CIK: 0001037037
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1997.
OR
[__] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 0-22343
Triad Park, LLC
---------------
(Name of Small Business Issuer in its Charter)
Delaware 94-3264115
-------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3055 Triad Drive, Livermore, CA 94550
-------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (510)449-0606
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Membership Interests, no par value
----------------------------------
(Title of Class)
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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year were $4,176,000.
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 6, 1998 was $25,900,694 (computed by reference
to the average bid and asked prices of such stock on March 6, 1998 as
reported in the over-the-counter market.)
As of December 31, 1997, the registrant had outstanding 19,708,123
membership interests ("shares") with no par value.
PART I
Item 1. DESCRIPTION OF THE BUSINESS
Summary
The Company was formed on February 10, 1997. The Company's manager is 3055
Management Corp., a California corporation ("Management Corp."). The
Company's primary assets consist of three buildings and improvements
(comprising 220,000 square feet) situated on approximately 15 acres of land
in Triad Park, Livermore, California (the "Headquarters") and 292 acres of
undeveloped land located in Triad Park (the "Land", the Land and the
Headquarters, collectively the "Property"). The Company was formed to
liquidate its investment in the Property. In the absence of any
liquidation, the Company's principal business has been to own, operate,
improve and maintain the Property.
History
Prior to the Company's formation, the real estate assets now owned by the
company were owned by Triad Systems Corporation, a Delaware corporation
("Triad") and its wholly-owned subsidiary, 3055 Triad Dr. Corp, a
California corporation ("3055 Triad Dr. Corp"). 3055 Triad Dr. Corp. was
the owner of the Headquarters as well as a certain portion of the Land, and
Triad was the owner of the remainder of the Land.
On October 23, 1996, Cooperative Computing, Inc., a Texas corporation
("CCI"), through a wholly owned subsidiary, commenced a tender offer (the
"Offer") to purchase all of the outstanding shares of common stock of
Triad. The Offer contemplated that, among other things, certain real
property assets of Triad and 3055 Triad Dr. Corp. would be spun off to the
shareholders of Triad in a dividend to be declared prior to the
consummation of the Offer. The dividend was declared on February 26, 1997.
The Company was organized under the laws of the State of Delaware as a
limited liability company on February 10, 1997 as a spin-off of Triad. At
the time of the formation of the Company, 3055 Triad Dr. Corp., the owner
of the Headquarters, was merged with and into Triad, with Triad being the
surviving corporation. On February 27, 1997, the offer was consummated,
CCI merged with Triad, and Triad became known as Cooperative Computing,
Inc., a Delaware corporation, aka CCI/Triad ("CCI/Triad").
Business of the Company
The Company's shares are owned 99% by the former shareholders of Triad and
1% by Management Corp. The Management Corp is the exclusive operator of
the Company's business except that certain actions require the approval of
its Advisory Board (the "Advisory Board"). The members of the Company's
Advisory Board are Stanley F. Marquis, James R. Porter, William W. Stevens
and Martin W. Inderbitzen. Information regarding each member may be found
under Part III, Item 9.
The Company's main objective is to liquidate its investment in the
Property. In the meantime, the Company will own, operate improve and
maintain the Property. The Company may enter into joint ventures with
third parties for the purpose of disposing of the Property if the Advisory
Board determines that such arrangements are appropriate to the purposes of
the Company.
There can be no assurance that the Company will be successful in its
efforts to dispose of the Property or that the Company will realize a
profit from its activities. The Company will be subject to all of the
market forces which impact the ownership and operation of real property,
including market supply and demand, interest rates, local, regional and
national economic conditions, local land use policies and restrictions,
construction costs, competition from other sellers and landlords, and the
effects of inflation. The Company is unable to predict the amount of time
it will take to completely dispose of the Property and wind up the Company.
Item 2. DESCRIPTION OF PROPERTY:
Pursuant to the certain Real Estate Distribution Agreement dated as of
February 26, 1997 between Triad, 3055 Triad Dr. Corp., Management Corp. and
the Company (the "Distribution Agreement"), Triad contributed to the
Company certain of its real estate assets located in Livermore, California,
consisting primarily of the Headquarters, subject to the existing first
deed of trust, and the Land, subject to existing assessment bonds, and the
right to certain refunds for infrastructure expenditures from the City of
Livermore (the "Contribution").
In conjunction with the Contribution, the Company agreed in the
Distribution Agreement to indemnify CCI/Triad against any claims relating
to "Environmental Costs and Liabilities" include all costs, liabilities,
losses, claims and expenses arising from or under any environmental law."
The term "environmental law" is defined to include any applicable law
regulating or prohibiting releases into any part of the natural
environment, or pertaining to the protection of natural resources, the
environment and public and employee health and safety including, among
other laws, the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act (RCRA), the Clean Water Act, the
Clean Air Act, the Toxic Substances Control Act, and the Occupational
Safety and Health Act, and any applicable state or local statutes.
Subject to certain limitations, the Company also agreed in the Distribution
Agreement to indemnify CCI/Triad against certain taxes arising from, or
relating to, among other things, any sale of the Property after October 17,
1996, the Company, the formation of the Company, the transfer by Triad or
any affiliate of Triad of the Property to the Company, the assumption or
refinancing of any liabilities with respect to the Property and the sale,
exchange or distribution of interests in the Company by CCI/Triad.
As of December 31, 1997, the Property consisted of approximately 292 acres
of unimproved land and the 220,000 (approximate) square feet of office
space contained in three separate buildings situated on 15 acres of land
occupied by CCI/Triad. The Property is located on the north side of
Interstate 580 in the city of Livermore, California. The City of Livermore
is located approximately 40 miles southeast of San Francisco.
All of the buildings are of concrete tilt-up construction and were built in
1987. Building G is a two story office building containing approximately
70,986 square feet. Building K is a 74,064 square foot single story
research and development building and Building F is a single story
industrial flex building of 74,768 square feet. The office build-out in
Buildings K and F is 90 percent and 40 percent, respectively. The
Company's management believes that the Headquarters is adequately insured.
There are 689 parking spaces associated with the Headquarters. The parking
area is landscaped and the areas between the buildings are improved as open
courtyards, fenced with iron gates for controlled access. Although the
buildings were primarily designed for owner occupancy, they were also
designed to be flexible to allow multi-tenant occupancy.
The 292 acres of vacant land is divided into land use categories of
residential, industrial/office flex, retail and open space. The
residential portion consists of three lots comprising approximately 28.1
useable acres. The industrial/office flex portion is divided into six lots
and contains approximately 103.7 acres. The retail/commercial portion is
divided into ten lots and contains approximately 35.9 useable acres. The
total useable area for these lots is approximately 141 acres. In addition,
there are two lots, one of approximately 112 acres designated for open
space or agricultural use and one lot of 4.54 acres dedicated for
transportation improvements. Finally, approximately 7.8 acres are to be
developed as public roadways. Approximately half the required offsite
improvements are in place, funded through a combination of assessment bonds
and community facility bonds. The construction of the remaining offsite
improvements are expected to be funded through additional community
facility bonds, as further described below in the final paragraph of this
section. Several of the vacant land sites are in escrow and most of the
remaining sites are subject to a first right of refusal contract.
