FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 2000 Commission File Number: 2-94509 LIF (Exact name of registrant as specified in its governing instruments) California 94-2969720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 0326 Highway 133, Suite 210, Carbondale, Colorado 81623 (Address of principal executive offices) (970) 963-8007 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: [X] No: [ ] PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LIF CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 (Unaudited) (Dollars in thousands)

~~June~~Sept 30, December 31, 2000 1999 ASSETS INVESTMENTS IN REAL ESTATE: Rental properties $ ~~327~~0 $ 2,102 Accumulated depreciation ~~(40)~~0 (278) Rental properties - net ~~287~~0 1,824 CASH AND CASH EQUIVALENTS (including Interest bearing deposits of $~~209~~249 in 2000 and $~~554~~544 in 1999) ~~1,360~~249 884 OTHER ASSETS: Accounts receivable-net 0 0 Prepaid expenses and deposits 10 2 Deferred organization costs and loan costs (net of accumulated amortization of $50 in 2000 and $~~168~~13 in 1999) 20 13 Notes receivable 0 0 Total other assets 30 15 TOTAL $~~1,650~~ 249 $ 2,723 LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Notes payable $ ~~300~~0 $ 1,427 Accounts payable 10 9 Liability for future improvement 0 0 Deferred gain on sale of real estate 0 0 Other liabilities 3249 49 Total liabilities ~~304~~249 1,485 PARTNERS' EQUITY Limited Partners ~~1,346~~0 1,238 General Partners ~~0 0~~ TOTAL $~~1,650~~ 249 $ 2,723 Equity Units Authorized - Limited Partners 12,820 12,820 - General Partners 0 0 Equity Units Outstanding - Limited Partners 12,820 12,820 - General Partners 0 0 The accompanying notes are an integral part of the consolidated financial statements.

LIF CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited) (In thousands except per share amounts)

Three Months Ended September 30 2000 1999 REVENUE: Rental $ 350 $ 3942 Interest 9 8 35 Gain on sale ~~203~~170 31 Total revenue ~~246~~179 7751 EXPENSE: Interest 256 3132 Operating 120 2132 Depreciation and amortization 132 1817 General and administrative 55113 5460 Total expense ~~105~~121 ~~124~~141 NET INCOME (LOSS Net income (loss) - Limited Partners ~~141~~58 (4790) Net income (loss) - General Partners 0 0 NET INCOME (LOSS) PER PARTNERSHIP UNIT: Limited Partners 1158 (47) General Partners 0 0 1158 (47) The accompanying notes are an integral part of the consolidated financial statements.

LIF CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND THE YEAR ENDED DECEMBER 31, 1999 (Unaudited)(Dollars in thousands)

..LIMITED PARTNERS.. NUMBER OF GENERAL TOTAL PARTNERSHIP PARTNER PARTNERS' UNITS AMOUNT AMOUNT DEFICIT BALANCE, JANUARY 1, 1999 12,820 $1,281 $ (175) $1,106 Net ~~Income~~income - 1999 3,162 175 3,337 DISTRIBUTION (3,205) 0 (3,205) BALANCE, DECEMBER 31, 1999 12,820 $1,238 $ 0 $1,~~106~~238 Net income ~~108~~165 0 ~~108~~165 ~~Distribution~~DISTRIBUTION 0(1,403) 0(1,403) ~~Contribution 0 0~~ BALANCE, ~~JUNE~~SEPTEMBER 30, 2000 12,820 $~~1,346~~ 0 $ 0 $~~1,346~~ 0 The accompanying notes are an integral part of the consolidated financial statements.

LIF CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited) (Dollars in thousands)

