-----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, By9nd2KYh4qQBuxe8/Q0NYTrcbzEv9POQbz8I1RFd24lxX9ud1jiEQM5JlqQ3XnU aAuOGYy7jBDHENGATDo4Bg== 0000310303-99-000002.txt : 19990402 0000310303-99-000002.hdr.sgml : 19990402 ACCESSION NUMBER: 0000310303-99-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PENSION INCOME FUND XXIV CENTRAL INDEX KEY: 0000780590 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942984976 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15710 FILM NUMBER: 99580074 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 BELLAIRE ST 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10-K 1 FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-15710 CENTURY PENSION INCOME FUND XXIV California 94-2984976 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip code) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Exchange Act: Individual Investor Units and Pension Investor Notes (Title of each class) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K X State issuers revenues for its most recent fiscal year. $4,765,000. State the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing. No market exists for the limited partnership interests of the Registrant, and therefore, no aggregate market value can be determined. Market value information for Registrant's Partnership Interests is not available. DOCUMENTS INCORPORATED BY REFERENCE NONE PART I ITEM 1. DESCRIPTION OF BUSINESS Century Pension Income Fund XXIV (the "Partnership" or "Registrant") was organized in June 1984 as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Partners VI, a California general partnership, is the general partner of the Registrant. Fox Capital Management Corporation (the "Managing General Partner") and Fox Realty Investors ("FRI") are the general partners of Fox Partners VI. The managing general partner of FRI is NPI Equity Investments II, Inc. ("NPI Equity II"). The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly-traded real estate investment trust. The Partnership's Agreement provides that the Partnership is to terminate on December 31, 2020, unless terminated prior to such date. The principal business of the Registrant is to operate, manage and ultimately sell income producing real properties. Beginning in July 1986, the Registrant offered $50,000,000 in Limited Partnership Assignee Units. The offering was completed on March 31, 1988, with 73,341 Limited Partnership Assignee Units having an initial price of $36,670,500 being sold. The net proceeds of this offering were used to acquire three properties and interests in four other properties through two joint ventures with an affiliated partnership. In September 1998, the three properties directly owned by the Partnership were sold. The Partnership's joint venture partner, an affiliated partnership, is currently marketing the joint venture properties for sale. See "Item 2. Properties" below for a description of the Registrant's investment in joint ventures. A further description of the Partnership's business is included in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Form 10-K. The Registrant has no employees. Management and administrative services are performed by the Managing General Partner, and by agents retained by the general partners. Until September 1, 1998 (date of property sales), property management services were performed at the Partnership's properties by an affiliate of the Managing General Partner. From March 1988 through December 1993, the Registrant's affairs were managed by Metric Management, Inc. ("MMI") or a predecessor. On December 16, 1993, the services agreement with MMI was modified and, as a result thereof, the Managing General Partner began directly providing real estate advisory and asset management services to the Registrant. As advisor, such affiliate provides all partnership accounting and administrative services, investment management, and supervisory services over property management and leasing. Both the income and expenses of operating the properties which are owned by the Registrant are subject to factors beyond the Registrant's control, such as oversupply of similar rental facilities as a result of overbuilding, increases in unemployment or population shifts, changes in zoning laws or changes in patterns of needs of the users. Expenses, such as local real estate taxes and management expenses, are subject to change and cannot always be reflected in rental increases due to market conditions or existing leases. The profitability and marketability of developed real property may be adversely affected by changes in general and local economic conditions and in prevailing interest rates, and favorable changes in such factors will not necessarily enhance the profitability or marketability of such property. Even under the most favorable market conditions there is no guarantee that any property owned by the Registrant can be sold by it or, if sold, that such sale can be made upon favorable terms. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Managing General Partner is unable to predict the extent, if any, to which such existing or new legislation or regulations might adversely affect the properties owned by the Registrant. The Registrant monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed, which resulted in no material adverse conditions or liabilities. In no case has the Registrant received notice that it is a potentially responsible party with respect to an environmental clean up site. The real estate business in which the Partnership is engaged is highly competitive. There are other commercial properties within the market area of the Partnership's properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the Managing General Partner in such market area could have a material effect on the rental market for commercial properties owned by the Registrant and the rents that may be charged for such properties. In addition, various limited partnerships have been formed by the Managing General Partner and/or affiliates to engage in business which may be competitive with the Partnership. Transfer of Control On December 6, 1993, the shareholders of the Managing General Partner entered into a Voting Trust Agreement with NPI Equity II pursuant to which NPI Equity II was granted the right to vote 100% of the outstanding stock of the Managing General Partner. In addition, NPI Equity II became the managing partner of FRI. As a result, NPI Equity II indirectly became responsible for the operation and management of the business and affairs of the Registrant and the other investment partnerships originally sponsored by the Managing General Partner and/or FRI. The individuals who had served previously as partners of FRI and as officers and directors of the Managing General Partner contributed their general partnership interests in FRI to a newly formed limited partnership, Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited partnership interests in PRA. The shareholders of the Managing General Partner and the prior partners of FRI, in their capacity as limited partners of PRA, continue to hold, indirectly, certain economic interests in the Registrant and such other investment limited partnerships, but have ceased to be responsible for the operation and management of the Registrant and such other partnerships. On January 19, 1996, IFGP Corporation, an affiliate of Insignia Financial Group, Inc. ("Insignia"), acquired all of the issued and outstanding shares of capital stock of National Property Investors, Inc. ("NPI"). At the time, NPI was the sole shareholder of NPI Equity II. In addition, on June 1996, an affiliate of Insignia purchased all of the issued and outstanding shares of capital stock of the Managing General Partner. Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership interest in the Managing General Partner. The Managing General Partner does not believe that this transaction will have a material effect on the affairs and operations of the Partnership. Property Sales In September 1998, the Partnership sold its three investment properties, Butler Square Shopping Center, Kenilworth Commons Shopping Center, and Plantation Pointe Shopping Center to an unaffiliated party. The Partnership's net proceeds were approximately $16,651,000 after payment of closing costs. The Partnership realized a gain of approximately $3,381,000 on the sale during the third quarter of 1998. Segments Segment data for the years ended December 31, 1998, 1997 and 1996 is included in "Item 8. Financial Statements and Supplementary Data - Note I" and is an integral part of the Form 10-K. ITEM 2. PROPERTIES The Partnership owns a 33 1/3% interest in a joint venture, Coral Palm Plaza Joint Venture, with Century Pension Income Fund XXIII ("CPF XXIII"), an affiliated partnership. The joint venture owns one property, Coral Palm Plaza, located in Coral Springs, Florida, which is currently being marketed for sale. For additional information relating to Coral Palm Plaza Joint Venture and its property see "Exhibit 99.1" attached hereto. The Partnership also owns a 32% interest in a joint venture, Minneapolis Business Parks Joint Venture, with CPF XXIII. The joint venture owns three properties, Alpha Business Center, Plymouth Service Center and Westpoint Business Center, all of which are located in Minnesota, and are also being marketed for sale. For additional information relating to Minneapolis Business Park's Joint Venture and its properties see "Exhibit 99.2" attached hereto. ITEM 3. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and entities which were, at the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard during February 1999. No ruling on such demurrers has been received. The Managing General Partner does not anticipate that costs associated with this case, if any, will be material to the Partnership's overall operations. On July 30, 1998, certain entities claiming to own limited partnership interests in certain limited partnerships whose general partners were, at the time, affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et. al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the State of California, County of Los Angeles. The action involves 44 real estate limited partnerships (including the Partnership) in which the plaintiffs allegedly own interests and which Insignia Affiliates allegedly manage or control (the "Subject Partnerships"). This case was settled on March 3, 1999. The Partnership is responsible for a portion of the settlement costs. The expense will not have a material effect on the Partnership's net income. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS During the quarter ended December 31, 1998, no matter was submitted to a vote of unit holders through the solicitation of proxies or otherwise. PART II ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS The Partnership, a publicly-held limited partnership, sold 73,341 Limited Partnership Assignee Units aggregating $36,670,500. The Partnership currently has 73,341 units outstanding held by 3,680 partners of record. There is no intention to sell additional Limited Partnership Assignee Units nor is there an established market for these units. During the years ended December 31, 1998, 1997 and 1996, distributions of approximately $16,111,000 ($217.48 per limited partnership assignee unit), $1,111,000 ($15.00 per limited partnership assignee unit) and $1,111,000 ($15.00 per limited partnership assignee unit) were paid respectively. Distributions in 1998 consisted of $15,000,000 ($202.48 per limited partnership unit) from proceeds from the sale of three commercial properties and approximately $1,111,000 ($15.00 per limited partnership unit) from operations. Additionally, all distributions in 1997 and 1996 were paid from operations. ITEM 6. SELECTED FINANCIAL DATA The following represents selected financial data for the Registrant, for the years ended December 31, 1998, 1997, 1996, 1995, and 1994. The data should be read in conjunction with the financial statements included elsewhere herein. This data is not covered by the independent auditors' report. For the Years Ended December 31, 1998 1997 1996 1995 1994 (in thousands, except per unit data) Total revenues $ 4,765 $ 2,150 $ 2,250 $ 2,012 $ 1,767 Net income (loss) $ 3,976 $ 176 $ 986 $ 1,017 $ (871) Net income (loss) per limited partnership assignee unit(1) $ 52.02 $ 2.25 $ 13.30 $ 13.44 $(11.75) Total assets $11,576 $23,404 $24,333 $24,424 $24,566 Cash distributions per limited partnership assignee unit $217.48 $ 15.00 $ 15.00 $ 15.00 $ 15.00 (1) $500 original contribution per unit, based on weighted average units outstanding during the period after giving effect to the allocation of net income (loss) to the general partner. ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The matters discussed in this Form 10-K contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosure contained in this Form 10-K and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operation. 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 financial statements and other items contained elsewhere in this report. Results of Operations 1998 Compared to 1997 The Partnership's net income for the years ended December 31, 1998 and 1997 was approximately $3,976,000 and $176,000, respectively. (See "Note E" of the financial statements for a reconciliation of these amounts to the Partnership's federal taxable losses.) The increase in net income was due to an increase in total revenues and a decrease in total expenses. Revenues increased due to the gain realized on the sale of the Partnership's three investment properties and resulting decrease in total expenses. In September 1998, the Partnership sold three investment properties, Butler Square Shopping Center, Kenilworth Commons Shopping Center, and Plantation Pointe Shopping Center to an unaffiliated party. The Partnership's net proceeds were approximately $16,651,000, after payment of closing costs. The Partnership realized a gain of approximately $3,381,000 on the sale. Also contributing to the increase in net income was an increase in equity in income of both of the Partnership's unconsolidated joint ventures. The increase in equity income of the unconsolidated joint ventures are primarily attributable to the write down of Coral Palm in 1997 and increased rental revenues and decreased operating expenses. Expenses of the unconsolidated joint ventures decreased due to a decrease in major repairs and maintenance costs. Decreases in both operating and depreciation expenses primarily contributed to the decrease in total expenses. Operating expense decreased due to exterior painting projects at Alpha Business Center, Plymouth Service Center and Coral Palm Plaza in 1997, as well as a decrease in snow removal costs at the three Minneapolis properties. Depreciation expense decreased due to the sale of the related depreciable properties. General and administrative expense remained relatively constant for the comparable periods. Included in general and administrative expenses at December 31, 1998, 1997, and 1996 are management reimbursements to the Managing General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit and appraisals required by the Partnership Agreement are also included. 1997 Compared to 1996 The Partnership's net income for the year ended December 31, 1997 was approximately $176,000 versus approximately $986,000 for the year ended December 31, 1996. The decline in net income is attributable to decreases in equity in income of the unconsolidated 33.3% owned joint venture, Coral Palm Plaza, and in rental revenue. The decrease in equity in joint venture operations is the result of the write-down of the Coral Palm Plaza Joint Venture property during 1997. During the year ended December 31, 1997, the Joint Venture property lost two major tenants. Based on its evaluation of the condition of the property after the loss of the tenants, the General Partner concluded that a $2,067,000 write-down was needed to reduce the property to its estimated fair value. The decrease in rental revenue is primarily due to decreases in rental revenue at Butler Square and in tenant reimbursements at Plantation Pointe. Partially offsetting the above decreases was a decrease in total expenses due to a decrease in general and administrative expenses. The decrease in general and administrative expense is partially attributable to a decrease in reimbursements for services of affiliates related to the transition from the Atlanta, Georgia to the Greenville, South Carolina administrative office in 1996. Additionally, the transition of asset management responsibilities to the Greenville office contributed to increased reimbursements during 1996. Liquidity and Capital Resources At December 31, 1998, the Partnership had cash and cash equivalents of approximately $3,529,000 compared to approximately $1,889,000 at December 31, 1997. The increase in cash and cash equivalents is due to approximately $1,100,000 of cash provided by operating activities and approximately $16,651,000 of cash provided by investing activities, which was partially offset by approximately $16,111,000 of cash used in financing activities. Cash provided by investing activities consisted of sales proceeds received from the 1998 sale of the investment properties. Cash used in financing activities consisted of partner distributions. The Partnership invests its working capital reserves in money market accounts. At December 31, 1997, the Partnership had cash and cash equivalents of approximately $1,889,000 compared to approximately $1,929,000 at December 31, 1996. The decrease in cash and cash equivalents is due to approximately $1,078,000 of cash provided by operating activities offset by approximately $7,000 and $1,111,000 of cash used in investing and financing activities, respectively. Cash used in investing activities consisted of capital improvements. Cash used in financing activities consisted of distributions paid to partners. 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 properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. Due to sale of all properties, there is no 1999 budget for this Partnership. During the years ended December 31, 1998, 1997 and 1996, distributions of approximately $16,111,000, $1,111,000 and $1,111,000 were paid respectively. Distributions in 1998 consist of approximately $15,000,000 from proceeds from the sale of three commercial properties and approximately $1,111,000 of cash from operations. Additionally, all distributions in 1997 and 1996 were paid from operations. