Item 1. Business
Teeco Properties L.P. (the "Partnership") commenced its business operation on October 1, 1978. The Partnership was formed pursuant to the Plan of Complete Liquidation and Dissolution (the "Plan") of Tishman Liquidating Corporation (formerly Tishman Realty & Construction Co., Inc.) ("TLC"). TLC had been engaged for many years in the development, construction and ownership of office buildings. The Partnership's principal objective is to sell or otherwise dispose of the real properties and other assets it acquired pursuant to the Plan and distribute the proceeds to its holders of units. As of December 31, 1997 the Partnership has disposed of all its non-liquid assets.
Pursuant to the Plan, which was approved by TLC's shareholders at the November 1977 Combined Annual and Special Meeting of Shareholders, on September 30, 1978, TLC transferred all of its remaining assets to the Partnership in exchange for units representing substantially all of the outstanding interests in the Partnership. On September 30, 1978, TLC assigned to its shareholders a one-unit interest in the Partnership for each share of TLC Common Stock held of record as of the close of business on September 29, 1978, after giving effect to trading on that date. Trading in TLC's Common Stock ceased and TLC's stock transfer books were permanently closed at such date.
In October, 1979 at a Special Meeting of the Partners (the "Special Meeting") the Partners approved (i) the contract of sale (the "Sale Agreement") entered into in June, 1979 for the purchase by Lazard Realty, Inc., (the "Purchaser"), acting on behalf of a group of investors, of all the partnership's interest in two office buildings, in New York City and three land assemblages in New York City, Chicago and Stamford (collectively, the "Sale Properties"). Robert V. Tishman and Jerry I. Speyer, two of the General Partners of the Partnership, were appointed to direct the development of the three land assemblages for the Purchaser and have an equity interest in these properties, and (ii) an amendment to the Limited Partnership Agreement to provide that the Partnership would not be dissolved upon the sale or other disposition of all or substantially all of the Partnership's assets. Pursuant to the approval of the Partners at the Special Meeting, the Partnership has taken the following actions:
1. Completed the sale on December 12, 1979 to Purchaser. In this transaction and a related transaction with the owner of the mortgage on the Partnership's interest in the 666 Fifth Avenue, New York building, the Partnership received net
PART I
proceeds from the sale of assets, before expenses, of approximately $80,379,000, consisting of approximately $76,700,000 in cash above existing mortgages and $3,679,000 net carrying value of interests in mortgages on the 666 Fifth Avenue building and a land assemblage on Madison Avenue in New York City. The Purchaser took title subject to existing mortgages other than the $2.5 million second mortgage on the 919 Third Avenue, New York property which was paid by Teeco at the closing. The properties were transferred subject to certain other liabilities, including ground lease in effect at the time of closing.
2. Distributed $6.50 per unit on December 27, 1979 and $5.00 per unit on January 7, 1980.
3. Amended the Limited Partnership Agreement to provide that the Partnership shall not be dissolved upon the sale or other disposition of all or substantially all of the Partnership's assets.
During 1979, the Partnership sold its interests in (i) two apartment complexes located in suburbs of Atlanta, Georgia for $800,000 cash above existing mortgages to limited partnerships with which Alan V. Tishman, a brother of Robert V. Tishman and formerly Executive Vice President of TLC, is affiliated, (ii) a 50,000 square foot plot of vacant land in downtown New York City to the mortgage lender for the property, for no consideration other than assumption of liability, and (iii) the leasehold interest in a parcel of land located in the vicinity of the Los Angeles Airport in California, to The Equitable Life Assurance Society of the United States ("Equitable") for $850,000 cash. This parcel had been subleased from Equitable in connection with the sale by TLC of various property interests to Equitable pursuant to the Plan of Liquidation in November 1977. At the time of sale of the sublease the amount of prepaid rent related thereto was approximately $600,000.
In January, 1980 the Partnership entered into a settlement agreement with an unaffiliated third party with respect to certain mortgages receivable in the principal amount of $969,000 on a land assemblage on Third Avenue between 52nd and 53rd streets in New York City. Teeco received $1,100,000, thus realizing an amount approximately $629,000 greater than the net carrying value of such mortgages.
In December, 1980 the Partnership sold a second mortgage held on Horizon House, Fort Lee, New Jersey to H & H Associates, an unaffiliated New York partnership. The selling price was $10,200,000 consisting of $1,000,000 cash and a $9,200,000 promissory note payable on the earlier
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of (i) the date of satisfaction of the mortgage, or (ii) September 30, 1984. Teeco realized an amount approximately $7,698,000 greater than the net carrying value of the mortgage but approximately $185,000 less than the original principal amount including accrued interest. The Partnership recognized the profit on this transaction as the sale price was collected using the installment method. The Partnership recognized a gain of $755,000 in 1980 and the balance in January 1981 when the property was sold and the mortgage satisfied.
