<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number 0-8942
DE ANZA PROPERTIES - X
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 95-3005938
(State or other jurisdiction of (IRS Employer Iden-
incorporation or organization) tification Number)
</TABLE>
9171 WILSHIRE BOULEVARD, SUITE 627
BEVERLY HILLS, CALIFORNIA 90210
(Address of principal executive offices, including zip code)
(310) 550-1111
(The registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered
sequentially. The total number of pages contained herein is 15.
1
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statements of Income 5
Statements of Changes in Partners'
Capital (Deficit) 6
Statements of Cash Flows 7
Notes to Financial Statements 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 12
PART II. OTHER INFORMATION 14
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DE ANZA PROPERTIES - X
(A Limited Partnership)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS - including restricted
deposits of $843,923 at March 31, 1996 and
December 31, 1995 - Note 1 $ 1,381,261 $ 1,388,279
ACCOUNTS RECEIVABLE 8,844 10,812
PREPAID EXPENSES 43,889 70,222
----------- -----------
1,433,994 1,469,313
----------- -----------
PROPERTY AND EQUIPMENT - Notes 2, 5 and 6
Land 2,989,265 2,989,265
Land improvements 4,738,665 4,704,170
Buildings and improvements 11,448,171 11,448,171
Furniture and equipment 623,498 623,498
----------- -----------
19,799,599 19,765,104
Less accumulated depreciation 10,062,815 9,921,679
----------- -----------
9,736,784 9,843,425
----------- -----------
OTHER ASSETS
Loan costs - less accumulated amortization of
$54,254 and $53,484 at March 31, 1996 and December 31,
1995, respectively - Note 2 53,561 54,331
Other 21,503 20,656
----------- -----------
75,064 74,987
----------- -----------
$11,245,842 $11,387,725
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Balance Sheets (Continued)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
including $8,254 and $11,305 due to related
parties at March 31, 1996 and December 31,
1995, respectively $ 179,176 $ 127,389
DEPOSITS AND ADVANCE RENTALS 125,027 122,937
DEFERRED GAIN ON SALE - Note 5 843,923 843,923
SECURED NOTE PAYABLE - Note 2 4,729,773 4,752,430
----------- -----------
5,877,899 5,846,679
----------- -----------
PARTNERS' CAPITAL (DEFICIT)
General partners (3,516,996) (3,476,003)
Cash general partners, 218.5 and 228.5 units issued and
outstanding at March 31, 1996 and December 31, 1995,
respectively 76,482 77,686
Limited partners, 22,650.5 and 22.640.5 units issued and
outstanding at March 31, 1996 and December 31, 1995,
respectively 8,808,457 8,939,363
----------- -----------
5,367,943 5,541,046
----------- -----------
$11,245,842 $11,387,725
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
------------ ------------
<S> <C> <C>
INCOME
Rent - Note 6 $896,293 $1,048,312
Utilities - 62,416
Other 29,414 30,699
Interest and dividends 14,864 7,844
-------- -----------
940,571 1,149,271
-------- ----------
EXPENSES
Depreciation and amortization 141,906 169,740
Interest 118,623 120,771
Maintenance, repairs and supplies 104,039 109,412
Professional fees and services -
including $27,645 and $33,911 paid
to related parties in 1996 and 1995,
respectively - Note 3 90,809 62,117
Other 84,650 68,972
Salaries - including $4,611 and $10,012
paid to related parties in 1996 and
1995, respectively - Note 3 68,142 88,623
Utilities 52,687 95,050
Real estate taxes 52,510 64,531
Management fees - including $46,045 and
$45,000 paid to related parties in 1996
and 1995, respectively - Note 3 46,045 55,475
Insurance 26,445 24,407
Payroll taxes and employee benefits 15,173 18,855
------- ----------
801,029 877,953
-------- ----------
NET INCOME $139,542 $ 271,318
======== ==========
NET INCOME
GENERAL PARTNERS $ 33,046 $ 64,252
======== ==========
CASH GENERAL AND LIMITED PARTNERS $106,496 $ 207,066
======== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 330.46 $ 642.52
======== ==========
INCOME PER CASH GENERAL AND
LIMITED PARTNERSHIP UNIT - Note 4 $ 4.66 $ 9.05
======== ==========
</TABLE>
See accompanying notes to financial statements.
