<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [Fee Required]
For the fiscal year ended December 31, 1995
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
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 in its charter)
California 33-0115651
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (619) 746-2411
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
- -------------------------------------
(Title of Class)
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 [_]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $1,090,900
DOCUMENTS INCORPORATED BY REFERENCE: None
1
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TABLE OF CONTENTS
PART I
------
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
Item 1. Description of Business 3
Item 2. Description of Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
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Item 5. Market for the Partnership's Units and Related Security Holder Matters 7
Item 6. Management's Discussion and Analysis 7
Item 7. Financial Statements 9
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 21
PART III
--------
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act 21
Item 10. Executive Compensation 22
Item 11. Security Ownership of Certain Beneficial Owners and Management 22
Item 12. Certain Relationships and Related Transactions 22
Item 13. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
</TABLE>
2
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PART I
------
Item 1. DESCRIPTION OF BUSINESS
-----------------------
Business Development
- --------------------
Windsor Park Properties 3, a California Limited Partnership (the Partnership),
was formed on August 7, 1985 pursuant to the provisions of the California
Uniform Limited Partnership Act. The General Partners of the Partnership are
The Windsor Corporation, a California corporation, and John A. Coseo, Jr., chief
executive officer, president and principal stockholder of The Windsor
Corporation. The Partnership term is set to expire on December 31, 1999;
however, the Partnership may either be dissolved earlier or extended under
certain circumstances. The Partnership may be extended at the recommendation of
the General Partners with approval of a majority of the Limited Partners.
The Partnership was organized to acquire and hold existing manufactured home
communities for investment. Its principal investment objectives are to provide
to its Limited Partners: (i) distributions of cash from operations, (ii)
preservation, protection and eventual return of the Limited Partners'
investment, and (iii) realization of appreciation in the value of the properties
acquired.
The Partnership was funded through a public offering of 200,000 limited
partnership units (Units). All Units were sold for gross proceeds aggregating
$20,000,000. In addition, the General Partners initially purchased 1,000 Units
for $100,000. The offering commenced on October 15, 1985 and terminated on
September 24, 1986. The net proceeds from the offering were expended for the
acquisition of undivided interests in 10 fully-developed properties located in
Oregon, Florida, Indiana, Idaho, South Carolina, Iowa, Tennessee, and Wyoming.
The Partnership paid all cash for these properties.
In August 1993, the Partnership sold its interests in four manufactured home
communities for net proceeds of $11,806,300. The Partnership realized an
accounting gain on sale of $4,818,100.
In May 1995, through a proxy vote of the limited partners, an amendment to the
Agreement of Limited Partnership was approved permitting the financing of
currently owned manufactured home communities and the reinvestment of financing
proceeds into newly acquired manufactured home communities to be purchased with
permanent mortgage financing. Overall Partnership mortgage financing will not
exceed 55% of the value of existing and newly acquired properties.
Subsequent to the approval of the financing and reinvestment proposal discussed
above, the Partnership obtained two loans collateralized by interests in
currently owned manufactured home communities. The proceeds from these loans
were used as partial consideration to purchase an additional manufactured home
community. The remaining consideration was paid from the proceeds of permanent
mortgage financing placed on the acquired community.
In September 1995, the Partnership and an affiliated limited partnership jointly
obtained a $1,200,000 loan collateralized by the Harmony Ranch manufactured home
community, a jointly owned property. The Partnership's share of this loan is
$300,000. In January 1996, the Partnership obtained a $1,800,000 loan
collateralized by the Pondarosa, Little Eagle and Shady Hills manufactured home
communities.
In January 1996, the Partnership purchased the Trailmont manufactured home
community located in Nashville, Tennessee. The Partnership's total cost of the
property was $2,114,500. The Partnership obtained a $1,050,000 loan,
collateralized by the community, in connection with the purchase.
3
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The Partnership owns interests in the following manufactured home communities at
February 28, 1996:
<TABLE>
<CAPTION>
Date
Name of Property Ownership % Acquired Location
- ------------------- ----------- --------------- --------------------------
<S> <C> <C> <C>
Pondarosa 100% March 1986 Indianapolis, Indiana
Little Eagle 100% March 1986 Indianapolis, Indiana
The Pines 100% August 1986 Charleston, South Carolina
Shady Hills 100% September 1986 Nashville, Tennessee
Harmony Ranch 25% December 1986 Thonotosassa, Florida
Big Country Estates 40% December 1986 Cheyenne, Wyoming
Trailmont 100% January 1996 Nashville, Tennessee
</TABLE>
No further property financings are planned by the General Partners. A 70 space
expansion of the Trailmont community is under consideration. Should this
expansion not prove feasible, the General Partners may consider the acquisition
of an interest in one additional manufactured home community.
