10-Q 1 rpfiling10q93003.txt REALTY PARKING 10Q FOR QUARTER ENDING 9/30/03 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) { X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _____ For Quarter Ended September 30, 2003 Commission file number 0-17616 Realty Parking Properties L.P. (Exact Name of Registrant as Specified in its Charter) Delaware 52-1591575 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 300 East Lombard Street, Baltimore, Maryland 21202 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (410) 727-4083 225 East Redwood Street, Baltimore, Maryland 21202 (Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report.) 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No X REALTY PARKING PROPERTIES L.P. INDEX Page No. Part I. Financial Information Item 1. Financial Statements Balance Sheets 1 Statements of Operations 2 Statements of Partners' Capital 3 Statements of Cash Flows 4 Notes to Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 Item 4. Controls and procedures 10 Part II. Other Information Item 1. through Item 6. 11-14 Signatures 15 REALTY PARKING PROPERTIES L.P. Balance Sheets

See accompanying notes to financial statements 1 REALTY PARKING PROPERTIES L.P. Statements of Operations (Unaudited)

See accompanying notes to financial statements 2 REALTY PARKING PROPERTIES L.P. Statements of Partners' Capital Nine Months Ended September 30, 2003 and 2002 (Unaudited)

See accompanying notes to financial statements 3 REALTY PARKING PROPERTIES L.P. Statements of Cash Flows (Unaudited)

See accompanying notes to financial statements 4 REALTY PARKING PROPERTIES L.P. Notes to Financial Statements September 30, 2003 (Unaudited) Note 1 - The Partnership and Basis of Preparation The accompanying financial statements of Realty Parking Properties L.P. (the "Partnership") do not include all of the information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The unaudited interim financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. The unaudited interim financial information should be read in conjunction with the financial statements contained in the 2002 Annual Report. Note 2 - Cash and Cash Equivalents The Partnership considers all short-term investments with maturities of three months or less at dates of purchase as cash equivalents. Cash and cash equivalents consist of cash and money market accounts and are stated at cost, which approximated market value at September 30, 2003 and December 31, 2002. Note 3 - Investment in Real Estate At December 31, 2002, investment in real estate was $11,102,721, net of accumulated depreciation of $415,717. Depreciation of the garage structures is computed using the straight-line method over 31.5 years for property placed in service prior to January 1, 1994 and 39 years for property placed in service after January 1, 1994. 5 REALTY PARKING PROPERTIES L.P. Notes to Financial Statements September 30, 2003 (Unaudited) Note 4 - Property Held for Sale and Discontinued Operations At September 30, 2003, property held for sale totals $979,583, net of accumulated depreciation of $385,797 and an impairment loss of $720,000. The Partnership is negotiating a contract with several serious buyers to sell its final property in Kansas City. Therefore, the property was classified as held for sale in the balance sheet at September 30, 2003. In accordance with the provisions of Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which was effective on January 1, 2002 with respect to the Partnership, the results of operations of this property, the five properties sold during 2003, and two properties sold during 2002 are reported in discontinued operations for all periods presented in the statements of operations. Income from discontinued operations is summarized as follows:

