FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended March 31, 2000
----------------------------------------------------
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 Identification
incorporation or organization) Number)
5850 San Felipe, Suite 450
Houston, Texas 77057
- -------------------------------------- -----------------------------------
(Address of principal executive (Zip Code)
offices)
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 - March 31, 2000 and December 31, 1999 .................... 4
Statements of Operations - For the Three Months Ended March 31,
2000 and 1999 ............................................................ 5
Statements of Changes in Partners' Equity - For the Year Ended
December 31, 1999 and for the Three Months Ended March 31, 2000 .......... 6
Statements of Cash Flows - for the Three Months Ended March 31,
2000 and 1999 ............................................................ 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 Sierra Pacific
Pension Investors `84's (the Partnership) Financial Statements and Notes thereto
appearing elsewhere in this Form 10-Q.
The Partnership currently owns one property, Sierra Valencia (the Property). In
addition, the Partnership holds a 69.83% interest in Sierra Mira Mesa Partners
(SMMP) which is maintained on the equity method of accounting.
(b) RESULTS OF OPERATIONS
Rental income for the three months ended March 31, 2000 increased by
approximately $5,000, or 3%, when compared to the corresponding period in the
prior year, primarily due to higher common area maintenance fees billed during
the quarter. This increase was partially offset by a decrease in occupancy at
the Property from 100% at March 31, 1999 to 87% at March 31, 2000.
2
<PAGE>
Interest income for the quarter ended March 31, 2000, decreased by approximately
$21,000, or 35%, in comparison to the same period in the prior year. In May
1999, the Partnership received a $943,000 principal payment on its trust deed
note receivable.
Operating expenses increased by approximately $6,000, or 5%, principally due to
an increase in administrative costs and property taxes. This increase was
partially offset as a result of lower accounting and auditing costs incurred
during the quarter.
Depreciation and amortization expenses for the three months ended March 31, 2000
decreased by approximately $32,000, or 47%, when compared to the corresponding
period in 1999, primarily due to fully depreciated capitalized tenant
improvements.
The Partnership's share of unconsolidated joint venture income increased by
approximately $69,000 for the three months ended March 31, 2000 in comparison to
the same period in the prior year.
(c) LIQUIDITY AND CAPITAL
The Partnership received a $943,000 principal payment on its trust deed note
receivable in May 1999. These funds were principally used to satisfy the
liquidity requirements of SMMP.
As of March 31, 2000, the Partnership is in an illiquid position. Total cash and
billed receivables amount to approximately $33,000 compared to approximately
$151,000 of accrued and other liabilities. The Partnership anticipates cash
required to meet debt obligations, operating expenses and costs for the
construction of new tenant space will be funded from the operations of the
Property and distributions from SMMP.
Inflation:
The Partnership does not expect inflation to be a material factor in its
operations in 2000.
3
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents ......................................................... $ 21,788 $ 31,562
Receivables:
Note receivable, net of deferred gain of $132,471 .............................. 1,459,139 1,459,139
Unbilled rent .................................................................. 44,652 44,708
Billed rent .................................................................... 11,293 2,762
Interest ....................................................................... 39,790 0
Income-producing property - net of
accumulated depreciation and valuation
allowance of $2,813,436 and $2,864,363
respectively .................................................................... 1,153,354 1,174,239
Investment in unconsolidated joint venture ........................................ 7,357,261 7,303,940
Other assets - net of accumulated amortization
of $156,401 and $172,144, respectively .......................................... 850,937 791,968
--------------- ---------------
Total Assets ...................................................................... $ 10,938,214 $ 10,808,318
=============== ===============
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities ..................................................... $ 151,065 $ 122,891
Notes payable ..................................................................... 1,381,483 1,398,368
--------------- ---------------
Total Liabilities ................................................................. 1,532,548 1,521,259
--------------- ---------------
Partners' equity (deficit):
General Partner ................................................................. (185,170) 0
Limited Partners:
80,000 units authorized,
77,000 issued and outstanding ................................................. 9,590,836 9,287,059
--------------- ---------------
Total Partners' equity ............................................................ 9,405,666 9,287,059
--------------- ---------------
Total Liabilities and Partners' equity ............................................ $ 10,938,214 $ 10,808,318
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
--------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
REVENUES:
Rental income ....................................................................... $ 148,485 $ 143,659
Interest income ..................................................................... 39,793 61,088
--------------- ---------------
Total revenues ............................................................. 188,278 204,747
