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 June 30, 1996
Commission file number 0-14269
SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
State of California 33-0043952
(State or other jurisdiction of (I.R.S. Employer
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
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 [ ].
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
Page number
Balance Sheets - June 30, 1996 and December 31, 1995 4
Statements of Operations - for the Six Months Ended
June 30, 1996 and 1995 and the Three Months Ended
June 30, 1996 and 1995 5
Statements of Changes in Partners' Equity - From
June 5, 1984 (inception of the Partnership) to
December 31, 1995 and for the Six Months Ended June 30, 1996 6
Statements of Cash Flows - for the Six Months
Ended June 30, 1996 and 1995 7
Notes to 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
Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q.
The Partnership currently owns one property, Sierra Valencia. In addition, the
Partnership holds a 49% interest in Sierra Mira Mesa Partners ("SMMP").
(b) RESULTS OF OPERATIONS
Rental income for the first six months of the year increased by $20,000, or 10%,
due to an increase in occupancy from 84% at March 31, 1996 to 96% at June 30,
1996. A single tenant, whose lease commenced April 1, 1996, accounts for this
entire increase with occupied square footage of 10,021 square feet. Interest
income decreased $69,000, or 42%, due to a $1.3 million paydown on the
underlying note receivable received in the third quarter of 1995.
2
Operating expenses decreased by $45,000, or 16%, primarily due to lower
administrative costs and other expense cutting measures implemented by
management. Further, administrative fees were overaccrued in the second quarter
of 1995. This overaccrual was corrected in the third quarter of 1995.
Depreciation expense decreased by $24,000, or 16%, due to the discontinuance of
depreciation on the building which is fully depreciated at June 30, 1996.
The Partnership's share of income (loss) from investment in SMMP was $284,000
for the six months ended June 30, 1996 compared to ($95,000) for the
corresponding period in the prior year due to SMMP's share of Sorrento I
Partners' ("SIP") second quarter income. SIP, which is accounted for by SMMP on
the equity method, exercised a discounted payoff option in May 1996. SIP
recorded an extraordinary gain of $1,200,000 in connection with this
transaction.
(c) LIQUIDITY AND CAPITAL
The Partnership is in a liquid position, with cash and billed rents of $86,000
and current liabilities of $78,000. Cash of $1,318,000 was received on the note
receivable from the Sierra Spectrum sale in the third quarter of 1995 and a
short-term advance was made to Sierra Mira Mesa Partners in the amount of
$1,300,000. 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.
3
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
June 30, December 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents ........................ $ 74,175 $ 254,768
Receivables:
Note receivable, net of
deferred gain of $215,786 .................... 1,697,739 1,697,739
Unbilled rent ................................. 76,523 76,462
Billed rent ................................... 12,459 7,139
Due from affiliates ........................... 1,338,800 1,300,000
Other receivables ............................. 111,622 38,894
Income-producing property - net of
accumulated depreciation and valuation
allowance of $3,345,556 and $3,238,741,
respectively ............................... 1,442,683 1,524,207
Investment in unconsolidated
joint venture ............................... 4,746,543 4,464,589
Other assets ..................................... 138,650 132,982
---------- ----------
Total Assets ..................................... $9,639,194 $9,496,780
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities .................... $ 77,617 $ 80,247
---------- ----------
Total Liabilities ................................ 77,617 80,247
---------- ----------
Partners' equity:
General Partner ................................ 0 0
Limited Partners:
80,000 units authorized,
77,000 issued and outstanding ............... 9,561,577 9,416,533
---------- ----------
Total Partners' equity ........................... 9,561,577 9,416,533
---------- ----------
Total Liabilities and Partners' equity .......... $9,639,194 $9,496,780
========== ==========
Unaudited
See Accompanying Notes
4
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
AND FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- --------------------
1996 1995 1996 1995
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Rental income ........................ $ 226,856 $ 206,676 $124,013 $ 104,199
Interest income ...................... 97,100 166,111 48,176 86,111
