<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 June 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
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TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION
- ------- ---------------------
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Balance Sheets 3
Statements of Operations 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>
June 30, December 31,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS - including restricted
deposits of $700,558 at June 30, 1997 and
December 31, 1996 - Note 1 $ 989,405 $ 1,401,497
ACCOUNTS RECEIVABLE 28,347 11,122
PREPAID EXPENSES - 70,995
---------- -----------
1,017,752 1,483,614
---------- -----------
PROPERTY AND EQUIPMENT - Notes 1, 2, 5 snd 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
---------- -----------
$1,037,752 $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>
June 30, December 31,
1997 1996
----------- ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
including $4,676 and $19,020 due to related
party at June 30, 1997 and December 31,
1996, respectively $ 29,059 $ 158,809
DEPOSITS AND ADVANCE RENTALS - 139,900
DEFERRED GAIN ON SALE - Note 5 700,558 700,558
SECURED NOTE PAYABLE - Notes 2 and 6 - 4,658,315
---------- -----------
729,617 5,657,582
PARTNERS' CAPITAL (DEFICIT)
General partners 72,972 (3,453,230)
Cash general partners, 228.5 units issued
and outstanding 1,972 78,420
Limited partners, 22.640.5 units issued
and outstanding 233,191 9,012,020
---------- -----------
308,135 5,637,210
---------- -----------
$1,037,752 $11,294,792
========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
----------- -----------
<S> <C> <C>
INCOME
Rent - Note 6 $ 510,481 $1,825,471
Interest and dividends 57,832 32,719
Other 19,283 62,848
Gain on sale of property and equipment -
Notes 5 and 6 19,174,502 -
----------- ----------
19,762,098 1,921,038
EXPENSES
Interest 102,067 236,675
Salaries - including $7,474 and $10,072
paid to related party in 1997 and
1996, respectively - Note 3 101,652 139,391
Maintenance, repairs and supplies 66,273 181,021
Other 59,254 158,162
Depreciation and amortization - Note 1 51,251 283,811
Professional fees and services -
including $14,222 and $51,690 paid
to related party in 1997 and 1996,
respectively - Note 3 50,531 153,445
Utilities 36,779 102,882
Real estate taxes 27,705 105,020
Management fees paid to related party
- Note 3 26,410 94,070
Payroll taxes and employee benefits 18,751 29,408
Insurance 17,256 52,875
----------- ----------
557,929 1,536,760
----------- ----------
NET INCOME $19,204,169 $ 384,278
=========== ==========
NET INCOME
GENERAL PARTNERS $ 9,336,067 $ 91,003
=========== ==========
CASH GENERAL AND LIMITED PARTNERS $ 9,868,102 $ 293,275
=========== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 93,360.67 $ 910.03
=========== ==========
INCOME PER CASH GENERAL AND
LIMITED PARTNERSHIP UNIT - Note 4 $ 431.51 $ 12.82
=========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
------------ ------------
<S> <C> <C>
INCOME
Rent - Note 6 $ 548 $929,178
Interest and dividends 12,177 17,855
Other (79) 33,434
Gain on sale of property and equipment -
Notes 5 and 6 6,226 -
-------- --------
18,872 980,467
-------- --------
EXPENSES
Interest - 118,052
Salaries - including $4,256 and $4,611
paid to related party in 1997 and
1996, respectively - Note 3 3,218 71,249
Maintenance, repairs and supplies 6,383 76,982
Other 14,611 73,512
Depreciation and amortization - Note 1 - 141,905
Professional fees and services -
including $14,222 and $27,645 paid
to related party in 1997 and 1996,
respectively - Note 3 6,664 62,636
Utilities 10 50,195
Real estate taxes - 52,510
Management fees paid to related party
- Note 3 - 48,025
Payroll taxes and employee benefits - 14,235
Insurance 1,687 26,430
-------- --------
32,573 735,731
-------- --------
NET INCOME (LOSS) $(13,701) $244,736
======== ========
NET INCOME (LOSS)
GENERAL PARTNERS $ (3,245) $ 57,957
======== ========
CASH GENERAL AND LIMITED PARTNERS $(10,456) $186,779
======== ========
INCOME (LOSS) PER 1% GENERAL
PARTNER INTEREST - Note 4 $ (32.45) $ 579.57
======== ========
INCOME (LOSS) PER CASH GENERAL AND
LIMITED PARTNERSHIP UNIT - Note 4 $ (0.46) $ 8.17
======== ========
</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 Six Months Ended June 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 six months ended June 30, 1997 19,204,169 9,336,067 110,630 9,757,472
------------ ----------- --------- ------------
BALANCE - June 30, 1997 $ 308,135 $ 72,972 $ 1,972 $ 233,191
============ =========== ========= ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Gross rents received from real estate
operations $ 378,555 $ 1,834,894
Cash paid to suppliers and employees -
including $76,827 and $160,149 paid
to related party in 1997 and 1996,
respectively (489,186) (1,013,689)
Interest paid (102,067) (236,675)
Interest and other income received 77,736 97,238
------------ -----------
Net cash (used in) provided by
operating activities (134,962) 681,768
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (53,022) (59,176)
Sale of property and equipment 29,433,000 -
Sales costs (349,507) (13,278)
------------ -----------
Net cash provided by (used in)
investing activities 29,030,471 (72,454)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on secured notes
payable (4,658,315) (45,886)
Prepayment penalty (116,042) -
Partner distributions (24,533,244) (625,291)