During 1980, the Partnership declared cash distributions aggregating $1.00 per unit, of which $.80 per unit was paid in 1980 and $.20 per unit paid on January 26, 1981.
During 1981, the Partnership declared cash distributions aggregating $1.30 per unit, of which $1.20 per unit was paid in 1981 and $.10 per unit paid on January 25, 1982.
During 1982, the Partnership sold for $224,000 cash, its interest in a parcel of land located in Los Angeles, California and realized a profit of approximately $152,000.
From 1982 through 1987, the Partnership declared cash distributions aggregating $.40 per unit in each year, of which $.30 per unit was paid in each of the respective years and $.10 per unit in January of the following year.
During 1988, the Partnership declared cash distributions aggregating $.20 per unit and $.30 per unit was paid which includes $.10 cash distribution declared and accrued in December, 1987. Further distributions have been suspended until such time as it can be determined that the Partnership's net worth is sufficient to meet its exposure under various pending litigations, etc.
Effective January 1, 1986, all the employees (5) of the Partnership have been transferred to the payroll of Tishman Speyer Properties, a Partnership in which Tishman Speyer Properties, Inc., is the only general partner of which Mr. Jerry I. Speyer is currently the sole stockholder. Tishman Speyer Properties will allocate costs based on utilization of services of such employees who spend at least a portion of their time on the business affairs of the Partnership. The amount of time which such employees spend on the business of the Partnership will decrease as the Partnership disposes of its assets.
Item 2.
Item 2. Properties
The Partnership has no remaining non-liquid assets.
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Item 3.
Item 3. Legal Proceedings and Contingent Liabilities
There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Partnership or any of its subsidiaries is a party or of which any of their property is the subject, except the following.
The most material of the Partnership's liabilities are litigations and other contingent liabilities of TLC for which the Partnership is contingently liable. In connection with its liquidation, TLC established a reserve fund for certain fixed and contingent liabilities which during the period from October 1, 1992 to February 11, 1993 was substantially exhausted and TLC was then liquidated. In accordance with the agreement under the Plan, the Partnership will pay any remaining TLC liabilities. Such agreement states, however, that none of the Partners of the Partnership shall be personally liable for any of the liabilities or obligations incurred by the Partnership under such agreement (see discussion at the end of this Item for potential liabilities of the partners).
TLC Litigation
The Partnership has no material pending legal proceedings except the following:
An informal claim has been asserted against TLC as a guarantor of the alleged obligations of a dissolved subsidiary of TLC to advance or contribute up to $11,125,000 to a joint venture formed to develop the building at 1166 Sixth Avenue and certain other properties. Counsel to TLC in the litigation believes that the maximum amount that TLC was required to contribute was $6,125,000 and that in any event, prior advances substantially in excess of $11,125,000 fully satisfied its obligation to make advances to the joint venture.
TLC has been named as one of many defendants in numerous law suits brought between November 1989 and February 1998 by persons who allege injuries from exposure to asbestos at various work sites, including some at which predecessors of TLC were involved in construction activities. Management of the Partnership believes, based in part upon the advice of counsel, including the experience of similar cases, that while the cost of resolving these cases could be material in relation to the assets of the Partnership, the resources of the Partnership, including insurance coverage, will be sufficient to cover the costs of resolving these cases and possible unasserted claims.
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Provision for Liabilities
Under state law, the Partnership is required, prior to making any distribution to Unitholders, to pay or adequately provide for the payment of its liabilities. The Partnership had also agreed with TLC that prior to distributing the proceeds of sale of any material assets of the Partnership the Partnership will, to the extent reasonably required at the time of such distribution and taking into account the remaining assets of the Partnership, set aside reserves for the payment of the liabilities of the Partnership, including those liabilities of TLC assumed by the Partnership.
The Partnership has established a reserve fund for contingent liabilities to supplement the TLC reserve fund which had been exhausted during the period from October 1, 1992 to February 11, 1993. Based on (i) opinions of counsel received by the Partnership and TLC, regarding certain of the litigations to which TLC and/or the Partnership is a party, (ii) reports from counsel regarding the status of other litigations, and (iii) the General Partners' evaluation of the potential for additional claims based on prior business operations of TLC, the General Partners believe that the amount in the fund taken together with the other remaining assets of the Partnership will be an adequate provision for the liabilities of the Partnership.
However, in view of the contingent nature of such liabilities, the General Partners cannot be certain of the sufficiency of the fund established for these liabilities. The reserve fund of the Partnership may be used to indemnify former officers and directors of TLC and/or General Partners of the Partnership.
If the reserve fund of the Partnership and the remaining assets of the Partnership were inadequate to provide for the liabilities of the Partnership, the Unitholders of the Partnership could be obligated to pay these liabilities to the following extent: (i) depending on the resolution of certain unresolved legal questions, Unitholders could be liable for the return of distributions received from the Partnership and (ii) if as a result of participation in the management of the Partnership, a Limited Partner is treated as a general partner of the Partnership, such Limited Partners would be generally liable for Partnership obligations, which could be satisfied out of such Unitholder's personal assets, except to the extent that the liability for such obligation is limited by agreement to the assets of the Partnership. The sale agreement with the Purchaser and other material agreements of the Partnership contain such a limitation.