The overall occupancy at the six Partnership's properties owned at December 31,
1995 was 82%. The General Partners continue to maintain the properties in good
condition and promote them to improve occupancy. There are no current plans to
dispose of any of the properties.
Business of Issuer
- ------------------
The Partnership is currently in the business of managing, holding for
investment, and eventually selling the existing manufactured home communities.
Competitors of the Partnership include other public and private limited
partnerships, individuals, corporations, and other entities engaged in real
estate investment activities. Competition for such properties varies with
changes in the supply or demand for similar or competing properties in a given
area, changes in interest rates and the availability of mortgage funds, and
changes in tax, real estate, environmental, and zoning laws.
Partnership profitability depends in part on maximizing occupancy and rental
rates in its manufactured home communities. Rents and occupancy rates are
affected by both changes in general economic conditions and changes in local
conditions such as levels of employment, supply of other comparable units or
competitive housing alternatives, zoning laws, and the availability and cost of
energy and transportation.
All of the Partnership's properties are located in or near urban areas.
Accordingly, they compete for rentals not only with other manufactured home
communities, but with apartments and any other form of low cost housing that
might exist.
The Partnership's profitability also depends on the minimization of both
property and partnership administration expenses. Expenses are affected by
changes in general economic trends and changes in local conditions, such as
prevailing wages, utility rates, insurance costs, and real estate taxation
practices.
The Partnership has no employees. Partnership administrative services are
provided by The Windsor Corporation, which is reimbursed for costs incurred on
behalf of the Partnership. An independent property management company employs
all of the properties' on-site personnel and is reimbursed by the Partnership
for all such costs.
4
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Item 2. DESCRIPTION OF PROPERTIES
-------------------------
The Partnership owns interests in seven properties. The Partnership operates
the properties as manufactured home communities, renting space to manufactured
home tenants on a month-to-month basis. The properties compete for rentals with
other manufactured home communities and apartments in their local markets. All
properties are encumbered, except for The Pines and Big Country. It is the
General Partners' opinion that the properties are in good condition and are
adequately insured.
<TABLE>
<CAPTION>
Little
Pondarosa Eagle The Pines Shady Hills
------------- ------------- -------------- -----------
Indianapolis, Indianapolis, Charleston, Nashville,
Location Indiana Indiana South Carolina Tennessee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Percentage of
Ownership 100% 100% 100% 100%
Date Acquired 3/86 3/86 8/86 9/86
Acreage 18 22 24 25
Number of Spaces 148 95 204 251
Monthly Rents (1) $ 202 $ 183 $ 124 $ 142
Occupancy Level:
February 28, 1996 94% 95% 53% 74%
Real Estate Taxes $ 13,800 $ 11,900 $ 8,500 $ 23,700
Federal Tax Basis (3) $ 863,400 $588,900 $1,181,800 $2,101,200
Mortgage Information:
Balance payable $1,800,000 (2) -- (2)
Interest rate 8.64% (2) -- (2)
Amortization period -- (2) -- (2)
Maturity date 1/03 (2) -- (2)
Balance due at
maturity $1,800,000 (2) -- (2)
</TABLE>
5
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Item 2. DESCRIPTION OF PROPERTIES (continued)
-------------------------
<TABLE>
<CAPTION>
Big
Harmony Country
Ranch Estates Trailmont
------------- --------- ----------
Thonotosassa, Cheyenne, Nashville,
Location Florida Wyoming Tennessee
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of
Ownership 25% 40% 100%
Date Acquired 12/86 12/86 1/96
Acreage 29 28 30
Number of Spaces 192 255 131
Monthly Rents (1) $ 217 $ 179 $ 180
Occupancy Level:
February 28, 1996 92% 88% 100%
Real Estate Taxes $ 38,000 $ 12,000 $ 9,800
Federal Tax Basis (3) $ 487,200 $893,900 $2,114,500
Mortgage Information:
Balance payable $1,200,000 -- $1,050,000
Interest rate 8.64% -- 8.41%
Amortization period -- -- --
Maturity date 9/02 -- 1/03
Balance due at
maturity $1,200,000 -- $1,050,000
</TABLE>
(1) Average rental rates in effect on February 28, 1996.
