<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1994 or
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period of to
COMMISSION FILE NUMBER 1-8898
MIP PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-1394207
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
2020 SANTA MONICA BLVD., SUITE #480
SANTA MONICA, CALIFORNIA 90404
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (310) 449-4444
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock ($.01 par value) American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
None None
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of registrant's voting shares held by non-
affiliates was $15,877,491 as of March 15, 1995.
Shares of common stock outstanding at March 15, 1995: 9,223,105
<PAGE>
MIP PROPERTIES, INC.
PART I
ITEM 1. BUSINESS
MIP Properties, Inc. (the "Company" or "MIP"), a Maryland Corporation
(formerly named Mortgage Investments Plus, Inc.), was formed on April 15, 1985
as a real estate investment trust under the applicable provisions of the
Internal Revenue Code. Under the Code, a real estate investment trust which
meets certain requirements is not subject to federal income tax if at least 95
percent of its taxable income is distributed.
The Company has investments in seven wholly-owned real estate properties and
three real estate joint ventures all located in California. The Company's
diversified portfolio consists of office, industrial and retail projects. The
following table summarizes the Company's investment portfolio at December 31,
1994:
INVESTMENT PORTFOLIO
DECEMBER 31, 1994
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MIP BOOK VALUE
BEFORE RESERVE
FOR LOSSES 1994 CASH FLOW THIRD PARTY 1994
WHOLLY- NUMBER OF PERCENT ---------------- BEFORE LOAN DEBT CASH FLOW
OWNED PROPERTIES PROPERTY TYPE TENANTS LEASED EQUITY LOAN DEBT SERVICE(A) AMOUNT(B) SERVICE(C) TO MIP(F)
- - ---------------- --------------- --------- ------- -------- ------ --------------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Irwindale
Executive Plaza Office 6 82% $ 2,498 $ -- $ 171 $ -- $ -- $ 561(D)
Irwindale, CA 40,000 Sq. Ft.
Retail 3 80%
13,300 Sq. Ft.
Long Beach
Building Office 26 80% 5,158 -- 553 2,495 170 383
Long Beach, CA 125,000 Sq. Ft. May-99 P + 4%
Northbay
Industrial Park Industrial 1 79% 6,128 -- 512 1,196 84 405
Petaluma, CA 120,500 Sq. Ft. Jan-96 P + 1.5%
Northbay
Industrial Park Land N/A N/A 2,617 -- (35) -- -- (35)
Petaluma, CA 11.20 Acres
San Dimas
Corporate
Center Industrial 2 100% 6,474 -- 847 -- -- 847
San Dimas, CA 75,000 Sq. Ft.
Sunwest Retail
Plaza Retail 7 92% 2,245 -- 284 1,416 117 139
San Bernardino,
CA 21,300 Sq. Ft. Jul-95 P + 1.5%
Sunwest
Professional
Park Land N/A N/A 1,426 -- (13) -- -- (13)
San Bernardino,
CA 4.27 Acres
---------------- ------
26,546 -- 2,287
JOINT VENTURES
--------------
Harbor Point Retail 2 93% 357 6,100 845 -- -- 845
Los Angeles, CA 150,000 Sq. Ft.
Occidental Plaza Office 1 100% 123 -- 1,809 12,202 Cash Flow --
Bakersfield, CA 125,600 Sq. Ft. Feb-96 9.50%
Shorebreeze
(Phase I) Office 8 100% 2,238 -- 2,052 15,497 Cash Flow --
Redwood City,
CA 113,000 Sq. Ft. Jun-95 9.50%
Shorebreeze
(Phase II) Office 7 100% 3,548 3,030(E) 1,968 15,187 Cash Flow --
Redwood City,
CA 115,600 Sq. Ft. Jun-95 LIBOR + 3.25%
or 9.56%
---------------- ------
6,266 9,130 845
----------------
Total Investment 32,812 9,130
Less Reserve For
Losses (8,562)
--------
Total Net Real Estate Investments and
Loans $ 33,380
========
------
Total Portfolio Cash Flow to MIP $3,132
======
</TABLE>
- - -------
(A) Amounts represent cash operating revenues less operating expenses and are
before depreciation, amortization, debt service, capital items and
reserves. Amounts do not necessarily represent cash flow in accordance
with generally accepted accounting principles.
(B) Date refers to maturity.
(C) Includes principal amortization.
(D) Includes approximately $390 related to a third party rent subsidy.
(E) Classified as a non-earning loan.
(F) Amounts represent net cash received from each investment or the net cash
outflow for each investment.
1
<PAGE>
<TABLE>
<CAPTION>
RENTABLE LEASED
SQUARE SQUARE
PORTFOLIO PROPERTY TYPE FEET PERCENT FEET PERCENT
- - ----------------------- -------- ------- ------- -------
<S> <C> <C> <C> <C>
Office......................................... 519,200 58% 487,200 94%
Industrial..................................... 195,500 22% 169,800 87%
Retail......................................... 184,600 20% 170,000 92%
------- ---- ------- ---
Total Portfolio.............................. 899,300 100% 827,000 92%
======= ==== ======= ===
</TABLE>
<TABLE>
<CAPTION>
RENTABLE LEASED
SQUARE FEET
PORTFOLIO LEASING STATISTICS FEET SQUARE PERCENT
- - ---------------------------- -------- ------- -------
<S> <C> <C> <C>
Wholly-Owned Properties................................ 395,100 332,800 84%
Joint Ventures......................................... 504,200 494,200 98%
------- ------- ---
Total Portfolio...................................... 899,300 827,000 92%
======= ======= ===
</TABLE>
WHOLLY-OWNED PROPERTY INVESTMENTS:
Irwindale Executive Plaza consists of a two-story office building and a
single story retail/service center located approximately 15 miles east of
downtown Los Angeles in Irwindale. The project is currently 81 percent leased
to nine tenants on relatively short term leases, typical in this market, and is
managed by a third party management company.
Long Beach Office Building is located in the heart of downtown Long Beach.
The building is 80 percent leased to 26 tenants, including a new restaurant and
billiard club which is currently scheduled to open in the Spring of 1995. MIP
acquired title to this project via foreclosure in January 1994. The project is
managed by a third party management company.
Northbay Industrial Building consists of a two-story industrial building in
Petaluma, California. The building is 71 percent leased to Sola Optical USA,
Inc. ("Sola") through January 2000. Sola is currently leasing an additional 8
percent of the building on a month-to-month basis. The Company manages the
property.
Northbay Industrial Park Land is 11 acres of developable land in a planned
industrial community in Petaluma, California. The land is currently being
marketed for sale.
San Dimas Corporate Center is a fully leased duplex industrial building
approximately 20 miles east of downtown Los Angeles in San Dimas. TRW Technar,
Inc. occupies 59 percent of the building until February, 1997. The remaining 41
percent of the building is leased to Magellan Systems Corporation until August
1996. The Company manages the property.
Sunwest Retail Plaza is a convenience retail center located in San
Bernardino, California. The project is 92 percent leased to seven tenants with
the largest tenant's lease expiring in 2012. The project is managed by a third
party management company.
Sunwest Land is an unimproved 4.27 acre parcel in the midst of several mid-
rise office buildings, near the Sunwest Retail Plaza in San Bernardino. The
property is currently being marketed for sale.
JOINT VENTURE INVESTMENTS:
Harbor Point is a single building retail property located approximately 15
miles from downtown Los Angeles in Gardena. The project is 93 percent leased
primarily to The Home Depot, Inc., one of the nation's leading retail home
improvement centers. Their lease runs through January 2000. MIP currently
receives all cash flow from this property. MIP is a 50 percent limited partner
and the lender in this project. The project is managed by an affiliate of the
general partner.
2
<PAGE>
Occidental Plaza is a suburban mid-rise office building with an adjacent 5.5
acre parcel of developable land in Bakersfield. The building is 100 percent
leased to Occidental Petroleum through September 1999. Currently, all cash flow
is being remitted to the third party lender for interest and principal
reduction. MIP is a 50 percent limited partner in this project. The project is
managed by an affiliate of the general partner.
Shorebreeze is a waterfront office complex consisting of two suburban mid-
rise office buildings in Redwood City, just south of the San Francisco
International Airport. This project is 100 percent leased to national and local
tenants with leases expiring periodically over the next ten years. Currently,
all cash flow is being remitted to the two third party lenders for interest and
principal reduction. MIP is a 50 percent limited partner in this project. The
project is managed by an affiliate of the general partners.