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Possible Liability for Return of Distributions
Under the Delaware Limited Partnership Act, a limited partner may not receive a return of any part of his contribution unless, among other things, the remaining assets of the partnership are sufficient to pay all the liabilities of the partnership, excluding certain liabilities to partners. Messrs. Fried, Frank, Harris, Shriver & Jacobson have advised the Partnership that while there is no authority directly on point, it appears that these provisions also apply to distributions to holders of interests in a limited partnership who have not been admitted as limited partners. The Partners' contributions to the Partnership were made in the form of a transfer of assets by TLC to the Partnership in exchange for all the outstanding Units. The Partnership's Certificate of Limited Partnership (the "Certificate") states that the agreed value of the property contributed to the Partnership by TLC is equal to the excess of the amount at which such property was initially recorded on the books of the Partnership over the amount at which the liabilities of the Partnership were initially recorded on its books. Based on this provision in the Certificate, the Partners' contribution would equal approximately $2.21 per unit, which was the total Partners' Equity per Unit as reflected in the Consolidated Balance Sheet of the Partnership and Subsidiary Companies at October 1, 1978. The total Partners' Equity at December 31, 1997 is $.02 per Unit. Accordingly, counsel has advised the General Partners that if the Partners' contributions are determined on the basis provided in the Certificate, distributions of $2.19 per unit made to Unitholders on or before December 31, 1997 and a portion of the distributions subsequent to December 31, 1997 will be treated as a return of the Partners' contribution to the Partnership. Such counsel have also advised the General Partners, however, that it is uncertain whether the assets of a partnership are valued at book value or fair market value for purpose of determining whether a distribution is a return of the Partners' contribution. If the amount of the Partners' contribution was determined on the basis of the fair market value of the Partnership's assets at the time such assets were transferred to the Partnership, it is likely that an additional portion of the distribution made following the closing of the sale of Partnership assets would be treated as a return of the Partners' contribution. The precise amount that would be treated as a return of the Partners' contribution would depend on fair market value of the Partnership's assets at the time of the transfer from TLC and the fair market value of the partnership's remaining assets following the sale of assets and the distribution to Unitholders.
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Possible Liability as General Partners
Limited Partners are generally not liable for the debts or losses of a limited partnership beyond the amount of their capital contributions. Under the Partnership Agreement, the General Partners are vested with exclusive authority to manage and conduct the business and affairs of the Partnership and Limited Partners are entitled to vote only in limited circumstances. The Partnership has received an opinion from its Delaware counsel that under Delaware Law the existence and exercise of rights granted to the Limited Partners in the Certificate, including the right to vote on the sale of assets and amendment to the Partnership Agreement, will not cause the Limited Partners to be treated as partners of the Partnership. Any General Partner acting alone may amend the Partnership Agreement and the Certificate to add additional matters material to the business of the Partnership which a General Partner may submit to a vote of the Partners in the event of disagreement among the General Partners, provided that such General Partners obtains an opinion of counsel that neither the existence nor the exercise of such voting rights will cause the Limited Partners to be liable as a general partner for the debts of the Partnership.
There is uncertainty as to whether Limited Partners exercising the powers granted to the Limited Partners by the Partnership Agreement, including the right to vote on the proposed sale of assets and amendment to the Partnership Agreement could, under certain circumstances, be treated as general partners under the laws of jurisdictions other than Delaware in which the Partnership conducts business. If Limited Partners were deemed to be general partners, they would be generally liable for Partnership obligations, which could be satisfied out of their personal assets. The Partnership has, however, followed a general policy of providing in all its material agreements, including the Partnership's conditional agreement and the Sale Agreement with the Purchaser, to pay the liabilities of TLC and that the Partners shall not be personally liable for the Partnership's obligation under such agreements. Accordingly, counsel has advised that a Limited Partner who is deemed to be a general partner would not be personally liable for such obligations of the Partnership. However, counsel had advised the General Partners that such a partner could, if assets of TLC were deemed to have been transferred to the Partnership without fair consideration, be liable to creditors of TLC up to the amount by which the value of the assets of the Partnership at the time of the initial transfer of assets of TLC to the Partnership exceeds the value of the assets of the Partnership at the time they become available to such creditors. Counsel has advised the Partnership that whether fair consideration has been given in a particular case is a question of fact. In their opinion it is unlikely, however, that the transfer of assets to the Partnership would be deemed to be without fair consideration
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since, in view of the Partnership's agreement to pay the liabilities of TLC, the transfer did not diminish the assets available to satisfy the claims of creditors of TLC and, at the time the assets were transferred, the Partnership did not have any liabilities other than those assumed from TLC. Therefore, counsel has advised that it is unlikely that a Limited Partner of the Partnership who is deemed to be a general partner would have any liability to creditors of TLC in excess of distributions received by such partner from TLC and the Partnership (plus interest).