Two residential lots, comprising 19.4 acres, are in escrow to be sold to a
single purchaser for a total price of $2,900,000 plus current assessments
and up to approximately $1,500,000 of future assessments on these lots and
an adjacent lot. This transaction is subject to the satisfaction of
several material conditions, and the closing is not assured.
One 19.3 acre lot is subject to a seven day right of first offer held by
Lincoln Property Co., starting at $3.99 per square foot and increasing 5%
per year, plus assessments. In addition, Lincoln Property Co. has the
right of first offer on 8 lots plus the above mentioned lot.
The Livermore City Council by resolution has accepted the offer to dedicate
the 4.54 acre parcel for transportation improvements. Thus, once the
dedication is complete the Company will own approximately 287.5 acres of
unimproved land.
The Property is partially improved with infrastructure improvements,
including curbs, gutters, storm drains and typical utilities. A community
facilities bond issue was completed on March 24, 1997, the proceeds of
which funded the reimbursement to the Company of $1,485,000 for completed
infrastructure, created a $600,000 security fund for future infrastructure
obligations, and will fund $3,700,000 for in-progress infrastructure
improvements. In addition, there are $7,000,000 of new bonds which are
planned to be sold in the future to fund the remaining improvements
required for completion of Triad Park. The current cost estimates for the
required improvements indicate that the community facilities bond funding
limits should be adequate to cover the expenses of the remaining items of
improvement. However, design and engineering is not complete and there is
a significant possibility that the actual cost of the improvements may be
greater than estimated and may exceed the bond funding limit. Any
shortfall in the bond funding will be borne by the Company or by purchasers
of lots, which may have an adverse impact on the value of the Land. The
remaining required improvements are scheduled to be completed by 2000.
Item 3. LEGAL PROCEEDINGS
The Company was not a party to any lawsuit during the reporting period.
On Monday, March 16, 1998, TKG Acquisition Company, LLC ("TKG Acquisition")
filed suit against the Company in the Delaware Court of Chancery (the
"Court"). The lawsuit was related to the Company's attempt to terminate
the merger agreement between the company, TKG Acquisition, LLC and its sole
and managing member, The Kontrabecki Group, Inc. ("TKG") dated February 1,
1998 (the "Merger Agreement"). In its suit, TKG Acquisition sought an order:
(i) temporarily, preliminarily and permanently enjoining the Company from
taking any action to terminate the Merger Agreement based on a new acquisition
proposal the Company received from Richard C. Blum & Associates, L.P. ("RCBA"),
(ii) temporarily, preliminarily and permanently enjoining the Company from
taking any action to frustrate the right of the company's shareholders from
considering and voting upon the Merger Agreement at a scheduled March 25, 1998,
shareholders' meeting and (iii) specifically enforcing all of the terms and
conditions fo the Merger agreement. TKG argued, among other things, that
RCBA's financing is not fully committed and therefore the RCBA proposal cannot
be considered a "Superior Proposal" (as defined in the Merger Agreement)
because the language of Section 7.6(d) states that a Superior Proposal is one
"for which financing, to the extent required, is then committed."
On Tuesday, March 17, 1998, the Court held a telephonic conference
call regarding TKG's motion for a temporary restraining order. The Court
granted TKG's request for a temporary restraining order on the basis that
TKG had presented a "colorable claim" that the RCBA proposal did not
constitute (i) a Superior Proposal, and (ii) that terminating the Merger
Agreement based upon the RCBA proposal would constitute a breach of the
Merger Agreement. On March 19,1998, the Court entered an order on TKG's
motion for a temporary restraining order.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
Item 5. MARKET FOR MEMBERS EQUITY AND RELATED SHAREHOLDER MATTERS
(a) Market Information
The Shares are publicly traded, although the Shares are not registered for
trading on any exchange. The Company is aware that bid and asked prices
have been quoted over the Internet under the symbol "TDPK." The following
table sets forth the range of high and low bid quotations per Share as
quoted on the OTC Bulletin Board. The quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
Bid Quotations
--------------
1997 High Low
- ---- ----- -----
Third Quarter (July 31 through September 30) $1.26 $0.75
Fourth Quarter $1.30 $1.25
(b) Holders
As of February 20, 1998, the Company had approximately 1,396 shareholders of
record.
(c) Dividends
The Company has never paid a cash distribution on the Shares and does not
anticipate paying any such distribution in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following Management's Discussion and Analysis is based upon and should
be read in conjunction with the Company's financial statements and notes
thereto included elsewhere in this annual report.
RESULTS OF OPERATIONS
Revenues generated from the leasing of the facilities located at 3055 Triad
Drive were $2.5 million in the years ended September 30, 1996 and December
31, 1997 and $.6 million for the three month periods ended December 31,
1996 and 1995. These revenues are pursuant to a lease agreement in effect
through February 2002. See "Management's Discussion and Analysis-Liquidity
and Capital Resources." Revenues from land sales were $3.8 million during
the year ended September 30, 1996. There were two land sales totaling $1.7
million during the year ended December 31, 1997. Revenues from land sales
were $640,000 for the three months ended December 31,1996 with no land
sales during the comparable period in the prior year. Overall gross margin
was $2.4 million in the year ended December 31, 1997, a decrease of 31%
compared to the gross margin of $3.5 million in the year ended September
30, 1996. The difference was attributed to a decline in the land sale
revenue as well as lower margins in 1997. Gross margin for the three
months ended December 31, 1996 was $678,000 compared to $491,000 for the
three months ended December 31, 1995. The increase was directly attributed
to land sales.
The Company had a net loss of $324,000 for the year ended December 31, 1997
compared to net income of $521,000 for the year ended September 30, 1996.
The decrease is due principally to the reduction in land sale revenue as
well as higher general and administrative expenses in 1997. The increase
from a loss of $130,000 for the three months ended December 31, 1995 to a
loss of $8,000 for the three months ended December 31, 1996 was due to the
absence of land sales in the earlier period.
LAND SALES
As of December 31, 1997, the Company had approximately 292 acres of
unimproved land remaining to be sold. Approximately 35.9 acres are zoned
for retail/commercial use, 28.1 acres for residential use, and 103.7 acres
for retail/light industrial/office use. The remaining acres are zoned for
open space/agricultural and transportation purposes. The Company sold two
parcels totaling 10.6 acres for $1.7 million during the year ended December
31, 1997. Four parcels totaling 25.5 acres were sold during the year ended
September 30, 1996 for $3.8 million and one parcel of 4.1 acres for
$640,000 during the three months ended December 31, 1996. There were no
land sales during the three months ended December 31, 1995.
