<PAGE>
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, 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: 0-17683
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 94-3069380
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(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
1341 West Robinhood, B-9, Stockton, CA 95207
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (209) 478-0140
N/A
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Former name, former address and former fiscal year, if changed since
last report
Indicate by check CK 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 such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days. Yes _CK_ No__
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TABLE OF CONTENTS
PAGE
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Part I. Financial Information
Item 1: Statement of net assets - June 30, 1999 . . . . . . 3
Balance sheet - December 31, 1998 . . . . . . . . . 3
Statement of changes in net assets for the three
months ended June 30, 1999 . . . . . . . . . . . . 4
Statements of operations for the three months ended
March 31, 1999 and for the three and six months
ended June 30, 1998 . . . . . . . . . . . . . . . . 4
Statement of changes in partners' equity (deficit)
for the three months ended March 31, 1999 . . . . . 5
Statements of cash flows for the three months ended
March 31, 1999 and for the six months ended
June 30, 1998 . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 10
Part II. Other Information . . . . . . . . . . . . . . . . . 11
2
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PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF NET ASSETS (UNAUDITED)
June 30, 1999
(in process of liquidation)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 7,871,106
Post closing escrow account 612,237
Other assets 89,988
---------
Total assets 8,573,331
---------
LIABILITIES
Accounts payable 345,434
Accounts payable, affiliate 40,204
Estimated liquidation expenses 75,000
Withholding taxes payable 773,818
---------
Total liabilities 1,234,456
---------
Net assets available to limited, subordinated and
general partners $ 7,338,875
=========
Limited partnership units issued and outstanding 316,828
=========
</TABLE>
BALANCE SHEET (UNAUDITED)
December 31, 1998
(going concern basis)
<TABLE>
<S> <C>
ASSETS
Property, net $ 71,583,977
Cash and cash equivalents 4,160,132
Other assets (net of accumulated amortization
of $1,318,000) 552,192
----------
$ 76,296,301
==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Mortgage loans payable $ 62,949,730
Accounts payable 683,274
Accounts payable, affiliate 204,608
Accrued distributions 394,418
Accrued interest 421,267
Unearned rent and tenant deposits 576,171
----------
65,229,468
----------
Partners' equity (deficit):
Limited partners' equity (316,828 units
authorized and outstanding) 3,564,811
Subordinated limited partners' equity (46,364
units authorized and outstanding) 8,878,175
General partners' equity (deficit) (1,376,153)
----------
11,066,833
----------
$ 76,296,301
==========
</TABLE>
See notes to financial statements.
3
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PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
Three months ended June 30, 1999
(in process of liquidation)
<TABLE>
<CAPTION>
Subordinated
Limited Limited General
Total Partners Partners Partners
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net assets -
April 1, 1999 $ 11,175,977 $ 3,671,772 $ 8,878,175 $ (1,373,970)
Gain on property sale 39,262,369 37,133,906 -0- 2,128,463
Legal fees re
settlement agreement (3,035,215) (3,035,215) -0- -0-
Net income from
liquidating activities (20,630) (20,217) -0- (413)
Distributions (40,043,626) (31,682,800) (7,761,036) (599,790)
----------- ----------- ----------- -----------
Net assets -
June 30, 1999 $ 7,338,875 $ 6,067,446 $ 1,117,139 $ 154,290
=========== =========== ========== ==========
</TABLE>
STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended March 31, 1999 and 1998
and the six months ended June 30, 1998
(going concern basis)
<TABLE>
<CAPTION>
Six months
Three months ended ended
3/31/99 6/30/98 6/30/98
-------- -------- ----------
<S> <C> <C> <C>
Revenues:
Rental $ 4,083,267 $ 4,023,441 $ 7,998,008
Interest 31,429 34,420 64,491
---------- ---------- ----------
4,114,696 4,057,861 8,062,499
---------- ---------- ----------
Expenses:
Property operating expenses 1,316,835 1,434,532 2,793,630
Property taxes 292,061 291,373 577,371
Property management fees to affiliates 122,253 120,706 239,426
General and administrative expense 48,900 32,502 80,459
Proxy solicitation costs -0- 306,370 306,370
Interest expense 1,305,963 1,280,236 2,536,680
Management fees to affiliates 163,330 160,938 319,920
Depreciation 756,210 756,210 1,512,420
---------- ---------- ----------
4,005,552 4,382,867 8,366,276
---------- ---------- ----------
Net income (loss) $ 109,144 $ (325,006)$ (303,777)
========== ========== ==========
Net income (loss) allocated to
General Partners $ 2,183 $ (6,500)$ (6,076)
========== ========== ==========
Net income (loss) allocated to
Limited Partners $ 106,961 $ (318,506)$ (297,701)
========== ========== ==========
Net income (loss) allocated to
Subordinated Limited Partners $ -0- $ -0- $ -0-
========== ========== ==========
Net income (loss) per unit of limited
partnership interest $ 0.34 $ (1.01)$ (0.94)
========== ========== ==========
</TABLE>
See notes to financial statements.
