<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 0-10430
DE ANZA PROPERTIES - XII, LTD.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3601367
(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 17.
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 14
PART II. OTHER INFORMATION 16
- -------- -----------------
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DE ANZA PROPERTIES - XII, LTD.
(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 $159,096 at
June 30, 1997 and December 31, 1996 -
Notes 1 and 5 $ 813,215 $ 631,598
ACCOUNTS RECEIVABLE 6,610 7,923
PREPAID EXPENSES 9,886 39,545
----------- -----------
829,711 679,066
----------- -----------
NOTES RECEIVABLE - Note 5 247,423 301,958
----------- -----------
PROPERTY AND EQUIPMENT - Notes 2 and 5
Land 1,179,884 1,184,605
Land improvements 3,506,766 3,437,005
Buildings and improvements 9,914,218 9,933,168
Furniture and equipment 478,119 469,216
----------- -----------
15,078,987 15,023,994
Less accumulated depreciation 7,270,534 7,180,893
----------- -----------
7,808,453 7,843,101
----------- -----------
OTHER ASSETS
Loan costs - less accumulated
amortization of $23,253 and
$20,008 at June 30, 1997 and
December 31, 1996, respectively
- Note 2 74,081 77,326
Other 12,221 4,420
----------- -----------
86,302 81,746
----------- -----------
$ 8,971,889 $ 8,905,871
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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 $13,691 and $6,399 due to
related party at June 30, 1997
and December 31, 1996, respectively $ 79,974 $ 92,710
DEPOSITS AND ADVANCE RENTALS 43,528 49,182
DEFERRED GAIN ON SALE - Note 5 159,096 159,096
MANAGEMENT AND CONDOMINIUM CONVERSION
FEES PAYABLE TO AFFILIATE OR RELATED
PARTY - Note 3 796,331 796,331
SECURED NOTE PAYABLE - Note 2 4,196,335 4,222,320
----------- -----------
5,275,264 5,319,639
----------- -----------
PARTNERS' CAPITAL (DEFICIT)
General partners (1,643,710) (1,648,564)
Limited partners, 22,719 units issued
and outstanding 5,340,335 5,234,796
----------- -----------
3,696,625 3,586,232
----------- -----------
$ 8,971,889 $ 8,905,871
=========== ===========
</TABLE>
4
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
---------- ----------
<S> <C> <C>
INCOME
Rent $1,134,559 $1,104,657
Other 91,895 27,677
Interest and dividends 25,240 29,374
Gain on sale of property and equipment 76,998 -
---------- ----------
1,328,692 1,161,708
---------- ----------
EXPENSES
Interest 153,491 159,219
Maintenance, repairs and supplies 127,246 131,282
Depreciation and amortization 105,317 306,773
Professional fees and services -
including $29,057 and $31,360 paid
to related party in 1997 and 1996,
respectively - Note 3 98,616 92,292
Salaries - including $7,612 and $9,506
paid to related party in 1997 and
1996, respectively - Note 3 96,785 97,507
Utilities 88,507 90,478
Real estate taxes 77,806 75,885
Other 44,344 44,348
Insurance 29,838 32,545
Payroll taxes and employee benefits 21,349 20,794
---------- ----------
843,299 1,051,123
---------- ----------
NET INCOME $ 485,393 $ 110,585
========== ==========
NET INCOME
GENERAL PARTNERS $ 4,854 $ 1,106
========== ==========
LIMITED PARTNERS $ 480,539 $ 109,479
========== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 48.54 $ 11.06
========== ==========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 21.15 $ 4.82
========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
------------ ------------
<S> <C> <C>
INCOME
Rent $562,653 $538,163
Other 84,159 15,155
Interest and dividends 12,790 14,628
Gain on sale of property and equipment 76,998 -
-------- --------
736,600 567,946
-------- --------
EXPENSES
Interest 77,008 78,499
Maintenance, repairs and supplies 74,253 80,755
Depreciation and amortization 1,813 153,372
Professional fees and services -
including $15,966 and $13,781 paid
to related party in 1997 and 1996,
respectively - Note 3 53,190 42,422
Salaries - including $3,889 and $5,106
paid to related party in 1997 and
1996, respectively - Note 3 49,254 49,356
Utilities 43,292 45,032
Real estate taxes 38,498 37,943
Other 28,842 22,449
Insurance 14,916 16,265
Payroll taxes and employee benefits 9,901 9,835
-------- --------
390,967 535,928
-------- --------
NET INCOME $345,633 $ 32,018
======== ========
NET INCOME
GENERAL PARTNERS $ 3,456 $ 320
======== ========
LIMITED PARTNERS $342,177 $ 31,698
======== ========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 34.56 $ 3.20
======== ========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 15.06 $ 1.40
======== ========
</TABLE>
See accompanying notesd to financial statements.