GROSS MARGIN
Land sale gross margins were 41% for the year ended September 30, 1996
compared to 29% for the year ended December 31, 1997. The percentage
decline resulted from the cost of a required street extension and increased
net assessment improvements. Likewise, there was a 29% gross margin on
land sales for the three months ended December 31, 1996. Gross margins on
rental income were approximately the same for all periods as the properties
are subject to a triple net lease whereby substantially all operating
expenses are paid by the tenant.
COSTS AND EXPENSES
Land-related sales expenses include broker commissions, escrow fees, etc.,
and totaled $369,000 for the year ended September 30, 1996 and $64,000 for
the three months ended December 31, 1996. The sales expenses for the year
ended December 31, 1997 were $108,000. The decrease from the year ended
September 30, 1996 is a result of fewer land sales.
General and administrative expenses consist of property taxes and other
general management and operational costs including costs necessary to
maintain the appearance of the land in a marketable condition and personnel
and overhead expenses required for the development, management and
marketing of the properties. These expenses were $.7 million for the year
ended September 30, 1996 compared to $1.1 million for the year ended
December 31, 1997 with the increase attributed to increased legal and
professional expenses. Operating expenses were similar for the quarters
ending December 31, 1995 and 1996.
Interest expense consists of mortgage interest in the buildings and the
bonded indebtedness incurred in connection with the development
improvements and community services. Interest expense was approximately
$1.9 million for the year ended September 30, 1996, compared to $1.6
million for the year ended December 31, 1997. The reduction is due to
normal debt maturation. Interest expense for the quarters ending December
31, 1995 and 1996 was relatively unchanged at $472,000 and $449,000,
respectively. See "Management's Discussion and Analysis-Liquidity and
Capital Resources."
FUTURE OPERATING RESULTS
Future operating results are dependent upon the Company's ability to
dispose of its real estate assets. Risks that affect real estate sales
include, but are not limited to, the relative illiquidity of real estate
investments, the ability to obtain entitlements from governmental agencies,
changing tax assessments, compliance with environmental requirements, and
general risks such as changes in interest rates and changes in local market
conditions which affect real estate values. The future operating results
may also be affected by the Company's relationship with CCI/Triad. These
risks include, but are not limited to, the indemnification agreement
between the Company and CCI/Triad, potential conflicts of interest within
the management and representation of the Company and CCI/Triad, and
reliance upon CCI/Triad lease payments for the Company's financial
performance.
On September 9, 1997, the Company entered into an Agreement of Merger with
TPL Acquisition, LLC and Richard C. Blum Associates, LP, a California
limited partnership ("RCBA"), subject to approval of the Members, in which TPL
Acquisition, LLC would have merged with and into the Company and each share
would have been converted into the right to receive a cash payment of
$1.32 per share from RCBA or TPL Acquisition, LLC. On February 1, 1998, the
Company notified RCBA that it was terminating the Merger Agreement pursuant
to a provision contained in the Merger Agreement allowing either party to
terminate should the merger fail to be consummated on or prior to January 31,
1998.
On February 1, 1998, the Company entered into an Agreement of Merger
with The Kontrabecki Group, Inc., a California corporation("TKG"), and TKG
Acquisition Company LLC, a Delaware limited liability corporation whose
sole and managing member is TKG ("Acquisition LLC"), subject to approval of
the Members, in which Acquisition LLC will be merged with and into the
Company and each outstanding share will be converted into the right to
receive a cash payment of $1.65125 per share from TKG or Acquisition LLC.
Following the merger of Acquisition LLC and Triad Park, LLC, all
obligations and contingent liabilities of Triad Park, LLC will remain with
Triad Park, LLC as the surviving company in the merger and will not become
obligations or liabilities of the Members. If the Merger is not consummated
on or before March 31, 1998, either Acquisition LLC or the Company may
terminate the Agreement of Merger provided that certain conditions are met.
Under certain circumstances, the Company is obligated to pay a termination
fee of $1.2 million to Acquisition LLC. A copy of the Agreement of Merger
was included as Exhibit 2.1 to the Company's Form 8-K filed with the
Securities and Exchange Commission on February 9, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ability to continue funding its current business will depend
upon the timing and volume of land sales, without taking the merger of the
Company and TKG into account. Receipts from rental of its buildings under
the existing lease agreements are expected to be sufficient to fund
mortgage obligations for the foreseeable future. Currently, there is a
lease agreement for the Company's buildings in effect through February 2002
with an option to renew for an additional term of five years. All expenses
related to the buildings are paid by the tenant as required by the "triple
net lease". The Company's ability to repay the remaining assessment
district debt and operating expenses are dependent in part on making future
land sales. To the extent additional working capital is required,
management expects that it will have sufficient borrowing capacity to
finance any needs which may arise in the ordinary course of business.
On March 24, 1997, the City of Livermore completed the sale of Mello-Roos
bonds which raised a total of $9,070,000 in new funds, of which approximately
$6,944,000 encumbered property owned by the Company. The proceeds were
designated to refinance $2,255,000 of prior bonded indebtedness, to fund the
reimbursement to the Company of approximately $2,045,000 of previously
completed improvements, to provide funds of approximately $3,700,000 to
complete improvements required by various agreements with the City of Livermore
and others, to pay financing expenses of $610,000 and to create a reserve fund
of approximately $673,000. Of the indebtedness, approximately $5,218,000 was an
additional encumbrance to the property owned by the Company and $1,726,000
refinanced existing debt. In the quarter ended June 30, 1997, the Company
received approximately $1,485,000 from the City of Livermore as reimbursement
for previously completed projects totaling $2,085,000, net of a surety deposit
of $600,000. In the quarter ended December 31, 1997, the Company received an
additional $177,000 for completion of a designated project. The amounts
received were recorded as reductions to the assessment receivable.
In addition, the Company is obligated to undertake an estimated additional
$7,000,000 in improvements to its land in connection with its approved
development plan. The City of Livermore is expected to issue bonds to
reimburse the Company for such improvements. Improvements are funded as
projects are completed. The current estimates for the required improvements
indicate that bonded funding limits are expected to be adequate to cover
the remaining items of improvement. However, the actual costs of the
improvements may be greater than estimated and may exceed the bond funding
limit. Any shortfall in the bond funding will be borne by the Company or by
purchasers of lots, which may have an adverse effect on the value of the
land.
Item 7. FINANCIAL STATEMENTS
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
BALANCE SHEETS
(AMOUNTS SHOWN IN THOUSANDS EXCEPT SHARE DATA)
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
ASSETS
Cash $ -- $ 1,249
Land 27,876 27,634
Property, plant and equipment 12,362 12,520
Assessments receivable 2,091 1,667
Property development commitments -- 3,031
Prepaid expenses and other assets -- 477
------- -------
Total assets $42,329 $46,578
======= =======
LIABILITIES AND MEMBERS' EQUITY
Debt $18,840 $21,891
Other liabilities -- 631
------- -------
Total liabilities 18,840 22,522
------- -------
Commitments and contingencies (Note 9)
Members' shares; no par value; 19,708,123
shares outstanding at December 31, 1997 -- --
Members' equity 23,489 24,056
------- -------
Total liabilities and members' equity $42,329 $46,578
======= =======
The accompanying notes are an integral part of these financial statements.
