FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 33-11013 ASSOCIATED PLANNERS REALTY INCOME FUND (Exact name of registrant as specified in its charter) CALIFORNIA 95-4120092 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5933 W. CENTURY BLVD., SUITE 900 LOS ANGELES, CALIFORNIA 90045 (Address of principal executive offices) (Zip Code) (310) 670-0800 (Registrant's telephone number, including area code) (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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) ITEM 1. FINANCIAL STATEMENTS In the opinion of the General Partner of Associated Planners Realty Income Fund (the "Partnership"), all adjustments necessary for a fair presentation of the Partnership's results for the three and nine months ended September 30, 1995 and 1994, have been made in the following financial statements which are of normal recurring entries in nature. However, such financial statements are unaudited and are subject to any year-end adjustments that may be necessary. BALANCE SHEETS September 30, 1995 (Unaudited)and December 31, 1994 September 30, December 31, 1995 1994 ASSETS RENTAL REAL ESTATE, net of accumulated depreciation (Note 2) $4,097,367 $4,160,924 CASH & CASH EQUIVALENTS 76,651 85,804 INVESTMENT IN GOVERNMENT SECURITIES 172,553 163,272 OTHER ASSETS 54,276 25,929 $4,400,847 $4,435,929 LIABILITIES AND PARTNERS' EQUITY ACCRUED LIABILITIES $22,325 $24,316 PROPERTY SECURITY DEPOSITS 26,290 30,698 TOTAL LIABILITIES 48,615 55,014 COMMITMENTS AND CONTINGENCIES PARTNERS' EQUITY: Limited Partner: $1,000 stated value per unit; authorized 12,000 units; issued and outstanding - 5,096 4,151,932 4,196,996 General Partner: 200,300 183,919 TOTAL PARTNERS EQUITY 4,352,232 4,380,915 $4,400,847 $4,435,929 [FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) STATEMENTS OF PARTNERS' EQUITY Six Months Ended June 30, 1995 (Unaudited) Limited Partners General Total Units Amount Partner BALANCE, December 31, 1994 $4,380,915 5,096 $4,196,996 $183,919 Net income 97,606 --- 81,225 16,381 Distributions to limited partners (126,289) --- (126,289) --- BALANCE, September 30, 1995 $4,352,232 5,096 $4,151,932 $200,300 Nine Months Ended September 30, 1994 (Unaudited) Limited Partners General Total Units Amount Partner BALANCE, December 31, 1993 $4,381,340 5,096 $4,228,487 $152,853 Net income 159,998 --- 137,392 22,606 Distributions to limited partners (191,100) --- (191,100) --- BALANCE, September 30, 1994 $4,350,238 5,096 $4,174,779 $175,459 [FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) STATEMENTS OF INCOME Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 1995 1994 1995 1994 REVENUES: Rental $103,082 $125,627 $287,043 $372,741 Interest 3,330 2,796 8,857 6,712 106,412 128,423 295,900 379,453 COSTS AND EXPENSES: Operating 8,660 14,720 41,999 41,703 Property taxes 5,003 5,003 14,296 14,786 Property management fees 5,167 6,281 12,595 18,637 General and administrative 21,368 20,285 58,936 63,014 Unrealized (gain) loss from investment in government securities (840) (757) (3,089) 7,915 Depreciation and amortization 24,519 24,540 73,557 73,400 63,877 70,072 198,294 219,455 NET INCOME $42,535 $58,351 $97,606 $159,998 NET INCOME PER LIMITED PARTNERSHIP UNIT $7.08 $9.87 $15.94 $26.96 [FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1995 and 1994 (Unaudited) Nine Months Nine Months Ended Ended September 30, September 30, 1995 1994 Cash flows from operating activities: Net income $97,606 $159,998 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 73,557 73,400 Proceeds from sales (purchases) of investments in government securities (6,192) 30,705 Unrealized (gain) loss from investment in government securities (3,089) 7,372 Increase (decrease) from changes in: Other assets (28,347) (13,510) Accounts payable (1,991) (27,977) Prepaid rent --- 26,402 Security deposits (4,408) 874 Net cash provided by operating activities 127,136 257,264 Cash flows from investing activities: Additions to rental real estate (10,000) (31,136) Cash (used in) provided by investing activities (10,000) (31,136) Cash flows from financing activities: Distributions to limited partners (126,289) (191,100) Cash provided by (used in) financing activities (126,289) (191,100) Net increase in cash and cash equivalents (9,153) 35,028 Cash and cash equivalents at beginning of period 85,804 40,278 Cash and cash equivalents at end of period $76,651 $75,306 [FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) SUMMARY OF ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying balance sheet as of September 30, 1995, and the income statements and statements of cash flow for the three and nine month periods ended September 30, 1995, and 1994 are unaudited. In the opinion of management these statements include all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the three and nine month periods ended September 30, 1995, are not necessarily indicative of results to be expected for the year ended December 31, 1995. The financial statements do not give effect to any assets that the partners may have outside of their interest in the partnership, nor to any personal obligations, including income taxes, of the partners. BUSINESS Associated Planners Realty Income Fund ("the Partnership"), a California limited partnership, was formed on December 23, 1986 under the Revised Limited Partnership Act of the State of California for the purpose of developing or acquiring, managing and operating unleveraged income producing real estate. The Partnership met its minimum funding of $1,200,000 on February 26, 1988 and terminated its offering on September 5, 1989. REAL ESTATE HELD FOR INVESTMENT AND DEPRECIATION Assets are stated at cost. Depreciation is computed using the straight- line method over an estimated useful life ranging from 31.5 to 40 years for financial reporting and income tax reporting purposes. ORGANIZATIONAL COSTS Organizational costs are capitalized and amortized over the first five years of the partnership. LEASE COMMISSIONS Lease commissions which are paid to real estate brokers for locating tenants are capitalized and amortized over the life of the lease. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) SUMMARY OF ACCOUNTING POLICIES (Continued) RENTAL INCOME Rental revenue is recognized on a straight-line basis to the extent that rental income is deemed collectible. INVESTMENT IN GOVERNMENT SECURITIES Investment in Government Securities, which represent trading securities, are accounted for in accordance with SFAS No. 115. The difference between historical cost and market value are reported as unrealized gains or losses in the statements of income. STATEMENTS OF CASH FLOW For purposes of the statements of cash flows, the Partnership considers cash in the bank, and all highly-liquid investments purchased with original maturities of three months or less , to be cash and cash equivalents. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) and December 31, 1994 Note 1 - Nature of Partnership Business Associated Planners Realty Income Fund, a California limited partnership (the "Fund"), was formed on December 23, 1986 under the Revised Limited Partnership Act of the State of California for the purpose of acquiring, managing, and operating income-producing real estate. Under the terms of the partnership agreement, the General Partner (West Coast Realty Advisors, Inc. and W. Thomas Maudlin Jr.) is entitled to cash distributions and net income allocations varying from 1% for depreciation allocations to 15% of cash and income after the limited partners have received cash distributions equal to their initial cash investment plus a cumulative 8% return. The General Partner is also entitled to cash distributions and net income allocations of 10% from ongoing partnership operations. Further, the General Partner has received acquisition fees for locating and negotiating the purchase of rental real estate and management fees for operating the Partnership. Note 2 - Rental Real Estate As of September 30, 1995 and December 31, 1994 the Fund's net real estate investment in the Yorba Center Building and PROCARE Industrial Building is as follows: September 30, December 31, 1995 1994 Land $1,282,861 $1,282,861 Buildings and Improvements 3,416,327 3,406,327 4,699,188 4,689,188 Less Accumulated Depreciation 601,821 528,264 Net Real Estate Investment $4,097,367 $4,160,924 ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited)and December 31, 1994 (continued) Note 3 - Related Party Transactions (a) For Partnership management services rendered to the Partnership, the General Partner is entitled to receive 10% of all distributions of Cash from Operations. These amounts totaled $5,662 for the quarter ended September 30, 1995 and $7,078 for the quarter ended September 30, 1994, and $14,014 for the nine months ended September 30, 1995 and $21,234 for the nine months ended September 30, 1994. (b) For administrative services rendered to the Partnership, the General Partner, in accordance with the partnership agreement, was reimbursed $9,000 for the nine months ended September 30, 1995 and 1994, and $3,000 for the three months ended September 30, 1995, and 1994. (c) Property management fees incurred in accordance with the Partnership Agreement to West Coast Realty Management, Inc., an affiliate of the corporate General Partner, totaled $12,595 for the nine months September 30, 1995, $18,637 for the nine months ended September 30, 1994, $5,167 for the three months ended September 30, 1995, and $6,281 for the three months ended September 30, 1994. (d) During 1990, the Partnership acquired a 90% undivided interest in property located in San Marcos, California (Note 2). The remaining 10% interest is owned by Associated Planners Realty Growth Fund, an affiliate. Note 4 - Net Income and Cash Distributions Per Limited Partnership Unit The Net Income per Limited Partnership Unit was computed in accordance with the Partnership Agreement on the basis of the number of outstanding limited partnership units. Cash distributions of $10.00, $8.50, $6.25, and $12.50 per unit are reflected for the distribution dates of August 4, 1995, May 5, 1995, February 3, 1995, February 9, 1994, May 5, 1994, and August 2, 1994 respectively. The record date in each case was March 31, 1995, June 30, 1995, September 30, 1995, December 31, 1994 & 1993 respectively. Note 5 - Subsequent Event The Partnership distributed $63,700 ($12.50 per unit), on November 6, 1995, to Limited Partners of record as of September 30, 1995. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS Introduction Associated Planners Realty Income Fund (the "Partnership") was organized in December 1986, under the California Revised Limited Partnership Act. The Partnership began offering units for sale on October 20, 1987. As of March 31, 1990, the Partnership had raised $4,652,625 in gross capital contributions. The Partnership netted approximately $4,173,000 after sales commissions andsyndication costs. The Partnership was organized for the purpose of investing in, holding, and managing improved, leveraged income-producing property, such as residential property, office buildings, commercial buildings, industrial properties, and shopping centers. The Partnership intends to own and operate such properties for investment over an anticipated holding period of approximately five to ten years. The Partnership's principal investment objectives are to invest in rental real estate properties which will: (1) Preserve and protect the Partnership's invested capital; (2) Provide for cash distributions from operations; (3) Provide gains through potential appreciation; and (4) Generate Federal income tax deductions so that during the early years of property operations, a portion of cash distributions may be treated as a return of capital for tax purposes and, therefore, may not represent tax able income to the limited partners. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The ownership and operation of any income-producing real estate is subject to those risks inherent in all real estate investments, including national and local economic conditions, the supply and demand for similar types of properties, competitive marketing conditions, zoning changes, possible casualty losses, increases in real estate taxes, assessments, and operating expenses, as well as others. The Partnership is operated by West Coast Realty Advisors, Inc. ("WCRA") (the corporate General Partner) and Mr. W. Thomas Maudlin Jr. (an individual General Partner), collectively the "General Partner," subject to the terms of the Amended and Restated Agreement of Limited Partnership. The Partnership has no employees, and all administrative services are provided by WCRA, the corporate General Partner. Results of Operations Operations for the quarter ended September 30, 1995 reflect an entire period of operations for all Partnership properties. Rental income for the three and nine months ended September 30, 1995 decreased over that for the prior years three and nine months ended September 30, 1994 by approximately $22,545 and $85,698 as a result of a vacancy at the San Marcos building from January 8, 1995 to February 13, 1995. In addition, the new tenant (No Fear Inc.) entered into a lease at a rate that was 30% less than the rate on the lease of the prior tenant (Professional Care Products). The statement of cash flows reflects proceeds from the sales or cash used in purchases of government securities for 1995 and 1994. These amounts pertain to gross sales and gross purchases of government securities and are not being reflected as net sales or net purchases for the periods being reported. At September 30, 1995, the Yorba Center Shopping Center was 90% leased to eight tenants. The Partnership generated $171,163 in income from operations (before depreciation expense of $73,557) for the nine months ended September 30, 1995 compared to $233,398 in income from operations (before depreciation expense of $73,400) for the nine months ended September 30, 1994. Interest income increased $2,145 (32%) as a result of higher interest rates and higher investable cash balances. Operating and General and Administrative expenses decreased $21,161 (10%) as a result of lower repairs and maintenance, property management fees, and utilities for the nine months ended September 30, 1995 as compared to the nine months ended September 30, 1994. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources During the nine months ended September 30, 1995, $127,136 in cash was provided by operating activities. This resulted from a cash basis income of $171,163 (net income with depreciation expense added back). These operating cash flow additions were offset by a $28,347 increase in other assets (due to prepaid leasing costs paid in connection with the new tenant, No Fear, Inc.) a $1,991 decrease in accounts payable (attributable to a normal decrease in trade accounts payable), a $6,192 increase in an investment in government securities (due to re-invested interest from government securities holdings), a $3,089 unrealized gain in government securities and $4,408 decrease in security deposits (due to a lower security deposit received from the new tenant, No Fear Inc. compared to the previous tenant, Professional Care Products). Cash used in investing activities totaled $10,000 in connection with tenant improvements on the San Marcos property. Cash used in financing activities totaled $126,289 due to the distributions to the limited partners during the nine months ended September 30, 1995. The Partnership's cash reserve is invested primarily in a pool of government securities managed by an outside independent investment firm. This reserve is intended to provide stability and safety of principal, competitive interest rates and quick availability of funds. With the purchase of the 90% interest in the PROCARE Industrial Building in January 1990, the Partnership had completed its acquisition program. ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) PART II O T H E R I N F O R M A T I O N 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. EXHIBIT AND REPORTS ON FORM 8-K (a) Information required under this section has been included in the financial statements. (b) Reports on Form 8-K None ASSOCIATED PLANNERS REALTY INCOME FUND (A California Limited Partnership) S I G N A T U R E S 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. ASSOCIATED PLANNERS REALTY INCOME FUND A California Limited Partnership (Registrant) November 14, 1995 By: WEST COAST REALTY ADVISORS, INC. A California Corporation, A General Partner William T. Haas William T. Haas Director and Executive Vice President / Secretary November 14, 1995 Michael G. Clark Michael G. Clark Vice President / Treasurer