--------- --------- -------- ---------
Total revenues ......................... 323,956 372,787 172,189 190,310
--------- --------- -------- ---------
EXPENSES:
Operating expenses ................... 232,401 277,870 114,997 156,768
Depreciation and amortization ........ 130,476 154,003 54,735 78,089
--------- --------- -------- ---------
Total costs and expenses ............... 362,877 431,873 169,732 234,857
--------- --------- -------- ---------
(LOSS) INCOME BEFORE PARTNERSHIP'S SHARE
OF UNCONSOLIDATED JOINT VENTURE
INCOME (LOSS) ........................ (38,921) (59,086) 2,457 (44,547)
--------- --------- -------- ---------
PARTNERSHIP'S SHARE OF UNCONSOLIDATED
JOINT VENTURE INCOME (LOSS) .......... 283,965 (94,500) 359,721 (30,499)
--------- --------- -------- ---------
NET INCOME (LOSS) ...................... $ 245,044 $(153,586) $362,178 $ (75,046)
========= ========= ======== =========
Net income (loss) per limited
partnership unit ..................... $ 3.18 $ (1.99) $ 4.70 $ (0.97)
========= ========= ======== =========
</TABLE>
Unaudited
See Accompanying Notes
5
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FROM JUNE 5, 1984 (INCEPTION OF PARTNERSHIP) TO DECEMBER 31, 1995
AND FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Limited Partners Total
-------------------------- General Partners'
Per Unit Total Partner Equity
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Proceeds from sale of
partnership units .................... $ 250.00 $ 19,418,250 -- $ 19,418,250
Underwriting commissions
and other organization expenses ...... (37.34) (2,894,014) -- (2,894,014)
Repurchase of 665 partnership units .... (0.03) (151,621) -- (151,621)
Cumulative net income
(to December 31, 1995) .............. (72.16) (5,556,076) $ 133,334 (5,422,742)
Cumulative distributions from operations
(to December 31, 1995) .............. (15.58) (1,200,006) (133,334) (1,333,340)
Cumulative distributions from
distribution of assets
(to December 31, 1995) .............. (2.60) (200,000) 0 (200,000)
---------- ------------ --------- ------------
Partners' equity - January 1, 1996 .... 122.29 9,416,533 0 9,416,533
Net income - year to date .............. 3.18 245,044 -- 245,044
Distributions from disposition of assets (1.30) (100,000) -- (100,000)
---------- ------------ --------- ------------
Partners' equity June 30, 1996 ........ $ 124.17 $ 9,561,577 $ 0 $ 9,561,577
========== ============ ========= ============
</TABLE>
Unaudited
See Accompanying Notes
6
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................. $ 245,044 $(153,586)
Adjustments to reconcile net income (loss) to
cash used in operating activities:
Depreciation and amortization ............... 130,476 154,003
Undistributed (income) loss of
unconsolidated joint venture .............. (283,965) 94,500
(Increase) decrease in rent receivable ...... (5,381) 13,122
Increase in other receivables ............... (72,728) (24,167)
(Increase) decrease in other assets ......... (27,319) 13,121
Decrease in accrued and other liabilites .... (2,630) (172,197)
--------- ---------
Net cash used in operating activities ....... (16,503) (75,204)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ............. (25,290) (49,778)
Capital contributions to
unconsolidated joint venture .............. 0 (165,190)
--------- ---------
Net cash used in investing activities ......... (25,290) (214,968)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to affiliate ....................... (38,800) 0
Cash distributions from disposition of assets (100,000) 0
--------- ---------
Net cash used in financing activities ..... (138,800) 0
--------- ---------
NET DECREASE IN CASH AND
CASH EQUIVALENTS ............................. (180,593) (290,172)
CASH AND CASH EQUIVALENTS - Beginning of period . 254,768 342,978
--------- ---------
CASH AND CASH EQUIVALENTS - End of period ....... $ 74,175 $ 52,806
========= =========
Unaudited
See Accompanying Notes
7
SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS OF FINANCIAL STATEMENTS
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 June 30, 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 six months ended June 30, 1996 and
1995 are affiliate transactions as follows:
June 30
-------------------
1996 1995
--------- ---------
Management fees ... $ 7,085 $ 0
Administrative fees $28,552 $36,284
Leasing fees ...... $ 8,640 $ 0
Construction fees . $ 1,873 $ 0
3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
Sierra Mira Mesa Partners ("SMMP") was formed in 1985 between the Partnership
and Sierra Pacific Development Fund II, an affiliate, to develop and operate the
real property known as Sierra Mira Mesa, an office building, located in San
Diego, California. At June 30, 1996 the Partnership's interest in SMMP was 49%;
the remaining 51% interest is owned by Sierra Pacific Development Fund II.
