UNITED STATES
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 September 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
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Commission file number 0-18226
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NYLIFE Government Mortgage Plus Limited Partnership
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(Exact name of registrant as specified in its charter)
Massachusetts 13-3487910
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
51 Madison Avenue, New York, New York 10010
- ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 576-6456
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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
-- --
NYLIFE Government Mortgage Plus
Limited Partnership
(In Process of Liquidation)
September 30, 1996
INDEX
PAGE NO.
Part I - Financial Information
Item 1. Financial Statements
Statement of Net Assets as of September 30, 1996 (Unaudited) 3
Statement of Changes in Net Assets for the Period
July 3, 1996 to September 30, 1996 (Unaudited) 4
Balance Sheet as of December 31, 1995 5
Statement of Operations for the Period January 1, 1996 to
July 2, 1996 (Unaudited) and for the Years Ended
December 31, 1995 and 1994 6
Statement of Partners' Capital and Net Assets for the Period
January 1, 1996 to July 2, 1996 (Unaudited) and for the
Year Ended December 31, 1995 7
Statement of Cash Flows for the Period January 1, 1996 to
July 2, 1996 (Unaudited) and for the Year Ended
December 31, 1995 8
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
NYLIFE Government Mortgage Plus
Limited Partnership
(In Process of Liquidation)
Statement of Net Assets
as of September 30, 1996
(Unaudited)
ASSETS 1996
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Cash and cash equivalents $ 18,487,061
Interest receivable 19,722
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Total assets $ 18,506,783
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LIABILITIES AND NET ASSETS
Accrued liabilities $ 92,958
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Total liabilities 92,958
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Net assets $ 18,413,825
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The accompanying notes are an integral part of these finanacial statements.
3
NYLIFE Government Mortgage Plus
Limited Partnership
(In Process of Liquidation)
Statement of Changes in Net Assets
For the Period from July 3, 1996 to September 30, 1996
(Unaudited)
Net assets as of July 3, 1996: $ 18,026,369
Interest income - Cash and cash equivalents 97,401
Interest income - Mortgages 115,832
Other income 254,102
Selling, general and administrative expenses (67,729)
Asset management fees (12,150)
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Net assets as of September 30, 1996 $ 18,413,825
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The accompanying notes are an integral part of these finanacial statements.
4
NYLIFE Government Mortgage Plus
Limited Partnership
Balance Sheet
as of December 31, 1995
ASSETS 1995
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Cash and cash equivalents $ 867,686
Interest receivable 208,392
Investments in Participating Insured Mortgages 29,765,800
Investments in Participating Guaranteed Loans 400,100
Deferred acquisition fees and expenses - net 875,965
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Total assets $ 32,117,943
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LIABILITIES AND PARTNERS' CAPITAL
Due to affiliates $ 21,729
Accrued liabilities 79,423
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Total liabilities 101,152
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Partners' capital:
Capital contributions
net of public offering expenses 36,028,557
Accumulated earnings 17,372,364
Cumulative distributions (21,384,130)
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Total partners' capital 32,016,791
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Total liabilities and partners' capital $ 32,117,943
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The accompanying notes are an integral part of these finanacial statements.
5
NYLIFE Government Mortgage Plus
Limited Partnership
(In Process of Liquidation)
Statement of Operations
(Unaudited)
For the Period from For the Years Ended
January 1, 1996 ----------------------------------
to July 2, 1996 1995 1994
--------------- -------------- --------------
INCOME
Interest - cash and cash equivalents $ 146,000 $ 64,991 $ 83,971
Interest - Mortgages net of amortization
of deferred acquisition costs 932,791 2,047,006 2,620,032
Other income 57,098 1,156,462 1,000
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Total income 1,135,889 3,268,459 2,705,003
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EXPENSES
General and administrative 104,760 222,572 300,121
Asset management fees 43,458 92,855 158,167
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Total expenses 148,218 315,427 458,288
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Net income $ 987,671 $ 2,953,032 $ 2,246,715
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NET INCOME ALLOCATED
General Partner $ 19,753 $ 43,654 $ 44,934
Corporate Limited Partner 25 71 55
Unitholders 967,893 2,909,307 2,201,726
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$ 987,671 $ 2,953,032 $ 2,246,715
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Net income per Unit $ .12 $ .36 $ .27
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Number of Units 8,168,457.7 8,168,457.7 8,168,457.7
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The accompanying notes are an integral part of these finanacial statements.
