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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, 2000
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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
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1999 Broadway Associates Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Delaware 04-6613783
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
PART 1 - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
--------------------- ---------------------
<S> <C> <C>
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $19,411 (2000) and $18,159 (1999) 29,761 30,800
--------------------- ---------------------
31,461 32,500
Other Assets:
Cash and cash equivalents 1,545 3,194
Restricted cash 2,580 2,528
Other assets 298 284
Deferred rent receivable 1,260 1,152
Deferred costs, net of accumulated amortization
of $2,252 (2000) and $1,902(1999) 2,402 2,575
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Total assets $ 39,546 $ 42,233
===================== =====================
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 37,000 $ 37,000
Accrued interest payable 293 287
Accounts payable and accrued expenses 780 1,737
Payable to related party 271 285
Security deposits 128 128
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Total liabilities 38,472 39,437
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Partners' Capital:
Preferred unitholders' deficit (460 units outstanding) (2,126) (626)
Investor limited partners' capital (460 units outstanding) 4,725 4,944
General partner's deficit (1,525) (1,522)
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Total Partners' Capital 1,074 2,796
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Total Liabilities and Partners' Capital $ 39,546 $ 42,233
===================== =====================
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
--------------------- ---------------------
<S> <C> <C>
Revenues:
Rental $ 4,889 $ 4,514
Other 426 335
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Total revenues 5,315 4,849
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Expenses:
Real estate taxes 371 273
Payroll and payroll expense reimbursements 272 325
Operating expenses 298 368
Repairs and maintenance 448 443
Utilities 423 464
Management and other fees 353 327
General and administrative costs 60 93
Insurance 53 54
Depreciation 1,252 1,160
Amortization 234 262
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Total expenses 3,764 3,769
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Operating income 1,551 1,080
Non-operating income (expense):
Interest income 114 102
Interest expense (1,886) (1,215)
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Net loss $ (221) $ (33)
===================== =====================
Net loss allocated:
General Partners $ (2) $ -
Preferred Unitholders - (22)
Investor Limited Partners (219) (11)
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$ (221) $ (33)
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Net loss allocated per unit:
Preferred Unitholders $ - $ (47.83)
===================== =====================
Investor Limited Partners $ (476.09) $ (23.91)
===================== =====================
Distribution Per Preferred Unitholder $ 3,260.87 $ -
===================== =====================
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
--------------------- ---------------------
<S> <C> <C>
Revenues:
Rental $ 2,480 $ 2,328
Other 241 191
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Total revenues 2,721 2,519
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Expenses:
Real estate taxes 175 137
Payroll and payroll expense reimbursements 151 133
Operating expenses 138 175
Repairs and maintenance 237 212
Utilities 208 240
Management and other fees 179 169
General and administrative costs 38 58
Insurance 31 27
Depreciation 643 612
Amortization 123 131
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Total expenses 1,923 1,894
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Operating income 798 625
Non-operating income (expense):
Interest income 55 52
Interest expense (945) (607)
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Net (loss) income $ (92) $ 70
===================== =====================
Net (loss) income allocated:
General Partners $ (1) $ -
Preferred Unitholders - 70
Investor Limited Partners (91) -
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$ (92) $ 70
===================== =====================
Net (loss) income allocated per unit:
Preferred Unitholders $ - $ 152.17
===================== =====================
Investor Limited Partners $ (197.83) $ -
===================== =====================
Distribution Per Preferred Unitholder $ 3,260.87 $ -
===================== =====================
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
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 DEFICIT CAPITAL DEFICIT TOTAL
--------------- --------------- --------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance - January 1, 2000 460 460 $ (626) $ 4,944 $ (1,522) $ 2,796
Net loss - - - (219) (2) (221)
Distribution to partners - - (1,500) - (1) (1,501)
--------------- --------------- --------------- --------------- ---------------- --------------
Balance - June 30, 2000 460 460 $ (2,126) $ 4,725 $ (1,525) $ 1,074
=============== =============== =============== =============== ================ ==============
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
--------------------- ---------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (221) $ (33)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,602 1,423
Deferred rent receivable (108) (230)
Changes in assets and liabilities:
Other assets (14) 125
Accrued interest payable 6 (1)
Accounts payable, accrued expenses, payable
to related party and security deposits (971) (212)
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Net cash provided by operating activities 294 1,072
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Cash Flows from Investing Activities:
Additions to buildings and improvements (213) (620)
Increase in restricted cash (52) (8)
Deferred lease costs (177) (194)
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Cash used in investing activities (442) (822)
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Cash Flows from Financing Activities:
Principal payments on mortgage loan - (156)
Distribution to partners (1,501) -
Deferred loan costs - (89)
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Cash used in financing activities (1,501) (245)
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Net (Decrease) Increase in Cash and Cash Equivalents (1,649) 5
Cash and Cash Equivalents, Beginning of Period 3,194 3,788
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Cash and Cash Equivalents, End of Period $ 1,545 $ 3,793
===================== =====================
Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 1,764 $ 1,215
===================== =====================
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
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,
1999.
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. The balance sheet at December 31, 1999 was derived from
audited financial statements at such date.
The results of operations for the three and six months ended June 30, 2000
and 1999 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 the
Investor Partnership (the "General Partner"). Related party transactions
with the General Partner and its affiliates include the following:
a. The Operating Partnership pays 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, 2000 and 1999, management fees of
approximately $258,000 and $237,000, respectively, were incurred.
