<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30, 1995
------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to __________________
Commission file number 0-15698
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WINDSOR PARK PROPERTIES 2, A CALIFORNIA LIMITED PARTNERSHIP
------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-0054332
- ----------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
------------------------------------------------------------
(Address of principal executive offices)
(619) 746-2411
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ( )
--- ----
1
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TABLE OF CONTENTS
PART I
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Page
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Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II
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Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE
2
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
September 30, 1995
--------------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 376,000
Buildings and improvements 2,594,700
Fixtures and equipment 61,600
--------------------
3,032,300
Less accumulated depreciation (2,162,000)
--------------------
870,300
Cash and cash equivalents 458,800
Other assets 8,200
--------------------
$ 1,337,300
====================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Accounts payable $ 49,100
Accrued liabilities 36,500
Tenant deposits and other liabilities 10,800
--------------------
96,400
--------------------
Partners' equity:
Limited partners 1,656,000
General partners (415,100)
--------------------
1,240,900
--------------------
$ 1,337,300
====================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1994
--------------- ----------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 117,600 $ 116,500
Interest 6,400 17,100
Other 3,500 3,000
--------------- ----------------
127,500 136,600
--------------- ----------------
COSTS AND EXPENSES
- ------------------
Property operating costs 139,400 120,200
Depreciation and amortization 15,900 20,000
General and administrative:
Related parties 8,100 8,600
Other 9,800 9,300
Interest 900
Provision for estimated loss in value of
property held for investment 1,075,000
--------------- ----------------
173,200 1,234,000
--------------- ----------------
Net loss $ (45,700) $ (1,097,400)
=============== ================
Net loss - general partners $ (500) $ (11,000)
=============== ================
Net loss - limited partners $ (45,200) $ (1,086,400)
=============== ================
Net loss per limited partnership unit $ (0.30) $ (7.21)
=============== ================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 355,600 $ 348,300
Interest 21,700 164,200
Other 9,800 12,100
--------------- ---------------
387,100 524,600
--------------- ---------------
COSTS AND EXPENSES
- ------------------
Property operating costs 348,300 309,500
Depreciation and amortization 49,600 61,000
General and administrative:
Related parties 24,900 29,800
Other 31,600 35,600
Interest 3,700
Provision for estimated loss in value of
property held for investment 1,075,000
--------------- ---------------
454,400 1,514,600
--------------- ---------------
Net loss $ (67,300) $ (990,000)
=============== ===============
Net loss - general partners $ (700) $ (9,900)
=============== ===============
Net loss - limited partners $ (66,600) $ (980,100)
=============== ===============
Net loss per limited partnership unit $ (0.44) $ (6.51)
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (67,300) $ (990,000)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 49,600 61,000
Amortization of loan fees - note receivable (24,000)
Loss on sale of property held for
investment 6,000
Provision for estimated loss in value of
property held for investment 1,075,000
Changes in operating assets and liabilities:
Other assets 22,800 39,900
Accounts payable 26,400 11,500
Accrued liabilities 18,600 7,100
Tenant deposits and other liabilities (4,300) (800)
--------------- ---------------
Net cash provided by operating activities 51,800 179,700
--------------- ---------------
Cash flows from investing activities:
Proceeds from sale of property held for
investment 6,500
Increase in property held for investment (13,100) (84,100)
Proceeds from collection of notes receivable 2,855,500
--------------- ---------------
Net cash (used in) provided by investing
activities (6,600) 2,771,400
--------------- ---------------
Cash flows from financing activities:
Cash distributions (303,000) (2,274,400)
Repurchase of limited partnership units (1,200) (12,000)
Repayment of notes payable (52,500)
--------------- ---------------
Net cash used in financing activities (304,200) (2,338,900)
--------------- ---------------
Net (decrease) increase in cash and cash
equivalents (259,000) 612,200
Cash and cash equivalents at beginning of
period 717,800 241,200
--------------- ---------------
Cash and cash equivalents at end of period $ 458,800 $ 853,400
=============== ===============
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ -- $ 3,700
=============== ===============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at September 30, 1995 and the related statements of operations
for the three and nine months ended September 30, 1995 and 1994 and the
statements of cash flows for the nine months ended September 30, 1995 and 1994
are unaudited. However, in the opinion of the General Partners, they contain all
adjustments, of a normal recurring nature, necessary for a fair presentation of
such financial statements. Interim results are not necessarily indicative of
results for a full year.
