<PAGE>
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 September 30, 1997
[ ] 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)
CALIFORNIA 95-3005938
(State or other jurisdiction of (IRS Employer Iden-
incorporation or organization) tification Number)
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
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
- ------ ---------------------
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statements of Income 5
Statements of Changes in Partners'
Capital (Deficit) 7
Statements of Cash Flows 8
Notes to Financial Statements 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 13
PART II. OTHER INFORMATION 14
- ------- -----------------
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DE ANZA PROPERTIES - X
(A Limited Partnership)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS - including restricted
deposits of $700,558 at December 31, 1996 -
Note 1 $1,004,097 $ 1,401,497
ACCOUNTS RECEIVABLE 2,165 11,122
PREPAID EXPENSES - 70,995
---------- -----------
1,006,262 1,483,614
---------- -----------
PROPERTY AND EQUIPMENT - Notes 1, 2 and 6
Land - 2,989,265
Land improvements - 4,793,220
Buildings and improvements - 11,448,171
Furniture and equipment - 647,412
---------- -----------
- 19,878,068
Less accumulated depreciation - 10,208,135
---------- -----------
- 9,669,933
---------- -----------
OTHER ASSETS
Loan costs - less accumulated amortization of
$56,564 at December 31, 1996 - Note 2 - 51,251
Prepaid sale costs - Notes 1 and 6 - 69,994
Other 20,000 20,000
---------- -----------
20,000 141,245
---------- -----------
$1,026,262 $11,294,792
========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Balance Sheets (Continued)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C>
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
including $1,085 and $19,020 due to related
party at September 30, 1997 and December 31,
1996, respectively $ 14,973 $ 158,809
DEPOSITS AND ADVANCE RENTALS - 139,900
DEFERRED GAIN ON SALE - Note 5 - 700,558
SECURED NOTE PAYABLE - Notes 2 and 6 - 4,658,315
---------- -----------
14,973 5,657,582
---------- -----------
PARTNERS' CAPITAL (DEFICIT)
General partners 239,490 (3,453,230)
Cash general partners, 228.5 units issued
and outstanding 7,334 78,420
Limited partners, 22,640.5 units issued
and outstanding 764,465 9,012,020
---------- -----------
1,011,289 5,637,210
---------- -----------
$1,026,262 $11,294,792
========== ===========
</TABLE>
4
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
INCOME
Rent - Note 6 $ 510,481 $2,757,941
Interest and dividends 69,599 49,556
Other 19,358 100,505
Gain on sale of property and equipment -
Notes 5 and 6 19,875,060 143,366
----------- ----------
20,474,498 3,051,368
----------- ----------
EXPENSES
Interest 102,067 354,939
Salaries - including $10,736 and $15,046
paid to related party in 1997 and
1996, respectively - Note 3 104,914 210,264
Maintenance, repairs and supplies 66,654 262,663
Other 63,506 236,350
Depreciation and amortization - Note 1 51,251 284,581
Professional fees and services -
including $14,222 and $75,075 paid
to related party in 1997 and 1996,
respectively - Note 3 52,397 183,530
Utilities 36,789 153,754
Real estate taxes 27,705 156,614
Management fees paid to related party
- Note 3 26,526 142,623
Payroll taxes and employee benefits 18,751 42,801
Insurance 16,615 78,852
----------- ----------
567,175 2,106,971
----------- ----------
NET INCOME $19,907,323 $ 944,397
=========== ==========
NET INCOME
GENERAL PARTNERS $ 9,502,585 $ 223,648
=========== ==========
CASH GENERAL AND LIMITED PARTNERS $10,404,738 $ 720,749
=========== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 95,025.85 $ 2,236.48
=========== ==========
INCOME PER CASH GENERAL AND
LIMITED PARTNERSHIP UNIT - Note 4 $ 454.97 $ 31.52
=========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
INCOME
Rent - Note 6 - $ 932,470
Interest and dividends $ 11,767 16,837
Other 75 37,657
Gain on sale of property and equipment -
Notes 5 and 6 700,558 143,366
--------- ----------
712,400 1,130,330
--------- ----------
EXPENSES
Interest - 118,264
Salaries - including $3,262 and $4,974
paid to related party in 1997 and
1996, respectively - Note 3 3,262 70,873
Maintenance, repairs and supplies 381 81,642
Other 4,252 78,188
Depreciation and amortization - Note 1 - 770
Professional fees and services -
including $23,385 paid to related party
in 1996 - Note 3 1,866 30,085
Utilities 10 50,872
Real estate taxes - 51,594
Management fees paid to related party
- Note 3 116 48,553
Payroll taxes and employee benefits - 13,393
Insurance (641) 25,977
--------- ----------
9,246 570,211
--------- ----------
NET INCOME $ 703,154 $ 560,119
========= ==========
NET INCOME
GENERAL PARTNERS $ 166,518 $ 132,645
========= ==========
CASH GENERAL AND LIMITED PARTNERS $ 536,636 $ 427,474
========= ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $1,665.18 $ 1,326.45
========= ==========
INCOME PER CASH GENERAL AND
LIMITED PARTNERSHIP UNIT - Note 4 $ 23.46 $ 18.69
