- ------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___ FORM 10-Q Quarterly Report Under Section 13 or 15(d) Of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1996 Commission File No. 000-16950 Prometheus Income Partners, a California Limited Partnership (Exact name of registrant as specified in its charter) California 77-0082138 (State or other jurisdiction of (IRS employee ID Number) incorporation or organization) 350 Bridge Parkway Redwood City, California 94065-1517 (Address of principal (zip code) executive offices) Registrant's telephone number, including area code: (415)596-5300 - ------------------------------------------------------------------------- (Former name, address and former fiscal year, if changed since last report) 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. Condensed Financial Statements The accompanying unaudited financial statements should be read in conjunction with the Form 10-K filed by the Partnership for the year ended December 31, 1995. These statements have been prepared in accordance with the instructions of the Securities and Exchange Commission Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. While the financial information is unaudited, in the opinion of the General Partner, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. PROMETHEUS INCOME PARTNERS a California Limited Partnership BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 (In Thousands, Except for Unit Data) March 31, December 31, 1996 1995 (Unaudited) (Audited) ASSETS Real Estate: Land, buildings and improvements $ 29,288 $ 29,288 Accumulated depreciation (6,075) (5,938) -------- -------- 23,213 23,350 Cash 815 603 Deferred expenses, net 142 163 Accounts receivable and other assets 102 56 -------- -------- Total assets $ 24,272 $ 24,172 ======== ======== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) Notes payable $ 24,141 $ 23,791 Payables and accrued liabilites 393 276 -------- -------- Total liabilities 24,534 24,067 -------- -------- General partner deficit (404) (404) Limited partners' capital 18,995 limited partnership units issued and outstanding 142 509 -------- -------- Total partners' capital (deficit) (262) 105 -------- -------- Total liabilities and partners' capital (deficit) $ 24,272 $ 24,172 ======== ======== The accompanying notes are an integral part of these financial statements. PROMETHEUS INCOME PARTNERS a California Limited Partnership STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (In Thousands, Except for Per Unit Data) 1996 1995 (Unaudited) (Unaudited) REVENUES Rental revenues $ 1,180 $ 1,001 Other income 24 23 Interest income 7 5 ------- ------- Total revenues 1,211 1,029 ------- ------- EXPENSES Interest 620 586 Operating and administrative 425 357 Depreciation and amortization 158 153 ------- ------- Total expenses 1,203 1,096 ------- ------- NET INCOME (LOSS) $ 8 $ (67) ======= ======= Net income (loss) per $1,000 limited partnership unit $ .4 $ (4) ======= ======= Number of limited partnership units used in computation 18,995 18,995 ====== ====== The accompanying notes are an integral part of these financial statements. PROMETHEUS INCOME PARTNERS a California Limited Partnership STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (In Thousands) 1996 1995 (Unaudited) (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 8 $ (67) Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 158 153 Increase in accounts receivable and other assets (46) (82) Deferral of mortgage interest 373 339 Increase (decrease) in payables and accrued liabilities 117 (13) ----- ------ Net cash provided by operating activities 610 330 ----- ------ CASH FLOWS FROM FINANCING ACTIVITIES Principal reductions on notes payable (23) (23) Distribution to partners (375) (424) ----- ------ Net cash used for financing activities (398) (447) ----- ------ Net increase (decrease) in cash 212 (117) Cash at beginning of year 603 514 ----- ------ Cash at end of period $ 815 $ 397 ====== ====== The accompanying notes are an integral part of these financial statements. PROMETHEUS INCOME PARTNERS a California Limited Partnership NOTES TO FINANCIAL STATEMENTS 1. THE PARTNERSHIP Prometheus Income Partners, a California Limited Partnership (the Partnership), was formed to construct, invest in, operate and ultimately sell two multi-family apartment projects, Alderwood Apartments (Alderwood) and Timberleaf Apartments (Timberleaf), located in Santa Clara, California. The General Partner is Prometheus Development Co., Inc., a California corporation. The financial information included herein at March 31, 1996 and for the three months ended March 31, 1996 and 1995 is unaudited and, in the opinion of the Partnership, reflects all adjustments (which include only normal recurring accruals) necessary for a fair presentation of the financial position as of those dates and the results of operations for those periods. The information in the Balance Sheets at December 31, 1995 was derived from the Partnership's audited annual report for 1995. Partnership profits, losses and distributions are allocated among the partners based on the provisions of the Partnership Agreement which generally provide for allocations to begin when the partners are admitted to the Partnership. 2. INCOME TAXES In accordance with federal and California income tax regulations, no income taxes are levied on the Partnership; rather, such taxes are levied on the individual partners. Consequently, no provision or liability for federal or California income tax has been reflected in the accompanying financial statements. ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION Alderwood and Timberleaf, which are located in Santa Clara, California, are apartment complexes with 234 units and 124 units, respectively. The properties commenced operations at completion of construction in December 1986. LIQUIDITY AND CAPITAL RESOURCES Cash generated by operations during the first three months of 1996 was used to pay current operating expenses and debt service. During this period, the Partnership also used cash flow from operations to make cash distributions to the Limited Partners. In February 1996, the Partnership distributed $375,000 to the Limited Partners. RESULTS OF OPERATIONS In the first quarter of 1995, the properties marketed available units at rents which average $895 for one bedroom units and $1,104 for two bedroom units. Average occupied rent for the quarter was $981 and average occupancy during the quarter was 97% for Alderwood and 96% for Timberleaf. As of March 31, 1995, Alderwood and Timberleaf were both 97% occupied. In the first quarter of 1996, the properties marketed available units at rents which averaged $1,103 for one bedroom units and $1,330 for two bedroom units. Average occupied rent for the quarter was $1,078 and average occupancy during the quarter was 97% for Alderwood and 98% for Timberleaf. As of March 31, 1996, Alderwood and Timberleaf were both 97% occupied. PART II: OTHER INFORMATION - ---------------------------------------------------------------------------- Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Section 13 or 15(d) 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. PROMETHEUS INCOME PARTNERS, a California Limited Partnership By PROMETHEUS DEVELOPMENT CO., INC., a California corporation Its General Partner Date: May 15, 1996 By: John H. Pringle __________________________ John H. Pringle Vice President Date: May 15, 1996 By: Vicki R. Mullins __________________________ Vicki R. Mullins Chief Financial Officer EXHIBIT INDEX ------------- EXHIBIT NO. DESCRIPTION - ------- ----------- 27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information