(2) Same mortgage note payable as Pondarosa.
(3) For income tax purposes, the properties and their components are
depreciated using both straight-line and accelerated methods over useful
lives ranging from 3 to 40 years.
Item 3. LEGAL PROCEEDINGS
-----------------
There are no pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Partnership is a party or of which any
of its properties is the subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to security holders for a vote during the fourth
quarter of the fiscal year covered by this report.
6
<PAGE>
PART II
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Item 5. MARKET FOR THE PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
-----------------------------------------------------------------------
A public market for the Partnership's units does not exist and is not likely to
develop. As of February 28, 1996, there were approximately 3,100 persons
holding an aggregate of 197,733 Units.
Cash distributions paid to the limited partners since December 31, 1993 are as
follows:
<TABLE>
<CAPTION>
Per $1,000
Originally
Date Paid Amount (1) Invested (2)
- ------------- ---------- ------------
<S> <C> <C>
February 1996 $140,000 $6.96
August 1995 $ 70,000 $3.48
May 1995 $ 70,000 $3.48
February 1995 $ 70,000 $3.48
November 1994 $100,000 $4.98
August 1994 $100,000 $4.98
May 1994 $100,000 $4.98
February 1994 $100,000 $4.98
</TABLE>
(1) Amounts exclude General Partner participation.
(2) Computed based on $20,100,000 original investment.
Cash distributions paid to the General Partners since December 31, 1993 were
$32,100. The General Partners expect that the Partnership will make cash
distributions on a semi-annual basis in the future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
a) Liquidity and Capital Resources
-------------------------------
The Partnership's primary sources of cash during the years ended December 31,
1995 and 1994 were from the operations of its investment properties and cash
distributions from joint ventures. The primary uses of cash during the same
period were for cash distributions to partners and property operations.
In May 1995, through a proxy vote of the limited partners, an amendment to the
Agreement of Limited Partnership was approved permitting the financing of
currently owned manufactured home communities and the reinvestment of financing
proceeds into newly acquired manufactured home communities to be purchased with
permanent mortgage financing. Overall Partnership mortgage financing will not
exceed 55% of the value of existing and newly acquired properties.
Subsequent to the approval of the financing and reinvestment proposal discussed
above, the Partnership obtained two loans collateralized by interests in
currently owned manufactured home communities. The proceeds from these loans
were used as partial consideration to purchase an additional manufactured home
community. The remaining consideration was paid from the proceeds of permanent
mortgage financing placed on the acquired community.
7
<PAGE>
In September 1995, the Partnership and an affiliated limited partnership jointly
obtained a $1,200,000 loan collateralized by the Harmony Ranch manufactured home
community, a jointly owned property. The Partnership's share of this loan is
$300,000. The loan is payable in monthly interest only installments bearing
interest at 90 day LIBOR plus 2.95% (8.64% at December 31, 1995) and is due in
September 2002. The Partnership and the affiliated limited partnership are both
contingently liable for the full amount of the loan.
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% (8.64% at December 31, 1995) 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 $2,114,500. 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.
The Partnership owns interests in the following manufactured home communities at
February 28, 1996:
<TABLE>
<CAPTION>
Date
Name of Property Ownership % Acquired Location
- ------------------- ----------- -------------- --------------------------
<S> <C> <C> <C>
Pondarosa 100% March 1986 Indianapolis, Indiana
Little Eagle 100% March 1986 Indianapolis, Indiana
The Pines 100% August 1986 Charleston, South Carolina
Shady Hills 100% September 1986 Nashville, Tennessee
Harmony Ranch 25% December 1986 Thonotosassa, Florida
Big Country Estates 40% December 1986 Cheyenne, Wyoming
Trailmont 100% January 1996 Nashville, Tennessee
</TABLE>
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 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.
b) Results of Operations
---------------------
The Partnership realized net income of $176,100 ($0.87 per limited partnership
unit) for the year ended December 31, 1995 compared to a net loss of $464,500
($2.29 per limited partnership unit) for the year ended December 31, 1994.
Rent and utilities revenues increased from $982,800 in 1994 to $1,007,300 in
1995. The overall
8
<PAGE>
occupancy of the Partnership's four wholly-owned properties increased from 72%
at December 31, 1994 to 76% at December 31, 1995. Rent increases implemented
include $5 per month at Little Eagle effective January 1995 and $5 per month at
Shady Hills effective May 1995.
