<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
FOR QUARTER ENDED MARCH 31, 1995
COMMISSION FILE NUMBER 2-92352
HOUSING PROGRAMS LIMITED
(FORMERLY SHEARSON LEHMAN/COAST SAVINGS HOUSING PARTNERS, LIMITED)
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. EMPLOYER IDENTIFICATION NO. 95-3906167
9090 Wilshire Blvd., Suite 201
Beverly Hills, Calif. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Securities Registered Pursuant to
Section 12(b) or 12(g) of the Act
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve 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> 2
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets, March 31, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . 1
Statements of Operations,
Three Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . 2
Statement of Partners' Equity,
Three Months Ended March 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Cash Flow,
Three Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Analysis and Discussion of Financial
Condition and Results of Operation . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
INVESTMENTS IN AND ADVANCES TO
LIMITED PARTNERSHIPS $14,545,994 $14,533,940
CASH AND CASH EQUIVALENTS 1,084,553 624,935
SHORT-TERM INVESTMENTS 525,176 533,409
----------- -----------
TOTAL ASSETS $16,155,723 $15,692,284
=========== ===========
LIABILITIES AND PARTNERS' DEFICIENCY
NOTES AND CAPITAL CONTRIBUTIONS PAYABLE $10,177,433 $10,177,433
ACCRUED FEES AND EXPENSES DUE GENERAL
PARTNERS 1,184,846 1,092,620
ACCRUED INTEREST PAYABLE 9,159,063 8,917,531
ACCOUNTS PAYABLE AND OTHER LIABILITIES 443,776 21,922
----------- -----------
20,965,118 20,209,506
PARTNERS' DEFICIENCY (4,809,395) (4,517,222)
----------- -----------
TOTAL LIABILITIES AND PARTNERS' DEFICIENCY $16,155,723 $15,692,284
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
INTEREST INCOME $ 5,361 $ 5,148
--------- ---------
OPERATING EXPENSES
Management fees 142,224 142,224
General and administrative 17,570 22,162
Legal and accounting 58,247 39,461
Interest expense 241,532 241,532
--------- ---------
Total operating expenses 459,573 445,379
--------- ---------
LOSS FROM PARTNERSHIP OPERATIONS (454,212) (440,231)
DISTRIBUTIONS RECOGNIZED AS INCOME 143,419 362,935
EQUITY IN INCOME OF LIMITED PARTNERSHIPS
AND AMORTIZATION OF ACQUISITION COSTS 18,620 154,000
--------- ---------
NET (LOSS) INCOME $(292,173) $ 76,704
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' DEFICIENCY
THREE MONTHS ENDED MARCH 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
BALANCE DEFICIENCY,
at January 1, 1995 $(295,918) $(4,221,304) $(4,517,222)
Net loss for the three months
ended March 31, 1995 (2,922) (289,251) (292,173)
--------- ----------- -----------
BALANCE DEFICIENCY,
at March 31, 1995 $(298,840) $(4,510,555) $(4,809,395)
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
MARCH 31, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net (loss) income $ (292,173) $ 76,704
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Equity in (income) loss of limited partnerships (28,620) (164,000)
Amortization of acquisition costs 10,000 10,000
Increase in advances to limited partnerships (10,331) -
Increase (decrease) in -
Accrued interest payable 241,532 241,532
Accrued fees due general partners 92,226 92,224
Accounts payable 421,854 1,172,976
---------- ----------
Net cash provided by operating activities 434,488 1,429,436
---------- ----------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Distributions from limited partnerships recognized
as a return of capital 16,897 150,835
Decrease in short-term investments 8,233 -
---------- ----------
Net cash provided by investing activities 25,130 150,835
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 459,618 1,580,271
CASH AND CASH EQUIVALENTS, beginning of period 624,935 673,835
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $1,084,553 $2,254,106
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information as of December 31, 1994 and the following notes to the
financial statements are condensed from the audited annual financial
statements; accordingly, the financial statements included herein should
be reviewed in conjunction with the financial statements and related
notes thereto contained in the Housing Programs Limited (formerly,
Shearson Lehman/Coast Savings Housing Partners, Limited) (the
"Partnership") Annual Report for the year ended December 31, 1994.
