<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------
FORM 10-K
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (FEE REQUIRED) for the fiscal year ended
November 30, 1995, or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (NO FEE REQUIRED) for the
transition period from ____________ to ____________
Commission File Number 1-8383
MISSION WEST PROPERTIES
Incorporated in California IRS Employer Identification Number: 95-2635431
Principal Executive Offices: Telephone: (619) 450-3135
6815 Flanders Drive, Suite 250
San Diego, California 92121-3914
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF CLASS EXCHANGES ON WHICH REGISTERED
- --------------------------------------- --------------------------------
Shares of common stock, no par value American Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K, or any amendment to the Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of
the Registrant was $2,172,000 as of February 15, 1996.
The number of shares of the Registrant's common stock outstanding as
of February 15, 1996, was 1,368,721.
Portions of Part III are incorporated by reference from the
Registrant's definitive Proxy Statement dated February 15, 1996, for
the annual meeting of shareholders to be held on March 22, 1996.
<PAGE>
PART I
ITEM 1. BUSINESS
Mission West Properties (the "Company"), with corporate offices
located in San Diego, California, is a California corporation engaged
in developing, owning, operating, and selling income-producing
commercial real estate. Since completing its most recent development
projects in 1991, the Company has been involved principally in owning
and operating real estate projects.
The Company was formed in 1969 as Palomar Mortgage Investors, a
California business trust. It operated as a real estate investment
trust ("REIT") (as defined by the Internal Revenue Code), investing
primarily in short- and intermediate-term construction and development
loans secured by first trust deeds on real property. In 1974, the
Company terminated new loan activity except to facilitate the sale of
property acquired from borrowers through foreclosure or by deed in
lieu of foreclosure and, in 1975, changed its name to Mission
Investment Trust. In 1979, the Company terminated its status as a
REIT and began directly to develop and market properties it owned.
Since then, the Company has acquired, developed, and sold properties
in southern California and Arizona in accordance with its business
strategy; the Company currently manages ten operating properties it
has developed or acquired. In 1982 the Company incorporated under its
present name.
WHOLLY OWNED SUBSIDIARIES:
The Company has two wholly owned subsidiaries, MIT Realty, Inc. and
Mission West Executive Aircraft Center, Inc. ("MWEAC"). MIT Realty,
Inc. is an inactive entity; it has no signed contracts or commitments.
MWEAC is an active subsidiary that owns and operates office buildings
and aircraft hangars as part of a fixed-base operations center at the
McClellan-Palomar Airport in San Diego County; management of this
facility is provided by an independent contractor and the results of
the operations of this subsidiary are included in the consolidated
financial statements of the Company.
EMPLOYEES:
The Company had eight full-time employees as of November 30, 1995.
REAL ESTATE INVESTMENTS AND MARKETING:
At November 30, 1995, the Company had investments in ten real estate
projects and one undeveloped parcel of land totaling $43,184,000, net
of accumulated depreciation and allowance for estimated losses. The
Company completed its most recent development projects in 1991 and,
since that time, has principally focused on managing its real estate
portfolio. Because the Company's property portfolio contains what
management believes to be high-quality projects located in desirable
markets, the Company historically has been successful in both leasing
projects and effecting sales from time to time. The Company's
properties are substantially leased, with an average portfolio
occupancy of 87 percent in fiscal year 1995, and currently have an
aggregate positive cash flow. Due to market conditions, however, no
significant property sales have occurred since 1990.
GOVERNMENT REGULATIONS/ENVIRONMENTAL ISSUES:
The Company's rental properties are subject to various federal, state,
and local regulations such as those addressed by the American
Disabilities Act and local building codes. The Company believes that
the properties are currently in substantial compliance with all
applicable regulatory requirements, although expenditures may be
required in the future to comply with changes in these laws. No
material expenditures are contemplated at this time in order to effect
compliance.
The government and the general public continue to be concerned with
the impact of real estate development and construction on the physical
and social environment. Governmental agencies focus on environmental
effects when considering zoning applications and applications for
construction of sewer, water, and other facilities generally required
of real estate developers. Additionally, lending institutions place a
significant emphasis on environmental factors when considering
property financing. Although ecological and other environmental
concerns have not had a material impact on its development, operating,
or borrowing activities, there can be no assurance that the Company
will not be affected in the future either by governmental policies,
public attitudes, or lending requirements in this regard.
- 1 -
<PAGE>
ITEM 2. PROPERTIES
The Company has developed or acquired commercial properties located in
southern California and Arizona. Each property was selected for its
perceived potential to contribute value to the Company's real estate
portfolio and ability to generate profit, typically upon sale. In the
pursuit of enhancing property values and profits, the Company is
committed to maintaining its high-quality projects and providing
superior property management services to its tenants. The Company's
real estate investments as of November 30, 1995, are as follows:
<TABLE>
<CAPTION>
YEAR FISCAL 1995 NUMBER OF
NUMBER OF AMOUNT CONSTRUCTED/ AVERAGE TENANTS AT
DESCRIPTION AND LOCATION BUILDINGS INVESTED ACQUIRED SQ. FT. OCCUPANCY 11/30/95
------------------------ ---------- ------------- ------------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
OFFICE PROJECTS:
Two-story, Carlsbad, CA 2 $ 7,649,000 1988 80,540 89% 5
Three-story, San Diego, CA 1 7,626,000 1989 75,711 85% 13
Two-story, Carlsbad, CA 1 5,575,000 1991 52,696 98% 7
Two-story, San Diego, CA 1 4,167,000 1989 45,097 51% 4
INDUSTRIAL/R&D PROJECTS:
Manufacturing, Riverside, CA 1 5,944,000 1991 161,588 100% 1
R&D, San Diego, CA 4 6,327,000 1984 87,409 48% 9
R&D, San Diego, CA 4 6,652,000 1990 72,320 97% 7
Light industrial, Chandler, AZ 2 3,750,000 1986 65,630 94% 15
Industrial, Carlsbad, CA 3 3,591,000 1991 44,574 88% 19
AIRPORT PROJECTS:
Hangar/office bldg., Carlsbad, CA 1 1,796,000 1990 43,116 97% 7
Hangars/office bldg., Carlsbad, CA 3 3,113,000 1990 90,155 93% 54
UNDEVELOPED LAND:
Chandler, AZ N/A 461,000 1985 N/A N/A N/A
</TABLE>
During the year ended November 30, 1995, the Company's operating
property portfolio was, on average, 87 percent leased. The rental
rate for leases, exclusive of airport hangar space, in effect during
the year ranged from $0.38 to $1.76 per square foot, net of
concessions. The Company has negotiated each lease separately;
typically, office building and airport lease rates are full-service,
net of utilities, and industrial rates are triple net or modified
gross. A majority of the leases contain provisions for annual cost-of-
living or percentage increases. Lease terms average from one to five
years, ranging up to ten years, with a few month-to-month tenancies.
