<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
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 September 30, 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 0-20273
1999 Broadway Associates Limited Partnership
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 04-6613783
- ------------------------------- ------------------------------------
(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 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
Consolidated Balance Sheets (Unaudited)
September 30, December 31,
(In Thousands, Except Unit Data) 1996 1995
-------- --------
<S> <C> <C>
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $11,859 (1996) and $10,953
(1995) and write down for permanent impairment 27,787 28,450
-------- --------
29,487 30,150
Other Assets:
Cash and cash equivalents 15,742 14,130
Deferred rent receivable 846 1,167
Receivables and other assets 478 256
Deferred costs, net of accumulated amortization
of $3,058 (1996) and $2,637 (1995) 1,368 1,749
-------- --------
Total assets $ 47,921 $ 47,452
======== ========
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 30,135 $ 30,135
Accrued interest payable 2,863 716
Accounts payable and accrued expenses 2,179 1,284
Payable to related party 129 98
Security deposits 162 152
-------- --------
Total liabilities 35,468 32,385
-------- --------
Partners' Capital (Deficit):
Investor limited partners' equity (460 units outstanding) 13,871 16,459
General partners' (deficit) (1,418) (1,392)
-------- --------
Total Partners' Capital 12,453 15,067
-------- --------
Total Liabilities and Partners' Capital $ 47,921 $ 47,452
======== ========
</TABLE>
See notes to consolidated financial statements.
2 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Consolidated Statements of Operations (Unaudited) For the Nine Months Ended
September 30, September 30,
(In Thousands, Except Unit Data) 1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Rental $ 3,790 $ 5,701
Other 269 300
----------- -----------
Total Revenues 4,059 6,001
----------- -----------
Expenses:
Real estate taxes 485 381
Payroll and payroll expense reimbursements 451 451
Operating expenses 381 519
Repairs and maintenance 530 507
Utilities 528 624
Management and other fees 324 451
General and administrative costs 123 74
Insurance 93 81
Depreciation and amortization 1,327 1,328
----------- -----------
Total Expenses 4,242 4,416
----------- -----------
Operating (loss) income (183) 1,585
Non-operating income (expense):
Interest income 466 421
Interest expense (2,147) (2,155)
Reorganization item - professional fees (750) --
----------- -----------
Net loss $ (2,614) $ (149)
=========== ===========
Net loss allocated:
General Partners $ (26) $ (1)
Investor Limited Partners (2,588) (148)
----------- -----------
$ (2,614) $ (149)
=========== ===========
Net loss allocated to Limited Partners per
Limited Partner Unit $ (5,626.09) $ (321.74)
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Consolidated Statements of Operations (Unaudited) For the Three Months Ended
September 30, September 30,
(In Thousands, Except Unit Data) 1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Rental $ 1,282 $ 1,820
Other 101 122
----------- -----------
Total Revenues 1,383 1,942
----------- -----------
Expenses:
Real estate taxes 162 126
Payroll and payroll expense reimbursements 142 138
Operating expenses 112 160
Repairs and maintenance 165 203
Utilities 179 220
Management and other fees 107 145
General and administrative costs 51 11
Insurance 31 23
Depreciation and amortization 382 443
----------- -----------
Total Expenses 1,331 1,469
----------- -----------
Operating income 52 473
Non-operating income (expense):
Interest income 146 122
Interest expense (716) (717)
Reorganization item - professional fees (750) --
----------- -----------
Net loss $ (1,268) $ (122)
=========== ===========
Net loss allocated:
General Partners $ (13) $ (1)
Investor Limited Partners (1,255) (121)
----------- -----------
$ (1,268) $ (122)
=========== ===========
Net loss allocated to Limited Partners per
Limited Partner Unit $ (2,728.26) $ (263.04)
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
Consolidated Statements of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of Investor
Limited General limited Total
Partnership partners' partners' partners'
Interest (deficit) equity capital
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 460 $ (1,392) $ 16,459 $ 15,067
Net loss -- (26) (2,588) (2,614)
----------- ----------- ----------- -----------
Balance - September 30, 1996 460 $ (1,418) $ 13,871 $ 12,453
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
5 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands) For the Nine Months Ended
September 30, September 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (2,614) $ (149)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,327 1,328
Deferred rent receivable 321 495
Changes in assets and liabilities
Receivables and other assets (222) --
Deferred costs (40) (693)
Accrued interest 2,147 --
Accounts payable, accrued expenses and other liabilities 936 (318)
----------- -----------
Net cash provided by operating activities 1,855 663
----------- -----------
Cash Flows from Investing Activities:
Additions to buildings and improvements (243) (147)
----------- -----------
Cash used in investing activities (243) (147)
----------- -----------
Cash Flows from Financing Activities:
Principal payments on mortgage note -- (190)
----------- -----------
Cash used in financing activities -- (190)
----------- -----------
Net Increase in Cash and Cash Equivalents 1,612 326
Cash and cash equivalents, beginning of period 14,130 13,168
----------- -----------
Cash and cash equivalents, end of period $ 15,742 $ 13,494
=========== ===========
Supplemental Disclosure of Cash Flow Information -
Cash paid for interest $ -- $ 2,155
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated
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 September 30, 1996 presentation. The balance sheet at
December 31, 1995 was derived from audited financial statements at such
date.