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
STATEMENTS OF OPERATIONS
(AMOUNTS SHOWN IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, FOR THE YEAR ENDED
SEPTEMBER 30, ------------------ DECEMBER 31,
1996 1995 1996 1997
-------------- ------- ------- ------------------
UNAUDITED
Revenues:
Rental income $2,506 $ 627 $ 627 $2,506
Land sales 3,795 -- 640 1,670
------ ------ ------ ------
Total revenues 6,301 627 1,267 4,176
Depreciation of
rental property 547 136 137 557
Cost of land sold 2,231 -- 452 1,192
------ ------ ------ ------
Gross Margin 3,523 491 678 2,427
------ ------ ------ ------
Costs and Expenses:
Sales expenses 369 -- 64 108
General and
administrative 723 162 174 1,075
------ ------ ------ ------
Total costs and expenses 1,092 162 238 1,183
------ ------ ------ ------
Operating income 2,431 329 440 1,244
Interest expense 1,857 472 449 1,577
------ ------ ------ ------
Income (loss) before
provision for (benefit
from) income taxes 574 (143) (9) (333)
Provision for (benefit from)
income taxes 53 (13) (1) (9)
------ ------ ------ ------
Net income (loss) $ 521 $ (130) $ (8) $ (324)
====== ====== ====== ======
Net income (loss)
per share $ 0.03 $(0.01) $(0.00) $(0.02)
====== ====== ====== ======
Shares used in per share
calculation (a) 19,708 19,708 19,708 19,708
====== ====== ====== ======
- ---------------
(a) The number of shares used to compute earnings per share assumes that
shares issued in connection with the spin-off were outstanding for all
periods presented.
The accompanying notes are an integral part of these financial statements.
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
STATEMENTS OF MEMBERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996
AND DECEMBER 31, 1997 AND THE THREE
MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS)
UNDISTRIBUTED
UNALLOCATED EARNINGS TOTAL MEMBERS'
CAPITAL (LOSSES) EQUITY
----------- ------------- -------------
Balance, September 30, 1995 $29,319 $(5,222) $24,097
Distributions (988) -- (988)
Net income 521 521
------- ------- -------
Balance, September 30, 1996 28,331 (4,701) 23,630
Distributions (133) -- (133)
Net loss (8) (8)
------- ------- -------
Balance, December 31, 1996 28,198 (4,709) 23,489
Contributions 891 -- 891
Net loss (324) (324)
------- ------- -------
Balance, December 31, 1997 $29,089 $(5,033) $24,056
======= ======= =======
The accompanying notes are an integral part of these financial statements.
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
STATEMENTS OF CASH FLOWS
(AMOUNTS SHOWN IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1997
------------- ---- ------ ------------
UNAUDITED
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 521 $(130) $ (8) $ (324)
Gain from sale of land (1,194) -- (124) (490)
Depreciation and amortization 567 141 143 640
Provision for doubtful accounts -- -- -- 65
Changes in assets and liabilities:
Increase in prepaid expenses and other
assets -- -- -- (539)
Increase in other liabilities -- -- -- 631
------- ----- ------ -------
Net cash provided by (used in)
operating activities (106) 11 11 (17)
------- ----- ------ -------
Cashflows from investing activities:
Land sales 3,523 -- 576 1,561
Investment in property, plant and equipment (15) (3) -- (113)
Acquisition of land (972) -- -- --
Land improvements (146) (38) (30) (14)
Assessment district improvements (214) (80) (18) (1,303)
------- ----- ------ -------
Net cash provided by (used in)
investing activites 2,176 (121) 528 131
------- ----- ------ -------
Cash flows from financing activities:
Repayment of debt (1,082) (443) (406) (1,418)
Reimbursement for property improvements -- -- -- 1,662
Members' contribution (distribution) net of
note receivable (988) 553 (133) 891
------- ----- ------ -------
Net cash provided by (used in)
financing activities (2,070) 110 (539) 1,135
------- ----- ------ -------
Net increase in cash -- -- -- 1,249
Cash, beginning of period -- -- -- --
------- ----- ------ -------
Cash, end of period $ -- $ -- $ -- $ 1,249
======= ===== ====== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 1,857 $ 472 $ 449 $ 1,735
------- ----- ------ -------
Income taxes $ 53 $ -- $ 5 $ --
------- ----- ------ -------
NONCASH INVESTING AND FINANCIAL ACTIVITY:
Land reclassified from (to) property, plant
and equipment to (from) land for resale $ -- $ -- $5,672 $ (444)
------- ----- ------ -------
Bond issuance resulting in increased
assessment district improvements and related
debt $ -- $ -- $ -- $ 5,218
------- ----- ------ -------
Assessment district improvements and related
debt transferred upon sale $ 1,348 $ -- $ 224 $ 850
------- ----- ------ -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
TRIAD PARK, LLC
(a Delaware limited liability company)
NOTES TO FINANCIAL STATEMENTS
1. Description of Business and Basis of Presentation:
Triad Park, LLC (the Company) is a Delaware limited liability company
organized to effect the spin-off of certain real estate assets and related
liabilities of Cooperative Computing, Inc., a Delaware Corporation,
formerly known as Triad Systems Corporation (Triad). On October 17, 1996
Triad signed a definitive merger agreement with Cooperative Computing, Inc.
(CCI), a Texas corporation, and its affiliate, CCI Acquisition Corp. (CAC),
a Delaware corporation, under which CCI, through CAC, would acquire Triad.
Pursuant to the terms of the merger agreement, CCI, through CAC, commenced
a cash tender offer for all outstanding shares of Triad at a price of
$9.25 per share on October 23, 1996. As a condition precedent to
completion of the merger, Triad arranged for the spin-off of certain real
estate assets and related liabilities (the Predecessor Business) to Triad
stockholders.
On February 27, 1997, immediately prior to completion of the tender
offer, Triad contributed such assets and related liabilities to the Company
which were recorded by the Company based on historical cost of the Predecessor
Business. Under the terms of the Real Estate Distribution Agreement (the
Agreement), all indebtedness of Triad or any of its subsidiaries secured,
in whole or in part, by any of the contributed assets have been assumed by
the Company. Stockholders of Triad received one Triad Park LLC membership
interest for each share of Triad common stock held as of February 26, 1997,
the Distribution Record Date.
The Company's operations include the ownership and management of the
spun-off real estate assets, all of which are located in Livermore, California,
for their orderly liquidation and distribution of related net proceeds to
the holders of membership interests ("Members"). The Company's shares are
owned 99% by the former shareholders of Triad and 1% by 3055 Management
Corp ("the Manager"). The Manager is responsible for management and control
of the business of the Company, subject to certain required approvals of
the Advisory Board. The Members may elect or vote to remove members of the
Advisory Board.