Under the Delaware Limited Partnership Act, even if the General Partners were deemed to have sufficiently provided for the Partnership's liabilities by the establishment of a reserve fund, a Unitholder receiving a distribution could be liable for a period of one year thereafter for the return of the distribution to the extent necessary to discharge the Partnership's liabilities to creditors who extend credit or whose claims arose prior to such distribution, including any liabilities in respect of litigations and other contingent obligations of TLC, if the distribution were deemed to have been a return of all or part of his contribution and subsequent distributions diminished the reserve fund to an amount insufficient to pay all the Partnership's liabilities. Counsel has also advised the General Partners that while there is no authority directly on point, it appears that this provision would also apply to distributions to holders of interests in a partnership who have not been admitted as limited partners.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None
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Item 5.
Item 5. Market for Registrant's Common Stock and Related Security Holders Matters
Units of limited partnership interest are traded on the Over-the-Counter Bulletin Board System under the symbol 3TPLPZ. As of March 2, 1998, the Partnership has 1,226 Unitholders of record. Market quotations of the units were deleted from the National Association of Securities Dealers Automated Quotation System in January 1990 due to an insufficient number of market makers.
The price range information for 1996 and 1997 is not available to registrant due to insufficient activity.
During 1996 and 1997, there were no distributions declared.
Holders of units who elected to be admitted as limited partners must satisfy all conditions set forth in the Limited Partnership Agreement. Such conditions include, among others, the written acceptance of all provisions of the Limited Partnership Agreement and the consent of a majority of the General Partners. Future distributions by the Partnership are suspended until such time as it can be determined that the Partnership's net worth is sufficient to meet its exposure under various pending litigations.
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PART II
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation
Introduction and History
The Partnership commenced its business operations on October 1, 1978. The Partnership was formed pursuant to the Plan of Complete Liquidation and Dissolution of Tishman Liquidating Corporation (formerly Tishman Realty & Construction Co., Inc.). TLC had been engaged for many years in the development, construction and ownership of office buildings. The Partnership's principal objective is to sell or otherwise dispose of the real properties and other assets it acquired pursuant to the Plan and distribute the proceeds to its holders of units.
Pursuant to the Plan, which was approved by TLC's shareholders at the Combined Annual and Special Meeting of Shareholders held on November 7, 1977, on September 30, 1978 TLC transferred all of its remaining assets to the Partnership in exchange for units representing substantially all of the outstanding interests in the Partnership. On September 30, 1978, TLC assigned to its shareholders a one-unit interest in the Partnership for each share of TLC Common Stock held of record as of the close of business on September 29, 1978, after giving effect to trading on that date. Trading in TLC's Common Stock ceased and TLC's stock transfer books were permanently closed at such date.
Effective February 11, 1993, the shareholders and the Board of Directors of TLC approved the liquidation of TLC.
On May 14, 1993, following the retirement of Robert V. Tishman as General Partner of the Partnership, the remaining General Partners then authorized the dissolution of the Partnership pursuant to Article 16 of the Limited Partnership Agreement. On June 30, 1993 all the remaining assets of the Partnership were to be transferred to a Liquidating Trust (the "Liquidating Trust"), and the Trustees of the Liquidating Trust, acting solely in their fiduciary capacity as Trustees, were to assume all liabilities of the Partnership. Upon such transfer to the Liquidating Trust, the Partnership was to close its Unit transfer books; and was to request the National Quotation Bureau, Inc. to cease carrying quotations of the Units.
All Unitholders of the Partnership were to be deemed beneficial owners (the "Beneficiaries") of a pro rata share of the aggregate beneficial interest of the Liquidating Trust (the "Beneficial Interest"). The Beneficial Interests were to be non-transferable except by will, intestate succession or operation of law.
On June 30, 1993, after further consideration, the general partners determined that it is in the best interest of the Partnership and the Unitholders to continue the dissolution and
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liquidation of the Partnership in partnership form. Therefore, the Partnership will continue to maintain its Unit transfer books and the Units will continue to be registered under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Results of Operations
Interest income amounted to $11,000 (1997), 18,000 (1996), and $46,000 (1995) . The interest income has been generated from cash available for investment purposes. There has been less cash available for each of the three years ended December 31, 1997.
General and administrative expenses amounted to $299,000(1997), $303,000(1996) and $336,000(1995). The 1997 expense reflects the effects of the limited activity of Partnership. The decrease in such expenses is principally due to an decrease in legal, professional, administrative and other costs incurred to wind up the business affairs of the Partnership.
It is expected that the Partnership will exhaust its remaining funds during the first quarter of 1998 and is expected to cease operations with no further distributions being made to its partners.
Impact of year 2000 - since the Partnership will exhaust its remaining funds over the next year, the year 2000 issue will have no effect on the entity.