The financial statements and notes are presented as permitted by Form 10-QSB and
do not contain certain information included in the Partnership's annual
financial statements and notes. Certain 1994 amounts have been reclassified to
conform with the 1995 presentation.
NOTE 2. NET LOSS PER LIMITED PARTNERSHIP UNIT
-------------------------------------
Net loss per limited partnership unit is calculated based on the weighted
average number of limited partnership units outstanding during the period and
the net loss allocated to the Limited Partners. The weighted average number of
limited partnership units outstanding during the three and nine months ended
September 30, 1995 was 150,231 and 150,290, respectively; and 150,345 and
150,620 during the three and nine months ended September 30, 1994, respectively.
NOTE 3. RELATED PARTY TRANSACTIONS
--------------------------
The General Partners of the Partnership are The Windsor Corporation, a
California corporation, and John A. Coseo, Jr. (Mr. Coseo is also the
president, chief executive officer and the principal stockholder of The Windsor
Corporation).
The General Partners and their affiliates are entitled to receive various fees
and compensation from the Partnership which are summarized as follows:
Operational Stage
- -----------------
The Partnership's investment properties were managed by Windsor Asset
Management, Inc. (WAMI), an affiliate of The Windsor Corporation, until November
1994. At that time, WAMI was merged into an independent property management
company. For management services, WAMI received 5 percent of gross property
receipts. During the three and nine months ended September 30, 1994, WAMI
received fees of $6,000 and $18,000, respectively. WAMI received no fees during
the three and nine months ended September 30, 1995.
The net profits and losses of the Partnership during the operational stage are
allocated 99 percent to the Limited Partners and 1 percent to the General
Partners. Cash distributions from operations are allocated 95 percent to the
Limited Partners and 5 percent to the General Partners.
The Partnership reimburses The Windsor Corporation and affiliates for certain
direct expenses, and employee, executive and administrative time, which are
incurred on the Partnership's behalf. The Partnership was charged $9,800 and
$10,100 for such costs during the three months ended September 30, 1995 and
1994, respectively; and $30,300 and $34,800 during the nine months ended
September 30, 1995 and 1994, respectively.
7
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Liquidation Stage
- -----------------
During the Partnership's liquidation stage, the total compensation paid to all
persons for the sale of investment properties is limited to competitive real
estate commissions, not to exceed 6 percent of the contract price for the sale
of the property. The General Partners may receive up to one-half of the
competitive real estate commission, not to exceed 3 percent, if they provide a
substantial amount of services in the sales effort. The General Partners'
commission is subordinated to the Limited Partners receiving a 9 percent
cumulative, non-compounded, annual return on their original capital investments.
No commissions were paid to the General Partners during the three and nine
months ended September 30, 1995 and 1994.
The General Partners also receive 1 percent of net income or loss and cash
distributions from the sale of Partnership properties.
During the three months ended September 30, 1995 and 1994, the General Partners
received cash distributions of $1,000 and $20,200, respectively; and $3,000 and
$24,400 for the nine months ended September 30, 1995 and 1994, respectively.
NOTE 4. DISTRIBUTIONS TO LIMITED PARTNERS
---------------------------------
Distributions to limited partners in excess of net income allocated to limited
partners are considered a return of capital. During the nine months ended
September 30, 1995 and 1994, the limited partners received distributions of
$300,000 ($2.00 per unit) and $2,250,000 ($14.94 per unit), respectively, all of
which represented a return of capital.
8
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
September 30, 1995 as compared to December 31, 1994
- ---------------------------------------------------
The Partnership's primary source of cash during the nine months ended September
30, 1995 was from the operations of its investment properties. The primary use
of cash during the same period was for cash distributions to partners.
The Partnership's cash balance decreased from $717,800 at December 31, 1994 to
$458,800 at September 30, 1995 due mainly to cash distributions to partners
exceeding cash generated from operations.
The General Partners are considering the best course of action for the
Partnership. The alternatives are either to sell the two remaining properties
and wind-up the affairs of the Partnership, or to continue to operate the two
remaining properties with a view to increasing their value over the next few
years. The General Partners continue to monitor the Oklahoma City and
Shreveport markets for indications of improvement.
