10-Q 1 c07824e10vq.txt QUARTERLY REPORT 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 June 30, 2006 --- 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 0-7798 FIRST WILKOW VENTURE, A LIMITED PARTNERSHIP (Exact Name of Registrant as Specified in Its Charter) Illinois 36-6169280 ----------------------- ---------------- (State of Organization) (IRS Employer Identification No.) 180 North Michigan Avenue, Chicago, Illinois 60601 --------------------------------------------------- (Address of Principal Executive Offices) Registrant's Telephone Number, including area code: (312) 726-9622 -------------- 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 a large accelerated filer,an accelerated filer, or a non-accelerated filer. Large accelerated filer [ ]Accelerated filer [ ] Non-accelerated filer [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] The Registrant's units of limited partnership interest are not traded in a regulated market. The restrictions on the sale, transfer, assignment or pledge of partnership units are described in the Agreement of Limited Partnership of the Registrant. FIRST WILKOW VENTURE FORM 10-Q TABLE OF CONTENTS JUNE 30, 2006 FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheet 3 Consolidated Statement of Operations 4 Consolidated Statement of Cash Flows 5 Notes 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 REMARKS 9 SIGNATURES 9 CERTIFICATIONS

2 FIRST WILKOW VENTURE (A LIMITED PARTNERSHIP) CONSOLIDATED BALANCE SHEET

Note: Balance Sheet at 12/31/05 taken from the audited financial statements at that date. See accompanying notes to consolidated financial statements 3 FIRST WILKOW VENTURE CONSOLIDATED STATEMENT OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)

See accompanying notes to consolidated financial statements 4 FIRST WILKOW VENTURE CONSOLIDATED STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)

