounts.
As owner of the commercial properties along the wharf, the Registrant
is responsible for maintaining the bulkheads. The Registrant
anticipates spending approximately $3,000,000 over the next five
years for bulkhead replacement. The Registrant expects to utilize
either proceeds, if any, from a potential refinancing of the
Registrant's properties (as discussed below) or cash flow from
operations to fund these improvements.
The Registrant has received a letter from the U.S. Department of
Justice relating to potential non-compliance with the American
Disabilities Act (the "Act"). After review of the commercial
properties
10 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB JUNE 30, 1999
Item 6. Management's Discussion and Analysis or Plan of Operation (Continued)
---------------------------------------------------------------------
Liquidity and Capital Resources (Continued)
-------------------------------------------
compliance with the Act, the Registrant agreed that certain
modifications are required. The cost and time period of these
modifications cannot be determined at this time. The Managing General
partner does not believe these costs will have a material adverse
effect on the Registrant.
The mortgage loan encumbering the Registrant's remaining properties
was refinanced upon the sale of certain of its properties in June
1998 and matures in June 2001, with a balloon payment of
approximately $11,264,000. Pursuant to the terms of the new loan,
Sherburne is prohibited from making any distributions to its partners
(including the Registrant) except for distributions by Sherburne to
the Registrant from funds from operations of such amounts necessary
to pay the Registrant's administrative fees, expenses and
reimbursements, as well as the General Partner's legal fees
associated with Sherburne's properties. The Registrant is currently
seeking to refinance this loan, as well as, obtain additional
financing to fund bulkhead replacement. There can be no assurance
that the Registrant will be successful in obtaining replacement
financing. It is anticipated that any cash flow from operations that
is not used for improvements to properties, will be held as
Partnership reserves.
Results of Operations
---------------------
The Registrant experienced a net loss of $88,000 for the six months
ended June 30, 1999, as compared to net income before extraordinary
loss of $312,000 for 1998. The income decreased as a result of the
sale of Sherburne's properties in June 1998 and January 1999. The
commercial properties, which were not sold, had an overall increase
in operating income of $189,000 for the six months ended June 30,
1999, as compared to 1998.
Total revenue decreased by $1,158,000 for the six months ended June
30, 1999, as compared to 1998 due to the above referenced sale of the
properties. The income from the commercial properties which were not
sold increased by $164,000 due to an increase in percentage rent and
rental rates.
Operating expenses decreased by $3,235,000 for the six months ended
June 30, 1999 as compared to 1998 due to the sale of the properties.
The remaining commercial properties operating expenses remained
relatively constant.
Interest expense decreased by $648,000, due to the reduction in the
mortgage principal balance. Other income decreased by $180,000 due to
the sale of the properties. Interest income decreased by $74,000 due
to an overall decrease in cash available for investments.
The results of operations in future quarters may differ from the
result of operations for the quarter ended June 30, 1999, as weather
conditions could adversely affect operating results due to the short
seasonal nature of the business. Inflation and changing economic
conditions could also affect occupancy levels, rental rates and
operating expenses.
11 of 14
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NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB JUNE 30, 1999
Item 6. Management's Discussion and Analysis or Plan of Operation (Continued)
---------------------------------------------------------------------
Year 2000
---------
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. The
Registrant is dependent upon the Managing General Partner and its
affiliates for management and administrative services. Any computer
programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in system failure or miscalculations
causing disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
During the first half of 1998, the Managing General Partner and its
affiliates completed their assessment of the various computer
software and hardware used in connection with the management of the
Registrant. This review indicated that significantly all of the
computer programs used by the Managing General Partner and its
affiliates are off-the-shelf "packaged" computer programs which are
easily upgraded to be Year 2000 compliant. In addition, to the extent
that custom programs are utilized by the Managing General Partner and
its affiliates, such custom programs are Year 2000 compliant.
Following the completion of its assessment of the computer software
and hardware, the Managing General Partner and its affiliates began
upgrading those systems which required upgrading. To date,
significantly all of these systems have been upgraded. The Registrant
has to date not borne, nor is it expected that the Registrant will
bear, any significant costs in connection with the upgrade of those
systems requiring remediation.