6
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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>
General Limited
Total Partners Partners
---------- ----------- ----------
<S> <C> <C> <C>
BALANCE - January 1, 1996 $4,070,413 $(1,652,362) $5,722,775
DISTRIBUTIONS TO PARTNERS (864,000) - (864,000)
NET INCOME - for the year
ended December 31, 1996 379,819 3,798 376,021
---------- ----------- ----------
BALANCE - December 31, 1996 3,586,232 (1,648,564) 5,234,796
DISTRIBUTIONS TO PARTNERS (375,000) - (375,000)
NET INCOME - for the six
months ended June 30,
1997 485,393 4,854 480,539
---------- ----------- ----------
BALANCE - June 30, 1997 $3,696,625 $(1,643,710) $5,340,335
========== =========== ==========
</TABLE>
See accompanying notes to financial statments.
7
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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 $1,130,079 $1,103,075
Cash paid to suppliers and employees -
including $38,990 and $43,515
paid to related party in 1997
and 1996, respectively (566,762) (566,309)
Interest paid (153,996) (160,202)
Interest and other income received 116,973 57,999
---------- ----------
Net cash provided by
operating activities 526,294 434,563
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (81,604) (153,236)
Payments received on notes receivable 54,535 133,702
Sale of property and equipment 100,000 -
Sales and closing costs (16,623) -
---------- ----------
Net cash provided by (used in)
investing activities 56,308 (19,534)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (375,000) (350,000)
Principal payments on secured
notes payable (25,985) (17,078)
---------- ----------
Net cash used in
financing activities (400,985) (367,078)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 181,617 47,951
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 631,598 671,430
---------- ----------
BALANCE AT END OF PERIOD $ 813,215 $ 719,381
========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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 PROVIDED BY OPERATING ACTIVITIES
Net income $485,393 $110,585
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization 105,317 306,773
Gain on sale of property and
equipment (76,998) -
Changes in operating assets and
liabilities
Decrease in accounts receivable 1,313 5,546
Decrease in prepaid expenses 29,659 32,336
Increase in other assets - (3,028)
Decrease in accounts payable and
accrued expenses (12,736) (12,599)
Decrease in deposits and advance
rentals (5,654) (5,050)
-------- --------
Net cash provided by
operating activities $526,294 $434,563
======== ========
</TABLE>
9
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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 Warner Oaks Apartments
("Warner Oaks") from the time it determined to sell the
property (see Note 5).
NOTE 2 - SECURED NOTE PAYABLE
Secured note payable at June 30, 1997 and December 31, 1996
consisted of:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ------------
<S> <C> <C>
Note collateralized by a first trust
deed, payable in monthly installments
of $29,997, including interest until
December 15, 1997.
Thereafter, the monthly payment changes
annually on each December 15th.
Interest accrues at 2.5% over the
FHLB's 11th District Cost of Funds
Index, not to exceed 12.9%, adjusted
monthly. Unpaid principal and accrued
interest are due November 15, 2008.
The interest rate in effect at June
30, 1997 and December 31, 1996 was
7.32% and 7.34%, respectively. $4,196,335 $4,222,320
========== ==========
</TABLE>
10
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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,
as amended, 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 distribution to the limited partners
of 7% 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 of the sale, refinancing
or other disposition after payment of the limited partners'
priority return and capital contribution and the general
partners' incentive interest. However, management fees payable
subsequent to a consummated refinancing are not subordinated to
the limited partners' priority return to the extent the
subordination would have been caused by increased debt service
charges. At June 30, 1997 and December 31, 1996, cumulative
accrued fees of $565,022 to De Anza Assets, Inc. have been
subordinated and are included in management and condominium
conversion fees payable to affiliate or related party, as
reflected in the balance sheets. Shortly before its sale to an
affiliate of Manufactured Home Communities, Inc. (MHC), as
discussed in Note 5, De Anza Assets, Inc. assigned its rights to
receipt of these fees to the Gelfand Family Trust.
On August 18, 1994, subsequent to the sale of the Mark and the
property management business of De Anza Group, Inc. (DAG), as
discussed in Note 5, the property management of Warner Oaks and
the two remaining spaces at San Luis Bay 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. Management fees of $57,496 and $56,160 were
deferred, but not accrued for the six months ended June 30, 1997
and 1996, respectively. Of the $57,496, $28,734 is attributable
to the three months ended June 30, 1997 (compared to $27,383
deferred, but not accrued for the three months ended June 30,
1996). The Partnership has determined, that based on the
anticipated net proceeds from the disposition or refinancing of
the property and their allocation under the terms of the
Partnership Agreement, that it is not probable any deferred
management fees would be paid. However, in the event there were
sufficient proceeds, the deferred management fees would be paid
at that time. At June 30, 1997 and December 31, 1996, cumulative
accrued fees to Terra Vista of $153,500, have been subordinated
and are included in management and condominium conversion fees
payable to affiliate or related party. The Gelfand Family Trust
has agreed to share equally any payment which is made to the
Gelfand Family Trust for deferred management fees with Terra
Vista until Terra Vista has been paid all outstanding deferred
management fees due Terra Vista.
