UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 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 2-68727 Krupp Associates 1980-1 Massachusetts 04-2708956 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 470 Atlantic Avenue, Boston, Massachusetts 02210 (Address of principal executive offices) (Zip Code) (617) 423-2233 (Registrant's telephone number, including area code) 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 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS KRUPP ASSOCIATES 1980-1 BALANCE SHEETS ASSETS June 30, December 31, 1995 1994 Multi-family apartment complex, net of accumulated depreciation of $2,452,560 and $2,365,138, respectively $ 2,162,267 $2,218,305 Cash and cash equivalent 108,281 44,832 Cash restricted for tenant security deposits 39,187 41,529 Escrow for property replacements 52,313 52,444 Prepaid expenses and other assets 70,344 64,360 Deferred expenses, net of accumulated amortization of $31,071 and $28,976, respectively 115,554 117,649 Total assets $ 2,547,946 $2,539,119 LIABILITIES AND PARTNERS' DEFICIT Mortgage note payable $ 2,238,143 $2,244,913 Notes payable 1,257,385 1,257,385 Accounts payable 163,200 149,866 Accrued expenses and other liabilities 218,621 227,927 Accrued interest due to an affiliate (Note 2) 456,639 394,046 Total liabilities 4,333,988 4,274,137 Partners' deficit (Note 3) (1,786,042) (1,735,018) Total liabilities and partners' deficit $ 2,547,946 $2,539,119 The accompanying notes are an integral part of the financial statements. KRUPP ASSOCIATES 1980-1 STATEMENTS OF OPERATIONS For the Three Months For the Six Months Ended June 30, Ended June 30, 1995 1994 1995 1994 Revenue: Rental $259,133 $241,769 $509,972 $481,609 Other income 536 179 728 3,108 Total revenue 259,669 241,948 510,700 484,717 Expenses: Operating 83,189 87,544 178,980 190,431 Maintenance 18,103 25,754 30,696 37,010 Real estate taxes 23,679 34,576 58,713 69,815 Depreciation and amortization 45,487 43,873 89,517 86,375 General and administrative 13,656 3,918 17,826 8,211 Interest (Note 2) 93,392 89,968 185,992 171,211 Total expenses 277,506 285,633 561,724 563,053 Net loss $(17,837) $(43,685) $(51,024) $(78,336) Allocation of net loss (Note 3): Per Unit of Class A Limited Partnership Interest (4,000 Units) $ (4.01) $ (9.83) $ (11.48) $ (17.63) Original Limited Partner $ (1,605) $ (3,931) $ (4,592) $ (7,050) General Partners $ (178) $ (436) $ (510) $ (783) The accompanying notes are an integral part of the financial statements. KRUPP ASSOCIATES 1980-1 STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1995 1994 Operating activities: Net loss $ (51,024) $(78,336) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 89,517 86,375 Decrease(increase) in cash restricted for tenant security deposits 2,342 (345) Increase in prepaid expenses and other assets (5,984) (54,224) Increase in accounts payable 13,334 8,993 Increase (decrease) in accrued expenses and other liabilities (9,306) 73,626 Increase in due to an affiliate 62,593 47,178 Net cash provided by operating activities 101,472 83,267 Investing activities: Additions to fixed assets (31,384) (37,024) Net decrease (increase) in escrow for property replacements 131 (9,957) Net cash used in investing activities (31,253) (46,981) Financing activity: Principal payments on mortgage note payable (6,770) (6,083) Net increase in cash and cash equivalent 63,449 30,203 Cash and cash equivalent, beginning of period 44,832 5,044 Cash and cash equivalent, end of period $ 108,281 $ 35,247 The accompanying notes are an integral part of the financial statements. KRUPP ASSOCIATES 1980-1 NOTES TO FINANCIAL STATEMENTS (1) Accounting Policies Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this report on Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. In the opinion of the General Partners of Krupp Associates 1980-1 (the "Partnership"), the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Financial Statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of June 30, 1995, its results of operations for the three and six months ended June 30, 1995 and 1994, and its cash flows for the six months ended June 30, 1995 and 1994. Certain prior year balances have been reclassified to conform with current period financial statement presentation. The results of operations for the three and six months ended June 30, 1995 are not necessarily indicative of the results which may be expected for the full year. See Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. (2) Related Party Transactions Interest on notes payable to the General Partner and its affiliates was $62,678 for the six months ended June 1995 and $31,785 for