4
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<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT) (UNAUDITED)
For the three months ended March 31, 1999
(going concern basis)
<TABLE>
<CAPTION>
Subordinated
Limited Limited General
Total Partners Partners Partners
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Partners' equity
(deficit)-
December 31, 1998 $ 11,066,833 $ 3,564,811 $ 8,878,175 $(1,376,153)
Net income 109,144 106,961 -0- 2,183
---------- ---------- ---------- ----------
Partners' equity
(deficit)-
March 31, 1999 $ 11,175,977 $ 3,671,772 $ 8,878,175 $(1,373,970)
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
5
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PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31, 1999
and the six months ended June 30, 1998
(going concern basis)
<TABLE>
<CAPTION>
Three months Six months
ended ended
3/31/99 6/30/98
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 109,144 $ (303,777)
Adjustments to reconcile net income ---------- ---------
(loss) to net cash provided by operating activities:
Depreciation 756,210 1,512,420
Amortization of loan fees included
in interest expense 5,157 10,314
Change in other assets (44,007) 60,324
Change in accounts payable, affiliate 176,426 386,550
Change in accrued liabilities (791) 187,885
Change in unearned rent and tenant deposits (3,799) 15,805
---------- ----------
Total adjustments 889,196 2,173,298
---------- ----------
Net cash provided by operating activities 998,340 1,869,521
---------- ----------
Cash flows from financing activities:
Mortgage loan principal amortization (325,008) (604,626)
Distributions to partners (394,418) (788,836)
---------- ----------
Net cash used in financing activities (719,426) (1,393,462)
---------- ----------
Net increase in cash and cash equivalents 278,914 476,059
Cash and cash equivalents, beginning of period 4,160,132 4,161,323
---------- ----------
Cash and cash equivalents, end of period $ 4,439,046 $ 4,637,382
========== ==========
</TABLE>
See notes to financial statements.
6
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PRUDENTIAL-BACHE/A. G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS(Unaudited)
NOTE A - FINANCIAL STATEMENT PREPARATION
As a result of its pending liquidation, the Partnership changed its method
of accounting from the going-concern basis by adopting the liquidation
basis of accounting effective April 1, 1999. Accordingly, the net assets of
the Partnership at June 30, 1999 are stated at liquidation value, whereby
the assets have been valued at their estimated net realizable values and
the liabilities include estimated amounts to be incurred through the date
of liquidation of the Partnership. The actual remaining net proceeds from
liquidation will depend upon a variety of factors and are likely to differ
from the estimated amounts reflected in the accompanying financial
statements. The Partnership intends to liquidate in 1999 after all
distributions have been paid to the partners. Prior to April 1, 1999, the
books and records of the Partnership were maintained on a going concern
accrual basis of accounting.
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments necessary
to present fairly such information subject to the effects of any further
liquidation accounting adjustments that would have been required had the
current realizable values of assets and the amounts of liabilities been
known when the Partnership first adopted the liquidation basis of
accounting. Net assets at June 30, 1999 have been adjusted to properly
reflect the allocation of limited partners' and General Partners' capital
in anticipation of the liquidation of the Partnership.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements must
be read in conjunction with the financial statements and notes thereto
included in the Partnership's annual report for the year ended December 31,
1998.
NOTE B - PROPERTY
Effective April 1, 1999, the Partnership reclassified the Properties from
held for use to held for sale and ceased depreciating them for financial
statement purposes in accordance with the liquidation basis of accounting.
7
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In February and March 1999, the Partnership entered into contracts with
three buyers to sell the Properties for an aggregate sale price of
$110,943,921. The sales closed in April, May and June 1999. The
Partnership incurred selling expenses of approximately $854,000 in
connection with the sales, consisting of surveys, legal fees, title
charges, transfer taxes, an advisory fee paid to the sales agent, and other
miscellaneous items. The net sales price was in excess of the carrying
amount of the Properties and resulted in a gain on sale of approximately
$39,262,000 for financial reporting purposes. The net cash proceeds were
approximately $47,620,000 after repayment of outstanding mortgage debt of
approximately $62,470,000. Pursuant to one of the sale contracts, an escrow
account of $612,237 was established to secure the Partnership's performance
of its post closing obligations. Such funds are to be released to the
Partnership 90 days following the closing of the property sales.
