-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G/2I+5eh5jQqT9vEgLI9uXERhN7Y+jysu0SrXKdYXbfIaWjHOsrD/O8aGTvv/daZ 5XvyC9vCmo8262CWmF38QA== 0000757642-99-000004.txt : 19990518 0000757642-99-000004.hdr.sgml : 19990518 ACCESSION NUMBER: 0000757642-99-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIF CENTRAL INDEX KEY: 0000757642 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942969720 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15756 FILM NUMBER: 99626736 BUSINESS ADDRESS: STREET 1: 155 BOVET RD STREET 2: STE 100 CITY: SAN METEO STATE: CA ZIP: 94402 BUSINESS PHONE: 4155135200 MAIL ADDRESS: STREET 1: PO BOX 130 CITY: CARBONDALE STATE: CO ZIP: 81623 FORMER COMPANY: FORMER CONFORMED NAME: LANDSING INCOME FUND DATE OF NAME CHANGE: 19900827 FORMER COMPANY: FORMER CONFORMED NAME: LANDSING REALTY PARTNERS III DATE OF NAME CHANGE: 19850617 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1999 Commission File Number: 2-94509 LIF (Exact name of registrant as specified in its governing instruments) California 94-2969720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) P. O. Box 130, Carbondale, Colorado 81623 (Address of principal executive offices) (970) 963-8007 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: [X] No: [ ] PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LIF CONSOLIDATED BALANCE SHEETS, MARCH 31, 1999 AND DECEMBER 31, 1998 (Unaudited) (Dollars in thousands)
March 31, December 31, 1999 1998 ASSETS INVESTMENTS IN REAL ESTATE: Rental properties $ 1,959 $ 10,370 Accumulated depreciation (230) (2,958) Rental properties - net 1,729 7,412 CASH AND CASH EQUIVALENTS (including Interest bearing deposits of $4200 in 1999 and $263 in 1998) 4,221 566 OTHER ASSETS: Accounts receivable-net 67 84 Prepaid expenses and deposits 2 23 Deferred organization costs and loan costs (net of accumulated amortization of $148 in 1999 and $242 in 1998) 28 72 Notes receivable 1,801 1,793 Total other assets 1,898 1,972 TOTAL $ 7,848 $ 9,950 LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Notes payable $ 3,257 $ 8,470 Accounts payable 4 24 Liability for future improvement 74 83 Deferred gain on sale of real estate 0 0 Other liabilities 25 267 Total liabilities 3,360 8,844 PARTNERS' EQUITY Limited Partners 4,663 1,281 General Partners (175) (175) TOTAL $ 7,848 $ 9,950 Equity Units Authorized - Limited Partners 12,820 12,820 - General Partners 0 0 Equity Units Outstanding - Limited Partners 12,820 12,820 - General Partners 0 0 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited) (In thousands except per share amounts)
1999 1998 REVENUE: Rental $ 266 $ 429 Interest 16 6 Gain on sale 3,365 0 Total revenue 3,647 435 EXPENSE: Interest 67 150 Operating 118 157 Depreciation and amortization 22 95 General and administrative 58 48 Total expense 265 450 NET INCOME (LOSS) $3,382 $ (15) Net income (loss) - Limited Partners 3,382 (15) Net income (loss) - General Partners 0 0 NET INCOME (LOSS) PER PARTNERSHIP UNIT: Limited Partners 264 (1) General Partners 0 0 264 (1) The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND THE YEAR ENDED DECEMBER 31, 1998 (Unaudited)(Dollars in thousands)
..LIMITED PARTNERS.. NUMBER OF GENERAL TOTAL PARTNERSHIP PARTNER PARTNERS' UNITS AMOUNT AMOUNT DEFICIT BALANCE, JANUARY 1, 1998 12,820 $1,632 $ (153) $1,479 Net Loss - 1998 (159) 0 (159) DISTRIBUTION (192) (22) (214) BALANCE, DECEMBER 31, 1998 12,820 $1,281 $ (175) $1,106 Net loss 3,382 0 3,382 BALANCE, MARCH 31, 1999 12,820 $4,663 $ (175) $4,488 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited) (Dollars in thousands)
1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $3,382 $ (15) Gain on sale of property (3,365) 0 Adjustments to reconcile net increase to net cash provided by operating activities: Depreciation and amortization 16 95 Change in operating assets and liabilities: Increase (decrease) in other liabilities (245) (34) Increase in accounts payable (19) 10 Increase in accounts receivable 18 (46) Decrease in deferred expenses 44 0 Increase in prepaid expenses 20 (33) Estimated cost to complete (8) 0 Net cash used in operating activities (157) (23) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures 0 (19) Sale of investment property-net 9,031 0 Increase in notes receivable (7) 0 Net cash provided (used) in investing activities 9,024 (19) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Financing 0 0 Payment on notes payable (5,212) (42) Net (distribution) contribution 0 (192) Net cash used by financing activities (5,212) (234) Increase (decrease) in cash and cash equivalents 3,655 (276) Cash and cash equivalents at beginning of period 566 570 Cash and cash equivalents at end of period $4,221 $ 294 The accompanying notes are an integral part of the consolidated financial statements.
