UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 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 0-14393 Krupp Cash Plus Limited Partnership Massachusetts 04-2865878 (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 The total number of pages in this document is 12. PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS This form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. KRUPP CASH PLUS LIMITED PARTNERSHIP BALANCE SHEETS ASSETS March 31, December 31, 1998 1997 Real estate assets: Retail centers (Note 3) $ - $26,544,659 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 7) 3,624,459 3,797,789 Total real estate assets 3,624,459 30,342,448 Cash and cash equivalents (Note 2) 30,044,061 1,021,686 Other assets 426,843 566,679 Total assets $34,095,363 $31,930,813 LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable $ 1,031 $ 335 Due to affiliates (Note 8) 35,025 - Accrued expenses and other liabilities (Note 5) 116,529 857,336 Total liabilities 152,585 857,671 Partners' equity (deficit) (Note 6): Limited Partners (4,000,000 Units outstanding) 34,049,539 31,186,226 Corporate Limited Partner (100 Units outstanding) 1,080 1,009 General Partners (285,655) (283,614) Unrealized holding gains on MBS (Note 7) 177,814 169,521 Total Partners' equity 33,942,778 31,073,142 Total liabilities and Partners' equity $34,095,363 $31,930,813 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1998 1997 Revenue: Rental $ 579,497 $1,452,013 Interest income - MBS (Note 7) 74,045 91,910 Interest income - other 281,238 60,406 Total revenue 934,780 1,604,329 Expenses: Operating (Note 8) 215,218 280,305 Maintenance 36,506 74,296 General and administrative (Note 8) 79,915 98,355 Real estate taxes 85,998 304,458 Management fees (Note 8) 24,736 71,645 Depreciation - 498,150 Total expenses 442,373 1,327,209 Income before gain on sale of properties 492,407 277,120 Gain on sale of properties (Note 3) 2,930,843 - Net income $3,423,250 $ 277,120 Allocation of net income (Note 6): Unitholders (4,000,000 Units outstanding): Income before gain on sale of properties$ 482,547 $ 271,571 Gain on sale of properties 2,930,770 - Net income $3,413,317 $ 271,571 Per Unit of Depositary Receipt: Income before gain on sale of properties$ .12 $ .07 Gain on sale of properties .73 - Net income $ .85 $ .07 Corporate Limited Partner (100 Units outstanding): Income before gain on sale of properties$ 12 $ 7 Gain on sale of properties 73 - Net income $ 85 $ 7 General Partners: Income before gain on sale of properties$ 9,848 $ 5,542 Gain on sale of properties - - Net income $ 9,848 $ 5,542 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 1997 Operating activities: Net income $ 3,423,250$ 277,120 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation - 498,150 Amortization of MBS premium, net 815 (150) Gain on sale of properties (2,930,843) - Changes in assets and liabilities: Decrease (increase) in other assets 57,564 (3,249) Increase in accounts payable 696 12,145 Increase (decrease) in due to affiliates 35,025 (26,735) Increase (decrease) in accrued expenses and other liabilities (740,807) 536,659 Net cash provided by (used in) operating activities (154,300) 1,293,940 Investing activities: Additions to fixed assets (627,911) - Decrease in accounts payable for fixed asset additions - (41,963) Principal collections on MBS 180,808 54,814 Proceeds from sale of property, net 30,185,685 - Net cash provided by investing activities 29,738,582 12,851 Financing activity: Distributions (561,907) (557,791) Net increase in cash and cash equivalents 29,022,375 749,000 Cash and cash equivalents, beginning of period1,021,686 4,043,066 Cash and cash equivalents, end of period $30,044,061$4,792,066 Supplemental schedule of noncash investing and financing activities: Unrealized holding gains on MBS (Note 7) $ 8,293$ - The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP 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 Cash Plus Limited Partnership (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, 1997 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 March 31, 1998, and its results of operations and cash flows for the three months ended March 31, 1998 and 1997. The results of operations for the three months ended March 31, 1998 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)Cash and Cash Equivalents Cash and cash equivalent consisted of the following: March 31, December 31, 1998 1997 Cash and money market accounts $1,356,483$1,021,686 Commercial paper 28,687,578 - $30,044,061$1,021,686 (3)Sale of Properties On January 30, 1998 the Partnership sold its remaining properties to unaffiliated third parties. The Partnership's properties were included in a package with eleven other properties owned by affiliates of the General Partners. The total selling price of the fourteen properties was $138,000,000, of which the Partnership received $31,247,100, less its share of closing costs of $1,061,415. For financial reporting purposes, the Partnership realized a gain of $2,930,843 on the sale. The gain was calculated as the difference between the properties' selling prices less net book value of the properties and closing costs. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS, Continued (4)Provision for Losses on Real Estate In accordance with Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of", the Partnership recorded valuation provisions for losses on its real estate assets of $4,689,099 at December 31, 1997. These provisions represented the difference between carrying values and selling prices less estimated costs to sell as a result of the sale of the Partnership's properties on January 30, 1998 (see Note 3). (5) Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following: March 31, December 31, 1998 1997 Accrued real estate taxes $ - $ 588,000 Deferred income and other accrued expenses 104,640 214,043 Tenant security deposits - 55,293 Distributions payable 11,889 - $ 116,529 $ 857,336 (6) Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the three months ended March 31, 1998 is as follows: Unrealized Corporate Holding Limited General Gains on Unitholders Partner Partner MBS Total Balance at December 31, 1997$ 31,186,226 $ 1,009 $(283,614)$ 169,521$ 31,073,142 Income before gain on sale of properties 482,547 12 9,848 - 492,407 Gain on sale of properties 2,930,770 73 - - 2,930,843 Unrealized Holding Gains on MBS - - - 8,293 8,293 Distributions (550,004) (14) (11,889) - (561,907) Balance at March 31, 1998 $ 34,049,539$ 1,080$(285,655)$ 177,814 $33,942,778 The distributions payable to the General Partners totaled $11,889 and were included in accrued expenses and other liabilities at March 31, 1998. