10-Q 1 capp10q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO 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: 333-42441 MID-AMERICA CAPITAL PARTNERS, L.P. (Exact Name of Registrant as Specified in Charter) TENNESSEE 62-1717980 (State of Incorporation) (I.R.S. Employer Identification Number) 6584 POPLAR AVENUE, SUITE 340 MEMPHIS, TENNESSEE 38138 (Address of principal executive offices) (901) 682-6600 Registrant's telephone number, including area code N/A (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. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Number of Shares Outstanding Class April 30, 2001 ----- ------------------------- none TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets of Mid-America Capital Partners, L.P. (the "Partnership") as of March 31, 2001 (Unaudited) and December 31, 2000 Statements of Operations of the Partnership for the three months ended March 31, 2001 and 2000 (Unaudited) Statements of Cash Flows of the Partnership for the three months ended March 31, 2001 and 2000 (Unaudited) Notes to Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk PART II - OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures PART I. Financial Information ITEM 1. Mid-America Capital Partners, L.P. (a limited partnership) Balance Sheets March 31, 2001 (Unaudited) and December 31, 2000 (Dollars in thousands)

Mid-America Capital Partners, L.P. (a limited partnership) Statements of Operations Three months ended March 31, 2001 and 2000 (Dollars in thousands) (Unaudited)

Mid-America Capital Partners, L.P. (a limited partnership) Statements of Cash Flows Three months ended March 31, 2001 and 2000 (Dollars in thousands) (Unaudited)

MID-AMERICA CAPITAL PARTNERS, L.P. (a limited partnership) NOTES TO FINANCIAL STATEMENTS March 31, 2001 and 2000 (Unaudited) 1. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the accounting policies in effect as of December 31, 2000, as set forth in the annual financial statements of Mid-America Capital Partners, L.P. (the "Partnership"), as of such date. In the opinion of management, all adjustments necessary for a fair presentation of the financial statements have been included and all such adjustments were of a normal recurring nature. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the results to be expected for the full year. The Partnership is a special purpose Delaware limited partnership. The Partnership was formed on November 24, 1997 for the sole purpose to own 26 apartment communities (the Mortgaged Properties) and manage, renovate, improve, lease, sell, transfer, exchange, mortgage and otherwise deal with the Mortgaged Properties. The sole limited partner of the Partnership is Mid-America Apartments, L.P., a Tennessee limited partnership (MAALP), which is a majority- owned subsidiary of Mid-America Apartment Communities, Inc. (MAAC). MAAC owns, directly or through its subsidiaries, all of the outstanding units of partnership interest. MAAC is a self-administered and self-managed umbrella partnership real estate investment trust (REIT). MAAC conducts a substantial portion of its operations through MAALP and subsidiaries of MAALP. The sole general partner of the Partnership is MAACP, Inc., a Tennessee corporation (MAACP), a wholly-owned subsidiary of MAAC. The term of the Partnership shall be to December 31, 2020, unless terminated earlier as provided in the Partnership Agreement or as otherwise provided by law. 2. Recent Accounting Pronouncements In June 2000, FASB Statement 138, "Accounting for Derivative Instruments and Hedging Activity-Deferral of Effective Date of FASB Statement 133", was issued. This Statement shall be effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Partnership has only limited involvement with derivative financial instruments, and does not use them for trading purposes. This new accounting statement did not have any impact on the Partnership's financial statements. 3. Real Estate Transactions Property Dispositions In March 2001, the Company sold a tract of surplus land adjacent to one of its operating communities for approximately $600,000. The Company recorded a gain for financial reporting purposes of approximately $234,000, which comprises the majority of the caption "gain on dispositions, net" in the accompanying financial statements. 4. Segment Information At March 31, 2001, the Partnership owned and operated 26 apartment communities from which it derives all significant sources of earnings and operating cash flows. The Partnership's operational structure is organized on a decentralized basis, with individual property managers having overall responsibility and authority regarding the operations of their respective properties. Each property manager individually monitors local and area trends in rental rates, occupancy percentages, and operating costs. Property managers are given the on-site responsibility and discretion to react to such trends in the best interest of the Partnership. Management evaluates the performance of each individual property based on its contribution of revenues and net operating income ("NOI"), which is composed of property revenues less all operating costs including insurance and real estate taxes. The Partnership's reportable segments are its individual properties because each is managed separately and requires different operating strategy and expertise based on the geographic location, community structure and quality, population mix, and numerous other factors unique to each community. The revenues and profits for the aggregated communities are summarized as follows (Dollars in thousands):

There have been no material changes in segment assets during the period. PART I. Financial Information ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following is a discussion of the financial condition and results of operations of the Partnership for the three months ended March 31, 2001 and 2000. This discussion should be read in conjunction with the financial statements included in this report. These financial statements include all adjustments, which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. The total number of apartment units owned at March 31, 2001 and 2000 was 5,948 in 26 apartment communities. Average monthly rental per apartment unit increased to $610 at March 31, 2001 from $590 at March 31, 2000. Overall occupancy was 95.7% and 95.8% at March 31, 2001 and 2000, respectively. RESULTS OF OPERATIONS (Dollars in 000's) COMPARISON OF THE PARTNERSHIP'S THREE MONTHS ENDED MARCH 31, 2001 TO THE THREE MONTHS ENDED MARCH 31, 2000 Total revenues for the three months ended March 31, 2001 increased 1.9% from the three months ended March 31, 2000. This increase is due to the increases in the average rental rate as compared to the same period a year ago. Property operating expenses for the three months ended March 31, 2001 increased by 5.6% as compared to the same period a year ago. Increases in personnel, real estate taxes and insurance, and other operating costs represented the majority of the increase. LIQUIDITY AND CAPITAL RESOURCES Net cash flow provided by operating activities increased to $3,473 for the three months ended March 31, 2001 from $2,957 for the three months ended March 31, 2000 mainly related to changes in operating assets and liabilities. Net cash flow used in investing activities increased by $157 for the three months ended March 31, 2001 as compared to the same period a year earlier entirely due to increased capital improvements to the properties. Net cash used in financing activities decreased during the period due to intercompany cash payments to the limited partner. The Partnership believes that cash provided by operations is adequate and anticipates that it will continue to be adequate in both the short and long-term to meet operating requirements (including recurring capital expenditures at the communities). INSURANCE In the opinion of management, property and casualty insurance is in place which provides adequate coverage to provide financial protection against normal insurable risks such that it believes that any loss experienced would not have a significant impact on the Partnership's liquidity, financial position, or results of operations. INFLATION Substantially all of the resident leases at the communities allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus may enable the Partnership to seek rent increases. The substantial majority of these leases are for one year or less. The short-term nature of these leases generally serves to reduce the risk to the Partnership of the adverse effects of inflation. RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS The Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to capital expenditures and rehabilitation costs on the apartment communities. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Although the Partnership believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Partnership or any other person that the objectives and plans of the Partnership will be achieved. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This information has been omitted as there have been no material changes in the Partnership's market risk as disclosed in the 2000 Annual Report on Form 10-K. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits or Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 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. MID-AMERICA CAPITAL PARTNERS, L.P. Date: 5/15/2001 /s/Simon R.C. Wadsworth Simon R.C. Wadsworth President and Director (Principal Executive Officer) Date: 5/15/2001 /s/Mark S. Martini Mark S. Martini Director (Principal Financial and Accounting Officer)

MID AMERICA CAPITAL PARTNERS L P 10-Q