UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 September 30, 2003
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from _________to _________
Commission file number 2-84760
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2839837
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2003
Assets
Cash and cash equivalents $ 770
Receivables and deposits 324
Restricted escrows 126
Other assets 582
Investment properties:
Land $ 2,058
Buildings and related personal property 28,706
30,764
Less accumulated depreciation (19,529) 11,235
$ 13,037
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 12
Tenant security deposit liabilities 192
Accrued property taxes 133
Other liabilities 159
Mortgage notes payable 14,052
Partners' Deficit
General partners $ (109)
Limited partners (23,139 units
issued and outstanding) (1,402) (1,511)
$ 13,037
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
(Restated) (Restated)
Revenues:
Rental income $ 1,404 $ 1,378 $ 4,163 $ 4,139
Other income 132 130 402 391
Casualty gain (Note D) -- 66 44 78
Total revenues 1,536 1,574 4,609 4,608
Expenses:
Operating 638 465 1,775 1,497
General and administrative 67 80 175 240
Depreciation 362 359 1,107 1,086
Interest 281 290 854 877
Property tax 114 85 287 250
Total expenses 1,462 1,279 4,198 3,950
Income from continuing operations 74 295 411 658
Gain on sale of discontinued
operations (Note E) -- -- 78 --
(Loss) income from discontinued
operations (Note A) -- (39) 120 2
Net income $ 74 $ 256 $ 609 $ 660
Net income allocated to general
partners (10%) $ 7 $ 26 $ 61 $ 66
Net income allocated to limited
partners (90%) 67 230 548 594
$ 74 $ 256 $ 609 $ 660
Per limited partnership unit:
Income from continuing operations $ 2.90 $ 11.45 $ 15.99 $ 25.58
Gain on sale of discontinued
operations -- -- 3.03 --
(Loss) income from discontinued
operations -- (1.51) 4.66 .09
Net income $ 2.90 $ 9.94 $ 23.68 $ 25.67
Distributions per limited
partnership unit $ -- $ 9.29 $ 73.94 $ 48.10
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 23,149 $ 2 $23,149 $23,151
Partners' deficit at
December 31, 2002 23,139 $ (51) $ (239) $ (290)
Distributions to partners -- (119) (1,711) (1,830)
Net income for the nine months
ended September 30, 2003 -- 61 548 609
Partners' deficit
at September 30, 2003 23,139 $ (109) $(1,402) $(1,511)
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2003 2002
Cash flows from operating activities:
Net income $ 609 $ 660
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,107 1,417
Amortization of loan costs and deferred costs 13 11
Bad debt expense, net 127 112
Casualty gain (44) (78)
Change in accounts:
Receivables and deposits 39 (209)
Other assets (122) (101)
Accounts payable (137) (48)
Tenant security deposit liabilities 15 32
Accrued property taxes 133 92
Other liabilities (59) 113
Net cash provided by operating activities 1,681 2,001
Cash flows from investing activities:
Property improvements and replacements (373) (422)
Insurance proceeds received 44 129
Net withdrawals from (deposits to) restricted escrows 14 (21)
Net cash used in investing activities (315) (314)
Cash flows from financing activities:
Payments on mortgage notes payable (270) (310)
Distributions paid to partners (1,830) (1,194)
Net cash used in financing activities (2,100) (1,504)
Net (decrease) increase in cash and cash equivalents (734) 183
Cash and cash equivalents at beginning of period 1,504 768
Cash and cash equivalents at end of period $ 770 $ 951
Supplemental disclosure of cash flow information:
Cash paid for interest $ 872 $ 1,142
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Winthrop Growth
Investors 1 Limited Partnership (the "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The general partner of the Partnership is Two Winthrop
Properties, Inc. (the "Managing General Partner"), an affiliate of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust. In the opinion of the Managing General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
months ended September 30, 2003 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2003. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", which established standards for the way that business
enterprises report information about long-lived assets that are either being
held for sale or have already been disposed of by sale or other means. The
standard requires that results of operations for a long-lived asset that is
being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. Stratford Village
Apartments was sold to an unrelated third party in November 2002. As a result,
the accompanying consolidated statements of operations have been restated as of
January 1, 2002 to reflect the operations of Stratford Village Apartments as
income from discontinued operations.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
Affiliates of the Managing General Partner are entitled to receive 5% of gross
receipts from both of the Partnership's properties as compensation for providing
property management services. The Partnership paid to such affiliates
approximately $222,000 and $299,000 for the nine months ended September 30, 2003
and 2002, respectively, which is included in operating expenses.