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 $29,900 and $17,400 for the years ended December 31, 1995 and
1994, respectively. The overall occupancy of the two joint venture properties
increased from 82% at December 31, 1994 to 89% at December 31, 1995. In
addition, rent increases of $10 and $8 per month were implemented at Harmony
Ranch in October 1995 and October 1994, respectively.
Interest income increased from $10,500 in 1994 to $15,300 in 1995 due mainly to
higher cash balances maintained by the Partnership.
Property operating expenses increased slightly from $672,400 in 1994 to $684,200
in 1995. The increase is due mainly to higher repairs and maintenance, and wage
costs.
In September 1994, the Partnership provided $600,000 for a loss in value of The
Pines manufactured home community. The provision was made after a management
review of the property and the local market indicated that an impairment in the
value of the property had occurred. The provision was measured as the
difference between the carrying value of the property and its estimated future
undiscounted cash flow. Factors considered and judgements made in estimating
future cash flow included current and expected future occupancy rates, future
rent raises, changes in operating expenses, the forecasted holding period and
the estimated property selling price.
Depreciation and amortization expense decreased from $133,400 in 1994 to
$111,600 in 1995. The decrease is due mainly to the $600,000 provision for
estimated loss in value of The Pines community recorded in September 1994, as
discussed previously. A portion of the provision was recorded as a reduction to
the depreciable basis of the property, thereby reducing future depreciation
expense.
General and administrative expense decreased slightly from $124,300 in 1994 to
$119,000 in 1995.
Item 7. FINANCIAL STATEMENTS
--------------------
The following financial statements are filed as a part of this report:
<TABLE>
<CAPTION>
Page
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<S> <C>
Independent Auditors' Report 10
Balance Sheet at December 31, 1995 11
Statements of Operations for the years ended
December 31, 1995 and 1994 12
Statements of Partners' Equity for the years ended
December 31, 1995 and 1994 13
Statements of Cash Flows for the years ended
December 31, 1995 and 1994 14
Notes to Financial Statements 15
</TABLE>
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Windsor Park Properties 3
(A California Limited Partnership)
Escondido, California
We have audited the accompanying balance sheet of Windsor Park Properties 3 as
of December 31, 1995 and the related statements of operations, partners' equity,
and cash flows for each of the two years in the period ended December 31, 1995.
These financial statements are the responsibility of the Partnership'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, such financial statements present fairly, in all material
respects, the financial position of Windsor Park Properties 3 as of December 31,
1995 and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Costa Mesa, California
March 1, 1996
10
<PAGE>
<TABLE>
<CAPTION>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
December 31, 1995
--------------------
ASSETS
- ------
<S> <C>
Property held for investment, net $ 2,010,000
Investments in joint ventures 937,500
Cash and cash equivalents 502,700
Other assets 134,500
--------------------
$ 3,584,700
====================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Accounts payable $ 48,300
Accrued expenses 82,100
Tenant deposits and other liabilities 45,500
--------------------
175,900
--------------------
Partners' equity:
Limited partners 3,954,200
General partners (545,400)
--------------------
3,408,800
--------------------
$ 3,584,700
====================
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------
1995 1994
---------------- --------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 1,007,300 $ 982,800
Equity in earnings of joint ventures 29,900 17,400
Interest 15,300 10,500
Other 38,400 55,900
---------------- -------------
1,090,900 1,066,600
---------------- -------------
COSTS AND EXPENSES
- ------------------
Property operating 684,200 672,400
Depreciation and amortization 111,600 133,400
General and administrative:
Related parties 70,200 75,800
Other 48,800 48,500
Interest 1,000
Provision for estimated loss in value of property
held for investment 600,000
---------------- -------------
914,800 1,531,100
---------------- -------------
Net income (loss) $ 176,100 $ (464,500)
================ =============
Net income (loss) - general partners $ 1,800 $ (4,600)
================ =============
Net income (loss) - limited partners $ 174,300 $ (459,900)
================ =============
Net income (loss) per limited partnership unit $ 0.87 $ (2.29)
================ =============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
----------------------------------------------
<TABLE>
<CAPTION>
General Partners Limited Partners Total
-------------------- ----------------- -------------
<S> <C> <C> <C>
Balance at January 1, 1994 $ (510,500) $ 4,882,400 $ 4,371,900
Cash distributions (21,100) (400,000) (421,100)
Net loss (4,600) (459,900) (464,500)