Cash flows from a property may vary from year to year depending on
tenant turnover. Upon lease maturity, expenditures such as lease
commissions, leasehold improvements, and suite refurbishments may
occur.
ITEM 3. LEGAL PROCEEDINGS
The Company is party to certain legal proceedings in its ordinary
course of business.
A civil action for an unspecified amount of damages relating to
environmental contamination was filed in May 1995 by residents in
Kennedy Heights and certain nearby residential developments located in
the greater Houston, Texas, area. The suit was filed in the 281st
District Court of Harris County in Houston, Texas. The Company and 50
other parties were named as defendants. The Company was dismissed
from the action without prejudice in December 1995 and agreed at that
time to a tolling of the statute of limitations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the quarter ended November 30, 1995.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S SHARES OF COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
Common Stock of the Company is traded on the American and Pacific
Stock Exchanges under the symbol MSW. The following are the high and
low sales prices, by quarter, of the Registrant's shares for the two
most recent fiscal years.
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
High Low High Low
----- ----- ----- -----
<S> <C> <C> <C> <C>
1st Quarter 7 1/4 5 1/4 5 3 1/2
2nd Quarter 5 3/4 5 1/4 4 3/8 3 3/4
3rd Quarter 5 5/8 4 7/8 5 1/8 3 3/4
4th Quarter 5 1/2 5 7 4 1/4
</TABLE>
As of February 15, 1996, the approximate number of holders of record
of the Company's stock was 525. The Company paid no dividends during
fiscal 1995 or 1994. Certain banks, through their debt agreements,
have restricted the Company from paying cash dividends to
shareholders.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
Selected consolidated financial information follows (in thousands,
except per share data).
<TABLE>
<CAPTION>
Years Ended November 30
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Results of Operations:
Revenues $ 7,926 $ 9,297 $ 7,142 $ 7,297 $ 6,482
Net Income (Loss) 52 (1,943) (1,065) (824) (869)
Net Income (Loss) per Share 0.04 (1.32) (0.73) (0.56) (0.59)
Financial Condition:
Total Assets $47,570 $50,963 $56,236 $59,731 $60,596
Notes Payable 31,967 34,382 35,938 38,229 37,265
Shareholders' Equity per Share 10.33 10.02 11.27 12.04 12.95
Cash Dividends Declared per Share 0.00 0.00 0.05 0.35 0.40
Average Shares Outstanding 1,393 1,469 1,469 1,469 1,475
</TABLE>
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED WITH FISCAL 1994:
During fiscal year 1995, the Company did not engage in development
activity and sold no rental properties; the Company sold one parcel of
undeveloped land. The Company continued to focus operating efforts on
managing its current real estate portfolio of ten operating projects.
During 1995 occupancy levels remained fairly stable, averaging 87
percent for the portfolio, compared to 84 percent in fiscal 1994. The
$5,200,000 adjustment recorded in fiscal 1994 (see "Results of
Operations -- FISCAL 1994 COMPARED WITH FISCAL 1993" below) affected
results of operations for fiscal 1995 in numerous areas, as discussed
below.
Compared to fiscal 1994, the Company's rental revenues from real
estate increased $509,000, or eight percent, in 1995; the related
operating expenses of real estate decreased $208,000, or ten percent.
The increase in rental revenue primarily resulted from effects of the
$5,200,000 adjustment recorded during the fourth quarter of fiscal
1994 to real estate investments and other assets (reduced amortization
of certain charges against rental revenue in 1995). The net decrease
in operating expenses resulted from several factors. Increases in
building repairs/reconditioning (successful leasing activity) and
property taxes in Arizona were offset by decreases in bad debt expense
(including $115,000 in recovery of prior bad debts), lease commission
amortization (additional effect of the 1994 adjustment), refunds of
prior year property taxes (successful assessment appeals), and general
cost containment. Depreciation of real estate decreased $120,000
between years due to effects of the 1994 adjustment.
Sales of real estate decreased a net $1,696,000 between years.
Litigation was settled during fiscal 1994 related to property sold in
1986, resulting in $1,500,000 of nonrecurring revenue in fiscal 1994.
During fiscal 1995, a parcel of unimproved land was sold for $225,000.
The related costs of real estate sold in fiscal 1994 consist of legal
fees and distributions in accordance with the Company's Management
Incentive Plan and in fiscal 1995 consist of the land sold and various
related selling costs.
Due to reimbursements from tenants for interior leasehold improvements
in excess of a standard allowance that were recorded in fiscal 1994
but not repeated in fiscal 1995, other revenues decreased $184,000
between 1994 and 1995.
During fiscal 1995, general and administrative expenses decreased
$255,000 due to cost control and elimination of outside consultant
fees recorded in fiscal 1994. Interest expense increased $347,000
between years as a result of increases in prime lending rates, offset
by a $2,415,000 reduction in notes payable. Prime rates averaged 8.8
percent during fiscal 1995 compared to 6.9 percent during fiscal 1994.