6
NYLIFE Government Mortgage Plus
Limited Partnership
(In Process of Liquidation)
Statement of Partners' Capital and Net Assets
for the Period from January 1, 1996 to July 2, 1996 (Unauditd)
and for the Year Ended December 31, 1995
Corporate Total
Limited General Partners'
Unitholders Partner Partner Capital
--------------- --------------- --------------- ---------------
Balance at January 1, 1995 $ 33,921,431 $ 915 $ (39,821) $ 33,882,525
Net income 2,909,307 71 43,654 2,953,032
Distributions (4,771,535) (117) (47,114) (4,818,766)
--------------- --------------- --------------- ---------------
Balance at December 31, 1995 32,059,203 869 (43,281) 32,016,791
Net income 967,892 25 19,753 987,670
Distributions (14,085,024) (345) (22,133) (14,107,502)
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Balance at July 2, 1996
before Liquidation Adjustment $ 18,942,071 $ 549 $ (45,661) $ 18,896,959
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Liquidation Adjustment (870,590)
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Net Assets in
Liquidation at July 2, 1996 $ 18,026,369
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The accompanying notes are an integral part of these finanacial statements.
7
NYLIFE Government Mortgage Plus
Limited Partnership
(In Process of Liquidation)
Statement of Cash Flows
(Unaudited)
For the Period from For the Year
January 1, 1996 Ended
to July 2, 1996 1995
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Cash flows from operating activities:
Net income $ 987,670 $ 2,953,032
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Adjustments to reconcile net income to net cash
flows from operating activities:
Amortization of acquisition fees and expenses 5,374 575,910
Changes in assets and liabilities:
Decrease in interest receivable 82,764 72,381
Decrease in due to affiliates (21,729) (78,271)
Increase (decrease) in accrued liabilities 30,898 (8,830)
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Total adjustments 97,308 561,190
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Net cash provided by operating activities 1,084,978 3,514,222
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Cash flows from investing activities:
Repayment of Participating Insured Mortgages 13,018,831 125,463
Repayment of Participating Guaranteed Loans - 1,095,800
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Net cash provided by investing activities 13,018,831 1,221,263
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Cash flows from financing activities:
Distributions to partners (14,107,502) (4,242,564)
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Net cash used in financing activities (14,107,502) (4,818,766)
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Net (decrease) in cash and cash equivalents (3,693) (83,281)
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Cash and cash equivalents at beginning of period 867,686 950,967
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Cash and cash equivalents at end of period $ 863,993 $ 867,686
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The accompanying notes are an integral part of these finanacial statements.
8
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
(IN PROCESS OF LIQUIDATION)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
On August 21, 1996, the Partnership sold its investments in the GNMA
certificates and Participating Guaranteed Loans relating to Cross Creek and
Signature Place to Greystone Funding Corporation, an unaffiliated third party,
for $17,341,379.53 in cash in a privately negotiated transaction in accordance
with the General Partner's plans to liquidate and dissolve the Partnership.
Unitholders of the Partnership had approved the dissolution of the Partnership
on July 1, 1996. As a result, the Partnership changed its basis of accounting
for the period subsequent to July 2, 1996, from the historical cost basis to the
liquidation basis. Under the liquidation basis of accounting, the Partnership's
assets at July 3, 1996 and September 30, 1996 were reported at net realizable
value; and the Partnership's liabilities were presented at estimated settlement
amounts. The net effect of the revaluation of the Partnership's assets and
liabilities to the adoption of the liquidation basis of accounting was a
downward adjustment of $870,590, to write-off unamortized deferred acquisition
costs, which was reported on the Statement of Partners' Capital and Net Assets
for the period ended June 30, 1996. The balance sheet at December 31, 1995, and
amounts in the accompanying statements of operations, partners' capital and cash
flows for the period from January 1, 1996 to July 2, 1996 and for the years
ended 1995 and 1994 were prepared using the historical cost basis of accounting.
The summarized financial information contained herein is unaudited; however, in
the opinion of management, all adjustments (which include normal recurring
adjustments) necessary for a fair presentation of financial information have
been included. The accompanying financial statements and related notes should be
read in conjunction with the Partnership's 1995 Annual Report on Form 10-K.
All capitalized terms used in these Notes to Financial Statements, unless
otherwise defined herein, shall have the meanings set forth in the Partnership
Agreement.
NOTE 2 - LIQUIDATION
Two class action lawsuits were filed against the general partner and certain of
its affiliates in the District Court of Harris County, Texas (the "Texas State
Court") on January 11, 1996, styled GRIMSHAWE V. NEW YORK LIFE INSURANCE CO., ET
AL. (No. 96-001188) and SHEA V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-
001189) alleging misconduct in connection with the original sale of Units in the
Partnership, including violation of various laws and regulations and claims of
continuing fraudulent conduct. The plaintiffs asked for compensatory damages
for their lost original investment, plus interest, costs (including attorneys'
fees), punitive damages, disgorgement of any earnings, compensation and benefits
received by the defendants as a result of the alleged actions
9
and other unspecified relief to which plaintiffs might have been entitled.