5
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Changes in Partners' Capital (Deficit)
(Unaudited)
For the Three Months Ended March 31, 1996 and
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Cash
General General Limited
Total Partners Partners Partners
----------- ------------ --------- ------------
<S> <C> <C> <C> <C>
BALANCE - January 1,
1995 $ 7,805,545 $(3,210,498) $ 97,659 $10,918,384
DISTRIBUTIONS TO
PARTNERS (5,524,941) (647,779) (48,731) (4,828,431)
NET INCOME - for the
year ended December
31, 1995 3,260,442 382,274 28,758 2,849,410
----------- ----------- -------- -----------
BALANCE - December 31,
1995 5,541,046 (3,476,003) 77,686 8,939,363
DISTRIBUTIONS TO
PARTNERS (312,645) (74,039) (2,175) (236,431)
NET INCOME - for the
three months ended
March 31, 1996 139,542 33,046 971 105,525
----------- ----------- -------- -----------
BALANCE - March 31,
1996 $ 5,367,943 $(3,516,996) $ 76,482 $ 8,808,457
=========== =========== ======== ===========
</TABLE>
See accompanying notes to financial statements.
6
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Gross rents received from real estate
operations $ 899,539 $ 1,102,361
Cash paid to suppliers and employees -
including $81,585 and $90,370 paid
to related parties in 1996 and 1995,
respectively (463,227) (516,018)
Interest paid (118,623) (120,771)
Interest and other income received 45,090 39,442
----------- ------------
Net cash provided by
operating activities 362,779 505,014
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (34,495) (48,237)
Sales and closing costs - (15,312)
----------- ------------
Net cash used in
investing activities (34,495) (63,549)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on secured notes
payable (22,657) (20,510)
Partner distributions (312,645) (278,720)
----------- ------------
Net cash used in
financing activities (335,302) (299,230)
----------- ------------
NET (DECREASE)INCREASE IN CASH AND
CASH EQUIVALENTS (7,018) 142,235
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 1,388,279 1,431,793
----------- ------------
BALANCE AT END OF PERIOD $ 1,381,261 $ 1,574,028
=========== ============
</TABLE>
See accompanying notes to financial statements.
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
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<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 139,542 $ 271,318
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization 141,906 169,740
Changes in operating assets and
liabilities
Decrease in accounts
receivable 1,968 38,969
Decrease in prepaid expenses 26,333 23,713
Increase in other assets (847) (3,221)
Increase in accounts payable
and accrued expenses 51,787 4,472
Increase in deposits and
advance rentals 2,090 23
----------- -----------
Net cash provided by
operating activities $ 362,779 $ 505,014
=========== ===========
</TABLE>
See accompanying notes to financial statements.
8
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
March 31, 1996 and December 31, 1995 and
For the Three Months Ended March 31, 1996 and 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) have been included.
Operating results during the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-K for the year ended December
31, 1995.
Cash and Cash Equivalents
The Partnership invests its cash not needed for working capital in
highly liquid short-term investments consisting primarily of money
market funds and certificates of deposit, with original maturities
ranging generally from one to three months. The Partnership considers
all such items to be cash equivalents.
NOTE 2 - SECURED NOTE PAYABLE
Secured note payable at March 31, 1996 and December 31, 1995 consisted
of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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<S> <C> <C>
Note collateralized by first trust deed,
payable in monthly installments of
$47,093, including interest at 10%,
maturing in 2014. $4,729,773 $4,752,430
========== ==========
</TABLE>
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES
Pursuant to a former management agreement dated October 1, 1985, De
Anza Assets, Inc., a former affiliate of the operating general partner
(OGP), was paid a management fee in the amount of 5% of the annual
gross receipts from the operations of the Partnership's properties.
The payment of this fee is subordinated to the priority distributions
to the cash general and limited partners of 6% of their adjusted
capital contributions each year and is noncumulative, except in the
case of a sale, refinancing or other disposition of the Partnership's
properties. In that case, the difference between the management fee
actually paid and the management fee that would have been paid if
it were not subordinate, is payable out of proceeds from the sale,
refinancing or other disposition after payment of the limited partners'
priority return and capital contribution and the general partners'
incentive interest.
9
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements (Continued) (Unaudited)
March 31, 1996 and December 31, 1995 and
For the Three Months Ended March 31, 1996 and 1995
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued)
On August 18, 1994, subsequent to the sale of Colonies of Margate and
the property management business of De Anza Group, Inc. (DAG), as
discussed in Note 5, the property management of Woodbridge was assumed
by Terra Vista Management, Inc. (Terra Vista). Terra Vista is wholly
owned by Michael D. Gelfand, president of the OGP and the son of
Herbert M. Gelfand. Herbert M. Gelfand, together with Beverly Gelfand,
is the sole shareholder of the OGP and an individual general partner.
Terra Vista was paid $46,045 and $45,000 for management fees during the
three months ended March 31, 1996 and 1995, respectively. The property
management of Aptos Pines was transferred to an affiliate of the buyer
when the property management business of DAG was transferred as part of
the overall transaction concurrent with the sale of Colonies of Margate
(see Note 5).