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Year 2000 Compliance General Description of the Year 2000 Issue and the Nature and Effects of the Year 2000 on Information Technology (IT) and Non-IT Systems The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. The Partnership is dependent upon the Managing General Partner and its affiliates for management and administrative services ("Managing Agent"). Any of the computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. Over the past two years, the Managing Agent has determined that it will be required to modify or replace significant portions of its software and certain hardware so that those systems will properly utilize dates beyond December 31, 1999. The Managing Agent presently believes that with modifications or replacements of existing software and certain hardware, the Year 2000 issue can be mitigated. However, if such modifications and replacements are not made or not completed in time, the Year 2000 issue could have a material impact on the operations of the Partnership. The Managing Agent's plan to resolve Year 2000 issues involves four Phases: assessment, remediation, testing, and implementation. To date, the Managing Agent has fully completed its assessment of all the information systems that could be significantly affected by the Year 2000, and has begun the remediation, testing and implementation phases on both hardware and software systems. Assessments are continuing in regards to embedded systems. The status of each is detailed below. Status of Progress in Becoming Year 2000 Compliant, Including Timetable for Completion of Each Remaining Phase Computer Hardware: During 1997 and 1998, the Managing Agent identified all of the computer systems at risk and formulated a plan to repair or replace each of the affected systems. In August 1998, the mainframe system used by the Managing Agent became fully functional. In addition to the mainframe, PC-based network servers and routers and desktop PCs were analyzed for compliance. The Managing Agent has begun to replace each of the non-compliant network connections and desktop PCs and, as of December 31, 1998, had completed approximately 75% of this effort. The total cost to the Managing Agent to replace the PC-based network servers, routers and desktop PCs is expected to be approximately $1.5 million of which $1.3 million has been incurred to date. The remaining network connections and desktop PCs are expected to be upgraded to Year 2000 compliant systems by March 31, 1999. Computer software: The Managing Agent utilizes a combination of off-the-shelf, commercially available software programs as well as custom-written programs that are designed to fit specific needs. Both of these types of programs were studied, and implementation plans written and executed with the intent of repairing or replacing any non-compliant software programs. During 1998, the Managing Agent began converting the existing property management and rent collection systems to its management properties Year 2000 compliant systems. The estimated additional costs to convert such systems at all properties, is $200,000, and the implementation and the testing process is expected to be completed by March 31, 1999. The final software area is the office software and server operating systems. The Managing Agent has upgraded all non-compliant office software systems on each PC and has upgraded 80% of the server operating systems. The remaining server operating systems are planned to be upgraded to be Year 2000 compliant by March 31, 1999. Operating Equipment: The Managing Agent has operating equipment, primarily at the property sites, which needed to be evaluated for Year 2000 compliance. In September 1997, the Managing Agent began taking a census and inventory of embedded systems (including those devices that use time to control systems and machines at specific properties, for example elevators, heating, ventilating, and air conditioning systems, security and alarm systems, etc.). The Managing Agent has chosen to focus its attention mainly upon security systems, elevators, heating, ventilating and air conditioning systems, telephone systems and switches, and sprinkler systems. While this area is the most difficult to fully research adequately, management has not yet found any major non-compliance issues that put the Managing Agent at risk financially or operationally. The Managing Agent intends to have a third-party conduct an audit of these systems and report their findings by March 31, 1999. Any of the above operating equipment that has been found to be non-compliant to date has been replaced or repaired. To date, these have consisted only of security systems and phone systems. As of December 31, 1998 the Managing Agent has evaluated approximately 86% of the operating equipment for the Year 2000 compliance. The total cost incurred for all properties managed by the Managing Agent as of December 31, 1998 to replace or repair the operating equipment was approximately $400,000. The Managing Agent estimates the cost to replace or repair any remaining operating equipment is approximately $325,000, which is expected to be completed by April 30, 1999. The Managing Agent continues to have "awareness campaigns" throughout the organization designed to raise awareness and report any possible compliance issues regarding operating equipment within our enterprise. Nature and Level of Importance of Third Parties and Their Exposure to the Year 2000 The Managing Agent continues to conduct surveys of its banking and other vendor relationships to assess risks regarding their Year 2000 readiness. The Managing Agent has banking relationships with three major financial institutions, all of which have indicated their compliance efforts will be complete before May 1999. The Managing Agent has updated data transmission standards with two of the three financial institutions. The Managing Agent's contingency plan in this regard is to move accounts from any institution that cannot be certified Year 2000 compliant by June 1, 1999. The Partnership does not rely heavily on any single vendor for goods and services, and does not have significant suppliers and subcontractors who share information systems (external agent). To date the Partnership is not aware of any external agent with a Year 2000 compliance issue that would materially impact the Partnership's results of operations, liquidity, or capital resources. However, the Partnership has no means of ensuring that external agents will be Year 2000 compliant. The Managing Agent does not believe that the inability of external agents to complete their Year 2000 remediation process in a timely manner will have a material impact on the financial position or results of operations of the Partnership. However, the effect of non-compliance by external agents is not readily determinable. Costs to Address Year 2000 The total cost of the Year 2000 project to the Managing Agent is estimated at $3.5 million and is being funded from operating cash flows. To date, the Managing Agent has incurred approximately $2.8 million ($0.6 million expensed and $2.2 million capitalized for new systems and equipment) related to all phases of the Year 2000 project. Of the total remaining project costs, approximately $0.5 million is attributable to the purchase of new software and operating equipment, which will be capitalized. The remaining $0.2 million relates to repair of hardware and software and will be expensed as incurred. The Partnership's portion of these costs are not material. Risks Associated with the Year 2000 The Managing Agent believes it has an effective program in place to resolve the Year 2000 issue in a timely manner. As noted above, the Managing Agent has not yet completed all necessary phases of the Year 2000 program. In the event that the Managing Agent does not complete any additional phases, certain worst case scenarios could occur. The worst case scenarios could include elevators, security and heating, ventilating and air conditioning systems that read incorrect dates and operate with incorrect schedules (e.g., elevators will operate on Monday as if it were Sunday). Although such a change would be annoying to residents, it is not business critical. In addition, disruptions in the economy generally resulting from Year 2000 issues could also adversely affect the Partnership. The Partnership could be subject to litigation for, among other things, computer system failures, equipment shutdowns or failure to properly date business records. The amount of potential liability and lost revenue cannot be reasonably estimated at this time. Contingency Plans Associated with the Year 2000 The Managing Agent has contingency plans for certain critical applications and is working on such plans for others. These contingency plans involve, among other actions, manual workarounds and selecting new relationships for such activities as banking relationships and elevator operating systems. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CENTURY PENSION INCOME FUND XXIV, List of Financial Statements Independent Auditors' Report Balance Sheets - December 31, 1998 and 1997 Statements of Operations - Years Ended December 31, 1998, 1997 and 1996 Statements of Changes in Partners' Capital - Years Ended December 31, 1998, 1997 and 1996 Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996 Notes to Financial Statements Independent Auditors' Report To the Partners Century Pension Income Fund XXIV, A California Limited Partnership Greenville, South Carolina We have audited the accompanying balance sheets of Century Pension Income Fund XXIV, A California Limited Partnership (the "Partnership") as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' capital and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Century Pension Income Fund XXIV, A California Limited Partnership, as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP Certified Public Accountants New York, N.Y. March 3, 1999 CENTURY PENSION INCOME FUND XXIV BALANCE SHEETS (in thousands, except unit data) December 31, 1998 1997 Assets Cash and cash equivalents $ 3,529 $ 1,889 Receivables and deposits -- 308 Other assets 186 181 Investments in unconsolidated joint ventures 7,861 7,429 Investment properties: Land -- 4,397 Buildings and related personal property -- 13,386 -- 17,783 Accumulated depreciation -- (4,186) -- 13,597 $ 11,576 $ 23,404 Liabilities and Partners' Capital Liabilities Accounts payable $ 3 $ 4 Tenant security deposit liabilities -- 34 Accrued property taxes -- 81 Due to general partner 176 -- Other liabilities 274 27 Partners' Capital General partner's -- -- Limited partners' (73,341 units issued and outstanding at December 31, 1998 and 1997) 11,123 23,258 11,123 23,258 $ 11,576 $ 23,404 See Accompanying Notes to Financial Statements CENTURY PENSION INCOME FUND XXIV STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1998 1997 1996 Revenues: Rental income $ 1,233 $2,044 $2,133 Other income 151 106 117 Gain on sale of investment properties 3,381 -- -- Total revenues 4,765 2,150 2,250 Expenses: Operating 235 400 392 General and administrative 556 516 656 Depreciation 322 482 478 Property taxes 108 161 161 Total expenses 1,221 1,559 1,687 Income before equity in income (loss) of unconsolidated joint ventures 3,544 591 563 Equity in income (loss) of unconsolidated joint ventures 432 (415) 423 Net income $ 3,976 $ 176 $ 986 Net income allocated to general partner $ 161 $ 11 $ 11 Net income allocated to limited partners 3,815 165 975 $ 3,976 $ 176 $ 986 Net income per limited partnership unit $ 52.02 $ 2.25 $13.30 Distribution per limited partnership unit $217.48 $15.00 $15.00 See Accompanying Notes to Financial Statements CENTURY PENSION INCOME FUND XXIV STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (in thousands, except unit data) Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 73,341 $ -- $ 36,671 $ 36,671 Partners' capital at December 31, 1995 73,341 $ -- $ 24,318 $ 24,318 Net income for the year ended December 31, 1996 -- 11 975 986 Distributions to partners -- (11) (1,100) (1,111) Partners' capital at December 31, 1996 73,341 -- 24,193 24,193 Net income for the year ended December 31, 1997 -- 11 165 176 Distributions to partners -- (11) (1,100) (1,111) Partners' capital at December 31, 1997 73,341 -- 23,258 23,258 Net income for the year ended December 31, 1998 -- 161 3,815 3,976 Distributions to partners -- (161) (15,950) (16,111) Partners' capital at December 31, 1998 73,341 $ -- $ 11,123 $ 11,123 See Accompanying Notes to Financial Statements CENTURY PENSION INCOME FUND XXIV STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1998 1997 1996 Cash flows from operating activities: Net income $ 3,976 $ 176 $ 986 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 322 482 478 Amortization of lease commissions 32 39 44 Gain on sale of investment properties (3,381) -- -- Equity in (income) loss of unconsolidated Joint ventures' operations (432) 415 (423) Change in accounts: Receivables and deposits 308 (10) (104) Other assets 6 (30) (88) Accounts payable (4) (9) 10 Tenant security deposit liabilities -- (9) (3) Accrued property taxes 26 15 25 Other liabilities 247 9 2 Net cash provided by operating activities 1,100 1,078 927 Cash flows from investing activities: Proceeds from sale of investment properties 16,651 -- -- Property improvements and replacements -- (7) (39) Contributions to unconsolidated joint ventures -- -- (38) Net cash provided by (used in) investing activities 16,651 (7) (77) Cash flows used in financing activities: Distributions paid to partners (16,111) (1,111) (1,111) Net increase (decrease) in cash and cash equivalents 1,640 (40) (261) Cash and cash equivalents at beginning of period 1,889 1,929 2,190 Cash and cash equivalents at end of period $ 3,529 $ 1,889 $ 1,929 Supplemental disclosure of non-cash transaction: Subordinated sales interest payable to general partner $ 176 $ -- $ -- See Accompanying Notes to Financial Statements Century Pension Income Fund XXIV Notes to Financial Statements December 31, 1998 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Century Pension Income Fund XXIV (the "Partnership") is a limited partnership organized in 1984 under the laws of the State of California to acquire, manage and ultimately sell income-producing real estate. The Partnership holds joint venture interests in a shopping center in Florida and in three business parks in Minnesota. The general partner is Fox Partners VI, a California general partnership, whose general partners are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a California corporation and Fox Realty Investors ("FRI"), a California general partnership. The managing general partner of FRI is NPI Equity Investments II, Inc. ("NPI Equity II"). Both NPI Equity II and FCMC are wholly-owned by Apartment Investment and Management Company, a publicly-traded real estate investment trust ("AIMCO"). The directors and officers of the Managing General Partner also serve as executive officers of AIMCO. The Partnership is to terminate on December 31, 2020, unless terminated prior to such date. Basis of Presentation: The Partnership's investments in unconsolidated joint ventures are accounted for under the equity method of accounting. Distributions: Cash distributions from operations were made at annualized rates of 3.0 percent of original capital contributions for each of the years 1998, 1997 and 1996. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks, money market funds and certificates of deposit with original maturities less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Leases: The Partnership leased certain commercial space to tenants under various lease terms. The leases were accounted for as operating leases in accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases". Some of the leases contained stated rental increases during their term. For leases with fixed rental increases, rents were recognized on a straight-line basis over the terms of the lease. Cash collections exceeded the straight-line basis of revenue recognition by approximately $9,000 during the year ended December 31, 1998. This straight-line basis recognized $25,000 and $39,000 more in rental income than was collected in 1997 and 1996, respectively. For all other leases, minimum rents were recognized over the terms of the leases. Fair Value of Financial Instruments: Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments approximates their fair value due to the short term maturity of these instruments. Depreciation: Depreciation was computed by the straight-line method over estimated useful lives ranging from thirty to thirty nine years for buildings and improvements and three to five years for furnishings. Deferred Leasing Commissions: Leasing commissions, which were included in other assets, are deferred and amortized over the lives of the related leases. At December 31, 1997, deferred leasing commissions totaled approximately $244,000 and accumulated amortization totaled approximately $92,000. Escrows for Taxes: All escrow funds were designated for the payment of real estate taxes and were held by the Partnership. These funds totaled approximately $114,000 at December 31, 1997 and are included in receivables and deposits. Net Income (Loss) Per Limited Partnership Assignee Unit: Net income (loss) per limited partnership assignee unit is computed by dividing the net income (loss) allocated to the unit holders by 73,341 units outstanding. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Net Income Allocation: In accordance with the Partnership Agreement, net income and taxable income have been allocated to the general partner in an amount equal to the amount of cash distributions received by the general partner. Segment Reporting: In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and Related Information" ("Statement 131"), which is effective for years beginning after December 15, 1997. Statement 131 established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers (see "Note I" for required disclosure). Reclassification: Certain reclassifications have been made to the 1997 and 1996 balances to conform to the 1998 presentation. NOTE B _ TRANSFER OF CONTROL On December 6, 1993, the shareholders of the Managing General Partner entered into a Voting Trust Agreement with NPI Equity II pursuant to which NPI Equity II was granted the right to vote 100% of the outstanding stock of the Managing General Partner. In addition, NPI Equity II became the managing partner of FRI. As a result, NPI Equity II indirectly became responsible for the operation and management of the business and affairs of the Registrant and the other investment partnerships originally sponsored by the Managing General Partner and/or FRI. The individuals who had served previously as partners of FRI and as officers and directors of the Managing General Partner contributed their general partnership interests in FRI to a newly formed limited partnership, Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited partnership interests in PRA. The shareholders of the Managing General Partner and the prior partners of FRI, in their capacity as limited partners of PRA, continue to hold, indirectly, certain economic interests in the Partnership and such other investment limited partnerships, but have ceased to be responsible for the operation and management of the Partnership and such other partnerships. On January 19, 1996, IFGP Corporation, an affiliate of Insignia Financial Group, Inc. ("Insignia"), acquired all of the issued and outstanding shares of capital stock of National Property Investors, Inc. ("NPI"). At the time, NPI was the sole shareholder of NPI Equity II. In addition, on June 1996, an affiliate of Insignia purchased all of the issued and outstanding shares of capital stock of the Managing General Partner. Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership interest in the Managing General Partner. The Managing General Partner does not believe that this transaction will have a material effect on the affairs and operations of the Partnership. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of the Managing General Partner were charged to expense in 1998, 1997 and 1996: For the Years Ended December 31, 1998 1997 1996 (in thousands) Partnership management fee (1) $123 $123 $123 Reimbursement for services of affiliates (2) 118 97 126 Subordinated sales interest (3) 176 -- -- (1) The Partnership Agreement provides for the payment of a Partnership management fee to the general partner equal to ten percent of cash available for distribution. This management fee is intended to defray some of the expenses related to services provided by the general partner, or an affiliate, but not reimbursed by the Partnership. (2) Included in "reimbursements for services of affiliates" for the year ended December 31, 1997, is approximately $1,000 in reimbursements for construction oversight costs. There were no reimbursements of this nature for the years ended December 31, 1998 and 1996. (3) The Partnership Agreement provides for the payment of a subordinated sales interest to the general partner not to exceed the lesser of (i) three percent of the gross sales price of a property or (ii) one-half of the competitive real estate commission, as defined in the Partnership Agreement. The general partner was entitled to this fee in connection with the sale of the Partnership's three investment properties during 1998. Payment cannot be made until the Limited Partners receive their original invested capital plus a 6% per annum return. Once the limited partners have received their priority return and return of their original investment, the subordinated sales interest can be paid. The Partnership has recognized a deferred asset until the fee becomes payable. For the period of January 19, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Managing General Partner with an insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner who received payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. The general partner received cash distributions of approximately $161,000, $11,000 and $11,000, during each of the years ended December 31, 1998, 1997, and 1996, respectively. NOTE D - INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES The Partnership has investments in two unconsolidated joint ventures as follows: Coral Palm Plaza Joint Venture On January 23, 1987, the Partnership acquired a 33.33% ownership interest in Coral Palm Plaza Joint Venture ("Coral Palm"), a joint venture with Century Pension Income Fund XXIII, a California Limited Partnership ("CPIF XXIII") and an affiliate of FCMC and FRI. Also, on January 23, 1987, Coral Palm Plaza Joint Venture acquired the Coral Palm Plaza, a shopping center located in Coral Springs, Florida. The Partnership's interest in the Coral Palm Plaza Joint Venture is reported using the equity method of accounting. Summary financial information for Coral Palm Plaza Joint Venture is as follows (in thousands): December 31, 1998 1997 Total assets $ 5,049 $ 5,041 Total liabilities (223) (366) Total venture's equity $ 4,826 $ 4,675 Years ended December 31, 1998 1997 Total revenues $ 987 $ 739 Total expenses (836) (2,897) Net income (loss) $ 151 $(2,158) In 1996, the Partnership made contributions of approximately $38,000 to Coral Palm. In 1997, the property owned by Coral Palm with a carrying value of $6,029,000 was determined to be impaired and its value was written down by $2,067,000 to reflect its fair value at December 31, 1997 of $3,962,000. Minneapolis Business Parks Joint Venture On April 30, 1987, the Partnership acquired a 32% ownership interest in Minneapolis Business Parks Joint Venture, a joint venture with CPIF XXIII. On May 5, 1987, Minneapolis Business Parks Joint Venture acquired Alpha Business Center located in Bloomington, Minnesota; Plymouth Service Center located in Plymouth, Minnesota, and Westpoint Business Center located in Plymouth, Minnesota. The Partnership's interest in the Minneapolis Business Parks Joint Venture is reported using the equity method of accounting. Summary financial information for Minneapolis Business Parks Joint Venture is as follows (in thousands): December 31, 1998 1997 Total assets $19,874 $18,331 Total liabilities (539) (167) Total venture's equity $19,335 $18,164 Years ended December 31, 1998 1997 Total revenues $ 3,293 $ 3,190 Total expenses (2,122) (2,262) Net income $ 1,171 $ 928 NOTE E - RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING The differences between the accrual method of accounting for income tax reporting and the accrual method of accounting used in the financial statements are as follows (in thousands, except per unit data): 1998 1997 1996 Net income - financial statements $ 3,976 $ 176 $ 986 Differences resulted from: Depreciation 82 145 132 Equity in unconsolidated joint venture's operations 50 765 (16) Gain on sale (1,477) -- -- Other 25 14 (38) Net income - income tax method $ 2,656 $ 1,100 $ 1,064 Taxable income per limited partnership assignee unit after giving effect to the allocation to the general partner $ 34 $ 15 $ 14 Partner's equity - financial statements $11,123 $23,258 $24,193 Differences resulted from: Sales commissions 3,050 3,050 3,050 Organization expenses 2,452 2,452 2,452 Depreciation -- 1,106 961 Payments credited to rental properties -- 112 112 Equity in unconsolidated joint ventures' operations 4,349 4,299 3,534 Subordinated sales interest (176) -- -- Other (7) (31) (44) Partners' equity - income tax method $20,791 $34,246 $34,258 NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION Years Ended December 31, 1998 1997 1996 Real Estate: Balance at beginning of year $ 17,783 $ 17,776 $ 17,737 Property improvements and replacements -- 7 39 Disposition of properties (17,783) -- -- Balance at end of year $ -- $ 17,783 $ 17,776 Accumulated Depreciation: Balance at beginning of year $ 4,186 $ 3,704 $ 3,226 Additions charged to expense 322 482 478 Disposition of properties (4,508) -- -- Balance at end of year $ -- $ 4,186 $ 3,704 The aggregate cost of the investment properties for Federal income tax purposes at December 31, 1997 and 1996 is approximately $17,896,000 and $17,888,000, respectively. Accumulated depreciation for Federal income tax purposes at December 31, 1997 and 1996 is approximately $3,080,000 and $2,743,000, respectively. NOTE G - SALE OF INVESTMENT PROPERTY In September 1998, the Partnership sold its three investment properties, Butler Square Shopping Center, Kenilworth Commons Shopping Center, and Plantation Pointe Shopping Center to an unaffiliated party. The Partnership's net proceeds were approximately $16,651,000 after payment of closing costs. The Partnership realized a gain of approximately $3,381,000 on the sale during the third quarter of 1998. The sales transaction is summarized as follows: (in thousands) Cash proceeds received $ 16,651 Net real estate (1) (13,275) Other 5 Gain on sale of investment property $ 3,381 (1) Real estate at cost, net of accumulated depreciation of approximately $4,508,000. NOTE H _ DISTRIBUTIONS During the years ended December 31, 1998, 1997 and 1996, distributions of approximately $16,111,000, $1,111,000 and $1,111,000 were paid, respectively. Distributions in 1998 consisted of $15,000,000 ($202.48 per limited partnership unit) from sales proceeds from the sale of three commercial properties and approximately $1,111,000 ($15.00 per limited partnership unit) from operations. Additionally, all distributions in 1997 and 1996 were paid from operations. NOTE I _ SEGMENT INFORMATION Description of the types of products and services from which the reportable segment derives its revenues: As defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", the Partnership had one reportable segment: commercial properties. The commercial property segment consisted of three retail shopping centers located in three different states: South Carolina, North Carolina, and Georgia. All of the commercial properties were sold in September 1998. Measurement of segment profit or loss: The Partnership evaluates performance based on net income. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consists of investment properties that offer similar products and services. Although each of the investment properties is managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the years 1998, 1997, and 1996 is shown in the tables below (in thousands). The "Other" column includes partnership administration related items and income and expense not allocated to the reportable segment. 1998 Commercial Other Totals Rental income $ 1,233 $ -- $ 1,233 Other income 9 142 151 Depreciation 322 -- 322 General and administrative expense -- 556 556 Gain on disposal of assets 3,381 -- 3,381 Equity in income of joint venture -- 432 432 Segment profit 3,958 18 3,976 Total assets 186 11,390 11,576 Capital expenditures for investment properties -- -- -- 1997 Commercial Other Totals Rental income $ 2,044 $ -- $ 2,044 Other income 9 97 106 Depreciation 482 -- 482 General and administrative expense -- 516 516 Equity in loss of joint venture -- (415) (415) Segment profit (loss) 1,010 (834) 176 Total assets 14,102 9,302 23,404 Capital expenditures for investment properties 7 -- 7 1996 Commercial Other Totals Rental income $ 2,133 $ -- $ 2,133 Other income 16 101 117 Depreciation 478 -- 478 General and administrative expense -- 656 656 Equity in income of joint venture -- 423 423 Segment profit (loss) 1,118 (132) 986 Total assets 14,570 9,763 24,333 Capital expenditures for investment properties 39 -- 39 NOTE J _ LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and entities which were, at the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard during February 1999. No ruling on such demurrers has been received. The Managing General Partner does not anticipate that costs associated with this case, if any, will be material to the Partnership's overall operations. On July 30, 1998, certain entities claiming to own limited partnership interests in certain limited partnerships whose general partners were, at the time, affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et. al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the State of California, County of Los Angeles. The action involves 44 real estate limited partnerships (including the Partnership) in which the plaintiffs allegedly own interests and which Insignia Affiliates allegedly manage or control (the "Subject Partnerships"). This case was settled on March 3, 1999. The Partnership is responsible for a portion of the settlement costs. The expense will not have a material effect on the Partnership's net income. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Neither Century Pension Income Fund XXIV (the "Partnership" or "Registrant") nor Fox Partners VI ("Fox"), the general partner of the Registrant, has any officers or directors. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), the managing general partner of Fox, manages and controls substantially all of the Registrant's affairs and has general responsibility and ultimate authority in all matters affecting its business. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"). The names and ages of, as well as the positions held by the executive officers and directors of FCMC are set forth below. No family relationships exist among any of the officers or directors of FCMC. Name Age Position Patrick J. Foye 41 Executive Vice President and Director Timothy R. Garrick 42 Vice President - Accounting and Director Patrick J. Foye has been Executive Vice President and Director of the Managing General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and serves as a member of the New York State Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham University Law School. Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice President-Accounting and Director of the Managing General Partner since October 1, 1998. Prior to that date, Mr. Garrick served as Vice President-Accounting Services of Insignia Financial Group since June of 1997. From 1992 until June of 1997, Mr. Garrick served as Vice President of Partnership Accounting and from 1990 to 1992 as an Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr. Garrick served in various capacities with U.S. Shelter Corporation. From 1979 to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick received his B.S. Degree from the University of South Carolina and is a Certified Public Accountant. ITEM 11. EXECUTIVE COMPENSATION The Registrant is not required to and did not pay any compensation to the officers or directors of the Managing General Partner. The Managing General Partner does not presently pay any compensation to any of its officers or directors. (See "Item 13, Certain Relationships and Related Transactions.") ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT There is no person known to the Registrant who owns beneficially or of record more than five percent of the voting securities of the Registrant as of December 31, 1998. Entity Number of Units Percentage Insignia Properties LP 2 0.003% (an affiliate of AIMCO) Their business address is 55 Beattie Place, Greenville, SC 29602. The Registrant is a limited partnership and has no officers or directors. The Managing General Partner, as managing general partner of Fox, has discretionary control over most of the decisions made by or for the Registrant in accordance with the terms of the Partnership Agreement. The directors and officers of the Managing General Partner and its affiliates, as a group do not own any of the Registrant's voting securities. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of the Managing General Partner were charged to expense in 1998, 1997 and 1996: For the Years Ended December 31, 1998 1997 1996 (in thousands) Partnership management fee (1) $123 $123 $123 Reimbursement for services of affiliates (2) 118 97 126 Subordinated sales interest (3) 176 -- -- (1) The Partnership Agreement provides for the payment of a partnership management fee to the General Partner equal to ten percent of cash available for distribution. This management fee is intended to defray some of the expenses related to services provided by the General Partner, or an affiliate, but not reimbursed by the Partnership. (2) Included in "reimbursements for services of affiliates" for the year ended December 31, 1997, is approximately $1,000 in reimbursements for construction oversight costs. There were no reimbursements of this nature for the years ended December 31, 1998 and 1996 (3) The Partnership Agreement provides for the payment of a subordinated sales interest to the general partner to not exceed the lesser of (i) three percent of the gross sales price of a property or (ii) one-half of the competitive real estate commission, as defined in the Partnership Agreement. The general partner is entitled to this fee in connection with the sale of the Partnership's three investment properties during 1998. Payment cannot be made until the Limited Partners receive their original invested capital plus a 6% per annum return. Once the limited partners have received their priority return and return of their original investment, the subordinated sales interest can be paid. The Partnership has recognized a deferred asset until the fee becomes payable. For the period of January 19, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Managing General Partner with an insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner who received payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. The general partner received cash distributions of approximately $161,000, $11,000 and $11,000 during each of the years ended December 31, 1998, 1997, and 1996. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1)(2) Financial Statements and Financial Statement Schedules: See "Item 8" of this Form 10-K for Financial Statements of the Registrant, Notes thereto, and Financial Statement Schedules. (A Table of Contents to Financial Statements and Financial Statement Schedules is included in "Item 8" and incorporated herein by reference.) (a)(3) Exhibits: 2 NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995, incorporated by reference to the Registrant's Current Report on Form 8-K dated August 17, 1995. 2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between AIMCO and IPT; incorporated by reference to Exhibit 2.1 of IPT's Current Report on Form 8-K dated October 1, 1998. 3.4 Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of the Registrant dated June 9, 1986 and thereafter supplemented included in the Registrant's Registration Statement on Form S-11 (Reg. No. 33-1261) 16. Letter dated April 27, 1994 from the Registrant's Former Independent Auditors incorporated by reference to the Registrant's Current Report on Form 8-K dated April 22, 1994. 27. Financial Data Schedule is filed as an Exhibit to this report. 99.1 Coral Palm Plaza Joint Venture and audited financial statements for the years ended December 31, 1998, 1997 and 1996. 99.2 Minneapolis Business Parks Joint Venture and audited financial statements for the years ended December 31, 1998, 1997 and 1996. (b) Reports on Form 8-K: Current Report on Form 8-K dated October 1, 1998 and filed on October 16, 1998 disclosing change in control of Registrant from Insignia Financial Group, Inc. to AIMCO. 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 this 19th day of March 1998. CENTURY PENSION INCOME FUND XXIV By: Fox Partners VI Its General Partner By: Fox Capital Management Corporation Its Managing General Partner By: /s/ Patrick J. Foye Patrick J. Foye Executive Vice President By:/s/Timothy R. Garrick Timothy R. Garrick Vice President _ Accounting Date: March 31, 1999 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the date indicated. /s/ Patrick J. Foye Executive Vice President Date: March 31, 1999 Patrick J. Foye and Director /s/ Timothy R. Garrick Vice President - Accounting Date: March 31, 1999 Timothy R. Garrick and Director EX-27 2