These suits were amended and refiled in a consolidated action (the "Lawsuit") in
the United States District Court for the Southern District of Florida (the
"Court") on March 18, 1996. The plaintiffs purported to represent claims of all
persons (the "Class") who purchased or otherwise assumed rights and title to
investments in certain limited partnerships, including the Partnership, and
other programs created, sponsored, marketed, sold, operated or managed by the
defendants (collectively, the "Proprietary Partnerships"). On May 3, 1996, the
Texas State Court entered an order dismissing the Texas proceeding without
prejudice, and provided that the dismissal would be with prejudice upon final
disposition of the Lawsuit. The Partnership was not a defendant in the Lawsuit.
The defendants expressly denied any wrongdoing alleged in the Lawsuit and
conceded no liability or wrongdoing in connection with the sale of the Units or
the structure of the program. Nevertheless, to reduce the burden of protracted
litigation, the defendants entered into a Stipulation of Settlement ("Settlement
Agreement") with the plaintiffs because, in their opinion, such settlement would
(i) provide substantial benefits to the Unitholders in a manner consistent with
New York Life's position that it had previously determined to wind up the
Partnership through orderly liquidation as the continuation of the business no
longer served the intended objectives of either the Unitholders or the
defendants and to offer the Unitholders an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up the Partnership on a schedule favorable to the Unitholders and resolve
the issues raised by the Lawsuit.
In coordination with the proposed settlement, the General Partner solicited the
approval of the Unitholders for the dissolution of the Partnership. On July 1,
1996, the expiration date for the solicitation of such consents, the Unitholders
of the Partnership approved the dissolution and the termination of the
Partnership. NYLIFE Realty Inc., as liquidator, has commenced the process of
winding up the Partnership.
Final approval of the Settlement Agreement was given by the Court on July 3,
1996. The Settlement Agreement became final on August 5, 1996, the date on
which the period for appeal of the Settlement Agreement expired. Cash payments
(comprised of a Liquidation Advance and an Enhancement, as defined in the
Settlement Agreement) were made by NYLIFE Realty to settling Unitholders in
August, September and November. Each settling Unitholder granted a
security interest in favor of NYLIFE Realty in his Units and liquidating
distributions up to the amount of the settling Unitholders Liquidation
Advance to secure repayment thereof. Accordingly, liquidating distributions for
settling Unitholders were first applied to repay the Liquidation Advance
and the remaining liquidating distributions were made to the Unitholders.
Under the terms of the Settlement Agreement, each settling Unitholder
received a complete return of his original investment, less distributions
received prior to the final settlement date. In exchange for the settlement
benefits the settling Unitholders released any and all claims that the
settling Unitholder may have had against the defendants in connection with
any and all causes of action related to the Proprietary Partnerships and all
activities related to the dissolution and liquidation of such partnerships.
10
NOTE 3- INVESTMENTS IN MORTGAGES
DISPOSITION OF ASSETS
On August 21, 1996, the Partnership sold its investments in the GNMA
certificates and Participating Guaranteed Loans relating to Cross Creek and
Signature Place to Greystone Funding Corporation, an unaffiliated third party,
for $17,341,379.53. The sales price represents principal in the amount of
$17,134,861.87, accrued interest of $75,363.50, and a gain on the sale of
$131,154.16. The sale of the Cross Creek and Signature Place GNMA certificates
and PGLs terminated the Partnerships beneficial interest in Cross Creek and
Signature Place.
On February 27, 1996, the Partnership sold the Highlands GNMA for cash in the
amount of $13,105,373.01. The Highlands GNMA was sold through Utendahl Capital
Partners, an unaffiliated broker dealer, pursuant to which the Highlands
Borrower agreed to pay a portion of any additional taxes determined by the State
of Florida to be due in connection with the recording of the original loan
documents. The State of Florida claimed that $136,800 in additional recording
taxes were due. On March 12, 1996, the Partnership settled the recording tax
claim of the State of Florida through a payment made on behalf of the
Partnership in the amount of $64,000 ($53,850 of which was funded by the General
Partner and $10,150 of which was funded by the Original Highlands Borrower).
The Partnership has recently received the signed Closing Agreement settling the
claim from the State of Florida and the letters of credit will be returned to
the Original Highlands Borrower. The sales price represents principal in the
amount of $12,976,812.45, accrued interest in the amount of $71,462.59 and a
premium $57,097.97. The Partnership was not charged any separate fees or
commissions in connection with the sale. The General Partner of the Partnership
decided to sell the Highlands GNMA to take advantage of what it perceived to be
a favorable market in which the Highlands GNMA could be sold at a premium. The
Partnership distributed the proceeds to the Unitholders on May 15, 1996.