In addition, Terra Vista or an affiliate of the OGP was paid $35,540
and $45,370 during the three months ended March 31, 1996, and 1995,
respectively, for performing bookkeeping, regional management, computer
and investor relations services necessary for the operation of the
Partnership and its properties.
NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND CASH GENERAL AND LIMITED
PARTNERSHIP UNIT
Income per cash general and limited partnership unit was computed based
on the cash general and limited partners' share of net income as
reflected on the Statements of Income and Changes in Partners' Capital
(Deficit) and the number of units outstanding (22,869 units). The
general partners' share of net income has not been included in this
computation. Income per 1% general partner interest was computed based
on the general partners' share of net income as reflected on the
Statements of Income and Changes in Partners' Capital (Deficit).
NOTE 5 - SALE OF COLONIES OF MARGATE
On August 18, 1994, the Partnership sold Colonies of Margate to an
affiliate of Manufactured Home Communities, Inc. ("MHC"), a real estate
investment trust, as part of an overall transaction for the sale of the
related property management business of DAG and other mobile home
communities affiliated with DAG.
The sales price for the Property was $23,147,228. Additional proceeds
of $557,192, which were included in the sales price for calculating the
gain on sale of property and equipment, were received from MHC to fund
a General Reserve. In connection with the sale, the Partnership
established various reserves totaling $1,024,923.
10
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DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements (Continued) (Unaudited)
March 31, 1996 and December 31, 1995 and
For the Three Months Ended March 31, 1996 and 1995
NOTE 5 - SALE OF COLONIES OF MARGATE (Continued)
The $1,024,923 was used to establish the following reserves:
<TABLE>
<S> <C>
MHC Reserve $181,000
General Reserve 557,192
Independent Committee Reserve 286,731
</TABLE>
The MHC Reserve was required by MHC and subsequently released in May
1995. The General Reserve and Independent Committee Reserve were
established to fund contingent liabilities that may arise out of the
MHC transaction.
Pursuant to the guidelines of Financial Accounting Standards No. 66
"Accounting for Sales of Real Estate", the Partnership deferred in 1994
the recognition of gain on that portion of the sales proceeds
represented by the MHC Reserve, Independent Committee Reserve and
General Reserve, totaling $1,024,923. As these reserves are released
or expended, gain on sale will be recognized. At March 31, 1996 and
December 31, 1995, $843,923 and $1,024,923 of sale proceeds have been
deferred and are included in deferred gain on sale, as reflected in the
balance sheets.
NOTE 6 - SALE OF APTOS PINES
On July 11, 1995, Aptos Pines (Aptos) was sold to a non-profit mutual
benefit corporation formed by the Aptos Pines Homeowners' Association.
The sales price for Aptos was $4,325,000, all cash, and an additional
$35,000 was received as reimbursement of capital outlays related to the
newly constructed sewer system. The Partnership incurred sales and
closing costs of approximately $56,200, has distributed $4,265,000 of
the proceeds to the limited and general partners and has reserved the
remaining $3,800.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity
The Partnership's quick ratios were 1.4:1 and 1.6:1, including unrestricted
cash balances of $537,338 and $544,356 at March 31, 1996 and December 31,
1995, respectively. The decrease in liquidity is primarily attributable to
an increase in accrued real estate taxes. The Partnership's cash balance is
its immediate source of liquidity.
On a long-term basis, the Partnership's liquidity is sustained primarily from
cash flows from operations, which during the three months ended March 31, 1996
were approximately $363,000. Should it become necessary to improve liquidity
the Partnership can reduce partner distributions from operations, which
totaled approximately $313,000 during the three months ended March 31, 1996,
arrange a short-term line of credit or refinance Woodbridge Meadows
Apartments.
In 1995 the Partnership sold Aptos Pines as discussed in Note 6 to the
financial statements. The sale has reduced partnership income and therefore,
liquidity. The Partnership intends to sell its remaining property,
Woodbridge Meadows Apartments, in the next twelve months which would prompt
the Partnership's dissolution.
Other than as described elsewhere, there are no known trends, demands,
commitments, events or uncertainties known to the Partnership which are
reasonably likely to materially affect the Partnership's liquidity.
Capital Resources
The Partnership anticipates spending approximately $137,000 in 1996 for
physical improvements at its properties, $102,000 of which will be spent
during the remainder of 1996. The Partnership will continuously review the
necessity for such expenditures in light of the expected sale of Woodbridge
Meadows Apartments. Funds for these improvements will be provided by cash
generated from operations and from the remaining reserves from the 1990
Margate refinancing available for improvement projects at Woodbridge.