2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income ~~(loss)~~ $ ~~108~~165 $ 3,~~382~~236 Gain on sale of property 0 (3,~~365~~363) Adjustments to reconcile net increase to net cash provided by operating activities: Depreciation and amortization 3157 1657 Change in operating assets and liabilities: Increase (decrease) in other liabilities ~~(46)~~200 (~~245~~234) ~~Decrease/increase~~Increase in accounts payable (89) (1913) ~~Decrease/increase~~Increase in accounts receivable 0 1819 Decrease in deferred expenses 1113 4448 ~~Increase~~Decrease/increase in prepaid expenses 12 2022 ~~Estimated cost to complete 0 (8)~~ Net cash used in operating activities 97428 (~~157~~228) CASH FLOWS FROM INVESTING ACTIVITIES: ~~Capital expenditures 0 0~~ Sale of investment property-net 1,~~506~~767 9,~~031~~021 ~~Decrease/increase in notes receivable 0 (7)~~ Net cash provided (used) in investing activities 1,~~506~~767 9,~~024~~021 CASH FLOWS FROM FINANCING ACTIVITIES: ~~Proceeds from Financing 0 0~~ Payment on notes payable (1,~~127~~427) (5,~~212~~250) Net (distribution) contribution 0(1,403) 0(3,205) Net cash used by financing activities (12,~~127~~830) (58,~~212~~455) Increase (decrease) in cash and cash equivalents ~~476~~(635) ~~3,655~~338 Cash and cash equivalents at beginning of period 884 566 Cash and cash equivalents at end of period ~~1,360~~$ 249 $ ~~4,221~~904 The accompanying notes are an integral part of the consolidated financial statements.

