<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 March 31, 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 0-20273
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)
Five Cambridge Center, Cambridge, MA 02142
- -------------------------------------- ------------------------------------
(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
------ ------
1 of 13
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
(In Thousands, Except Unit Data) 1999 1998
------------ ------------
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $16,273 (1999) and
$15,725 (1998) 31,372 31,800
------------ ------------
33,072 33,500
Other Assets:
Cash and cash equivalents 3,819 3,788
Restricted cash 471 467
Other assets 349 356
Deferred rent receivable 760 690
Deferred costs, net of accumulated amortization
of $1,425 (1999) and $2,504 (1998) 2,248 2,269
------------ ------------
Total assets $ 40,719 $ 41,070
============ ============
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 25,545 $ 25,622
Accrued interest payable 202 203
Accounts payable and accrued expenses 959 1,158
Payable to related party 183 151
Security deposits 132 135
------------ ------------
Total liabilities 27,021 27,269
------------ ------------
Partners' Capital:
Preferred unit holders' capital
(460 units outstanding) 10,150 10,218
Investor limited partners' capital
(460 units outstanding) 5,059 5,093
General partner's deficit (1,511) (1,510)
------------ ------------
Total Partners' Capital 13,698 13,801
------------ ------------
Total Liabilities and Partners' Capital $ 40,719 $ 41,070
============ ============
See notes to consolidated financial statements.
2 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
Consolidated Statements of Operations (Unaudited) For the Three Months Ended
March 31, March 31,
(In Thousands, Except Unit Data) 1999 1998
----------- -----------
Revenues:
Rental $ 2,186 $ 2,080
Other 144 216
----------- -----------
Total revenues 2,330 2,296
----------- -----------
Expenses:
Real estate taxes 136 126
Payroll and payroll expense reimbursements 192 174
Operating expenses 193 150
Repairs and maintenance 231 206
Utilities 224 229
Management and other fees 158 142
General and administrative costs 35 52
Insurance 27 27
Depreciation 548 482
Amortization 131 125
----------- -----------
Total expenses 1,875 1,713
----------- -----------
Operating income 455 583
Non-operating income (expense):
Interest income 50 90
Interest expense (608) (630)
----------- -----------
Net (loss) income $ (103) $ 43
=========== ===========
Net (loss) income allocated:
General Partners $ (1) $ -
Preferred Unit Holders (68) 43
Investor Limited Partners (34) -
----------- -----------
$ (103) $ 43
=========== ===========
Net (loss) income allocated per unit:
Preferred Unit Holders $(147.83) $ 93.48
=========== ===========
Investor Limited Partners $ (73.91) $ -
=========== ===========
See notes to consolidated financial statements.
3 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
Consolidated Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
<TABLE> --------------------
<CAPTION> Preferred
Units of Units of Preferred Investor
Limited Limited Unit Limited General
Partnership Partnership Holders' Partners' Partner's
Interest Interest Capital Capital (Deficit) Total
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance -
January 1, 1999 460 460 $ 10,218 $ 5,093 $ (1,510) $ 13,801
Net loss - - (68) (34) (1) (103)
------------- ------------- ------------- ------------- ------------- -------------
Balance -
March 31, 1999 460 460 $ 10,150 $ 5,059 $ (1,511) $ 13,698
============= ============= ============= ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
4 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands) For the Three Months Ended
March 31, March 31,
1999 1998
------------ ------------
Cash Flows from Operating Activities:
Net (loss) income $ (103) $ 43
Adjustments to reconcile net (loss)
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 679 622
Deferred rent receivable (70) (232)
Changes in assets and liabilities:
Other assets 7 (46)
Accrued interest payable (1) -
Accounts payable, accrued expenses,
payable to related party and
security deposits (170) (1,911)
------------ ------------
Net cash provided by (used in) operating
activities 342 (1,524)
------------ ------------
Cash Flows from Investing Activities:
Additions to buildings and improvements (120) (185)
Restricted cash (4) 60
Deferred lease costs (110) (223)
------------ ------------
Net cash used in investing activities (234) (348)
------------ ------------
Cash Flows from Financing Activities:
Principal payments on mortgage loan (77) (70)
Distributions to partners - (4,646)
------------ ------------
Cash used in financing activities (77) (4,716)
------------ ------------
Net Increase (Decrease) in Cash and
Cash Equivalents 31 (6,588)
Cash and Cash Equivalents, Beginning of
Period 3,788 11,116
------------ ------------
Cash and Cash Equivalents, End of Period $ 3,819 $ 4,528
------------ ------------
Supplemental Disclosure of Cash Flow
Information:
Cash Paid For Interest $ 609 $ 615
============ ============
See notes to consolidated financial statements.
