U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File Number 0-20273
1999 Broadway Associates Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Delaware 04-6613783
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
7 Bulfinch Place, Suite 500, P.O. Box 9507, Boston, Massachusetts 02114-9507
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 570-4600
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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
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2002 2001
-------- --------------
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $24,606 (2002) and $23,364 (2001) 28,407 28,875
--------- ---------
30,107 30,575
Other Assets:
Cash and cash equivalents 2,131 2,916
Restricted cash 2,908 2,717
Other assets 443 515
Deferred rent receivable 1,964 2,001
Deferred costs, net of accumulated amortization
of $2,225 (2002) and $1,942 (2001) 2,039 2,283
--------- ---------
Total assets $ 39,592 $ 41,007
========= =========
Liabilities and Partners' Deficit
Liabilities:
Mortgage loan payable $ 49,400 $ 49,600
Accrued interest payable 328 340
Accounts payable and accrued expenses 843 1,588
Deferred lease termination fee 1,049 1,303
Payable to related party 322 243
Security deposits 133 133
--------- --------
Total liabilities 52,075 53,207
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Partners' Deficit:
Investor limited partners' deficit (460 units outstanding) (10,802) (10,522)
General partner's deficit (1,681) (1,678)
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Total Partners' Deficit (12,483) (12,200)
--------- --------
Total Liabilities and Partners' Deficit $ 39,592 $ 41,007
========= ========
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 2002 2001
--------- --------
Revenues:
Rental $ 5,693 $ 5,439
Other 277 379
--------- --------
Total revenues 5,970 5,818
--------- --------
Expenses:
Real estate taxes 405 353
Payroll and payroll expense reimbursements 353 340
Operating expenses 389 329
Repairs and maintenance 583 461
Utilities 424 462
Management and other fees 403 374
General and administrative costs 76 70
Insurance 71 35
Depreciation 1,242 1,353
Amortization 266 250
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Total expenses 4,212 4,027
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Operating income 1,758 1,791
Non-operating income (expense):
Interest income 26 48
Interest expense (2,000) (2,026)
--------- --------
Net loss $ (216) $ (187)
========= ========
Net loss allocated:
General Partner $ (2) $ (2)
Investor Limited Partners (214) (185)
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$ (216) $ (187)
========= ========
Net loss allocated per unit:
Investor Limited Partners $ (465.22) $(402.17)
========= ========
Distribution per unit of Investor Limited Partners interest $ 143.48 $ -
========= ========
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 2002 2001
----------- ----------
Revenues:
Rental $ 2,782 $ 2,821
Other 103 185
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Total revenues 2,885 3,006
--------- -------
Expenses:
Real estate taxes 202 176
Payroll and payroll expense reimbursements 179 174
Operating expenses 213 166
Repairs and maintenance 279 225
Utilities 189 232
Management and other fees 194 186
General and administrative costs 44 39
Insurance 35 18
Depreciation 624 679
Amortization 142 126
--------- -------
Total expenses 2,101 2,021
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Operating income 784 985
Non-operating income (expense):
Interest income 14 17
Interest expense (1,004) (1,012)
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Net loss $ (206) $ (10)
========= =======
Net loss allocated:
General Partners $ (2) $ -
Investor Limited Partners (204) (10)
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$ (206) $ (10)
========= =======
Net loss allocated per unit:
Investor Limited Partners $(443.48) $(21.74)
========= =======
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
UNITS OF INVESTOR
LIMITED LIMITED GENERAL
PARTNERSHIP PARTNERS' PARTNER'S
INTEREST DEFICIT DEFICIT TOTAL
------------ --------- --------- ---------
Balance - January 1, 2002 460 $(10,522) $(1,678) $(12,200)
Net loss - (214) (2) (216)
Distribution - (66) (1) (67)
--------- -------- ------- --------
Balance - June 30, 2002 460 $(10,802) $(1,681) $(12,483)
========= ======== ======= ========
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
2002 2001
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Cash Flows from Operating Activities:
Net loss $ (216) $ (187)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,525 1,620
Amortization of deferred lease termination fee (254) -