========= ==========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Changes in Partners' Capital (Deficit)
(Unaudited)
For the Nine Months Ended September 30, 1997 and
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Cash
General General Limited
Total Partners Partners Partners
------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
BALANCE - January 1,
1996 $ 5,541,046 $(3,476,003) $ 77,686 $ 8,939,363
DISTRIBUTIONS TO
PARTNERS (1,250,582) (296,158) (9,536) (944,888)
NET INCOME - for the
year ended December
31, 1996 1,346,746 318,931 10,270 1,017,545
------------ ----------- --------- ------------
BALANCE - December 31,
1996 5,637,210 (3,453,230) 78,420 9,012,020
DISTRIBUTIONS TO
PARTNERS (24,533,244) (5,809,865) (187,078) (18,536,301)
NET INCOME - for the
nine months ended
September 30, 1997 19,907,323 9,502,585 115,992 10,288,746
------------ ----------- --------- ------------
BALANCE - September
30, 1997 $ 1,011,289 $ 239,490 $ 7,334 $ 764,465
============ =========== ========= ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Gross rents received from real estate
operations $ 378,555 $2,761,672
Cash paid to suppliers and employees -
including $73,737 and $254,893 paid
to related party in 1997 and 1996,
respectively (486,698) (1,405,611)
Interest paid (102,067) (354,939)
Interest and other income received 89,940 152,224
----------- -----------
Net cash (used in) provided by
operating activities (120,270) 1,153,346
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (53,022) (78,389)
Sale of property and equipment 29,433,000 -
Sales costs (349,507) (26,115)
------------ -----------
Net cash provided by (used in)
investing activities 29,030,471 (104,504)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on secured notes
payable (4,658,315) (69,700)
Prepayment penalty (116,042) -
Partner distributions (24,533,244) (937,936)
------------ -----------
Net cash used in
financing activities (29,307,601) (1,007,636)
------------ -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (397,400) 41,206
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 1,401,497 1,388,279
------------- -------------
BALANCE AT END OF PERIOD $ 1,004,097 $1,429,485
============= =============
</TABLE>
See accompanying notes to financial statememts.
8
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
-------------- -------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES
Net income $19,907,323 $944,397
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities
Depreciation and amortization 51,251 284,581
Gain on sale of property and
equipment (19,875,060) (143,366)
Changes in operating assets and
Liabilities
Decrease in accounts receivable 8,957 2,544
Decrease in prepaid expenses 70,995 (21,359)
Decrease in other assets - 656
(Decrease) increase in accounts payable
and accrued expenses (143,836) 83,132
(Decrease) increase in deposits
and advance rentals (139,900) 2,761
------------ ----------
Net cash (used in) provided by
operating activities $ (120,270) $1,153,346
=========== ==========
</TABLE>
SUPPLEMENTAL DISCLOSURE
- -----------------------
During the nine months ended September 30, 1996, $143,366 of the Independent
Committee cash reserve was released from restricted cash and the Partnership
recognized a gain on that portion of the 1994 sale proceeds.
During the nine months ended September 30, 1997, the remaining $143,366 of the
Independent Committee cash reserve and the entire $557,192 of the General
Reserve, were released from restricted cash and the Partnership recognized a
gain on that portion of the 1994 sale proceeds.
See accompanying notes to financial statements.
9
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
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 nine and three months ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. 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, 1996.
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.
Depreciation
------------
Pursuant to generally accepted accounting principles the Partnership
ceased to depreciate Woodbridge Meadows Apartments ("Woodbridge") from
the time it determined to sell the property (see Note 6).
NOTE 2 - SECURED NOTE PAYABLE
Secured note payable at September 30, 1997 and December 31, 1996
consisted of:
September 30, December 31,
1997 1996
------------- ------------
Note collateralized by first
trust deed, payable in monthly
installments of $47,093,
including interest at 10%,
maturing in 2014. The note was
repaid February 19, 1997 upon
sale of Woodbridge (see Note 6).
$ - $4,658,315
============ ===========
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
10
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued)
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
subordinated, 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.
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 $26,526 and $142,623 for management fees during
the nine months ended September 30, 1997 and 1996, respectively. Of the
$26,526, none was attributable to the three months ended September 30,
1997 (compared to $48,553 paid for the three months ended September 30,
1996).