As discussed in Note 4 to the Consolidated Financial Statements, the
Company adopted SFAS No. 109 effective December 1, 1993. This
required change in accounting for income taxes resulted in a $440,000
cumulative effect, directly contributing net income for fiscal 1994.
FISCAL 1994 COMPARED WITH FISCAL 1993:
The Company did not engage in development activity during fiscal year
1994 and no properties were acquired or sold during the year. The
Company did, however, enter into an agreement to sell substantially
all its real estate assets. As a result of this proposed sales
transaction, the Company recorded a $5,200,000 provision for estimated
losses on real estate; this provision represented the difference
between the carrying value of the assets (real estate and other
related assets) and the proposed sales price, which was considered to
approximate market value (subsequent to November 30, 1994, the
proposed sales transaction was terminated).
During 1994, occupancy rates averaged 84 percent, compared to 85
percent in fiscal 1993. As a result of consistent occupancy rates and
minimal rental rate decreases, rental revenues from real estate
remained relatively constant. The related operating expenses of real
estate, including depreciation, decreased $460,000, or 11 percent,
between years. This decrease resulted from reductions in depreciation
expense, property taxes, general operating expenses, and the provision
for bad debts. (Fiscal 1993 results included nonrecurring
adjustments.) During the fourth quarter of fiscal 1994, an affiliate
continued to remit only
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<PAGE>
partial rent. The affiliate had requested a renegotiation of its lease
obligation, which was effected in the first quarter of 1995.
During the first quarter of fiscal 1994, the Company settled
litigation, receiving $1,500,000 in cash. The matter related to
property sold by the Company in 1986; therefore, the settlement amount
was recorded as revenue from sales of real estate. Also in fiscal
1994, the Company received nonrecurring proceeds on a note receivable
related to the same 1986 land sale, which contributed to the
$1,994,000 increase in sales of real estate between years. Other
revenue increased $202,000 between years as a result of reimbursements
from tenants for interior improvements in excess of a standard
allowance.
As a result of a reduction in Corporate staff and continuing cost
containment, general and administrative expenses were $183,000, or 13
percent, lower in fiscal 1994 than 1993. Interest expense decreased
$117,000 between years; this decrease resulted from the Company's
lenders' abating certain loan fees, which were offset by increased
expense due to higher interest rates (the prime lending rate increased
from six percent to 8.5 percent during 1994).
The Company recorded a $440,000 effect of a required change in
accounting for income taxes during the first quarter of fiscal 1994.
This change is more fully described in Note 4 to the Consolidated
Financial Statements.
CHANGES IN FINANCIAL POSITION
NOVEMBER 30, 1995 COMPARED WITH NOVEMBER 30, 1994:
During fiscal year 1995, the Company's cash and investments position
decreased $1,817,000 as a result of numerous items. Among the most
significant factors were scheduled debt amortizations of $1,070,000,
debt principal reductions of $1,000,000 and $345,000 made upon loan
renegotiations/extensions, and building improvements/refurbishments
and lease commissions payments of $605,000.
The $2,015,000 decrease in real estate investments during fiscal 1995
resulted from normal depreciation, sale of a parcel of unimproved
land, and disposition of certain interior improvements to an
affiliated tenant; these decreases were offset by tenant improvement
additions. The disposition of the interior improvements additionally
resulted in retirement of 100,000 shares of the Company's common
stock, as discussed in Note 5 to the Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
Management believes that the Company continues to be in a stable and
competitive position with its current real estate portfolio. The
portfolio continues to generate sufficient rental revenue to cover
real estate operating expenses and interest expense and it is
generating cash, after normal debt service (interest and monthly
principal amortization); however, the portfolio's operations have not
yet reached a level to additionally cover corporate overhead.
Historically, the Company has experienced net income and cash
increases in the years properties were sold and has experienced losses
and cash decreases in the years where no property sales occurred. The
occurrences of major property sales depends on several factors,
including prevailing market conditions and available financing for
potential purchasers (see "Impact of Recession on Operations" below).
During fiscal 1995, the Company negotiated modifications of 49 percent
of its debt portfolio, extending maturities until 1998 and lowering
interest rates to nine percent fixed. Another 41 percent of the debt
portfolio matures in April 1996. It is the Company's intention to
negotiate renewals of these notes or seek alternative financing; based
on prior experience and current relationships with lenders, it is
anticipated that renewal or replacement terms will be available and
will be similar to those currently in effect. Due to lingering
effects of the sluggish economy and of financial institution failures
(and the resulting revisions of lending practices), management is
unable to predict whether principal paydowns will be required upon
loan renewals, although none are anticipated at this time.
The Company continues to evaluate its future strategic course and
intends to pursue all viable growth or other opportunities, which may
include the sale or redeployment of certain assets currently held in
the real estate portfolio. The Company has no projects under
development and none specifically planned. Three stabilized
properties currently held have been reviewed as possible sale
candidates; acquisition candidates would be considered in light of
property sales or other available resources.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The only other capital expenditures anticipated are interior
improvements to existing buildings, which may be required as new
tenants are obtained or existing leases extended. The real estate
portfolio comprises operating properties that are either leased or
partially available for lease. The Company plans to continue to
finance its general and administrative operations with internally
generated funds, including rental receipts from the rental properties,
and existing cash and investments. The need for additional financing
in the future would depend on the number and size of projects
undertaken, if any.
The classification and carrying value of the Company's real estate
investments at November 30, 1995 are based on its intent to continue
owning and operating the assets for the production of income, while
amortizing the cost of the assets over their useful lives. The
Company's major shareholder, Triton Group Ltd. ("Triton"), has
liquidated most of its assets pursuant to a strategy of returning
value to its shareholders and has retained an investment banking firm
to assist it in developing and evaluating proposals for potential
purchasers, acquisitions candidates, or merger partners. Although not
presently contemplated, it is possible that Triton's ultimate course
of action could result in the Company's reclassifying some or all of
its real estate investments as held-for-sale, which would require
valuing the assets at the lower of cost or fair value less costs to
sell. Triton's ultimate course of action and the resulting effect, if
any, on the Company's classification and carrying value of its real
estate assets cannot be predicted at this time.
