<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30, 1996
------------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to__________________
Commission file number 0-15699
_____________________________________
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
-------------------------------------------------------------
(Address of principal executive offices)
(619) 746-2411
-------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes (x) No ( )
--- ----
1
<PAGE>
TABLE OF CONTENTS
PART I
------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II
-------
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE
</TABLE>
2
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
September 30, 1996
------------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 1,192,600
Buildings and improvements 5,036,600
Fixtures and equipment 108,200
------------------
6,337,400
Less accumulated depreciation (2,357,200)
------------------
3,980,200
Investments in joint ventures 881,000
Cash and cash equivalents 1,071,500
Deferred financing costs 131,400
Note receivable 34,000
Other assets 54,300
------------------
$ 6,152,400
==================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $ 2,850,000
Accounts payable 31,200
Accrued expenses 101,200
Tenant deposits and other liabilities 54,400
------------------
3,036,800
------------------
Partners' equity:
Limited partners 3,675,300
General partners (559,700)
------------------
3,115,600
------------------
$ 6,152,400
==================
</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 September 30,
--------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 367,300 $ 257,600
Equity in earnings of joint ventures 9,100 13,300
Interest 12,900 3,100
Other 6,900 7,900
--------------- ---------------
396,200 281,900
--------------- ---------------
COSTS AND EXPENSES
- ------------------
Property operating 253,400 187,400
Interest 67,400
Depreciation and amortization 52,100 28,400
General and administrative:
Related parties 16,700 15,700
Other 7,700 11,600
--------------- ---------------
397,300 243,100
--------------- ---------------
Net (loss) income $ (1,100) $ 38,800
=============== ===============
Net income - general partners $ -- $ 400
=============== ===============
Net (loss) income - limited partners $ (1,100) $ 38,400
=============== ===============
Net (loss) income per limited partnership unit $ (0.01) $ 0.20
=============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 1,044,200 $ 754,900
Equity in earnings of joint ventures 31,200 27,800
Interest 36,400 9,200
Other 25,600 28,800
--------------- ---------------
1,137,400 820,700
--------------- ---------------
COSTS AND EXPENSES
- ------------------
Property operating 676,600 516,900
Interest 189,200
Depreciation and amortization 151,500 82,700
General and administrative:
Related parties 49,700 50,200
Other 30,700 40,400
--------------- ---------------
1,097,700 690,200
--------------- ---------------
Net income $ 39,700 $ 130,500
=============== ===============
Net income - general partners $ 400 $ 1,300
=============== ===============
Net income - limited partners $ 39,300 $ 129,200
=============== ===============
Net income per limited partnership unit $ 0.19 $ 0.65
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR PARK PROPERTIES 3
----------------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 39,700 $ 130,500
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 151,500 82,700
Equity in earnings of joint ventures (31,200) (27,800)
Joint ventures' cash distributions 31,200 27,800
(Gain) loss on sale of property held for investment (3,500) 300
Amortization of deferred financing costs 14,000
Changes in operating assets and liabilities:
Other assets 5,100 200
Accounts payable (14,900) (13,400)
Accrued expenses 14,700 21,800
Tenant deposits and other liabilities 8,900 (8,000)
--------------- ---------------
Net cash provided by operating activities 215,500 214,100
--------------- ---------------
Cash flows from investing activities:
Increase in property held for investment (118,600) (86,700)
Joint ventures' cash distributions 56,500 312,700
Proceeds from sale of property held for investment 14,500 1,100
--------------- ---------------
Net cash (used in) provided by investing activities (47,600) 227,100
--------------- ---------------
Cash flows from financing activities:
Proceeds from mortgage note payable 778,500
Cash distributions (294,700) (221,000)
Payment of deferred financing costs (44,700)
Repurchase of limited partnership units (38,200) (5,100)
--------------- ---------------
Net cash provided by (used in) financing activities 400,900 (226,100)
--------------- ---------------
Net increase in cash and cash equivalents 568,800 215,100
Cash and cash equivalents at beginning of period 502,700 260,000
--------------- ---------------
Cash and cash equivalents at end of period $ 1,071,500 $ 475,100
=============== ===============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
WINDSOR PARK PROPERTIES 3
----------------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at September 30, 1996 and the related statements of operations
for the three and nine months ended September 30, 1996 and 1995 and the
statements of cash flows for the nine months ended September 30, 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
----------------------------
In January 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.