Financial Condition
As indicated in the Consolidated Financial Statements, Partners' Equity at December 31, 1997 aggregated $135,000. The Partnership's remaining equity, however, may not be realized in its entirety due to one or more of the following:
(a) Certain sundry assets will not be ultimately realized in cash.
(b) The Partnership has an obligation to pay any liabilities which ultimately arise from the various contingencies described in Item 3 (Legal Proceedings and Contingent Liabilities) of this report. Management is unable, at this time, to predict the extent, if any, to which the Partnership may be required to pay such liabilities.
Summary
It is in the opinion of management that all of the Partnership assets which had market values in excess of the carrying values reflected in the financial statements have been disposed of. Future distributions by the Partnership are suspended until such time as it can be determined that the Partnership's net worth is sufficient to meet its exposure under various pending litigations.
Item 8.
Item 8. Financial Statements and Supplementary Data
The response to this Item is submitted in a separate section of this report.
ANNUAL REPORT ON FORM 10-K
ITEM 8 AND ITEM 14(a)(1)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS
YEAR ENDED December 31, 1997
TEECO PROPERTIES L.P. (A LIMITED PARTNERSHIP)
NEW YORK, NEW YORK
FORM 10-K--ITEMS 8 AND 14 (a) (1)
TEECO PROPERTIES L.P. (A LIMITED PARTNERSHIP)
INDEX OF FINANCIAL STATEMENTS
The following consolidated financial statements of Teeco Properties L.P. (A Limited Partnership) and subsidiaries are included in Item 8:
Consolidated balance sheets--December 31, 1997 and 1996 ...............14 Consolidated statements of operations--Years ended December 31, 1997, 1996 and 1995.....................................15 Consolidated statements of partners' equity--Years ended December 31, 1997, 1996 and 1995...............................16 Consolidated statements of cash flows --Years ended December 31, 1997, 1996 and 1995.......................17 Notes to consolidated financial statements -- December 31, 1997 ...................................................18
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
REPORT OF INDEPENDENT AUDITORS
To The Partners Teeco Properties L.P. (A Limited Partnership)
We Have audited the accompanying consolidated balance sheets of Teeco Properties L.P. and subsidiaries (the "Company") as of December 31, 1997 and 1996, and the related consolidated statements of operations, partners' equity and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York February 3, 1998
CONSOLIDATED BALANCE SHEETS--Notes A and B [CAPTION]
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS--Notes A and B [CAPTION]
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY--Notes A and B [CAPTION]
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
For The Years Ended December 31, 1997, 1996, and 1995
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS--Notes A and B [CAPTION]
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
December 31, 1997
NOTE A--PRINCIPLES OF CONSOLIDATION AND BASIS OF PREPARATION
The consolidated financial statements include the accounts of Teeco Properties L.P. ("Teeco" and the "Partnership"), and (i) corporations wholly-owned by Teeco and (ii) investments in joint ventures, both of which are inactive. During 1979, Teeco sold its interests in substantially all of its properties and ventures and its real estate operations were effectively terminated. The assets and liabilities transferred from Tishman Liquidating Corporation ("Tishman Liquidating") (see Notes B and F(1)) had been recorded on the accounts of Teeco principally at the net carrying amounts of such assets and liabilities on the books of Tishman Liquidating. Intercompany transactions of a material nature have been eliminated in consolidation. The Partnership considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
NOTE B--FORMATION OF THE PARTNERSHIP
Teeco was formed on August 17, 1978 pursuant to a Plan of Complete Liquidation and Dissolution (the "Plan") approved by the shareholders of Tishman Liquidating on November 7, 1977. The partnership term will continue until December 31, 2051, unless sooner terminated under conditions as set forth in the Partnership Agreement. On September 30, 1978, certain assets (aggregating $77,557,000) net of certain related liabilities (aggregating $63,259,000), were transferred from Tishman Liquidating in exchange for 6,479,516 units representing limited partnership interests ("Units") in Teeco (see Note F(1)).
Tishman Liquidating subsequently assigned all its units to its shareholders pursuant to the Plan. Of the 6,479,516 units transferred, 70,200 units were designated general partners' units pursuant to the terms of the Limited Partnership Agreement.
On May 14, 1993, Robert V. Tishman retired as a General Partner of the Partnership and transferred his 70,000 General Partner units (book value of approximately $21,000) to Limited Partner units.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
NOTE C--SUNDRY OTHER ASSETS 1997 1996 ---- ---- (In Thousands)
Furniture, fixtures and equipment--at cost $ 52 $ 52 Less accumulated depreciation -0- -0- ----- ----- 52 52
Unexpired insurance 11 11 ----- ----- $ 63 $ 63 ===== ===== NOTE D--ACCOUNTS PAYABLE, ACCRUED EXPENSES AND SUNDRY LIABILITIES
1997 1996 ---- ---- (In Thousands)
Accrued leasing commissions $ 0 $ 10 Other 130 77 ---- ---- $130 $ 87 ==== ====
NOTE E--PARTNERS' EQUITY
1. No provision for Federal, state and local income taxes has been made since Teeco is not subject to income taxes and the corporations included in the consolidated financial statements did not generate profits.