The results of operations for the nine and three months ended September
30, 1996 and 1995 are not necessarily indicative of the results to be
expected for the full year.
2. Related Party Transactions
The Partnership has incurred charges and made commitments to companies
affiliated by common ownership and management with Winthrop Financial
Associates (the "General Partner"). Related- party transactions with
the General Partner and its affiliates include the following:
a. 1999 Broadway Partnership (the "Operating Partnership") pays
or accrues to an affiliate of the General Partner an annual
property management fee equal to 5% of cash receipts. For the
period ended September 30, 1996 management fees of $211,000
were incurred.
b. The Partnership pays or accrues to the General Partner an
annual partnership administration and investor service fees
of $100,000, increased annually by 6% (commencing in 1990).
Fees of $113,000 were paid during the period ended September
30, 1996.
3. Accounting Change
On January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ",
which requires impairment losses to be recognized for long-lived assets
used in operations when indicators of impairment are present and the
undiscounted cash flows are not sufficient to recover the asset's
carrying amount. The impairment loss is measured by comparing the fair
value of the asset to its carrying amount. The adoption of the SFAS had
no effect on the Partnership's financial statements.
4. Petition of Relief Under Chapter 11
On November 15, 1995, the Operating Partnership filed a petition for
relief under Chapter 11 of federal bankruptcy laws in the United States
Bankruptcy Court. Under Chapter 11, certain claims against the
Operating Partnership, in existence prior to the filing of the petition
for relief under the
7 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Petition of Relief Under Chapter 11 (Continued)
federal bankruptcy laws, are stayed while the Operating Partnership
continues business operations as Debtor-in-possession. These claims are
reflected in the following September 30, 1996 and December 31, 1995
consolidated balance sheets as "Pre-Petition Liabilities". Claims
secured against the Operating Partnership assets also were stayed,
although the holders of such claims maintain the right to move the
court for relief from the stay. Secured claims are secured primarily by
liens on the Operating Partnership property. The following balance
sheets are presented as of September 30, 1996 and December 31, 1995
(see Note 5).
<TABLE>
<CAPTION>
(In Thousands) September 30, December 31,
1996 1995
-------- --------
<S> <C> <C>
Assets
Real Estate, net $ 29,487 $ 30,150
Receivables and other Assets 18,434 17,302
-------- --------
Total Assets $ 47,921 $ 47,452
======== ========
Liabilities and Partners' Capital
Pre-Petition Liabilities:
Mortgage Note $ 30,135 $ 30,135
Other Liabilities 1,707 1,774
-------- --------
Total Pre-Petition Liabilities 31,842 31,909
-------- --------
Post-Petition Liabilities:
Other Liabilities 3,626 476
-------- --------
Total Post-Petition Liabilities 3,626 476
-------- --------
Partners' Capital (Deficit):
Limited Partners 13,871 16,459
General Partners (1,418) (1,392)
-------- --------
12,453 15,067
-------- --------
Total Liabilities and Partners' Capital $ 47,921 $ 47,452
======== ========
</TABLE>
8 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Subsequent Event
The Partnership and the holder of the first mortgage on the Property
(the "Lender") reached an agreement pursuant to which the Lender voted
in favor of the Plan of Reorganization submitted by the Operating
Partnership, which was confirmed by the Bankruptcy Court on November
13, 1996. The Plan, as approved by the Bankruptcy Court, provides for
the modification of the existing loan encumbering the property as
follows: (i) the maturity date is extended one year to September 1999;
and (ii) principal payments will be paid based on a 25 year
amortization schedule (instead of 30 years), with a balloon payment
being due at maturity. The loan continues to bear interest at 9.5% per
annum. In addition, the Partnership agreed to pay all costs and
expenses of the Bankruptcy litigation (approximately $1,000,000, of
which $750,000 has been accrued as reorganization costs at September
30, 1996), accrued interest on the loan (approximately $3,300,000) and
principal reductions of $4,000,000. The Partnership will also establish
a $1,000,000 reserve for debt service shortfall and provide funds to
lease-up the Property.
9 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 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, through its 99.9% ownership interest in the 1999
Broadway Partnership (the "Operating Partnership"), owns a 42-story
office tower located in Denver, Colorado together with a parking garage
located one and one-half blocks northeast of the office tower
(collectively, the "Property"). The Operating Partnership generates
rental revenue from the Property and is responsible for the Property's
operating expense as well as its administrative costs.
The Registrant's original business plan was to selectively contribute
its reserves to the Operating Partnership to enhance the Property's
value (through leasing the Property). The Registrant hoped that the
Denver market would improve so that the Property could generate cash
flow distributions and realize capital appreciation above the first
mortgage loan. The Denver market has not yet achieved the fundamental
rebound required for the Registrant to achieve its long term investment
objectives of generating cash flow distributions and realizing capital
appreciation.