The Company will be dissolved upon the earlier of a majority vote to
dissolve the Company or upon the sale or other disposition of all or
substantially all of the assets and properties of the Company and
distribution of the proceeds to the members. The financial statements
presented herein include the financial position, results of operations and
cash flows of the Predecessor Business through February 27, 1997 as if the
Company had existed as a corporation separate from Triad with all periods
presented on a historical basis and may not be indicative of actual results
of operations and financial position of the Company as an independent
stand-alone entity. The statements of operations through February 27, 1997
reflect certain expense items incurred by Triad which are allocated to the
Company on a basis which management believes represents a reasonable
allocation of such costs. These allocations consist primarily of corporate
expenses such as management and accounting services. Expenses related to
the normal recurring management activities of the Company through February 27,
1997 have been allocated based on an estimate of Triad personnel time
dedicated to the operations and management of the Company. Separate
information for the period from January 1, 1997 to February 27, 1997 is not
presented due to the immateriality of operating results and changes in
financial position during this period.
2. Summary of Significant Accounting Policies:
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reported periods. Actual results could differ from those
estimates.
LAND:
Land held for resale includes developed lots, land underdeveloped and raw
land. Land held for resale is carried at the lower of cost or market. The
cost of development of building lots includes the land, the related costs
of development (planning, survey, engineering and other) and interest costs
during development, all of which are capitalized. The carrying costs of
property held for resale, interest expense, property taxes and other are
expensed. Common costs are allocated based on square footage and relative
market value.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
related assets. Leasehold improvements are amortized using the straight-
line method over their estimated useful lives or the lease term, whichever
is less. As property, plant and equipment are disposed of, the asset cost
and related accumulated depreciation or amortization are removed from the
accounts, and the resulting gains or losses are reflected in operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
Carrying amounts of certain of the Company's financial instruments
including cash, assessments receivable, accounts payable and other accrued
liabilities approximate fair value due to their short maturities. Based on
borrowing rates currently available to the company for loans with similar
terms, the carrying value of mortgage obligations and assessment district
improvement bond obligations also approximate fair value.
DEBT ISSUANCE COSTS:
The unamortized costs associated with the issuance of debt are recorded
with the associated liability. Amortization is computed according to the
interest method for debt issuance costs and is included in interest
expense. Upon retirement of remaining principal balances, the associated
unamortized costs are reflected in operations.
REVENUE RECOGNITION:
Profits on sale of developed lots, developed land and raw land are
recognized in accordance with standards established for the real estate
industry which generally provide for deferral of all or part of the profit
on a sale if the buyer does not meet certain down payment requirements or
certain other tests of the buyer's financial commitment to the purchase, or
the Company is required to perform significant obligations subsequent to
the sale. Cost of land sold includes an allocated portion of acquisition
and development costs along with sales commissions, closing costs and other
costs specifically related to the sale.
INCOME TAXES:
The Company does not provide for income taxes as all income and losses are
allocated to the members for inclusion in their respective state and
federal tax returns. Prior to the quarter ending December 31, 1997, the
company had elected to be treated as a taxable entity in the state of
California. During the calendar quarter ending December 31, 1997,
legislation was enacted retroactive to January 1, 1997 requiring an entity
to use the same election for both federal and state purposes. The Company
changed its election to comply with this legislation.
UNAUDITED INTERIM PERIOD ENDED DECEMBER 31, 1995:
In the opinion of management, the unaudited interim financial statements
for the three months ended December 31, 1995 include all adjustments,
consisting only of those of a normal recurring nature, necessary for fair
presentation.
FISCAL YEAR:
As a limited liability corporation, the Company is treated as a partnership
for federal income tax purposes and is therefore required to use a calendar
based fiscal year end whereas Triad had a fiscal year based on the twelve
months ending on September 30 of each year. Accordingly, the accompanying
financial statements include audited financial statements for the three-
month transition period ending December 31, 1996. Unaudited financial
statements are presented for the three-month period ended December 31, 1995
for comparative purposes only.
NET INCOME (LOSS) PER SHARE:
The number of shares used to compute earnings per share assumes that shares
issued in connection with the spin-off were outstanding for all periods
presented. Net income (loss) per share has been computed in accordance
with SFAS 128. Basic net income (loss) per share is computed using the
weighted average common shares outstanding during the period and are
presented for all periods as if the spin-off had occurred at the beginning
of the earliest period presented. Basic and diluted net income per share
are the same for all periods presented.
3. Related Party Agreement:
The Company's developed commercial property, consisting of three buildings
and improvements on approximately 15 acres, is occupied by Triad under a
lease agreement that provides for annual rent of $2,505,720 payable monthly
in advance through February 1999 and prevailing market rate thereafter,
providing that annual rental shall not fall below the rate in effect at the
date of renegotiation nor exceed 120% of such rental rate. Payments under
the lease are on a "net lease" basis, free of any impositions and with out
abatement, deduction or set-off. The tenant is required to pay all
impositions (e.g. taxes, assessments, water and sewer charges, excises,
levies, etc.) in addition to the annual rent.
Certain officers of the Company are also officers or employees of Triad.
The stock of 3055 Management Corp. is owned by two of Triad's current or
former directors. In February 1997, in connection with the Company's
capitalization, a promissory note of $142,000 was received from 3055
Management Corp. for purchase of 1% of the membership interests. This note
was redeemed as of the quarter ended December 31, 1997.
4. Land:
Land consists of property in Livermore, California, classified by planned
use as follows (Dollars shown are in thousands and acreage is
approximate.):
Use Classification December 31,1996 December 31,1997
Acreage/Cost Acreage/Cost
------------ ------------
Residential 28.1 $ 4,029 28.1 $ 4,311
Retail/commercial 35.9 4,797 35.9 5,788
Retail/industrial/office 114.3 17,925 103.7 16,570
Open space/agricultural 112.0 -- 112.0 --
Transportation 12.3 1,125 12.3 965
------ ------ ------ ------
302.6 $27,876 292.0 $27,634
====== ======= ====== =======
5. Property, Plant and Equipment:
Property, plant and equipment consist of the following (in thousands):
December 31,1996 December 31,1997
---------------- ----------------
Building and leasehold improvements $16,317 $16,429
Less accumulated depreciation (4,932) (5,488)
------- -------
11,385 10,941
Land 977 1,579
------- -------
$12,362 $12,520
======= =======
The above facilities and land are all subject to a lease agreement with
Triad for use as their headquarters (see Note 3).
During 1997, assessment projects were funded and the prorata portion,
$158,000, was capitalized to land included in property, plant and
equipment. In addition, a change in the valuation by the tax assessor
resulted in a $444,000 reclassification which increased the land associated
with property, plant, and equipment and decreased land for resale by the
same amount.