Due to the sale of Colonies of Margate and Aptos Pines discussed in Notes 5
and 6, and the distributions pursuant to the sale of Margate and Aptos Pines,
the Partnership's capital resources have been reduced. Similarly, the
expected sale of Woodbridge Meadows Apartments in the next twelve months would
prompt the Partnership's dissolution. The Partnership has submitted the
proposed sale to the Independent Committee for its approval of this
Fundamental Transaction. The Partnership has also begun negotiating an
agreement with a national commercial real estate broker to sell Woodbridge
Meadows Apartments.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Capital Resources (Continued)
Other than as described above, there are no known material trends, favorable
or unfavorable, in the Partnership's capital resources. The Partnership does
not contemplate any other material changes in the mix of its capital
resources, other than as described above.
Results of Operations
Since Aptos Pines was sold in July 1995, a comparison of results of
operations for the three months ended March 31, 1996 and 1995 would not be
meaningful. However, a comparison can be done excluding the operations of
Aptos Pines.
Rental income, excluding Aptos Pines, decreased 0.5% during the three months
ended March 31, 1996, over the same period in 1995. Occupancy at Woodbridge
in 1996 is slightly lower than in 1995 which decrease in rental income is
partly offset by slightly higher rental rates. Competition in the immediate
area has lowered occupancy at Woodbridge, but the major improvements done to
the property begun in 1992 and completed in 1995 are expected to allow
Woodbridge to maintain a stable income stream. Competition mostly arises
from Irvine Apartment Communities whose numerous properties dominate the
local luxury apartment market.
Interest and dividend income increased during the three months ended March
31, 1996 over the same period in 1995 due to investing reserves in higher
yielding investments.
Expenses, excluding Aptos Pines, increased 10.6% during the three months
ended March 31, 1996 over the same period in 1995. Professional fees and
services increased due to timing of the payment of audit and tax return fees
and increased legal costs because of the recent tender offer by Moraga
Capital, LLC. Insurance premiums at Woodbridge increased as a result of the
January 1994 Northridge earthquake centered approximately 70 miles from
Woodbridge. Other expenses increased due to additional investor mailings
also because of the recent tender offer by Moraga Capital, LLC. Maintenance,
repairs and supplies increased due to tree trimming expense in 1996 but not
in 1995. Partially offsetting these increases was a decrease in depreciation
and amortization costs due to the declining balance method of depreciation.
Other than as described above, there are no known trends or uncertainties
which have had or can be reasonably expected to have a material effect on
continuing operations.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM NUMBER
1. LEGAL PROCEEDINGS
No new material legal proceedings were commenced during the three
months ended March 31, 1996 and there are none pending.
2. CHANGES IN SECURITIES
None.
3. DEFAULTS UPON SENIOR SECURITIES
None.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
5. OTHER INFORMATION
The Partnership has determined to pursue a sale of its remaining
property within twelve months and the prompt liquidation of the
Partnership thereafter.
6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits.
No reports on Form 8-K were filed during the quarter ended March 31,
1996. However, subsequently, a report on Form 8-K dated April 24,
1996 was filed disclosing in Item 5 both a request by Moraga Capital,
LLC and its affiliated Limited Partners for a meeting of Limited
Partners and the withdrawal of that request.
14
<PAGE> 15
PART II. OTHER INFORMATION (Continued)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DE ANZA PROPERTIES - X
(Registrant)
By DE ANZA CORPORATION A
California Corporation
Operating General Partner
Date: May 14, 1996 By /s/ Michael D. Gelfand
---------------------------------
Michael D. Gelfand
President and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,381,261
<SECURITIES> 0
<RECEIVABLES> 8,844
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,433,994
<PP&E> 19,799,599
<DEPRECIATION> 10,062,815
<TOTAL-ASSETS> 11,245,842
<CURRENT-LIABILITIES> 400,780
<BONDS> 4,729,773
0
0
<COMMON> 0
<OTHER-SE> 5,367,943
<TOTAL-LIABILITY-AND-EQUITY> 11,245,842
<SALES> 896,293
<TOTAL-REVENUES> 940,571
<CGS> 0
<TOTAL-COSTS> 540,500
<OTHER-EXPENSES> 141,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118,623
<INCOME-PRETAX> 139,542
<INCOME-TAX> 0
<INCOME-CONTINUING> 139,542
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,542
<EPS-PRIMARY> 4.66<F1>
<EPS-DILUTED> 4.66
<FN>
<F1>Earnings per share is per Limited Partner Unit.
</FN>
</TABLE>