On April 15, 2003, the Partnership sold its Birmingham, Alabama property for $1,900,000. The Partnership's investment in the property was $875,726, net of accumulated depreciation of $313,877. The gain from the sale totaled $807,060, net of expenses of $217,214. On April 15, 2003, the Partnership sold its Milwaukee property for $5,000,000. The Partnership's investment in the property was $1,796,395, net of accumulated depreciation of $606,743. The gain from the sale totaled $2,962,373, net of expenses of $241,232. On August 29, 2003, the Partnership sold its Los Angeles property for $4,500,000. The Partnership's investment in the property was $3,482,360, net of accumulated depreciation of $47,880 and an impairment loss of $4,409,624, which was recognized in 1999. The gain from the sale totaled $905,590, net of expenses of $112,050. On September 22, 2003, the Partnership sold its Little Rock, Arkansas property for $1,200,000. The Partnership's investment in the property was $1,002,360. The gain from the sale totaled $86,355, net of expenses of $111,285. On September 26, 2003, the Partnership sold its 75% interest in the Miami, Florida property for $6,600,000. The Partnership's investment in the property was $4,900,458. The gain from the sale totaled $1,305,186, net of expenses of $394,356. The Partnership is negotiating a contract with several serious buyers to sell its Kansas City property for approximately $1,100,000. The Partnership's investment in the property is $979,583, net of depreciation of $385,796. At September 30, 2003, the Partnership recorded an impairment loss of $720,000 to reflect the fair value of the property, less estimated expenses associated with the sale. 6 REALTY PARKING PROPERTIES L.P. Notes to Financial Statements September 30, 2003 (Unaudited) Note 5 - Related Party Transactions The General Partner earned property management fees of $2,747 and $6,067 (1% of the gross revenues of the properties and other sources of income) during the three months ended September 30, 2003 and 2002, respectively, and $10,578 and $19,952 during the nine months ended September 30, 2003 and 2002, respectively (which were recorded in discontinued operations). The General Partner was reimbursed for certain costs incurred relating to administrative and professional services of the Partnership totaling $28,263 and $28,136 for the three months ended September 30, 2003 and 2002, respectively, and $81,132 and $95,156, for the nine months ended September 30, 2003 and 2002, respectively. Pursuant to an Investment Advisory Agreement, Central Parking System (the "Advisor") earns a fee upon disposition of a property equal to 2% of the contract price for the sale of a property. Such fee is earned for services rendered to advise the General Partner on the timing and pricing of a property sale. For the three and nine months ended September 30, 2003, the Advisor earned Advisory fees totaling $246,000 and $384,000, respectively, from the sales of properties. Additionally, the Advisor earned lease termination fees totaling $190,946 for the nine months ended September 30, 2003 from the sales of two properties. For the three and nine months ended September 30, 2002, the Advisor earned an Advisory fee of $40,000 from the sale of one property. Note 6 - Net Earnings Per Unit of Assignee and Limited Partnership Interest Net earnings per unit of assignee and limited partnership interest is disclosed on the statements of operations and is based upon 1,909,127 units outstanding. Note 7 - Subsequent Event On October 7, 2003, the Partnership made a distribution totaling $7,294,359, of which 100% was allocated to Assignee and Limited Partners. The distribution was derived from funds provided by the net sales proceeds of the Little Rock and Miami properties, which were sold in September 2003. Assignee and Limited Partners received a cash distribution of approximately $3.82 per unit. 7 REALTY PARKING PROPERTIES L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At September 30, 2003, the Partnership had a working capital position that included cash and cash equivalents of $8,050,126, and accounts payable and accrued expenses of $250,554. Cash and cash equivalents increased $7,020,868 during the third quarter of 2003. The increase represents the net effect of $39,933 in cash used in operating activities, $11,682,309 in sales proceeds, and distributions to investors totaling $4,621,508. On August 29, 2003, the Partnership sold its Los Angeles property for $4,500,000. The Partnership's investment in the property was $3,482,360, net of accumulated depreciation of $47,880 and an impairment loss of $4,409,624, which was recognized in 1999. The gain from the sale totaled $905,590, net of expenses of $112,050. On September 11, 2003, the Partnership distributed the sale proceeds totaling $4,387,950, of which 100% was allocated to Assignee and Limited Partners. Holders of Units received a cash distribution of approximately $2.30 per Unit. On September 22, 2003, the Partnership sold its Little Rock, Arkansas property for $1,200,000. The Partnership's investment in the property was $1,002,360. The gain from the sale totaled $86,355, net of expenses of $111,285. On October 7, 2003, the Partnership distributed the sale proceeds totaling $1,088,715, of which 100% was allocated to Assignee and Limited Partners. Holders of Units received a cash distribution of approximately $0.57 per Unit. On September 26, 2003, the Partnership sold its 75% interest in the Miami, Florida property for $6,600,000. The Partnership's investment in the property was $4,900,458. The gain from the sale totaled $1,305,186, net of expenses of $394,356. On October 7, 2003, the Partnership distributed the sale proceeds totaling $6,205,644, of which 100% was allocated to Assignee and Limited Partners. Holders of Units received a cash distribution of approximately $3.25 per Unit. Results of Operations In accordance with the provisions of Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144), the statements of operations present income from continuing operations and from discontinued operations. Discontinued operations include the operating results of the final property in Kansas City, which is currently the subject of contract negotiations with several serious buyers, the five properties which were sold in 2003, and the two properties which were sold during 2002. The prior year amounts for these properties have been reclassified to discontinued operations as required by SFAS No. 144. The following discussion and analysis of the results of operations conforms to this presentation in the statements of operations. Continuing Operations Continuing operations includes interest earned on cash and cash equivalents and administrative expenses and professional fees not directly identifiable with a specific property sold or held for sale. Expenses incurred during the three months ended September 30, 2003 totaled $30,006 reflecting a decrease of $2,800 from the same period in 2002. Expenses incurred during the nine months ended September 30, 2003 totaled $104,282 reflecting a decrease of $12,910 from the same period in 2002. The decreases are the result of lower administrative expenses, as a result of property sales. 