In August 1996, the Partnership sold approximately eight acres of unimproved
land at the Little Eagle community in Indianapolis, Indiana, for $32,100, net of
closing costs of $7,900. In connection with the sale, the Partnership received
a $34,000 note receivable which bears interest at 10% and is due in December
1998.
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 nine months ended September 30, 1996 and
1995 follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Total revenues $ 770,400 $ 687,500
----------- -----------
Expenses:
Property operating 404,100 380,000
Depreciation 198,400 201,200
Interest 85,500 14,600
----------- -----------
688,000 595,800
----------- -----------
Net income $ 82,400 $ 91,700
=========== ===========
</TABLE>
NOTE 4. MORTGAGE NOTES PAYABLE
----------------------
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, which was originally payable in monthly interest only installments bearing
interest at 90 day LIBOR plus 2.95%, is due in January
7
<PAGE>
2003. The Partnership incurred loan costs of $100,400. In March 1996, the
Partnership converted the loan to a fixed rate loan bearing interest at 8.97%.
All other terms remain the same.
In January 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 January 2003. The Partnership
incurred loan costs of $45,000.
NOTE 5. NET (LOSS) INCOME PER LIMITED PARTNERSHIP UNIT
----------------------------------------------
Net (loss) income per limited partnership unit is calculated based on the
weighted average number of limited partnership units outstanding during the
period and the net (loss) income allocated to the Limited Partners. The
weighted average number of limited partnership units outstanding during the
three and nine months ended September 30, 1996 was 196,941 and 197,490,
respectively; and 200,167 and 200,218 for the three and nine months ended
September 30, 1995, 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 $19,500 and $18,200 for such
costs during the three months ended September 30, 1996 and 1995, respectively;
and $58,000 and $57,300 during the nine months ended September 30, 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 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 September 30, 1996 and 1995, the General Partners
received cash distributions of $7,300 and $3,600, respectively; and $14,700 and
$11,000 for the nine months ended September 30, 1996 and 1995, respectively.
8
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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 nine months ended September 30, 1996 and 1995
follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ----------------------
Per Per
Amount Unit Amount Unit
---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Net income
- limited partners $ 39,300 $ 0.19 $ 129,200 $ 0.65
Return of capital 240,700 1.23 80,800 0.40
---------- ------- ---------- --------
$ 280,000 $ 1.42 $ 210,000 $ 1.05
========== ======= ========== ========
</TABLE>
NOTE 8. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 154,300 $ --
============ ============
</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>
9
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
September 30, 1996 as compared to December 31, 1995
- ---------------------------------------------------
The Partnership's primary sources of cash during the nine months ended September
30, 1996 were from the operations of its investment properties, cash
distributions from joint ventures and proceeds from a mortgage note 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, which was originally payable in monthly interest only installments bearing
interest at 90 day LIBOR plus 2.95%, is due in January 2003. In March 1996, the
loan was converted to a fixed rate loan bearing interest at 8.97%. All other
terms remain the same.
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.
In August 1996, the Partnership sold approximately eight acres of unimproved
land at the Little Eagle community in Indianapolis, Indiana, for $32,100, net of
closing costs of $7,900. In connection with the sale, the Partnership received
a $34,000 note receivable which bears interest at 10% and is due in December
1998.
No further property financings are planned by the General Partners. An
expansion of the Trailmont community which was previously under consideration
has proven not to be economically feasible. Therefore the General Partners are
currently considering the purchase of an interest in one additional manufactured
home community.