An affiliate of the Managing General Partner earned reimbursements of
accountable administrative expenses amounting to approximately $132,000 and
$190,000 for the nine months ended September 30, 2003 and 2002, respectively,
which is included in general and administrative expenses. Included in these
amounts are fees related to construction management services provided by an
affiliate of the Managing General Partner of approximately $12,000 and $13,000
for the nine months ended September 30, 2003 and 2002, respectively.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers compensation, property casualty and vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the General
Partner. During the nine months ended September 30, 2003 and 2002, the
Partnership was charged by AIMCO and its affiliates approximately $69,000 and
$113,000, respectively, for insurance coverage and fees associated with policy
claims administration.
Note C - Supplementary Information Required Pursuant to Section 9.4 of
the Partnership Agreement
Statement of cash available for distribution for the three and nine months ended
September 30, 2003 (in thousands):
Three Months Nine Months
Ended Ended
September 30, September 30,
2003 2003
Net Income $ 74 $ 609
Add: Amortization expense 4 13
Depreciation expense 362 1,107
Less: Cash to reserves (440) (1,729)
Cash available for distribution $ -- $ --
Note D - Casualty Gain
During the nine months ended September 30, 2002, a casualty gain of
approximately $66,000 was recorded at Ashton Ridge Apartments related to a fire
that damaged eight apartment units in April 2002. The gain was the result of the
receipt of insurance proceeds of approximately $92,000 net of the write off of
fixed assets of approximately $26,000. The total cost to restore the damaged
units was approximately $149,000. During the nine months ended September 30,
2003, there was an additional casualty gain of approximately $44,000 recorded at
Ashton Ridge Apartments as a result of the receipt of additional insurance
proceeds of approximately $44,000 related to this fire.
During the nine months ended September 30, 2002, a net casualty gain of
approximately $12,000 was recorded at Ashton Ridge Apartments. The casualty gain
related to wind damage in September 2001. This gain was the result of the
receipt of insurance proceeds of approximately $37,000, net of the write off of
net fixed assets of approximately $25,000.
Note E - Sale of Investment Property
On November 27, 2002, Stratford Village Apartments was sold to an unaffiliated
third party for approximately $9,514,000. After closing costs and expenses
related to the sale, the net proceeds received by the Partnership were
approximately $9,214,000. The Partnership realized a gain on the sale of
investment property of approximately $5,492,000 during the fourth quarter of
2002. During the nine months ended September 30, 2003, the Partnership
recognized additional gain on the sale of approximately $78,000 due to a
reduction in the estimated costs related to the sale. Additionally, during the
nine months ended September 30, 2003, the Partnership received approximately
$120,000 that was held by the trustee for the bonds underlying the mortgage
encumbering Stratford Village Apartments. When the property's mortgage was paid
off at closing and the underlying bonds were repaid, these remaining funds were
released to the Partnership and are included in income from discontinued
operations.
