SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 1-9393
Interstate General Company L.P.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1488756
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Smallwood Village Center
St. Charles, Maryland 20602
----------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(301) 843-8600
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
-------------------------------------------------------
(Former name, former 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 report(s), and (2) has
been subject to such filing requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
10,311,785 Class A Units
------------------------
INTERSTATE GENERAL COMPANY L.P.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION Page
Number
Item 1. Consolidated Financial Statements ------
Consolidated Statements of Income for
the Six Months Ended June 30, 1998 and
1997. (Unaudited) 3
Consolidated Statements of Income for
the Three Months Ended June 30, 1998 and
1997. (Unaudited) 4
Consolidated Balance Sheets at June 30, 1998
(Unaudited) and December 31, 1997. 5
Consolidated Statements of Cash Flow for the
Six Months Ended June 30, 1998 and 1997.
(Unaudited) 7
Consolidated Statements of Cash Flow for the
Three Months Ended June 30, 1998 and 1997.
(Unaudited) 8
Notes to Consolidated Financial Statements. 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three
and Six Month Periods Ended June 30, 1998 and 1997. 18
PART II OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Material Modifications of Rights of Registrant's 24
Securities
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 25
Signatures 26
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
(In thousands, except per unit amounts)
(Unaudited)
1998 1997
---------- ----------
REVENUES
Community development-land sales
Non-affiliates $ 11,640 $ 2,619
Affiliates 620 3,000
Homebuilding-home sales 3,630 3,760
Equity in earnings from partnerships and
developer fees 646 635
Investment in gaming properties -- 549
Rental property revenues 4,432 4,300
Management and other fees, including fees
from affiliates of $1,507 and $2,100 1,749 2,269
Interest and other income 804 488
---------- ----------
Total revenues 23,521 17,620
---------- ----------
EXPENSES
Cost of land sales, including purchases
from affiliates of $490 and $1,689 7,139 3,555
Cost of home sales 3,281 3,612
Selling and marketing 668 571
General and administrative 3,457 3,532
Interest expense 1,654 1,817
Rental properties operating expense 1,781 1,768
Depreciation and amortization 989 1,089
Wetlands litigation expenses -- 68
Write-off of deferred project costs -- 6
Spin-off costs 1,048 --
---------- ----------
Total expenses 20,017 16,018
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST 3,504 1,602
PROVISION FOR INCOME TAXES 504 112
---------- ----------
INCOME BEFORE MINORITY INTEREST 3,000 1,490
MINORITY INTEREST (461) (13)
---------- ----------
NET INCOME $ 2,539 $ 1,477
========== ==========
BASIC NET INCOME PER UNIT $ .24 $ .14
========== ==========
NET INCOME
General Partners $ 25 $ 15
Limited Partners 2,514 1,462
---------- ----------
$ 2,539 $ 1,477
========== ==========
WEIGHTED AVERAGE UNITS OUTSTANDING 10,332 10,257
========== ==========
The accompanying notes are an integral part
of these consolidated statements.
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
(In thousands, except per unit amounts)
(Unaudited)
1998 1997
---------- ----------
REVENUES
Community development-land sales
Non-affiliates $ 5,972 $ 1,170
Affiliates 296 3,000
Homebuilding-home sales 1,600 1,865
Equity in earnings from partnerships and
developer fees 141 239
Investment in gaming properties -- 549
Rental property revenues 2,223 2,142
Management and other fees, including fees
from affiliates of $755 and $843 773 926
Interest and other income 558 342
---------- ----------
Total revenues 11,563 10,233
---------- ----------
EXPENSES
Cost of land sales, including purchases
from affiliates of $240 and $1,689 3,635 2,612
Cost of home sales 1,447 1,827
Selling and marketing 335 327
General and administrative 1,762 1,871
Interest expense 788 895
Rental properties operating expense 885 933
Depreciation and amortization 496 512
Wetlands litigation expenses -- 68
Write-off of deferred project costs -- 1
Spin-off costs 291 --
---------- ----------
Total expenses 9,639 9,046
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST 1,924 1,187
PROVISION FOR INCOME TAXES 169 --
---------- ----------
INCOME BEFORE MINORITY INTEREST 1,755 1,187
MINORITY INTEREST (263) 35
---------- ----------
NET INCOME $ 1,492 $ 1,222
========== ==========
BASIC NET INCOME PER UNIT $ .14 $ .12
========== ==========
NET INCOME
General Partners $ 15 $ 12
Limited Partners 1,477 1,210
---------- ----------
$ 1,492 $ 1,222
========== ==========
WEIGHTED AVERAGE UNITS OUTSTANDING 10,332 10,257
========== ==========
The accompanying notes are an integral part
of these consolidated statements.
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
A S S E T S
June 30, December 31,
1998 1997
----------- -----------
(Unaudited) (Audited)
CASH AND CASH EQUIVALENTS
Unrestricted $ 2,590 $ 2,273
Restricted 2,352 508
-------- --------
4,942 2,781
ASSETS RELATED TO COMMUNITY DEVELOPMENT -------- --------
Land and development costs
Puerto Rico 29,866 32,918
St. Charles, Maryland 29,816 28,417
Other United States locations 15,524 14,698
Notes receivable on lot sales and other 3,004 6,476
-------- --------
78,210 82,509
ASSETS RELATED TO RENTAL PROPERTIES -------- --------
Operating properties, net of accumulated
depreciation of $22,023 and $21,392 as of June
30, 1998 and December 31, 1997, respectively 37,530 37,829
Investment in unconsolidated rental property
partnerships, net of deferred income of
$1,998 and $2,193 as of June 30, 1998 and
December 31, 1997, respectively 7,202 8,657
Other receivables, net of reserves of
$338 and $223 as of June 30, 1998
and December 31, 1997, respectively 1,043 805
-------- --------
45,775 47,291
-------- --------
ASSETS RELATED TO HOMEBUILDING
Homebuilding construction and land 1,561 1,914
Investment in joint venture 754 591
Receivables and other 121 68
-------- --------
2,436 2,573
OTHER ASSETS -------- --------
Deferred costs regarding waste technology and
other projects, receivables and other 5,744 8,797
Property, plant and equipment, less accumulated
depreciation of $2,369 and $2,460 as of June
30, 1998 and December 31, 1997, respectively 1,101 1,087
-------- --------
6,845 9,884
-------- --------
Total assets $138,208 $145,038
======== ========
The accompanying notes are an integral part
of these consolidated balance sheets.