National Partnership Investments Corp. ("NAPICO") is the corporate
general partner for the Partnership. Accounting measurements at interim
dates inherently involve greater reliance on estimates than at year end.
The results of operations for the interim period presented are not
necessarily indicative of the results for the entire year.
In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting primarily of normal
recurring accruals) necessary to present fairly the financial position of
the Partnership at March 31, 1995 and the results of operations and
changes in cash flow for the three months then ended.
METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS
The investments in local limited partnerships are accounted for on the
equity method. Acquisition, selection fees and other costs related to
the acquisition of the projects have been capitalized to the investment
accounts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and bank certificates of
deposit.
SHORT TERM INVESTMENTS
Short term investments consist of bank certificates of deposit and other
securities with original maturities ranging from more than three months
to twelve months. The fair value of these securities, which have been
classified as held for sale, approximates their carrying value.
INCOME TAXES
No provision has been made for income taxes in the accompanying financial
statements since such taxes, if any, are the liability of the individual
partners.
The Partnership holds limited partnership interests in 19 limited
partnerships. The partnerships own residential rental projects consisting
of 2,803 apartment units. The mortgage loans of these projects are
insured by various governmental agencies.
5
<PAGE> 8
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1995
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
The Partnership, as a limited partner, is entitled to 99 percent of the
profits and losses of the limited partnerships.
As of March 31, 1995, the Partnership is obligated, if certain conditions
are met, to invest additional capital of approximately $90,000 in an
investee partnership, at some time in the future. This amount has not
been recorded as a liability in the accompanying financial statements.
Equity in losses of limited partnerships is recognized in the financial
statements until the limited partnership investment account is reduced to
a zero balance. Losses incurred after the investment account is reduced
to zero are not recognized.
Distributions from the limited partnerships are recognized as a reduction
of capital until the investment balance has been reduced to zero or to a
negative amount equal to further capital contributions required.
Subsequent distributions are recognized as income.
The following is a summary of the investment in limited partnerships as
of March 31, 1995:
<TABLE>
<S> <C>
Balance, beginning of period $14,533,940
Advances to limited partnerships 10,331
Distributions recognized as return of capital (16,897)
Amortization of acquisition costs (10,000)
Equity in income of limited partnerships 28,620
-----------
Balance, end of period $14,545,994
===========
</TABLE>
Selected unaudited operating information of the unconsolidated limited
partnerships in which the Partnership has invested is as follows:
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
INCOME
Rental and Other $4,204,000 $4,658,000
EXPENSES
Depreciation 877,000 953,000
Interest 943,000 1,159,000
Operating 2,790,000 2,943,000
---------- ----------
Total expenses 4,610,000 5,055,000
---------- ----------
NET LOSS $ (406,000) $ (397,000)
========== ==========
</TABLE>
6
<PAGE> 9
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1995
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
The Montecito local partnership's mortgage payments for April and May
1994, were made on June 6, 1994. No subsequent mortgage payments have
been made since then and the mortgage is in default. The Montecito local
partnership has been operating at a deficit, and the general partner has
been unsuccessful in its attempt to negotiate a mortgage modification
with the lender to improve the situation. On July 25, 1994, the loan
servicer notified the local partnership of its intention to file a formal
Notice of Default ("NOD") and commence foreclosure action. A NOD and
Election To Sell under the Deed of Trust was filed for record on October
27, 1994 in the LA County Recorder's office. On October 26, 1994, the
loan servicer, on behalf of the lender, filed a complaint for Specific
Performance for Appointment of Receiver and Judicial Foreclosure against
the Partnership. The request for an appointment of a receiver was
approved on November 10, 1994. Representatives of the Montecito local
partnership and the general partner met with the loan servicer on
November 2, 1994 and on February 22, 1995 to discuss a loan modification
proposal. The Montecito local partnership has attempted to establish a
workout plan for the project. However, the lender has rejected all
mortgage modification proposals. In April 1995, the lender requested a
settlement whereby the lender would agree to terminate the deficiency
being sought against the Partnership and pursue solely a non-judicial
foreclosure action. Discussions regarding a settlement are ongoing at
this time. There can be no assurance that the settlement will be
granted. The Partnership's original investment in the Montecito local
partnership represents approximately 5% of the Partnership's total
capital raised. The Partnership's financial statements reflect no
investment in Montecito at March 31, 1995.
