<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 June 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
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TABLE OF CONTENTS
PART I
------
<TABLE>
<CAPTION>
Page
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<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 12
</TABLE>
SIGNATURE
2
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WINDSOR PARK PROPERTIES 3
--------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
June 30, 1996
-----------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 1,228,300
Buildings and improvements 5,018,200
Fixtures and equipment 92,000
-----------------
6,338,500
Less accumulated depreciation (2,305,100)
-----------------
4,033,400
Investments in joint ventures 909,400
Cash and cash equivalents 1,158,900
Deferred financing costs 136,300
Other assets 42,000
-----------------
$ 6,280,000
=================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $ 2,850,000
Accounts payable 28,700
Accrued expenses 81,400
Tenant deposits and other liabilities 52,000
-----------------
3,012,100
-----------------
Partners' equity:
Limited partners 3,820,300
General partners (552,400)
-----------------
3,267,900
-----------------
$ 6,280,000
=================
</TABLE>
See accompanying notes to financial statements.
3
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WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------
1996 1995
------------ -------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 350,900 $ 251,600
Equity in earnings of joint ventures 11,500 7,000
Interest 12,000 3,000
Other 8,000 9,900
------------ -------------
382,400 271,500
------------ -------------
COSTS AND EXPENSES
- ------------------
Property operating 220,200 153,200
Interest 68,500
Depreciation and amortization 51,700 27,500
General and administrative:
Related parties 16,300 15,800
Other 12,300 13,000
------------ -------------
369,000 209,500
------------ -------------
Net income $ 13,400 $ 62,000
============ =============
Net income - general partners $ 100 $ 600
============ =============
Net income - limited partners $ 13,300 $ 61,400
============ =============
Net income per limited partnership unit $ 0.06 $ 0.30
============ =============
</TABLE>
See accompanying notes to financial statements.
4
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WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1996 1995
------------ -------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 676,900 $ 497,300
Equity in earnings of joint ventures 22,100 14,500
Interest 23,500 6,100
Other 18,700 20,900
------------ -------------
741,200 538,800
------------ -------------
COSTS AND EXPENSES
- ------------------
Property operating 423,200 329,500
Interest 121,800
Depreciation and amortization 99,400 54,300
General and administrative:
Related parties 33,000 34,500
Other 23,000 28,800
------------ -------------
700,400 447,100
------------ -------------
Net income $ 40,800 $ 91,700
============ =============
Net income - general partners $ 400 $ 900
============ =============
Net income - limited partners $ 40,400 $ 90,800
============ =============
Net income per limited partnership unit $ 0.20 $ 0.45
============ =============
</TABLE>
See accompanying notes to financial statements.
5
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WINDSOR PARK PROPERTIES 3
--------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
----------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 40,800 $ 91,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 99,400 54,300
Equity in earnings of joint ventures (22,100) (14,500)
Joint ventures' cash distributions 22,100 14,500
Loss on sale of property held for investment 600
Amortization of deferred financing costs 9,100
Changes in operating assets and liabilities:
Other assets 11,600 13,100
Accounts payable (19,600) (15,300)
Accrued expenses (700) 200
Tenant deposits and other liabilities 6,500 (6,800)
-------------- --------------
Net cash provided by operating activities 147,700 137,200
-------------- --------------
Cash flows from investing activities:
Increase in property held for investment (84,000) (63,100)
Joint ventures' cash distributions 28,100 44,300
Proceeds from sale of property held for investment 12,300 1,000
-------------- --------------
Net cash used in investing activities (43,600) (17,800)
-------------- --------------
Cash flows from financing activities:
Proceeds from mortgage note payable 778,500
Cash distributions (147,400) (147,400)
Payment of deferred financing costs (44,700)
Repurchase of limited partnership units (34,300) (1,000)
-------------- --------------
Net cash provided by (used in) financing activities 552,100 (148,400)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 656,200 (29,000)
Cash and cash equivalents at beginning of period 502,700 260,000
-------------- --------------
Cash and cash equivalents at end of period $ 1,158,900 $ 231,000
============== ==============
</TABLE>
See accompanying notes to financial statements
6
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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 June 30, 1996 and the related statements of operations for
the three and six months ended June 30, 1996 and 1995 and the statements of cash
flows for the six months ended June 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. Certain 1995 amounts have been reclassified to
conform with the 1996 presentation.