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND PARTNERS' CAPITAL
June 30, December 31,
1998 1997
----------- -----------
(Unaudited) (Audited)
LIABILITIES RELATED TO COMMUNITY DEVELOPMENT
Recourse debt $ 27,229 $ 35,176
Non-recourse debt 2,369 2,295
Accounts payable, accrued liabilities
and deferred income 4,462 5,245
-------- --------
34,060 42,716
-------- --------
LIABILITIES RELATED TO RENTAL PROPERTIES
Recourse debt 917 969
Non-recourse debt 38,886 39,101
Accounts payable and accrued liabilities 3,529 3,331
-------- --------
43,332 43,401
-------- --------
LIABILITIES RELATED TO HOMEBUILDING
Recourse debt 221 159
Accounts payable and accrued liabilities 2,306 2,501
-------- --------
2,527 2,660
-------- --------
OTHER LIABILITIES
Accounts payable and accrued liabilities 5,520 6,330
Notes payable and capital leases 619 615
Accrued income tax liability - current 2,587 1,541
Accrued income tax liability - deferred 3,945 4,487
-------- --------
12,671 12,973
-------- --------
Total liabilities 92,590 101,750
-------- --------
PARTNERS' CAPITAL
General partners' capital 4,368 4,345
Limited partners' capital-10,332 Units
issued and outstanding as of
June 30, 1998 and December 31, 1997 41,250 38,943
-------- --------
Total partners' capital 45,618 43,288
-------- --------
Total liabilities and partners' capital $138,208 $145,038
======== ========
The accompanying notes are an integral part
of these consolidated balance sheets.
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30,
(In thousands)
(Unaudited)
1998 1997
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,539 $ 1,477
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 989 1,089
Provision for deferred income taxes (542) (995)
Equity in earnings from gaming properties -- (549)
Equity in earnings from unconsolidated
partnerships and development fees (483) (683)
Distributions from unconsolidated partnerships 1,796 4,967
Cost of sales-community development
and homebuilding 10,420 7,167
Homebuilding construction expenditures (2,928) (3,174)
Equity in loss from homebuilding joint venture (163) 48
Write-off of deferred project cost -- 6
Collection of fines 3,212 --
Changes in notes and accounts receivable, due
from affiliates changed $4,046 and $(210) 3,862 (731)
Changes in accounts payable, accrued
liabilities and deferred income (544) (460)
------- -------
Net cash provided by operating activities 18,158 8,162
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in land improvements for future sales (6,312) (3,590)
Change in assets related to unconsolidated
rental property partnerships 142 (741)
Change in restricted cash (1,844) 88
Additions to rental operating properties, net (556) (350)
Acquisitions of other assets, net (988) (86)
Contributions to homebuilding joint venture -- (225)
------- -------
Net cash used in investing activities (9,558) (4,904)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from debt financing 4,154 3,321
Payment of debt (12,228) (7,216)
Distributions to Unitholders (209) --
-------- -------
Net cash used in financing activities (8,283) (3,895)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 317 (637)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 2,273 2,212
-------- -------
CASH AND CASH EQUIVALENTS, JUNE 30, $ 2,590 $ 1,575
======== =======
The accompanying notes are an integral part
of these consolidated statements.
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED JUNE 30,
(In thousands)
(Unaudited)
1998 1997
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,492 $ 1,222
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 496 512
Provision for deferred income taxes 36 (1,139)
Equity in earnings from gaming properties -- (549)
Equity in earnings from unconsolidated
partnerships and development fees (240) (266)
Distributions from unconsolidated partnerships 46 4,636
Cost of sales-community development
and homebuilding 5,082 4,439
Homebuilding construction expenditures (1,410) (1,713)
Equity in loss from homebuilding joint venture 99 27
Write-off of deferred project cost -- 1
Changes in notes and accounts receivable, due
from affiliates changed $1,159 and $(596) 1,511 (846)
Changes in accounts payable, accrued
liabilities and deferred income (384) (413)
------- --------
Net cash provided by operating activities 6,728 5,911
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in land improvements for future sales (3,643) (2,841)
Change in assets related to unconsolidated
rental property partnerships 7 (775)
Change in restricted cash (216) 214
Additions to rental operating properties, net (98) (205)
Acquisitions of other assets, net (867) 210
Contributions to homebuilding joint venture -- (1)
------- --------
Net cash used in investing activities (4,817) (3,398)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from debt financing 2,449 2,032
Payment of debt (4,795) (4,084)
Distribution to Unitholders (209) --
-------- -------
Net cash used in financing activities (2,555) (2,052)
-------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (644) 461
CASH AND CASH EQUIVALENTS, MARCH 31, 3,234 1,114
-------- -------
CASH AND CASH EQUIVALENTS, JUNE 30, $ 2,590 $ 1,575
======== =======
The accompanying notes are an integral part
of these consolidated statements.
INTERSTATE GENERAL COMPANY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
(1) BASIS OF PRESENTATION AND PRINCIPLES OF ACCOUNTING
The accompanying consolidated financial statements are unaudited but
include all adjustments (consisting of normal recurring adjustments) which
the Company's management considers necessary for a fair presentation of the
results of operations for the interim periods. Certain account balances in
the 1997 financial statements have been reclassified to conform to the 1998
presentation. The operating results for the three and six months ended
June 30, 1998 are not necessarily indicative of the results that may be
expected for the year. Net income per Unit is calculated based on weighted
average Units outstanding. Outstanding options, warrants to purchase Units
and Unit Appreciation Rights do not have a material dilutive effect on the
calculation of earnings per Unit and therefore are not presented.