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 $190,000 per annum. Fees of approximately
$95,000 and $90,000 were paid or accrued during the periods ended June
30, 2000 and 1999, 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 approximately $10,000
and $42,000 were incurred during the six months ended June 30, 2000
and 1999, respectively, and have been capitalized to the cost of
buildings and improvements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. RELATED PARTY TRANSACTIONS (CONTINUED)
d. In accordance with the partnership agreement, the General Partner
received a distribution of approximately $1,000 in April 2000.
e. In April 2000, the Preferred Unitholders who are also affiliates of
the General Partner, received approximately $864,000 of the $1,500,000
distribution of cash from operations.
3. ALLOCATION OF INCOME AND CASH DISTRIBUTIONS
In accordance with the Second Amended and Restated Partnership Agreement
(the "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 limited partners and to the General Partner, to restore net
loss previously allocated to them during the period that the Preferred
Units were outstanding. Gain from the disposition of the Partnership's
property is allocated in accordance with the Agreement. The Agreement also
provides that while the Preferred Units are outstanding, cash flow and
capital proceeds (as defined in the Agreement) shall be distributed first
to the Preferred Unitholders in an amount equal to a cumulative annual 12%
non-compounded return on their preferred invested capital; and in the case
of capital proceeds only, to the Preferred Unitholders in a cumulative
amount equal to the greater of $46,500 (per Preferred Unit) or an amount
equal to the subscription price per Preferred Unit together with a
cumulative annual 15% compounded return thereon. Cash flow is then
distributed 99% to the limited partners and 1% to the General Partner until
the limited partners have received an amount equal to an annual 6% per
annum noncumulative, noncompounded return on their invested capital and the
balance, if any, 97% to the limited partners, and 3% to the General
Partners.
4. 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, 2000 and 1999, 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.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Office Parking
Tower Garage Other Total
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
2000
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Rental income $ 4,889 $ - $ - $ 4,889
Other income 162 264 - 426
Interest income 87 - 27 114
Interest expense 1,821 65 - 1,886
Depreciation and amortization 1,463 23 - 1,486
Segment profit (loss) (314) 176 (83) (221)
Total assets 37,859 1,075 612 39,546
Capital expenditures 213 - - 213
Office Parking
Tower Garage Other Total
----------------- ----------------- ----------------- -----------------
1999
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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>
5. PARTNERS' DISTRIBUTIONS
The Partnership distributed $1,500,000 ($3,260.87 per unit) of cash from
operations to the Preferred Unitholders and $1,000 to the General Partner
in April 2000.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
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
decreased by $1,649,000 during the six months ended June 30, 2000, as
compared to December 31, 1999. The decrease is due to $1,501,000 of cash
used for a distribution to partners (financing activities) and $442,000 of
cash used in investing activities, which was slightly offset by $ 294,000
of net cash provided by operating activities. Cash used in investing
activities consisted of $213,000 of cash used for improvements to real
estate, primarily tenant improvements, $177,000 of cash expended on leasing
costs and commissions and an increase of $52,000 in restricted cash. The
Property is approximately 90% leased as of June 30, 2000. At June 30, 2000,
the Registrant's cash and cash equivalents have 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. As a result of a refinancing in 1999, the
Partnership distributed $10,695,000 to the Preferred Unitholders in October
1999 in satisfaction of a portion of the Preferred Unitholders priority
return. The mortgage indebtedness of $37,000,000 matures on September 20,
2002. It is anticipated that the Operating Partnership will be able to
replace its maturing debt obligation or, if such financing is not
available, market the Property for sale.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)
Liquidity and Capital Resources (Continued)
In April 2000, the Partnership distributed $1,500,000 ($3,260.87 per unit)
and $1,000 of cash from operations to the Preferred Unitholders and General
Partner, respectively.
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 Unitholders is dependent upon the performance of the
Property and the market in which it is located. Subsequent to September
2002, 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.
Results of Operations
Operating results, before non-operating income (expenses) for the six
months ended June 30, 2000, as compared to the comparable period in 1999,
improved by $471,000 due to an increase in revenue of $466,000 and a
decrease in expenses of $5,000. Operating results, before non-operating
income (expense) for the three months ended June 30, 2000, as compared to
1999, improved by $173,000.
Revenues for the six months ended June 30, 2000, as compared to 1999,
increased due to an increase in rental income of $375,000 and an increase
in other income of $91,000. Rental income increased due to increases in
rental rates, which was offset by a decrease in occupancy due to a portion
of a significant tenants space becoming vacant.
Expenses decreased by $5,000 for the six months ended June 30, 2000, as
compared to 1999, primarily due to decreases in operating expenses
($70,000), payroll and payroll expense reimbursements ($53,000), utilities
($41,000), general and administrative expenses ($33,000) and amortization
($28,000). These decreases were substantially offset by increases in real
estate taxes ($98,000) and depreciation ($92,000). Operating expenses and
utilities decreased due to a decrease in overall occupancy. Payroll and
payroll expense reimbursements decreased primarily as a result of the
reduction of administrative personnel. Depreciation expense increased due
to expenditures for tenant improvements made in connection with an increase
in leasing activity in the previous two years. Real estate taxes increased
as a result of an increase in the assessed value of the Property.
Interest expense increased by $671,000 due to an increase in the
outstanding balance of the loan in connection with the refinancing in
September 1999. All other income and expense items, including the garage
operation, remained relatively constant.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
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.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2000
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 14, 2000
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