<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 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 0-20273
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 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
(In Thousands, Except Unit Data) 1999 1998
--------------------- --------------------
<S> <C> <C>
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $16,885 (1999) and $15,725 (1998) 31,260 31,800
--------------------- --------------------
32,960 33,500
Other Assets:
Cash and cash equivalents 3,793 3,788
Restricted cash 475 467
Other assets 231 356
Deferred rent receivable 920 690
Deferred costs, net of accumulated amortization
of $1,557 (1999) and $2,504 (1998) 2,289 2,269
--------------------- --------------------
Total assets $ 40,668 $ 41,070
===================== ====================
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 25,466 $ 25,622
Accrued interest payable 202 203
Accounts payable and accrued expenses 808 1,109
Payable to related party 294 200
Security deposits 130 135
--------------------- --------------------
Total liabilities 26,900 27,269
--------------------- --------------------
Commitments
Partners' Capital:
Preferred unit holders' capital (460 units outstanding) 10,196 10,218
Investor limited partners' capital (460 units outstanding) 5,082 5,093
General partner's deficit (1,510) (1,510)
--------------------- --------------------
Total Partners' Capital 13,768 13,801
--------------------- --------------------
Total Liabilities and Partners' Capital $ 40,668 $ 41,070
===================== ====================
</TABLE>
See notes to consolidated financial statements.
2 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
<TABLE>
<CAPTION>
Consolidated Statements of Operations (Unaudited) For the Six Months Ended
June 30, June 30,
(In Thousands, Except Unit Data) 1999 1998
--------------------- --------------------
<S> <C> <C>
Revenues:
Rental $ 4,514 $ 4,268
Other 335 392
--------------------- --------------------
Total revenues 4,849 4,660
--------------------- --------------------
Expenses:
Real estate taxes 273 263
Payroll and payroll expense reimbursements 325 303
Operating expenses 368 308
Repairs and maintenance 443 414
Utilities 464 457
Management and other fees 327 297
General and administrative costs 93 179
Insurance 54 54
Depreciation 1,160 1,016
Amortization 262 277
--------------------- --------------------
Total expenses 3,769 3,568
--------------------- --------------------
Operating income 1,080 1,092
Non-operating income (expense):
Interest income 102 154
Interest expense (1,215) (1,259)
--------------------- --------------------
Net loss $ (33) $ (13)
===================== ====================
Net loss allocated:
General Partners $ - $ -
Preferred Unit Holders (22) (9)
Investor Limited Partners (11) (4)
--------------------- --------------------
$ (33) $ (13)
===================== ====================
Net loss allocated per unit:
Preferred Unit Holders $ (47.83) $ (19.57)
===================== ====================
Investor Limited Partners $ (23.91) $ (8.70)
===================== ====================
Distribution Per Investor Limited Partner Unit $ - $ 10,000.00
===================== ====================
</TABLE>
See notes to consolidated financial statements.
3 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
<TABLE>
<CAPTION>
Consolidated Statements of Operations (Unaudited) For the Three Months Ended
June 30, June 30,
(In Thousands, Except Unit Data) 1999 1998
--------------------- --------------------
<S> <C> <C>
Revenues:
Rental $ 2,328 $ 2,188
Other 191 176
--------------------- --------------------
Total revenues 2,519 2,364
--------------------- --------------------
Expenses:
Real estate taxes 137 137
Payroll and payroll expense reimbursements 133 129
Operating expenses 175 158
Repairs and maintenance 212 208
Utilities 240 228
Management and other fees 169 155
General and administrative costs 58 127
Insurance 27 27
Depreciation 612 534
Amortization 131 152
--------------------- --------------------
Total expenses 1,894 1,855
--------------------- --------------------
Operating income 625 509
Non-operating income (expense):
Interest income 52 64
Interest expense (607) (629)
--------------------- --------------------
Net income (loss) $ 70 $ (56)
===================== ====================
Net income (loss) allocated:
General Partners $ - $ (1)
Preferred Unit Holders 70 (37)
Investor Limited Partners - (18)
--------------------- --------------------
$ 70 $ (56)
===================== ====================
Net income (loss) allocated per unit:
Preferred Unit Holders $ 152.17 $ (80.43)
===================== ====================
Investor Limited Partners $ - $ (39.13)
===================== ====================
</TABLE>
See notes to consolidated financial statements.
4 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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 - - (22) (11) - (33)
--------------- --------------- --------------- --------------- ---------------- --------------
Balance - June 30, 1999 460 460 $ 10,196 $ 5,082 $ (1,510) $ 13,768
=============== =============== =============== =============== ================ ==============
</TABLE>
See notes to consolidated financial statements.
5 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
(In Thousands) For the Six Months Ended
June 30, June 30,
1999 1998
--------------------- --------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (33) $ (13)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,423 1,324
Deferred rent receivable (230) (299)
Changes in assets and liabilities:
Other assets 125 (113)
Accrued interest payable (1) (3)
Accounts payable, accrued expenses, payable
to related party and security deposits (212) (2,440)
--------------------- --------------------
Net cash provided by (used in) operating activities 1,072 (1,544)
--------------------- --------------------
Cash Flows from Investing Activities:
Additions to buildings and improvements (620) (777)
(Increase) decrease in restricted cash (8) 54
Deferred lease costs (194) (294)
--------------------- --------------------
Net cash used in investing activities (822) (1,017)
--------------------- --------------------
Cash Flows from Financing Activities:
Principal payments on mortgage loan (156) (142)
Distributions to partners - (4,646)
Deferred loan costs (89) -
--------------------- --------------------
Cash used in financing activities (245) (4,788)
--------------------- --------------------
Net increase (decrease) in cash and cash equivalents 5 (7,349)
Cash and cash equivalents, beginning of period 3,788 11,116
--------------------- --------------------
Cash and cash equivalents, end of period $ 3,793 $ 3,767
===================== ====================
Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 1,215 $ 1,231
===================== ====================
</TABLE>
See notes to consolidated financial statements.