In addition, Terra Vista was paid $47,211 and $112,270 during the nine
months ended September 30, 1997 and 1996, respectively, for performing
bookkeeping, regional management, computer, disposition and investor
relations services necessary for the operation of the Partnership and
its properties. Of the $47,211, ($3,206) is attributable to the three
months ended September 30, 1997 (compared to $46,191 paid for the three
months ended September 30, 1996).
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.
11
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 5 - SALE OF COLONIES OF MARGATE (Continued)
In connection with the sale, the Partnership established various
reserves totaling $1,024,923. 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. It was released in 1995, at which
time the gain on sale was recognized. The General Reserve and
Independent Committee Reserve were established to fund contingent
liabilities that may arise out of the MHC transaction. In August 1996,
$143,366 of the Independent Committee Reserve was released and the gain
on sale was recognized and included in net income. On March 4, 1997,
the Partnership distributed the $143,366 to the cash general and
limited and general partners. In August 1997, the remaining balance of
the Independent Committee Reserve, $143,366, and the General Reserve of
$557,192, were released and the gain on sale was recognized and
included in net income.
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 were released
or expended, gain on sale was recognized. At December 31, 1996,
$700,558 of sale proceeds have been deferred and are included in
deferred gain on sale, as reflected in the balance sheets while at
September 30, 1997, all reserves were released with no deferred gain on
sale reflected in the balance sheets.
NOTE 6 - SALE OF WOODBRIDGE MEADOWS APARTMENTS
On February 19, 1997, the Partnership sold its sole remaining property,
Woodbridge, to Heritage Square Apartments, a general partnership, as to
a 90% interest and Arroyo Grande Investment Company, a limited
liability company, as to a 10% interest, as tenants in common, for
consideration of $29,433,000, all cash. The Buyers are affiliates of
J.F. Shea Co., Inc. and are not affiliated with the Partnership. Net
sale proceeds, after repayment of mortgage debt of $4,757,740
(including a prepayment penalty of $116,042), broker's commission of
$261,330 and transaction costs of $158,171, totaled $24,255,759. Net
proceeds of $24,249,532 were distributed to the cash general and
limited and general partners on March 4, 1997.
With the release of the remaining Colonies of Margate sale reserves,
the Partnership will cease operations, commence liquidation and
dissolve.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Partnership's quick ratio increased to 67.1:1 from 1.7:1, including
unrestricted cash balances of $1,004,097 and $700,939 at September 30, 1997
and December 31, 1996, respectively. The increase is due to the reduction of
Partnership liabilities as a result of the Woodbridge sale, the release of
restricted cash balances and the maintenance of cash reserves to pay for
Partnership expenses until the Partnership can be dissolved. The
Partnership's cash balance is its only remaining source of liquidity.
On February 19, 1997, the Partnership sold Woodbridge, as discussed in Note 6
to the financial statements, and expects to wind up its operations in 1997
and dissolve. Since the Partnership no longer has real estate operations its
sole liquidity source is its cash balance. The Partnership expects to
distribute these funds, net of any future operating expenditures and
contingencies, if any, as part of its 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.
Results of Operations
- ---------------------
A comparison of results of operations for the nine and three months ended
September 30, 1997 and 1996 is not meaningful since the Partnership sold
Woodbridge, its sole remaining property, on February 19, 1997. As described
in Liquidity and Capital Resources above, the Partnership expects to dissolve
upon the release of the Colonies of Margate sale reserves.
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>
PART II. OTHER INFORMATION
ITEM NUMBER
- -----------
1. LEGAL PROCEEDINGS
No new material legal proceedings were commenced during the three
months ended September 30, 1997 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
None.
5. OTHER INFORMATION
None.
6. EXHIBITS AND REPORTS ON FORM 8-K
None.
14
<PAGE>
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: November 12, 1997 By /s/ Michael D. Gelfand
-----------------------
Michael D. Gelfand
President and
Chief Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,004,097
<SECURITIES> 0
<RECEIVABLES> 2,165
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,006,262
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,026,262
<CURRENT-LIABILITIES> 14,973
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,011,289
<TOTAL-LIABILITY-AND-EQUITY> 1,026,262
<SALES> 510,481
<TOTAL-REVENUES> 20,474,498
<CGS> 0
<TOTAL-COSTS> 413,857
<OTHER-EXPENSES> 51,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,067
<INCOME-PRETAX> 19,907,323
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,907,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,907,323
<EPS-PRIMARY> 454.97<F1>
<EPS-DILUTED> 454.97
<FN>
<F1>EPS is per limited partnership unit
</FN>
</TABLE>