11
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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 (Continued)
Pursuant to the partnership agreement, a condominium
conversion fee equal to 1% of the sales price of the San
Luis Bay homesites sold is due to an affiliate of the OGP
(see Note 5). Payment of this fee has been deferred
pursuant to the partnership agreement's requirement
regarding subordination to payment of the limited partners'
priority return and capital contribution, the general
partners' incentive interest and deferred management fees.
Subordinated cumulative accrued fees of $77,809 have been
included in management and condominium conversion fees
payable to an affiliate or related party at June 30, 1997
and December 31, 1996. Shortly before the sale to MHC, De
Anza Assets, Inc. assigned its rights to receive these fees
to the Gelfand Family Trust.
In addition, Terra Vista was paid $38,990 and $43,515
during the six months ended June 30, 1997 and 1996,
respectively, for performing bookkeeping, legal, regional
management, computer, disposition and investor relations
services necessary for the operation of the Partnership and
its properties. Of the $38,990, $17,290 is attributable to
the three months ended June 30, 1997 (compared to $19,845
paid for the three months ended June 30, 1996).
NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND LIMITED
PARTNERSHIP UNIT
Income per limited partnership unit is computed based on
the limited partners' share of net income as shown on the
Statements of Income and Changes in Partners' Capital
(Deficit) and the number of limited partnership units
outstanding (22,719 units). The general partners' share of
net income has not been included in this computation.
Income per 1% general partner interest is computed based on
the general partners' share of net income as shown on the
Statements of Operations and Changes in Partners' Capital
(Deficit).
NOTE 5 - SALE OF PROPERTY AND EQUIPMENT
San Luis Bay
------------
On May 2, 1989, the Partnership entered into an agreement
to sell San Luis Bay Mobile Estates (the 162-space mobile
home community in Avila Beach, California) to the residents
for an aggregate sales price of $8,850,000 and, pursuant to
that agreement, subdivided the property into condominium
units in 1991. The Partnership provided purchase money
financing for up to 80% of the individual homesite price,
payable in monthly payments, including interest at 10%,
based on a loan amortization schedule of 30 years, with a
balloon payment of unpaid principal and interest due at the
end of seven years. At June 30, 1997 and December 31, 1996,
respectively, the outstanding amounts due under such notes
totaled $247,423 and $301,958. Those residents who
purchased their homesites for cash received a 10% discount
off their purchase price.
12
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(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 PROPERTY AND EQUIPMENT (Continued)
San Luis Bay (continued)
------------------------
The Partnership sold 160 homesites prior to 1995. On May 1,
1997, the Partnership sold one of the two remaining spaces
at San Luis Bay for $100,000. Net proceeds, after
commission and sale and closing costs of $7,112, was
$92,888. The sole remaining homesite is leased to a
resident.
The Mark
--------
On August 18, 1994 the Partnership sold The Mark to an
affiliate of MHC, a real estate investment trust, as part
of an overall transaction for the sale of the related
management business of DAG and other mobile home
communities affiliated with DAG. In connection with the
sale, the Partnership established various reserves totaling
$230,097. The $230,097 was used to establish the following
cash reserves:
<TABLE>
<S> <C>
MHC Reserve $ 42,000
General Reserve 130,094
Independent Committee Reserve 58,003
</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, $29,001 of the
Independent Committee Reserve was released and the gain on
sale 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, General Reserve and Independent Committee Reserve,
totaling $230,097. As these reserves are released or
expended, gain on sale will be recognized. At June 30,
1997, and December 31, 1996, $159,096 of sale proceeds have
been deferred and are included in deferred gain on sale, as
reflected in the balance sheets.
Possible Sale of Warner Oaks Apartments
---------------------------------------
In March 1997, the Partnership listed Warner Oaks
Apartments, located in Los Angeles and its remaining
property, for sale. The Partnership anticipates the
property will be sold in 1997, however there can be no
assurance that a sale will be consummated, or if
consummated that it will occur in 1997. Upon such a sale it
is anticipated that the Partnership would be dissolved and
terminated.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity
- ---------
The Partnership's quick ratios were 3.7:1 and 2.4:1, including unrestricted cash
balances of $654,119 and $472,502 at June 30, 1997 and December 31, 1996,
respectively. The increase in cash is mainly due to notes receivable prepayments
and the sale of a space at San Luis Bay. 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 six months ended June 30, 1997 were
approximately $526,000. Should it become necessary to improve liquidity, the
Partnership can reduce partner distributions, which totaled $375,000 during the
six months ended June 30, 1997, arrange a short-term line of credit or refinance
Warner Oaks.