6. Debt:
Long-term debt consists of the following (in thousands):
December 31,1996 December 31,1997
---------------- ----------------
Mortgage loan payable, bearing
interest at 9.9% and maturing
through 2003 $9,749 $8,680
Assessment district improvement
bonds bearing interest rates ranging
from 4.5% to 7.25% and maturing
through 2022 9,228 13,328
Unamortized debt issuance costs (137) (117)
------- -------
$18,840 $21,891
======= =======
The interest rate on the mortgage financing for the Livermore headquarters
facility may be adjusted at the option of the lender in 1998 and could
impact the interest rate from 1999 to its maturity in 2003. Borrowings are
collateralized by the land and buildings and are payable in monthly
installments.
A portion of the Company's land for resale and the parcel retained for its
facilities are part of assessment districts and are subject to bonded
indebtedness incurred in connection with the development of improvements
and community services. Semiannual principal and interest payments on the
bonds are required as long as the parcels are owned by the Company. As the
Company sells land, the corresponding obligation will be assumed by the new
owners.
On March 24, 1997, the City of Livermore entered into a Bond Indenture and
issued an additional $9,070,000 in new funds from the sale of community
facility bonds. At that time the Company owned 76.56% of the property
related to this Issuance. The Company's portion of the bond issuance was
designated for approximately $5,218,000 of additional debt and $1,726,000
for the refinancing of existing debt. The Company recorded the net
additional debt as a liability.
7. Members Equity:
Members have the right to vote on certain matters of the Company including
the election and removal of Advisory Board members, merger with or into
another business entity and dissolution of the Company. All the issued and
outstanding membership interests are fully paid and nonassessable. Holders
of membership interests do not have preemptive or conversion rights, nor
rights to redemption or sinking fund provisions by the Company. In the
event of any liquidation, dissolution or winding up of the Company, the
holders of the membership interests are entitled to distribution in any
assets remaining after payment of all debts and liabilities.
8. Significant Customers:
The Company had land sales to four customers during the year ended
September 30, 1996 and one customer during the three months ended December 31,
1996. The Company had land sales to two customers during the year ended
December 31, 1997.
9. Contingencies:
Under the terms of the Distribution Agreement (see Note 1), the Company will
indemnify and hold Triad and its subsidiaries harmless from and against loss,
cost, damage or expense arising out of or related to any failure of the
Company to discharge the obligations specified in the Agreement. The Company
will indemnify and hold Triad and its subsidiaries harmless from and against
any taxes attributed to, arising out of or relating to the Company, its
formation, the transfer of contributed assets, the assumption or refinancing
of liabilities with respect to the contributed assets, the sale, exchange,
distribution, dividend or other disposition of interests of the Company by
Triad or its subsidiaries.
To support its ability to fund the indemnity commitment to Triad, the
Company has agreed to maintain net assets with a minimum market value of
$2,350,000 based upon the most recent appraised value of the Company's then
existing real property assets until 60 days after the expiration of all
statutes of limitation related to the collection of taxes related to the
transactions contemplated by the Agreement (estimated to be approximately
four years). Triad may cause the real property to be appraised at any time
and the Company must pay one half of the expense if the most current
calculation of net worth is less than $4,000,000. Compliance with these
requirements may limit the Company's ability to make distributions to
members.
The Company is obligated to undertake an estimated additional $7,000,000 in
improvements to its land held for resale in connection with its approved
development plan. The City of Livermore has indicated that it is willing
to reimburse the Company for such improvements by means of a bond
financing. Historically, the City of Livermore has been able to
successfully sell its bond offerings and the current estimates for required
improvements indicate that bonded funding limits will be adequate to cover
the remaining items of improvement. However, the actual costs of the
improvements may be greater than estimated and may exceed the bond funding
limit. Alternatively, if the City of Livermore is unsuccessful in
completing a bond offering, it is possible the Company would not receive
any reimbursement for such improvements. Any shortfall in the bond funding
will be borne by the Company or by purchasers of lots, which may have an
adverse effect on the value of the land.
10. Recent Accounting Pronouncements:
In July 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 130 (SFAS 130), "Reporting Comprehensive Income",
which requires a separate financial statement showing changes in
comprehensive income, is effective for financial statements issued for
fiscal years beginning after December 15, 1997. SFAS 130 requires
reclassification of all prior-period financial statements for comparative
purposes. The Company is evaluating alternative formats for presenting
this information, but does not expect this pronouncement to materially
impact the Company's results of operations.
In July 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information", which requires companies to report
certain information about operating segments, including certain information
about their products, services, the geographic areas in which they operate
and their major customers. This statement supersedes FASB Statements Nos.
14, 18, 24, 30. SFAS 131 is effective for financial statements for fiscal
years beginning after December 15, 1997. The Company is evaluating the
requirements of SFAS 131 and the effects if any, on the Company's current
reporting and disclosures.
11. Subsequent Event
On September 9, 1997, the Company entered into an Agreement of Merger with
TPL Acquisition, LLC and Richard C. Blum Associates, LP, a California limited
partnership ("RCBA"), subject to approval of the Members, in which TPL
Acquisition, LLC would have merged with and into the Company and each share
would have been converted into the right to receive a cash payment of $1.32 per
share from RCBA or TPL Acquisition, LLC. On February 1, 1998, the Company
notified RCBA that it was terminating the Merger Agreement pursuant to a
provision contained in the Merger Agreement allowing either party to terminate
should the merger fail to be consummated on or prior to January 31, 1998.
On February 1, 1998, the Company entered into an Agreement of Merger
with The Kontrabecki Group, Inc., a California corporation("TKG"), and TKG
Acquisition Company LLC, a Delaware limited liability corporation whose
sole and managing member is TKG ("Acquisition LLC"), subject to approval of
the Members, in which Acquisition LLC will be merged with and into the
Company and each outstanding share will be converted into the right to
receive a cash payment of $1.65125 per share from TKG or Acquisition LLC.
Following the merger of Acquisition LLC and Triad Park, LLC, all
obligations and contingent liabilities of Triad Park, LLC will remain with
Triad Park, LLC as the surviving company in the merger and will not become
obligations or liabilities of the Members. If the Merger is not consummated
on or before March 31, 1998, either Acquisition LLC or the Company may
terminate the Agreement of Merger provided that certain conditions are met.
Under certain circumstances, the Company is obligated to pay a termination
fee of $1.2 million to Acquisition LLC. A copy of the Agreement of Merger
was included as Exhibit 2.1 to the Company's Form 8-K filed with the
Securities and Exchange Commission on February 9, 1998.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
Triad Park, LLC:
We have audited the accompanying balance sheet of Triad Park, LLC (a
Delaware limited liability company) as of December 31, 1997, and the related
statements of operations, changes in members' equity and cash flows for the
year then ended. We have also audited the balance sheet at December 31, 1996
and the related statements of operations, changes in members' equity and cash
flows of the Predecessor Business (See Note 1) for the year ended September 30,
1996 and the three months ended December 31, 1996. 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 audit.