the three months ended June 1995, as compared to $47,178 for the six months ended June 1994 and $25,174 for the three months ended June 1994. (3) Summary of Changes in Partners' Deficit A summary of changes in Partners' Deficit for the six months ended June 30, 1995 is as follows: Class A Original Total General Limited Limited Partners' Partners Partners Partner Deficit Balance at December 31, 1994 $(1,144,880) $(163,523) $(426,615) $(1,735,018) Net loss (510) (45,922) (4,592) (51,024) Balance at June 30, 1995 $(1,145,390) $(209,445) $(431,207) $(1,786,042) KRUPP ASSOCIATES 1980-1 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership's ability to generate cash adequate to meet its needs is dependent primarily upon the successful operation of Riverside Apartments. Such ability is also dependent upon the future availability of short-term borrowings and upon the potential refinancing or sale of the asset. These sources of liquidity could be used by the Partnership for payment of expenses related to real estate operations, debt service and expenses. Cash Flow and Capital Transaction Proceeds, if any, as calculated under Section 8.2(a) ("Cash Flow") and 8.3(a) of the Partnership Agreement would then be available for distribution to the Partners. The Partnership has discontinued distributions due to insufficient operating cash flow. The Partnership has experienced cash flow deficiencies for several years and currently has very limited liquidity. Expenditures are being monitored closely and capital improvements are made on an as-needed basis. To date, the General Partners have been able to arrange financing through borrowings, from an affiliate of the General Partners, to cover a substantial portion of these cash flow deficiencies. Also, one of the General Partners, The Krupp Company Limited Partnership ("The Krupp Company"), contributed an additional $100,000 to the Partnership during 1991. In January 1993, The Krupp Company loaned an additional $135,000 to the Partnership in the form of a demand note to payoff a demand note from an unaffiliated bank. In addition, the affiliate lender has been willing to defer interest payments on the borrowings since late 1990. Furthermore, the General Partners, through annual negotiations, have continued to arrange for the waiver of property management fees and expense reimbursements payable to the management agent, also an affiliate of the General Partners. The General Partners anticipate operating deficits to continue and cannot guarantee that they will be able to take actions that will cover any future deficits. If the property is unable to generate funds sufficient to cover these deficits, the Partnership could default on its mortgage payments and become subject to foreclosure proceedings. However, the Partnership is current on its mortgage payments. In the past several years, management has tried several times to market the property for sale but has been unsuccessful in generating interest because of the limited demand for product in this area. However, continued efforts will be made to sell the property in the future and to retire all existing debts. Cash Flow Shown below is the calculation of Cash Flow for the six months ended June 30, 1995. Rounded to $1,000 Net loss for tax purposes $(52,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 90,000 Principal payments on mortgage (7,000) Expenditures for capital improvements (31,000) Cash Flow $ - Continued KRUPP ASSOCIATES 1980-1 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Operations For the three and six months ended June 30, 1995, as compared to the same period in 1994, Riverside Apartments experienced an increase in revenue attributable to rental rate increases established throughout the first half of the year. During the first and second quarters of 1995 as compared to 1994, total expenses have remained relatively stable with the exception of operating and interest expense. Operating expense decreased primarily as a result of a reduction in insurance expense due to a favorable claim history. Interest expense increased as a result of the rise in prime rate from approximately 6% to 9% from the first half of 1994 to the first half of 1995, respectively. KRUPP ASSOCIATES 1980-1 PART II - OTHER INFORMATION Item 1. Legal Proceedings Response: None Item 2. Changes in Securities Response: None Item 3. Defaults upon Senior Securities Response: None Item 4. Submission of Matters to a Vote of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Krupp Associates 1980-1 (Registrant) BY: /s/Marianne Pritchard Marianne Pritchard Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. DATE: August 4, 1995