IMPACT OF RECESSION ON OPERATIONS
The southern California economy continues to recover, although at a
relatively sluggish pace. Corporate combinations and downsizing have
contributed to reduced employment and decreased demand for commercial
property. The commercial and industrial real estate in the region is
still overbuilt. Although absorption in the markets in which the
Company competes has increased, commercial real estate is still
selling below replacement values. An upturn in the economy may
positively impact the occupancy, rental rates, and values of
commercial properties (including the Company's investments), while a
downturn would have the opposite effect. Additionally, alternative
financing for commercial property may be limited during a weak
economy; this would reduce the ability of the Company to borrow and
the ability of potential investors to purchase property.
Continued economic difficulties may impair further the business
performance and credit worthiness of some of the Company's tenants,
which in turn may affect these tenants' ability to meet lease
obligations.
A majority of the leases between the Company and its tenants have
terms from one to five years. The Company devotes a significant
amount of time to renewing leases with existing tenants and replacing
tenants that vacate at lease maturity (or sooner in the case of
business failures). Because recent economic conditions have placed
downward pressure on market rental rates, management believes leases
may continue to be renewed or replaced at lower rental rates than
those of currently existing leases.
IMPACT OF INFLATION AND CHANGING PRICES ON OPERATIONS
In recent years, inflation has not been a significant factor and has
not had a significant impact on the Company's operations and business
decisions. Indeed, values of southern California properties have
generally declined over the past several years. While renewed
inflation may increase the future market value of certain real estate
owned by the Company, it also is likely to increase the cost of
construction on, or improvements to, that real estate. In addition,
higher inflation and interest rates tend to increase the cost and
restrict the availability of long-term mortgage funds, which in turn
may impede sales of the Company's properties and limit development
activity.
The Company typically leases property to tenants with terms that
provide for periodic rent increases in proportion to increases in
inflation as measured by the Consumer Price Index. However, most
leases provide for a limit on the amount by which such rent can
increase in any given period. Additionally, most of the leases
provide for the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes, and insurance,
thereby reducing the Company's exposure to increases in costs and
operating expenses that would result from inflation.
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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES:
Page
----
Report of Independent Accountants 8
Consolidated Balance Sheets 9
Consolidated Statements of Operations 10
Consolidated Statements of Cash Flows 11
Consolidated Statements of Shareholders' Equity 12
Notes to Consolidated Financial Statements 13 - 17
Schedule XI -- Real Estate and Accumulated Depreciation 18
(All other schedules are omitted because they are not
applicable or the required information is presented in the
financial statements or notes thereto.)
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Mission West Properties
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects,
the financial position of Mission West Properties and its
subsidiaries (the "Company") at November 30, 1995 and 1994, and
the results of their operations and their cash flows for each of
the three years in the period ended November 30, 1995, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 4, during fiscal year 1994 the Company
changed its method of accounting for income taxes.
PRICE WATERHOUSE LLP
San Diego, California
January 26, 1996
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MISSION WEST PROPERTIES
Consolidated Balance Sheets
At November 30
<TABLE>
<CAPTION>
ASSETS 1995 1994
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 566,000 $ 2,192,000
Short-term investments, held-to-maturity 2,528,000 2,719,000
Real estate investments:
Rental properties, less accumulated depreciation of
$9,054,000 in 1995 and and $7,702,000 in 1994
($45,729,000 pledged in 1995 and $47,428,000 in 1994) 47,136,000 48,887,000
Unimproved land ($461,000 pledged in 1995 and 1994) 461,000 725,000
----------- -----------
47,597,000 49,612,000
Less allowance for estimated losses (4,413,000) (4,413,000)
----------- -----------
Net real estate investments 43,184,000 45,199,000
Other assets, less allowances of $541,000 in 1995 and
$449,000 in 1994 and accumulated depreciation of $312,000
in 1995 and $304,000 in 1994 1,292,000 853,000
----------- -----------
$47,570,000 $50,963,000
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $31,967,000 $34,382,000
Accounts payable and accrued expenses 1,466,000 1,861,000
----------- -----------
Total liabilities 33,433,000 36,243,000
----------- -----------
Commitments and contingencies (Note 7)
Shareholders' equity:
Common stock, no par value, 10,000,000 shares authorized
1,368,721 shares issued and outstanding (1,468,721 in
1994) 19,446,000 20,081,000
Accumulated deficit (5,309,000) (5,361,000)
----------- -----------
Total shareholders' equity 14,137,000 14,720,000
----------- -----------
$47,570,000 $50,963,000
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
MISSION WEST PROPERTIES
Consolidated Statements of Operations
Years Ended November 30
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental revenues from real estate $7,146,000 $ 6,637,000 $ 6,678,000
Sales of real estate 400,000 2,096,000 102,000
Other, including interest 380,000 564,000 362,000
---------- ----------- -----------
7,926,000 9,297,000 7,142,000
---------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,783,000 1,991,000 2,421,000
Depreciation of real estate 1,352,000 1,472,000 1,688,000
Costs of real estate sold 324,000 229,000 43,000
Provision for estimated losses on real estate -- 5,200,000 94,000
General and administrative 945,000 1,200,000 1,386,000
Interest 3,435,000 3,088,000 3,205,000
---------- ----------- -----------
7,839,000 13,180,000 8,837,000
---------- ----------- -----------
Income (loss) before income taxes and cumulative effect of
change in accounting 87,000 (3,883,000) (1,695,000)
Provision for (benefit from) income taxes 35,000 (1,500,000) (630,000)
---------- ----------- -----------
Income (loss) before cumulative effect of change in
accounting 52,000 (2,383,000) (1,065,000)
Cumulative effect of change in accounting for income taxes -- 440,000 --
---------- ----------- -----------
NET INCOME (LOSS) $ 52,000 $(1,943,000) $(1,065,000)
---------- ----------- -----------
---------- ----------- -----------
PER SHARE:
Income (loss) before cumulative effect of change in
accounting $ 0.04 $ (1.62) $ (0.73)