See accompanying notes to consolidated financial statements 5 FIRST WILKOW VENTURE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2006 1 - Financial Statements The financial statements have been prepared in accordance with U.S. generally accepted accounting principles. Under this method of accounting, revenues are recorded when earned and expenses are recorded when incurred. No provision for federal income taxes has been made since First Wilkow Venture (the "Registrant") is a partnership and the partners report their pro rata share of income or loss individually. In December 2003, the FASB issued Interpretation No. 46R (FIN 46R), "Consolidation of Variable Interest Entities," which replaces FIN 46, "Consolidation of Variable Interest Entities," which was issued in January 2003. The objective of this interpretation is to provide guidance on how to identify a variable interest entity ("VIE") and determine whether the assets, liabilities, non-controlling interests, and results of operations of a VIE need to be included in a company's consolidated financial statements. A company that holds variable interests in an entity will need to consolidate the entity if the company's interest in the VIE is such that the company will absorb a majority of the VIE's expected losses and/or receive a majority of the entity's expected residual returns, if they occur. FIN No. 46R also requires additional disclosures by primary beneficiaries and other significant variable interest holders. The Registrant has determined that it is not the "primary beneficiary", as defined by FIN No. 46R with respect to any of its unconsolidated real estate investments. Reference is made to the Registrant's annual report for the year ended December 31, 2005, for a description of other accounting principles and additional details for the Registrant's financial condition, results of operations, changes in partners' capital and statement of cash flows for the year then ended. The details provided in the notes thereto have not changed as a result of normal transactions in the interim. 2 - Subsequent Events On July 10, 2006, the Registrant made a distribution to its partners in the amount of $211,520, or $1.30 per unit, based on 162,708 units outstanding as of June 30, 2006. On July 12, 2006, the third party Tender Offer Statement submitted by MacKenzie Patterson Fuller, LP expired. No units were exchanged as a result of the tender offer. On July 20, 2006, the Registrant filed an "odd-lot tender offer" to purchase for cash all, but not less than all, of the units of limited partnership of the Registrant held by each unit holder who holds 50 or fewer units as of the close of business on July 19, 2006. 6 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OVERVIEW First Wilkow Venture is a limited partnership composed of numerous limited partners and two general partners, Marc R. Wilkow and Clifton J. Wilkow. It was organized on December 8, 1972, for the purpose of acquiring the total interest in twenty-one partnerships and to carry on the business and operations of such terminating partnerships. The acquisition of these partnerships was accomplished in 1973 through an exchange offer of partnership units in First Wilkow Venture for substantially all of the partnership units in the terminating partnerships. Throughout the following years First Wilkow Venture has continued to own outright or otherwise maintain a participatory interest in real property for investment purposes. The partnership currently has an interest in sixteen properties, divided among residential, commercial and industrial buildings and shopping centers. Fourteen of the properties are neither owned nor leased by First Wilkow Venture directly, but are owned in participation with other partnerships. These properties break down as follows: one is a residential project, six are shopping centers, six are office buildings, and one is a real estate investment trust. The remaining two properties are owned and operated by First Wilkow Venture as office buildings. MATERIAL CHANGES IN FINANCIAL CONDITION Total Assets increased through June 30, 2006, as a result of various capital expenditures at one of the office buildings. The increase in Total Liabilities and Partners' Capital is a result of the increase in a number of prepaid tenant receivable balances and an increase in Mortgages Payable due to various draws for capital expenditures at one of the office buildings. MATERIAL CHANGES IN RESULTS OF OPERATIONS REVENUE Revenue totaled $1,993,234 for the second quarter ended June 30, 2006, compared to $2,119,084 for the three months ended June 30, 2005. Revenue for the current fiscal quarter end was largely attributable to office building tenant collections. No significant change in quarterly revenue is anticipated for the remainder of the fiscal year. In addition, income earned from partnerships remained relatively the same with $131,825 for the second quarter 2005 and $119,020 in the comparative current fiscal quarter end. 7 EXPENSES Total expenses for the three months ended June 30, 2006, were $2,299,177, consisting of operating, interest, real estate tax and depreciation/amortization expenses for the office buildings as well as other general and administrative expenses for the partnership. For the three months ended June 30, 2005, expenses were $2,028,011. First Wilkow Venture is expecting to complete renovation work to one of the office buildings throughout the remainder of the fiscal year and a portion of these expenditures will be classified as repairs causing the expense line item to rise. This renovation work is intended to upgrade the quality of the office building and will enhance our office space marketing programs. NET INCOME First Wilkow Venture had net loss in the amount of $177,470 for the most recent fiscal quarter ended June 30, 2006. In comparison, First Wilkow Venture had net income from operations in the amount of $188,844 for the same period in the prior year. LIQUIDITY AND CAPITAL RESOURCES First Wilkow Venture has cash on hand to pay for the cost of renovating the office building as described in the expenses section above, as well as to cover any current liabilities that exist. The cash on hand has been generated from partnership interest sales over the past few years. The remaining cash on hand may be used for future investments as the opportunities present themselves or distributions to the partners as well as the tender offer that was discussed earlier in the report. As a result of the refinancing of Marketfair North, a partnership in which M & J Retail Limited Partnership is an equity holder, M & J Retail Limited Partnership is no longer obligated to maintain a certificate of deposit of $250,000. This deposit, held with LaSalle National Bank, was maintained as collateral for two letters of credit relating to Marketfair North. There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material impact on First Wilkow Venture's revenues from continuing operations. First Wilkow Venture does not have any off-balance sheet arrangements. First Wilkow Venture does not own any significant plant or equipment that it would seek to sell in the near future. 8 REMARKS In the opinion of the General Partners, the financial information of this report includes all adjustments, including estimated provisions for items normally settled at year end, and is a fair statement of the results for the interim periods ended June 30, 2006 and 2005. 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. FIRST WILKOW VENTURE By: Marc R. Wilkow ------------------------------------- Marc R. Wilkow, General Partner and President of M&J Wilkow, Ltd., its Managing Agent DATED: August 11, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, in the capacities indicated, on August 11, 2006. By: Clifton J. Wilkow ------------------------------------- Clifton J. Wilkow, General Partner and Executive Vice President of M&J Wilkow, Ltd. By: Peter Boelke ------------------------------------- Peter Boelke, Vice President of M&J Wilkow, Ltd. 9

FIRST WILKOW VENTURE 10-Q