<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended 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 0-15699
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WINDSOR PARK PROPERTIES 3, A CALIFORNIA LIMITED PARTNERSHIP
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-0115651
- ------------------------------- ---------------------------------
(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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1
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TABLE OF CONTENTS
PART I
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<TABLE>
<CAPTION>
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 9
PART II
-------
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
SIGNATURE
2
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WINDSOR PARK PROPERTIES 3
----------------------------------
(A California Limited Partnership)
BALANCE SHEET
----------------------------------
(unaudited)
<TABLE>
<CAPTION>
March 31, 1996
-----------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 1,228,300
Buildings and improvements 5,018,700
Fixtures and equipment 87,300
-----------------
6,334,300
Less accumulated depreciation (2,254,300)
-----------------
4,080,000
Investments in joint ventures 921,400
Cash and cash equivalents 1,086,200
Deferred financing costs 141,300
Other assets 46,200
-----------------
$ 6,275,100
=================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $ 2,850,000
Accounts payable 31,000
Accrued expenses 82,100
Tenant deposits and other liabilities 51,100
-----------------
3,014,200
-----------------
Partners' equity:
Limited partners 3,813,400
General partners (552,500)
-----------------
3,260,900
-----------------
$ 6,275,100
=================
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
WINDSOR PARK PROPERTIES 3
----------------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
----------------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
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<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 326,000 $ 245,700
Equity in earnings of joint ventures 10,600 7,500
Interest 11,500 3,100
Other 10,700 11,000
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358,800 267,300
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COSTS AND EXPENSES
- ------------------
Property operating 203,000 176,300
Interest 53,300
Depreciation and amortization 47,700 26,800
General and administrative:
Related parties 16,700 18,700
Other 10,700 15,800
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331,400 237,600
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Net income $ 27,400 $ 29,700
============= ============
Net income - general partners $ 300 $ 300
============= ============
Net income - limited partners $ 27,100 $ 29,400
============= ============
Net income per limited partnership unit $ 0.14 $ 0.15
============= ============
</TABLE>
See accompanying notes to financial statements
4
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WINDSOR PARK PROPERTIES 3
----------------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
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(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 27,400 $ 29,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 47,700 26,800
Equity in earnings of joint ventures (10,600) (7,500)
Joint ventures' cash distributions 10,600 7,500
Loss on sale of property held for investment 1,100
Amortization of deferred financing costs 4,100
Changes in operating assets and liabilities:
Other assets 88,300 1,600
Accounts payable (17,300) (7,400)
Accrued expenses (1,700)
Tenant deposits and other liabilities 5,600 (4,800)
----------- -------------
Net cash provided by operating activities 156,900 44,200
----------- -------------
Cash flows from investing activities:
Increase in property held for investment (92,800) (16,200)
Joint ventures' cash distributions 16,100 27,200
Proceeds from sale of property held for investment 500 500
----------- -------------
Net cash (used in) provided by investing activities (76,200) 11,500
----------- -------------
Cash flows from financing activities:
Proceeds from mortgage note payable 778,500
Cash distributions (147,400) (73,700)
Payment of deferred financing costs (100,400)
Repurchase of limited partnership units (27,900) (500)
----------- -------------
Net cash provided by (used in) financing activities 502,800 (74,200)
----------- -------------
Net increase (decrease) in cash and cash equivalents 583,500 (18,500)
Cash and cash equivalents at beginning of period 502,700 260,000
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Cash and cash equivalents at end of period $ 1,086,200 $ 241,500
=========== =============
</TABLE>
See accompanying notes to financial statements.
5
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WINDSOR PARK PROPERTIES 3
----------------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
----------------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
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. PROPERTY HELD FOR INVESTMENT
----------------------------
On January 17, 1996, the Partnership purchased the Trailmont manufactured home
community located in Nashville, Tennessee. The community is situated on 30
acres of land and contains 131 manufactured home sites. The Partnership's cost
of the property was $2,114,600.
