10-Q 1 file001.txt QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20459 FORM 10-QSB (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 -------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ________________ Commission File Number 0-20273 ------- 1999 Broadway Associates Limited Partnership -------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 04-6613783 --------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Five Cambridge Center, Cambridge, MA 02142 ---------------------------------------- ------------------------------ (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (617) 234-3000 ------------------ 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 ----- 1 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP FORM 10-QSB MARCH 31, 2001 PART 1 - FINANCIAL INFORMATION

See notes to consolidated financial statements. 2 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP -------------------------------------------- FORM 10-QSB MARCH 31, 2001 --------------------------

See notes to consolidated financial statements. 3 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP FORM 10-QSB MARCH 31, 2001 CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT (UNAUDITED) (IN THOUSANDS, EXCEPT UNIT DATA)

See notes to consolidated financial statements. 4 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP FORM 10-QSB MARCH 31, 2001

See notes to consolidated financial statements. 5 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP FORM 10-QSB MARCH 31, 2001 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL The accompanying financial statements reflect the accounts of 1999 Broadway Associates Limited Partnership (the "Investor Partnership"), 1999 Broadway Partnership (the "Operating Partnership") and 1999 Broadway LLC (the "Operating Company"). The Investor Partnership, the Operating Partnership and the Operating Company are collectively referred to as the "Partnerships". These consolidated financial statements, footnotes and discussions should be read in conjunction with the consolidated financial statements, related footnotes and discussions contained in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 2000. The financial information contained herein is unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. All adjustments are of a normal recurring nature. The balance sheet at December 31, 2000 was derived from audited financial statements at such date. The results of operations for the three months ended March 31, 2001 and 2000 are not necessarily indicative of the results to be expected for the full year. 2. RELATED PARTY TRANSACTIONS The Partnership has incurred charges and made commitments to companies affiliated by common ownership and management with Winthrop Financial Associates, A Limited Partnership, the managing general partner of the Investor Partnership, (the "General Partner"). Related party transactions with the General Partner and its affiliates include the following: a. The Partnership accrues to an affiliate of the General Partner an annual property management fee equal to 5% of cash receipts. For the three months ended March 31, 2001 and 2000, management fees of $138,000 and $126,000, respectively, were incurred. b. The Partnership pays or accrues to the General Partner an annual partnership administration and investor service fee, as provided for in the partnership agreement, of $100,000, which, since 1990, has been increased annually by 6% to its present level of approximately $200,000 per annum. Fees of $50,000 and $48,000 were paid or accrued during the periods ended March 31, 2001 and 2000, respectively. c. The Partnership pays or accrues to an affiliate of the General Partner a construction management fee equal to 5% of the aggregate cost of each applicable construction project. Fees of $20,000 and $6,000 were incurred during the three months ended March 31, 2001 and 2000, respectively, and have been capitalized to the cost of buildings and improvements. 6 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP -------------------------------------------- FORM 10-QSB MARCH 31, 2001 -------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 3. ALLOCATION OF LOSS In accordance with the second amended and restated partnership agreement (the "Agreement"), effective December 1, 1997 and while the Preferred Units are outstanding, losses are allocated 1% to the General Partner and 99% to the limited partners in proportion to and to the extent of the capital account balances. In accordance with the Agreement, during 2000 the Partnership distributed approximately $13,214,000 ($28,726 per Preferred Unit) to the Preferred Unitholders. The distributions were funded primarily by proceeds received on the refinancing on the Property. Since the Preferred Unitholders have been paid in full, their units have been redeemed in accordance with the Agreement and they will receive no future distributions or income/loss allocations. Subsequent to the retirement of the Preferred Units, losses are allocated 1% to the General Partner and 99% to the Limited Partners. 4. SEGMENT INFORMATION The Partnership has two reportable segments, the Office Tower and the Garage. The Partnership evaluates performance based on net operating income, which is income before depreciation, amortization, interest and non-operating items. Segment information for the three months ended March 31, 2001 and 2000, is shown in the tables below (in thousands). The "Other" column includes partnership administrative items and income and expense not allocated to a reportable segment.

