10-Q 1 e13683_10-q.txt FORM 10-Q FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002. 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: 0-5537 INVESTMENT PROPERTIES ASSOCIATES ----------------------------------------------------- (Exact name of registrant as specified in its charter) A New York Limited Partnership 13-2647723 ------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 60 East 42nd Street, New York, New York 10165 -------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 687-6400 --------------------------------------------------- (Registrant's telephone number, including area code) 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. [X] Yes [ ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No 820,000 participations of Limited Partnership Interests are outstanding as of the date hereof. INVESTMENT PROPERTIES ASSOCIATES FORM 10-Q For the Fiscal Quarter Ended March 31, 2002 INDEX Page PART I. FINANCIAL INFORMATION............................................ 1 Item 1. Financial Statements............................................. 1 Balance Sheets................................................... 1 Statements of Income............................................. 2 Statements of Cash Flows......................................... 3 Notes to Unaudited Financial Statements.......................... 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... 5 Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 6 PART II. OTHER INFORMATION................................................ 7 Item 6. Exhibits and Reports on Form 8-K................................. 7 Signatures....................................................... 8 -i- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) BALANCE SHEETS MARCH 31, 2002 AND DECEMBER 31, 2001

~~SEPTEMBER~~MARCH 3031, ~~2001~~2002 DECEMBER 31, ~~2000~~2001 --------------~~----~~ ----------------- ASSETS (Unaudited) (Note) ------ Real estate, at cost $ 8,033,347 $ 8,033,347 Less: Accumulated depreciation and amortization (5,880,040) (5,880,040) ------------ ------------ 2,153,307 2,153,307 Cash and cash equivalents 12,~~631~~392,~~374~~368 92,~~514~~788,~~349~~292 Due from managing agent (Helmsley-Spear, Inc.) ~~205~~168,~~430~~229 ~~730~~229,~~578~~291 Receivables, ~~principally from rentals 8~~3,~~215~~553 83,~~215~~553 Other assets ~~510~~442,~~654~~224 ~~553~~457,~~350~~515 ------------ ------------ $ 45,~~508~~159,~~980~~681 $ 125,~~959~~631,~~799~~958 ============ ============ LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) ~~----------------------------------------------~~ Accounts payable $ 4322,~~462~~461 $ ~~113~~7,~~368~~903 ~~Accrued real estate taxes 70,843 11,086~~ Distributions payable to General Partners, Special Limited Partners and Limited Partners 7567,~~214~~179 3698,~~915,446~~179 Sundry liabilities and other accrued expenses ~~319~~339,~~114~~759 ~~394~~415,~~918~~799 Deposits -- 1,500,000 ----------- ------------ ~~440~~929,~~633~~399 42,~~434~~621,~~818~~881 ------------ ------------ Partners' Capital (Deficiency) General Partners (2,~~489~~488,~~908~~495) (2,~~465~~495,~~397~~206) Special Limited Partners 3,~~762~~889,~~581~~683 53,~~966~~286,~~387~~292 Limited Partners (represented by the equivalent of 820,000 Participation Interests) 2,~~795~~829,~~674~~094 52,~~023~~218,991 ------------ ------------ 4,~~068~~230,~~347~~282 83,~~524~~010,~~981~~077 ------------ ------------ $ 45,~~508~~159,~~980~~681 $ 125,~~959~~631,~~799~~958 ============ ============

Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date. See accompanying notes to financial statements. 1 INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2002 MARCH 31, 2001 Revenues: Gross revenues from real estate $ -- $ 3,232 Real estate tax refund -- 517,038 Other income 1,500,000 -- Interest 11,531 132,830 --------------- --------------- 1,511,531 653,100 --------------- --------------- Expenses: Real estate taxes 77,034 35,653 Other expenses 185,167 173,219 --------------- --------------- 262,201 208,872 --------------- --------------- Income before items shown below 1,249,330 444,228 --------------- --------------- Guaranteed payments required under the Limited Partnership Agreement: To the Limited Partners 3,750 3,750 To the General and Special Limited Partners 25,375 25,375 --------------- --------------- 29,125 29,125 --------------- --------------- Net income transferred to Partners' Capital Accounts $ 1,220,205 $ 415,103 =============== =============== Net income allocable as follows (based on terms of the Limited Partnership Agreement): General Partners $ 6,711 $ 2,283 Special Limited Partners 603,391 205,268 Limited Partners (represented by the equivalent of 820,000 Participation Interests - unchanged during the periods) 610,103 207,552 --------------- --------------- $ 1,220,205 $ 415,103 =============== =============== Per Participation Interest: Net income $ 0.7440 $ 0.2531 =============== =============== See accompanying notes to financial statements. 2 INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND MARCH 31, 2001 2002 2001 ---- ---- OPERATING ACTIVITIES: Net income $ 1,220,205 $ 415,103 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Changes in operating assets and liabilities: Decrease in due from managing agent 61,062 212,380 Decrease in other assets 15,289 4,117 Increase in accounts payable 14,558 (17,209) Decrease in accrued real estate taxes -- (8,936) Decrease in sundry liabilities and other accrued expenses (76,038) (126,740) Decrease in deposits (1,500,000) -- ------------ ---------- Net cash (used in) provided by operating activities (264,924) 478,715 ------------ ---------- FINANCING ACTIVITIES: Distributions of net operating revenues and proceeds from sale of Real Estate to General Partners, Special Limited Partners and Limited Partners (131,000) (750,000) ------------ ---------- Decrease in cash and cash equivalents (395,924) (271,285) Cash and cash equivalents at beginning of period 2,788,292 9,514,349 ------------ ---------- Cash and cash equivalents at end of period $ 2,392,368 $9,243,064 ============ ========== See accompanying notes to financial statements. 3 INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 1 As permitted by the Securities and Exchange Commission, the accompanying unaudited financial statements and footnotes have been condensed and therefore, do not contain all disclosures required by accounting principles generally accepted in the United States. Reference should be made to the Company's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Securities and Exchange Commission. NOTE 2 In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly its financial position as of March 31, 2002 and the results of operations for the three months ended March 31, 2002 and 2001. NOTE 3 The results of operations for the three months ended March 31, 2002 and 2001 are not necessarily indicative of the results to be expected for the full year. NOTE 4 - Taxes The net income for Federal income tax purposes is $1,166,527 (March 31, 2002) and $361,425 (March 31, 2001) as compared with net income of $1,220,205 and $415,103 respectively, as shown in the statements of income. The difference results principally from depreciation expense which continues to be recognized for income tax purposes. NOTE 5 - Other Income On October 22, 2001, the Company signed a contract, subject to certain closing conditions, to sell its only remaining property, a vacant commercial office building located at 570 Broad Street, Newark, New Jersey, for a purchase price of $11,500,000. In connection with the contract, the Company received non-refundable deposits from the buyer in the amount of $1,500,000. In January 2002, due to the buyer's inability to satisfy the closing conditions, the contract expired and the Company resumed marketing activities with respect to the Property. The Company retained the non-refundable deposits from the buyer in the amount of $1,500,000. 4 INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As a result of the sales of the Company's remaining income producing properties in 2000, the Company no longer derives income from rental operations. The activity of the Company consists of marketing for sale its remaining non-income producing property, a vacant office property located at 570 Broad Street, Newark, New Jersey. The real estate tax refund in 2001 was attributable to the settlement of tax certiorari appeals filed in a prior year relating to the Company's Chicago properties which had been sold in 1998 and the 1328 Broadway and 261 Fifth Avenue properties which had been sold in 2000. The decrease in interest income was due to the reduction of investments in commercial paper as a result of the distribution made to partners during 2001 and 2002 of the net proceeds from the sales of properties. The increase in real estate taxes in 2002 as compared to 2001 is principally attributable to a tax refund received in 2001 for the 570 Broad Street property. Other income in 2002 relates to the Company's retention of a non-refundable deposit in the amount of $1,500,000 received in 2001 from a prospective buyer of the 570 Broad Street property pursuant to a contract to sell the 570 Broad Street property, which was subject to certain closing conditions. As a result of the prospective buyer's inability to satisfy the closing conditions of the sales contract, the contract expired in accordance with its terms in January of 2002, and the buyer's deposit was forfeited to the Company. See Note 5 of the accompanying notes to the financial statements. As of December 31, 2001, the Company had accrued (i) a special dividend of $410,000 to its General Partners and Special Limited Partners and holders of record of the PPI's as of the close of business on December 31, 2001 from its available cash and (ii) a distribution in the amount of $280,965 in respect of 2001 net operating revenues. During the quarter ended March 31, 2002, $131,000 had been paid in connection with such accrued distributions. 5 INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At March 31, 2002, the Company had no interest bearing indebtedness and accordingly was not exposed to market risk with respect to changes in interest rates, and does not anticipate a need to seek additional borrowings. 6 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K None. Items 1, 2, 3, 4 and 5 are not applicable and have been omitted. 7 INVESTMENT PROPERTIES ASSOCIATES (A New York Limited Partnership) 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. INVESTMENT PROPERTIES ASSOCIATES By: /s/ Irving Schneider ----------------------------------- Irving Schneider General and Special Limited Partner Dated: July 26, 2002 8