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS, Continued (7) Mortgage Backed Securities The MBS held by the Partnership were issued by the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. The following is additional information on the MBS held: March 31, December 31, 1998 1997 Face Value $3,435,180 $ 3,785,509 Amortized Cost $3,446,645 $ 3,628,268 Estimated Market Value $3,624,000 $ 3,798,000 Coupon rates of the MBS ranged from 8.5% to 9.0% per annum and were due to mature in the years 2008 through 2017. In accordance with Financial Accounting Standard No. 115, "Accounting for Certain Investments in Debt and Equity Securities", unrealized holding gains and losses for available-for-sale securities are reported as a component of equity until realized. At March 31, 1998 and December 31, 1997, the Partnership had unrealized holding gains of $177,814 and $169,521, respectively on its MBS investments to adjust to market value, based on quoted market prices. (8)Related Party Transactions The Partnership paid property management fees to an affiliate of the General Partners for management services. Payment of these fees ended in conjunction with the sale of the Partnership's properties on January 30, 1998 (see Note 3). Pursuant to the agreements, management fees were payable monthly at a rate of up to 6% of the gross receipts, net of leasing commissions, from commercial properties under management. The Partnership continues to reimburse affiliates of the General Partners for certain expenses incurred in connection with the operation of the Partnership, including administrative expenses. Amounts accrued or paid to the General Partners' affiliates were as follows: For the Three Months Ended March 31, 1998 1997 Property management fees $ 24,736 $ 71,645 Expense reimbursements 93,398 87,320 Charged to operations $118,134 $158,965 Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS, Continued (8) Related Party Transactions, Continued Due to affiliates consisted of expense reimbursements of $35,024 at March 31, 1998. In addition to the amounts above, costs paid to the General Partners' affiliates associated with the sale of the Partnership's remaining properties were $250,667 during the three months ended March 31, 1998. (9) Subsequent Event On April 29, 1998, the General Partners sold the Partnership's MBS portfolio to unaffiliated third parties for $3,583,068. KRUPP CASH PLUS LIMITED PARTNERSHIP Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements including those concerning Management's expectations regarding the future financial performance and future events. These forward-looking statements involve significant risk and uncertainties, including those described herein. Actual results may differ materially from those anticipated by such forward-looking statements. Liquidity and Capital Resources Based upon the General Partners' assessment of the current and future market conditions, the capital improvements necessary to remain competitive in the properties' markets and the Partnership's capital resources, the General Partners determined that it was in their best interests, and that of their respective investors, to sell all the Partnership's properties. On January 30, 1998, the Partnership sold all of its properties to unaffiliated third parties. The properties were included in a package with eleven other properties owned by affiliates of the General Partners. The total selling price of the fourteen properties was $138,000,000, of which the Partnership received $31,247,100 for the sale of its properties, less its share of the closing costs of $1,061,415 (see Note 3). The sale of the properties is considered a Terminating Capital Transaction, as defined by the Partnership Agreement. The Partnership anticipates making a special distribution of $6.80 per Unit in the second quarter of 1998, based upon approximately 80% of the proceeds of the sale and estimated liquidation value of remaining Partnership assets. Once all necessary reserves and contingent liabilities are funded, the remaining proceeds will be distributed. All Partnership affairs are expected to be completed by year-end. The Partnership held MBS that were guaranteed by the Government National Mortgage Association ("GNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). At March 31, 1998 and December 31, 1997, the Partnership had unrealized holding gains on its MBS of $177,814 and $169,521, respectively to adjust the investments to market value (see Note 7). Subsequent to March 31, 1998, the General Partners sold the Partnership's MBS portfolio to unaffiliated third parties (see Note 9). KRUPP CASH PLUS LIMITED PARTNERSHIP Operations The following discussion relates to the operations of the Partnership for the three months ended March 31, 1998 and 1997. The sale of the Partnership's properties (High Point National Furniture Mart, Tradewinds Shopping Center and Luria's Plaza) on January 30, 1998, significantly impacts the comparability of the Partnership's operations between the two periods. Net income for the three months ended March 31, 1998 as compared to the three months ended March 31, 1997, net of activity of the Partnership's sold properties, increased as total revenue increased and total expenses decreased. Total revenue increased due to higher average cash and cash equivalent balances available for investment, as a result of the sale of the Partnership's properties on January 30, 1998. Proceeds of approximately $30,186,000 were received from the sale. Total expenses for the three months ended March 31, 1998, net of activity of the Partnership's sold properties, decreased when compared to the same period in 1997, due to a decrease in general and administrative expense. This decrease is the result of legal costs incurred in 1997 which related to unsolicited tender offers to purchase Units of Depository Receipts. KRUPP CASH PLUS LIMITED PARTNERSHIP 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 (a)Exhibits Response: None (b)Reports on Form 8-K Date Event Reported Financial Statements Filed January 30, 1998 Disposition of the Pro Forma Balance Sheet at Partnership's remaining September 30, 1997. properties Pro Forma Statements of Operations for the nine months ended September 30, 1997 and for the year ended December 31, 1996. 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 Cash Plus Limited Partnership (Registrant) By:/s/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. Date: May 13, 1998