In the event that the General Partners decide to continue to operate the
properties, cash distributions may be reduced or suspended in order to maintain
cash reserves for marketing programs, capital improvements and any other
strategic plans considered appropriate.
The future sources of cash for the Partnership will be provided from property
operations, cash reserves and ultimately from the sale of property. The future
uses of cash will be for Partnership administration, capital expenditures and
possibly distributions to partners. The General Partners believe that the
future sources of cash are sufficient to meet the working capital requirements
of the Partnership for the foreseeable future.
Results of Operations
- ---------------------
Three months ended September 30, 1995 as compared to three months ended
- -----------------------------------------------------------------------
September 30, 1994
- ------------------
The Partnership incurred net losses of $45,700 and $1,097,400 for the three
months ended September 30, 1995 and 1994, respectively. Net loss per limited
partnership unit was $0.30 in 1995 and $7.21 in 1994.
Rent and utilities revenues increased slightly from $116,500 in 1994 to $117,600
in 1995. The overall occupancy of the Partnership's two remaining properties
increased from approximately 51% at September 30, 1994 to 58% at September 30,
1995.
In September 1994, the Partnership provided $1,075,000 for estimated losses in
value of the Edgewood and Pinecrest manufactured home communities. The
provision was made after a management review of the properties and the local
markets indicated that an impairment in the values of the properties had
occurred. The provision was measured as the difference between the carrying
value of the properties and their estimated future undiscounted cash flows.
Factors considered and judgements made in estimating future cash flows included
current and future occupancy rates, future
9
<PAGE>
rent raises, changes in operating expenses, the forecasted holding period and
estimated property selling price.
Depreciation and amortization expense decreased from $20,000 in 1994 to $15,900
in 1995. The decrease is due mainly to the $1,075,000 provision for estimated
losses in value of the Pinecrest and Edgewood manufactured home communities
recorded in September 1994. A portion of the provision was allocated to the
depreciable bases of the properties, thereby reducing future depreciation
expense.
Nine months ended September 30, 1995 as compared to the nine months ended
- -------------------------------------------------------------------------
September 30, 1994
- ------------------
The Partnership incurred net losses of $67,300 and $990,000 for the nine months
ended September 30, 1995 and 1994, respectively. Net loss per limited
partnership unit was $0.44 in 1995 and $6.51 in 1994.
Rent and utilities revenues increased slightly from $348,300 in 1994 to $355,600
in 1995 due to a slight improvement in occupancy at the two Partnership
properties.
Interest income decreased from $164,200 in 1994 to $21,700 in 1995 due to the
June 1994 repayment of a note receivable taken back by the Partnership from the
sale of Palm Bay Estates in 1992.
Property operating expenses increased from $309,500 in 1994 to $348,300 in 1995
due mainly to higher utilities and insurance costs.
Depreciation and amortization expense decreased from $61,000 in 1994 to $49,600
in 1995 for the reason discussed previously.
General and administrative expense decreased from $65,400 in 1994 to $56,500 in
1995 due mainly to a $6,300 state asset tax incurred in 1994 in connection with
the note receivable taken back on the sale of Palm Bay.
As discussed previously, in September 1994, the Partnership provided $1,075,000
for estimated losses in value of the Edgewood and Pinecrest manufactured home
communities.
10
<PAGE>
PART II
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Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the period covered by
this Form 10-QSB.
11
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR PARK PROPERTIES 2,
A California Limited Partnership
---------------------------------
(Registrant)
By: The Windsor Corporation, General Partner
By /s/John A. Coseo, Jr.
--------------------------------------------
JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: November 6, 1995
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF WINDSOR PARK PROPERTIES 2 AT SEPTEMBER 30, 1995 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE NINE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 458,800
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,032,300
<DEPRECIATION> 2,162,000
<TOTAL-ASSETS> 1,337,300
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,240,900<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,337,300
<SALES> 0
<TOTAL-REVENUES> 387,100
<CGS> 0
<TOTAL-COSTS> 348,300
<OTHER-EXPENSES> 106,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (67,300)
<INCOME-TAX> 0
<INCOME-CONTINUING> (67,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,300)
<EPS-PRIMARY> (0.44)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Limited and general partners equity.
<F2>Net loss per limited partnership unit.
</FN>
</TABLE>