The sale of the Highlands GNMA, together with the 1995 sale of the Highlands and
the related modification of the Highlands Mortgage, terminated the Partnership's
beneficial interest in the Highlands Mortgage and the Highlands as of February
27, 1996.
PARTICIPATING INSURED MORTGAGES
Investment in PIMs as of December 31, 1995 were comprised of the following:
December 31, 1995:
- ------------------
Cross Creek The Highlands Signature Place Total
----------- ------------- --------------- -----
Investment in PIM $7,226,406 $13,037,676 $ 9,756,900 $30,020,982
Principal repayments (100,837) (54,466) (99,879) (255,182)
Acquisition fees and expenses net of
accumulated amortization 293,276 -0- 582,689 875,965
--------- --------- --------- ---------
$7,418,845 $12,983,209 $10,239,710 $30,641,765
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(1) As described above in Recent Developments - the investments in PIMs were
sold on August 21, 1996.
11
PARTICIPATING GUARANTEED LOANS
Investment in PGLs on the balance sheets as of December 31, 1995 were comprised
of the following:
December 31, 1995:
- ------------------
Cross Creek Signature Place Total
----------- --------------- -----
Investment in PGL $400,000 $100 $ 400,100
-------- -------- ---------
-------- -------- ---------
(1) As described below in Recent Developments - the investments in PIMs were
sold on August 21, 1996. 1995.
NOTE 4 - TRANSACTIONS WITH THE GENERAL PARTNER
The following is a summary of the fees earned and reimbursable expenses incurred
by the General Partner for the nine months ended September 30, 1996 and 1995:
Total earned for the Total earned for the
nine months ended nine months ended
September 30, 1996 September 30, 1995
------------------ ------------------
Asset management fees $ 55,608 $ 71,125
Reimbursement of general and
administrative expenses to the
General Partner 75,000 75,000
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$ 130,608 $ 146,125
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All amounts have been paid as of September 30, 1996.
NOTE 5 - SURPLUS CASH - SIGNATURE PLACE
A review of the borrower's audited financial statements for the year ended
December 31, 1995 indicated that the Partnership was due surplus cash under the
terms of the Additional Interest Agreement and Supplemental Interest Agreement.
Surplus cash (as defined by HUD) is cash on hand at a particular month end that
exceeds the amount of the required reserve. As outlined by HUD, the required
reserve generally includes reserves for obligations due within 30 days such as
accrued mortgage interest payable; delinquent mortgage principal payments and
deposits to reserve for replacements, if any; accounts payable and accrued
expenses due within 30 days; loans and notes payable due within 30 days;
deficient tax insurance or mortgage insurance premium escrow deposits, if a any;
prepaid rents; and tenant security deposits payable.
During the third quarter of 1996, the Partnership received a distribution of
$39,189 that represents its 50% allocation under the Additional Interest
Agreement and a distribution of $3,919 that represents its 10% allocation under
the Supplemental Interest Agreement. Additionally, the Partnership received
$79,840 under this agreement during the second quarter of 1996. This had been
the first participation that the Partnership was entitled to from the Signature
Place Mortgage since its inception in 1991.
12
NOTE 6 - SUBSEQUENT EVENTS
LIQUIDATING DISTRIBUTION TO UNITHOLDERS
On November 15, 1996, the Partnership made a liquidating distribution of
$18,578,390.63. Of this amount, $17,617,784.73 was paid to NYLIFE Inc. as a
repayment of the Liquidation Advance portion of the Settlement to settling
Unitholders. The $960,605.90 paid to Unitholders consisted of all
remaining working capital reserves and all cash generated from operations from
April 1, 1996 to November 15, 1996.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All remaining investment assets of the Partnership were sold in the third
quarter as described in Note 3 to the financial statements. Thereafter, as
described in Note 6 to the financial statements, on November 15, 1996, a
liquidating distribution of $18,578,390.63 was paid to NYLIFE Inc. and the
Unitholders pursuant to both the Settlement and the liquidation of the
Partnership. With payment of the liquidating distribution, the General Partner
has concluded the wind up of the Partnership.
14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
Current Report on Form 8-K dated August 21, 1996. Sale of GNMA
Certificates and Participating Guaranteed Loans relating to Cross
Creek and Signature Place.
15
SIGNATURES
Pursuant to the requirements of 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.
NYLIFE Government Mortgage
Plus Limited Partnership
By: NYLIFE Realty Inc.
General Partner
Date: November 20, 1996 By: /s/ Kevin M. Micucci
------------------------------------------
Kevin M. Micucci
President ( Principal Executive,
Financial and Accounting Officer)
16