These unaudited financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in financial
statements prepared in accordance with Generally Accepted Accounting
Principles ("GAAP") have been condensed or omitted. While the Managing
General Partner believes that the disclosures presented are adequate to
make the information not misleading, it is suggested that these financial
statements be read in conjunction with the financial statements and the
notes included in the Partnership's Annual Report filed on Form 10-K for
the year ended December 31, 1997.
(2) IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
During 1998, IGC adopted the provisions of SFAS No. 130 "Reporting
Comprehensive Income" and SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information." The adoption of SFAS No. 130 did not
have a material effect on IGC's financial statements. The Company intends
to implement SFAS No. 131 at December 31, 1998.
(3) INVESTMENT IN UNCONSOLIDATED PARTNERSHIPS
Housing Partnerships
The following information summarizes financial data and principal
activities of unconsolidated housing partnerships which the Company
accounts for under the equity method. The information is presented to
segregate the two projects undergoing condominium conversion from the
operating properties (in thousands).
Projects
Operating Under Condo
Properties Conversions Total
---------- ----------- -----
SUMMARY FINANCIAL POSITION:
Total Assets
June 30, 1998 $123,209 $ 9,915 $133,124
December 31, 1997 129,332 9,509 138,841
Total Non-Recourse Debt
June 30, 1998 132,049 12,720 144,769
December 31, 1997 132,984 11,612 144,596
Total Other Liabilities
June 30, 1998 24,812 237 25,049
December 31, 1997 24,804 122 24,926
Total Equity
June 30, 1998 (33,652) (3,042) (36,694)
December 31, 1997 (28,456) (2,225) (30,681)
Company's Investment
June 30, 1998 7,207 -- 7,207
December 31, 1997 8,657 -- 8,657
SUMMARY OF OPERATIONS:
Total Revenue
Three Months Ended June 30, 1998 7,671 10 7,681
Three Months Ended June 30, 1997 7,595 485 8,080
Six Months Ended June 30, 1998 15,590 93 15,683
Six Months Ended June 30, 1997 15,204 1,093 16,297
Net Income (Loss)
Three Months Ended June 30, 1998 (247) (532) (779)
Three Months Ended June 30, 1997 (321) (70) (391)
Six Months Ended June 30, 1998 (285) (818) (1,103)
Six Months Ended June 30, 1997 (311) 70 (241)
Company's recognition of equity in
earnings and developer fees
Three Months Ended June 30, 1998 240 -- 240
Three Months Ended June 30, 1997 300 (35) 265
Six Months Ended June 30, 1998 483 -- 483
Six Months Ended June 30, 1997 647 35 682
Projects
Operating Under Condo
Properties Conversions Total
---------- ----------- -----
SUMMARY OF CASH FLOWS:
Cash flows from operating activities
Three Months Ended June 30, 1998 1,056 (1,302) (246)
Three Months Ended June 30, 1997 1,463 270 1,733
Six Months Ended June 30, 1998 3,117 (1,706) 1,411
Six Months Ended June 30, 1997 2,373 437 2,810
Company's share of cash flows
from operating activities
Three Months Ended June 30, 1998 399 (651) (252)
Three Months Ended June 30, 1997 448 135 583
Six Months Ended June 30, 1998 1,120 (853) 267
Six Months Ended June 30, 1997 956 219 1,175
Cash distributions
Three Months Ended June 30, 1998 362 -- 362
Three Months Ended June 30, 1997 417 9,222 9,639
Six Months Ended June 30, 1998 4,813 -- 4,813
Six Months Ended June 30, 1997 856 9,292 10,148
Company's share of cash distributions
Three Months Ended June 30, 1998 46 -- 46
Three Months Ended June 30, 1997 -- 4,636 4,636
Six Months Ended June 30, 1998 1,796 -- 1,796
Six Months Ended June 30, 1997 296 4,671 4,967
The unconsolidated rental properties partnerships as of March 31, 1998
include 19 partnerships owning 4,563 rental units in 22 apartment complexes
owned by Alturas Del Senorial Associates Limited Partnership, Bannister
Associates Limited Partnership, Bayamon Gardens Associates Limited
Partnership, Brookside Gardens Limited Partnership, Carolina Associates
Limited Partnership, Chastleton Apartments Associates, Coachman's Limited
Partnership, Colinas de San Juan Associates Limited Partnership, Crossland
Associates Limited Partnership, Essex Apartments Associates Limited
Partnership, Huntington Associates Limited Partnership, Jardines de Caparra
Associates Limited Partnership, Lakeside Apartments Limited Partnership,
Monserrate Associates Limited Partnership, Monte de Oro Associates Limited
Partnership, New Center Associates Limited Partnership, San Anton
Associates Limited Partnership, Turabo Limited Dividend Partnership and
Valle del Sol Limited Partnership. The Company holds a general partner
interest in these partnerships and generally shares in zero to 5% of
profits, losses and cash flow from operations until such time as the
limited partners have received cash distributions equal to their capital
contributions. Thereafter, IGC generally shares in 50% of cash
distributions from operations. Pursuant to the partnership agreements, the
general partners of the unconsolidated partnerships are prohibited from
selling or refinancing the apartment complexes without majority limited
partner approval. Due to the absence of control and non-majority
ownership, these partnerships are accounted for under the equity method of
accounting.
During 1997, the rental complexes owned by Monte de Oro and New Center
were refinanced to provide distributions to their partners and funds to
convert the rental units into condominiums. Rental revenues started to
decline in 1997 as the units were vacated in preparation for conversion.