Repurchase of limited
partnership units (13,200) (13,200)
-------------------- ----------------- -------------
Balance at December 31, 1994 (536,200) 4,009,300 3,473,100
Cash distributions (11,000) (210,000) (221,000)
Net income 1,800 174,300 176,100
Repurchase of limited
partnership units (19,400) (19,400)
-------------------- ----------------- -------------
Balance at December 31, 1995 $ (545,400) $ 3,954,200 $ 3,408,800
==================== ================= =============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
For The Year Ended December 31,
--------------------------------
1995 1994
---------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 176,100 $ (464,500)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 111,600 133,400
Equity in earnings of joint ventures (29,900) (17,400)
Joint ventures' cash distributions 29,900 17,400
Gain on sale of property held for
investment and other assets (400) (800)
Provision for estimated loss in value of property
held for investment 600,000
Changes in operating assets and liabilities:
Other assets (72,700) 46,400
Accounts payable 9,700 18,200
Accrued expenses 29,900 (35,200)
Tenant deposits and other liabilities (11,600) (20,800)
---------------- ------------
Net cash provided by operating activities 242,600 276,700
---------------- ------------
Cash flows from investing activities:
Joint ventures' cash distributions 334,900 47,400
Increase in property held for investment (98,300) (59,800)
Proceeds from sale of property held for
investment and other assets 3,900 5,600
---------------- ------------
Net cash provided by (used in) investing activities 240,500 (6,800)
---------------- ------------
Cash flows from financing activities:
Cash distributions (221,000) (421,100)
Repurchase of limited partnership units (19,400) (13,200)
Repayment of note payable (10,000)
---------------- ------------
Net cash used in financing activities (240,400) (444,300)
---------------- ------------
Net increase (decrease) in cash and cash equivalents 242,700 (174,400)
Cash and cash equivalents at beginning of year 260,000 434,400
---------------- ------------
Cash and cash equivalents at end of year $ 502,700 $ 260,000
================ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (none capitalized) $ -- $ 1,000
================ ============
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------------
The Partnership
- ---------------
Windsor Park Properties 3, A California Limited Partnership (the Partnership),
was formed on August 7, 1985 for the purpose of acquiring and holding existing
manufactured home communities for investment. The General Partners of the
Partnership are The Windsor Corporation, a California corporation, and John A.
Coseo, Jr., chief executive officer, president and principal stockholder of The
Windsor Corporation.
The Partnership was funded through a public offering of 200,000 limited
partnership units at $100 per unit which commenced on October 15, 1985, and
terminated on September 24, 1986. The Partnership term is set to expire on
December 31, 1999; however, the Partnership may either be dissolved earlier or
extended under certain circumstances. The Partnership may be extended at the
recommendation of the General Partners with approval of a majority of the
limited partners.
The following is a summary of the Partnership's significant accounting policies:
Property Held For Investment
- ----------------------------
Property held for investment is recorded at the lower of cost or estimated net
realizable value after disposition costs and depreciated over various estimated
useful lives (buildings and improvements - 5 to 19 years; fixtures and equipment
- - 3 to 5 years) using the straight-line method. When assets are sold or
otherwise disposed of, the cost and related accumulated depreciation are removed
from the accounts, and any gain or loss is included in net income. Repairs and
maintenance are charged to operations as incurred.
Property held for investment is reviewed for impairment annually or whenever
events or changes in circumstances indicate that the carrying values of the
properties may not be recoverable. Impairment is measured as the difference
between the carrying value of the property and the estimated future undiscounted
cash flows.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of Long-
Lived Assets and Long-Lived Assets to Be Disposed Of (SFAS No. 121), which must
be adopted by the Partnership in 1996. SFAS No. 121, when adopted, represents a
change in the way the Partnership will measure the recoverability of its
property held for investment. At this time, the General Partners do not believe
that adoption of SFAS No. 121 will have a material impact on the financial
statements of the Partnership.
Investments in Joint Ventures
- -----------------------------
The investments in joint ventures are accounted for by the equity method of
accounting as the Partnership does not exercise control over these ventures.
Income Taxes
- ------------
Under provisions of the Internal Revenue Code and the California Revenue and
Taxation Code, partnerships are generally not subject to income taxes. The tax
effect of any income or loss accrues
15
<PAGE>
to the individual partners.
