FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended March 31, 1996
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Commission file number 0-11068
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SIERRA PACIFIC DEVELOPMENT FUND
(A LIMITED PARTNERSHIP)
State of California 95-3643693
- --------------------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5850 San Felipe, Suite 500
Houston, Texas 77057
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (713) 706-6271
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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[ ].
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
Page
Number
------
Consolidated Balance Sheets - March 31, 1996 and \
December 31, 1995 .......................................................... 4
Consolidated Statements of Operations -
For the Three Months Ended March 31, 1996 and 1995 ......................... 5
Consolidated Statements of Changes in Partners' Equity -
From February 13, 1981 (inception of Partnership) to
December 31, 1995 and For the Three Months Ended
March 31, 1996 ............................................................. 6
Consolidated Statements of Cash Flows - For the
Three Months Ended March 31, 1996 and 1995 ................................. 7
Notes to Consolidated Financial Statements ................................. 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) OVERVIEW
The following discussion should be read in conjunction with the Partnership's
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Form 10-Q.
The Partnership currently owns a 72.62% interest in the Sierra Creekside
Partnership, which operates the Sierra Creekside property.
(b) RESULTS OF OPERATIONS
Revenues increased by $48,000, or 37%, due primarily to an increase in occupancy
from 71% at March 31, 1995 to 95% at March 31, 1996. One new tenant, whose lease
commenced October 1, 1995, accounted for an increase in leased square footage of
5,071, or 11% of the rentable square footage of the Property. Another
significant tenant increased their square footage March 1, 1995 by 2,846, or 6%
of the rentable square footage of the Property.
2
Operating expenses decreased by $22,000, or 18%, due to lower administrative
costs and other expense cutting measures implemented by management. Depreciation
and amortization expenses increased by $18,000, or 19%, primarily due to
depreciation and amortization on additional tenant improvements associated with
the increased occupancy of the Property.
The funds necessary to build out new tenant space and pay leasing commissions
were provided by the proceeds of a mortgage loan funded in June 1995. Interest
expense increased due to the funding of this loan.
(c) LIQUIDITY AND CAPITAL RESOURCES
A loan in the amount of $1,850,000 was funded in June 1995. This loan is secured
by a trust deed on the Property. The proceeds of this loan were used to pay
delinquent property taxes, commissions, and other accrued liabilities. The
remainder is being held in reserve to fund capital improvements and tenant
build-out. A secondary source of cash is available through advances from the
minority owner of the Property, Sierra Mira Mesa Partners.
The Partnership's primary capital requirements will be for construction of new
tenant space and compliance with the Americans with Disabilities Act or other
yet unknown changes in building codes. The estimated cost of completing tenant
improvements for space not previously leased is $20 per square foot. As a result
of funding a loan on the Property in 1995, the Partnership has sufficient cash
reserves to meet all foreseeable future capital requirements.
3
SIERRA PACIFIC DEVELOPMENT FUND
(A LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
MARCH 31, DECEMBER 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents .................. $ 656,611 $ 787,269
Receivables:
Unbilled rent ........................... 76,674 63,362
Billed rent ............................. 36,176 10,564
Income-producing property -
net of
accumulated depreciation
and valuation
allowance of $3,836,273 and
$3,737,823,
respectively ............................ 3,416,503 3,422,035
Other assets ............................... 279,477 271,628
---------- ----------
Total Assets ............................... $4,465,441 $4,554,858
========== ==========
LIABILITIES AND PARTNERS'
EQUITY
Accrued and other liabilities .............. $ 103,301 $ 102,994
Note payable ............................... 1,827,150 1,838,747
---------- ----------
Total Liabilities .......................... 1,930,451 1,941,741
---------- ----------
Minority interest in
consolidated
joint venture ........................... 455,446 476,836
---------- ----------
Partners' equity:
General Partner .......................... 0 0
Limited Partners:
30,000 units
authorized,
29,354 issued and
outstanding ......................... 2,079,544 2,136,281
---------- ----------
Total Partners' equity ..................... 2,079,544 2,136,281
---------- ----------
Total Liabilities and
Partners' equity ........................... $4,465,441 $4,554,858
========== ==========
UNAUDITED
SEE ACCOMPANYING NOTES
4
SIERRA PACIFIC DEVELOPMENT FUND
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
--------- ----------
REVENUES:
Rental income ............................ $ 175,284 $ 132,009
Interest income .......................... 5,045 0
--------- ---------
Total revenues ............. 180,329 132,009
--------- ---------
EXPENSES:
Operating expenses ..................... 103,410 125,702
Depreciation and
amortization ............................... 113,805 95,538
Interest ............................... 41,242 0
--------- ---------
Total costs and expenses ............. 258,457 221,240
--------- ---------
LOSS BEFORE MINORITY
INTEREST'S SHARE
OF CONSOLIDATED JOINT
VENTURE LOSS ............................... (78,128) (89,231)
--------- ---------
MINORITY INTEREST'S SHARE OF
CONSOLIDATED JOINT VENTURE
LOSS ....................................... 21,391 21,103
--------- ---------
NET LOSS ................................... $ (56,737) $ (68,128)
========= =========
Net loss per limited
partnership unit ........................... $ (1.93) $ (2.32)