STRATEGIC ALTERNATIVES:
In April 1994, the Company announced the retention of investment bankers to
assist MIP in maximizing stockholder value. Some of the strategies that the
Board of Directors has considered to accomplish this goal include a merger,
sale of MIP or a significant acquisition by MIP. In September 1994, the Company
announced plans to enter into a non-binding letter of intent to be acquired by
an affiliate of K/B Realty Advisors for $2.525 per share. Subsequently, in
December 1994, the Company announced that merger negotiations with K/B Realty
Advisors had reached an impasse. Additionally, in February 1995, the Company
announced that the Board of Directors rejected a proposal to purchase the
Company for $1.83 per share in cash and $0.695 per share in notes from MIP's
largest stockholder, Palm Finance Corporation. The Company continues to believe
that a sale, merger or business combination is a desirable option to achieve
the goal of maximizing stockholder value and is actively pursuing such
opportunities.
COMPETITION AND ECONOMIC ENVIRONMENT:
All of the Company's real estate investments are located in California which
has been significantly impacted by the continued real estate recession. The
Company's real estate investments compete with similar properties located in
their respective markets on the basis of rents charged, services provided,
location and the physical improvements. Currently, the Company's portfolio is
92 percent leased overall. Approximately 4 and 16 percent of the existing
leases in MIP's portfolio, on a square foot basis, expire in 1995 and 1996,
respectively. MIP does not anticipate a material impact upon operations or
liquidity with regard to expiring leases and lease rollovers and management
plans to continue to aggressively renew leases to minimize the risk of vacant
space. However, outside factors such as business contractions of significant
tenants and the overall health of the economy may impact the Company's success.
MIP's mortgage debt matures in 1995, 1996, and 1999 and certain of the
Company's joint venture investments have debt that matures in 1995 and 1996.
Although management believes that these loans can be replaced or extended with
equal or more favorable financing, there has been in the recent past and
continues to be limited availability of credit which could impede the Company's
ability to obtain financing on acceptable terms or at all.
OTHER INFORMATION:
The Company operates only in one business segment and its operations are not
seasonal. Additionally, in 1994, approximately 15 percent of the Company's
gross revenues were generated by its loan to the Harbor Point joint venture
which owns a building substantially leased to Home Depot and approximately 12
percent of the Company's gross revenues were generated from the Company's
investment in the Northbay Industrial Building which is leased to Sola Optical
USA, Inc. In 1993, revenues from the Company's loans relating to Harbor Point,
Casas Lindas Apartments, Hacienda Promenade and Irwindale Executive Plaza and
from the Sola Optical USA, Inc., lease at the Northbay Building and TRW Technar
lease at San Dimas Corporate Center approximate 20%, 15%, 13%, 12%, 16% and 10%
of gross revenues, respectively. In 1992, revenues from the Company's loans
relating to Harbor Point, Casas Lindas Apartments, Hacienda Promenade and from
the Sola Optical USA, Inc., lease at the Northbay Building and TRW Technar
lease at San Dimas Corporate Center approximated 21%, 12%, 12%, 16% and 10% of
gross revenues, respectively.
3
<PAGE>
As of March 15, 1995, the Company had four employees.
ITEM 2. PROPERTIES
The Company leases executive and administrative offices. They are located at
2020 Santa Monica Blvd., Suite #480, Santa Monica, California, 90404. The
Company does not own any real property for use in connection with its
administration. See table in Item 1. for real estate investment property.
ITEM 3. LEGAL PROCEEDINGS
At the present time, the Company is not a party to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Price and Dividend Data
<TABLE>
<CAPTION>
1994 HIGH LOW DIVIDENDS
---- ------- -------- ---------
<S> <C> <C> <C>
First Quarter.................................... $1 7/16 $1 1/16 --
Second Quarter................................... 2 1/16 1 3/16 --
Third Quarter.................................... 2 1/4 1 11/16 --
Fourth Quarter................................... 2 1/4 1 3/4 --
<CAPTION>
1993 HIGH LOW DIVIDENDS
---- ------- -------- ---------
<S> <C> <C> <C>
First Quarter.................................... $1 7/16 $ 5/8 --
Second Quarter................................... 1 1/4 1 --
Third Quarter.................................... 1 3/16 5/8 --
Fourth Quarter................................... 1 1/4 11/16 --
</TABLE>
Set forth above for the quarters indicated are the high and low prices of the
Company's common stock and the per share cash dividend declared in each
quarter. No cash dividend was declared in 1994 or 1993. During 1993 and through
August 1994, when the Company repaid its corporate debt, the Company was
precluded from paying a dividend unless such dividend was required for the
Company to retain its status as a real estate investment trust. Presently, the
Company does not anticipate paying any dividends in 1995.
The Company's common stock is listed on the American Stock Exchange. The
trading symbol is "MIP". On March 15, 1995, the closing price of the stock was
$1.81 .
There were 909 stockholders of record at December 31, 1994.
4
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------------------
1994 1993 1992 1991 1990
------- ------- -------- -------- --------
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 5,583 $ 4,111 $ 3,976 $ 6,631 $ 9,171
Expenses........................ 7,016 11,908 19,041 29,360 7,892
Income (Loss) Before
Extraordinary Items............ (1,433) (7,797) (15,065) (22,729) 1,279
Extraordinary Gain on Debt
Forgiveness.................... 4,296 -- -- -- --
Extraordinary Gain on
Foreclosure.................... -- -- 1,022 -- --
Net Income (Loss)............... 2,863 (7,797) (14,043) (22,729) 1,279
Income (Loss) Before
Extraordinary Items Per Share.. (0.16) (0.86) (1.67) (2.52) 0.14
Extraordinary Gain on Debt
Forgiveness Per Share.......... 0.47 -- -- -- --
Extraordinary Gain on
Foreclosure Per Share.......... -- -- 0.11 -- --
Net Income (Loss) Per Share..... 0.31 (0.86) (1.56) (2.52) 0.14
Dividends Paid Per Share........ -- -- -- -- 0.40
Total Real Estate Investments,
Net............................ 33,380 48,827 57,926 90,143 114,896
Total Assets.................... 35,907 51,752 66,801 91,940 117,458
Corporate Debt.................. -- 21,971 28,953 28,928 31,730
Mortgage Debt................... 5,107 2,026 534 13,300 13,300
Stockholders' Equity............ 30,125 27,186 34,841 48,884 76,613
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MIP Properties, Inc., formerly named Mortgage Investments Plus, Inc. (the
"Company" or "MIP") was incorporated in April, 1985 and commenced operations on
July 9, 1985, after completing an initial public offering of its common stock.
The Company is engaged in the business of making real estate investments.
FINANCIAL CONDITION
During 1994, total real estate investments decreased by $15.4 million and
total liabilities decreased by $18.8 million. This change reflects the sale of
certain assets and the refinancing of others which generated funds to
completely repay MIP's $22 million corporate debt at a net discount of
approximately $4.3 million. Additionally, in 1994 the Company's reserve for
losses decreased by approximately $12.7 million. This decrease is primarily the
result of the write-off of reserves relating to the foreclosure of the Long
Beach Building for approximately $7.5 million, the negotiated settlement of the
Greenhouse Marketplace note for approximately $3.4 million, the third party
foreclosure relating to MIP's joint venture investment 580 Marketplace for $1
million, and to the sales of the Northbay Land for approximately $0.8 million.
No provision for losses were recorded in 1994.
LIQUIDITY AND CAPITAL RESOURCES
Based on current information and market conditions, management believes that
for the next twenty-four months there will be sufficient cash from operations
to operate the Company. MIP's mortgage debt, including the debt at the joint
venture level, matures in 1995, 1996, and 1999. Funds to repay mortgage debt
are expected to be generated from the refinancing of existing debt, sales of
certain assets, and current cash flow. Additionally, approximately 4 and 16
percent of the existing leases in MIP's portfolio, on a square foot basis,
expire in 1995 and 1996, respectively. MIP's ability to successfully manage
tenant turnover and improve the overall leasing of the portfolio is contingent
on various external factors such as business contractions of significant
tenants and a more competitive marketplace. Although MIP anticipates a
satisfactory outcome regarding refinancing and re-leasing its projects, MIP may
be negatively impacted by the conditions in the real estate and financial
markets in general.
5
<PAGE>
At December 31, 1994, the Company had an unfunded commitment of approximately
$2.2 million to an existing joint venture. If required, management expects that
this commitment would be funded from available cash, future cash flow and from
additional mortgage debt.
Both the Company's investment portfolio and its debt are sensitive to
fluctuations in the prime rate. The weighted average interest rate for the
Company's mortgage debt and corporate debt was 10.01 percent and 8.02 percent,
respectively, for the year ended December 31, 1994.