5 This schedule contains summary financial information extracted from Century Pension Income fund XXIV 1998 Year-end 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000780590 CENTURY PENSION INCOME FUND XXIV 1,000 12-MOS DEC-31-1998 DEC-31-1998 3,529 0 0 0 0 0 0 0 11,576 0 0 0 0 0 11,123 11,576 0 4,765 0 0 1,221 0 0 0 0 0 0 0 0 3,976 52.02 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-99.1 3 EXHIBIT 99.1 CORAL PALM PLAZA JOINT VENTURE FINANCIAL STATEMENTS DECEMBER 31, 1998, 1997 and 1996 Exhibit 99.1 (Continued) CORAL PALM PLAZA JOINT VENTURE List of Financial Statements Independent Auditors' Report Balance Sheets - December 31, 1998 and 1997 Statements of Operations - Years Ended December 31, 1998, 1997 and 1996 Statements of Changes in Partners' Capital - Years Ended December 31, 1998, 1997 and 1996 Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996 Notes to Financial Statements Exhibit 99.1 (Continued) CORAL PALM PLAZA JOINT VENTURE Independent Auditors' Report To the Partners Coral Palm Plaza Joint Venture Greenville, South Carolina We have audited the accompanying balance sheets of Coral Palm Plaza Joint Venture (the "Partnership") as of December 31, 1998 and 1997, and the related statements of operations, changes in partners capital and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coral Palm Plaza Joint Venture as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP Certified Public Accountants New York, N.Y. March 3, 1999 Exhibit 99.1 (continued) CORAL PALM PLAZA JOINT VENTURE BALANCE SHEETS (in thousands) December 31, 1998 1997 Assets Cash and cash equivalents $ 702 $ 427 Other assets 523 652 Investment Property: Land 1,980 1,980 Building and related personal property 5,658 5,532 7,638 7,512 Less accumulated depreciation (3,814) (3,550) 3,824 3,962 $ 5,049 $ 5,041 Liabilities and Partners' Capital Accrued expenses and other liabilities $ 223 $ 366 Partners' Capital: Century Pension Income Fund XXIII 3,212 3,111 Century Pension Income Fund XXIV 1,614 1,564 Total partners' capital 4,826 4,675 $ 5,049 $ 5,041 See Accompanying Notes to Financial Statements Exhibit 99.1 (continued) CORAL PALM PLAZA JOINT VENTURE STATEMENTS OF OPERATIONS (in thousands) Years Ended December 31, 1998 1997 1996 Revenues: Rental income $ 951 $ 706 $ 1,157 Other income 36 33 26 Total revenues 987 739 1,183 Expenses: Operating 378 380 357 General and administrative 16 4 16 Depreciation 264 254 250 Property taxes 178 192 184 Provision for impairment -- 2,067 -- Total expenses 836 2,897 807 Net income (loss) $ 151 $(2,158) $ 376 Allocation of net income (loss): Century Pension Income Fund XXIII $ 101 $(1,446) $ 252 Century Pension Income Fund XXIV 50 (712) 124 $ 151 $(2,158) $ 376 See Accompanying Notes to Financial Statements Exhibit 99.1 (continued) CORAL PALM PLAZA JOINT VENTURE STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (in thousands)
Century Pension Century Pension Income Fund XXIII Income Fund XXIV Total Partners' capital at December 31, 1995 $ 4,231 $ 2,114 $ 6,345 Net income for the year ended December 31, 1996 252 124 376 Contributions from partners 74 38 112 Partners' capital at December 31, 1996 4,557 2,276 6,833 Net loss for the year ended December 31, 1997 (1,446) (712) (2,158) Partners' capital at December 31, 1997 3,111 1,564 4,675 Net income for the year ended December 31, 1998 101 50 151 Partners' capital at December 31, 1998 $ 3,212 $ 1,614 $ 4,826
See Accompanying Notes to Financial Statements Exhibit 99.1 (continued) CORAL PALM PLAZA JOINT VENTURE STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1998 1997 1996 Cash flows from operating activities: Net income (loss) $ 151 $(2,158) $ 376 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 264 254 250 Amortization of lease commissions 47 39 37 Provision for impairment of value -- 2,067 -- Change in accounts: Other assets 82 (78) (226) Accrued expenses and other liabilities (143) (102) 123 Net cash provided by operating activities 401 22 560 Cash flows from investing activities: Property improvements and replacements (126) (53) (477) Net cash used in investing activities (126) (53) (477) Cash flows provided by financing activities: Contributions received from partners -- -- 112 Net increase (decrease) in cash and cash equivalents 275 (31) 195 Cash and cash equivalents at beginning of year 427 458 263 Cash and cash equivalents at end of year $ 702 $ 427 $ 458 See Accompanying Notes to Financial Statements Exhibit 99.1 (continued) CORAL PALM PLAZA JOINT VENTURE Notes To Financial Statements December 31, 1998 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Coral Palm Plaza Joint Venture (the "Partnership") is a general partnership organized in 1987 under the laws of the State of California to acquire Coral Palm Plaza, a shopping center located in Coral Springs, Florida. The general partners are Century Pension Income Fund XXIII ("XXIII") and Century Pension Income Fund XXIV ("XXIV"), California limited partnerships affiliated through their general partners. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks, money market funds and certificates of deposit with original maturities of less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in other assets. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Leases: The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases." Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the lease. This straight-line basis recognized approximately $6,000 and $28,000 more in rental income than was collected in 1998 and 1997, respectively. This amount will be collected in future years as cash collections under the terms of the leases exceed the straight-line basis of revenue recognition. For all other leases, minimum rents are recognized over the terms of the leases. Investment Properties: The Partnership's investment property, which consists of one shopping center, is stated at cost. Acquisition fees are capitalized as a cost of real estate. The Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. The Partnership had determined that Coral Palm Plaza with a carrying amount of $6,029,000 was impaired and wrote its value down by $2,067,000 to reflect its fair value at December 31, 1997 of $3,962,000. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from four to thirty-nine years for buildings and improvements and related personal property. Deferred Leasing Commission: Leasing commissions, which are included in other assets, are deferred and amortized over the lives of the related leases, which range from one to eleven years. At December 31, 1998 and 1997 deferred leasing commissions totaled approximately $340,000 and $324,000 and accumulated amortization totaled approximately $150,000 and $104,000, respectively. Net Income (Loss) Allocation: Net income (loss) is allocated based on the ratio of each partner's capital contribution to the Joint Venture. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Reclassification: Certain reclassifications have been made to the 1997 and 1996 balances to conform to the 1998 presentation. NOTE B - RELATED PARTY TRANSACTIONS During 1998 and 1997, the Partnership paid property management fees of approximately $34,000 and $31,000, respectively, to an affiliate of the general partners. These fees were allocated 66.67% to XXIII and 33.33% to XXIV, in accordance with the partnership agreement. NOTE C - PROVISION FOR IMPAIRMENT OF VALUE In December 1997, two significant tenants that had occupied 36,000 square feet (27% of leasable space) at Coral Palm Plaza moved out. The Partnership determined that, based on economic conditions at the time as well as projected future operational cash flows, a decline in value had occurred which was other than temporary. Accordingly, the property's carrying value was reduced to an amount equal to its estimated fair value and an impairment write down of $2,067,000 was recorded at December 31, 1997. NOTE D - TERMINATION AGREEMENT WITH FORMER TENANT In October 1995, the Partnership accepted a lease buy-out and termination agreement with a former tenant at the Partnership's property. The $300,000 termination payment, has been deferred and is being amortized into income on a straight-line basis over the remaining three years of the former tenant's lease. Management is currently attempting to re-lease the space. NOTE E - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Partnership (in thousands) Buildings Net Cost Capitalized and Related (written down) Subsequent Description Encumbrances Land Personal Property to Acquisition (in thousands) Coral Palm Plaza $ -- $ 5,009 $11,046 $(8,417)
Gross Amount at Which Carried at December 31, 1998 (in thousands) Buildings and Related Personal Accumulated Year of Acquired Depreciable Description Land Property Total Depreciation Construction Date Life-Years (in thousands) Coral Palm Plaza $1,980 $5,658 $7,638 $3,814 1985 1/87 4 to 39 Years