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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Triad Park, LLC
(a Delaware limited liability company) as of December 31, 1997 and the results
of its operations and cash flows for the year then ended, in conformity with
generally accepted accounting principles. Also in our opinion, the financial
statements of the Predecessor Business referred to above present fairly, in
all material respects, the financial position of the Predecessor Business as of
December 31, 1996 and the results of its operations and its cash flows for the
year ended September 30, 1996 and the three months ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND LLP
San Jose, California
February 27, 1998
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
Certain information concerning the directors and executive officers of the
Company is set forth below. Unless otherwise indicated, each such person
is a citizen of the United States and the address of each such person is
that of the Company. The names, ages, principal occupations and employment
history for the past five years of the members of the Advisory Board and
executive officers of the Company, and the Board of Directors and executive
officers of the Management Corp. are set forth below.
James R. Porter, 61, has been a member of the Company's Advisory Board
since the Company's inception in February, 1997, and has been a director and
Vice President of the Management Corp. since its inception in February, 1997.
He is Chairman of the Board of CCI/Triad. He was President and Chief Executive
Officer of Triad from September, 1985 until its merger with Cooperative
Computing, Inc. in February, 1997. He is also a director of Silicon Valley
Bank, Brock International, Inc. and Cellular Technical Services, Inc.
William W. Stevens, 65, has been a member of the Company's Advisory Board
since the Company's inception in February, 1997, and has been a director and
Chairman of the Management Corp. since its inception in February, 1997. He was
Chairman of the Board of Triad from 1972 until its merger with Cooperative
Computing, Inc. in February, 1997. He is the founder of Triad and was its
President and Chief Executive Officer from its inception until September, 1985.
Stanley F. Marquis, 54, has been a member of the Company's Advisory Board
since the Company's inception in February, 1997. He was President of Triad
Systems Financial Corporation from August, 1983 until June 30, 1997.
Mr. Marquis was also Treasurer of Triad from September, 1987 until June 30,
1997, and was its Vice President, Finance from December, 1994 until March,
1997.
Martin W. Inderbitzen, 45, has been a member of the Company's Advisory
Board since March, 1997. He has been a member of the State Bar of California
since 1976, maintaining a private general civil law practice since that time.
His practice has emphasized land use entitlement and zoning work almost
exclusively for the past ten years.
Larry D. McReynolds, 52, has been the President of the Company since its
inception in February, 1997. He joined Triad in September, 1984 as its Manager,
Facilities and became Manager, Real Estate and Facilities in June, 1992. In
July, 1994 he also assumed responsibility for Triad's Office Services. He is
currently employed in similar capacities for CCI/Triad.
Item 10. EXECUTIVE COMPENSATION
The Manager is entitled to receive an annual fee from the Company equal to
2% of the net income, if any, allocated to the Manager (in its capacity as
a Share Holder) for the preceding fiscal year. This fee is intended to
compensate the Manager for the additional California corporate income tax
it will pay on its share of the Company's income. The LLC Agreement
permits the payment of additional compensation to the Manager, with the
approval of the Advisory Board. No additional compensation has been
approved and none is contemplated at the present time. There was no fee
owed or paid for the period ending December 31, 1997.
Members of the Advisory Board are entitled to receive reimbursement of
expenses and an annual retainer fee of $10,000, payable quarterly, plus a
fee of $750 for each meeting and $250 for each telephonic meeting of the
Advisory Board which they attend, as compensation for their services as
members of the Advisory Board.
The following table sets forth the executive compensation paid by the
Company. The President of the company is also the facilities director for
CCI/Triad, and splits his time equally between the Company and CCI/Triad.
The Company reimburses CCI/Triad for 50% of his salary and 100% of his
earned bonus. The reimbursement paid by the Company for the period from
inception to December 31, 1997 is presented below. There are no other
executive officers of the Company.
Name and Principal Position Year Salary Bonus
- --------------------------- ---- ------ -----
Larry D. McReynolds, President 1997 $45,000 $7,308
Item 11. SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of December 31, 1997,
with respect to the beneficial ownership of Shares by (i) all persons known
by the Company to beneficially own more than 5% of the outstanding Shares,
(ii) each Advisory Board member of the Company, (iii) each executive officer
of the Company, and (iv) all executive officers and directors of the Company
as a group. For purposes of this table, beneficial ownership of securities is
defined in accordance with the rules of the Commission and means generally the
power to vote or dispose of securities, regardless of any economic interest
therein. Except as otherwise indicated, the shareholders listed in the table
have sole voting and investment power with respect to the Shares indicated.
Amount and Nature
Name and Address of of Beneficial Ownership
Beneficial Owner of shares Percent of Class
- ------------------- ----------------------- ----------------
Richard C. Blum 2,012,158(2) 10.2%
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Manchester Securities Corp 1,914,760(3) 9.7%
712 Fifth Avenue
New York, NY 10019
Farallon Capital Management, L.L.C. 1,569,900(4) 8.0%
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
Mentor Partners, L.P. 1,384,563(5) 7.0%
500 Park Avenue
New York, NY 10022
Pioneering Management Corporation 1,237,950 6.3%
60 State Street
Boston, MA 02109
Gabelli Funds, Inc. 1,031,200(6) 5.2%
One Corporate Center
Rye, New York 10580-1434
James R. Porter 828,664 4.2%
3055 Triad Drive
Livermore, CA 94550
William W. Stevens 324,154(7) 1.6%
3055 Triad Drive
Livermore, CA 94550
3055 Management Corp 199,072(8) 1.0%
3055 Triad Drive
Livermore, CA 94550
Stanley F. Marquis 136,824 0.7%
3055 Triad Drive
Livermore, CA 94550
Larry D. McReynolds 19,317 0.1%
3055 Triad Drive
Livermore, CA 94550
Martin W. Inderbitzen 0 0%
3055 Triad Drive
Livermore, CA 94550
All Executive Officers and Advisory
Board Members as a Group 1,508,031 7.7%
(1) Except as indicated in the footnotes to this table, the persons named
in the table have sole voting and investment power with respect to all
Shares shown as beneficially owned by them, subject to community property
laws, where applicable.
(2) Richard C. Blum ("Mr. Blum") is a controlling person and Chairman of
Richard C. Blum & Associates Inc. ("Inc."), which is the general partner
of Richard Blum & Associates LP ("LP"). These Shares are directly owned
by three limited partnerships for which LP is the general partner (BK
Capital Partners II, 111,111 Shares; BK Capital Partners III, 500,000
Shares; and BK Capital Partners IV, 1,387,047 Shares). Mr. Blum disclaims
beneficial ownership of these securities except to the extent of his
pecuniary interest thereof.
(3) Manchester Securities Corp. is wholly-owned by Elliott Associates, L.P.
("Elliott"). Paul E. Singer ("Singer") and Braxton Associates, L.P., a
New Jersey limited partnership, which is controlled by Singer, are the
general partners of Elliott.