LIF FINANCIAL NOTES (Dollars in thousands) The accompanying unaudited financial statements should be read in conjunction with the Partnership's 1998 Annual Report. These statements have been prepared in accordance with the instructions to the Securities and Exchange Commission form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the general partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three months ended March 31, 1999 and 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. Organization - LIF (the "Partnership") is a limited partnership organized under the laws of the state of California for the purpose of investing in income properties and making short-term loan and capital contributions to operating entities formed to acquire or develop and operate one or more income producing real properties. The General Partner is Partners '85 (the "General Partner"), a California limited partnership, whose General Partner is Landsing Equities Corporation. LIF was formed in June 1984, and shall continue until December 31, 2034, unless sooner terminated. Investment In Real Estate Partnership - At December 31, 1998 and 1997, the Partnership was invested in Landsing Private Fund ("P-21"), a 99%-owned real estate partnership. In 1997, Cattle Creek Development Partners (CCDP) was liquidated into the Partnership. CCDP was originally formed in 1994. During 1996, the Partnership invested into 95% of a new entity - Alpine Center Partners ("ACP"). ACP acquired rental real estate in Colorado in 1996. The real estate was sold in 1997 and 1998. Consolidation of Investment in Real Estate Partnerships - For financial reporting purposes, the Partnership consolidates the operations of it's investment in real estate partnerships with that of the Partnership. All significant intercompany transactions, including notes payable/receivable and short-term loans/receivables, and balances have been eliminated. Rental Property - Rental property is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives ranging from five to forty years. Major additions and betterments are capitalized at cost, while maintenance and repairs which do not improve or extend the life of the respective assets are expensed currently. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any gain or loss on disposal is included in the results of operations. Deferred Loan Costs - Loan fees are deferred and amortized over the life of the related note payable. Cash and Cash Equivalents - The Partnership considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Short-Term Investments - The Partnership invests in short-term federally insured certificates of deposits which mature on a date in excess of three months from the date of purchase. The cost of these investments approximate market value. Income Taxes - No provision for federal or state income taxes has been made in the consolidated financial statements because these taxes are the obligation of the partners. Net Income (Loss) Per Partnership Unit - Net Income (Loss) per partnership unit is based on weighted average units outstanding of 12,820 in 1999 and 1998, after giving effect to net income (loss) allocated to the General Partner. Cash distributions of $15 per unit were paid to limited partnership unit holders in 1998. A distribution has been declared to unit holders of record as of February 28, 1999 in the amount of $250 per unit. Concentrations of Credit Risk - The Partnership's financial instruments that are exposed to concentrations of credit risk consist primarily of its cash and cash equivalents, and note receivables. The Partnership's cash and cash equivalents are maintained in various accounts in FDIC insured institutions. This investment policy limits the Partnership's exposure to concentrations of credit risk. The note receivables outstanding are held by two related parties (see note 4). Due to the related party nature of the receivables and the intention of the related parties to obtain permanent financing from a bank within the next six months, credit risk is considered minimal. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Impairment of Long-Lived Assets - The Partnership adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of" during 1996. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During 1999 and 1998, the Partnership determined that no impairment loss need be recognized for applicable assets of continuing operations. Accounting Pronouncements - In June 1996, the Financial Accounting Standards Board issued Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities" (SFAS No.125). This Statement is effective for transactions occurring after December 31, 1996. However, transactions such as securities lending, repurchase agreements, dollar rolls, and similar secured financing arrangements are not subject to the provisions of SFAS No. 125 until January 1, 1998. The standard provides that, following a transfer of financial assets, an entity is to recognize the financial and servicing assets it controls and the liabilities it has incurred, derecognize financial assets when control has been surrendered and derecognize liabilities when extinguished. The adoption of SFAS No. 125 had no impact on the Partnership's consolidated financial statements. The impact of the delayed provisions is also not expected to be material. Effective January 1, 1998, the Partnership adopted SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial condition. However, the Partnership had no items of comprehensive income at March 31, 1999. Effective January 1, 1998, the Partnership adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." However, the Partnership does not have any reportable segments at March 31, 1999. Year 2000 - The Partnership is aware of the Year 2000 conversion issue. It is management's assertion that the current accounting system utilized by the Partnership has the capability to accommodate the Year 2000 issue. Management has also considered outside parties the Partnership conducts business with. It is their belief that these outside parties are already Year 2000 compliant or will be by mid-1999. Management does not believe there will be a significant impact on the Partnership's operations. Fair Value of Financial Instruments - The fair value of certain financial assets carried at cost, including cash and cash equivalents and accounts receivable, are considered to approximate their respective fair value. The fair value of accrued liabilities is considered to approximate their respective book values due to their short-term nature. The valuation of notes receivables and notes payable with floating rates is estimated to be the same as carrying value. Fair value of notes payable with fixed rates is estimated based on quoted market prices for similar issues. At March 31, 1999 and December 31, 1998, fair value of notes payable approximate carrying value. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Partnership was organized to acquire real properties, including commercial, residential and agricultural properties, located primarily within the western portion of the United States, and to make short-term loans and capital contributions to other limited partnerships formed to acquire or develop and operate one or more income-producing real properties. The Partnership currently has a 99% investment in Landsing Private Fund-21 ("P-21") which sold its one multi-family rental property on February 28, 1999. The Partnership currently owns a 95% investment in Alpine Center Partners ("ACP") which does not own any real property. The partnership also owns two retail rental properties, which were formerly owned by CCDP. For financial reporting purposes the Partnership's investments are presented on a consolidated basis. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1999, the Partnership's consolidated cash balance totaled $4,221,000. Cash not required for current operations is placed in federally insured financial instruments, certificates of deposit, and money market funds which can be liquidated as needed. It is the Partnership's intention to maintain adequate cash reserves for its operations. During the first quarter of 1999, the Partnership experienced a net increase in cash and cash equivalents of $3,655,000. As of March 31, 1999, cash and cash equivalents totaled $4,221,000 versus $294,000 at December 31, 1998. On June 3, 1996, the Partnership made a Short-Term Loan in the principal amount of $550,000 to Alpine Center Partners, a Colorado limited partnership ("ACP"). ACP was organized to acquire one commercial property located in Carbondale, Colorado. The Partnership also made a capital contribution to ACP in the amount of $10,000 and became a Co-General Partner of ACP. On September 