To date, the Managing General Partner is not aware of any external
agent with the Year 2000 issue that would materially impact the
Registrant's results of operations, liquidity or capital resources.
However, the Managing General Partner has no means of ensuring that
external agents will be Year 2000 compliant. The Managing General
Partner does not believe that the inability of external agents to
complete their Year 2000 resolution process in a timely manner will
have a material impact on the financial position or results of
operations of the Registrant. However, the effect of non-compliance
by external agents is not readily determinable.
12 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
FORM 10 - QSB JUNE 30, 1999
Part II - Other Information
- ---------------------------
Item 1. Legal Proceedings
-----------------
Frederic D. Nemer et al., v. Winthrop Securities Co., Inc., et al.,
Superior Court, Suffolk County, Massachusetts, Civil Action No.
98-5536C. In October 1998, plaintiffs filed an action in
Massachusetts state court as a purported class and derivative action
on behalf of themselves and limited partners in the Partnership
against the Partnership and certain affiliates. The October 1998
complaint was never served upon any of the defendants. In July 1999,
plaintiffs filed and served an Amended Class Action Complaint which
purports to allege class and derivative claims against the
Partnership and its affiliates [the "Partnership Defendants"], as
well as certain unaffiliated defendants, seeking damages and
equitable relief. The Amended Class Action Complaint purports to
allege claims for unjust enrichment, violation of the Massachusetts
securities laws, breach of fiduciary duty, gross negligence, fraud
and deceit, civil conspiracy, intentional and negligent
misrepresentation, violation of the Massachusetts consumer protection
statute, breach of contract and breach of covenant, all in connection
with a 1996 offering of preferred limited partnership units in the
Partnership and a 1998 sale of Sherburne's hotel, restaurant and boat
basin properties. Plaintiffs also allege that events and information
occurring in 1996 and 1998 caused them to be misled as to the terms
of the original 1987 offering of limited partnership units in the
Partnership. The Partnership Defendants' response is not yet due nor
has discovery commenced. The Partnership Defendants believe that the
claims are without merit and intend to contest this action, including
a possible counterclaim for waste of Partnership assets.
Lewis Jacobs et al., v. Winthrop Financial Associates, et al., United
States District Court for the District of Massachusetts, Civil Action
No. 99CV11363WGY. In June 1999, plaintiffs filed an action in the
United States District Court for the District of Massachusetts as a
purported class action on behalf of themselves and limited partners
in the Partnership against certain affiliates of the Partnership.
Plaintiffs' complaint purports to allege class claims for fraud under
the federal securities laws, breach of fiduciary duty, breach of
contract, and unjust enrichment, all in connection with a 1996
offering of preferred limited partnership units in the Partnership
and a 1998 sale of property. Plaintiffs seek an unspecified amount of
damages and an accounting. The defendants' response is not yet due
nor has discovery commenced. The defendants believe that the claims
are without merit and intend to contest this action, including a
possible counterclaim for waste of Partnership assets.
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.
13 of 14
<PAGE>
NANTUCKET ISLAND ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
----------------------------------------------------------------
FORM 10 - QSB JUNE 30, 1999
---------------------------
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/ Thomas Staples
--------------------------
Thomas Staples
Chief Financial Officer
Dated: August 9, 1999
14 of 14
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,138,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 143,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,501,000
<PP&E> 25,358,000
<DEPRECIATION> 7,359,000
<TOTAL-ASSETS> 21,485,000
<CURRENT-LIABILITIES> 2,404,000
<BONDS> 11,882,000
<COMMON> 0
0
0
<OTHER-SE> 7,477,000
<TOTAL-LIABILITY-AND-EQUITY> 21,485,000
<SALES> 0
<TOTAL-REVENUES> 1,461,000
<CGS> 0
<TOTAL-COSTS> 1,257,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 464,000
<INCOME-PRETAX> (88,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (88,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (88,000)
<EPS-BASIC> (256.05)
<EPS-DILUTED> (256.05)
<FN>
<F1>
Cash includes $2,038,000 of restricted cash
</FN>
</TABLE>