--------------- ---------------
EXPENSES:
Operating expenses .................................................................. 128,074 122,176
Depreciation and amortization ....................................................... 36,355 68,349
Interest expense .................................................................... 32,568 34,769
--------------- ---------------
Total costs and expenses ................................................... 196,997 225,294
--------------- ---------------
LOSS BEFORE PARTNERSHIP'S SHARE OF
UNCONSOLIDATED JOINT VENTURE INCOME ................................................. (8,719) (20,547)
PARTNERSHIP'S SHARE OF UNCONSOLIDATED
JOINT VENTURE INCOME ................................................................ 127,326 58,670
--------------- ---------------
NET INCOME ............................................................................ $ 118,607 $ 38,123
=============== ===============
Net income per limited partnership unit ............................................... $ 1.52 $ 0.50
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 2000
- --------------------------------------------------------------------------------
<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 (loss) income
(to December 31, 1999) ........................... (70.59) (5,435,550) $ 133,334 (5,302,216)
Cumulative distributions
(to December 31, 1999) ........................... (21.43) (1,650,006) (133,334) (1,783,340)
--------------- --------------- --------------- ---------------
Partners' equity - January 1, 2000 (audited) ....... 120.61 9,287,059 0 9,287,059
Cumulative adjustment of net loss allocation ....... 2.42 186,356 (186,356) 0
Net income (unaudited).............................. 1.52 117,421 1,186 118,607
--------------- --------------- --------------- ---------------
Partners' equity (deficit) - March 31, 2000
(unaudited) ...................................... $ 124.55 $ 9,590,836 $ (185,170) $ 9,405,666
=============== =============== =============== ===============
</TABLE>
SEE ACCOMPANYING NOTES
6
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
--------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................................. $ 118,607 $ 38,123
Adjustments to reconcile net income
to cash (used in) provided by operating activities:
Depreciation and amortization ........................................................ 36,355 68,349
Partnership's share of unconsolidated joint
venture income ..................................................................... (127,326) (58,670)
Increase in rent receivable .......................................................... (8,475) (626)
Increase in interest receivable ...................................................... (39,790) (61,085)
(Increase) decrease in other assets .................................................. (71,621) 28,466
Increase (decrease) in accrued and other liabilites .................................. 28,174 (2,876)
--------------- ---------------
Net cash (used in) provided by operating activities .................................. (64,076) 11,681
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ...................................................... (1,813) (48,025)
--------------- ---------------
Net cash used in investing activities ................................................ (1,813) (48,025)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable .................................................. (16,885) (21,159)
Capital contributions to unconsolidated joint venture ................................ (34,000) 0
Distributions from unconsolidated joint venture ...................................... 107,000 0
Loan from affiliate .................................................................. 0 54,500
--------------- ---------------
Net cash provided by financing activities ............................................ 56,115 33,341
--------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ............................................... (9,774) (3,003)
CASH AND CASH EQUIVALENTS - Beginning of period .......................................... 31,562 10,122
--------------- ---------------
CASH AND CASH EQUIVALENTS - End of period ................................................ $ 21,788 $ 7,119
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest ............................................. $ 32,504 $ 34,888
=============== ===============
</TABLE>
See Accompanying Notes
7
<PAGE>
SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
---------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
1. BASIS OF FINANCIAL STATEMENTS
In the opinion of Sierra Pacific Pension Investors `84's (the Partnership)
management, these unaudited financial statements reflect all adjustments which
are necessary for a fair presentation of its financial position at March 31,
2000 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, 1999.
2. RELATED PARTY TRANSACTIONS
Included in the financial statements for the three months ended March 31, 2000
and 1999 are affiliate transactions as follows:
MARCH 31
-----------------------
2000 1999
---------- ----------
Management fees $ 4,449 $ 4,585
Administrative fees 19,744 16,596
3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
Sierra Mira Mesa Partners (SMMP) was formed in 1985 between the Partnership and
Sierra Pacific Development Fund II (SPDFII), an affiliate, to develop and
operate the real property known as Sierra Mira Mesa, an office building, located
in San Diego, California. The Partnership's initial ownership interest in SMMP
was 49%; the remaining 51% was owned by SPDFII. Effective December 31, 1996, the
general partners amended the partnership agreement to allow for adjustments in
the sharing ratio each year based upon the relative net contributions and
distributions since inception of each general partner. At March 31, 2000 the
Partnership's interest in SMMP was 69.83%; the remaining 30.17% interest is
owned by SPDFII.