Cumulative effect of change in accounting for income taxes -- 0.30 --
---------- ----------- -----------
Net income (loss) per share $ 0.04 $ (1.32) $ (0.73)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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MISSION WEST PROPERTIES
Consolidated Statements of Cash Flows
Years Ended November 30
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 52,000 $ (1,943,000) $ (1,065,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for estimated losses on real estate -- 5,200,000 94,000
Depreciation 1,360,000 1,479,000 1,704,000
Cumulative effect of change in accounting for income
taxes -- (440,000) --
Deferred income taxes 102,000 (1,784,000) (276,000)
Compensation expense of stock options -- 82,000 --
Changes in assets and liabilities:
Decrease (increase) in net real estate investments 28,000 (673,000) (462,000)
Decrease (increase) in other assets (549,000) 361,000 1,325,000
Increase (decrease) in accounts payable and accrued
expenses (395,000) 168,000 210,000
------------ ------------ ------------
Net cash provided by operating activities 598,000 2,450,000 1,530,000
------------ ------------ ------------
Cash flows from investing activities:
Net maturities (purchases) of short-term investments 191,000 492,000 (121,000)
------------ ------------ ------------
Cash flows from financing activities:
Repayments on notes payable (2,415,000) (1,556,000) (2,291,000)
Payments of cash dividends -- -- (73,000)
------------ ------------ ------------
Net cash used for financing activities (2,415,000) (1,556,000) (2,364,000)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (1,626,000) 1,386,000 (955,000)
Cash and cash equivalents at beginning of year 2,192,000 806,000 1,761,000
------------ ------------ ------------
Cash and cash equivalents at end of year $ 566,000 $ 2,192,000 $ 806,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
- 11 -
<PAGE>
MISSION WEST PROPERTIES
Consolidated Statements of Shareholders' Equity
Years Ended November 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Common Accumulated
Stock Deficit Total
----------- ------------ -----------
<S> <C> <C> <C>
Balance at November 30, 1992 $19,966,000 $ (2,280,000) $17,686,000
Cash dividends ($0.05 per share) -- (73,000) (73,000)
Net loss for 1993 -- (1,065,000) (1,065,000)
----------- ------------ -----------
Balance at November 30, 1993 19,966,000 (3,418,000) 16,548,000
Grant of 125,000 nonqualified stock options, net 115,000 -- 115,000
Net loss for 1994 -- (1,943,000) (1,943,000)
----------- ------------ -----------
Balance at November 30, 1994 20,081,000 (5,361,000) 14,720,000
Redemption and retirement of 100,000 shares (635,000) -- (635,000)
Net income for 1995 -- 52,000 52,000
----------- ------------ -----------
Balance at November 30, 1995 $19,446,000 $ (5,309,000) $14,137,000
----------- ------------ -----------
----------- ------------ -----------
</TABLE>
See accompanying notes to consolidated financial statements.
- 12 -
<PAGE>
MISSION WEST PROPERTIES
Notes to Consolidated Financial Statements
November 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL POLICIES: Mission West Properties (the "Company") is engaged
in developing, owning, operating, and selling income-producing real
estate located principally in southern California. The Company is 49
percent owned by Triton Group Ltd. ("Triton").
The accompanying financial statements consolidate the accounts of the
Company and its wholly owned subsidiaries. All transactions between
the Company and its subsidiaries have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at
financial statement date, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
REAL ESTATE: The Company's real estate investments are carried at
cost; an allowance for estimated losses is provided for other than
temporary declines in value based on the Directors' and management's
periodic evaluation of those investments. This evaluation considers
recent appraised values, market conditions, and the Company's
investment strategies.
Although adoption is not required until its fiscal year 1997, the
Company has assessed the impact of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of." Based on
current conditions, the Company does not believe that adoption will
have an adverse impact on its financial position or results of
operations.
Revenues from sales of real estate are reported at the time of sale or
when certain financial criteria are met.
DEPRECIATION: Depreciation on rental properties is computed using the
straight-line method over the estimated useful lives of the assets,
generally ten to 30 years.
INCOME TAXES: Income taxes are accounted for in accordance with SFAS
No. 109, "Accounting for Income Taxes." Deferred income taxes are
provided for all temporary differences and operating loss and tax
credit carryforwards. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
NET INCOME (LOSS) PER SHARE: Net income (loss) per share of common
stock is based on 1,393,105, 1,468,721, and 1,468,725 shares in fiscal
years 1995, 1994 and 1993, respectively, the weighted average number
of shares outstanding during those years. The effect of stock options
is either immaterial or antidilutive; therefore, such effect is not
reflected in the per share computations.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents includes cash on
hand, money market funds, U.S. Treasury Bills and Notes, and
certificates of deposit with an original maturity of 90 days or less.
Short-term investments include U.S. Treasury Bills and Notes and
certificates of deposit.
CONCENTRATIONS OF CREDIT RISK: Credit risk is primarily concentrated
in cash equivalents, short-term investments, and rent receivables.
Cash in excess of operating requirements is invested in U.S. Treasury
securities or with federally insured institutions in short-term
certificates of deposit; amounts invested with a single institution
are limited to minimize risk. The Company's primary operations
consist of leasing commercial space to small and medium-sized tenants,
primarily in southern California. To reduce credit risk, the Company
obtains and holds security deposits from a majority of tenants and
performs ongoing credit evaluations of all major tenants' financial
conditions.
- 13 -
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SHORT-TERM INVESTMENTS: Effective December 1, 1994, the Company
adopted SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which requires that investments be classified as
either held-to-maturity, trading, or available-for-sale. Held-to-
maturity investments are carried at amortized costs; unrealized gains
and losses are included in earnings for trading investments and are
recorded directly to shareholders' equity for available-for-sale
investments. Management determines the classification of investments
at the time of purchase; the Company's short-term investments are
classified as held-to-maturity and are carried at amortized cost,
which approximates fair value. Adoption of SFAS No. 115 had no effect
on the Company's financial position or results of operations.