FOR THE NINE MONTHS FOR THE THREE MONTHS ------------------- -------------------- ENDED ENDED ----- ----- SEPT 30, 2001 SEPT 30, 2000 SEPT 30, 2001 SEPT 30, 2000 ------------- ------------- ------------- ------------- Revenues: --------- Gross revenues from real estate $ 62,788 $ 5,726,371 $ 51,536 $ (128,103) Real estate tax refund 1,245,541 -- 585,046 -- Interest 212,988 1,114,994 16,897 161,317 Other Income 43,139 -- 43,139 -- ------------ ------------ ------------ ------------ 1,564,456 6,841,365 696,618 33,214 ------------ ------------ ------------ ------------ Expenses: --------- Real estate taxes 187,258 460,353 68,693 (181,384) Interest on mortgages -- 43,584 -- -- Other expenses 641,554 2,549,095 242,044 239,121 Depreciation and amortization of real estate -- 536,818 -- 59,669 ------------ ------------ ------------ ------------ 828,812 3,589,850 310,737 117,406 ------------ ------------ ------------ ------------ Income (loss) before items shown below 735,644 3,251,515 385,881 (84,192) Gain on sale of real estate 95,096 150,500,239 95,096 (881,100) ------------ ------------ ------------ ------------ 830,740 153,751,754 480,977 (965,292) ------------ ------------ ------------ ------------ Guaranteed payments required under the Limited Partnership Agreement: To the Limited Partners 11,250 3,750 3,750 -- To the General and Special Limited Partners 76,125 59,429 25,375 4,054 ------------ ------------ ------------ ------------ 87,375 63,179 29,125 4,054 ------------ ------------ ------------ ------------ Net income (loss) transferred to Partners' Capital Accounts $ 743,365 $153,688,575 $ 451,852 $ (969,346) ============ ============ ============ ============ Net income (loss) allocable as follows (based on terms of the Limited Partnership Agreement): General Partners $ 4,088 $ 1,102,331 $ 2,485 $ (5,331) Special Limited Partners 367,594 99,109,540 223,441 (479,342) Limited Partners (represented by the equivalent of 820,000 Participation Interests - unchanged during the periods) 371,683 53,476,704 225,926 (484,673) ------------ ------------ ------------ ------------ $ 743,365 $153,688,575 $ 451,852 $ (969,346) ============ ============ ============ ============ Per Participation Interest: Net income (loss) $ 0.4533 $ 65.2155 $ 0.2755 $ (0.5911) ============ ============ ============ ============

2001 2000 ---- ---- OPERATING ACTIVITIES: Net income $ 743,365 $ 153,688,575 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of real estate -- 536,818 Gain on sale of real estate (138,235) (150,500,239) Amortization of deferred leasing commissions -- 232,161 Changes in operating assets and liabilities: Decrease in due from managing agent 525,148 2,237,301 Decrease in receivables -- 361,993 Decrease in other assets 42,209 232,294 Decrease in accounts payable (26,767) (475,621) Increase in accrued real estate taxes 59,757 90,531 Decrease in accrued interest -- (29,278) Decrease in sundry liabilities and other accrued expenses (75,804) (648,684) Decrease in deposits and rents received in advance -- (1,696,853) ------------- ------------- Net Cash Provided By Operating Activities 1,129,673 4,028,998 ------------- ------------- INVESTING ACTIVITIES: Property improvements -- (1,477,097) Net proceeds from sale of real estate 95,583 165,952,915 ------------- ------------- Net Cash Provided By Investing Activities 95,583 164,475,818 ------------- ------------- FINANCING ACTIVITIES: Distributions of net operating revenues to General Partners, Special Limited Partners and Limited Partners (9,108,231) (234,979,781) Principal payments on mortgage payable -- (4,000,000) ------------- ------------- Net Cash Used in Financing Activities (9,108,231) (238,979,781) ------------- ------------- Decrease in Cash and Cash Equivalents (7,882,975) (70,474,965) Cash and Cash Equivalents at beginning of period 9,514,349 79,770,013 ------------- ------------- Cash and Cash Equivalents at end of period $ 1,631,374 $ 9,295,048 ============= ============= Supplemental disclosure of cash flow information: Cash paid during the period for interest $ -- $ 72,862 ============= =============

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