Cash flows from operating activities increased significantly in 1994
primarily due to the timing of payments made on interest due on the corporate
debt. In February 1993, the Company paid approximately $1.6 million of interest
relating to 1992. Excluding the above, the increase in cash flows from
operating activities can be attributed to lower interest expense from reduced
outstanding amounts of debt and increased cash flow from the Long Beach
Building and Irwindale Executive Plaza partly relating to MIP obtaining title
to the projects in January 1994 and October 1993, respectively, and to improved
leasing at the Long Beach Building. Significant change from cash flows from
operating activities is not expected in the future unless the debt at the joint
venture level is restructured in a fashion that would allow MIP to receive cash
flow from its investments.
Cash flows from investing activities increased due to the various asset sales
in 1994. Management expects cash outflows from investing activities to be
limited in the future because of the Company's current decision to minimize
additional investment and the Company's limited unfunded obligations. The cash
flows used in financing activities in 1994 reflect the repayment of corporate
debt with the proceeds of the disposition of investments, offset by the
proceeds from the new mortgage debt.
The Company believes that it has operated so as to qualify as a real estate
investment trust under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended. In order to maintain this qualification, the Company must pay
at least 95 percent of its taxable income in dividends. The Company currently
anticipates having a tax loss for reporting purposes for the year ended
December 31, 1994, and as such no dividends were declared for the year ended
December 31, 1994.
Although certain aspects of the economy have improved, management believes
that continued uncertainty will impact a broad range of industries, including
real estate. In 1995, MIP may continue to be negatively impacted by external
factors such as its lessees' and partners' ability to meet obligations, the
limited availability of credit, business contractions of significant tenants,
and a more competitive marketplace. Accordingly, MIP's cost of credit may
increase and it may be necessary for the Company to commit additional funds to
certain projects.
RESULTS OF OPERATIONS
Fiscal Year Ended December 31, 1994 Compared to Fiscal Year Ended December 31,
1993
Consolidated net income for the year ended December 31, 1994, was
approximately $2.9 million or $0.31 per share, compared to a consolidated net
loss for the year ended December 31, 1993 of approximately $7.8 million or
$0.86 per share.
Included in the results for 1994 is an extraordinary gain on debt forgiveness
of approximately $4.3 million or $0.47 per share related to discounts earned
from the early repayment of MIP's corporate debt. Additionally, earnings
increased due to operations from wholly-owned properties, lower joint venture
losses and lower interest and corporate operating expenses, offset by costs of
pursuing strategic alternatives. The consolidated loss of $7.8 million in 1993
included a provision for losses on investments of $6.25 million or $0.69 per
share.
Interest income decreased in 1994 primarily due to the sale of the $4.4
million Hacienda Promenade mortgage loan in June which resulted in a loss on
disposition of investments of $1.5 million.
6
<PAGE>
Rental income, rental operating expenses, and depreciation and amortization
increased in 1994 due to the acquisitions via foreclosure of the Irwindale
Executive Plaza in October 1993 and the Long Beach Building in January 1994,
and to the acquisition of the remaining 50 percent of the Ontario Airport
Business Park joint venture in December 1993. In fiscal 1993, prior to MIP
acquiring title to these properties, cash receipts from these investments were
not recognized as income. The increases in rental income, rental operating
expenses and depreciation and amortization were offset by the sales of Casas
Lindas Apartments in August 1994, which resulted in a gain on the disposition
of investments of $1.5 million and Ontario Airport Business Park in December
1994, which resulted in a nominal gain.
Joint venture losses decreased in 1994 primarily due to Ontario Airport
Business Park becoming wholly- owned in December 1993, the sale of MIP's
interest in the Fort Sutter Medical joint venture in August 1993, and to
increased rental income related to the Shorebreeze joint venture.
Interest expense in 1994 was lower due to the significant decrease in debt.
MIP's corporate debt was restructured in December 1993. The new agreement
provided for MIP to earn a discount from the face amount of the note upon
prepayment. By August 1994, the Company had generated funds to retire the
corporate debt from the net proceeds of asset sales and from the financing of
Sunwest Retail Plaza, the Long Beach Building and the Northbay Building. The
net proceeds of approximately $17.1 million from these transactions were used
to prepay the corporate debt generating approximately $4.8 million in discount
from the face amount, offset by the write-off of deferred financing costs of
approximately $0.5 million.
Corporate operating expenses decreased primarily due to a lower directors'
and officers' liability insurance premium. Additionally, no costs were incurred
in 1994 relating to MIP's Park in the Valley mortgage loan investment which was
fully written off in 1993. These decreases were offset by increased
compensation relating to the Long-Term Incentive Compensation Plan. Cash
operating expenses in 1994 approximated 2.9 percent of average invested assets.
Additionally, costs of pursuing strategic alternatives relate to investment
banking, legal, and consulting fees incurred in pursuit of MIP's stated goal of
reviewing strategic alternatives.
RESULTS OF OPERATIONS
Fiscal Year Ended December 31, 1993 Compared to Fiscal Year Ended December 31,
1992
For the year ended December 31, 1993, consolidated net loss was approximately
$7.8 million or $0.86 per share. Consolidated net loss for the year ended
December 31, 1992 was approximately $14.0 million or $1.56 per share, including
an extraordinary gain on foreclosure of approximately $1.0 million or $.11 per
share, relating to the Campus at Carlsbad project.
The decrease in the 1993 net loss is primarily the result of the lower
provision for losses on investments of $6.25 million or $0.69 per share versus
$12.5 million or $1.39 per share in 1992 and the $75,700 gain from the sale of
Miramar Building A in 1993 versus the $500,000 gain in 1992 from the
disposition of a portion of the Company's joint venture interest in San Diego
Corporate Center. Additionally, earnings increased from improved operations
from the Company's wholly-owned properties and joint venture investments and
lower interest expense. These increases were offset by lower interest income
and increased corporate operating expenses.
Rental income increased primarily due to the expiration of a significant
lease concession at San Dimas in early 1993, improved efforts in rent
collection, and the acquisitions of Irwindale Executive Plaza and Ontario
Airport Business Park in October, 1993 and December, 1993, respectively. These
increases were offset by the loss of revenue related to Campus at Carlsbad, a
158,000 square foot office and research and development complex, which was
taken over by its lender in June, 1992. The decreases in rental operating
expenses and depreciation and amortization were primarily related to Campus at
Carlsbad and improved
7
<PAGE>
operating efficiencies, which were offset by the acquisitions of Irwindale
Executive Plaza and Ontario Airport Business Park.
The decrease in interest expense primarily relates to the foreclosure by the
third party lender on the $13.3 million loan at Campus at Carlsbad discussed
above and lower outstanding corporate debt.
Joint venture losses decreased primarily due to the Company ceasing to
recognize joint venture losses in the 1993 financial statements on certain of
its joint ventures as a result of the related joint venture investment account
having been reduced to zero and overall improved joint venture operations.
Joint venture return decreased because excess cash flow from certain joint
ventures was not distributed and was instead used to reduce debt at the joint
venture level.
Interest income was lower due to the treatment of cash receipts as principal
paydowns rather than interest income for the Long Beach Building and Irwindale
Executive Plaza loans.