Homebuilding Joint Venture
The Company holds a 50% joint venture interest in Escorial Builders
S.E. Escorial Builders was formed in 1995 to purchase lots from the
Company and construct homes for resale. It purchased land to construct 118
units in 1997 and land to construct 98 units in 1996. The profit on these
lots are deferred until sold by Escorial Builders to a third party. The
following tables summarize Escorial Builders' financial information (in
thousands):
SUMMARY OF FINANCIAL POSITION: AS OF
------------------------
June 30, December 31,
1998 1997
--------- ------------
Total assets $13,105 $13,374
Total liabilities 11,597 12,191
Total equity 1,508 1,183
Company's investment 754 591
SUMMARY OF OPERATIONS: FOR THE SIX FOR THE THREE
MONTHS ENDED MONTHS ENDED
------------------ ------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
Total revenue $ 4,481 $ -- $ 2,296 $ --
Net income (loss) 326 (95) (198) (48)
Company's recognition of equity
in earnings (losses) 163 (48) (99) (24)
SUMMARY OF OPERATING CASH FLOWS: FOR THE SIX FOR THE THREE
MONTHS ENDED MONTHS ENDED
------------------ ------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
Cash flows from operating
activities $ 1,378 $(5,630) $ 745 $(2,185)
Company's share of cash flows
from operating activities 689 (2,815) 373 (1,093)
Operating cash distributions -- -- -- --
Company's share of operating cash
distributions -- -- -- --
(4) DEBT
Debt
The Company's outstanding debt is collateralized primarily by land,
land improvements, housing, receivables, investments in partnerships, and
rental properties. The following table summarizes the indebtedness of IGC
at June 30, 1998 and December 31, 1997 (in thousands):
Outstanding
Maturity Interest ----------------------
Dates Rates (a) June 30, December 31,
From/To From/To 1998 1997
-------- --------- --------- ------------
Related to community development:
Recourse debt Demand/ P+2.5%/ $27,229 $35,176
07-31-04 10.0% (b)
Non-recourse debt 08-02-09 P+1.5% 2,369 2,295
Related to investment properties:
Recourse debt Demand 7.35% 917 969
Non-recourse debt 10-01-19/ 6.85%/ 38,886 39,101
10-01-28 8.5%
Related to homebuilding projects:
Recourse debt Demand P+1.5% 221 159
General:
Recourse debt Demand P+1.25%/ 619 615
04-01-03 12% ------- -------
Total debt $70,241 $78,315
======= =======
(a) P = Prime lending interest rate.
(b) Approximately $14,109,000 of this debt requires additional
interest payments on each annual anniversary date. The amount
due is 1% of the outstanding balance in 1998 and 1999, and
increases 1/2% each year thereafter, through 2003.
As of June 30, 1998, the $27,241,000 of recourse debt related to
community development assets is fully collateralized by substantially all
of the community development assets. Approximately $14,358,000 of this
amount is further secured by investments in apartment rental partnerships.
As of June 30, 1998, recourse investment property debt is secured by
cash receipts received by the Company pursuant to the terms of a sales
contract. The non-recourse investment properties debt is collateralized by
apartment projects and secured by FHA or the Maryland Housing Fund.
Mortgage notes payable of $7,180,000 have stated interest rates of 7.5% and
7.75%; however, after deducting interest subsidies provided by HUD, the
effective interest rate over the life of the loans is 1%.
The homebuilding debt is secured by three homes under construction.
(5) RELATED PARTY TRANSACTIONS
Certain officers, directors and a general partner, IBC, of the Company
have ownership interests in various entities that conducted business with
IGC during the last two years. The financial impact of the related party
transactions on the accompanying financial statements are reflected below:
INCOME STATEMENT IMPACT:
Six Months Ended Three Months Ended
June 30, June 30,
---------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
Community Development - Land Sales (A)
Homebuilding joint venture $ 620 $ -- $ 297 $ --
Affiliate of IBC, general partner of IGC,
and James Michael Wilson, director (A2) -- 3,000 -- 3,000
------ ------ ------ ------
$ 620 $3,000 $ 297 $3,000
====== ====== ====== ======
Cost of Land Sales
Homebuilding joint venture $ 490 $ -- $ 240 $ --
Affiliate of IBC, general partner of IGC,
and James Michael Wilson, director (A2) -- 1,689 -- 1,689
------ ------ ------ ------
$ 490 $1,689 $ 240 $1,689
====== ====== ====== ======
Management and Other Fees (B)
Unconsolidated subsidiaries $1,265 $1,755 $ 626 $ 601
Affiliate of IBC, general partner of IGC (B1,2) 125 234 67 180
Affiliate of James Michael Wilson, director,
Thomas B. Wilson, director, and James
J. Wilson, director 77 74 39 37
Affiliate of James Michael Wilson, director,
Thomas B. Wilson, director, James J. Wilson,
director, and an Affiliate of IBC, general
partner of IGC 40 37 23 25
------ ------ ------ ------
$1,507 $2,100 $ 755 $ 843
====== ====== ====== ======
Interest and Other Income
Unconsolidated subsidiaries $ 24 $ 24 $ 12 $ 12
Affiliate of a former director 57 91 14 68
Affiliate of IBC, general partner of IGC 39 -- -- --
Affiliate of Thomas B. Wilson, director -- 9 -- 5
------ ------ ------ ------
$ 120 $ 124 $ 26 $ 85
====== ====== ====== ======
General and Administrative Expense
Affiliate of IBC, general partner of IGC (D1) $ 162 $ 155 $ 73 $ 76
Reserve additions and other write-offs-
Affiliate of IBC, general partner of IGC 64 57 32 29
Unconsolidated subsidiaries (D4) 105 55 31 28
------ ------ ------ ------
$ 331 $ 267 $ 136 $ 133
====== ====== ====== ======
BALANCE SHEET IMPACT:
Increase Increase
Balance (Decrease) Balance (Decrease)
June 30, in Reserves December 31, in Reserves
1998 1998 1997 1997
-------- ----------- ------------ -----------
Assets Related to Rental Properties
Receivables, all unsecured and due on demand-
Unconsolidated subsidiaries $ 751 $ 56 $ 552 $ 111
Affiliate of IBC, general partner
of IGC (B1,2) 85 59 51 (9)
Affiliate of James Michael Wilson,
director and James J. Wilson,
director 55 -- 20 --
------ ----- ------ -----
$ 891 $ 115 $ 623 $ 102
====== ===== ====== =====
Assets Related to Community Development
Notes receivable and accrued interest-
Affiliate of a former director, Interest 10%
secured by land matured April 1,
1998, paid (A1) $ -- $ -- $ 980 $ --
Affiliate of a former director, Interest 10%
secured by land payments per month
$27,000, matures
April 1, 1999 (A1) 2,111 -- 2,088 388
Affiliate of IBC, general partner Interest P+1.5%
of IGC, secured by land matured June 29,
1998, paid (A2) -- -- 2,520 --
------ ----- ------ -----
$2,111 $ -- $5,588 $ 388
====== ===== ====== =====
Other Assets
Receivables - All unsecured
IBC, general partner of IGC Payable from IGC
distributions, paid (D2) $ -- $ -- $ 681 $ --
Affiliate of IBC, general partner demand
of IGC, and Thomas B. Wilson,
director (C) 34 -- 12 --
IBC, general partner of IGC demand (33) -- (39) --
------ ----- ------ -----
$ 1 $ -- $ 654 $ --
====== ===== ====== =====
Liabilities Related to Community Development
Accounts payable
Whitman, Requardt (D3) $ 188 $ -- $ 121 $ --
====== ===== ====== =====
(A) Land Sales
IGC sells land to affiliates and non-affiliates with similar terms.
