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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 March 31, 1996
-------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 0-15698
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WINDSOR PARK PROPERTIES 2, A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
California 33-0054332
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
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(Address of principal executive offices)
(619) 746-2411
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(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 [_]
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TABLE OF CONTENTS
PART I
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<TABLE>
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Page
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<C> <S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II
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Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
SIGNATURE
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WINDSOR PARK PROPERTIES 2
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(A California Limited Partnership)
BALANCE SHEET
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(unaudited)
<TABLE>
<CAPTION>
March 31, 1996
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ASSETS
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Property held for sale:
<S> <C>
Land $ 376,000
Buildings and improvements 2,605,600
Fixtures and equipment 65,200
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3,046,800
Accumulated depreciation (2,175,600)
Allowance for loss on sale (90,000)
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781,200
Cash and cash equivalents 416,100
Other assets 19,200
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$ 1,216,500
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LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Accounts payable $ 17,300
Accrued expenses 24,400
Tenant deposits and other liabilities 14,900
-----------------
56,600
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Partners' equity:
Limited partners 1,575,800
General partners (415,900)
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1,159,900
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$ 1,216,500
=================
</TABLE>
See accompanying notes to financial statements
3
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WINDSOR PARK PROPERTIES 2
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(A California Limited Partnership)
STATEMENTS OF OPERATIONS
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(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
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1996 1995
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<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 122,600 $ 117,200
Interest 4,600 8,400
Other 13,700 2,700
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140,900 128,300
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COSTS AND EXPENSES
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Property operating 107,500 98,500
Depreciation and amortization 4,900 17,000
General and administrative:
Related parties 7,900 8,800
Other 10,100 10,000
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130,400 134,300
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Net income (loss) $ 10,500 $ (6,000)
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Net income (loss) - general partners $ 100 $ (100)
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Net income (loss) - limited partners $ 10,400 $ (5,900)
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Net income (loss) per limited partnership unit $ 0.07 $ (0.04)
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</TABLE>
See accompanying notes to financial statements.
4
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WINDSOR PARK PROPERTIES 2
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(A California Limited Partnership)
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STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
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1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 10,500 $ (6,000)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,900 17,000
Loss on sale of property held for sale 500
Changes in operating assets and liabilities:
Other assets 7,800 7,900
Accounts payable (7,600) (5,700)
Accrued expenses (1,100) (2,800)
Tenant deposits and other liabilities 1,500 3,200
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Net cash provided by operating activities 16,500 13,600
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Cash flows from investing activities:
Increase in property held for sale (12,300) (5,800)
Proceeds from sale of property held for sale 700
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Net cash used in investing activities (11,600) (5,800)
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Cash flows from financing activities:
Repurchase of limited partnership units (600)
Cash distributions (101,000)
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Net cash used in financing activities (600) (101,000)
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Net increase (decrease) in cash and cash equivalents 4,300 (93,200)
Cash and cash equivalents at beginning of period 411,800 717,800
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Cash and cash equivalents at end of period $ 416,100 $ 624,600
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</TABLE>
See accompanying notes to financial statements.
5
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. GENERAL
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In February 1996, the General Partners determined that it was in the best
interests of the limited partners to sell the Partnership's two remaining
investment properties. Upon the sale of the properties, the Partnership will be
liquidated as soon as possible thereafter.
The balance sheet at March 31, 1996 and the related statements of operations and
of cash flows for the three months ended March 31, 1996 and 1995 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.
NOTE 2. NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
----------------------------------------------
Net income (loss) per limited partnership unit is calculated based on the
weighted average number of limited partnership units outstanding during the
period and the net income (loss) allocated to the Limited Partners. The
weighted average number of limited partnership units outstanding during the
three months ended March 31, 1996 and 1995 was 149,777 and 150,345,
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 are entitled to receive various fees and compensation from
the Partnership which are summarized as follows:
Operational Stage
- -----------------
The net profits and losses of the Partnership during the operational stage are
allocated 99% to the Limited Partners and 1% to the General Partners. Cash
distributions from operations are allocated 95% to the Limited Partners and 5%
to the General Partners.
The Partnership reimburses The Windsor Corporation for certain direct expenses,
and employee, executive and administrative time, which are incurred on the
Partnership's behalf. The Partnership was charged $9,700 and $10,600 for such
costs during the three months ended March 31, 1996 and 1995, respectively.
These costs are included in property operating and general and administrative
expenses in the accompanying Statements of Operations.