NOTE 3 - NOTES AND CAPITAL CONTRIBUTIONS PAYABLE
Certain of the Partnership's investments involved purchases of
partnership interest from partners who subsequently withdrew from the
operating partnership. The Partnership is obligated for non-recourse
notes payable of $10,177,433, bearing interest at 9.5 percent, to the
sellers of the partnership interests. The notes have principal maturity
dates ranging from October 1996 to December 1999 or upon or refinancing
of the underlying partnership properties. These obligations and the
related interest are collateralized by the Partnership's investment in
the investee limited partnerships and are payable only out of cash
distributions from the investee partnerships, as defined in the notes.
Unpaid interest is due at maturity of the notes.
NOTE 4 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNERS
Under the terms of the Restated Certificate and Agreement of the Limited
Partnership, the Partnership is obligated to the general partners for an
annual management fee equal to .5 percent of the invested assets of the
limited partnerships. Invested assets is defined as the costs of
acquiring project interests including the proportionate amount of the
mortgage loans related to the Partnership's interests in the capital
accounts of the respective partnerships. The fees accrued for the three
months ended March 31, 1995 and 1994 was approximately $142,200.
7
<PAGE> 10
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1995
NOTE 4 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNERS
As of March 31, 1995, the fees and expenses due the general partners
exceeded the Partnership's cash. The general partners, during the
forthcoming year, will not demand payment of amounts due in excess of
such cash or such that the Partnership would not have sufficient
operating cash.
The Partnership reimburses NAPICO for certain expenses. In 1995, the
reimbursement to NAPICO of $7,462 has been paid and included in the
Partnership's operating expenses.
NOTE 5 - CONTINGENCIES
The corporate general partners of the Partnership are plaintiffs in
various lawsuits and also have been named as defendants in other lawsuits
arising from transactions in the ordinary course of business. In the
opinion of management and the corporate general partner, the claims will
not result in any material liability to the Partnership.
8
<PAGE> 11
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1995
ITEM 2. MANAGEMENT'S ANALYSIS AND DISCUSSION OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary source of funds include interest income earned
from investing available cash and distributions from limited partnerships
in which the Partnership has invested. It is not expected that any of
the local limited partnerships in which the Partnership has invested will
generate cash flow sufficient to provide for distributions to limited
partners in any material amount.
The Partnership has committed to investments, requiring additional
capital contributions of approximately $90,000 to the Montecito Local
Partnership. The ongoing negotiations with the Lender will ultimately
determine whether the aforementioned additional capital contribution
would be paid to the Local Partnership. The Partnership normally makes
its capital contributions to the local limited partnerships in stages,
over a period of two to five years, with each contribution due on a
specified date, provided that certain conditions regarding construction
or operation of the project have been fulfilled. The Partnership has no
significant commitments once the capital contributions have been made.
RESULTS OF OPERATIONS
Partnership revenues consist primarily of interest income earned on
certificates of deposit and other temporary investment of funds not
required for investment in local partnerships.
Operating expenses consist of recurring general and administrative
expenses, professional fees for services rendered to the Partnership and
accrued interest on the notes payable. In addition, an annual
Partnership management fee in an amount equal to .5 percent of invested
assets is payable to the general partners.
The Partnership accounts for its investments in the local limited
partnerships on the equity method, thereby adjusting its investment
balance by its proportionate share of the income or loss of the local
limited partnerships. Equity losses in limited partnerships are reduced
as a result of the partnership not recognizing losses on limited
partnerships when their respective investment balances have been reduced
to zero.
Distributions received from limited partnerships are recognized as return
of capital until the investment balance has been reduced to zero or to a
negative amount equal to future capital contributions required.
Subsequent distributions received are recognized as income.
9
<PAGE> 12
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1995
ITEM 2. MANAGEMENT'S ANALYSIS AND DISCUSSION OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
Except for certificates of deposit and money market funds, the
Partnership's investments are entirely interests in other limited
partnerships owning government assisted projects. Available cash is
invested providing interest income as reflected in the statements of
operations. These funds can be converted to cash to meet obligations as
they arise. The Partnership intends to continue investing available
funds in this manner.