Subsequent to the sale of The Mark, the Partnership continues to operate Warner
Oaks, the remaining property. In March 1997, the Partnership listed Warner Oaks
for sale and anticipates that a closing would occur prior to the end of 1997;
however, there can be no assurances that a sale will occur. The Partnership also
owns one space at San Luis Bay Mobile Estates and various notes receivables
related to the 1991 sale (see Note 5 to the Financial Statements). Upon sale of
Warner Oaks the Partnership expects to pursue the sale of its remaining space at
San Luis Bay and collection of its notes receivable in order to liquidate and
dissolve the Partnership.
In November 1993, the Partnership refinanced Warner Oaks with a variable
interest rate loan. The interest rate for the initial three months was 6.25%,
thereafter the loan bears interest at 250 basis points over the Eleventh
District Cost of Funds with caps on the maximum annual payment change of 7.5% of
the current payment, and an interest rate cap of 12.9% over the life of the
loan. This loan is subject to negative amortization. Future liquidity will be
affected, unfavorably or favorably, to the extent the payment rate fluctuates.
At June 30, 1997, the interest rate in effect was 7.32%.
The Partnership has sold 161 of 162 spaces at San Luis Bay as of June 30, 1997
(see Note 5 to the Financial Statements). Liquidity is expected to improve as
the notes receivable from the buyers of San Luis Bay spaces mature, as discussed
in Note 5 to the Financial Statements. As of June 30, 1997, the amount of the
notes receivable outstanding was approximately $247,000. Liquidity also improves
when the notes receivable are prepaid and if the remaining space is sold.
Other than as described elsewhere, there are no known trends, demands,
commitments, events or uncertainties which are reasonably likely to materially
affect the Partnership's liquidity.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Capital Resources
- -----------------
The Partnership anticipates spending approximately $139,000 in 1997 for physical
improvements at Warner Oaks, approximately $57,000 of which will be spent during
the remainder of 1997. The Partnership is continuously reviewing the necessity
for such expenditures in light of the expected sale of Warner Oaks. Funds for
these improvements will be provided by cash generated from operations.
As described above the Partnership is seeking to sell Warner Oaks in 1997. No
assurances can be made that such a sale will occur. However, if it does the
Partnership would endeavor to dispose of its remaining space at San Luis Bay and
collect its notes receivable in order to liquidate as soon as practical.
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
- ---------------------
Rental income increased 2.7% and 4.6% during the six and three months ended June
30, 1997, respectively, over the same periods in 1996, primarily due to higher
occupancy. Other income increased in 1997 due to receipt of a legal settlement
of litigation regarding a matter at The Mark that occurred prior to the sale of
that property in 1994. Gain of the sale of a space at San Luis Bay increased
1997 income while no such sale occurred in 1996.
Expenses decreased 19.8% and 27.0% during the six and three months ended June
30, 1997, respectively, over the same periods in 1996. The decrease is almost
entirely due to lower depreciation and amortization expense in 1997 because,
according to generally accepted accounting principles, from the time the
Partnership determined to sell Warner Oaks it ceased to depreciate the carrying
value of the assets. Additionally, interest expense decreased in 1997 due to
declining principal balances. Partly offsetting these decreases was an increase
in professional fees and services due to legal fees paid in connection with
obtaining the cash legal settlement included in other income in 1997.
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.
15
<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.
16
<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 - XII, LTD.
(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
17
<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> 813,215
<SECURITIES> 0
<RECEIVABLES> 6,610
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 829,711
<PP&E> 15,078,987
<DEPRECIATION> 7,270,534
<TOTAL-ASSETS> 8,971,889
<CURRENT-LIABILITIES> 175,502
<BONDS> 4,144,335
0
0
<COMMON> 0
<OTHER-SE> 3,696,625
<TOTAL-LIABILITY-AND-EQUITY> 8,971,889
<SALES> 1,134,559
<TOTAL-REVENUES> 1,328,692
<CGS> 0
<TOTAL-COSTS> 226,585
<OTHER-EXPENSES> 105,317
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 153,491
<INCOME-PRETAX> 485,393
<INCOME-TAX> 0
<INCOME-CONTINUING> 485,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485,393
<EPS-PRIMARY> 21.15
<EPS-DILUTED> 21.15<F1>
<FN>
<F1>EPS is per limited partnership unit.
</FN>
</TABLE>