------------ -----------
Net cash used in
financing activities (29,307,601) (671,177)
------------ -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (412,092) (61,863)
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 1,401,497 1,388,279
------------ -----------
BALANCE AT END OF PERIOD $ 989,405 $ 1,326,416
============ ===========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
------------ -----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES
Net income $ 19,204,169 $384,278
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities
Depreciation and amortization 51,251 283,811
Gain on sale of property
and equipment (19,174,502) -
Changes in operating assets and
liabilities
(Increase) decrease in accounts
receivable (17,225) 439
Decrease in prepaid expenses 70,995 52,667
Decrease in other assets - 656
Decrease in accounts payable
and accrued expenses (129,750) (50,148)
(Decrease) increase in deposits and
advance rentals (139,900) 10,065
------------ --------
Net cash (used in) provided by
operating activities $ (134,962) $681,768
============ ========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 1997 and December 31, 1996 and
For the Six and Three Months Ended June 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 six and
three months ended June 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 June 30, 1997 and December 31, 1996
consisted of:
June 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
=========== ==========
10
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
June 30, 1997 and December 31, 1996 and
For the Six and Three Months Ended June 30, 1997 and 1996
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 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 $26,410 and $94,070 for
management fees during the six months ended June 30, 1997 and 1996,
respectively. Of the $26,410, none was attributable to the three
months ended June 30, 1997 (compared to $48,025 paid for the three
months ended June 30, 1996).
In addition, Terra Vista was paid $50,417 and $66,079 during the six
months ended June 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 $50,417, $11,944 is attributable to the
three months ended June 30, 1997 (compared to $30,539 paid for the
three months ended June 30, 1996).
NOTE 4 - INCOME (LOSS) PER 1% GENERAL PARTNER INTEREST AND CASH GENERAL AND
LIMITED PARTNERSHIP UNIT
Income (loss) per cash general and limited partnership unit was
computed based on the cash general and limited partners' share of
net income (loss) as reflected on the Statements of Operations and
Changes in Partners' Capital (Deficit) and the number of units
outstanding (22,869 units). The general partners' share of net
income (loss) has not been included in this computation. Income
(loss) per 1% general partner interest was computed based on the
general partners' share of net income (loss) as reflected on the
Statements of Operations and Changes in Partners' Capital (Deficit).
11
<PAGE>
DE ANZA PROPERTIES - X
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
June 30, 1997 and December 31, 1996 and
For the Six and Three Months Ended June 30, 1997 and 1996
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.
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:
MHC Reserve $181,000
General Reserve 557,192
Independent Committee Reserve 286,731
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.
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 June 30, 1997 and
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.
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 $29,433,000, all cash. The Buyers are
affiliates of J.F. Shea Co., Inc. 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 approximately $24,255,759. Net proceeds of
$24,249,532 were distributed to the cash general and limited and
general partners on March 4, 1997.
Following 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 9.9:1 from 1.7:1, including
unrestricted cash balances of $288,847 and $700,939 at June 30, 1997 and
December 31, 1996, respectively. The increase is due to the reduction of
Partnership liabilities as a result of the Woodbridge sale and the maintenance
of cash reserves to pay for Partnership expenses until the Partnership can be
dissolved. The Partnership's cash balance is its immediate 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. Liquidity may improve to the extent that
funds are released from the General Reserve and/or the Independent Committee
Reserve. However, 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 six and three months ended June
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 June 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: August 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 984,405
<SECURITIES> 0
<RECEIVABLES> 28,347
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,017,752
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,037,752
<CURRENT-LIABILITIES> 29,059
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 308,135
<TOTAL-LIABILITY-AND-EQUITY> 1,037,752
<SALES> 510,481
<TOTAL-REVENUES> 19,762,098
<CGS> 0
<TOTAL-COSTS> 404,611
<OTHER-EXPENSES> 51,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,067
<INCOME-PRETAX> 19,204,169
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,204,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,204,169
<EPS-PRIMARY> 431.51
<EPS-DILUTED> 431.51<F1>
<FN>
<F1>EPS is per limited partnership unit.
</FN>
</TABLE>