RECLASSIFICATIONS: Certain amounts in the fiscal year 1994 and 1993
financial statements have been reclassified to conform to the
presentation used in fiscal year 1995.
NOTE 2 - REAL ESTATE INVESTMENTS
The classification and carrying value of the Company's real estate
investments are based on its intent to continue owning and operating
the assets for the production of income, while amortizing the cost of
the assets over their useful lives. The Company's major shareholder,
Triton, has liquidated most of its assets pursuant to a strategy of
returning value to its shareholders and has retained an investment
banking firm to assist it in developing and evaluating proposals for
potential purchasers, acquisitions candidates, or merger partners.
Although not presently contemplated, it is possible that Triton's
ultimate course of action could result in the Company's reclassifying
some or all of its real estate investments as held-for-sale, which
would require valuing the assets at the lower of cost or fair value
less costs to sell. Triton's ultimate course of action and the
resulting effect, if any, on the Company's classification and carrying
value of its real estate assets cannot be predicted at this time.
As of November 30, 1994, the Company had entered into an agreement to
sell substantially all its real estate investments; the agreement was
terminated effective February 3, 1995. As a result of the proposed
sales transaction, the related assets were recorded at their
anticipated sales price, which approximated market value; accordingly,
a $5,200,000 provision for estimated losses on real estate was
recorded in fiscal year 1994.
Minimum future rentals on non-cancelable operating leases amount to
$5,162,000, $3,309,000, $2,295,000, $1,553,000, and $1,093,000 for
fiscal years 1996 through 2000, respectively, and $7,038,000
thereafter. During the years ended November 30, 1995, 1994, and 1993,
rental revenue from real estate of $611,000, $763,000, and $669,000,
respectively, was recorded for property leased to former affiliates of
Triton.
NOTE 3 - NOTES PAYABLE
<TABLE>
<CAPTION>
November 30
----------------------------
Notes payable comprise the following: 1995 1994
----------- -----------
<S> <C> <C>
Secured notes payable to banks, due 1996 through 1998, interest rates $30,218,000 $32,532,000
ranging from 9% (fixed) to 10.25% (prime plus 1.5%), principal and
interest due in monthly installments of $312,000, balance of principal
due at maturity
Unsecured note payable to bank, due 1996, interest rate of 10.25% (prime 250,000 250,000
plus 1.5%), interest only due monthly, principal due at maturity
Secured note payable to insurance company, due 1997, interest rate of
10%, principal and interest due in monthly installments of $21,000 1,499,000 1,600,000
----------- -----------
$31,967,000 $34,382,000
----------- -----------
----------- -----------
</TABLE>
Aggregate principal payments required on the notes payable at November
30, 1995, are $13,594,000, $1,919,000, and $16,454,000 for the years
1996 through 1998. The fiscal year 1996 payments comprise
approximately $771,000 in scheduled principal amortization and
$12,823,000 in maturing notes payable. It is the Company's policy and
intent to pursue renewal or replacement of the notes payable as they
become due.
- 14 -
<PAGE>
Certain of the notes payable contain financial covenants such as
minimum cash balances and net worth and maximum debt-to-worth ratios.
Additionally, covenants restrict the Company from paying cash
dividends and other provisions specify that a change in the majority
voting power of the Company's stock, either by transfer or the
issuance of additional voting securities, is an event of default. As
of November 30, 1995, the Company was in violation of a non-financial
occupancy covenant on a $4,863,000 loan; it is anticipated the
condition will be remedied during the first or second quarter of
fiscal year 1996.
NOTE 4 - INCOME TAXES
<TABLE>
<CAPTION>
November 30
------------------------
Deferred tax assets (liabilities) comprise the following: 1995 1994
------------ ----------
<S> <C> <C> <C>
Basis of depreciable assets $ 500,000 $1,153,000
Other 324,000 259,000
------------ ----------
Deferred tax assets 824,000 1,412,000
------------ ----------
Deferred rental revenue (21,000) (468,000)
Other (75,000) (71,000)
------------ ----------
Deferred tax liabilities (96,000) (539,000)
------------ ----------
728,000 873,000
Deferred tax asset valuation allowance (226,000) (269,000)
------------ ----------
$ 502,000 $ 604,000
------------ ----------
------------ ----------
Years Ended November 30
The provision for (benefit from) income taxes comprises the ----------------------------------
following: 1995 1994 1993
-------- ------------ ----------
CURRENT
Federal $(81,000) $ 696,000 $ (353,000)
State 14,000 83,000 --
-------- ------------ ----------
(67,000) 779,000 (353,000)
-------- ------------ ----------
DEFERRED
Federal 102,000 (1,916,000) (197,000)
State -- (363,000) (80,000)
-------- ------------ ----------
102,000 (2,279,000) (277,000)
-------- ------------ ----------
$ 35,000 $ (1,500,000) $ (630,000)
-------- ------------ ----------
-------- ------------ ----------
</TABLE>
<TABLE>
<CAPTION>
Years Ended November 30
The provision for (benefit from) income taxes reconciles to -------------------------
the statutory rate as follows: 1995 1994 1993
------ ------- -------
<S> <C> <C> <C>
Statutory federal tax rate 34.0% (34.0)% (34.0)%
Increase (decrease) in taxes resulting from:
Change in deferred tax asset valuation allowance (7.1) 5.3 --
State income tax, net of federal tax benefit 10.6 (7.6) (3.1)
Other 2.7 (2.3) (0.1)
----- ------ ------
40.2% (38.6)% (37.2)%
----- ------ ------
----- ------ ------
</TABLE>
- 15 -
<PAGE>
NOTE 4 - INCOME TAXES (CONTINUED)
The Company adopted SFAS No. 109 effective December 1, 1993. This
accounting statement requires recognition of deferred tax assets and
liabilities for differences between the financial statement carrying
amounts and the tax basis of assets and liabilities, at anticipated
tax rates. The cumulative effect of this change in the method of
accounting for income taxes resulted in a $440,000 decrease in the net
loss for fiscal year 1994. As of November 30, 1995, the Company's net
deferred tax asset is included in other assets.