Net Income (Loss) Per Limited Partnership Unit
- ----------------------------------------------
Net income (loss) per limited partnership unit is calculated based on the
weighted average number of limited partnership units outstanding during the year
and the net income (loss) allocated to the Limited Partners. The weighted
average number of limited partnership units outstanding during the years ended
December 31, 1995 and 1994 was 200,069 and 200,482, respectively.
Statements of Cash Flows
- ------------------------
For purposes of the statements of cash flows, the Partnership considers all
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amounts of cash and cash equivalents, accounts payable, accrued
expenses and other liabilities approximate fair value because of the short
maturity of these financial instruments.
Reclassification
- ----------------
Certain 1994 amounts have been reclassified to conform with the 1995
presentation.
NOTE 2. PARTNERSHIP AGREEMENT
---------------------
In accordance with the Partnership Agreement, the maximum liability of the
Limited Partners is the amount of their capital contributions. The number of
limited partnership units outstanding at December 31, 1995 and 1994 was 199,224
and 200,270, respectively, which represented capital contributions of
$19,922,400 and $20,027,000, respectively. During the years ended December 31,
1995 and 1994, the Partnership repurchased 1,046 units and 575 units,
respectively, for $19,400 and $13,200, respectively. The General Partners owned
1,010 units at both December 31, 1995 and 1994.
The General Partners and their affiliates are entitled to receive various fees
and compensation from the Partnership which are summarized as follows:
Operational Stage
- -----------------
The Partnership's investment properties were managed by Windsor Asset
Management, Inc. (WAMI), an affiliate of The Windsor Corporation, until November
1994. At that time, WAMI was merged into an independent company in which The
Windsor Corporation has a nominal equity position. For management services, WAMI
received 5% of gross property receipts. During the year ended December 31, 1994
WAMI received fees of $47,400. WAMI received no fees during the year ended
December 31, 1995.
16
<PAGE>
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 $80,100 and $85,800 for such
costs during the years ended December 31, 1995 and 1994, 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 years ended December 31, 1995 and 1994, the General Partners received
cash distributions of $11,000 and $21,100, respectively.
NOTE 3. PROPERTY HELD FOR INVESTMENT
----------------------------
Property held for investment consists of four manufactured home communities
summarized as follows:
<TABLE>
<CAPTION>
Name of Property Date Acquired Location
- ---------------- ------------- --------
<S> <C> <C>
Pondarosa March 31, 1986 Indianapolis, Indiana
Little Eagle March 31, 1986 Indianapolis, Indiana
The Pines August 1, 1986 Charleston, South Carolina
Shady Hills September 30, 1986 Nashville, Tennessee
</TABLE>
<TABLE>
<CAPTION> December 31, 1995
-----------------
<S> <C>
Land $ 920,000
Buildings and improvements 3,216,800
Fixtures and equipment 79,800
-----------------
4,216,600
Less accumulated depreciation (2,206,600)
-----------------
$ 2,010,000
=================
</TABLE>
In September 1994, the Partnership provided $600,000 for an estimated loss in
value of The Pines manufactured home community. The provision was made after a
management review of the property and the local market indicated that an
impairment in the value of the property had occurred. The provision was
measured as the difference between the carrying value of the property and its
estimated future undiscounted cash flows. The provision was reflected as a
reduction to the depreciable and non-depreciable components of the property.
17
<PAGE>
NOTE 4. INVESTMENTS IN JOINT VENTURES
-----------------------------
The Partnership's investments in joint ventures consist of undivided interests
in two manufactured home communities summarized as follows:
<TABLE>
<CAPTION>
Ownership
Name of Property Percentage Date Acquired Location
- ---------------------- ---------- ------------- --------
<S> <C> <C> <C>
Big Country Estates 40% December 1, 1986 Cheyenne, Wyoming
Harmony Ranch 25% December 15, 1986 Thonotosassa, Florida
</TABLE>
The remaining interests in the communities are owned by Windsor Park Properties
4, a California Limited Partnership, which has the same General Partners as the
Partnership.
In September 1995, the Partnership and Windsor Park Properties 4 jointly
obtained a $1,200,000 loan collateralized by the Harmony Ranch community. The
Partnership's share of this loan is $300,000. The loan is payable in monthly
interest only installments bearing interest at 90 day LIBOR plus 2.95% (8.64% at
December 31, 1995) and is due in September 2002. The Partnership and Windsor
Park Properties 4 are contingently liable for the full amount of the loan.