30, 1997, the Partnership's investment in ACP sold 40.20% of the Alpine Center Building to Gary K. Barr (GKB). GKB is the president of the General Partner of LIF. This sale resulted in cash to ACP of $370,000. On September 30, 1997, ACP also sold 45.90% of the Alpine Center Building to Open World Investors (OWI), of which Gary K. Barr is a General Partner. This sale generated cash to ACP of $420,000. ACP deferred a gain on sale from these two transactions of $69,000. ACP provided seller financing to GKB and OWI in the amounts of $864,300 and $986,850 respectively. The partnership's investment in ACP owned 1.96% of the Alpine Center Building on December 31, 1997. ACP reduced its short-term note payable to LIF by $358,000. The balance of the note payable at December 31, 1997 was $227,000, which was purchased by Gary K. Barr in 1998. ACP's share of the note payable was eliminated in the consolidation of the Partnership's financial statements. For financial reporting purposes, results of operations for P21 and ACP have been shown on a consolidated basis. RESULTS OF OPERATIONS Rental revenues were $266,000 for the quarter ended March 31, 1999, a decrease of $163,000 compared to the first quarter of 1998. The decline in rental revenues in 1999 versus 1998 was the result of the sale of the Whistler Point Apartment Building and a reduction in rent for 701 Cooper over the same period last year. Operating expenses were $118,000 for the quarter ended March 31, 1999, a decrease of $39,000 compared to the first quarter of 1998, which was the result of the sale of the Whistler Point Apartment Building. Net operating income of properties (rental revenue less operating expenses) was $148,000 in 1999, a decrease of $124,000 from 1998. Management believes net operating income is the best indication of the properties' performance. Interest income increased from $6,000 in 1998 to $16,000 in 1999. The increase was due to the sale of Whistler Point Apartment Building in February, 1999 with the proceeds in short-term investments until distribution to unit holders. On February 26, 1999, the Partnership sold the Whistler Point Apartments for a cash sales price of $9,600 to an unrealted third party. As part of this sale, debt of $5,207 was retired and a gain of approximately $3,365 was recognized. Interest expense decreased by $83,000 for the first quarter 1999, compared to the first quarter 1998, due to the sale of Whistler Point Apartment Building and the repayment of the associated debt. Interest income and interest expense on loans by and between LIF and its investments were eliminated in the consolidation of the Company's financial statements. Entity level general and administrative expenses, exclusive of that at the property level, increased $11,000 in 1999 compared to 1998. Portfolio management fees remained unchanged, due to activity associated with the sale of Whistler Point Apartments. OCCUPANCY Occupancy at the two Partnership's properties remain stable during the first quarter 1999. Occupancy at Valley View was 79.4% at the end of the first quarter 1999. 701 Cooper remained vacant. Both properties are for sale. 701 Cooper is not being actively marketed to lease to tenants to allow owner/user prospects to participant in the sale process. DISTRIBUTIONS In March 1998, the Partnership paid a cash distribution of $15 per unit to unit holders of record on February 28, 1998. A distribution of $250 per unit was declared to unit holders of record as of February 28, 1999. This distribution will be paid in June, 1999. INFLATION The effect of inflation on the Partnership's operations have been no greater than the effect on the economy as a whole. Because of competitive conditions, market rate rents may increase or decrease disproportionately with inflation while property operating costs continue to follow inflationary trends. Inflationary conditions are not expected to have a major impact on the Partnership during 1999. PART II. OTHER INFORMATION All items in Part II have been omitted since they are inapplicable or the answer is negative. 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. L I F Date: May 15, 1999 /s/ Gary K. Barr Gary K. Barr, President & Director Landsing Equities Corporation Managing Partner of the General Partner, Partners '85 EX-27 2 ART. 5 FDS MAR-31-99
5 1000 3-MOS DEC-31-1999 MAR-31-1999 4,221 0 67 0 0 2 1,959 (230) 7,848 29 0 0 0 0 4,488 7,848 0 282 0 0 198 0 67 0 0 0 0 3,365 0 3,382 0 0
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