For the years ended December 31, 1997, 1996 and 1995, there were no reported differences between the consolidated financial statements and the U.S. Partnership Income Tax Return.
2. Pursuant to the Limited Partnership Agreement, twenty-five percent (25%) of Partnership income, gains, losses, deductions and credits for each fiscal year shall be allocated among the persons who were owners of Partnership Units at the end of each of the four fiscal quarters of such year in proportion to the number of Units held by each of them at the end of the fiscal quarter in question. In addition, any gain or loss of more than $100,000 from a single transaction shall be allocated among the unit holders at the end of the fiscal quarter in which such gain or loss is included in Teeco's taxable income on the same method as stated above. During 1997, 1996 and 1995 there were no gain or loss of more PART II NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
TEECO PROPERTIES L.P. (A Limited Partnership) AND SUBSIDIARY COMPANIES
than $100,000 from a single transaction.
3. Effective July 1988, Teeco has suspended further cash distributions until such time as it can be determined that its net worth is sufficient to meet its exposure under various pending litigations, etc. (See Note F(1)).
4. Per unit amounts set forth in the financial statements are based on the weighted average number of units outstanding during the applicable periods. The number of units used in the computation for each period was 6,479,516.
NOTE F--CONTINGENCIES AND OTHER COMMENTS
1. In connection with Tishman Liquidating's Plan of Complete Liquidation and Dissolution (see Note B), Tishman Liquidating retained assets to liquidate certain fixed and contingent liabilities, consisting of claims, litigation and disputed obligations, as to which uncertainties exist. During the period from October 1, 1992 to February 11, 1993, Tishman Liquidating exhausted substantially all of its assets and was liquidated. Accordingly, Teeco will be required to pay the remaining balance of such fixed and contingent liabilities under an agreement with Tishman Liquidating in accordance with the Plan. The ultimate outcome of the foregoing cannot be determined at this time. Accordingly, no provision for any liability that may result has been made in the accompanying consolidated financial statements. See Item 3 (Legal Proceedings and Contingent Liabilities - TLC Litigation) included elsewhere in this Annual Report on Form 10-K for a description of certain of the contingent liabilities to which Tishman Liquidating (which had stockholders' equity of approximately $23,000 and $-0- after liquidation at September 30, 1992 and February 11, 1993 respectively) and now Teeco is subject.
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2. On May 14, 1993, following the retirement of Robert V. Tishman as General Partner of Teeco, the remaining General Partners authorized the dissolution of the Partnership pursuant to Article 16 of the Limited Partnership Agreement. On June 30, 1993 all the remaining assets of Teeco were to be transferred to a Liquidating Trust and the Trustees of such Liquidating Trust, acting solely in their fiduciary capacity as Trustees, were to assume all liabilities of Teeco.
On June 30, 1993 after further consideration, the General Partners determined that it is in the best interest of the Partnership and the Unitholders to continue the dissolution and liquidation of the Partnership in partnership form. Therefore, the Partnership will continue to maintain its Unit transfer books and the Units will continue to be registered under the Securities Exchange Act of 1934.
3. See the last paragraph of Item 11 "Executive Compensation" and Item 13 "Certain Relationships and Related Transactions" included elsewhere herein for information relating to the allocation of certain expenses among Teeco and other related parties.
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Item 9.
Item 9. Disagreements on Accounting & Financial Disclosure
Not applicable
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Name Age Principal Occupation - --------------- --- ------------------------- Jerry I. Speyer 57 Managing General Partner and President of Tishman Speyer Properties, Inc., a General Partner of Tishman Speyer Properties.
Carl Glick 76 President of CYGY Realty Corp., a General Partner; President of Carl Glick Company.
David Augarten 42 Chief Financial Officer, a Senior Managing Director, and Treasurer of Tishman Speyer Properties, Inc., a General Partner of Tishman Speyer Properties.
Mr. Speyer has been a General Partner of the Partnership since the Partnership was formed. Prior to its liquidation, Mr. Speyer had been President of TLC since 1978.
On November 30, 1978 CYGY Realty Corp., all of the stock of which is owned by Mr. Glick, became a General Partner of the Partnership. On the same date Mr. Glick, was elected a director of TLC. During the period June 1978 through November 1978, Mr. Glick was a limited partner and consultant of Neuberger and Berman, members of the New York Stock Exchange. From August 1976 through May 1978, Mr. Glick was a general partner of Neuberger and Berman, members of the New York Stock Exchange. Prior thereto, Mr. Glick was a partner of David J. Greene Co., members of the New York Stock Exchange.