Deferred rent receivable 37 (374)
Changes in assets and liabilities:
Other assets 72 392
Accrued interest payable (12) (1)
Accounts payable, accrued expenses, payable
to related party and security deposits (666) (1,416)
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Net cash provided by operating activities 486 34
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Cash Flows from Investing Activities:
Additions to buildings and improvements (774) (683)
Restricted cash (191) (145)
Deferred costs (39) (102)
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Cash used in investing activities (1,004) (930)
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Cash Flows from Financing Activities:
Distribution to Partners (67) -
Principal payments on mortgage loan (200) (185)
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Cash used in financing activities (267) (185)
-------- -------
Net Decrease in Cash and Cash Equivalents (785) (1,081)
Cash and Cash Equivalents, Beginning of Period 2,916 3,201
-------- -------
Cash and Cash Equivalents, End of Period $ 2,131 $ 2,120
======== =======
Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 1,995 $ 2,010
======== =======
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying financial statements reflect the accounts of 1999
Broadway Associates Limited Partnership (the "Investor Partnership"),
1999 Broadway Partnership (the "Operating Partnership") and 1999
Broadway LLC (the "Operating Company"). The Investor Partnership, the
Operating Partnership and the Operating Company are collectively
referred to as the "Partnerships". These consolidated financial
statements, footnotes and discussions should be read in conjunction
with the consolidated financial statements, related footnotes and
discussions contained in the Investor Partnership's Annual Report on
Form 10-KSB for the year ended December 31, 2001.
The financial information contained herein is unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of
such financial information have been included. All adjustments are of a
normal recurring nature. The balance sheet at December 31, 2001 was
derived from audited financial statements at such date.
The results of operations for the six and three months ended June 30,
2002 and 2001 are not necessarily indicative of the results to be
expected for the full year.
2. RELATED PARTY TRANSACTIONS
The Partnership has incurred charges and made commitments to companies
affiliated by common ownership and management with Winthrop Financial
Associates, A Limited Partnership, the managing general partner of the
Investor Partnership (the "General Partner"). Related party
transactions with the General Partner and its affiliates include the
following:
a. The Partnership accrues to an affiliate of the General Partner
an annual property management fee equal to 5% of cash
receipts. For the six months ended June 30, 2002 and 2001,
management fees of $296,000 and $274,000, respectively, were
incurred.
b. The Investor Partnership pays or accrues to the General
Partner an annual partnership administration and investor
service fee, as provided for in the partnership agreement, of
$100,000, which, since 1990, has been increased annually by 6%
to its present level of approximately $213,000 per annum. Fees
of $107,000 and $100,000 were paid or accrued during the
periods ended June 30, 2002 and 2001, respectively.
c. The Partnership pays or accrues to an affiliate of the General
Partner a construction management fee equal to 5% of the
aggregate cost of each applicable construction project. Fees
of $29,000 and $32,000 were incurred during the six months
ended June 30, 2002 and 2001, respectively, and have been
capitalized to the cost of buildings and improvements.
d. In March 2002, the General Partner received a $1,000
distribution of cash flow from operations.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ALLOCATION OF LOSS AND DISTRIBUTION OF CASH FLOW
In accordance with the partnership agreement losses are allocated 1% to
the General Partner and 99% to the Limited Partners. Net income is
allocated 3% to the General Partner and 97% to the limited partners.
Cash flow is distributed 99% to the limited partners and 1% to the
General Partner until the limited partners have received an amount
equal to an annual 6% per annum noncumulative, noncompounded return on
their invested capital and the balance, if any, 97% to the limited
partners, and 3% to the General Partner.
4. PARTNERS DISTRIBUTION
For the six months ended June 30, 2002, the Partnership distributed
$66,000 ($143.48 per unit) of cash from operations to the limited
partners and $1,000 to the General Partner.