5 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying financial statements reflect the accounts of 1999
Broadway Associates Limited Partnership (the "Investor Partnership")
and 1999 Broadway Partnership (the "Operating Partnership"). The
Investor Partnership and the Operating Partnership are collectively
referred to as the "Partnership". These 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 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. Certain amounts have been reclassified to
conform to the March 31, 1999 presentation. The balance sheet at
December 31, 1998 was derived from audited financial statements at
such date.
The results of operations for the three months ended March 31,
1999 and 1998 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, A Limited Partnership (the "General Partner"). Related
party transactions with the General Partner and its affiliates include
the following:
a. The Operating Partnership accrues to an affiliate of the
General Partner an annual property management fee equal to 5%
of cash receipts. For the three months ended March 31, 1999
and 1998, management fees of $113,000 and $100,000,
respectively, were incurred. In accordance with the plan of
reorganization, beginning in 1996, property management fee
payments were reduced to 4% of cash receipts as long as the
mortgage note is outstanding. Management fees of $91,000 and
$81,000 have been paid or accrued for the period ended March
31, 1999 and 1998, respectively.
b. The Partnership pays or accrues to the General Partner an
annual partnership administration and investor service fee of
$100,000, which, since 1990, has been increased annually by 6%
to its present level of approximately $179,000 per annum. Fees
of $45,000 and $42,000, were paid or accrued during the
periods ended March 31, 1999 and 1998, respectively.
c. The Partnership pays or accrues to an affiliate of the General
Partner a construction management fee equal to 5% of the
aggregate cost of each applicable construction project. Fees
of $7,000 and $9,000 were incurred during the three months
ended March 31, 1999 and 1998, respectively, and have been
capitalized to the cost of buildings and improvements.
6 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Related Party Transactions (Continued)
d. In accordance with the partnership agreement, the General
Partner is entitled to receive 1% of aggregate cash
distributions. In January 1998, the General Partner received
a distribution of $46,000.
3. Distribution
In January 1998, the Partnership distributed $4,600,000 ($10,000 per
unit) to Unitholders and $46,000 to the General Partner.
4. Allocation of Income
In accordance with the Partnership's Second Amended and Restated
Partnership Agreement, losses are allocated 1% to the General Partner
and 99% to the limited partners in proportion to and to the extent of
the positive balances in the limited partners' capital accounts. Net
income is allocated, first, to the Preferred Unitholders, in an amount
equal to the excess of the cumulative distributions made or to be made;
second, to restore net loss previously allocated to the Preferred
Unitholders; and the balance to the Unitholders and to the General
Partner, to restore net loss previously allocated to them during the
period that the Preferred Units were outstanding.
5. Segment Information
The Partnership has two reportable segments, the Office Tower and the
Garage. The Partnership evaluates performance based on net operating
income, which is income before depreciation, amortization, interest
and non-operating items.
Segment information for the three months ended March 31, 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.
Office Parking
Tower Garage Other Total
---------- --------- --------- ---------
1999
Rental income $ 2,186 $ - $ - $ 2,186
Other income 41 103 - 144
Interest income 18 - 32 50
Interest expense 586 22 - 608
Depreciation and
amortization 668 11 - 679
Segment profit (loss) (135) 70 (38) (103)
Total assets 36,520 1,132 3,067 40,719
Capital expenditures 120 - - 120
7 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Segment Information (Continued)
Office Parking
Tower Garage Other Total
---------- --------- --------- ---------
1998
Rental income $ 2,080 $ - $ - $ 2,080
Other income 87 129 - 216
Interest income 26 - 64 90
Interest expense 607 23 - 630
Depreciation and
amortization 596 11 - 607
Segment profit (loss) (47) 95 (5) 43
Total assets 37,380 1,178 3,385 41,943
Capital expenditures 185 - - 185
6. Legal Proceedings
Equity Resources Pilgrim Limited Partnership v. 1999 Broadway
Associates Limited Partnership, Winthrop Financial Associates,
Bronco L.L.C. and The Second Guarantor, Delaware Chancery Court,
New Castle County (Civil Action No. 16325-NC).
A limited partner in the Partnership alleged that the allocation of
the Preferred Units subject to the oversubscription privilege made by
the Partnership pursuant to the October 30, 1997 Proxy Statement and
Prospectus, as amended, was incorrect. The Plaintiff alleged that it
should have received 188.0526 Preferred Units instead of the 56.2812
Preferred Units plaintiff received. This matter was settled in January
1999 at no cost to the Partnership.
8 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 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 Partnership from time to time. The
discussion of the Partnership'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 Partnership'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 the consolidated
financial statements and other items contained elsewhere in the
report.
Liquidity and Capital Resources
The Registrant, through its 99.9% ownership interest in 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 expenses as well as its
administrative costs.