7 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP -------------------------------------------- FORM 10-QSB MARCH 31, 2001 -------------------------- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and other filings with the Securities and Exchange Commission made by the Partnership from time to time. The discussion of the Partnership's liquidity, capital resources and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in the report. Liquidity and Capital Resources The Registrant, through its effectively 99.9% ownership interest in 1999 Broadway LLC (the "Operating Company"), owns a 42-story office tower located in Denver, Colorado together with a parking garage located one and one-half blocks northeast of the office tower (collectively, the "Property"). The Operating Company generates rental revenue from the Property and is responsible for the Property's operating expenses as well as its administrative costs. The Registrant's level of liquidity based on cash and cash equivalents decreased by $765,000 during the three months ended March 31, 2001, as compared to December 31, 2000. The decrease is due to $582,000 of cash used in investing activities, $102,000 of cash used for mortgage principal payments (financing activities) and $81,000 of cash used in operating activities. Cash used in investing activities consisted of $413,000 of cash used for improvements to real estate, primarily tenant improvements, $99,000 of cash expended on leasing costs and commissions and an increase of $70,000 in restricted cash. The Property is approximately 88% leased as of March 31, 2001. At March 31, 2001, the Registrant had approximately $1,814,000 invested in money market accounts included in cash and cash equivalents. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the Property to adequately maintain the physical assets and the other operating needs of the Operating Company. Such assets are currently thought to be sufficient for any near-term needs of the Operating Company. The General Partner periodically evaluates the Registrant's cash needs to determine if distributions can be made. Based on the retirement of the Preferred Units, current operations and anticipated cash needs, distributions may resume prior to the end of 2001. 8 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP -------------------------------------------- FORM 10-QSB MARCH 31, 2001 -------------------------- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED) --------------------------------------------------------- Liquidity and Capital Resources (Continued) ------------------------------------------- At this time, it appears that the original investment objective of capital growth from the inception of the Registrant will not be attained and that the limited partners will not receive a complete return of their invested capital. The extent to which invested capital is refunded to the limited partners is dependent upon the performance of the Property and the market in which it is located. Recently Issued Accounting Standards ------------------------------------ The Financial Accounting Standards Board issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133." The Statement deferred for one year the effective date of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The Statement requires companies to recognize all derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether they qualify for hedge accounting. This Statement is effective for fiscal years beginning after June 15, 2000. The Partnership believes that the effect of SFAS 133 on its financial statements will be immaterial. Results of Operations --------------------- Operating results, before non-operating income (expense) improved by $53,000 for the three months ended March 31, 2001, as compared to 2000, due to an increase in revenue of $218,000, which was partially offset by an increase in expenses of $165,000. Revenues increased by $218,000 for the three months ended March 31, 2001, as compared to 2000, due to increases in rental income of $209,000 and in other income of $9,000. Rental income increased due to an increase in rental rates, which was partially offset by a decline in occupancy. Expenses increased by $165,000 for the three months ended March 31, 2001, as compared to 2000, primarily due to increases in depreciation ($65,000), payroll and payroll expense reimbursements ($45,000), repairs and maintenance ($25,000) and management and other fees ($14,000), These increases were partially offset by decreases in real estate taxes ($19,000) and insurance ($5,000). Depreciation expense increased due to expenditures for tenant improvements made in connection with an increase in leasing activity in the previous two years. Interest income declined due to lower capital reserves available for investment and a slight decline in interest rates. Interest expense increased by $73,000 due to an increase in the outstanding balance of the loan in connection with the mortgage refinancing in October 2000. All other income and expense items, including the garage operation, remained relatively constant. Quantitative and Qualitative Disclosures of Market Risk ------------------------------------------------------- The Registrant does not have any financial instruments that would expose it to market risk associated with the risk of loss arising from adverse changes in market rates and prices. The Registrant's mortgage note payable at December 31, 2000 is at a fixed rate of interest. 9 of 10 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP -------------------------------------------- FORM 10-QSB MARCH 31, 2001 -------------------------- SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP -------------------------------------------- BY: WINTHROP FINANCIAL ASSOCIATES, A LIMITED PARTNERSHIP MANAGING GENERAL PARTNER BY: /s/ Michael L. Ashner ---------------------------- Michael L. Ashner Chief Executive Officer BY: /s/ Thomas Staples ---------------------------- Thomas Staples Chief Financial Officer DATED: May 15, 2001 10 of 10

1999 BROADWAY ASSOCIATES LTD PARTNERSHIP 10-Q