Corporate operating expenses increased primarily due to the impact of the
Directors Stock Plan and the Long-Term Incentive Compensation Plan for key
employees that were approved by the stockholders in July, 1993, as well as a
higher directors' and officers' liability insurance premium. These increases
were offset by lower costs relating to the Park in the Valley mortgage loan
investment which was written off in 1993. Cash operating expenses in 1993
approximated 2.2 percent of average invested assets.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants................................ 9
Consolidated Balance Sheets............................................. 10
Consolidated Statements of Operations................................... 11
Consolidated Statements of Stockholders' Equity......................... 12
Consolidated Statements of Cash Flows................................... 13
Notes to Consolidated Financial Statements.............................. 14
</TABLE>
8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Directors of MIP Properties, Inc.:
We have audited the accompanying consolidated balance sheets of MIP
Properties, Inc. (a Maryland corporation) and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MIP Properties, Inc. and
subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Los Angeles, California
January 27, 1995
9
<PAGE>
MIP PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Real Estate Investments:
Investments in Joint Ventures.................... $ 6,266,100 $ 7,575,100
Loans to Joint Ventures.......................... 6,100,000 6,100,000
Mortgage Loan.................................... -- 4,565,900
Non-Earning Loans................................ 3,030,400 18,992,400
Land............................................. 5,827,800 6,552,200
Buildings and Improvements (net of accumulated
depreciation of $2,389,100 and $2,515,300, as of
December 31, 1994 and 1993, respectively)....... 16,674,600 20,329,800
Land Held for Sale............................... 4,042,800 5,957,900
------------ ------------
41,941,700 70,073,300
Reserve for Losses............................... (8,562,000) (21,246,000)
------------ ------------
33,379,700 48,827,300
Cash and Cash Equivalents.......................... 1,799,300 1,390,900
Other Assets....................................... 728,100 1,533,500
------------ ------------
$ 35,907,100 $ 51,751,700
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Corporate Debt................................... $ -- $ 21,971,400
Mortgage Debt.................................... 5,107,000 2,026,400
Accounts Payable and Other Liabilities........... 674,700 567,800
------------ ------------
5,781,700 24,565,600
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock $.01 Par Value, 25,000,000 Shares
Authorized, No Shares Outstanding............... -- --
Common Stock, $.01 Par Value, 75,000,000 Shares
Authorized, 9,206,437 Shares Outstanding in
1994, 9,161,962 Shares Outstanding in 1993...... 92,100 91,600
Additional Paid-In Capital....................... 82,726,700 82,651,300
Accumulated Loss and Dividends Paid in Excess of
Net Income...................................... (52,693,400) (55,556,800)
------------ ------------
30,125,400 27,186,100
------------ ------------
$ 35,907,100 $ 51,751,700
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
10
<PAGE>
MIP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1994 1993 1992
----------- ------------ ------------
<S> <C> <C> <C>
Revenues:
Interest Income..................... $ 1,111,300 $ 1,538,700 $ 1,920,700
Rental Income....................... 4,731,400 3,035,800 2,876,800
Net Gain on Disposition of
Investments........................ 32,300 75,700 500,000
Joint Venture Losses................ (291,800) (564,600) (1,618,900)
Joint Venture Return................ -- 25,300 297,600
----------- ------------ ------------
5,583,200 4,110,900 3,976,200
Expenses:
Interest............................ 1,657,500 1,817,800 2,450,500
Rental Operating Expenses........... 1,774,500 855,100 1,054,200
Depreciation and Amortization....... 1,195,100 779,100 872,900
Corporate Operating Expenses........ 1,981,800 2,206,400 2,163,500
Costs of Pursuing Strategic
Alternatives....................... 407,100 -- --
Provision for Losses on Investments. -- 6,250,000 12,500,000
----------- ------------ ------------
7,016,000 11,908,400 19,041,100
Loss Before Extraordinary Items....... (1,432,800) ( 7,797,500) (15,064,900)
Extraordinary Gain on Debt
Forgiveness.......................... 4,296,200 -- --
Extraordinary Gain on Foreclosure..... -- -- 1,021,500
----------- ------------ ------------
Net Income (Loss)..................... $ 2,863,400 $( 7,797,500) $(14,043,400)
=========== ============ ============
Loss Before Extraordinary Items Per
Share................................ $ (0.16) $ (0.86) $ (1.67)
Extraordinary Gain on Debt Forgiveness
Per Share............................ 0.47 -- --
Extraordinary Gain on Foreclosure Per
Share................................ -- -- 0.11
----------- ------------ ------------
Net Income (Loss) Per Share........... $ 0.31 $ (0.86) $ (1.56)
=========== ============ ============
Dividends Paid Per Share.............. $ -- $ -- $ --
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
11
<PAGE>
MIP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
-----------------------------------------------
ACCUMULATED
NUMBER OF LOSS AND
SHARES OF DIVIDENDS
COMMON ADDITIONAL PAID IN TOTAL
STOCK COMMON PAID-IN EXCESS OF STOCKHOLDERS'
OUTSTANDING STOCK CAPITAL NET INCOME EQUITY
----------- ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1991................... 9,020,000 $90,200 $82,509,700 $(33,715,900) $ 48,884,000
Net Loss.............. -- -- -- (14,043,400) (14,043,400)
--------- ------- ----------- ------------ ------------
Balance at December 31,
1992 .................. 9,020,000 90,200 82,509,700 (47,759,300) 34,840,600
Stock Issuance........ 141,962 1,400 141,600 -- 143,000
Net Loss.............. -- -- -- (7,797,500) (7,797,500)
--------- ------- ----------- ------------ ------------
Balance at December 31,
1993................... 9,161,962 91,600 82,651,300 (55,556,800) 27,186,100
Stock Issuance........ 44,475 500 75,400 -- 75,900
Net Income............ -- -- -- 2,863,400 2,863,400
--------- ------- ----------- ------------ ------------
Balance at December 31,
1994................... 9,206,437 $92,100 $82,726,700 $(52,693,400) $ 30,125,400
========= ======= =========== ============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
12
<PAGE>
MIP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1994
---------------------------------------
1994 1993 1992
------------ ----------- ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss)................... $ 2,863,400 $(7,797,500) $(14,043,400)
Extraordinary Gain on Debt
Forgiveness........................ (4,296,200) -- --
Depreciation and Amortization....... 1,195,100 779,100 872,900
Equity in Joint Venture Losses...... 291,800 564,600 1,618,900
Cash Received from Rent Subsidy..... 390,500 -- --
Joint Venture Distributions......... -- 270,700 50,000
Provision for Losses on Investments. -- 6,250,000 12,500,000
Net Gain on Disposition of
Investments........................ (32,300) (75,700) (500,000)
Extraordinary Gain on Foreclosure... -- -- (1,021,500)
Net Change in Other Assets and
Accounts Payable and Other
Liabilities........................ 458,600 (997,800) 2,157,500
------------ ----------- ------------
Net Cash Provided By (Used In)
Operating Activities................. 870,900 (1,006,600) 1,634,400
------------ ----------- ------------
Cash Flows from Investing Activities:
Mortgage Loan Disbursed............. (107,000) (103,400) --
Non-Earning Loans Repaid............ -- 311,400 268,000
Investment in Buildings and
Improvements....................... (258,400) (67,200) (77,000)
Net Proceeds from Disposition of
Investments........................ 13,887,100 2,360,800 5,603,700
Joint Venture Equity Repaid......... 17,200 -- (6,700)
------------ ----------- ------------
Net Cash Provided By Investing
Activities........................... 13,538,900 2,501,600 5,788,000
------------ ----------- ------------
Cash Flows from Financing Activities:
Paydowns of Corporate Debt.......... (17,081,900) (8,369,500) --
Proceeds from Corporate Debt........ -- 422,700 24,700
Paydowns of Mortgage Debt........... (13,500) (800) --
Proceeds from Mortgage Debt......... 3,094,000 -- --
Proceeds from Joint Venture Debt
Refinancing........................ -- -- 291,200
------------ ----------- ------------
Net Cash (Used In) Provided By
Financing Activities................. (14,001,400) (7,947,600) 315,900
------------ ----------- ------------
Net Increase (Decrease) in Cash....... 408,400 (6,452,600) 7,738,300
Cash and Cash Equivalents at Beginning
of the Year.......................... 1,390,900 7,843,500 105,200
------------ ----------- ------------
Cash and Cash Equivalents at End of
the Year............................. $ 1,799,300 $ 1,390,900 $ 7,843,500
============ =========== ============
Cash Interest Paid.................... $ 1,383,800 $ 3,177,300 $ 223,800
============ =========== ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
13
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. ORGANIZATION
MIP Properties, Inc. ("the Company" or "MIP"), formerly named Mortgage
Investments Plus, Inc., a Maryland corporation, was formed on April 15, 1985
for the purpose of making real estate investments. Operations commenced on July
9, 1985 after completing an initial public offering of its common stock.
MIP invests in real estate properties and real estate joint ventures in
California. The Company's diversified portfolio of investments may be impacted
by external factors such as the limited availability of credit, business
contractions of tenants and an increasingly competitive marketplace.
Specifically, some properties are facing tenant turnover and the maturity of
third party loans in 1995 and 1996. Management carefully evaluates each
property individually before determining whether or not to commit additional
funds to enhance or maintain the value of an investment.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Company are as follows:
A. Investments in Joint Ventures
Investments in which MIP does not have a controlling interest are accounted
for by the equity method. Under the terms of the various joint venture
agreements, the Company is allocated between 20 and 100 percent of net losses
and between 50 and 100 percent of net income. Joint venture losses are
recognized in the financial statements until the related joint venture
investment account is reduced to a zero balance. Losses incurred after the
joint venture investment account is reduced to zero are not recognized.
Distributions from joint ventures are accounted for as a return of capital
until the investment balance is reduced to zero. Subsequent distributions
received after the investment account has been reduced to zero are recognized
as income.
Joint ventures in which the Company has a controlling interest are
consolidated. Through August 1994, the Company had an investment in an 80
percent owned joint venture and under the terms of the joint venture agreement,
as amended, the Company recorded 100 percent of the net loss. All significant
intercompany accounts and transactions have been eliminated in consolidation.