The Registrant's level of liquidity based on cash and cash
equivalents increased by $31,000 during the three months ended
March 31, 1999, as compared to December 31, 1998. The increase is
due to $342,000 of cash provided by operating activities, which
was partially offset by $234,000 of cash used in investing
activities and $77,000 of cash used in financing activities. Cash
from operations increased during the period ended March 31, 1999
primarily as a result of the timing of payments and receipts of
various operating activities. Cash used in investing activities
consisted of $120,000 of cash used for improvements to real
estate, primarily tenant improvements, $110,000 of cash expended
on leasing costs and commissions and an increase of $4,000 in
restricted cash. Cash used in financing activities consisted of
$77,000 of mortgage principal amortization. The Property is
approximately 99% leased as of March 31, 1999. At March 31, 1999,
the Registrant had approximately $3,740,000 included in cash and
cash equivalents which has been invested primarily in money market
accounts.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the
level of capital expenditures required at the Property to
adequately maintain the physical assets and the other operating
needs of the Operating Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Operating
Partnership. The mortgage indebtedness of $25,545,000 is due on
September 30, 1999. It is anticipated that the Operating
Partnership will be able to refinance this debt prior to maturity.
In addition, the Partnership may obtain additional financing which
it will use to satisfy, in whole or in part, the preferred return
obligation due to the Preferred Unitholders.
9 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (Continued)
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 the limited partners will not receive a complete
return of their invested capital. The extent to which invested
capital is refunded to the limited partners and preferred unit
holders is dependent upon the performance of the Property and the
market in which it is located. Subsequent to September 1999, the
maturity date of the mortgage, the ability to hold and operate the
Property is dependent upon the Operating Partnership's ability to
refinance or restructure the first mortgage loan or sell the
Property.
Year 2000 Issue
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. It is expected
that all systems will be remediated, tested and implemented during
the first half of 1999.
To date, the Managing General Partner is not aware of any external
agent with a 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.
10 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Results of Operations
Operating results, before non-operating income (expenses) for the
three months ended March 31, 1999, as compared to the comparable
period in 1998, decreased by $128,000 due to an increase in
expenses of $162,000, which was partially offset by an increase in
revenue of $34,000.
Expenses increased by $162,000 for the three months ended March
31, 1999, as compared to 1998, primarily due to increases in
depreciation and amortization ($72,000), operating expenses
($43,000), repairs and maintenance ($25,000) and payroll and
payroll expense reimbursements ($18,000). These increases were
partially offset by a decrease in general and administrative
expenses ($17,000). Depreciation and amortization expense
increased due to expenditures for tenant improvements and leasing
commissions made in connection with an increase in leasing
activity.
Revenues for the three months ended March 31, 1999, as compared to
1998, increased due to an increase in rental income of $106,000
which was partially offset by a decrease in other income of
$72,000. Rental income increased due to an increase in overall
occupancy from 96% at March 31, 1998 to approximately 99% at March
31, 1999, and an increase in rental rates. Other income decreased
due to the volume of additional billing to tenants associated with
the increase in occupancy during the first quarter of 1998.
Interest income decreased by $40,000 due to the distribution in
January 1998 of approximately $4,646,000, which reduced the amount
of capital available for investment.
11 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1999
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Equity Resources Pilgrim Limited Partnership v. 1999 Broadway
Associates Limited Partnership, Winthrop Financial Associates,
Bronco L.L.C. and The Second Guarantor, Delaware Chancery Court,
New Castle County (Civil Action No. 16325-NC).
A limited partner in the Partnership alleged that the allocation
of the Preferred Units subject to the oversubscription privilege
made by the Partnership pursuant to the October 30, 1997 Proxy
Statement and Prospectus, as amended, was incorrect. The Plaintiff
alleged that it should have received 188.0526 Preferred Units
instead of the 56.2812 Preferred Units plaintiff received. This
matter was settled in January 1999 at no cost to the Partnership.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule, is filed as an Exhibit to this report.
(b) Reports on Form 8-K:
No report of Form 8-K was filed during the period.
12 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 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.
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/ Thomas Staples
---------------------
Thomas Staples
Chief Financial Officer
DATED: May 15, 1999
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,290,000<F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 49,345,000
<DEPRECIATION> (16,273,000)
<TOTAL-ASSETS> 40,719,000
<CURRENT-LIABILITIES> 0
<BONDS> 25,545,000
<COMMON> 0
0
0
<OTHER-SE> 13,698,000
<TOTAL-LIABILITY-AND-EQUITY> 40,719,000
<SALES> 0
<TOTAL-REVENUES> 2,330,000
<CGS> 0
<TOTAL-COSTS> 1,840,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (608,000)
<INCOME-PRETAX> (103,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (103,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (103,000)
<EPS-PRIMARY> (221.74)<F2>
<EPS-DILUTED> (221.74)<F2>
<FN>
<F1>Includes $471,000 of restricted cash.
<F2>Primary EPS and diluted EPS include ($147.83) per Preferred Unit of
Limited Partnership Interest.
</FN>
</TABLE>