Reconciliation of Real Estate and Accumulated Depreciation (in thousands) Years Ended December 31, 1998 1997 1996 Real Estate: Balance at beginning of year $ 7,512 $ 9,526 $ 9,049 Property improvements 126 53 477 Allowance for impairment of value -- (2,067) -- Balance at end of year $ 7,638 $ 7,512 $ 9,526 Accumulated Depreciation: Balance at beginning of year $ 3,550 $ 3,296 $ 3,046 Additions charged to expense 264 254 250 Balance at end of year $ 3,814 $ 3,550 $ 3,296 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1998 and 1997, is approximately $17,224,000 and $17,098,000, respectively. Accumulated depreciation for Federal income tax purposes at December 31, 1998 and 1997, is approximately $4,034,000 and $3,678,000, respectively. NOTE F - MINIMUM FUTURE RENTAL REVENUES Minimum future rental revenues from operating leases having non-cancelable lease terms in excess of one year at December 31, 1998 are as follows (in thousands): 1999 $ 818 2000 795 2001 637 2002 663 2003 549 Thereafter 993 Total $4,455 Rental revenue from one tenant was 20 percent, 22 percent and 12 percent of total rental revenues in 1998, 1997 and 1996, respectively. Rental revenue from another tenant was 11 percent, 13 percent and 12 percent of total rental revenues in 1998, 1997 and 1996, respectively. Rental revenues included percentage and other contingent rentals of approximately $60,000 in 1998 and approximately $33,000 in 1996. There was no percentage or contingent rental revenue in 1997. Amortization of deferred leasing commissions totaled $47,000, $39,000 and $37,000 for the years ended December 31, 1998, 1997, and 1996, respectively, and are included in operating expense. EX-99.2 4 EXHIBIT 99.2 MINNEAPOLIS BUSINESS PARKS JOINT VENTURE FINANCIAL STATEMENTS DECEMBER 31, 1998, 1997 and 1996 Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE List of Financial Statements Independent Auditors' Report Balance Sheets - December 31, 1998 and 1997 Statements of Operations - Years Ended December 31, 1998, 1997 and 1996 Statements of Changes in Partners' Capital - Years Ended December 31, 1998, 1997 and 1996 Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996 Notes to Financial Statements Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE Independent Auditors' Report To the Partners Minneapolis Business Parks Joint Venture Greenville, South Carolina We have audited the accompanying balance sheets of Minneapolis Business Parks Joint Venture (the "Partnership") as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' capital and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Minneapolis Business Parks Joint Venture as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP Certified Public Accountants New York, N.Y. March 3, 1999 Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE BALANCE SHEETS (in thousands) December 31, 1998 1997 Assets Cash and cash equivalents $ 4,191 $ 2,751 Receivables and other assets 1,033 650 Investment Properties: Land 4,523 4,523 Building and related personal property 16,489 16,184 21,012 20,707 Less accumulated depreciation (6,362) (5,777) 14,650 14,930 $19,874 $18,331 Liabilities and Partners' Capital Accrued expenses and other liabilities $ 539 $ 167 Partners' Capital: Century Pension Income Fund XXIII 13,088 12,299 Century Pension Income Fund XXIV 6,247 5,865 Total partners' capital 19,335 18,164 $19,874 $18,331 See Accompanying Notes to Financial Statements Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE STATEMENTS OF OPERATIONS (in thousands) Years Ended December 31, 1998 1997 1996 Revenues: Rental income $3,121 $3,052 $3,000 Other income 172 138 136 Total revenues 3,293 3,190 3,136 Expenses: Operating 773 931 837 General and administrative 19 5 16 Depreciation 585 581 593 Property taxes 745 745 756 Total expenses 2,122 2,262 2,202 Net income $1,171 $ 928 $ 934 Allocation of net income: Century Pension Income Fund XXIII $ 789 $ 631 $ 635 Century Pension Income Fund XXIV 382 297 299 $1,171 $ 928 $ 934 See Accompanying Notes to Financial Statements Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (in thousands)
Century Pension Century Pension Income Fund XXIII Income Fund XXIV Total Partners' capital at December 31, 1995 $11,033 $ 5,269 $16,302 Net income for the year ended December 31, 1996 635 299 934 Partners' capital at December 31, 1996 11,668 5,568 17,236 Net income for the year ended December 31, 1997 631 297 928 Partners' capital at December 31, 1997 12,299 5,865 18,164 Net income for the year ended December 31, 1998 789 382 1,171 Partners' capital at December 31, 1998 $13,088 $ 6,247 $19,335
See Accompanying Notes to Financial Statements Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1998 1997 1996 Cash flows from operating activities: Net income $1,171 $ 928 $ 934 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 585 581 593 Amortization 80 71 84 Change in accounts: Receivables and other assets (463) (214) (155) Accrued expenses and other liabilities 372 (9) 19 Net cash provided by operating activities 1,745 1,357 1,475 Cash flows from investing activities: Property improvements and replacements (305) (149) (91) Cash used in investing activities (305) (149) (91) Cash flows from financing activities: -- -- -- Net increase in cash and cash equivalents 1,440 1,208 1,384 Cash and cash equivalents at beginning of year 2,751 1,543 159 Cash and cash equivalents at end of year $4,191 $2,751 $1,543 See Accompanying Notes to Financial Statements Exhibit 99.2 (continued) MINNEAPOLIS BUSINESS PARKS JOINT VENTURE Notes to Financial Statements December 31, 1998 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Minneapolis Business Parks Joint Venture (the "Partnership") is a general partnership organized in 1987 under the laws of the State of California to acquire three business parks in Minnesota. The general partners are Century Pension Income Fund XXIII ("XXIII") and Century Pension Income Fund XXIV ("XXIV"), California limited partnerships which are affiliated through their general partners. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks, money market funds and certificates of deposit with original maturities of less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Leases: The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases." Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the lease. Cash collections exceeded the straight-line basis of revenue recognition by approximately $43,000 in 1998. The straight- line basis recognized approximately $23,000 more in rental income than was collected in 1997. For all other leases, minimum rents are recognized over the terms of the leases. Investment Properties: Investment properties include three commercial properties and are stated at cost. Acquisition fees are capitalized as a cost of real estate. The Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from five to thirty-nine years for buildings and improvements and related personal property. Deferred Leasing Commission: Leasing commissions are deferred and amortized over the lives of the related leases, which range from one to eleven years. At December 31, 1998 and 1997, deferred leasing commissions totaled approximately $422,000 and $452,000 and accumulated amortization totaled approximately $236,000 and $221,000, respectively. Net Income Allocation: Net income is allocated based on the ratio of each partner's capital contribution to the joint venture. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Reclassification: Certain reclassifications have been made to the 1997 and 1996 balances to conform to the 1998 presentation. NOTE B - MINIMUM FUTURE RENTAL REVENUES Minimum future rental revenues from operating leases having non-cancelable lease terms in excess of one year at December 31, 1998, are as follows (in thousands): 1999 $1,891 2000 1,286 2001 712 2002 294 2003 167 Thereafter 7 Total $4,357 Amortization of deferred leasing commissions totaled $80,000, $62,000 and $84,000 for the years ended December 31, 1998, 1997, and 1996, respectively. NOTE C - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Partnership (in thousands) Buildings and Net Cost Capitalized Related Personal (Removed) Subsequent Description Encumbrances Land Property to Acquisition (in thousands) Alpha Business Center $ -- $ 3,199 $ 6,735 $ 733 Plymouth Service -- 475 2,306 37 Westpoint Business -- 1,166 5,987 374 Total $ -- $ 4,840 $15,028 $ 1,144
Gross Amount at Which Carried at December 31, 1998 (in thousands) Buildings and Related Personal Accumulated Year of Acquired Depreciable Description Land Property Total Depreciation Construction Date Life-Years (in thousands) Alpha Business Center $ 3,002 $ 7,665 $10,667 $ 3,025 1979 5/87 5-39 Years Plymouth Service 419 2,399 2,818 871 1979 5/87 5-39 Years Westpoint Business 1,102 6,425 7,527 2,466 1979 5/87 5-39 Years Total $ 4,523 $16,489 $21,012 $ 6,362
Reconciliation of Real Estate and Accumulated Depreciation (in thousands) Years Ended December 31, 1998 1997 1996 Real Estate Balance at beginning of year $20,707 $20,558 $20,467 Property improvements 305 149 91 Balance at end of year $21,012 $20,707 $20,558 Accumulated Depreciation: Balance at beginning of year $ 5,777 $ 5,196 $ 4,603 Additions charged to expense 585 581 593 Balance at end of year $ 6,362 $ 5,777 $ 5,196 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1998 and 1997, is approximately $22,236,000 and $22,040,000, respectively. Accumulated depreciation for Federal income tax purposes at December 31, 1998 and 1997, is approximately $5,517,000 and $5,004,000, respectively. -----END PRIVACY-ENHANCED MESSAGE-----