NOTE 3. INVESTMENTS IN JOINT VENTURES
-----------------------------
The Partnership's investments in joint ventures consist of undivided interests
in two manufactured home communities. The combined condensed results of
operations of these properties for the three months ended March 31, 1996 and
1995 follows:
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Total revenues $ 245,800 $ 219,200
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Expenses:
Property operating 124,700 127,600
Depreciation 65,400 65,200
Interest 27,400
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217,500 192,800
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Net income $ 28,300 $ 26,400
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</TABLE>
NOTE 4. MORTGAGE NOTES PAYABLE
----------------------
On January 17, 1996, the Partnership obtained a $1,800,000 loan collateralized
by the Pondarosa, Little Eagle and Shady Hills manufactured home communities.
The loan is payable in monthly interest only installments bearing interest at 90
day LIBOR plus 2.95% (8.4% at March 31, 1996) and is due in January 2003. The
Partnership incurred loan costs of $100,400.
On January 17, 1996, in connection with the purchase of the Trailmont
manufactured home community, the Partnership obtained a $1,050,000 loan
collateralized by the property. The loan is payable in monthly interest only
installments bearing interest at a fixed rate of 8.41% and is due in
6
<PAGE>
January 2003. The Partnership incurred loan costs of $45,000.
NOTE 5. NET INCOME PER LIMITED PARTNERSHIP UNIT
---------------------------------------
Net income per limited partnership unit is calculated based on the weighted
average number of limited partnership units outstanding during the period and
the net income 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 198,278 and 200,262, respectively.
NOTE 6. 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 $19,200 and $21,100 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
- -----------------
The General Partners receive 1% of the profits, losses, and cash distributions
from the sale or financing of Partnership properties. This participation
increases to 15% after the Limited Partners have received their original
invested capital plus a 9% cumulative, non-compounded annual return.
During the three months ended March 31, 1996 and 1995, the General Partners
received cash distributions of $7,400 and $3,700, respectively.
7
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NOTE 7. DISTRIBUTIONS TO LIMITED PARTNERS
---------------------------------
Distributions to limited partners in excess of net income allocated to limited
partners are considered a return of capital. A breakdown of cash distributions
to limited partners for the three months ended March 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
---------------------- --------------------------
Per Per
Amount Unit Amount Unit
----------- ------- ------------- --------
<S> <C> <C> <C> <C>
Net income
- - limited partners $ 27,100 $ 0.14 $ 29,400 $ 0.15
Return of capital 112,900 0.57 40,600 0.20
----------- ------- ------------- --------
$ 140,000 $ 0.71 $ 70,000 $ 0.35
=========== ======= ============= ========
</TABLE>
NOTE 8. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 29,400 $ --
=========== ==========
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
- ---------------------------------------------------------------------
In 1996, the Partnership acquired the Trailmont
community in which a new note payable was obtained
and a portion of the proceeds from the refinancing
of existing Partnership properties was remitted
directly to the seller, as follows:
<TABLE>
<CAPTION>
1996
-----------------
<S> <C>
Total property cost $ 2,114,600
Note payable proceeds, net (1,005,000)
Existing property financing proceeds to seller (1,021,500)
-----------------
Cash paid $ 88,100
=================
</TABLE>
8
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WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
March 31, 1996 as compared to December 31, 1995
- -----------------------------------------------
The Partnership's primary sources of cash during the three months ended March
31, 1996 were from the operations of its investment properties, cash
distributions from joint ventures and proceeds from mortgage notes payable. The
primary uses of cash during the same period were for the purchase of an
investment property and cash distributions to partners.
In January 1996, the Partnership obtained a $1,800,000 loan collateralized by
the Pondarosa, Little Eagle and Shady Hills manufactured home communities. The
loan is payable in monthly interest only installments bearing interest at 90 day
LIBOR plus 2.95% (8.4% at March 31, 1996) and is due in January 2003.
In January 1996, the Partnership purchased the Trailmont manufactured home
community located in Nashville, Tennessee. The Partnership's total cost of the
property was $2,114,600. In connection with the purchase, the Partnership
obtained a $1,050,000 loan, collateralized by the community. The loan, which is
due in January 2003, bears interest at a fixed rate of 8.41% and is payable in
monthly interest only installments.