Pursuant to the Settlement Agreement approved by the court in connection
with the Prudential Securities Incorporated Limited Partnership Litigation
(MDL Docket 1005), the counsel representing the Unitholders are expected to
be paid an estimated $3,000,000 in legal fees, $2,755,026 of which
has been paid at June 30, 1999.
NOTE C - NET LOSS FROM LIQUIDATING ACTIVITIES
Net loss from liquidating activities for the three months ended June 30,
1999 consisted of:
Revenues:
Rental $1,005,101
Interest 120,269
---------
1,125,470
---------
Expenses:
Property operating expenses 416,016
Property taxes 91,965
Property management fees to affiliates 46,611
General and administrative expense 25,310
Interest expense 451,264
Management fees to affiliates 40,204
Estimated liquidation expenses 75,000
---------
1,146,100
---------
Net loss from liquidating activities $ (20,630)
=========
8
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NOTE C - RELATED PARTY TRANSACTIONS
Set forth below are the fees and other amounts relating to transactions
between the Partnership and the General Partners and their affiliates for
the three months ended March 31, 1999 and the six months ended June 30,
1998.
Three months Six Months
Ended 3/31/99 Ended 6/30/98
------------- -------------
Expensed to the General Partners:
Supervisory management fee $101,767 $159,960
Special distribution 87,892 146,085
Administrative expense reimbursements 13,875 13,875
------- -------
$203,534 $319,920
======= =======
Expensed to A.G. Spanos Management, Inc.:
Property management fees $168,864 $239,426
======= =======
Accruals of $40,204 and $163,760 for the supervisory management fee,
special distribution and administrative expense reimbursements were
outstanding at June 30, 1999 and December 31, 1998, respectively.
Accruals of $40,848 for property management fees were outstanding at
December 31, 1998.
Fees and other amounts relating to transactions between the Partnership and
the General Partners and their affiliates for the period from April 1, 1999
through June 30, 1999 include $40,204 for the supervisory management fee,
special distribution and administrative expense reimbursements and $46,611
for property management fees.
In connection with the adoption of the liquidation basis of accounting, the
Partnership recorded an accrual of $75,000 as of June 30, 1999 for the
estimated costs expected to be incurred to liquidate the Partnership.
Included in such amount is $15,000 expected to be payable to the General
Partners during the anticipated remaining liquidation period. The actual
charges to be incurred by the Partnership may differ from the amounts
accrued as of June 30, 1999.
Prudential Securities Incorporated ("PSI"), an affiliate of the Bache
General Partner, owned 4,663 Units at June 30, 1999.
NOTE D - SUBSEQUENT EVENT
In July 1999, the Partnership paid cash distributions of $4,277,178,
$699,501 and $83,829 to the Unitholders, Subordinated Limited Partners and
General Partners, respectively. The Partnership also paid $249,192 in
legal fees to the counsel representing the Unitholders pursuant to the
Settlement Agreement.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Capital Resources and Liquidity
In June 1998, a majority in interest of the limited partners approved a
proposal to sell all the Partnership's properties at a public auction and
then distribute the sale proceeds in liquidation of the Partnership. The
auction and liquidation were part of an overall settlement of certain
litigation which had been pending in the United States District Court for
the Southern District of New York under the caption In re Prudential
Securities Incorporated Limited Partnerships Litigation (MDL Docket 1005).
In July 1998, the settlement, including the auction and liquidation, was
approved by the court. In February and March 1999, the Partnership entered
into contracts with three buyers to sell the Properties. The sales closed
in April, May and June 1999.
The Partnership paid distributions in 1999 totaling $113.50 per limited
partnership unit (including $13.50 per unit that was paid on July 22, 1999)
consisting of previously undistributed operating cash flow and the net
sales proceeds reduced by a contingency reserve and funds required to meet
the anticipated current and future operating costs until the liquidation of
the Partnership. The Partnership intends to liquidate in 1999 and will
distribute any remaining funds at such time. In accordance with the
Partnership Agreement, such distributions to partners will be made based
upon each partner's capital account for Federal income tax purposes.
Estimated costs expected to be incurred through the date of liquidation of
the Partnership have been accrued in the accompanying financial statements.
Results of Operations
As a result of the Partnership adopting liquidation accounting in
accordance with generally accepted accounting principles as of April 1,
1999 and thus not reporting results of operations thereafter, there is no
management discussion comparing the corresponding 1999 and 1998 periods.
