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 September 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 - September 30, 1996 and December 31, 1995 ................. 4
Statements of Operations - for the Nine Months Ended September 30, 1996
and 1995 and the Three Months Ended September 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 Nine Months Ended
September 30, 1996 ........................................................ 6
Statements of Cash Flows - for the Nine Months Ended September 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 nine months of the year increased by $35,000, or
11%, due to an increase in occupancy from 88% at September 30, 1995 to 100% at
September 30, 1996. A single tenant, whose lease commenced April 1, 1996,
accounts for the majority of this increase with occupied square footage of
10,021 square feet. Interest income decreased $77,000, or 35%, due to a $1.3
million paydown on the underlying note receivable received in the third quarter
of 1995.
2
<PAGE>
Operating expenses decreased by $15,000, or 5%, primarily due to lower
administrative costs and other expense cutting measures implemented by
management. Included in operating expenses for the three months ended September
30, 1995 is an adjustment to correct an overaccrual of administrative fees in
the second quarter of 1995. Depreciation expense decreased by $48,000, or 21%,
due to the discontinuance of depreciation on the building which is fully
depreciated at September 30, 1996.
The Partnership's share of income (loss) from investment in SMMP was $246,000
for the nine months ended September 30, 1996 compared to ($170,000) for the
corresponding period in the prior year due to SMMP's share of Sorrento I
Partners' ("SIP") second quarter income. SIP, which is consolidated with SMMP,
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 illiquid position, at September 30, 1996 with cash and
billed rents of $22,000 and current liabilities of $95,000. 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
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
September 30, December 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents ............................ $ 11,083 $ 254,768
Receivables:
Note receivable, net of deferred gain of $215,786 1,697,739 1,697,739
Unbilled rent ..................................... 83,884 76,462
Billed rent ....................................... 11,223 7,139
Due from affiliates ............................... 1,245,300 1,300,000
Other receivables ................................. 159,461 38,894
Income-producing property - net of
accumulated depreciation and valuation
allowance of $3,332,966 and $3,238,741,
respectively ................................... 1,470,732 1,524,207
Investment in unconsolidated
joint venture ................................... 4,707,441 4,464,589
Other assets ......................................... 175,811 132,982
---------- ----------
Total Assets ......................................... $9,562,674 $9,496,780
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities ........................ $ 94,669 $ 80,247
---------- ----------
Total Liabilities .................................... 94,669 80,247
---------- ----------
Partners' equity:
General Partner .................................... 0 0
Limited Partners:
80,000 units authorized,
77,000 issued and outstanding ................... 9,468,005 9,416,533
---------- ----------
Total Partners' equity ............................... 9,468,005 9,416,533
---------- ----------
Total Liabilities and Partners' equity .............. $9,562,674 $9,496,780
========== ==========
Unaudited
See Accompanying Notes
4
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1996 and 1995
and for the Three Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
-------------------- ----------------------
1996 1995 1996 1995
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Rental income ..................... $351,215 $ 316,333 $ 124,359 $ 109,657
Interest income ................... 144,967 222,465 47,867 56,354
-------- --------- --------- ---------
Total revenues ...................... 496,182 538,798 172,226 166,011
-------- --------- --------- ---------
EXPENSES:
Operating expenses ................ 307,957 323,174 75,556 45,304
Depreciation and amortization ..... 182,620 230,328 52,144 76,325
-------- --------- --------- ---------
Total costs and expenses ............ 490,577 553,502 127,700 121,629
-------- --------- --------- ---------
INCOME (LOSS) BEFORE GAIN FROM
PROPERTY DISPOSITION .............. 5,605 (14,704) 44,526 44,382
GAIN FROM PROPERTY DISPOSITION ...... 0 151,510 0 151,510
-------- --------- --------- ---------
INCOME BEFORE PARTNERSHIP'S SHARE
OF JOINT VENTURE INCOME (LOSS) .... 5,605 136,806 44,526 195,892
PARTNERSHIP'S SHARE OF UNCONSOLIDATED
JOINT VENTURE INCOME (LOSS) ....... 245,867 (170,025) (38,098) (75,525)
-------- --------- --------- ---------
NET INCOME (LOSS) ................... $251,472 $ (33,219) $ 6,428 $ 120,367
======== ========= ========= =========
Net income (loss) per limited
partnership unit .................. $ 3.27 $ (0.43) $ 0.08 $ 1.56
======== ========= ========= =========
</TABLE>
Unaudited
See Accompanying Notes
5
<PAGE>
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 Nine Months Ended September 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 .............. 3.27 251,472 -- 251,472
Distributions from disposition of assets (2.60) (200,000) -- (200,000)
------- ------------ --------- ------------