Note F - Legal Proceedings
On August 8, 2003 AIMCO Properties L.P., an affiliate of the Managing General
Partner, was served with a Complaint in the United States District Court,
District of Columbia alleging that AIMCO Properties L.P. willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week. The Complaint is styled as a
Collective Action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the Complaint
alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating
maintenance workers for time that they worked in responding to a call while
"on-call". The Complaint also attempts to certify a subclass for salaried
service directors who are challenging their classification as exempt from the
overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to
the Complaint denying the substantive allegations. Although the outcome of any
litigation is uncertain, in the opinion of the Managing General Partner the
claims will not result in any material liability to the Partnership.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 2003 and 2002:
Average Occupancy
2003 2002
Ashton Ridge Apartments
Jacksonville, Florida 97% 96%
Stratford Place Apartments
Gaithersburg, Maryland 95% 96%
Results of Operations
The Partnership's net income for the nine months ended September 30, 2003 was
approximately $609,000 compared to net income of approximately $660,000 for the
corresponding period in 2002. The Partnership's net income for the three months
ended September 30, 2003 was approximately $74,000 compared to net income of
approximately $256,000 for the corresponding period in 2002. The decrease in net
income for the nine months ended September 30, 2003 was due to an increase in
total expenses partially offset by a gain on sale of discontinued operations and
an increase in income from discontinued operations. The decrease in net income
for the three months ended September 30, 2003 was primarily due to an increase
in total expenses and a decrease in total revenues partially offset by a
decrease in loss from discontinued operations.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", which established standards for the way that business
enterprises report information about long-lived assets that are either being
held for sale or have already been disposed of by sale or other means. The
standard requires that results of operations for a long-lived asset that is
being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. Stratford Village
Apartments was sold to an unrelated third party in November 2002. As a result,
the accompanying consolidated statements of operations for the period ended
September 30, 2002, have been restated as of January 1, 2002 to reflect the
operations of Stratford Village Apartments as income from discontinued
operations.
On November 27, 2002, Stratford Village Apartments was sold to an unaffiliated
third party for approximately $9,514,000. After closing costs and expenses
related to the sale, the net proceeds received by the Partnership were
approximately $9,214,000. The Partnership realized a gain on the sale of
investment property of approximately $5,492,000 during the fourth quarter of
2002. During the nine months ended September 30, 2003, the Partnership
recognized additional gain on the sale of approximately $78,000 due to a
reduction in the estimated costs related to the sale. Additionally, during the
nine months ended September 30, 2003, the Partnership received approximately
$120,000 that was held by the trustee for the bonds underlying the mortgage
encumbering Stratford Village Apartments. When the property's mortgage was paid
off at closing and the underlying bonds were repaid, these remaining funds were
released to the Partnership and are included in income from discontinued
operations.
The Partnership recognized income from continuing operations for the three and
nine months ended September 30, 2003 of approximately $74,000 and $411,000
compared to income from continuing operations of approximately $295,000 and
$658,000 for the three and nine months ended September 30, 2002. The decrease in
income from continuing operations for both periods is primarily due to an
increase in total expenses. Additionally, during the three month period ended
September 30, 2003 there was a slight decrease in total revenues. Total revenues
remained relatively constant during the nine months ended September 30, 2003.
Total expenses increased during the three and nine months ended September 30,
2003 due to an increase in operating, depreciation and property tax expenses
partially offset by a decrease in general and administrative and interest
expenses. Operating expenses increased primarily due to an increase in
maintenance, property and administrative expenses. Maintenance expenses
increased primarily due to an increase in contract services and snow removal
costs at Stratford Place Apartments. Property expenses increased primarily due
to an increase in utility expenses at both of the Partnership's investment
properties. Administrative expenses increased primarily due to an increase in
common area cleaning at Stratford Place Apartments. Depreciation expense
increased due to property improvements and replacements completed during the
past twelve months primarily at Stratford Place Apartments. Property tax expense
increased due to increased assessed values at both of the Partnership's
properties. Interest expense decreased due to principal payments made against
the mortgage loans at the Partnership's investment properties.
General and administrative expenses decreased for the three and nine months
ended September 30, 2003 due to a decrease in the costs of the services included
in the management reimbursements to the Managing General Partner as allowed
under the Partnership Agreement. Also included in general and administrative
expenses are costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement.