Year 2000 Risk
As the Partnership is expected to be liquidating in 1999 and will not have
operations in the year 2000, the General Partners do not believe it is
appropriate to include a discussion of the Year 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
10
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(None)
Item 2. Changes in Securities
(None)
Item 3. Defaults Upon Senior Securities
(None)
Item 4. Submission of Matters to a Vote of Security Holders
(None)
Item 5. Other Information
(None)
Item 6. Exhibits and Reports on Form 8-K
Exhibits
4(a) Certificate of Limited Partnership of Registrant as
filed with the Secretary of State of Delaware,
incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11, File No. 33-22613,
filed with the Securities and Exchange Commission on
October 14, 1988.
4(b) Amendment to Certificate of Limited Partnership of
Registrant as filed with the Secretary of State of
Delaware, incorporated by reference to Exhibit 4(b) to
Amendment No. 1 to Registration Statement on Form S-11,
File No. 33-22613, filed with the Securities and
Exchange Commission on October 14, 1988.
4(c) Amended and Restated Agreement of Limited Partnership of
Registrant, incorporated by reference to Exhibit 4(c) to
Amendment No. 1 to Registration Statement on Form S-11,
File No. 33-22613, filed with the Securities and
Exchange Commission on October 14, 1988.
11
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4(d) Amendments No. 1 through 7 dated November 21, and
December 30, 1988 and January 31, February 28, March 31,
April 28, and May 31, 1989 to the Amended and Restated
Agreement of Limited Partnership of Registrant,
incorporated by reference to Exhibit 4(d) to
Post-Effective Amendment No. 1 to Registration Statement
on Form S-11, File No. 33-22613, filed with the
Securities and Exchange Commission on June 30, 1989.
4(e) Amendments No. 8 through 14 dated June 30, August 11
and 31, September 29, October 31, and December 1 and 22,
1989 to the Amended and Restated Agreement of Limited
Partnership of Registrant, incorporated by reference to
Exhibit 4(e) to Annual Report on Form 10-K, File No.
0-17683, filed with the Securities and Exchange
Commission on March 28, 1991.
4(f) Amendment No. 15 dated August 12, 1998, to the
Amended and Restated Agreement of Limited Partnership
of Registrant, incorporated by reference to Exhibit 4(f)
of the Quarterly Report on Form 10-Q dated September 30,
1998, File No. 0-17683.
10(a) Agreement for Purchase and Sale of Real Property dated
February 24, 1999 by and among the Partnership as Seller
and General Services Corporation as Buyer, incorporated
by reference to Exhibit 10(a) to Annual Report on Form
10-K, File No. 0-17683.
10(b) Agreement for Purchase and Sale of Real Property dated
March 3, 1999 by and among the Partnership as Seller and
SGD Investments, Inc. as Buyer, incorporated by reference
to Exhibit 10(b) to Annual Report on Form 10-K, File No.
0-17683.
10(c) Agreement for Purchase and Sale of Real Property dated
March 11, 1999 by and among the Partnership as Seller and
WXI/SPN Real Estate Limited Partnership as Buyer,
incorporated by reference to Exhibit 10(c) to Annual
Report on Form 10-K, File No. 0-17683.
27 Financial Data Schedule (filed herewith)
Reports on Form 8-K
(None)
12
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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.
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS, L.P., I (Registrant)
By: A.G. Spanos Realty Partners, L.P., General Partner
By: AGS Financial Corporation, a general partner
By: /s/Arthur J. Cole Date: August 6, 1999
---------------------------------
Arthur J. Cole
President and Chief Accounting Officer
By: A.G. Spanos Realty Capital, Inc., a general partner
By: /s/Arthur J. Cole Date: August 6, 1999
---------------------------------
Arthur J. Cole
Vice President and Chief Accounting Officer
13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> The Schedule contains summary financial
information extracted from the financial
statements for Prudential-Bache/A.G. Spanos
Realty Partners L.P., I, and is qualified
entirely by reference to such financial
statements.
</LEGEND>
<RESTATED>
<CIK> 000844159
<NAME> Prudential-Bache/A.G. Spanos Realty Partners L.P., I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Jun-30-1999
<PERIOD-TYPE> 6-Mos
<CASH> 7871106
<SECURITIES> 0
<RECEIVABLES> 702225
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8573331
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8573331
<CURRENT-LIABILITIES> 1234456
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7338875
<TOTAL-LIABILITY-AND-EQUITY> 8573331
<SALES> <FN1>
<TOTAL-REVENUES> <FN1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> <FN1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> <FN1>
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> <FN1>
<EPS-BASIC> <FN1>
<EPS-DILUTED> 0
<FN>
<FN1> The Partnership adopted the liquidation basis of accounting as of
April 1, 1999, and, accordingly, does not reflect operations subsequent to
April 1, 1999. See Note A to the financial statements for further details.
</TABLE>