The combined condensed financial position and results of operations of the joint
ventures follows:
<TABLE>
<CAPTION>
Financial Position December 31, 1995
- ------------------ -----------------
<S> <C>
Property held for investment, net $ 3,663,600
Cash 51,500
Other assets 125,900
-----------------
Total assets $ 3,841,000
=================
Mortgage note payable $ 1,200,000
Accounts payable 22,100
Other liabilities 72,900
-----------------
Total liabilities 1,295,000
Partners' equity 2,546,000
-----------------
$ 3,841,000
=================
</TABLE>
<TABLE>
<CAPTION>
For The Year Ended December 31,
----------------------------------
<S> <C> <C>
Results of Operations 1995 1994
- --------------------- ----------------------------------
Property revenues $ 932,500 $ 825,000
----------------------------------
Expenses:
Property operating 525,000 480,800
Depreciation 266,600 256,100
Interest 43,600 21,100
----------------------------------
835,200 758,000
----------------------------------
Net income $ 97,300 $ 67,000
==================================
</TABLE>
18
<PAGE>
NOTE 5. 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 years ended December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------
Per Per
Amount Unit Amount Unit
----------- -------- --------- -------
<S> <C> <C> <C> <C>
Net income
- limited partners $ 174,300 $ 0.87 $ $
Return of capital 35,700 0.18 400,000 2.00
----------- -------- --------- -------
$ 210,000 $ 1.05 $ 400,000 $ 2.00
=========== ======== ========= =======
</TABLE>
NOTE 6. INCOME TAXES
------------
Certain transactions of the Partnership are reported in different periods for
financial and tax reporting purposes. A reconciliation between amounts reported
for financial statement and federal tax return purposes as of December 31, 1995
and 1994 and for the years then ended follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------- ------------------------
Partners' Net (Loss) Partners'
Net Income Equity Income Equity
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Per financial statements $176,100 $3,408,800 $(464,500) $3,473,100
Syndication costs 2,203,400 2,203,400
Gain on sale of property
held for investment (710,000) (710,000)
Provision for estimated
loss in value of
property held for
investment 2,525,000 600,000 2,525,000
Depreciation (57,200) 1,057,200 (68,900) 1,114,400
Other (6,800) 99,500 (24,200) 106,300
-------------- ----------- ---------- ----------
Per Partnership tax
return $112,100 $8,583,900 $ 42,400 $8,712,200
============== =========== ========== ==========
</TABLE>
19
<PAGE>
NOTE 7. SUBSEQUENT EVENTS
-----------------
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% (approximately 8.6% at the closing) and is due in January 2003.
In January 1996, the Partnership purchased the Trailmont manufactured home
community located in Nashville, Tennessee for a total cost of $2,114,500. In
connection with the purchase, 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.
20
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
There were no disagreements over accounting or financial disclosure with the
independent accountants for the Partnership.
PART III
--------
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
--------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
The original general partners of the Partnership were The Windsor Corporation
(Windsor), and John A. Coseo, Jr. Mr. Coseo, his wife Patricia Ann Coseo and
their children owned a majority of the stock of Windsor.
In July 1994, Windsor merged into Windsor Group, Inc., a majority-owned
subsidiary. In conjunction with the merger, Windsor Group, Inc. changed its
name to The Windsor Corporation (Wincorp). Subsequent to the merger, Mr. Coseo,
his wife Patricia Ann Coseo and their children own a majority of the stock of
Wincorp.
Windsor and Wincorp were incorporated in 1977 and 1992, respectively, to engage
in the real estate syndication business. Since 1979 they have concentrated
solely on the acquisition, management, and sale of fully-developed manufactured
home communities through the investment programs which they sponsor.
The executive officers of Windsor and Wincorp, their subsidiaries, and
affiliates do not receive direct compensation from the Partnership in these
capacities and are only required to spend such time on the Partnership's affairs
as is deemed necessary. Substantial amounts of these officers' time is expected
to be spent on matters unrelated to the Partnership, particularly after the
completion of its offering and acquisition stages.