B. Revenue Recognition
In 1994 approximately 15% of the Company's gross revenues were generated by
its loan to the Harbor Point joint venture and approximately 12% of the
Company's gross revenues were generated from the single tenant at the Northbay
Industrial Building. In 1993, revenues from the Company's loans relating to
Harbor Point, Casas Lindas Apartments, Hacienda Promenade and Irwindale
Executive Plaza and from the Sola Optical USA, Inc., lease at the Northbay
Building and TRW Technar lease at San Dimas Corporate Center approximated 20%,
15%, 13%, 12%, 16% and 10% of gross revenues, respectively. In 1992, revenues
from the Company's loans relating to Harbor Point, Casas Lindas Apartments,
Hacienda Promenade and from the Sola Optical USA, Inc., lease at the Northbay
Building and TRW Technar lease at San Dimas Corporate Center approximated 21%,
12%, 12%, 16% and 10% of gross revenues, respectively.
In general, rental income from operating leases is recognized in income on a
straight-line basis over the period of the related lease agreement.
14
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Future minimum rental receipts from wholly-owned properties as of December
31, 1994, are as follows (in thousands):
<TABLE>
<S> <C>
1995.............................. $3,854
1996.............................. 3,403
1997.............................. 2,278
1998.............................. 1,934
1999.............................. 1,667
Thereafter........................ 3,284
</TABLE>
Loan origination and commitment fees are deferred and recognized as interest
income over the term of the related loan in accordance with Statement of
Financial Accounting Standards No. 91. Deferred loan fees are classified as a
reduction of the related loan balance in the accompanying financial statements.
The Company does not recognize income when collection of such income is
subject to material uncertainties. Such unrecognized income is recorded when
received.
C. Real Estate
Land and buildings and improvements are carried at the lower of cost less
accumulated depreciation relating to the buildings and improvements or net
realizable value. Land held for sale is carried at the lower of cost or fair
market value. Properties acquired via foreclosure or deed in lieu of
foreclosure are carried at the lower of cost or fair market value on the date
of acquisition. See also D below. Depreciation is computed using the straight
line method over the estimated useful life of 40 years for buildings.
Improvements are capitalized and depreciated over the shorter of the remaining
useful life of the building or the improvement. Repairs and maintenance are
expensed as incurred.
D. Reserve for Losses
Management periodically evaluates the Company's investment portfolio for
realizability. In performing its evaluation, management assesses the
recoverability of investments by comparing the carrying amount of the
investment with its estimated net realizable value. Based on these evaluations,
the Company's investment portfolio is stated at the lower of cost or net
realizable value, or in the case of land held for sale, fair market value, as
of December 31, 1994 and 1993.
Estimated net realizable value differs from market value in that, among other
things, market value assumes a sale under current market conditions, considers
a potential purchaser's requirement for future profit and discounts the timing
of estimated future cash receipts, whereas, net realizable value is defined as
the estimated selling price in the ordinary course of business less estimated
costs to complete, hold and dispose of the property. The Company's valuation of
its investment portfolio by comparison of the carrying amount of the investment
to net realizable value is based on the Company's present plans for each
investment, the financial ability of the Company to carry out such plans,
management's judgments regarding borrowers' and partners' ability to meet
obligations, the estimated operating results of the investment, the cost of
credit and future economic conditions. Based on the Company's intent and
ability to support its investments, as well as other factors noted, the Company
made provisions for losses on investments and charged to expense $6,250,000,
and $12,500,000 in 1993 and 1992, respectively. No provisions for losses were
recorded in 1994. As conditions change, further adjustments may be deemed
necessary.
The adjustments recorded and the year end balances are based on the
assumption that the Company is a going concern and that its assets will be
operated and disposed of in the ordinary course of business. Several
15
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
of the properties have leases expiring and outstanding loans maturing in 1995
and 1996. See Notes 9, 10, and 11. The realization of the Company's
investments in these properties will depend on the Company's ability to either
successfully renegotiate the current terms of such outstanding loans or obtain
alternative financing and the lease-up of space upon tenant turnover. If the
Company were forced to dispose of its investments in a liquidation mode rather
than realizing the values in the ordinary course of business, the values
attained may be significantly less than those reflected herein.
The activity in reserve for losses for the years ended December 31, 1994,
1993, and 1992 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Balance, Beginning of the Year................. $21,246 $28,993 $18,250
Provision for Losses........................... -- 6,250 12,500
Write-offs..................................... (12,684) (13,997) (1,757)
------- ------- -------
Balance, End of the Year....................... $ 8,562 $21,246 $28,993
======= ======= =======
</TABLE>
The write-offs in 1994 against the previously recorded reserves primarily
relate to the foreclosure of the Long Beach Building for approximately $7.5
million, the negotiated settlement of the Greenhouse Marketplace note for
approximately $3.4 million, the third party foreclosure relating to MIP's
joint venture investment 580 Marketplace for $1 million, and to the sales of
the Northbay Land for approximately $0.8 million. The write-offs in 1993
relate to the Park-in-the Valley loan for approximately $12 million and the
foreclosure of Irwindale Executive Plaza for approximately $1.9 million. The
write-offs in 1992 relate to the sale of a portion of San Dimas Corporate
Center.
E. Non-Earning Loans
Non-earning loans are those for which management has discontinued accrual of
interest because there exists reasonable doubt as to the full and timely
collection of either principal or interest or such loans have become
significantly past due with respect to principal or interest. Interest
accruals may be continued for loans that have become contractually past due
when such loans are well secured and in the process of collection, and
accordingly, management has determined such loans to be fully collectible as
to both principal and interest. For this purpose, loans are considered well
secured if they are collateralized by property having an estimated net
realizable value in excess of the amount of principal and accrued interest
outstanding. All payments received are first applied to unpaid principal and
then to accrued but uncollected interest.
F. Corporate Operating Expenses
A breakdown of corporate operating expenses for the years ended December 31,
1994, 1993, and 1992, is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Compensation(1)..................................... $ 816 $ 663 $ 562
Directors' and Officers' Insurance.................. 498 740 660
Park in the Valley Carrying Costs(2)................ -- 114 393
Other(1)............................................ 667 689 549
------ ------ ------
$1,981 $2,206 $2,164
====== ====== ======
</TABLE>
- - --------
(1) See Note 5.
(2) Costs relate to the Company's Park in the Valley mortgage loan which was
written off in 1993.
16
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
G. Reclassifications
Certain prior year amounts have been reclassified to conform with the 1994
presentation.
3. PER SHARE DATA
Net income per share is based on the weighted average number of common shares
outstanding of 9,231,285 for 1994, 9,028,217 for 1993, and 9,020,000 for 1992.
Common shares granted and vested but deferred pursuant to the Directors Stock
Plan and the Long-Term Incentive Compensation Plan are included in the weighted
average number of shares outstanding. Total shares issuable pursuant to the
Directors Stock Plan and the Long-Term Incentive Compensation Plan are excluded
from the weighted average number of shares outstanding for 1994 and 1993 as
their impact is not material and is antidilutive, respectively. Additionally,
fully diluted earnings per share are not presented because the effect of
outstanding options is either not material or is antidilutive.
4. CASH DIVIDENDS AND INCOME TAXES
No dividends were paid in 1994, 1993 or 1992. It is estimated that the
Company generated a federal income tax net operating loss of $0.94, $1.46, and
$0.14 per share in 1994, 1993 and 1992, respectively. As of December 31, 1994,
for federal income tax purposes, it is estimated that the Company had an
ordinary loss carryforward of approximately $26.3 million and a capital loss
carryforward of approximately $1.9 million.
Earnings and profits, which determine the taxability of dividends to
stockholders, differ from net income due to differences in the timing of the
recognition of certain income and expense items for tax reporting and for
financial reporting purposes.
The Company has operated at all times so as to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended.
Accordingly, no provision for income taxes has been made in the accompanying
consolidated financial statements.
The net difference in the tax basis and the reported amounts of the Company's
assets and liabilities as of December 31, 1994 is approximately $7.5 million.
The difference primarily relates to reserves for losses for financial statement
purposes which have not been deducted for tax purposes.
5. STOCKHOLDERS' EQUITY
On July 21, 1993, the stockholders approved a Long-Term Incentive
Compensation Plan for key employees covering 200,000 shares of common stock.
Under the Plan, stock awards totaling 200,000 shares have been granted. One
third of the shares granted vested on February 11, 1993, 1994 and 1995,
respectively. As of December 31, 1994, 133,333 shares had vested and 79,665 of
those shares were outstanding. Certain participants had elected to defer the
remaining 63,001 shares pursuant to the Plan.
Also on July 21, 1993, the stockholders approved the Directors Stock Plan
covering 240,000 shares of common stock. Under the Plan, the Company shall
issue common stock or stock credits, as defined in the Plan, to each non-
employee Director on September 1 of each year in an amount equal to $10,000
divided by the fair market value, as defined, of one share on such date. The
Plan, however, provided for the first issuance to be made on July 21, 1993. As
of December 31, 1994, 106,772 shares had been issued under the Directors Stock
Plan, and 10,492 shares had been deferred by the participants pursuant to the
Plan.