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 six months ended June 30, 1996 and 1995
follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Total revenues $ 499,700 $ 441,700
----------- -----------
Expenses:
Property operating 254,200 251,600
Depreciation 131,800 130,600
Interest 56,700 6,500
----------- -----------
442,700 388,700
----------- -----------
Net income $ 57,000 $ 53,000
=========== ===========
</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 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,
7
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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 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 and six months ended
June 30, 1996 was 197,262 and 197,767, respectively; and 200,228 and 200,245 for
the three and six months ended June 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 $19,300 and $18,000 for such
costs during the three months ended June 30, 1996 and 1995, respectively; and
$38,500 and $39,100 during the six months ended June 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 June 30, 1995, the General Partners received cash
distributions of $3,700; and $7,400 for both the six months ended June 30, 1996
and 1995. The General Partners received no cash distributions during the three
months ended June 30, 1996.
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 six months ended June 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
------------------------- -----------------------
Per Per
Amount Unit Amount Unit
-------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net income
- limited partners $ 40,400 $ 0.20 $ 90,800 $ 0.45
Return of capital 99,600 0.51 49,200 0.25
-------------- -------- ----------- ---------
$ 140,000 $ 0.71 $ 140,000 $ 0.70
============== ======== =========== =========
</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) $ 91,800 $ --
=========== ===========
</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
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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
- ------------------------------
June 30, 1996 as compared to December 31, 1995
- ----------------------------------------------
The Partnership's primary sources of cash during the six months ended June 30,
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, 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.
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 June 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 June 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.
Results of Operations
- ---------------------
Six months ended June 30, 1996 as compared to six months ended June 30, 1995
- ----------------------------------------------------------------------------
The results of operations for the six months ended June 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 $40,800 and $91,700 for
the six months ended June 30, 1996 and 1995, respectively. Net income per
limited partnership unit was $0.20 in 1996 and $0.45 in 1995.
10
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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 83%
at June 30, 1996, compared to 78% for four wholly-owned properties at June 30,
1995. The recently acquired Trailmont community was 99% occupied at June 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 $22,100 and $14,500 for the six months ended June 30, 1996 and
1995, respectively. The overall occupancy of the two joint venture properties
increased from 86% at June 30, 1995 to 94% at June 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.
Interest income increased from $6,100 in 1995 to $23,500 in 1996 due mainly to
higher cash balances maintained by the Partnership.
Interest expense of $121,800 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 $63,300 in 1995 to $56,000 in
1996, due mainly to proxy solicitation costs which were incurred in 1995.
Three months ended June 30, 1996 as compared to three months ended June 30, 1995
- --------------------------------------------------------------------------------
The results of operations for the three months ended June 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 $13,400 and $62,000 for
the three months ended June 30, 1996 and 1995, respectively. Net income per
limited partnership unit was $0.06 in 1996 and $0.30 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.
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 $11,500 and $7,000 for the three months ended June 30, 1996 and
1995, respectively. The reasons for the increase were previously discussed.
Interest income increased from $3,000 in 1995 to $12,000 in 1996 due mainly to
higher cash balances maintained by the Partnership.
Interest expense of $68,500 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.
11
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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.
12
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR PARK PROPERTIES 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: August 12, 1996
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET OF WINDSOR PARK PROPERTIES 3 AS OF JUNE 30, 1996 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE SIX MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,158,900
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,338,500
<DEPRECIATION> 2,305,100
<TOTAL-ASSETS> 6,280,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,850,000
0
0
<COMMON> 0
<OTHER-SE> 3,267,900 <F1>
<TOTAL-LIABILITY-AND-EQUITY> 6,280,000
<SALES> 0
<TOTAL-REVENUES> 741,200
<CGS> 0
<TOTAL-COSTS> 423,200
<OTHER-EXPENSES> 155,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,800
<INCOME-PRETAX> 40,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 40,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,800
<EPS-PRIMARY> 0.20 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Limited and general partners equity.
<F2> Net income per limited partnership unit.
</FN>
</TABLE>