Effective June 15, 1996, David Augarten, a Senior Managing Director, Treasurer and Chief Financial Officer of Tishman Speyer Properties, Inc., the General Partner of Tishman Speyer Properties was appointed as the Chief Financial Officer of the Partnership.
Item 11.
Item 11. Executive Compensation
The following table sets forth the cash and equivalent renumeration and aggregate contingent forms of renumeration incurred by the Partnership and its subsidiaries during 1997 to all General Partners and the chief financial officers of the Partnership.
PART III
Securities or Property, Salaries Insurance and Benefits or Name of General Reimbursements, Individual or Capacity in Partners' Personal Persons in Group Which Served Fees Benefits - ---------------- --------------- ------------ --------------- David Augarten Chief Financial Officer $10,000 $-0-
General Partners and Chief Financial Officer as a Group (3 persons) $10,000 $-0-
Since August 1982 no compensation has been paid to the General Partners.
During the 1978 fiscal year Messrs. Robert V. Tishman and Jerry I. Speyer entered the real estate development business under the name Tishman Speyer Properties and, along with certain other employees of TLC and the Partnership, devoted a portion of their time to this business. Commencing October 1, 1978, the Partnership, TLC and Tishman Speyer Properties shared office space, certain employees and overhead services and facilities, and divided their costs based on utilization of such offices, employees services and facilities. Such amounts did not include an allocation to Tishman Speyer Properties of amounts paid by TLC and the Partnership to Messrs. Tishman and Speyer under their consulting and employment agreements, because such agreements contemplated that Messrs. Tishman and Speyer would not have devoted all of their time to the business of TLC and the Partnership.
PART III
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 2, 1998, the following persons had reported to the Securities and Exchange Commission * beneficial ownership in the amounts shown of more than five percent of the units of limited partnership interest: % of Amount and Nature Total Name and Address of Beneficial Owner of Beneficial Ownership Units - ------------------------------------ ----------------------- ----- Goldman, Sachs & Co. 85 Broad Street New York, N.Y. 10004 1,017,256 direct 15.7%
Gruss & Co. and related entities 540,000 direct and 8.3 450 Park Avenue indirect New York, N.Y. 10022
Bernard J. Lasker and related entities 486,494 direct and 7.5 20 Broad Street indirect New York, N.Y.
SB Contingency Fund Partnership 384,463 direct 5.9 1 New York Plaza New York, N.Y. 10004
* Schedule 13G dated February 4, 1992, filed by Goldman Sachs & Co.; Schedule 13D dated January 14, 1980 filed by Gruss & Co. and related persons; and Schedule 13D dated January 18, 1980 filed by Bernard J. Lasker and Lasker, Stone & Stern; Schedule 13D dated October 1, 1982 filed by SB Contingency Fund Partnership (successor in interest to SBBD Liquidating Partnership); Schedule 13G dated January 31, 1982 filed by John L. Tishman, Louise T. Rothman and William E. Spiro.
PART III
% of Amount and Nature Total Name and Address of Beneficial Owner of Beneficial Ownership Units - ------------------------------------ ----------------------- -----
John L. Tishman, individually and 338,256 (1) direct and 5.2 as co-trustee indirect 666 Fifth Avenue New York, N.Y. 10103
Louise T. Rothman, as co-trustee 332,837 (1) direct and 5.1 24 Avenue 30 indirect Venice, California 90291
William E. Spiro, as co-trustee 332,426 (1) indirect 5.1 15 Columbus Circle New York, N.Y. 10023
(1) 332,426 Units are held by two trusts of which John L. Tishman, William E. Spiro and Louise T. Rothman are co-trustees. In one trust, which holds 275,633 Units, Mr. Tishman has a one-third remainder interest. Ms. Rothman is a beneficiary of the second trust which holds 56,793 Units. The figure for John L. Tishman includes 5,830 Units held by the Rose and John Tishman Fund, Inc. of which Mr. Tishman is a director and officer. Mr. Tishman disclaims ownership of a beneficial interest in 246,378 Units listed. Mr. Spiro disclaims ownership of a beneficial ownership in all of the Units listed. Ms. Rothman, who owns an additional 411 Units individually, disclaims a beneficial interest in 275,633 Units listed.
Mr. John L. Tishman, who is a cousin of Mr. Robert V. Tishman, is president of Tishman Realty & Construction Co., Inc. performed construction management services in two of the land assemblages sold to the Purchaser. Mr. John L. Tishman was an executive vice president of Tishman Liquidating Corporation prior to the sale of its construction and research divisions to Rockefeller Center, Inc. in October 1976.
PART III
The following table includes information as to the number of units beneficially owned, directly or indirectly at March 2, 1998 by each of the General Partners. Except to the extent of the units set forth in the table each General Partner disclaims beneficial ownership of the units described in footnote (1) below.
Name Units - -------------------- ------------- Jerry I. Speyer 1,685 (1) (2) CYGY Realty Corp 101 (2)
(1) The figure for Jerry I. Speyer includes 169 Units held jointly with his former wife. In addition, Mr. Speyer also owns 472 Units as custodian for his daughter, Valerie Hope Speyer.