The decrease in total revenues for the three months ended September 30, 2003 is
due to a decrease in casualty gain which more than offset an increase in rental
income. Total revenues remained relatively constant for the nine months ended
September 30, 2003 due to an increase in rental income which was offset by a
decrease in casualty gain. Other income remained relatively constant for three
and nine months ended September 30, 2003. The increase in rental income for the
three and nine months ended September 30, 2003 is due to an increase in average
rental rates at both of the Partnership's investment properties partially offset
by a decrease in occupancy at Stratford Place Apartments and an increase in bad
debt expenses at Stratford Place Apartments.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, the Managing General
Partner may use rental concessions and rental rate reductions to offset
softening market conditions, accordingly, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At September 30, 2003, the Partnership had cash and cash equivalents of
approximately $770,000 compared to approximately $951,000 at September 30, 2002.
Cash and cash equivalents decreased approximately $734,000 since December 31,
2002 due to approximately $315,000 and $2,100,000 of cash used in investing and
financing activities, respectively, partially offset by approximately $1,681,000
of cash provided by operating activities. Cash used in investing activities
consisted of property improvements and replacements partially offset by the
receipt of insurance proceeds and net withdrawals from restricted escrow
accounts maintained by the mortgage holder of Stratford Place Apartments. Cash
used in financing activities consisted of distributions paid to the partners and
principal payments made on the mortgages encumbering the Partnership's
investment properties. The Partnership invests its working capital reserves in
interest bearing 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 properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state and local legal and regulatory requirements. The Managing General Partner
monitors developments in the area of legal and regulatory compliance and is
studying new federal laws, including the Sarbanes-Oxley Act of 2002. The
Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures
with regard to governance, disclosure, audit and other areas. In light of these
changes, the Partnership expects that it will incur higher expenses related to
compliance, including increased legal and audit fees. Capital improvements
planned for each of the Partnership's properties are detailed below.
Ashton Ridge Apartments
During the nine months ended September 30, 2003, the Partnership completed
approximately $163,000 of capital improvements at Ashton Ridge Apartments,
consisting primarily of floor covering and appliance replacements, structural
improvements and air conditioning upgrades. These improvements were funded from
operating cash flow and insurance proceeds. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $29,000 in capital improvements during the remainder
of 2003. The additional capital improvements will consist primarily of floor
covering, appliance and HVAC replacements. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Stratford Place Apartments
During the nine months ended September 30, 2003, the Partnership completed
approximately $210,000 of capital improvements at Stratford Place Apartments,
consisting primarily of floor covering replacements, structural upgrades, water
heater replacements and exterior painting. These improvements were funded from
operating cash flow and replacement reserves. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $23,000 in capital improvements during the remainder
of 2003. The additional capital improvements will consist primarily of floor
covering, HVAC and appliance replacements. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property and replacement reserves.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering Stratford Place Apartments of approximately $8,377,000
requires a balloon payment of approximately $7,739,000 in July 2006. The
mortgage indebtedness encumbering Ashton Ridge Apartments of approximately
$5,675,000 has a maturity date of January 2021 at which time the loan is
scheduled to be fully amortized. The Managing General Partner will attempt to
refinance the indebtedness and/or sell Stratford Place Apartments prior to its
maturity date. If the property cannot be refinanced or sold for a sufficient
amount, the Partnership will risk losing the property through foreclosure.
Pursuant to the Partnership Agreement, the term of the Partnership was
scheduled to expire on December 31, 2003. In this regard, in October 2003 the
Partnership sent the limited partners a preliminary consent statement seeking
their consent to extend the term of the Partnership to December 31, 2021. The
consent of a majority in interest of the limited partners was required to extend
the term of the Partnership. As of November 2003 the Partnership had received
the consent of a majority of the limited partners to extend the term of the
Partnership to December 31, 2021.