The names, ages, and nature of the positions held by the directors and executive
officers of Wincorp follow:
<TABLE>
<CAPTION>
Name Age Office
- ------------------ --- -------------------------------
<S> <C> <C>
John A. Coseo, Jr. 57 Chairman of the Board and Chief
Executive Officer
Patricia A. Coseo 54 Secretary and Director
</TABLE>
A brief background of the directors and executive officers follows.
John A. Coseo, Jr. (57) was the founder of Windsor in 1974 and has been actively
involved in all facets of the manufactured housing business since that time.
From 1979 to the present, Mr. Coseo has acted as general partner or advisor in
the acquisition and management of 55 manufactured home communities throughout
the United States. Mr. Coseo is the Chairman and chief executive officer of
Wincorp. Mr. Coseo is a general partner of seven limited partnerships which
have registered their securities under the Securities and Exchange Act of 1934.
Mr. Coseo is also Chairman, chief executive officer, and a trustee of Wincorp's
first sponsored real estate investment trust, Windsor Real Estate Investment
Trust 8. Mr. Coseo is the husband of Patricia A. Coseo.
21
<PAGE>
Patricia A. Coseo (54) is and has been the Secretary and a Director of Windsor
and Wincorp for the past ten years. She is involved in corporate planning and
development, and is the spouse of John A. Coseo, Jr.
Item 10. EXECUTIVE COMPENSATION
----------------------
The Partnership has not paid and does not propose to pay any remuneration or
retirement benefits to the directors or executive officers of The Windsor
Corporation, its subsidiaries and affiliates. Refer to Item 12 (Certain
Relationships and Related Transactions) for management fees and expense
reimbursements paid to The Windsor Corporation and affiliates by the
Partnership.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
No person is known by the Partnership to be the beneficial owner of more
than 5% of the limited partnership units.
(b) Security Ownership of Management
The following table presents certain information regarding the number of
units owned, directly or indirectly, by (i) each General Partner and (ii)
all General Partners as a group as of December 31, 1995.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Units of Limited John A. Coseo, Jr.
Partnership Interest A General Partner 10 .005%
Units of Limited The Windsor Corporation
Partnership Interest A General Partner 1,000 .502%
--------------------- ----------
Units of Limited All General Partners
Partnership Interest As a group 1,010 .507%
===================== ==========
</TABLE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The following table reflects all compensation accrued or paid to the General
Partners and their affiliates during the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Form of Compensation and Entity Receiving 1995 1994
- ----------------------------------------- ------- -------
<S> <C> <C>
Expense reimbursement - The Windsor Corporation $80,100 $85,800
Cash distributions - The Windsor Corporation $11,000 $21,100
Property management fees - Windsor Asset Management, Inc. $ -0- $47,400
</TABLE>
22
<PAGE>
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
--- ------------------------------
(3) - Certificate and Agreement of Limited Partnership filed as
Exhibit A to Registration Statement No. 2-99697 and incorporated
herein by reference.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last quarter of the
period covered by this Form 10-KSB.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on this 18 day of March, 1996.
WINDSOR PARK PROPERTIES 3
A California Limited Partnership
By: /s/ John A. Coseo, Jr.
-------------------------------
John A. Coseo, Jr.
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------ ----------------------------------- --------------
<S> <C> <C>
/s/ John A. Coseo, Jr. General Partner and Chairman of the March 18, 1996
- ------------------------ Board of The Windsor Corporation
JOHN A. COSEO, JR. (Principal Executive Officer of The
Windsor Corporation)
/s/ Patricia A. Coseo Director of The Windsor Corporation March 18, 1996
- ------------------------
PATRICIA A. COSEO
</TABLE>
24
<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 DECEMBER 31, 1995 AND THE RELATED
STATEMENTS OF OPERATIONS, PARTNER'S EQUITY AND CASH FLOWS FOR THE YEAR THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 502,700
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,216,600
<DEPRECIATION> 2,206,600
<TOTAL-ASSETS> 3,584,700
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,408,800<F1>
<TOTAL-LIABILITY-AND-EQUITY> 3,584,700
<SALES> 0
<TOTAL-REVENUES> 1,090,900
<CGS> 0
<TOTAL-COSTS> 684,200
<OTHER-EXPENSES> 230,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 176,100
<INCOME-TAX> 0
<INCOME-CONTINUING> 176,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 176,100
<EPS-PRIMARY> 0.87<F2>
<EPS-DILUTED> 0
<FN>
<F1>Limited and general partners equity
<F2>Net income per limited partnership unit
</FN>
</TABLE>