The sales prices to affiliates are based on third party appraisals, payable
in cash or a combination of a 20% cash down payment and a note for the
balance. The notes receivable are secured by deeds of trust on the land
sold, and bear an interest rate equal to those charged at that time for
land sales. The notes mature in one year or mature in five or less years
with annual amortizations. As circumstances dictate, the maturity dates
and repayment terms of the notes receivable due from affiliates or non-
affiliates have been modified. Any sales transactions that vary from these
terms are described below:
(1) The notes receivable due from an affiliate of a former director
did not bear interest until certain infrastructure improvements
were completed. This infrastructure was delayed and the interest
commencement dates modified. These delays created the additional
discount reflected above.
(2) On June 30, 1997, IGC sold 374 acres to an affiliate of IBC for
$3,000,000 and recognized a profit of $1,311,000. As payment for
this parcel, IGC received a 20% down payment and assumption of a
note payable.
(B) Management and Other Services
IGC provides management and other support services to its
unconsolidated subsidiaries and other related entities in the normal course
of business. These fees are typically collected on a monthly basis, one
month in arrears. These receivables are unsecured and due upon demand.
Certain partnerships experiencing cash shortfalls have not paid timely. As
such, these receivable balances are reserved until satisfied or the
prospects of collectibility improves. Decreases to the reserves for other
than routine cash payments are discussed below:
(1) During the second quarter of 1997, an affiliate of IBC purchased
the management fees receivable of $190,000 due from Chastleton,
Coachman's, Rolling Hills, and Village Lake for a cash payment of
$190,000. The collection of these receivables had previously been
questionable and they had been fully reserved. This transaction
resulted in income recognition of $190,000.
(2) During the second quarter of 1997, IGC sold to IBC its 49% limited
partner interest and 99% of its 1% general partner interest in
Coachman's Limited Partnership. This transaction had no financial
effect on the Company's 1997 annual results of operation.
(C) Operations Distributed to Unitholders
The Company's 99% limited partnership interest in Equus was
distributed to its unitholders in February 1995 (the "Equus Distribution").
Since that time through April 1996, the Company continued to manage and
provided certain reimbursable administrative services and support to Equus
pursuant to a Master Support and Services Agreement.
Pursuant to the Transfer Control Agreement effective December 31, 1996
(the "Transfer Agreement"), IGC transferred its remaining interests in and
control over EMC and Equus (subject to NASDAQ's approval) to IBC. In
addition, the Transfer Agreement called for IGC to issue 75,000 IGC Units
to Equus to satisfy the outstanding employee option and incentive rights
for the employees who were transferred to EMC. The Transfer Agreement was
amended in December 1997 to allow IGC to withdraw as a general partner of
Equus provided it granted a guarantee to EMC. IGC agreed to guarantee
$20,000,000 of EMC's liabilities in excess of assets should Equus or EMC
become insolvent.
(D) Other
Other transactions with related parties are as follows:
(1) IGC rents executive office space and other property from
affiliates both in the United States and Puerto Rico pursuant to
leases that expire through 2005. In management's opinion, all
leases with affiliated persons are on terms generally available
from unaffiliated persons for comparable property.
(2) During 1996, the sale of four properties in Puerto Rico triggered
a taxable gain, a portion of which is passed through to the
predecessor of IGC that contributed those assets. IGC's
partnership agreement provides for (1) an allocation to that
predecessor of the income tax payable in Puerto Rico on such
portion of the gain and (2) a reduction from its cash
distributions in an amount equivalent to the Puerto Rico income
tax specifically allocated to the predecessor. In accordance with
these provisions, IGC recorded a receivable from IBC of $881,000
and will recover the amount from future distributions due to IBC.
(3) Thomas J. Shafer became a director of IGMC in 1998 after his
retirement from Whitman, Requardt, where he was a Senior Partner.
Whitman, Requardt provides engineering services to IGC. In
management's opinion, services performed are on terms available to
other clients.
(4) James J. Wilson, as a general partner of IGP, is entitled to
priority distributions made by each housing partnership in which
IGP is the general partner. If IGP receives a distribution which
represents 1% or less of a partnership's total distribution, Mr.
Wilson receives the entire distribution. If IGP receives a
distribution which represents more than 1% of a partnership's
total distribution, Mr. Wilson receives the first 1% of such
total.
(6) COMPANY RESTRUCTURING
The proposed restructure plan has been finalized and presented in
American Community Properties Trust's registration statement on Form S-11
which became effective with the Securities and Exchange Commission ("SEC")
on August 10, 1998. Copies of the Proxy Statement/Prospectus were mailed
on August 11, 1998 to Unitholders of record as of August 10, 1998
soliciting their approval of the restructure. The Unitholder meeting is
scheduled for August 31, 1998.