The provision for (benefit from) income taxes reflects temporary
differences in the recognition of revenue and expense for tax and
financial reporting purposes. These temporary differences primarily
arise from the recognition of rental revenue from real estate,
recognition of accrued expenses, capitalized interest, and a different
depreciable basis for tax than for financial reporting purposes. The
Company carries back federal net operating losses to prior years for
refunds and carries forward state net operating losses to be applied
against future operating income, if any.
Due to the uncertainty of realizing the benefit of certain deferred
tax assets, including state loss carryforwards, a valuation allowance
was established in fiscal year 1994. The net decrease in the
valuation allowance during fiscal year 1995 was due to changes in the
state loss carryforward amount.
NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the fiscal year for interest was $3,566,000,
$3,102,000, and $2,973,000 in 1995, 1994, and 1993, respectively. The
Company paid income taxes, net of refunds, of $258,000 and $145,000 in
fiscal years 1995 and 1994, respectively, and received an income tax
refund, net of payments, of $480,000 in fiscal year 1993.
During the first quarter of fiscal year 1995, in a noncash
transaction, the Company reacquired and retired 100,000 shares of its
common stock. This transaction was effected by a transfer of 100,000
shares of the Company's stock from Triton to an affiliated tenant, at
which point Triton's investment in the Company decreased to 49
percent, and an exchange of the 100,000 shares from the affiliated
tenant to the Company for real estate assets, consisting of certain
tenant improvements, and a modification of lease terms, consisting of
an extension of maturity and a reduction in rent.
NOTE 6 - STOCK OPTIONS AND STOCK PURCHASE PLAN
The Company has a Director Stock Option Plan and an Incentive Stock
Option Plan under which non-salaried directors and officers,
respectively, may purchase shares of the Company's stock at a minimum
option price based on market value at the date of grant. Options
granted under the plans become exercisable ratably over five years and
expire after a period not to exceed ten years. At November 30, 1995,
300,000 and 350,000 shares were authorized under each plan, of which
114,000 and 153,600 were available for grant and 30,400 and 43,480
were exercisable under the Director Stock Option Plan and the
Incentive Stock Option Plan, respectively.
<TABLE>
<CAPTION>
Years Ended November 30
-------------------------
Activity in these plans comprises the following: 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Beginning share balance 106,400 156,200 199,000
Granted -- -- 23,200
Canceled ($8.25 per share in 1995) (6,400) (49,800) (66,000)
------- ------- -------
Ending share balance ($3.25 to $10.125
per share) 100,000 106,400 156,200
------- ------- -------
------- ------- -------
</TABLE>
Effective July 1, 1994, the Company granted nonqualified options to
purchase 125,000 shares of its Common stock to a key executive. The
exercise price of the options is $3.00 per share and the options
expire ten years from the date of grant. Options to purchase 73,000
shares of the grant vested immediately; the remainder of the options
become exercisable if specific financial milestones occur.
- 16 -
<PAGE>
The Company has a Stock Purchase Plan for which all directors and
employees are eligible. Under terms of the plan, each eligible
participant may contribute up to $3,000 per month, to be invested in
shares of the Company's stock purchased on the open market. The
Company contributes $0.50 to the plan for each $1.00 contributed by a
participant. The total amounts expended by the Company for such
contributions during the years ended November 30, 1995, 1994, and 1993
were $31,000, $19,000, and $17,000, respectively.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company is a lessee on two 30-year land leases at an airport in
San Diego County and incurred rental expense of $192,000, $189,000,
and $187,000 for fiscal years ended November 30, 1995, 1994, and 1993,
respectively. The provisions of the leases require minimum lease
payments of $179,000, $188,000, $197,000, $207,000, and $217,000
during the Company's fiscal years 1996 through 2000 and $6,713,000
thereafter, and contingent payments of five percent of certain
sublease income. The lease amounts are subject to renegotiation to
reflect cost of living increases every five years. The Company holds
subleases and records sublease revenue from these two parcels; the
related minimum future rentals are included in the amounts set forth
in Note 2 to these consolidated financial statements.
A civil action for an unspecified amount of damages relating to
environmental contamination was filed in May 1995 by residents in
Kennedy Heights and certain nearby residential developments located in
the greater Houston, Texas, area. The suit was filed in the 281st
District Court of Harris County in Houston, Texas. The Company and 50
other parties were named as defendants. The Company was dismissed
from the action without prejudice in December 1995 and agreed at that
time to a tolling of the statute of limitations.
- 17 -
<PAGE>
MISSION WEST PROPERTIES
SCHEDULE XI -- Real Estate and Accumulated Depreciation
November 30, 1995
(in thousands)
<TABLE>
<CAPTION>
Costs
Capitalized
Subsequent to Carrying
Initial Cost Acquisition Amount
----------------- ---------------- at End Accum. Date
Bldgs. & Improve- Prop. of Year Deprec. of Date
Location and Description Encumbrances Land Impvmts. ments Taxes (a)(c) (b) Const. Acq'd.