The Partnership distributed the following amounts during the nine months ended
September 30, 2003 and 2002 (in thousands except per unit data):
Nine Months Per Nine Months Per
Ended Limited Ended Limited
September 30, Partnership September 30, Partnership
2003 Unit 2002 Unit
Operations $1,191 $ 46.33 $ 1,194 $ 48.10
Sale (1) 639 27.61 -- --
$1,830 $ 73.94 $ 1,194 $ 48.10
(1) From the remaining undistributed sale proceeds of Stratford Village
Apartments.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from operations, the availability of cash reserves, and the timing of debt
maturities, refinancings and/or property sales. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations,
after required capital expenditures, to permit further distributions to its
partners during the remainder of 2003 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 10,969.25 limited partnership units
(the "Units") in the Partnership representing 47.41% of the outstanding Units at
September 30, 2003. A number of these Units were acquired pursuant to tender
offers made by AIMCO or its affiliates. It is possible that AIMCO or its
affiliates will acquire additional Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that would include, but are not
limited to, voting on certain amendments to the Partnership Agreement and voting
to remove the Managing General Partner. As a result of its ownership of 47.41%
of the outstanding units, AIMCO and its affiliates are in a position to
influence all voting decisions with respect to the Partnership. Although the
Managing General Partner owes fiduciary duties to the limited partners of the
Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as
its sole stockholder. As a result, the duties of the Managing General Partner,
as managing general partner, to the Partnership and its limited partners may
come into conflict with the duties of the Managing General Partner to AIMCO, as
its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned and
the Partnership fully reserves all outstanding balances over thirty days. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
ITEM 3. Controls and Procedures
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Managing General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Managing General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 8, 2003 AIMCO Properties L.P., an affiliate of the Managing General
Partner, was served with a Complaint in the United States District Court,
District of Columbia alleging that AIMCO Properties L.P. willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week. The Complaint is styled as a
Collective Action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the Complaint
alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating
maintenance workers for time that they worked in responding to a call while
"on-call". The Complaint also attempts to certify a subclass for salaried
service directors who are challenging their classification as exempt from the
overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to
the Complaint denying the substantive allegations. Although the outcome of any
litigation is uncertain, in the opinion of the Managing General Partner the
claims will not result in any material liability to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 3.1, Amended and Restated Agreement of Limited
Partnership of Winthrop Growth Investors I Limited Partnership
dated May 11, 1984 (included as an exhibit to the
Partnership's Registration Statement on Form S-11, File No.
2-84760 and incorporated herein by reference).
Exhibit 3.2, Amendment to Amended and Restated Agreement of
Limited Partnership dated August 23, 1985 (Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995 is incorporated herein by reference).
Exhibit 31.1, Certification of equivalent of Chief Executive
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2, Certification of equivalent of Chief Financial
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1, Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2003.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
By: Two Winthrop Properties, Inc.
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Vice President - Residential
By: /s/Paul J. McAuliffe
Paul J. McAuliffe
Vice President - Residential
Date: November 13, 2003
Exhibit 31.1
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Winthrop Growth
Investors I Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 13, 2003
/s/Patrick J. Foye
Patrick J. Foye
Vice President - Residential of Two Winthrop
Properties, Inc., equivalent of the chief
executive officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Winthrop Growth
Investors I Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 13, 2003
/s/Paul J. McAuliffe
Paul J. McAuliffe
Vice President - Residential of Two Winthrop
Properties, Inc., equivalent of the chief
financial officer of the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Winthrop Growth
Investors I Limited Partnership (the "Partnership"), for the quarterly period
ended September 30, 2003 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), Patrick J. Foye, as the equivalent of the chief
executive officer of the Partnership, and Paul J. McAuliffe, as the equivalent
of the chief financial officer of the Partnership, each hereby certifies,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: November 13, 2003
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: November 13, 2003
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.