(7) SUBSEQUENT EVENT
On July 30, 1998, the Company redeemed the 20% minority interest in
Land Development Associates S.E. ("LDA") from an outside partner for
$3,000,000. LDA also repaid a $2,400,000 note due to an affiliate of this
unrelated partner. This transaction was financed with a $5,600,000 loan
from a commercial bank. The loan bears interest at prime plus 1%, matures
in one year and is collateralized by an assignment of the 20% partnership
interest in LDA and a second mortgage on Parque El Comandante land held by
LDA.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General:
Historically, the Company's financial results have been significantly
affected by the cyclical nature of the real estate industry. Accordingly,
the Company's historical financial statements may not be indicative of
future results.
For the Six Months Ended June 30, 1998 and 1997
Community Development Operations.
Community development land sales revenue increased $6,641,000 to
$12,260,000 during the six months ended June 30, 1998, compared to sales of
$5,619,000 during the six months ended June 30, 1997. The increase was
attributable to residential lot sales in Puerto Rico of $7,900,000 which
are sold to homebuilders in bulk. The gross profit margin for the six
months ended June 30, 1998 increased to 42%, as compared to 37% in the same
period of 1997. This increase was due primarily to the sales mix. During
the first six months of 1997, 53% of the sales revenue was generated by an
undeveloped bulk parcel with a low acquisition cost. In addition, during
the first two quarters of 1998, 29% of the sales revenue was generated by
sales of commercial parcels, compared to 15% in the first two quarters of
1997. Commercial parcels have historically produced higher gross profits
due to their high sales prices and relatively low development costs.
Seventy-one percent of the sales were generated by residential sales in the
six months ended June 30, 1998, as compared to 31% in the same period of
1997.
Homebuilding Operations.
Revenues from home sales decreased 3% to $3,630,000 during the six
months ended June 30, 1998, as compared to $3,760,000 during the six months
ended June 30, 1997. The decrease is primarily due to the phase out of its
tract homebuilding operations. The number of homes sold decreased 14%
during the first six months of 1998, as compared to the same period in
1997. The gross profit margins increased to 10% during the first six
months of 1998, as compared to 3% in the comparable 1997 period. During
the six months ended June 30, 1997, the Company closed seven homes that
incurred additional costs to cure non-recurring construction problems.
Rental Property Revenues and Operating Results.
Rental property revenues, net of operating expenses, increased 5% to
$2,651,000 for the six months ended June 30, 1998, as compared to
$2,532,000 in the same period in 1997. The increase is primarily
attributable to a 3% increase in rental revenues offset by a less than 1%
increase in operating expenses. The increase in rental revenues is a
result of a reduction in vacancies and an increase in rental rates.
Equity in Earnings from Partnerships and Developer Fees.
Equity in earnings increased 2% to $646,000 during the first six
months of 1998, as compared to $635,000 during the first six months of
1997. The increase is primarily attributable to an increase of earnings
generated from the homebuilding joint venture during the first six months
of 1998, as compared to the first six months of 1997, offset in part by
reduced earnings from partnerships that paid refinancing fees or had
reduced income due to a temporary reduction in occupancy in the first two
quarters of 1998 as compared to the same period in 1997.
Management and Other Fees.
Management and other fees decreased 30% to $1,749,000 in the first six
months of 1998, as compared to $2,269,000 in the same period in 1997. This
decrease is primarily due to a reduction of $435,000 in fees earned from
the refinancing of certain apartment complexes and a reduction of $208,000
in fees recognized related to prior periods earned during the six months
ended June 30, 1997, offset by $100,000 of incentive fees earned during the
first six months of 1998.
Interest Expense.
Interest expense decreased 9% to $1,654,000 during the six months
ended June 30, 1998, as compared to $1,817,000 for the six months ended
June 30, 1997. This decrease is primarily attributable to a $3,873,000
decrease in outstanding debt from June 30, 1998 as compared to June 30,
1997.
General and Administrative Expense.
General and administrative expenses decreased 2% to $3,457,000 for the
six months ended June 30, 1998, as compared to $3,532,000 for the same
period of 1997. This decrease is a result of management's continued focus
on cost efficiency and the reduction of expenses.
Spin-off Costs.
Costs of $1,048,000 related to the restructuring of the Company were
recognized as an expense for the six months ended June 30, 1998. There
were no such costs in the first six months of 1997.
For the Three Months Ended June 30, 1998 and 1997
Community Development Operations.
Community development land sales revenue increased $2,098,000 to
$6,268,000 during the three months ended June 30, 1998, compared to sales
of $4,170,000 during the three months ended June 30, 1997. The increase
was attributable to a sale of residential lots in Puerto Rico of $3,190,000
during the second quarter of 1998 and no such sale in the comparable 1997
period. The gross profit margin for the three months ended June 30, 1998
increased to 42%, as compared to 37% in the same period of 1997. This
increase was due primarily to the sales mix. During the second quarter of
1998, 27% of the sales revenue was generated by sales of commercial
parcels, with no comparable sales in the second quarter of 1997.
Commercial parcels have historically produced higher gross profits due to
their high sales prices and relatively low development costs. Sixty-nine
percent of the sales were generated by residential sales in the three
months ended June 30, 1998, as compared to 96% in the same period of 1997.
Homebuilding Operations.
Revenues from home sales decreased 14% during the second quarter of
1998 compared to the same period in 1997 due to there being four fewer
settlements in 1998 as a result of the reduced backlog carried over from
1997 in the Virginia area. The gross profit margins increased during the
second three months of 1998 to 8% compared to 2% earned during the same
period in 1997. During the three months ended June 30, 1997, the Company
incurred additional costs to cure non-recurring construction problems on
seven homes.
Rental Property Revenues and Operating Results.