The consolidated financial statements of SMMP include the accounts of SMMP and
Sorrento I Partners, a majority owned California general partnership. Summarized
income statement information for SMMP for the three months ended March 31, 2000
and 1999 follows:
8
<PAGE>
Sierra Pacific Pension Investors '84
Notes to Financial Statements (Unaudited)
Page two
MARCH 31
------------------------
2000 1999
----------- ----------
Rental income $ 556,156 $ 500,720
Total revenues 617,334 556,010
Operating expenses 219,914 190,270
Share of unconsolidated
joint venture income (loss) 45,176 (25,266)
Net income 175,848 87,978
As of March 31, 2000, SMMP holds a 43.92% interest in Sorrento II Partners
(SIIP), a California general partnership with Sierra Pacific Institutional
Properties V formed in 1993; a 5.08% interest in Sierra Creekside Partners
(SCP), a California general partnership with Sierra Pacific Development Fund
formed in 1994; and a 33.36% interest in Sierra Vista Partners (SVP), a
California general partnership with Sierra Pacific Development Fund III formed
in 1994.
Summarized income statement information for these Partnerships, which are
accounted for by SMMP under the equity method, for the three months ended March
31, 2000 and 1999 follows:
<TABLE>
<CAPTION>
SCP SVP SIIP
-------------------------- -------------------------- -------------------------
March 31 March 31 March 31
-------------------------- -------------------------- -------------------------
2000 1999 2000 1999 2000 1999
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Rental income ................. $ 229,440 $ 214,772 $ 0 $ 0 $ 385,844 $ 260,066
Total revenues ................ 229,440 214,772 0 11,907 397,049 260,066
Operating expenses ............ 154,180 126,351 13,665 13,797 124,762 123,578
Extraordinary loss ............ 46,020 0 0 0 0 0
Net (loss) income ............. (124,683) (36,421) (20,154) (2,457) 127,660 (63,391)
</TABLE>
4. PARTNERS' EQUITY
Equity and net income per limited partnership unit is determined by dividing the
limited partners' share of the Partnership's equity and net income by the number
of limited partnership units outstanding, 77,000.
Partners' equity accounts have been adjusted to reflect an allocation of
cumulative net loss to the partners in accordance with the agreement of limited
partnership. This agreement provides that 99% of operating profits and losses of
the Partnership shall be allocated among the limited partners and 1% be
allocated to the general partner.
Prior year balances have not been adjusted because management does not believe
that the effects of these adjustments are significant to the prior year
partners' equity balances.
9
<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
A Form 8-K was filed in April 2000 reporting a change in the Partnership's
Certifying Accountant.
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: MAY 10, 2000 /S/ THOMAS N. THURBER
------------ -----------------------------------------------
Thomas N. Thurber
President and Director
Date: MAY 10, 2000 /S/ G. ANTHONY EPPOLITO
------------ -----------------------------------------------
G. Anthony Eppolito
Chief Accountant
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SIERRA PACIFIC PENSION INVESTORS '84 MARCH 31, 2000 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 21,788
<SECURITIES> 0
<RECEIVABLES> 95,735
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 72,871
<PP&E> 3,966,790
<DEPRECIATION> 2,813,436
<TOTAL-ASSETS> 10,938,214
<CURRENT-LIABILITIES> 151,065
<BONDS> 1,381,483
0
0
<COMMON> 0
<OTHER-SE> 9,405,666
<TOTAL-LIABILITY-AND-EQUITY> 10,938,214
<SALES> 148,485
<TOTAL-REVENUES> 188,278
<CGS> 0
<TOTAL-COSTS> 128,074
<OTHER-EXPENSES> 36,355
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,568
<INCOME-PRETAX> 118,607
<INCOME-TAX> 0
<INCOME-CONTINUING> 118,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,607
<EPS-BASIC> 1.54
<EPS-DILUTED> 1.54
</TABLE>