8 REALTY PARKING PROPERTIES L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Discontinued Operations Discontinued operations reflect parking revenue from the Partnership's property in Kansas City (in contract negotiations), the five properties sold in 2003, and the two properties sold in 2002, net of expenses that can be directly attributed to the properties. On April 15, 2003, the Partnership sold its Birmingham, Alabama property for $1,900,000. The Partnership's investment in the property was $875,726, net of accumulated depreciation of $313,877. The gain from the sale totaled $807,060, net of expenses of $217,214. On April 15, 2003, the Partnership sold its Milwaukee property for $5,000,000. The Partnership's investment in the property was $1,796,395, net of accumulated depreciation of $606,743. The gain from the sale totaled $2,962,373, net of expenses of $241,232. On August 29, 2003, the Partnership sold its Los Angeles property for $4,500,000. The Partnership's investment in the property was $3,482,360, net of accumulated depreciation of $47,880 and an impairment loss of $4,409,624, which was recognized in 1999. The gain from the sale totaled $905,590, net of expenses of $112,050 On September 22, 2003, the Partnership sold its Little Rock, Arkansas property for $1,200,000. The Partnership's investment in the property was $1,002,360. The gain from the sale totaled $86,355, net of expenses of $111,285. On September 26, 2003, the Partnership sold its 75% interest in the Miami, Florida property for $6,600,000. The Partnership's investment in the property was $4,900,458. The gain from the sale totaled $1,305,186, net of expenses of $394,356 Parking lot revenue of $188,795 was earned during the three months ended September 30, 2003, reflecting a decrease of $250,388 from the same period in 2002. Parking lot revenue of $731,819 was earned during the nine months ended September 30, 2003, reflecting a decrease of $438,790 from the same period in 2002. The decreases are the result of the 2003 and 2002 property sales. Expenses incurred during the three months ended September 30, 2003 totaled $27,004 reflecting a decrease of $1,457 from the same period in 2002, net of depreciation. Expenses, excluding depreciation, incurred during the nine months ended September 30, 2003 totaled $77,834 reflecting a decrease of $8,915 from the same period in 2002. The decreases are the result of the 2003 and 2002 property sales. The Partnership is negotiating a contract with several serious buyers to sell the Kansas City property for approximately $1,100,000. The Partnership's investment in the property is $1,699,583, net of depreciation of $385,796. At September 30, 2003, the Partnership recorded an impairment loss of $720,000 to reflect the fair value of the property, less estimated expenses associated with the sale. 9 REALTY PARKING PROPERTIES L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Critical accounting policies are those that are both important to the presentation of financial condition and results of operations and require management's most difficult, complex or subjective judgments. The Partnership's critical accounting policy relates to the evaluation of impairment of long-lived assets. If events or changes in circumstances indicate that the carrying value of a property to be held and used may be impaired, a recoverability analysis is performed based on estimated undiscounted cash flows to be generated from the property in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the property is written down to its estimated fair value and an impairment loss is recognized. If the Partnership decides to sell a property, it evaluates the recoverability of the carrying amount of the assets. If the evaluation indicates that the carrying value is not recoverable from estimated net sales proceeds, the property is written down to estimated fair value less costs to sell and an impairment loss is recognized. The estimates of cash flows and fair values of the properties are based on current market conditions and consider matters such as each of the parking properties' parking rates, operating expenses and/or the terms of a net lease with a parking operator, recent sales data for comparable properties and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers. These estimates are subject to revision as market conditions, and the Partnership's assessment of them, change. PART I. FINANCIAL INFORMATION Item 3. Quantitative and Qualitative Disclosures About Market Risk Inapplicable Item 4. Controls and Procedures Evaluation was performed under the supervision and with the participation of the Partnership's management, including the Chief Executive Officer and Chief Financial Officer of the General Partner, of the effectiveness of the design and operation of disclosure controls and procedures, as of September 30, 2003, as defined in Rule 13a-15 of the rules promulgated under the Securities and Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. 10 REALTY PARKING PROPERTIES L.P. PART II. OTHER INFORMATION Item 1. Legal Proceedings Inapplicable Item 2. Changes in Securities and Use of Proceeds Inapplicable Item 3. Defaults upon Senior Securities Inapplicable Item 4. Submission of Matters to a Vote of Security Holders Inapplicable Item 5. Other Information Inapplicable Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. b. Reports on Form 8-K: Form 8-K dated August 29, 2003 described the Partnership's sale of its property in Los Angeles, California. Form 8-K dated September 22, 2003 described the Partnership's sales of its properties in Little Rock, Arkansas, and Miami, Florida. 11 Exhibit 31.1 REALTY PARKING PROPERTIES L.P. Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, John M. Prugh, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Realty Parking Properties II L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 11/11/03 By: /s/ John M. Prugh John M. Prugh Chief Executive Officer Realty Parking Company, Inc. General Partner -12- Exhibit 31.2 REALTY PARKING PROPERTIES L.P. Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Timothy M. Gisriel, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Realty Parking Properties L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 11/11/03 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Chief Financial Officer Realty Parking Company, Inc. General Partner -13- Exhibit 32 REALTY PARKING PROPERTIES L.P. CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the filing of Realty Parking Properties L.P.'s (the "Partnership") Quarterly Report on Form 10-Q for the period ending September 30, 2003 with the Securities and Exchange Commission on the date hereof (the "Report"), we certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Date: 11/11/03 By: /s/ John M. Prugh John M. Prugh Chief Executive Officer Realty Parking Company, Inc. General Partner Date: 11/11/03 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Chief Financial Officer Realty Parking Company, Inc. General Partner -14- REALTY PARKING PROPERTIES L.P. SIGNATURES Pursuant to the requirements 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. REALTY PARKING PROPERTIES L.P. DATE: 11/11/03 By: /s/ John M. Prugh John M. Prugh President and Director Realty Parking Company, Inc. General Partner DATE: 11/11/03 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Treasurer Realty Parking Company, Inc. General Partner 15

REALTY PARKING PROPERTIES LP 10-Q