17
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
5. STOCKHOLDERS' EQUITY--(CONTINUED)
The Company has an Incentive Stock Option Plan and a Non-Qualified Stock
Option Plan (collectively, "the Plans"). The Board of Directors has reserved
400,000 shares of common stock of the Company which may be granted to eligible
persons under the plan. Options generally become exercisable at the rate of 20
percent per year, cumulatively, and are exercisable in full after five years.
The options outstanding at December 31, 1994 and 1993 were granted between May
2, 1985 and May 16, 1991 and expire ten years after the date of grant. In 1993
options for 20,000 shares of common stock were terminated. Summary information
at December 31, 1994, 1993 and 1992, is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Options Outstanding............................... 290,000 290,000 310,000
Options Exercisable............................... 288,000 287,000 306,000
Average Option Price Per Share.................... $3.35 $3.35 $3.32
</TABLE>
The Company has authorized 25,000,000 shares of preferred stock. The issuance
of preferred stock may be authorized from time to time by the Board of
Directors of the Company, without stockholder approval, in such series and with
such preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or other provisions, as determined
by the Board of Directors.
6. CORPORATE DEBT
On December 28, 1993, the Company's corporate debt was purchased by a new
lender and simultaneously restructured. The new Amended and Restated Credit
Agreement (the "Loan") was for approximately $22 million and was scheduled to
mature on June 28, 1997. The Loan was secured by most of the Company's assets
and bore interest at prime plus one percent. Additionally, the Loan allowed
prepayment of all or part of the principal at any time before maturity and
provided the Company the opportunity to earn a discount from the face amount of
the loan upon prepayment. Under the terms of the Loan, the Company could pay
only such dividends as are required for the Company to retain its status as a
real estate investment trust.
By August 1994, the Company had completed the sales of the Hacienda Promenade
mortgage loan, approximately two acres of land at Northbay Industrial Park, and
the Casas Lindas Apartments and had completed the refinancing of Sunwest Retail
Plaza, Long Beach Building, and the Northbay Industrial Building. The net
proceeds of $17.1 million from these transactions were used to prepay the
corporate debt which generated approximately a $4.8 million discount from the
face amount, which was offset by the write-off of deferred financing costs of
approximately $0.5 million.
In February 1993, the Company had previously entered into an Amended and
Restated Credit Agreement with its bank. The loan bore interest at prime plus
one percent and there were no commitment fees. Costs related to restructuring
the loan were capitalized, included in other assets, and amortized over the
original life of the loan.
The weighted average cost of the corporate debt outstanding as of December
31, 1993 and 1992 was 7.00, and 6.25 percent, respectively. No corporate debt
was outstanding as of December 31, 1994. The weighted average cost of corporate
debt for the years ended December 31, 1994, 1993 and 1992 was 8.02, 7.06, and
6.60 percent, respectively. The maximum amount of borrowings outstanding was
approximately $22 and $29 million during 1994 and 1993, respectively. The
Company withheld interest payments from the lender of approximately $1.6
million through December 31, 1992 relating to the pending restructure of the
loan agreement. These amounts were included in accounts payable, accrued
interest and other liabilities as of December 31, 1992, and were remitted to
the bank in February, 1993 when the loan restructure was completed.
18
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
7. MORTGAGE DEBT
In April 1994, the Company borrowed an additional $850,000 on the mortgage
loan secured by Sunwest Retail Plaza bringing the total loan amount to
$1,388,350. The loan matures in July 1995 and bears interest at prime plus one
and one-half percent, or 10 percent, and prime plus one percent, or 7.0 percent
as of December 31, 1994 and 1993, respectively. The loan requires a repayment
fee as of December 31, 1994 of approximately $28,000 which increases monthly to
approximately $61,000 at maturity.
In May 1994, the Company obtained a $2.5 million mortgage loan secured by the
Long Beach Building. The Company paid a one percent origination fee. The note
bears interest at prime plus four percent or 12.5 percent as of December 31,
1994. The loan matures in May 1999 and has no prepayment fee.
In August 1994, the Company obtained a $2.9 million mortgage loan secured by
the Northbay Industrial Building. In the fourth quarter of 1994, the Company
applied the net proceeds from the sale of Ontario Airport Business Park and
some of the net proceeds from the sale of a portion of the Northbay Industrial
Land to reduce the outstanding amount to $1,180,000. The loan matures in
January 1996 and bears interest at prime plus one and one-half percent, or 10
percent as of December 31, 1994. The loan requires a repayment fee as of
December 31, 1994 of approximately $20,000 which increases monthly to
approximately $87,000 at maturity.
In December 1993 the Company took over ownership of Ontario Airport Business
Park and assumed a mortgage loan of approximately $1.5 million. In November
1994 the Company sold the property and the buyer assumed the existing mortgage
loan.
8. COMMITMENTS
At December 31, 1994, the Company had an unfunded commitment of approximately
$2.2 million to an existing joint venture.
Agreements to extend credit or provide capital to a partner or borrower are
commitments as long as there is no violation of any condition established in
the contract. The Company may also advance additional funds to investments if
it believes such action will enhance or maintain its investment. Commitments
generally have fixed expiration dates or other termination clauses. However,
all commitments may expire without being fully drawn upon. Each potential real
estate investment and each partners' or borrowers' creditworthiness is
evaluated on a case-by-case basis. The Company obtains additional collateral
such as personal guarantees or other real estate, when available and deemed
appropriate, based on the Company's evaluation of the project, partner or
borrower.
9. INVESTMENTS IN JOINT VENTURES
The Company is a limited partner in joint ventures which are engaged in the
operation of commercial and industrial real estate. The Company is entitled to
cash distribution preferences with respect to its capital contributions to such
joint ventures. In addition, the Company loaned funds to the joint ventures for
land acquisition and construction of buildings and improvements.
The combined financial position of the unconsolidated joint ventures at
December 31, 1994 and 1993 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Assets (principally land, buildings and improvements)..... $48,172 $67,980
======= =======
Liabilities (including loans of $9,130 at December 31,
1994 and 1993, payable to the Company)................... $53,780 $71,847
Partners' Equity (Deficit)................................ (5,608) (3,867)
------- -------
Total Liabilities and Partners' Equity (Deficit).......... $48,172 $67,980
======= =======
</TABLE>
19
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
9. INVESTMENTS IN JOINT VENTURES--(CONTINUED)
The combined results of operations of the unconsolidated joint ventures for
the years ended December 31, 1994, 1993, and 1992 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Revenues........................................ $ 8,845 $12,689 $ 13,144
Operating Expenses.............................. (1,968) (2,675) (3,157)
Interest........................................ (5,172) (7,757) (10,015)
Depreciation and Amortization................... (1,995) (2,913) (3,276)
------- ------- --------
Net Loss........................................ $ (290) $ (656) $ (3,304)
======= ======= ========
</TABLE>
MIP is a 50 percent limited partner in the Shorebreeze Associates joint
venture which owns two 100 percent leased office buildings in Redwood City,
California. A $15.5 million third party loan on Phase I and a $15.2 million
third party loan on Phase II mature in June, 1995. The partners are reviewing
various options including extending the current loans and obtaining alternative
financing.
10. INVESTMENTS IN LAND AND BUILDINGS AND IMPROVEMENTS
The following tabulation lists by type of property the investments included
in land and buildings and improvements as of December 31, 1994 (dollars in
thousands):
<TABLE>
<CAPTION>
COST GROSS AMOUNT
INITIAL COST CAPITALIZED CARRIED AT
THIRD PARTY BUILDING & SUBSEQUENT TO DECEMBER 31, ACCUMULATED DATE OF DATE
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS ACQUISITION 1994 DEPRECIATION CONSTRUCTION ACQUIRED
----------- ----------- ------ ------------ ------------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Irwindale Executive
Plaza.................. $ -- $ 620 $ 2,529 $(385)(2) $ 2,764 $ 266 1990 1993
Office/Retail
Irwindale, CA
Long Beach Building..... 2,495 875 4,248 228 5,351 193 1925(3) 1994
Office
Long Beach, CA
Northbay Industrial
Park................... 1,196 1,409 5,305 -- 6,714 586 1989 1990
Industrial
Petaluma, CA
San Dimas Corp. Ctr..... -- 2,146 5,442 -- 7,588 1,114 1989 1992
Office/R&D
San Dimas, CA
Sunwest Retail Plaza.... 1,416 778 1,697 -- 2,475 230 1989 1992
Retail
San Bernardino, CA
Northbay Industrial
Park(1)................ -- 2,616 -- -- 2,616 -- -- 1990
Unimproved Land
Petaluma, CA
Sunwest Professional
Park(1)................ -- 1,426 -- -- 1,426 -- -- 1991
Unimproved Land
San Bernardino, CA
------ ------ ------- ----- ------- ------ ---- ----
$5,107 $9,870 $19,221 $(157) $28,934 $2,389
====== ====== ======= ===== ======= ======
</TABLE>
- - --------
(1) Land Held for Sale.