5. SEGMENT INFORMATION
The Partnership has two reportable segments, the Office Tower and the
Garage. The Partnership evaluates performance based on net operating
income, which is income before depreciation, amortization, interest and
non-operating items.
Segment information for the six months ended June 30, 2002 and 2001, is
shown in the tables below (in thousands). The "Other" column includes
partnership administrative items and income and expense not allocated
to a reportable segment.
Office Parking
Tower Garage Other Total
-------- -------- ------- -------
2002
Rental income $ 5,693 $ - $ - $ 5,693
Other income 46 231 - 277
Interest income 21 - 5 26
Interest expense 1,936 64 - 2,000
Depreciation and amortization 1,485 23 - 1,508
Segment profit (loss) (177) 144 (183) (216)
Total assets 38,432 983 177 9,592
Capital expenditures 774 - - 774
2001
Rental income $ 5,439 $ - $ - $ 5,439
Other income 92 287 - 379
Interest income 38 - 10 48
Interest expense 1,959 67 - 2,026
Depreciation and amortization 1,580 23 - 1,603
Segment profit (loss) (264) 197 (120) (187)
Total assets 38,103 1,029 502 39,634
Capital expenditures 683 - - 683
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosures contained in this Form
10-QSB and other filings with the Securities and Exchange
Commission made by the Partnership from time to time. The
discussion of the Partnership's liquidity, capital resources and
results of operations, including forward-looking statements
pertaining to such matters, does not take into account the effects
of any changes to the Partnership's operations. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors,
including those identified herein.
This item should be read in conjunction with the consolidated
financial statements and other items contained elsewhere in the
report.
Liquidity and Capital Resources
The Registrant, through its effectively 99.9% ownership interest
in 1999 Broadway LLC (the "Operating Company"), owns a 42-story
office tower located in Denver, Colorado together with a parking
garage located one and one-half blocks northeast of the office
tower (collectively, the "Property"). The Operating Company
generates rental revenue from the Property and is responsible for
the Property's operating expenses as well as its administrative
costs.
The Registrant's level of liquidity based on cash and cash
equivalents decreased by $785,000 during the six months ended June
30, 2002, as compared to December 31, 2001. The decrease is due to
$1,004,000 of cash used in investing activities and $267,000 of
cash used in financing activities, which were partially offset by
$486,000 of cash provided by operating activities. Cash used in
investing activities consisted of $774,000 of cash used for
improvements to real estate, primarily tenant improvements,
$39,000 of cash expended on leasing costs and commissions and an
increase of $191,000 in restricted cash. Cash used in financing
activities included $200,000 of mortgage principal payments and
$67,000 in distributions to the partners. The Property is
approximately 86% leased as of June 30, 2002 as compared to 97% at
June 30, 2001. At June 30, 2002, the Registrant had $2,131,000 in
cash and cash equivalents, of which approximately $1,501,000 was
invested primarily in money market mutual funds.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the
level of capital expenditures required at the Property to
adequately maintain the physical assets and the other operating
needs of the Operating Company. Such assets are currently thought
to be sufficient for any near-term and long-term needs of the
Operating Company. As of June 2002, the partnership made $67,000
in distributions to the partners.
The Registrant was not directly affected by the events of the
September 11th terrorist attacks, however, the attacks have had a
negative effect on the economy which was already considered to be
in a recession. The Registrant could be affected by declining
economic conditions as a result of various factors that affect the
real estate business including the financial condition of tenants,
competition, and increased operating costs, including insurance
costs.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Liquidity and Capital Resources (Continued)
At this time, it appears that the original investment objective of
capital growth from the inception of the Registrant will not be
attained and that the limited partners will not receive a complete
return of their invested capital. The extent to which invested
capital is refunded to the limited partners is dependent upon the
performance of the Property and the market in which it is located.