The Montecito local partnership's mortgage payments for April and May
1994, were made on June 6, 1994. No subsequent mortgage payments have
been made since then and the mortgage is in default. The Montecito local
partnership has been operating at a deficit, and the general partner has
been unsuccessful in its attempt to negotiate a mortgage modification
with the lender to improve the situation. On July 25, 1994, the loan
servicer notified the local partnership of its intention to file a formal
Notice of Default ("NOD") and commence foreclosure action. A NOD and
Election To Sell under the Deed of Trust was filled for record on October
27, 1994 in the LA County Recorder's office. On October 26, 1994, the
loan servicer, on behalf of the lender, filed a complaint for Specific
Performance for Appointment of Receiver and Judicial Foreclosure against
the Partnership. The request for an appointment of a receiver was
approved on November 10, 1994. Representatives of the Montecito local
partnership and the general partner met with the loan servicer on
November 2, 1994 and on February 22, 1995 to discuss a loan modification
proposal. The Montecito local partnership has attempted to establish a
workout plan for the project. However, the lender has rejected all
mortgage modification proposals. In April 1995, the lender requested a
settlement whereby the lender would agree to terminate the deficiency
being sought against the Partnership and pursue solely a non-judicial
foreclosure action. Discussions regarding a settlement are ongoing at
this time. There can be no assurance that the settlement will be
granted. The Partnership's original investment in the Montecito local
partnership represents approximately 5% of the Partnership's total
capital raised. The Partnership's financial statements reflect no
investment in Montecito at March 31, 1995.
10
<PAGE> 13
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1995
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of March 31, 1995, the Partnership's corporate general partners were
plaintiffs or defendants in several suits. None of these suits are related to
the Partnership.
The Montecito local partnership's mortgage payments for April and May 1994,
were made on June 6, 1994. No subsequent mortgage payments have been made
since then and the mortgage is in default. The Montecito local partnership has
been operating at a deficit, and the general partner has been unsuccessful in
its attempt to negotiate a mortgage modification with the lender to improve the
situation. On July 25, 1994, the loan servicer notified the local partnership
of its intention to file a formal Notice of Default ("NOD") and commence
foreclosure action. A NOD and Election To Sell under the Deed of Trust was
filed for record on October 27, 1994 in the LA County Recorder's office. On
October 26, 1994, the loan servicer, on behalf of the lender, filed a complaint
for Specific Performance for Appointment of Receiver and Judicial Foreclosure
against the Partnership. The request for an appointment of a receiver was
approved on November 10, 1994. Representatives of the Montecito local
partnership and the general partner met with the loan servicer on November 2,
1994 and on February 22, 1995 to discuss a loan modification proposal. The
Montecito local partnership has attempted to establish a workout plan for the
project. However, the lender has rejected all mortgage modification proposals.
In April 1995, the lender requested a settlement whereby the lender would agree
to terminate the deficiency being sought against the Partnership and pursue
solely a non-judicial foreclosure action. Discussions regarding a settlement
are ongoing at this time. There can be no assurance that the settlement will
be granted. The Partnership's original investment in the Montecito local
partnership represents approximately 5% of the Partnership's total capital
raised. The Partnership's financial statements reflect no investment in
Montecito at March 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are required per the provision of item 7 of regulation
S-K.
11
<PAGE> 14
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOUSING PROGRAMS LIMITED
(a California limited partnership)
By: National Partnership Investments Corp.
General Partner
Date: 5/17/95
--------------------------------
By: /s/ BRUCE E. NELSON
--------------------------------
Bruce E. Nelson
President
Date: 5/17/95
---------------------------------
By: /s/ SHAWN HORWITZ
---------------------------------
Shawn Horwitz
Executive Vice President and
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,084,553
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,609,729
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,155,723
<CURRENT-LIABILITIES> 443,776
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (4,809,395)
<TOTAL-LIABILITY-AND-EQUITY> 16,155,723
<SALES> 0
<TOTAL-REVENUES> 167,400
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 218,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241,532
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (292,173)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