(2) Basis was reduced by $390 relating to a third party rent subsidy.
(3) Building is classified as a historical landmark and was rehabilitated in
1986.
20
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
10. INVESTMENTS IN LAND AND BUILDINGS AND IMPROVEMENTS--(CONTINUED)
The land and buildings and improvements have a federal income tax cost basis
of approximately $29.7 million at December 31, 1994.
The activity in investments in land and buildings and improvements and
related accumulated depreciation for the years ended December 31, 1994, 1993,
and 1992 is summarized as follows (in thousands):
INVESTMENTS IN LAND AND BUILDINGS AND IMPROVEMENTS
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Balance, Beginning of Year $35,355 $30,445 $46,678
Additions--
Acquisitions through Foreclosure.................. 5,123 3,149 4,020
Other Acquisitions................................ -- 2,805 --
Improvements...................................... 258 67 77
------- ------- -------
40,736 36,466 50,775
------- ------- -------
Deductions--
Cost of Real Estate Sold.......................... 11,412 1,111 7,111
Third Party Foreclosure........................... -- -- 13,369
Cash Received From Rent Subsidy................... 390 -- --
Reclassification.................................. -- -- (150)
------- ------- -------
11,802 1,111 20,330
------- ------- -------
Balance, End of Year................................. $28,934 $35,355 $30,445
======= ======= =======
ACCUMULATED DEPRECIATION
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Balance, Beginning of Year........................... $ 2,515 $ 1,812 $ 2,472
Additions (Deductions)--
Charged to Operations............................. 1,136 732 777
Third Party Foreclosure........................... -- -- (1,191)
Sales and Write-offs.............................. (1,262) (29) (246)
------- ------- -------
Balance, End of Year................................. $ 2,389 $ 2,515 $ 1,812
======= ======= =======
</TABLE>
21
<PAGE>
MIP PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
11. LOANS
The following tabulation lists investments in loans outstanding by type as of
December 31, 1994 (dollars in thousands):
<TABLE>
<CAPTION>
FACE AND
CARRYING
INTEREST MATURITY AMOUNT OF
DESCRIPTION RATE(1) DATE(1) MORTGAGE
----------- ------------- -------------- ---------
<S> <C> <C> <C> <C>
Loans to Joint Ventures:
Harbor Point Retail Prime + 1.5% September 1998 $6,100
Los Angeles, CA Cap of 12%
Non-Earning Loans:
Shorebreeze Phase II Office LIBOR + 3.25% June 1995 3,030(2)
Redwood City, CA or 9.56% ------
Total Investment in Loans............................... $9,130
======
</TABLE>
- - --------
(1) Interest accrues and is payable monthly. Principal is payable upon maturity
of the loan.
(2) MIP's loan is subordinated to a $15.2 million third party loan. See Note 9
for further discussion.
The activity in the loan accounts for the years ended December 31, 1994, 1993
and 1992 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
Balance, Beginning of Year...................... $ 29,658 $ 47,027 $50,852
Increases--
Disbursements................................. 107 103 --
Write-off of Loan Fees........................ 125 -- 5
Decreases--
Sale.......................................... (4,673) -- --
Write-offs.................................... (3,500) (11,913) --
Foreclosures.................................. (12,587) (5,248) --
Repayments.................................... -- (311) (268)
Deeds-in-lieu of Foreclosures................. -- -- (3,562)
-------- -------- -------
Balance, End of Year............................ $ 9,130 $ 29,658 $47,027
======== ======== =======
</TABLE>
22
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS OF THE REGISTRANT:
The Board of Directors, currently consisting of eight members, is classified
into three classes. The Charter and Bylaws of the Company provide that the
number of Directors in each class shall be as nearly as practicable equal.
Certain information regarding the directors of the Company as of March 1,
1995 is set forth below:
Raymond L. Bly, Jr.--Mr. Bly, 75, has served as director of the Company since
1985 and was formerly Vice President, Western Real Estate Operations, of
Prudential Insurance Company. Mr. Bly's term as a director expires in 1995.
John W. Creighton, Jr.--Mr. Creighton, 62, has served as a director of the
Company since 1985, and is president, chief executive officer and a director of
Weyerhaeuser Company (forest products). He is also a director of Portland
General Corporation, Quality Food Centers, Inc. and Washington Energy Company.
Mr. Creighton's term as a director expires in 1995.
Robert W. Draine--Mr. Draine, 70, has served as a director of the Company
since 1985, and is a partner of Draine/Poulson Real Estate Group. He is also a
director of Watson Land Company. Mr. Draine's term as a director expires in
1996.
Mr. W. John Driscoll--Mr. Driscoll, 66, has served as a director of the
Company since 1989, and was formerly chairman and president of Rock Island
Company, a private investment company. He is also a director of Comshare
Incorporated, Northern States Power Company, John Nuveen & Company, Inc., Rock
Island Company, The St. Paul Companies, Taylor Investment Corporation and
Weyerhaeuser Company. Mr. Driscoll's term as a director expires in 1996.
Lawrence W. Farmer--Mr. Farmer, 60, has served as a director of the Company
since 1985, and is a principal of Wasatch Investments, Inc. Formerly, he was
president of Koll Realty Advisors, the advisor of the Company until August,
1991, and executive vice president of The Koll Company, parent of such advisor.
Mr. Farmer's term as a director expires in 1996.
Paul Fitzgerald--Mr. Fitzgerald, 58, has served as a director of the Company
since 1985, and is a vice president of Chemical Bank. Mr. Fitzgerald's term as
a director expires in 1997.
Carl C. Gregory, III--Mr. Gregory, 50, has served as a director of the
Company since 1986, and is chairman of the board and chief executive officer of
the Company. He was president of American Western Realty Corporation until
August, 1991. Mr. Gregory's term as a director expires in 1995.
Richard T. Pratt--Mr. Pratt, 58, has served as a director of the Company
since 1985, and is chairman of Richard T. Pratt Associates, a consulting firm.
Formerly, he was managing director of Merrill Lynch Financial Institutions
Group, chairman of the board of Merrill Lynch Mortgage Capital, Inc., and
chairman of the Federal Home Loan Bank Board, the Federal Home Loan Mortgage
Corporation and the Federal Savings and Loan Insurance Corporation. Mr. Pratt's
term as a director expires in 1997.
23
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT:
Certain information regarding the executive officers of the Company as of
March 1, 1995 is set forth below:
Carl C. Gregory, III, 50, has served as Chairman of the Board of Directors
and Chief Executive Officer of the Company since May 1989 and as a member of
the Board of Directors since May 1986. He was the President of American Western
Realty Corporation until August 1991.
Marsha Z. Day, 35, has served as Chief Financial Officer of the Company since
August 1991, Controller of the Company since November 1988, and Secretary of
the Company since August 1993.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- --------------------------
NAME AND OTHER ANNUAL RESTRICTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION STOCK AWARDS COMPENSATION
- - ------------------ ---- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Carl C. Gregory, III.... 1994 $270,000 $ 0 * $ 0 $ 0
Chief Executive Officer 1993 261,667 50,000(1) * 100,000(2) 0
1992 250,000 30,000 * 0 0
</TABLE>
- - --------
* Aggregate does not exceed 10% of the total annual salary and bonus reported
for the named officer.
(1) Represents fair market value on February 10, 1993 of stock award granted on
February 10, 1993 in the amount of 50,000 shares, which award was subject
to stockholder approval of the Company's Long- Term Incentive Compensation
Plan (the "LTIP Plan"). The LTIP Plan was approved by the Stockholders at
the 1993 Annual Stockholders Meeting.