No further property financings are planned by the General Partners. Subsequent
to the Trailmont acquisition in January 1996, the Partnership is holding
approximately $1 million of excess loan proceeds. The General Partners intend
to use these funds for a 70 space expansion of the Trailmont community, which is
currently under consideration, and for replenishing Partnership cash reserves.
Should the expansion of Trailmont not prove feasible, the General Partners may
consider the acquisition of an interest in one additional manufactured home
community.
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 for the foreseeable future.
Results of Operations
- ---------------------
Three months ended March 31, 1996 as compared to three months ended
- -------------------------------------------------------------------
March 31, 1995
- --------------
The results of operations for the three months ended March 31, 1996 and 1995 are
not directly comparable due to the purchase of the Trailmont community in
January 1996. The Partnership realized net income of $27,400 and $29,700 for
the three months ended March 31, 1996 and 1995, respectively. Net income per
limited partnership unit was $0.14 in 1996 and $0.15 in 1995.
As a result of the investment property purchase described above, all major
revenue and expense categories increased in 1996, specifically rent and
utilities revenues, property operating costs, and deprecation and amortization.
9
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The overall occupancy of the Partnership's five wholly-owned communities was 80%
at March 31, 1996, compared to 73% for four wholly-owned properties at March 31,
1995. The newly acquired Trailmont community was 100% occupied at March 31,
1996. The Partnership implemented $5 per month rent increases at both Pondarosa
and Little Eagle effective January 1996.
Equity in earnings of joint ventures, which reflects the Partnership's share of
the net income of the Big Country Estates and Harmony Ranch manufactured home
communities, was $10,600 and $7,500 for the three months ended March 31, 1996
and 1995, respectively. The overall occupancy of the two joint venture
properties increased from 85% at March 31, 1995 to 92% at March 31, 1996. In
addition, recent rent increases include $12 per month at Big Country effective
February 1996, and $10 per month at Harmony Ranch effective October 1995.
Interest expense of $53,300 in 1996 was incurred on the two loans obtained by
the Partnership in January 1996, as discussed previously. No interest expense
was incurred in 1995.
General and administrative expense decreased from $34,500 in 1995 to $27,400 in
1996, due mainly to proxy solicitation costs which were incurred in 1995.
10
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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
1) A Form 8-K (dated January 26, 1996) was filed with regards to the
Partnership's acquisition of the Trailmont manufactured home
community located in Nashville, Tennessee.
The item reported in this current report was Item 2 (acquisition
or disposition of assets).
2) A Form 8-K/A (dated March 15, 1996) was filed with regards to the
Partnership's acquisition of the Trailmont manufactured home
community located in Nashville, Tennessee.
The items reported in this current report were Item 2
(acquisition or disposition of assets) and Item 7 (financial
statements, proforma financial information and exhibits).
A summary of the financial information included in the report
follows:
a) Financial Statements and Proforma Financial Information of
Trailmont Manufactured Home Community.
b) Proforma Financial Information of Windsor Park Properties 3.
11
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR PARK PROPERTIES 3,
A California Limited Partnership
--------------------------------
(Registrant)
By: The Windsor Corporation, General Partner
By /s/ John A. Coseo, Jr.
--------------------------------------------------
JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: May 10, 1996
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF WINDSOR PARK PROPERTIES 3 AS OF MARCH 31, 1996 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE THREE MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<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> 1,086,200
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,334,300
<DEPRECIATION> 2,254,300
<TOTAL-ASSETS> 6,275,100
<CURRENT-LIABILITIES> 0
<BONDS> 2,850,000
0
0
<COMMON> 0
<OTHER-SE> 3,260,900<F1>
<TOTAL-LIABILITY-AND-EQUITY> 6,275,100
<SALES> 0
<TOTAL-REVENUES> 358,800
<CGS> 0
<TOTAL-COSTS> 203,000
<OTHER-EXPENSES> 75,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,300
<INCOME-PRETAX> 27,400
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,400
<EPS-PRIMARY> 0.14<F2>
<EPS-DILUTED> 0
<FN>
<F1> Limited and general partners equity.
<F2> Net income per limited partnership unit.
</FN>
</TABLE>