========= =========
UNAUDITED
SEE ACCOMPANYING NOTES
5
SIERRA PACIFIC DEVELOPMENT FUND
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FROM FEBRUARY 13, 1981 (INCEPTION OF PARTNERSHIP) TO DECEMBER 31, 1995
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
Limited Partners Total
--------------------------- General Partners'
Per Unit Total Partner Equity
--------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Proceeds from sale of
partnership units .............................. $ 500.00 $ 14,677,000 -- $ 14,677,000
Underwriting commissions
and other organization
expenses ......................................... (60.29) (1,769,862) -- (1,769,862)
Cumulative net income (loss)
(to December 31, 1995) ......................... (200.18) (5,876,384) $ 14,600 (5,861,784)
Cumulative distributions
from operations
(to December 31, 1995) ......................... (51.25) (1,504,086) (14,600) (1,518,686)
Cumulative distributions
from dispositions of assets
(to December 31, 1995) ......................... (115.50) (3,390,387) -- (3,390,387)
---------- ------------ ----------- ------------
Partners' equity - January 1, 1996 ............... 72.78 2,136,281 0 2,136,281
Net loss ......................................... (1.93) (56,737) -- (56,737)
---------- ------------ ----------- ------------
Partners' equity - March 31, 1996 ................ $ 70.85 $ 2,079,544 $ 0 $ 2,079,544
========== ============ =========== ============
</TABLE>
UNAUDITED
SEE ACCOMPANYING NOTES
6
SIERRA PACIFIC DEVELOPMENT FUND
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss ................................. $ (56,737) $ (68,128)
Adjustments to reconcile
net loss
to cash used in operating
activities:
Depreciation and
amortization ............................... 113,805 95,538
Minority interest's share
of consolidated
joint venture loss ................... (21,391) (21,103)
Increase in rent
receivable ................................. (38,924) (13,894)
Decrease in other
receivables ................................ 0 10,795
Increase in other assets ............... (23,202) (87,282)
Increase (decrease) in
accrued and other liabilities .............. 307 (143,481)
--------- ---------
Net cash used in
operating activities ....................... (26,142) (227,555)
--------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for property
additions .................................. (92,919) 0
--------- ---------
Net cash used in investing
activities ................................. (92,919) 0
--------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on note
payable .................................... (11,597) 0
Contributions from minority
investor ................................... 0 190,000
--------- ---------
Net cash (used in) provided
by financing activities .................... (11,597) 190,000
--------- ---------
NET DECREASE IN CASH
AND CASH EQUIVALENTS .................... (130,658) (37,555)
CASH AND CASH EQUIVALENTS
Beginning of period .................... 787,269 38,957
--------- ---------
CASH AND CASH EQUIVALENTS
End of period ......................... $ 656,611 $ 1,402
========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the
period for interest ........................ $ 55,033 $ 0
========= =========
UNAUDITED
SEE ACCOMPANYING NOTES
7
SIERRA PACIFIC DEVELOPMENT FUND
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated condensed financial statements include
the accounts of the Partnership and Sierra Creekside Partners, a majority owned
joint venture at March 31, 1996. All significant intercompany balances and
transactions have been eliminated in consolidation.
In the opinion of the Partnership's management, these unaudited financial
statements reflect all adjustments which are necessary for a fair presentation
of its financial position at March 31, 1996 and results of operations and cash
flows for the periods presented. All adjustments included in these statements
are of a normal and recurring nature. These financial statements should be read
in conjunction with the financial statements and notes thereto contained in the
Annual Report of the Partnership for the year ended December 31, 1995.
2. RELATED PARTY TRANSACTIONS
In 1994, all of the common stock of S-P Properties, Inc., the General Partner of
the Partnership, was purchased by Finance Factors, Inc. from Carlsberg
Management Company ("CMC"). CMC continued to manage the affairs of the
Partnership through March 31, 1995.
Included in the financial statements for the three months ended March 31, 1996
and 1995 are affiliate transactions as follows:
March 31
--------------------------------
1996 1995
--------------- ----------------
Management fees $ 4,785 $ 0
Administrative fees $ 5,438 $ 0
Leasing fees $ 19,744 $ 0
3. PARTNERS' EQUITY
Equity and net loss per limited partnership unit is determined by dividing the
Limited Partners' share of the Partnership's equity and net loss by the number
of limited partnership units outstanding, 29,354.
UNAUDITED
8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-K.
Exhibit
Number Description of Exhibit
- -------------- ------------------------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
SIERRA PACIFIC DEVELOPMENT FUND
a Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: MAY 13, 1996 /S/ THOMAS N. THURBER
Thomas N. Thurber
President and Director
Date: MAY 13, 1996 /S/ MICHELE E. JOHNSON
Michele E. Johnson
Chief Accounting Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SIERRA PACIFIC DEVELOPMENT FUND MARCH 31, 1996 FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 656,611
<SECURITIES> 0
<RECEIVABLES> 112,850
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 692,787
<PP&E> 7,252,776
<DEPRECIATION> 3,836,273
<TOTAL-ASSETS> 4,465,441
<CURRENT-LIABILITIES> 103,301
<BONDS> 1,827,150
0
0
<COMMON> 0
<OTHER-SE> 2,079,544
<TOTAL-LIABILITY-AND-EQUITY> 4,465,441
<SALES> 175,284
<TOTAL-REVENUES> 180,329
<CGS> 0
<TOTAL-COSTS> 103,410
<OTHER-EXPENSES> 113,805
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,242
<INCOME-PRETAX> (56,737)
<INCOME-TAX> 0
<INCOME-CONTINUING> (56,737)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (56,737)
<EPS-PRIMARY> (1.93)
<EPS-DILUTED> (1.93)
</TABLE>