UNAUDITED
8
Summarized income statement information for SMMP for the six months ended June
30, 1996 and 1995 follows:
June 30
----------------------
1996 1995
---------- -----------
Rental income ......... $848,603 $ 715,942
Total revenues ........ $940,590 $ 809,383
Operating expenses .... $526,358 $ 340,196
Share of unconsolidated
joint venture loss .. $181,890 $ 364,800
Net income (loss) ..... $818,758 $(192,858)
As of June 30, 1996, SMMP holds a 75.06% interest in Sorrento I Partners
("SIP"), a general partnership with Sierra Pacific Development Fund III formed
in 1993; a 26.92% interest in Sorrento II Partners ("SIIP"), a general
partnership with Sierra Pacific Institutional Properties V formed in 1993; a
18.87% interest in Sierra Creekside Partners ("SCP"), a general partnership with
Sierra Pacific Development Fund formed in 1994; and a 37.74% interest in Sierra
Vista Partners ("SVP"), a general partnership with Sierra Pacific Development
Fund III formed in 1994.
Summarized income statement information for these Partnerships for the six
months ended June 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
SIP SIIP
------------------------ ----------------------
June 30 June 30
------------------------ ----------------------
1996 1995 1996 1995
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Rental income ................ $ 47,272 $ 0 $ 506,638 $ 460,267
Total revenues ............... $ 47,272 $ 0 $ 506,638 $ 460,383
Operating expenses ........... $ 159,450 $ 123,917 $ 197,964 $ 223,275
Loss before extraordinary item $ (241,103) $(347,147) $(106,301) $(162,077)
Extraordinary gain ........... $ 1,200,467 $ 0 $ 0 $ 0
Net income (loss) ............ $ 959,278 $(347,147) $(106,301) $(162,077)
----------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
SCP SVP
---------------------- ----------------------
June 30 June 30
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Rental income ................ $ 372,584 $ 275,413 $ 343,209 $ 347,235
Total revenues ............... $ 379,912 $ 275,413 $ 343,209 $ 347,235
Operating expenses ........... $ 255,607 $ 269,983 $ 250,274 $ 271,337
Loss before extraordinary item $(191,276) $(193,519) $(310,415) $(356,365)
Extraordinary gain ........... $ 0 $ 0 $ 0 $ 0
Net income (loss) ............ $(191,276) $(193,519) $(310,415) $(356,366)
--------- --------- --------- ---------
</TABLE>
UNAUDITED
9
4. PARTNERS' EQUITY
Equity and net income (loss) per limited partnership unit is determined by
dividing the Limited Partners' share of the Partnership's equity and net income
(loss) by the number of limited partnership units outstanding, 77,000.
UNAUDITED
10
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 PENSION INVESTORS `84
a Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: AUGUST 9, 1996 /s/ THOMAS N. THURBER
Thomas N. Thurber
President and Director
Date: AUGUST 9, 1996 /s/ MICHELE E. JOHNSON
Michele E. Johnson
Chief Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SIERRA PACIFIC PENSION INVESTORS '84 JUNE 30, 1996 FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 74,175
<SECURITIES> 0
<RECEIVABLES> 88,982
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,537,056
<PP&E> 4,788,239
<DEPRECIATION> 3,345,556
<TOTAL-ASSETS> 9,639,194
<CURRENT-LIABILITIES> 77,617
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,561,577
<TOTAL-LIABILITY-AND-EQUITY> 9,639,194
<SALES> 226,856
<TOTAL-REVENUES> 323,956
<CGS> 0
<TOTAL-COSTS> 232,401
<OTHER-EXPENSES> 130,476
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 245,044
<INCOME-TAX> 0
<INCOME-CONTINUING> 245,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 245,044
<EPS-PRIMARY> 3.18
<EPS-DILUTED> 3.18
</TABLE>