Liquidation Stage
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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% of the contract price for the sale of the
property. The General Partners may receive up to one-half of the
6
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competitive real estate commission, not to exceed 3%, 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% cumulative,
non-compounded, annual return on their original capital investments. No
commissions were paid to the General Partners during the three months ended
March 31, 1996 and 1995.
The General Partners also receive 1% of profits, losses, and cash distributions
from the sale of Partnership properties.
During the three months ended March 31, 1995, the General Partners received cash
distributions of $1,000. The General Partners received no cash distributions
during the three months ended March 31, 1996.
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 three months ended
March 31, 1995, the limited partners received distributions of $100,000 ($0.67
per unit) all of which represented a return of capital. The limited partners
received no cash distributions during the three months ended March 31, 1996.
NOTE 5. SUBSEQUENT EVENT
----------------
On May 7, 1996, the Partnership sold the Pinecrest manufactured home community
for approximately $795,000 (net of selling costs of $5,000). The Partnership
realized an accounting gain on the sale of approximately $120,000.
7
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WINDSOR PARK PROPERTIES 2
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(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
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March 31, 1996 as compared to December 31, 1995
- -----------------------------------------------
The Partnership's primary source of cash during the three months ended March 31,
1996 was from the operations of its investment properties. The primary use of
cash during the same period was for capital improvements.
In February 1996, the General Partners determined that it was in the best
interests of the limited partners to sell the Partnership's two remaining
properties. This decision was based primarily on the length of the holding
period of the properties and the fact that there are no indications of sustained
strengthening in the local economies.
On May 7, 1996, the Partnership sold the Pinecrest manufactured home community
for approximately $795,000 (net of selling cost of $5,000). The Partnership
realized an accounting gain on sale of approximately $120,000. The General
Partners intend to make a distribution of sales proceeds in May 1996.
The Partnership's only remaining investment property, the Edgewood community in
Oklahoma City, Oklahoma, is actively being marketed for sale. Upon the sale of
Edgewood, the timing of which cannot be determined, the Partnership will be
liquidated.
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
distributions to partners. The General Partners believe that the future sources
of cash are sufficient to meet the working capital requirements of the
Partnership until the final investment property is sold and the Partnership
liquidated.
Results of Operations
- ---------------------
Three months ended March 31, 1996 as compared to three months
- -------------------------------------------------------------
ended March 31, 1995
- --------------------
The Partnership realized net income of $10,500 ($0.07 per limited partnership
unit) for the three months ended March 31, 1996 and incurred a net loss of
$6,000 ($0.04 per limited partnership unit) for the three months ended March 31,
1995.
Rent and utilities revenues increased slightly from $117,200 in 1995 to $122,600
in 1996, corresponding to a slight increase in overall occupancy of the
Partnership's two remaining properties from 57% at March 31, 1995 to 60% at
March 31, 1996.
Interest income decreased from $8,400 in 1995 to $4,600 in 1996 due mainly to
lower cash balances maintained by the Partnership.
Property operating expenses increased from $98,500 in 1995 to $107,500 in 1996
due mainly to higher wage and utility costs.
Depreciation expense decreased from $17,000 in 1995 to $4,900 in 1996. The
depreciation of the
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Partnership's two remaining investment properties was discontinued in February
1996, following the General Partners' announcement that the properties were
being marketed for sale.
General and administrative expense decreased slightly from $18,800 in 1995 to
$18,000 in 1996.
9
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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
A Form 8-K (dated May 7, 1996) was filed with regards to the
Partnership's sale of the Pinecrest manufactured home community.
The items reported in this current report were Item 2 (acquisition of
disposition of asset) and Item 7 (financial statements, proforma
financial information and exhibits).
A summary of the financial information included in the report follows:
a) Proforma Balance Sheet of Windsor Park Properties 2 at December
31, 1995.
b) Proforma Statement of Operations of Windsor Park Properties 2 for
the year ended December 31, 1995.
10
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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.
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JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: May 10, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 416,100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,046,800
<DEPRECIATION> 2,265,600
<TOTAL-ASSETS> 1,216,500
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,159,900<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,216,500
<SALES> 0
<TOTAL-REVENUES> 140,900
<CGS> 0
<TOTAL-COSTS> 107,500
<OTHER-EXPENSES> 22,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,500
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,500
<EPS-PRIMARY> 0.07<F2>
<EPS-DILUTED> 0
<FN>
<F1> Limited and general partners equity.
<F2> Net income per limited partnership unit.
</FN>
</TABLE>