At September 30, 1996, the Partnership's total mortgage debt, including its
proportionate share of joint venture debt, was $3,150,000, consisting entirely
of fixed rate debt. The average rate of interest on the fixed rate debt was
8.8% at September 30, 1996.
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,
distributions to partners and possibly the acquisition of one additional
investment property. 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.
10
<PAGE>
Results of Operations
- ---------------------
Nine months ended September 30, 1996 as compared to nine months ended September
- -------------------------------------------------------------------------------
30, 1995
- --------
The results of operations for the nine months ended September 30, 1996 and 1995
are not directly comparable due to the purchase of the Trailmont community in
January 1996. The Partnership realized net income of $39,700 and $130,500 for
the nine months ended September 30, 1996 and 1995, respectively. Net income per
limited partnership unit was $0.19 in 1996 and $0.65 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 depreciation and amortization.
The overall occupancy of the Partnership's five wholly-owned communities was 88%
at September 30, 1996, compared to 78% for four wholly-owned properties at
September 30, 1995. The recently acquired Trailmont community was 99% occupied
at September 30, 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 $31,200 and $27,800 for the nine months ended September 30,
1996 and 1995, respectively. The overall occupancy of the two joint venture
properties increased from 89% at September 30, 1995 to 94% at September 30,
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. Offsetting the occupancy gains and rent increases was increased interest
expense at Harmony Ranch as a result of the $1.2 million loan obtained in
September 1995.
Interest income increased from $9,200 in 1995 to $36,400 in 1996 due mainly to
higher cash balances maintained by the Partnership.
Interest expense of $189,200 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 $90,600 in 1995 to $80,400 in
1996, due mainly to proxy solicitation costs incurred in 1995, but not in 1996.
Three months ended September 30, 1996 as compared to three months ended
- -----------------------------------------------------------------------
September 30, 1995
- ------------------
The results of operations for the three months ended September 30, 1996 and 1995
are not directly comparable due to the purchase of the Trailmont community in
January 1996. The Partnership incurred a net loss of $1,100 ($0.01 per limited
partnership unit) for the three months ended September 30, 1996 and realized net
income of $38,800 ($0.20 per limited partnership unit) for the three months
ended September 30, 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.
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 $9,100 and $13,300 for the three months ended September 30,
1996 and 1995, respectively. In addition to the factors discussed previously,
in the third quarter Big Country also incurred approximately $9,000 in losses
11
<PAGE>
from the sale of park owned mobile homes.
Interest income increased from $3,100 in 1995 to $12,900 in 1996 due mainly to
higher cash balances maintained by the Partnership.
Interest expense of $67,400 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.
12
<PAGE>
PART II
-------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the period covered by
this Form 10-QSB.
13
<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: November 11, 1996
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET OF WINDSOR PARK PROPERTIES 3 AS OF SEPTEMBER 30, 1996 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE NINE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,071,500
<SECURITIES> 0
<RECEIVABLES> 34,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,337,400
<DEPRECIATION> 2,357,200
<TOTAL-ASSETS> 6,152,400
<CURRENT-LIABILITIES> 0
<BONDS> 2,850,000
0
0
<COMMON> 0
<OTHER-SE> 3,115,600<F1>
<TOTAL-LIABILITY-AND-EQUITY> 6,152,400
<SALES> 0
<TOTAL-REVENUES> 1,137,400
<CGS> 0
<TOTAL-COSTS> 676,600
<OTHER-EXPENSES> 231,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 189,200
<INCOME-PRETAX> 39,700
<INCOME-TAX> 0
<INCOME-CONTINUING> 39,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,700
<EPS-PRIMARY> 0.19<F2>
<EPS-DILUTED> 0
<FN>
<F1>Limited and general partners equity.
<F2>Net income per limited partnership unit.
</FN>
</TABLE>