(2) Includes 100,000 shares granted on February 10, 1993 under the LTIP Plan,
50,000 shares of which vested on February 11, 1994 and 1995, but payment
for which (together with declared dividends) was deferred at the election
of Mr. Gregory to January 1, 2000. Mr. Gregory holds no other restricted
stock. The value of such restricted stock on December 31, 1994 was
$190,325. Dividends are accrued on such restricted stock, and delivered
when the restricted stock (or cash in lieu thereof if deferred) is
delivered.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR- OPTIONS AT FISCAL
END YEAR-END
NUMBER OF ------------------------- -----------------
SHARES ACQUIRED VALUE EXERCISABLE/
ON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE UNEXERCISABLE
--------------- -------- ----------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Carl C. Gregory, III.... 0 $0 95,000 0 $0
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Carl C. Gregory, III, currently serves as chairman and chief executive
officer of the Company pursuant to an employment contract which became
effective June 1, 1993 and expires on June 30, 1995. Presently, the Board of
Directors has elected not to have the existing contract continue beyond June
30, 1995. Under the contract, Mr. Gregory is entitled to cash compensation of
at least $270,000 annually. Although the employment contract may be terminated
at any time by either the Company or Mr. Gregory, Mr. Gregory is entitled to
receive, whether or not earned, salary that would be otherwise due under the
contract through June 30, 1995, should his employment by the Company be
terminated without cause (as that term is defined
24
<PAGE>
in the contract) or should he resign because a majority of the directors of the
Company are individuals whose elections did not have the approval of the
current directors of the Company; or the Company engages in a merger or sale-
of-assets transaction with another corporation, as a result of which those who
were stockholders of the Company prior to such a transaction no longer hold
shares of the other corporation which is the surviving corporation sufficient
for such holders to elect a majority of the directors of such corporation; or
directors' and officers' liability indemnification and insurance which is the
same or comparable to that which was available to him either as of June 1, 1991
or June 1, 1993, is not in effect; or the nature of his duties as chief
executive officer of the Company are significantly limited by the Board of
Directors.
COMPENSATION OF DIRECTORS
In 1994, each non-employee director was entitled to receive for service as a
director an annual fee of $10,000 and a daily fee of $500 for attending board
meetings, and reimbursement of travel expenses in connection with meetings.
Pursuant to the First Amended and Restated Directors Stock Plan each non-
employee director is paid an annual fee in the form of common stock or stock
credits, as defined in said plan, having a value on the date of grant equal to
$10,000. Members of the Audit Committee received an annual fee of $1,500; and
non-employee members of the Investment Committee received an annual fee of
$2,500 and a daily fee of $500 for attending committee meetings and carrying
out the work of the Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee, each of whom is currently a
director of the Company, are: John W. Creighton, Jr., W. John Driscoll and
Richard T. Pratt. No member of the Compensation Committee is, or has ever been,
an officer or employee of the Company, except that Mr. Creighton has held the
office of Chairman of the Board but has never been employed by the Company nor
compensated by the Company other than compensation in the form of directors'
fees paid to directors generally.
No executive officer of the Company serves, or has served, as either a
director or a member of the compensation committee of an entity of which a
director of the Company or a member of its Compensation Committee is an
executive officer.
None of the members of the Compensation Committee has had a relationship with
the Company the disclosure of which is required by Item 404 of SEC Regulation
S-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the persons who, to the Company's knowledge,
beneficially owned more than five percent of the outstanding common stock as of
March 1, 1995:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
TITLE OF NAME OF AMOUNT AND NATURE OF PERCENT
CLASS BENEFICIAL OWNER(A) BENEFICIAL OWNERSHIP(A) OF CLASS
-------- ------------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock Palm Finance Corporation 1,380,964(b) 14.97
100 Wilshire Blvd., 3rd Fl.
Santa Monica, CA 90401
</TABLE>
- - --------
(a) Information was obtained from the Schedule 13D filed by Steven C. Markoff
and Palm Finance Corporation on January 26, 1995.
(b) Includes 14,658 shares of common stock owned by Steven C. Markoff, the
indirect owner of Palm Finance Corporation.
25
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
TITLE OF NAME OF AMOUNT AND NATURE OF PERCENT
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP(A) OF CLASS
-------- ---------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock Raymond J. Bly, Jr. 35,658(b) *
Common Stock John W. Creighton, Jr. 70,258(b) *
Common Stock Robert W. Draine 88,412(b) *
Common Stock W. John Driscoll 200,898(b)(e) 2.17
Common Stock Lawrence W. Farmer 69,534(c) *
Common Stock Paul Fitzgerald 34,658(b) *
Common Stock Carl C. Gregory, III 161,000(d) 1.73
Common Stock Richard T. Pratt 36,992(b) *
Directors and Executive Officers as a 733,110 7.72
group (9 individuals)
</TABLE>
- - --------
(a) As of March 1, 1995.
(b) Includes 20,000 shares which may be acquired upon exercise of a stock
option.
(c) Includes 50,000 shares which may be acquired upon exercise of a stock
option.
(d) Includes 95,000 shares which may be acquired upon exercise of a stock
option.
(e) Includes 131,800 shares the voting and/or dispositive powers of which are
shared with others.
(f) Asterisk denotes amount is less than 1%.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
26
<PAGE>
MIP PROPERTIES, INC.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. Index to Financial Statements and Schedules
1. Financial Statements (included under Item 8)
--Report of Independent Public Accountants
--Consolidated Balance Sheets at December 31, 1994 and 1993
--Consolidated Statements of Operations for the years ended December
31, 1994, 1993 and 1992
--Consolidated Statements of Stockholders' Equity at December 31,
1994, 1993 and 1992
--Consolidated Statements of Cash Flows for the years ended December
31, 1994, 1993 and 1992
2. Supplemental Financial Statement Schedules--
--None
All schedules have been omitted because the required information is
presented in the financial statements or the related notes or are
not applicable.
B. Reports on Form 8-K
A Form 8-K was filed on October 7, 1994.
C. Exhibits
<TABLE>
<C> <C> <S>
* 3.1 Articles of Incorporation
***** 3.2 Bylaws, as Amended
** 10.3 Incentive Stock Option Plan
** 10.4 Non-Qualified Stock Option Plan
*** 10.19 Amended and Restated Credit Agreement, dated as of December
28, 1993
**** 10.20 Amended and Restated Credit Agreement, dated as of January 28,
1991
**** 10.21 Amended and Restated Credit Agreement, dated as of February 8,
1993
***** 10.22 First Amended and Restated Directors Stock Plan
***** 10.23 First Amended and Restated Long-Term Incentive Compensation
Plan
***** 10.24 Fee Deferral Plan
***** 10.25 Employment Agreement dated June 1, 1993 between Carl C.
Gregory, III and MIP Properties, Inc.
***** 10.26 Extension of Employment Agreement dated November 30, 1994
between Carl C. Gregory, III and MIP Properties, Inc.
***** 21. Subsidiaries of the Registrant
23. Consent of Independent Public Accountants
</TABLE>
- - --------
* Incorporated herein by reference to such Exhibit to the Annual Report on
Form 10-K of Registrant for the year ended December 31, 1991.
** Incorporated herein by reference to such Exhibit to Registration Statement
on Form S-8 of Registrant (Registration No. 33-17183) filed on September
11, 1987.
*** Incorporated herein by reference to such Exhibit to Form 8-K of Registrant
filed on January 7, 1994.
**** Incorporated herein by reference to such Exhibit to the Annual Report on
Form 10-K of Registrant for the year ended December 31, 1993.
***** Previously filed.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
MIP PROPERTIES, INC.
/S/ CARL C. GREGORY, III
Date: April 25, 1995 By___________________________________
Carl C. Gregory, III Chairman of
the Board and Chief Executive
Officer
28
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <C> <S> <C>
* 3.1 Articles of Incorporation
***** 3.2 Bylaws, as Amended
** 10.3 Incentive Stock Option Plan
** 10.4 Non-Qualified Stock Option Plan
*** 10.19 Amended and Restated Credit Agreement, dated as of
December 28, 1993
**** 10.20 Amended and Restated Credit Agreement, dated as of
January 28, 1991
**** 10.21 Amended and Restated Credit Agreement, dated as of
February 8, 1993
***** 10.22 First Amended and Restated Directors Stock Plan
***** 10.23 First Amended and Restated Long-Term Incentive
Compensation Plan
***** 10.24 Fee Deferral Plan
***** 10.25 Employment Agreement dated June 1, 1993 between Carl
C. Gregory, III and MIP Properties, Inc.
***** 10.26 Extension of Employment Agreement dated November 30,
1994 between Carl C. Gregory, III and MIP Properties, Inc.
***** 21. Subsidiaries of the Registrant
23. Consent of Independent Public Accountants
</TABLE>
- - --------
* Incorporated herein by reference to such Exhibit to the Annual Report on
Form 10-K of Registrant for the year ended December 31, 1991.
** Incorporated herein by reference to such Exhibit to Registration Statement
on Form S-8 of Registrant (Registration No. 33-17183) filed on September
11, 1987.
*** Incorporated herein by reference to such Exhibit to Form 8-K of Registrant
filed on January 7, 1994.
**** Incorporated herein by reference to such Exhibit to the Annual Report on
Form 10-K of Registrant for the year ended December 31, 1993.
***** Previously filed.
<PAGE>
EXHIBIT 23
MIP PROPERTIES, INC.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K/A, into the Company's previously filed
Registration Statements File Numbers 33-17183 and 33-71754.
Los Angeles, California
April 25, 1995