Recently Issued Accounting Standards
In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets". SFAS No. 142 addresses accounting and
reporting for intangible assets acquired, except for those
acquired in a business combination. SFAS No. 142 presumes that
goodwill and certain intangible assets have indefinite useful
lives. Accordingly, goodwill and certain intangibles will not be
amortized but rather will be tested at least annually for
impairment. SFAS No. 142 also addresses accounting and reporting
for goodwill and other intangible assets subsequent to their
acquisition. SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001. This statement will not effect the
Partnership's financial statements.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses
financial accounting and reporting for the impairment or disposal
of long-lived assets. This statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" and the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results
of Operations -Reporting the Effects of a Disposal of a Business
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business. This
statement also amends ARB No. 51, "Consolidated Financial
Statements," to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. SFAS No.
144 is effective for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years. The
provisions of this Statement generally are to be applied
prospectively. This statement will not have a material effect on
the Partnership's liquidity, financial position or results of
operations.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Recently Issued Accounting Standards (Continued)
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13
and Technical Corrections," which updates, clarifies and
simplifies existing accounting pronouncements. This statement
rescinds SFAS No. 4, "Reporting Gains and Losses from
Extinguishment of Debt an amendment of Accounting Principles Board
Opinion ("APB") No. 30 "Reporting the Results of Operations -
Reporting the Effects of a Disposal of a Business and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business. As a
result, the criteria in APB 30 will be used to classify those
gains and losses. FASB No. 64, "Extinguishments of Debts Made to
Satisfy Sinking-Fund Requirements (an amendment of FASB No. 4)"is
no longer necessary because FASB No. 4 has been rescinded. FASB
No. 44, "Accounting for Intangible Assets of Motor Carriers" is no
longer necessary since the transition to the Motor Carrier Act of
1980 has been completed. FASB No. 145 amends FASB No. 13,
"Accounting for Leases" to require that certain lease
modifications that have economic effects similar to sale-leaseback
transactions be accounted for in the same manner as sale-leaseback
transactions. FASB No. 145 also makes technical corrections to
existing pronouncements. While these corrections are not
substantive in nature, in some instances, they may change
accounting practice. FASB No. 145 will be effective for fiscal
years beginning after May 15, 2002, with early adoption
encouraged. Upon adoption, enterprises must reclassify prior
period items that do not meet the extraordinary item
classification criteria in APB 30. The Partnership does not expect
that this statement will have a material effect on the
Partnership's financial statements.
Results of Operations
Operating results, before non-operating income (expense) declined
by $33,000 for the six months ended June 30, 2002, as compared to
2001, due to an increase in expenses of $185,000 which was
partially offset by an increase in revenue of $152,000. Operating
results, before non-operating income (expense) declined by
$201,000 for the three months ended June 30, 2002, as compared to
2001.
Revenue increased by $152,000 for the six months ended June 30,
2002, as compared to 2001, due to increased in rental income of
$254,000, which was partially offset by a decrease in other income
of $102,000. Rental income increased due to an increase in rental
rates which was partially offset by a decrease in occupancy.
Expenses increased by $185,000 for the six months ended June 30,
2002, as compared to 2001, primarily due to increases in real
estate taxes ($52,000), repairs and maintenance ($122,000),
operating expenses ($60,000), insurance ($36,000) and management
and other fees ($29,000). These increases were partially offset by
a decrease in depreciation ($111,000).
Interest income declined due to a decline in interest rates.
Interest expense decreased by $26,000 due to a decrease in the
outstanding balance of the loan. All other income and expense
items, including the garage operation, remained relatively
constant.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Quantitative and Qualitative Disclosures of Market Risk
The Registrant does not have any financial instruments that would
expose it to market risk associated with the risk of loss arising
from adverse changes in market rates and prices. The Registrant's
mortgage note payable at June 30, 2002 is at a fixed rate of
interest.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
June 30, 2002.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 2002
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.
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
BY: WINTHROP FINANCIAL ASSOCIATES, A LIMITED PARTNERSHIP
MANAGING GENERAL PARTNER
BY: /s/ Michael L. Ashner
---------------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas Staples
---------------------------------
Thomas Staples
Chief Financial Officer
DATED: August 14, 2002
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