(2) 100 of the Units held by Jerry I. Speyer and 100 of the Units held by CYGY Realty Corp. have been designated as General Partner Units, as such term is used in the Partnership Agreement.
At February 21, 1998 the General Partners and the Chief Financial Officer, as a group (3 persons)beneficially owned 1,786 units (approximately .03% of the outstanding units).
Item 13.
Item 13. Certain Relationships and Related Transactions
The Partnership shares office space, certain employees and overhead services and facilities with Tishman Speyer Properties, a limited partnership engaged in the business of providing real estate-related services. Tishman Speyer Properties is indirectly owned by Jerry I. Speyer, a General Partner of the Partnership and its Chief Financial Officer is the Chief Financial Officer of the Partnership. Costs of employees are divided between the Partnership and Tishman Speyer Properties based on utilization of such employees. During 1997, the Partnership paid Tishman Speyer (1)$142,000 of its allocable share of the cost of employees of Tishman Speyer and (2)$11,000 for its allocable share of the costs of postage, office supplies, etc. of Tishman Speyer. Tishman Speyer provides office space and overhead services and facilities to the Partnership without charge under an arrangement entered into prior to 1984.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. The response to this portion of Item 14 is submitted as a separate section of this report.
2. None
3. Exhibits 2.1 Plan of Complete Liquidation and Dissolution of Tishman Realty & Construction., Inc. Incorporated by reference from Exhibit A to the Proxy Statement which formed part of Amendment No. 1 to Registration Statement No. 2-60054.
3.1 Certificate of Limited Partnership of Teeco Properties L.P. together with First and Second Amendments of the Certificate of Limited Partnership. Incorporated by reference from Exhibit 2 (iii) to registrant's report on Form 10-K for the fiscal year ended December 31, 1978. Third and Fourth Amendments of the Certificate of Limited Partnership are incorporated by reference from Exhibit 2 (i) to registrant's report of Form 10-K for the fiscal year ended December 31, 1979.
3.2 Limited Partnership Agreement of Teeco Properties L.P. Incorporated by reference from Exhibit 2 (ii) to registrant's report on Form 10-K for the fiscal year ended December 31, 1978. Amendment of Limited Partnership Agreement of Teeco Properties L.P. is incorporated by reference from Exhibit 2 (ii) to registrant's report on Form 10-K for the fiscal year ended December 31, 1978.
10.1 Assignment and Assumption Agreement dated as of September 30, 1978 between Tishman Realty & Construction Co., Inc. and Teeco Properties L.P. Incorporated by reference from Exhibit 2 (v) to registrant's report on Form 1-K for the fiscal year ended December, 31, 1978.
10.2 Executive Employment Agreement dated as of November 29, 1977 between Tishman Realty & Construction Co., Inc. and Jerry I. Speyer, as countersigned by Teeco PART IV
Properties L.P. on September 30, 1978. Incorporated by reference from Exhibit 2 (iv) to registrant's report on Form 10-K for the fiscal year ended December 31, 1978.
10.3 Contract of Sale, dated June 22, 1979, between Teeco Properties L.P. and Lazard Realty, Inc. Incorporated by reference from Exhibit 2 (iii) to registrant's report on Form 10-K for the fiscal year ended December 31, 1979.
10.4 Assignment of mortgage dated December 22, 1980 between Teeco Properties L.P. and H & H Associates. Incorporated by reference to registrant's report on Form 10-K for the fiscal year ended December 31, 1980.
22. Subsidiaries of the registrant
Percentage of Voting Securities Owned by State of Immediate Incorporation Parent or Organization ----------- --------------- Subsidiaries of the Registrant: 1166 Sixth Corp. 100% New York 1170 Sixth Corp. 100% New York Tishman Landing Inc. 100% New York Madison Decorating Co., Inc. 100% New York LST Investors Corp. * 100% New York
The accounts of all of the foregoing inactive subsidiaries are included in the consolidated financial statements.
(b) Reports on Form 8-K No reports on Form 8-K were filed in the last quarter of the fiscal year ended December 31, 1997.
(c) Exhibits See (a) 3 above.
(d) Financial Statement Schedule None.
* Subsidiary of 1170 Sixth Corp.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TEECO PROPERTIES L.P. (Registrant)
Dated March 25, 1998 By: /S/ JERRY I. SPEYER Jerry I. Speyer, Managing General Partner
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 and in the capacities and on the dates indicated.
Signatures Title Date --------------------- ---------------- ------------------
/S/ JERRY I. SPEYER Managing General March 2, 1998 --------------- Partner Jerry I. Speyer
/S/ CARL GLICK General Partner March 2, 1998 ----------------- Carl Glick, President CYGY Realty Corp.
/S/ DAVID AUGARTEN Chief Financial March 2, 1998 ----------------- Officer and David Augarten Principal Accounting Officer