LIF FINANCIAL NOTES (Dollars in thousands) The accompanying unaudited financial statements should be read in conjunction with the Partnership's 1999 Annual Report. These statements have been prepared in accordance with the instructions to the Securities and Exchange Commission form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the general partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three months ended September 30, 2000 and 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. Organization - LIF (the "Partnership") is a limited partnership organized under the laws of the state of California for the purpose of investing in income properties and making short-term loan and capital contributions to operating entities formed to acquire or develop and operate one or more income producing real properties. The General Partner is Partners '85 (the "General Partner"), a California limited partnership, whose General Partner is Landsing Equities Corporation. LIF was formed in June 1984, and shall continue until December 31, 2034, unless sooner terminated. Consolidation of Investment in Real Estate Partnerships - For financial reporting purposes, the Partnership consolidates the operations of it's investment in real estate partnerships with that of the Partnership. All significant intercompany transactions, including notes payable/receivable and short-term loans/receivables, and balances have been eliminated. Rental Property - Rental property is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives ranging from five to forty years. Major additions and betterments are capitalized at cost, while maintenance and repairs which do not improve or extend the life of the respective assets are expensed currently. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any gain or loss on disposal is included in the results of operations. Deferred Loan Costs - Loan fees are deferred and amortized over the life of the related note payable. Cash and Cash Equivalents - The Partnership considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Short-Term Investments - The Partnership invests in short-term federally insured certificates of deposits which mature on a date in excess of three months from the date of purchase. The cost of these investments approximate market value. Income Taxes - No provision for federal or state income taxes has been made in the consolidated financial statements because these taxes are the obligation of the partners. Net Income (Loss) Per Partnership Unit - Net Income (Loss) per Partnership Unit is based on weighted average units outstanding of 12,820 in 2000 and 1999, after giving effect to net income (loss) allocated to the General Partner. A distribution was paid to unit holders of record as of August 1, 2000 in the amount of $90 per unit. The final Partnership distribution of $19 will be paid on December 13, 2000 to unit holders of record as of December 1, 2000. Concentrations of Credit Risk - The Partnership's financial instruments that are exposed to concentrations of credit risk consist primarily of its cash and cash equivalents, and note receivables. The Partnership's cash and cash equivalents are maintained in various accounts in FDIC insured institutions. This investment policy limits the Partnership's exposure to concentrations of credit risk. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Impairment of Long-Lived Assets - The Partnership adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of" during 1996. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During 2000 and 1999, the Partnership determined that no impairment loss need be recognized for applicable assets of continuing operations. Accounting Pronouncements - In June 1996, the Financial Accounting Standards Board issued Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities" (SFAS No.125). This Statement is effective for transactions occurring after December 31, 1996. However, transactions such as securities lending, repurchase agreements, dollar rolls, and similar secured financing arrangements are not subject to the provisions of SFAS No. 125 until January 1, 1998. The standard provides that, following a transfer of financial assets, an entity is to recognize the financial and servicing assets it controls and the liabilities it has incurred, derecognize financial assets when control has been surrendered and derecognize liabilities when extinguished. The adoption of SFAS No. 125 had no impact on the Partnership's consolidated financial statements. The impact of the delayed provisions is also not expected to be material. Effective January 1, 1998, the Partnership adopted SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial condition. However, the Partnership had no items of comprehensive income at September 30, 2000. Effective January 1, 1998, the Partnership adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." However, the Partnership does not have any reportable segments at September 30, 2000. Fair Value of Financial Instruments - The fair value of certain financial assets carried at cost, including cash and cash equivalents and accounts receivable, are considered to approximate their respective fair value. The fair value of accrued liabilities is considered to approximate their respective book values due to their short-term nature. The valuation of notes receivables and notes payable with floating rates is estimated to be the same as carrying value. Fair value of notes payable with fixed rates is estimated based on quoted market prices for similar issues. At September 30, 2000 and December 31, 1999, fair value of notes payable approximate carrying value. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Partnership was organized to acquire real properties, including commercial, residential and agricultural properties, located primarily within the western portion of the United States, and to make short-term loans and capital contributions to other limited partnerships formed to acquire or develop and operate one or more income-producing real properties. The Partnership does not own any properties as of September 30, 2000. For financial reporting purposes, the Partnership investments are presented on a consolidated basis. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2000, the Partnership's consolidated cash balance totaled $249,000. This cash will be distributed to limited partners as the final distribution for the Partnership. During the third quarter of 2000, the Partnership experienced a net decrease in cash and cash equivalents of $635,000, as the result of the final property sale and a distribution of $1,407 to limited partners. As of September 30, 2000, cash and cash equivalents totaled $249,000 versus $884,000 at December 31, 1999. On September 30, 1997, the Partnership's investment in ACP sold 40.20% of the Alpine Center Building to Gary K. Barr (GKB). GKB is the president of the General Partner of LIF. This sale resulted in cash to ACP of $370,000. On September 30, 1997, ACP also sold 45.90% of the Alpine Center Building to Open World Investors (OWI), of which Gary K. Barr is a General Partner. This sale generated cash to ACP of $420,000. ACP provided seller financing to GKB and OWI in the amounts of $864,300 and $986,850 respectively. These loans were repaid in July, 1999. RESULTS OF OPERATIONS The Partnership sold it final property on July 19, 2000 and no longer has any property operations. It will make its final distribution and cease operations as of Decmeber 13, 2000. Rental revenues were $0 for the three months ended September 30, 2000, a decrease of $42,000 compared to the third three months of 1999. The decline in rental revenues in 2000 versus 1999 was the result of the sale of the Valley View Business Park and 701 Cooper building. Operating expenses were $0 for the three months ended September 30, 2000, a decrease of $32,000 compared to the third three months of 1999, which was the result of the sale of the Valley View Business Park and 701 Cooper building. Net operating loss of properties (rental revenue less operating expenses) was $0 in 2000, a decrease of $10,000 from 1999. Management believes net operating income is the best indication of the properties' performance. Interest income increased from $8,000 in 1999 to $9,000 in 2000. On February 26, 1999, the Partnership sold the Whistler Point Apartments for a cash sales price of $9,600 to an unrelated third party. As part of this sale, debt of $5,207 was retired and a gain of approximately $3,363 was recognized. On May 19, 2000, the Partnership sold the Valley View Business Park for a cash sales price of $1,875 to an unrelated third party. As part of this sale, debt of $1,012 was retired and a gain of approximately $203 was recognized. On July 19, 2000, the Partnership sold 701 Cooper for a cash sales price of $499 to an unrelated third party. As part of this sale, debt of $306 was retired and a gain of approximately $170 was recognized. Interest expense decreased by $26,000 for the third three months of 2000, compared to the third three months of 1999, due to the sale of Valley View Business Park and 701 Cooper and the associated debt. Entity level general and administrative expenses, exclusive of that at the property level, increased $51,000 in 2000 compared to 1999. OCCUPANCY The Partnership owns no property. DISTRIBUTIONS In August 2000, the Partnership paid a cash distribution of $90 per unit to unit holders of record on June 30, 2000. The Partnership will make a final distribution on December 13, 2000 of $19 per unit to unit holders of record as of December 1, 2000. INFLATION The effect of inflation on the Partnership's operations have been no greater than the effect on the economy as a whole. Because of competitive conditions, market rate rents may increase or decrease disproportionately with inflation while property operating costs continue to follow inflationary trends. Inflationary conditions are not expected to have a major impact on the Partnership during 2000. PART II. OTHER INFORMATION All items in Part II have been omitted since they are inapplicable or the answer is negative. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. L I F Date: November 15, 2000 /s/ Gary K. Barr Gary K. Barr, President & Director Landsing Equities Corporation Managing Partner of the General Partner, Partners '85

Filing Compare · LIF