6 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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 June 30, 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 and six months ended June 30,
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 Managing General
Partner of Investor 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 six months ended June 30, 1999
and 1998, management fees of $237,000 and $213,000,
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 $190,000
and $170,000 have been paid or accrued for the period ended
June 30, 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 $90,000 and $84,000, were paid or accrued
during the periods ended June 30, 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 $42,000 and $35,000 were incurred during the six
months ended June 30, 1999 and 1998, respectively, and have
been capitalized to the cost of buildings and improvements.
7 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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 six months 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>
Office Parking
Tower Garage Other Total
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
1999
Rental income $ 4,514 $ - $ - $ 4,514
Other income 112 223 - 335
Interest income 37 - 65 102
Interest expense 1,171 44 - 1,215
Depreciation and amortization 1,400 23 - 1,423
Segment profit (loss) (126) 156 (63) (33)
Total assets 36,525 1,120 3,023 40,668
Capital expenditures 620 - - 620
</TABLE>
8 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Segment Information (Continued)
<TABLE>
<CAPTION>
Office Parking
Tower Garage Other Total
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
1998
Rental income $ 4,268 $ - $ - $ 4,268
Other income 180 212 - 392
Interest income 50 - 104 154
Interest expense 1,214 45 - 1,259
Depreciation and amortization 1,301 23 - 1,324
Segment profit (loss) (70) 144 (87) (13)
Total assets 36,936 1,166 3,181 41,283
Capital expenditures 777 - - 777
</TABLE>
9 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
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 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 $5,000 during the six months ended June
30, 1999, as compared to December 31, 1998. The increase is due
to $1,072,000 of cash provided by operating activities, which
was significantly offset by $822,000 of cash used in investing
activities and $245,000 of cash used in financing activities.
Cash from operations increased during the period ended June 30,
1999 primarily as a result of the timing of payments and
receipts of various operating activities. Cash used in investing
activities consisted of $620,000 of cash used for improvements
to real estate, primarily tenant improvements, $194,000 of cash
expended on leasing costs and commissions and an increase of
$8,000 in restricted cash. Cash used in financing activities
consisted of $156,000 of mortgage principal amortization and
$89,000 in deferred loan costs. The Property is approximately
98% leased as of June 30, 1999. At June 30, 1999, the Registrant
had approximately $3,621,000 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
$25,466,000 is due on September 30, 1999. The Operating
Partnership is currently negotiating for the replacement of the
existing indebtedness. 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.
10 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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.
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.
11 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
Item 2. Management's Discussion and Analysis or Plan of Operation
(Continued)
Results of Operations
Operating results, before non-operating income (expense) for the
six months ended June 30, 1999, as compared to the comparable
period in 1998, decreased by $12,000 due to an increase in
expenses of $201,000, which was significantly offset by an
increase in revenue of $189,000. Operating results, before
non-operating income (expense) for the three months ended June
30, 1999, as compared to 1998, improved by $116,000.
Expenses increased by $201,000 for the six months ended June 30,
1999, as compared to 1998, primarily due to increases in
depreciation ($144,000), operating expenses ($60,000),
management and other fees ($30,000), repairs and maintenance
($29,000) and payroll and payroll expense reimbursements
($22,000). These increases were partially offset by a decrease
in general and administrative expenses ($86,000). Depreciation
expense increased due to expenditures for tenant improvements
made in connection with an increase in leasing activity.
Revenues for the six months ended June 30, 1999, as compared to
1998, increased due to an increase in rental income of $246,000
which was partially offset by a decrease in other income of
$57,000. Rental income increased due to an increase in overall
occupancy from 89% at January 1, 1998 and 96% at June 30, 1998,
to approximately 98% at June 30, 1999, and an increase in rental
rates.
Interest income decreased by $52,000 due to the distribution in
January 1998 of approximately $4,646,000, which reduced the
amount of capital available for investment. Interest expense
decreased by $44,000 primarily due to the amortization of the
mortgage principal. All other income and expense items remained
relatively constant.
12 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1999
PART II - OTHER INFORMATION
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.
13 of 14
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
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.
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: August 13, 1999
14 of 14
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 4,268,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 49,845,000
<DEPRECIATION> 16,885,000
<TOTAL-ASSETS> 40,668,000
<CURRENT-LIABILITIES> 0
<BONDS> 25,466,000
<COMMON> 0
0
0
<OTHER-SE> 13,768,000
<TOTAL-LIABILITY-AND-EQUITY> 40,668,000
<SALES> 0
<TOTAL-REVENUES> 4,849,000
<CGS> 0
<TOTAL-COSTS> 3,676,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,215,000)
<INCOME-PRETAX> (33,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,000)
<EPS-BASIC> (71.74)<F2>
<EPS-DILUTED> (71.74)<F2>
<FN>
<F1>
Includes $475,000 of restricted cash.
<F2>
Primary EPS and diluted EPS include ($47.83) per Preferred Unit of Limited
Partnership Interest.
</FN>
</TABLE>
