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 September 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 September 30, December 31, 1995 1994 Multi-family apartment complex, net of accumulated depreciation of $2,498,553 and $2,365,138, respectively $ 2,143,397 $ 2,218,305 Cash 21,500 44,832 Cash restricted for tenant security deposits 38,572 41,529 Escrow for property replacements 66,519 52,444 Prepaid expenses and other assets 103,143 64,360 Deferred expenses, net of accumulated amortization of $32,118 and $28,976, respectively 114,507 117,649 Total assets $ 2,487,638 $ 2,539,119 LIABILITIES AND PARTNERS' DEFICIT Mortgage note payable $ 2,234,623 $ 2,244,913 Notes payable 1,257,385 1,257,385 Accounts payable 86,677 149,866 Accrued expenses and other liabilities 254,171 227,927 Accrued interest due to an affiliate (Note 2) 488,105 394,046 Total liabilities 4,320,961 4,274,137 Partners' deficit (Note 3): Class A Limited Partners (4,000 Units outstanding) (251,998) (163,523) Original Limited Partner (435,462) (426,615) General Partners (1,145,863) (1,144,880) Total Partners' deficit (1,833,323) (1,735,018) Total liabilities and Partners' deficit $ 2,487,638 $ 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 Nine Months Ended September 30, Ended September 30, 1995 1994 1995 1994 Revenue: Rental $262,750 $249,185 $772,722 $ 730,794 Other income 3,244 184 3,972 3,292 Total revenue 265,994 249,369 776,694 734,086 Expenses: Operating 93,705 97,910 272,685 288,341 Maintenance 33,040 19,726 63,736 56,736 Real estate taxes 33,600 29,561 92,313 99,376 Depreciation and amortization 47,040 44,997 136,557 131,372 General and administrative 12,992 15,939 30,818 24,150 Interest (Note 2) 92,898 88,910 278,890 260,121 Total expenses 313,275 297,043 874,999 860,096 Net loss $(47,281) $(47,674) $(98,305) $(126,010) Allocation of net loss (Note 3): Per Unit of Class A Limited Partnership Interest (4,000 Units) $ (10.64) $ (10.73) $ (22.12) $ (28.35) Original Limited Partner $ (4,255) $ (4,291) $ (8,847) $ (11,341) General Partners $ (473) $ (477) $ (983) $ (1,260) The accompanying notes are an integral part of the financial statements. KRUPP ASSOCIATES 1980-1 STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 1994 Operating activities: Net loss $ (98,305) $(126,010) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 136,557 131,372 Decrease (increase) in cash restricted for tenant security deposits 2,957 (529) Increase in prepaid expenses and other assets (38,783) (42,281) Increase (decrease) in accounts payable (63,189) 1,063 Increase in accrued expenses and other liabilities 26,244 50,287 Increase in due to affiliates 94,059 74,491 Net cash provided by operating activities 59,540 88,393 Investing activities: Additions to fixed assets (58,507) (53,666) Increase in escrow for property replacements (14,075) (1,554) Net cash used in investing activities (72,582) (55,220) Financing activity: Principal payments on mortgage note payable (10,290) (9,539) Net increase (decrease) in cash (23,332) 23,634 Cash, beginning of period 44,832 5,044 Cash, end of period $ 21,500 $ 28,678 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 September 30, 1995, its results of operations for the three and nine months ended September 30, 1995 and 1994, and its cash flows for the nine months ended September 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 nine months ended September 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 $94,059 for the nine months ended September 1995 and $31,381 for the three months ended September 1995, as compared to $74,491 for the nine months ended September 1994 and $27,313 for the three months ended September 1994. (3) Summary of Changes in Partners' Deficit A summary of changes in Partners' Deficit for the nine months ended September 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 (983) (88,475) (8,847) (98,305) Balance at September 30, 1995 $(1,145,863) $(251,998) $(435,462) $(1,833,323) 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 are continuing to actively pursue the sale of Riverside Apartments. Although a prospective local buyer appears interested, at this time it is not certain that a sale will result. It is likely that all potential proceeds will be used to satisfy Partnership obligations, and it is unlikely that the Partners will receive a distribution. Cash Flow Shown below is the calculation of Cash Flow for the nine months ended September 30, 1995. Rounded to $1,000 Net loss for tax purposes $(97,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 135,000 Principal payments on mortgage (10,000) Expenditures for capital improvements (59,000) Cash Flow Deficit $(31,000) Continued KRUPP ASSOCIATES 1980-1 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Operations In comparing the three and nine months ended September 30, 1995, to the same period in 1994, the increase in rental revenue at Riverside Apartments is due to increases in rental rates at the property. For the three and nine months ended September 30, 1995, as compared to the same period in 1994, operating expenses decreased due to a decrease in gas expense as a result of the warmer winter season and a reduction in insurance expense due to a favorable claim history. The increase in interest expense is attributable to a rise in the prime rate from approximately 7% to 9% from the first nine months of 1994 to the first nine months 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: November 2, 1995