Rental property revenues, net of operating expenses, increased 11% to
$1,338,000 for the three months ended June 30, 1998, as compared to
$1,209,000 in the same period in 1997. This increase is primarily due to a
4% increase in rental revenues and a 5% decrease in operating expenses.
The increase in rental revenues is primarily a result of a reduction in
vacancies and an increase in rental rates. The decrease in operating
expenses is a result of a decrease in maintenance expenses and timing
difference of utility costs.
Equity in Earnings from Partnerships and Developer Fees.
Equity in earnings decreased $98,000 to $141,000 during the three
months ended June 30, 1998, as compared to $239,000 during the three months
ended June 30, 1997. This decrease is primarily attributable to a
reduction in earnings from the homebuilding joint venture during the three
months ended June 30, 1998, as compared to the same period of 1997 due to
construction cost overruns.
Management and Other Fees.
Management and other fees decreased 16% to $773,000 in the second
quarter of 1998, as compared to $926,000 in the second quarter of 1997.
This decrease is primarily attributable to a reduction of deferred
management fees recognized during the second quarter of 1998, as compared
to the second quarter of 1997.
Interest Expense.
Interest expense decreased 12% to $788,000 during the three months
ended June 30, 1998, as compared to $895,000 for the three months ended
June 30, 1997. This decrease is a result of reduced outstanding loan
balances during the second quarter of 1998 as compared to the same quarter
in 1997.
General and Administrative Expense.
General and administrative expenses decreased 6% to $1,762,000 for the
three months ended June 30, 1998, as compared to $1,871,000 for the same
period of 1997. This decrease is primarily attributable to management's
continued focus on cost efficiency and the reduction of expenses.
Spin-off Costs.
Costs of $291,000 related to the restructuring of the Company were
recognized as an expense for the three months ended June 30, 1998. There
were no such costs in the three months ended June 30, 1997.
Liquidity and Capital Resources
Cash and cash equivalents were $2,590,000 and $2,273,000 at June 30,
1998 and December 31, 1997, respectively. This increase was attributable
to $18,158,000 provided by operating activities, offset by $9,558,000 and
$8,283,000 used in investing and financing activities, respectively. The
cash inflow from operating activities was primarily attributable to
distributions from unconsolidated partnerships, land sales, collection of
wetlands fines previously paid and other notes receivable. The cash
outflow for investing activities was primarily attributable to land
improvements put in place for future land sales and deposits into escrow
accounts. During the first six months of 1998, the Company paid down debt
by $8,074,000, net of advances, and distributed $209,000 to the
Unitholders.
IGC has historically met its liquidity requirements principally from
cash flow generated from home and land sales, property management fees,
distributions from residential rental partnerships and from bank financing
providing funds for development and working capital.
Over the past several years, IGC's cash flows have been constrained
because of the terms of its existing debt agreements and the reluctance of
lenders to provide financing in the U.S. as a result of the wetlands
litigation. As a result, substantially all of the cash generated has been
used to pay debt service requirements with existing lenders. This resulted
in limited opportunities for new construction and development in the U.S.
The recently closed Banc One financing provided funding to commence
construction in Fairway Village, the third village in St. Charles, and will
allow IGC to retain a greater portion of its U.S. land sales proceeds. IGC
currently has other development projects in various stages of completion.
Substantially all of the projects under construction have sufficient
development loans in place to complete the construction.
IGC's principal demands for liquidity are expected to be the continued
funding of its current debt service and operating costs, including capital
for its waste technology investments as well as potential fines that may be
imposed should the Company and the U.S. Attorney's office reach a
settlement approved by the court to the Wetlands Litigation. Management
believes that the cost of such a settlement would not be materially greater
than the $1,500,000 reserved by IGC for the Wetlands Litigation (see Part
III, Item 1 to this Form 10-Q). After the Restructuring, management
expects to obtain additional funding which can be used by ACPT to fund new
community development projects. Such sources of funding may include, but
are not limited to, excess operating cash flows, secured or unsecured
financings, private or public offerings of debt or equity securities and
proceeds from sales of properties. IGC's anticipated cash provided by
operations, new and existing financing facilities, and extension or
refinancing of $9,000,000 of loans that are due in the next twelve months
are expected to satisfy the Company's capital needs in 1998. However,
there are no assurances that these funds will be generated.
Debt Summary
As of June 30, 1998, the consolidated rental properties with a net
asset book value of $39,000,000 were encumbered by $39,000,000 of non-
recourse debt. The remaining assets with a book value of $99,000,000 are
substantially all collateralized by $28,000,000 of recourse debt and
$2,000,000 of non-recourse debt. The significant terms of IGC's recourse
debt financing arrangements are shown below (dollars in thousands):
Balance
Maximum Interest Maturity Outstanding
Descriptions Borrowings Rate Date 6/30/98
------------ ---------- -------- -------- -----------
Banc One-term loan (a) $11,000 P+2.5% 7/31/04 $10,000
Banc One-development loan (a) 4,000 P+2.5% 7/31/04 931
Banc One-remediation loan (a) 5,000 P+2.5% 7/31/04 3,428
First Bank-term loan (b) 9,865 P+1.5% 8/31/98 6,399
First Bank-construction loan (b) 5,500 P+1.5% 9/30/98 347
First Bank-construction loan (b) 8,350 P+1.5% 12/31/00 1,292
RG-Premier Bank (c) 1,641 P+1.5% 4/30/99 1,398
Citibank (d) 969 (e) demand 917
Washington Savings Bank (e) 1,317 9.5% 9/30/99 844
Miscellaneous land and
development loans 2,165 Various Various 2,278
Other miscellaneous 346 Various Various 533
------- -------
$50,153 $28,367
======= =======
(a) The three notes are cross-collateralized by substantially all
of the U.S. land and the U.S. and Puerto Rico future cash
entitlements pursuant to its ownership interest in the housing
partnerships. Interest is paid monthly. The loan agreement
calls for a minimum of $2,000,000 principal curtailments in
1998, and $3,000,000 in each of the following six years. In
addition, IGC is to establish a $1,000,000 development reserve
during 1998. It is IGC's intention to meet the required
payments from land sales and proceeds from the refinancing of a
rental property. On each anniversary date, IGC is to pay an
additional fee, 1% in 1998 and 1999, increasing 1/2% in the
following four years, and grant an option to the lender to
purchase an additional 75,000 Units at a strike price to be
determined after the restructure. The loan agreement covenants
include restrictions on additional indebtedness of IGC and St.