- ---------------------------------------- ------------ ------- -------- -------- ----- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTIES:
Carlsbad, California:
Industrial buildings $ 1,810 $ 1,029 $ -- $ 2,531 $ 31 $ 3,591 $ 400 3/91 7/88
Office building 2,923 1,029 -- 4,460 86 5,575 583 3/91 7/88
Office buildings 4,863 1,434 -- 6,156 59 7,649 1,398 9/88 11/85
Hangars/office building 1,754 -- -- 3,084 29 3,113 652 2/90 6/88
Hangar/office building -- -- 1,353 443 -- 1,796 389 -- 9/90
Riverside, California:
Manufacturing building 3,142 2,187 28 3,693 36 5,944 742 3/91 9/90
San Diego, California:
Office building 5,596 2,155 3,498 1,973 -- 7,626 1,043 5/85 7/89
R&D buildings 4,190 2,122 -- 4,157 48 6,327 1,304 11/84 1/84
R&D/office buildings 5,940 2,786 -- 7,967 66 10,819 1,581 3/90 1/84
Chandler, Arizona:
Industrial buildings 1,499 760 -- 2,942 48 3,750 962 9/86 6/85
UNIMPROVED LAND:
Chandler, Arizona:
Vacant land -- 457 -- -- 4 461 -- -- 6/85
------------ ------- -------- -------- ----- -------- ------
$31,717 $13,959 $4,879 $ 37,406 $ 407 $ 56,651 $9,054
------------ ------- -------- -------- ----- -------- ------
------------ ------- -------- -------- ----- -------- ------
</TABLE>
- ------------------------
(a) The cost basis of real estate for federal income tax purposes approximates
its gross carrying value, before accumulated depreciation and allowance for
estimated losses. The allowance for estimated losses of $4,413,000 at
November 30, 1995, was determined in accordance with the Company's policy as
described in Note 1 to the Consolidated Financial Statements.
(b) Rental properties are depreciated on a straight-line basis over a 10-to
30-year life. Changes in accumulated depreciation for the three years ended
November 30, 1995, follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year $ 7,702 $ 6,233 $ 4,545
Charged to expense during the year 1,352 1,472 1,688
Deletions for property sold during the year and other -- (3) --
------- ------- -------
Balance at end of year $ 9,054 $ 7,702 $ 6,233
------- ------- -------
------- ------- -------
</TABLE>
(c) Changes in the carrying amount for the three years ended November 30, 1995,
follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year $57,314 $56,644 $56,182
Additions/improvements during the year 236 673 464
Property sold during the year and other (899) (3) (2)
------- ------- -------
Balance at end of year $56,651 $57,314 $56,644
------- ------- -------
------- ------- -------
</TABLE>
- 18 -
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in, or disagreements with, independent
accountants on matters of accounting principles or practices or of
financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Director information is incorporated herein by reference to the
Company's definitive Proxy Statement dated February 15, 1996, for the
annual meeting of shareholders to be held on March 22, 1996. There is
no relationship by blood, marriage, or adoption among the officers.
All officers hold office at the discretion of the Board of Directors.
Executive officers of the Company are as follows:
Name Age Position
---- --- --------
J. Gregory Kasun 40 President, Chief Executive Officer, Director
Employed by the Company since 1989; President
since November 1993, previously CFO and Secretary
Harve Filuk 53 Vice President Real Estate Operations
Employed by the Company since 1975; Vice President
since 1978
Katrina L. Thompson 37 Chief Financial Officer, Corporate Secretary
Employed by the Company since 1991; CFO and
Secretary since November 1993, previously
Controller. Formerly an Audit Senior with Price
Waterhouse
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the Company's definitive Proxy
Statement dated February 15, 1996, for the annual meeting of
shareholders to be held on March 22, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated herein by reference to the Company's definitive Proxy
Statement dated February 15, 1996, for the annual meeting of
shareholders to be held on March 22, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to the Company's definitive Proxy
Statement dated February 15, 1996, for the annual meeting of
shareholders to be held on March 22, 1996.
- 19 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) 1. FINANCIAL STATEMENTS
The financial statements and financial statement schedules listed
in the index under Item 8 "CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA" are filed as part of this annual report.
2. EXHIBITS
(23) Consent of Independent Accountants
(27) Financial Data Schedules
(b) REPORTS ON FORM 8-K
None
- 20 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual
Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MISSION WEST PROPERTIES
-----------------------------------
Registrant
DATE: February 15, 1996 /s/ J. GREGORY KASUN
-----------------------------------
J. Gregory Kasun
President, Chief Executive Officer & Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chief Financial Officer and Secretary
/s/ KATRINA L. THOMPSON (Principal Financial and Accounting Officer) February 15, 1996
- ---------------------------
Katrina L. Thompson
/s/ MICHAEL M. EARLEY Director February 15, 1996
- ---------------------------
Michael M. Earley
/s/ MARK G. FOLETTA Director February 15,1996
- ---------------------------
Mark G. Foletta
/s/ J. GREGORY KASUN Director February 15,1996
- ---------------------------
J. Gregory Kasun
/s/ WILLIAM E. NELSON Director February 15,1996
- ---------------------------
William E. Nelson
/s/ RICHARD R. TARTRE Director February 15,1996
- ---------------------------
Richard R. Tartre
/s/ BYRON B. WEBB, JR. Director February 15,1996
- ---------------------------
Byron B. Webb, Jr.
</TABLE>
- 21 -
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Forms S-8 (Numbers 2-68161, 33-16154, 33-40664, and 33-40665)
of Mission West Properties of our report dated January 26, 1996 appearing
on page 8 of this Form 10-K.
PRICE WATERHOUSE LLP
San Diego, California
February 15, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets as of November 30, 1995 and the related consolidated
statements of operations for the year then ended and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 3,094
<SECURITIES> 0
<RECEIVABLES> 543
<ALLOWANCES> 315
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 329
<DEPRECIATION> 312
<TOTAL-ASSETS> 47,570
<CURRENT-LIABILITIES> 0
<BONDS> 31,967
0
0
<COMMON> 19,446
<OTHER-SE> (5,309)
<TOTAL-LIABILITY-AND-EQUITY> 47,570
<SALES> 0
<TOTAL-REVENUES> 7,926
<CGS> 0
<TOTAL-COSTS> 3,459
<OTHER-EXPENSES> 945
<LOSS-PROVISION> 42
<INTEREST-EXPENSE> 3,435
<INCOME-PRETAX> 87
<INCOME-TAX> 35
<INCOME-CONTINUING> 52
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