Partners' equity - September 30, 1996 .. $122.96 $ 9,468,005 $ 0 $ 9,468,005
======= ============ ========= ============
</TABLE>
Unaudited
See Accompanying Notes
6
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
1996 1995
--------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................... $ 251,472 $ (33,219)
Adjustments to reconcile net income (loss) to cash
used in operating activities:
Depreciation and amortization ..................... 182,620 230,328
Undistributed (income) loss of
unconsolidated joint venture .................... (245,867) 170,025
Gain from property disposition .................... 0 (151,510)
(Increase) decrease in rent receivable ............ (11,506) 9,612
Increase in other receivables ..................... (120,567) (980,988)
(Increase) decrease in other assets ............... (74,902) 2,246
Increase (decrease) in accrued and other liabilites 14,422 (159,702)
--------- -----------
Net cash used in operating activities ............. (4,328) (913,208)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on note receivable .............. 0 1,317,928
Payments for property additions ................... (94,057) (28,127)
Capital contributions to unconsolidated
joint venture ................................... 0 (1,242,020)
Distributions received from unconsolidated
joint venture ................................... 0 954,183
--------- -----------
Net cash (used in) provided by investing activities (94,057) 1,001,964
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to affiliate ............................. 54,700 0
Cash distributions from disposition of assets ..... (200,000) (100,000)
--------- -----------
Net cash used in financing activities ............. (145,300) (100,000)
--------- -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS ................................... (243,685) (11,244)
CASH AND CASH EQUIVALENTS - Beginning of period ....... 254,768 342,978
--------- -----------
CASH AND CASH EQUIVALENTS - End of period ............. $ 11,083 $ 331,734
========= ===========
Unaudited
See Accompanying Notes
7
<PAGE>
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 September 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 nine months ended September 30,
1996 and 1995 are affiliate transactions as follows:
September 30
--------------------------
1996 1995
------------- ------------
Management fees $ 10,903 $ 3,440
Administrative fees 48,157 30,796
Leasing fees 9,995 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 September 30, 1996 the Partnership's interest in SMMP was
49%; the remaining 51% interest is owned by Sierra Pacific Development Fund II.
UNAUDITED
8
<PAGE>
SIERRA PACIFIC PENSION INVESTORS `84
NOTES TO FINANCIAL STATEMENTS
Summarized income statement information for SMMP for the nine months ended
September 30, 1996 and 1995 follows:
September 30
--------------------------
1996 1995
------------- ------------
Rental income $1,327,910 $1,098,260
Total revenues 1,463,279 1,224,497
Operating expenses 605,231 482,134
Share of unconsolidated joint venture
loss 277,055 345,842
Loss before extraordinary item (463,792) (346,989)
Extraordinary gain 1,200,380 0
Net income (loss) 501,770 (346,989)
As of September 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 nine
months ended September 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
SIP SIIP
------------------------- -----------------------
September 30 September 30
------------------------- -----------------------
1996 1995 1996 1995
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental income ................ $ 118,181 $ 0 $ 748,770 $ 671,973
Total revenues ............... 118,268 0 748,770 672,139
Operating expenses ........... 127,141 142,877 275,159 294,754
Loss before extraordinary item (246,823) (476,635) (148,853) (220,936)
Extraordinary gain ........... 1,200,380 0 0 0
Net income (loss) ............ 953,557 (476,635) (148,853) (220,936)
</TABLE>
<TABLE>
<CAPTION>
SCP SVP
----------------------- -----------------------
September 30 September 30
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental income ................ $ 547,972 $ 419,964 $ 523,377 $ 474,346
Total revenues ............... 555,744 420,211 523,377 474,346
Operating expenses ........... 376,892 404,365 388,328 415,595
Loss before extraordinary item (291,816) (306,561) (481,951) (532,529)
Extraordinary gain ........... 0 0 0 0
Net income (loss) ............ (291,816) (306,561) (481,951) (532,529)
</TABLE>
UNAUDITED
9
<PAGE>
SIERRA PACIFIC PENSION INVESTORS `84
NOTES TO FINANCIAL STATEMENTS
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
11
<PAGE>
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: NOVEMBER 11, 1996 /S/ THOMAS N. THURBER
Thomas N. Thurber
President and Director
Date: NOVEMBER 11, 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 SEPTEMBER 30, 1996 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 11,083
<SECURITIES> 0
<RECEIVABLES> 95,107
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,427,067
<PP&E> 4,803,698
<DEPRECIATION> 3,332,966
<TOTAL-ASSETS> 9,562,674
<CURRENT-LIABILITIES> 94,669
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,468,005
<TOTAL-LIABILITY-AND-EQUITY> 9,562,674
<SALES> 351,215
<TOTAL-REVENUES> 496,182
<CGS> 0
<TOTAL-COSTS> 307,957
<OTHER-EXPENSES> 182,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 251,472
<INCOME-TAX> 0
<INCOME-CONTINUING> 251,472
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 251,472
<EPS-PRIMARY> 3.27
<EPS-DILUTED> 3.27
</TABLE>