Charles Community LLC. The loan agreement contains a cross
default provision for any amounts in excess of $1,000,000 past
due for 45 days after demand notification.
(b) The three notes are cross collateralized by the Puerto Rico
land assets. The interest is paid monthly from an interest
reserve. Principal payments are funded through the partial
release prices of the collateral. IGC expects to extend the
maturity date of these loans. The loan agreement covenants
include restrictions on distributions by LDA and additional
indebtedness of LDA and cross default provisions for other loan
payment defaults.
(c) The note requires monthly principal payments of $27,000 and is
secured by three mortgage notes receivable totalling
$2,717,600. Interest is paid monthly by advances under the
loan agreement.
(d) The note requires monthly payments of interest calculated at
250 basis points over the cost of funds, 8.406% at December 31,
1997. The note was secured by a letter of credit that expired
in January 1998. Management is currently renegotiating the
terms of this loan.
(e) The note requires monthly payments of interest and is
collateralized by the land under development for 115 townhome
lots in St. Charles, Maryland. The loan is to be repaid from
the sale of townhome lots that are currently under an option
contract.
Year 2000
IGC has assessed and continues to assess the impact of the Year 2000
issue on its reporting systems and operations. The Year 2000 issue exists
because many computer systems and applications and other systems using
computer chips currently use two-digit fields to designate a year. As the
century date occurs, date sensitive systems may recognize the year 2000 as
1900 or not at all. This inability to recognize or properly treat the year
2000 may cause the systems to process critical financial and operations
information incorrectly.
IGC's reporting systems are Year 2000 compliant with the exception of
one module. The Company has engaged a programmer at a nominal cost to
bring this module into compliance. Management is continuing to review the
remaining operating systems and computer systems that affect the properties
the Company manages. This review is continuing and management has not yet
determined whether these remaining systems are Year 2000 compliant, and if
not, whether the failure to correct them would have a material effect on
the operations or financial performance of IGC.
Forward-Looking Statements
Certain matters discussed and statements made within this Form 10-Q
are forward-looking statements within the meaning of the Private Litigation
Reform Act of 1995 and as such may involve known and unknown risks,
uncertainties, and other factors that may cause the actual results,
performance or achievements of the company to be different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Although the Company believes the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be
attained. These risks are detailed from time to time in the Company's
filings with the Securities and Exchange Commission or other public
statements.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As reported in Registrant's 10-K for December 31, 1997, convictions in
the Wetlands litigation in the United States District Court for the
District of Maryland were reversed by the United States Court of Appeals
for the Fourth Circuit and the case remanded to the District Court for a
new trial.
Counsel for Registrant is currently engaged in negotiations with the
U.S. Attorney's office on a possible disposition of the Wetlands litigation
that would require payment of a fine by Registrant, remediation of a
portion of two parcels in St. Charles and Registrant's undertaking an
environmental compliance program. Registrant would also plead guilty to a
single felony count. All other criminal charges in the indictment against
Registrant and its president, James J. Wilson, would be dropped. The
foregoing settlement proposal has not as yet been agreed upon by either
Registrant or the U.S. Government, and there are a number of issues that
are still under discussion. If agreement is reached, the disposition must
be approved by the court. Management believes that the cost of such a
settlement would not be materially greater than the amount ($1.5 million)
reserved by IGC for the Wetlands litigation. If such a settlement is
reached, a portion of the land in St. Charles presently encumbered by the
Wetlands litigation would become available for development.
ITEM 2. MATERIAL MODIFICATIONS OF RIGHTS OF REGISTRANT'S 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
(a) Exhibits required by Securities and Exchange Commission
Section 601 of Regulation S-K.
Exhibit
No. Description of Exhibit Reference
- ------- ----------------------------------------- ----------------------
10(a) Trust Agreement dated November 10, 1997 Filed herewith
by and between Interstate General Company
L.P. and Mark Augenblick, Hans Hertell,
Thomas B. Wilson and J. Michael Wilson
10(b) Memorandum of Agreement dated July 16, Filed herewith
1998 between The Wilson Family Limited
Partnership, Interstate Business
Corporation and Interstate General
Company L.P.
10(c) Agreement dated July 8, 1998 between Filed herewith
Land Development Associates S.E., Supra
and Company, S.E., Supra Development
Corporation, Rexach Construction Company,
Inc. and Ruben Velez Lebron.
(b) None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
INTERSTATE GENERAL COMPANY L.P.
-------------------------------
(Registrant)
By: Interstate General Management
Corporation
Managing General Partner
Dated: August 14, 1998 By: /s/ James J. Wilson
----------------- -----------------------------
James J. Wilson
Chairman and Chief
Executive Officer
Dated: August 14, 1998 By: /s/ J. Michael Wilson
----------------- -----------------------------
J. Michael Wilson
Vice Chairman, Chief Financial
Officer and Director
Dated: August 14, 1998 By: /s/ Cynthia L. Hedrick
----------------- -----------------------------
Cynthia L. Hedrick
Vice President and Controller
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
10(a) Trust Agreement dated November 10, 1997 by and between
Interstate General Company L.P. and Mark Augenblick, Hans
Hertell, Thomas B. Wilson and J. Michael Wilson
10(b) Memorandum of Agreement dated July 16, 1998 between The
Wilson Family Limited Partnership, Interstate Business
Corporation and Interstate General Company L.P.
10(c) Agreement dated July 8, 1998 between Land Development
Associates S.E., Supra and Company, S.E., Supra Development
Corporation, Rexach Construction Company, Inc. and Ruben
Velez Lebron.