The Registrant's level of liquidity based on cash and cash equivalents
increased by $1,612,000 during the nine months ended September 30, 1996
as compared to December 31, 1995. This increase is attributable to
$1,855,000 of cash from operating activities which was primarily the
result of non-payment of debt service and was partially offset by
$243,000 in capital improvements (investing activities). The Registrant
invests its working capital reserves in a money market account.
In November 1995, the Operating Partnership did not make its monthly
mortgage payment on the debt encumbering the Property. Thereafter,
First Interstate, the lender holding the mortgage encumbering the
Property, through its subsidiary DAG Management, Inc., obtained a court
order on November 14, 1995 to appoint a receiver to collect the rents
of the Property and take control of the management of the Property. The
receiver never took possession of the Property. On November 15, 1995,
the Operating Partnership commenced a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code. This action was
necessary to retain control of the Property and its rents and income,
and to maintain and preserve the value of the Property to the Operating
Partnership. Since the bankruptcy petition, the Operating Partnership
has continued in possession of the property and is operated and managed
its business as a debtor-in-possession. The Registrant and the holder
of the first mortgage on the Property reached an agreement pursuant to
which the Lender voted in favor of the Plan of Reorganization submitted
by the Operating Partnership, which was confirmed by the Bankruptcy
Court on November 13, 1996. The Plan, as approved by the Bankruptcy
Court, provides for the modification of the existing loan encumbering
the property as follows: (i) the maturity date is extended one year to
September 1999; and (ii) principal payments will be paid based on a 25
year amortization schedule (instead of 30 years), with a balloon
payment being due at maturity. The loan continues to bear interest at
9.5% per annum. In addition, the Registrant agreed to pay all costs and
expenses of the Bankruptcy litigation (approximately $1,000,000, of
which $750,000 has been accrued as reorganization costs at September
30, 1996), accrued interest on the loan (approximately $3,300,000) and
principal reductions of $4,000,000. The Registrant will also establish
a $1,000,000 reserve for debt service shortfall and provide funds to
lease-up the Property.
10 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Liquidity and Capital Resources (Continued)
The General Partner does not expect the Registrant to make any cash
distributions to the Limited Partners in the near future. The General
Partner believes it is in the best interest of the Registrant to
conserve any excess cash to be used for tenant improvements and leasing
costs.
At this time, it appears that the original investment objective of
capital growth from the inception of the Registrant will not be
attained and that Limited Partners will not receive a return of their
invested capital. The extent to which invested capital is refunded to
Limited Partners is dependent upon the performance of the Property and
the market in which it is located. The ability to hold and operate the
Property is dependent upon the Operating Partnership's ability to
restructure or refinance the first mortgage loan.
Results of Operations
Operating results, before non-operating income (expenses), declined by
$1,768,000 for the nine months and $421,000 for the three months ended
September 30, 1996, as compared to 1995. The decline of $1,768,000 for
the nine months ended September 30, 1996 is due to decreases in
revenues of $1,942,000 and expenses of $174,000.
Revenues declined due to a decrease in rental income of $1,911,000 and
other income of $31,000. Rental revenues declined due to a decrease in
occupancy (from 85% in 1995 to 69% in 1996) as two major tenants
vacated their space during September/October of 1995.
Expenses declined by $174,000 for the nine months ended September 30,
1996, as compared to 1995, due to decreases in operating expenses
($138,000), management and other fees ($127,000), and utilities
($96,000). These decreases were partially offset by increases in real
estate taxes ($104,000), repairs and maintenance ($23,000), general and
administrative ($49,000) and insurance ($12,000). The decreases in
operating expenses, management and other fees and utilities are
directly related to the decline in occupancy. Real estate taxes
increased due to an increase in the assessed property value. These
taxes are currently under appeal. All other expenses remained
relatively constant.
Interest income increased by $45,000 for the nine months ended
September 30, 1996, as compared to 1995, due to an increase in average
working capital reserves available for investment.
Interest expense (which has been accrued but not paid since the
bankruptcy filing) remained relatively constant.
11 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1996
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
On September 23, 1996, a current report on Form 8-K was filed with
respect to the Registrant's change of independent auditors.
12 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 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.
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
BY: WINTHROP FINANCIAL ASSOCIATES, A LIMITED PARTNERSHIP
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: November 14, 1996
13 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from 1999
Broadway Associates Limited Partnership and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,742,000
<SECURITIES> 0
<RECEIVABLES> 478,000<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 41,346,000
<DEPRECIATION> (11,859,000)
<TOTAL-ASSETS> 47,921,000
<CURRENT-LIABILITIES> 0
<BONDS> 30,135,000
0
0
<COMMON> 0
<OTHER-SE> 12,453,000
<TOTAL-LIABILITY-AND-EQUITY> 47,921,000
<SALES> 0
<TOTAL-REVENUES> 4,059,000
<CGS> 0
<TOTAL-COSTS> 4,119,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,147,000
<INCOME-PRETAX> (2,614,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,614,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,614,000)
<EPS-PRIMARY> (5,626.09)
<EPS-DILUTED> (5,626.09)
<FN>
<F1> Includes $162,000 of other assets.
</TABLE>