(4) Includes 1,363,200 Shares held by Farallon Capital Partners, L.P. ("FCP")
and 206,700 Shares held by Tinicum Partners, L.P. ("Tinicum"). Farallon
F. Partners, L.L.C. ("FPLLC") is the General Partner of FCP and
Tinicum. Thomas Steyer is the senior managing member of FPLLC.
(5) Mentor Partners, L.P. is a limited partnership whose general partner is
WTG & Co., L.P. (the "General Partner"). The general partner of the
General Partner is D.Tisch & Co., Inc., all of the common stock of which
is owned by Daniel R. Tisch.
(6) Includes 205,000 Shares held by GAMCO Investors, Inc., 169,900 Shares
held by Gabelli Performance Partnership L.P. and 656,300 Shares held by
Gabelli Associates Fund. Mario J. Gabelli is the Chairman, Chief Executive
Officer and Chief Investment Officer of Gabelli Funds, Inc.
(7) Includes 324,154 Shares held as tenant-in-common with Virda J. Stevens.
(8) In addition to the totals shown in the above table, Messrs. Porter and
Stevens are deemed to be the beneficial owners of 199,072 Shares by virtue
of their respective 50% equity ownership in 3055 Management Corp.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 9, 1997, the Company entered into an Agreement of Merger with
TPL Acquisition, LLC and Richard C. Blum Associates, LP, a California limited
partnership ("RCBA"), subject to approval of the Members, in which TPL
Acquisition, LLC would have merged with and into the Company and each share
would have been converted into the right to receive a cash payment of $1.32 per
share from RCBA or TPL Acquisition, LLC. On February 1, 1998, the Company
notified RCBA that it was terminating the Merger Agreement pursuant to a
provision contained in the Merger Agreement allowing either party to terminate
should the merger fail to be consummated on or prior to January 31, 1998. RCBA
and related entities hold 10.2% of the outstanding shares of the Company.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
Item 13 (a) Exhibit Index
The exhibits filed herewith are listed in the "Index to Exhibits" on
page 29 of this Form 10-KSB and are incorporated here by reference.
Item 13 (b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission (the Commission) on December 9, 1997, which disclosed
that the Company had changed its fiscal year end from one ending on
September 30 to a fiscal year ending December 31. Revised financial
statements were filed concurrently with the Form 8-K in the Company's amended
Schedule 14A.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Triad Park, LLC
By: 3055 Management Corp., its Manager
Date: March 27, 1998
By: /s/ JAMES R. PORTER
James R. Porter
Vice President, Secretary and
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ LARRY D. MCREYNOLDS
Larry D. McReynolds, President
March 27, 1998
By: /s/ STANLEY F. MARQUIS
Stanley F. Marquis, Advisory Board Member
March 27, 1998
By: /s/ JAMES R. PORTER
James R. Porter, Advisory Board Member
March 27, 1998
By: /s/ WILLIAM W. STEVENS
William W. Stevens, Advisory Board Member
March 27, 1998
By: /s/ MARTIN W. INDERBITZEN
Martin W. Inderbitzen, Advisory Board Member
March 27, 1998
EXHIBIT INDEX
3. Charter and By-Laws
3.1 Limited Liability Company Agreement of Triad Park, LLC
(incorporated by reference to Exhibit 2.1 to Form 10-SB
(Amendment No. 1) of the Company, filed with the Securities and
Exchange Commission on June 20, 1997).
3.2 By-laws of Triad Park, LLC (incorporated by reference to
Exhibit 2.2 to Form 10-SB (Amendment No.1) of the Company, filed
with the Securities and Exchange Commission on June 20, 1997).
4. Instruments defining the rights of security holders
4.1 Limited Liability Company agreement of Triad Park, LLC (see Exhibit 3.1)
4.2 By Laws of Triad Park, LLC (see Exhibit 3.2)
4.3 Form of Rights Plan of Triad Park, LLC (incorporated by
reference to Exhibit 3.3 to Form 10-SB (Amendment No.1) of the
Company, filed with the Securities and Exchange Commission on
June 20, 1997).
10. Material contracts
10.1 Real Estate Distribution Agreement, dated as of February 26,
1997, by and between Triad Systems Corporation, 3055 Triad Dr.
Corp., 3055 Management Corp. and Triad Park, LLC (incorporated
by reference to Exhibit 6.1 to Form 10-SB (Amendment No.1) of
the Company, filed with the Securities and Exchange Commission
on June 20, 1997).
10.2 Project Lease Agreement, dated as of August 1, 1988, between
3055 Triad Dr. Corp. and Triad Systems Corporation (incorporated
by reference to Exhibit 6.2 to Form 10-SB (Amendment No.1) of
the Company, filed with the Securities and Exchange Commission
on June 20, 1997).
10.3 First Amendment to Project Lease Agreement, dated as of
February 26, 1997, by and between Triad Park, LLC, 3055 Triad
Dr. Corp. and Triad Systems Corporation (incorporated by
reference to Exhibit 6.3 to Form 10-SB (Amendment No.1) of the
Company, filed with the Securities and Exchange Commission on
June 20, 1997).
10.4 Conflict Agreement, dated as of February 26, 1997, by and
between Triad Systems Corporation, 3055 Triad Dr. Corp., Triad
Park, LLC and Cooperative Computing, Inc. (incorporated by
reference to Exhibit 12.3 to Form 10-SB (Amendment No.1) of the
Company, filed with the Securities and Exchange Commission on
June 20, 1997).
10.5 Agreement of Merger dated as of September 9, 1997, by and
between TPL Acquisition, LLC, Richard C. Blum & Associates, LP
and Triad Park, LLC (incorporated by reference to Exhibit 2.1 to
Form 8-K(Amendment No. 1) of the Company, filed with the
Securities and Exchange Commission on September 15, 1997).
10.6 Agreement of Merger dated as of February 1, 1998, by and among
The Kontrabecki Group, Inc., TKG Acquisition Company, LLC, and
Triad Park, LLC (incorporated by reference to Exhibit 2.1 to
Form 8-K filed with the Securities and Exchange Commission on
February 9, 1998).
Financial Data Schedule
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at December 31, 1997, and Consolidated Statement of
Income and Statement of Cash Flows for the twelve months ended December 31,
1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,249
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,520
<DEPRECIATION> 5,488
<TOTAL-ASSETS> 46,578
<CURRENT-LIABILITIES> 0
<BONDS> 21,891
0
0
<COMMON> 0
<OTHER-SE> 24,056
<TOTAL-LIABILITY-AND-EQUITY> 46,578
<SALES> 0
<TOTAL-REVENUES> 4,176
<CGS> 0
<TOTAL-COSTS> 1,749
<OTHER-EXPENSES> 1,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,577
<INCOME-PRETAX> (333)
<INCOME-TAX> (9)
<INCOME-CONTINUING> (324)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (324)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
