<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 1997
-------------------------
[_] 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 incorporation (IRS Employer
or organization) Identification No.)
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
------
Page
----
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II
-------
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE
2
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WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
March 31, 1997
--------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 1,192,600
Buildings and improvements 5,055,800
Fixtures and equipment 106,200
--------------
6,354,600
Less accumulated depreciation (2,454,800)
--------------
3,899,800
Investments in joint ventures 1,458,900
Cash and cash equivalents 370,700
Due from affiliate 244,000
Deferred financing costs 124,800
Other assets 80,800
--------------
$ 6,179,000
==============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $ 2,970,400
Accounts payable 27,800
Accrued expenses 85,600
Tenant deposits and other liabilities 63,600
--------------
3,147,400
--------------
Partners' equity:
Limited partners 3,063,600
General partners (32,000)
--------------
3,031,600
--------------
$ 6,179,000
==============
</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 March 31,
----------------------------
1997 1996
------------ ------------
REVENUES
- --------
<S> <C> <C>
Rent and utilities $ 395,500 $ 326,000
Equity in earnings of joint ventures 17,000 10,600
Interest 10,800 11,500
Other 11,800 10,700
------------ ------------
435,100 358,800
------------ ------------
COSTS AND EXPENSES
- ------------------
Property operating 225,500 203,000
Interest 70,000 53,300
Depreciation and amortization 49,600 47,700
General and administrative:
Related parties 18,700 16,700
Other 11,200 10,700
------------ ------------
375,000 331,400
------------ ------------
Net income $ 60,100 $ 27,400
============ ============
Net income - general partners $ 600 $ 300
============ ============
Net income - limited partners $ 59,500 $ 27,100
============ ============
Net income per limited partnership unit $ 0.30 $ 0.14
============ ============
</TABLE>
See accompanying notes to financial statements.
4
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WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 60,100 $ 27,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 49,600 47,700
Equity in earnings of joint ventures (17,000) (10,600)
Joint ventures' cash distributions 17,000 10,600
Loss on sale of property held for investment 1,100
Amortization of deferred financing costs 5,000 4,100
Changes in operating assets and liabilities:
Other assets 107,200 88,300
Accounts payable (6,000) (17,300)
Accrued expenses (28,300)
Tenant deposits and other liabilities 400 5,600
------------- -------------
Net cash provided by operating activities 188,000 156,900
------------- -------------
Cash flows from investing activities:
Investment in joint venture (636,200)
Due from affiliate (244,000)
Joint ventures' cash distributions 35,300 16,100
Increase in property held for investment (10,000) (92,800)
Proceeds from sale of property held for investment 500 500
------------- -------------
Net cash used in investing activities (854,400) (76,200)
------------- -------------
Cash flows from financing activities:
Cash distributions (147,400) (147,400)
Repurchase of limited partnership units (7,300) (27,900)
Proceeds from mortgage note payable 778,500
Payment of deferred financing costs (100,400)
------------- -------------
Net cash (used in) provided by financing activities (154,700) 502,800
------------- -------------
Net (decrease) increase in cash and cash equivalents (821,100) 583,500
Cash and cash equivalents at beginning of period 1,191,800 502,700
------------- -------------
Cash and cash equivalents at end of period $ 370,700 $ 1,086,200
============= =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at March 31, 1997 and the related statements of operations and
of cash flows for the three months ended March 31, 1997 and 1996 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. INVESTMENTS IN JOINT VENTURES
-----------------------------
In February 1997, the Partnership purchased a 29% interest in the Apache East
Estates and Denali Park Estates manufactured home communities located in
Phoenix, Arizona. The remaining interests in the communities were purchased by
affiliated entities. The Partnership's cost of its equity interest in the
communities was $636,200. In connection with the purchase, the joint venture
obtained a $3,040,000 loan, collateralized by the communities. The
Partnership's share of this loan is $881,600. The loan initially bears interest
at 8.375%. In March 2000 and March 2003, the interest rate adjusts to the yield
on the 3-year Treasury Note plus 2.2% and the loan is due in March 2006.
The Partnership's investments in joint ventures consist of interests in four
manufactured home communities at March 31, 1997. The combined condensed results
of operations of the joint venture properties (including Apache East Estates and
Denali Park Estates since their purchase) for the three months ended March 31,
1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
------------ -------------
<S> <C> <C>
Total revenues $ 346,900 $ 245,800
------------ -------------
Expenses:
Property operating 160,200 124,700
Depreciation 80,400 65,400
Interest 57,000 27,400
------------ -------------
297,600 217,500
------------ -------------
Net income $ 49,300 $ 28,300
============ =============
</TABLE>
NOTE 3. DUE FROM AFFILIATE
------------------
In connection with the acquisition of the Apache East Estates and Denali Park
Estates manufactured home communities, the Partnership provided a $244,000
advance to an affiliated entity. The advance bears interest at prime plus 2%
and was fully collected in April 1997.
6
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NOTE 4. NET INCOME PER LIMITED PARTNERSHIP UNIT
---------------------------------------
Net income per limited partnership unit is calculated based on the weighted
average number of limited partnership units outstanding during the period and
the net income allocated to the Limited Partners. The weighted average number
of limited partnership units outstanding during the three months ended March 31,
1997 and 1996 was 196,314 and 198,278, respectively.
NOTE 5. 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 from the Partnership various fees
and compensation 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 incurred on the Partnership's
behalf. The Partnership was charged $22,100 and $19,200 for such costs during
the three months ended March 31, 1997 and 1996, respectively. These costs are
included in property operating and general and administrative expenses in the
accompanying Statement of Operations.
Liquidation Stage
- -----------------
The General Partners receive 1% of 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.
The General Partners generally receive 1% of profits and losses from the sale of
Partnership properties. However, if applicable, profits on sale will first be
allocated 100% to the General Partners to the extent of their negative capital
account.
During both the three months ended March 31, 1997 and 1996, the General Partners
received cash distributions of $7,400.
7
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NOTE 6. DISTRIBUTIONS TO LIMITED PARTNERS
---------------------------------
Distributions to limited partners in excess of net income allocated to limited
partners are considered a return of capital. A breakdown of cash distributions
to limited partners for the three months ended March 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
Per Per
Amount Unit Amount Unit
------ ---- ------ ----
<S> <C> <C> <C> <C>
Net income
- Limited Partners $ 59,500 $0.30 $ 27,100 $0.14
Return of capital 80,500 0.41 112,900 0.57
-------- ----- -------- -----
$140,000 $0.71 $140,000 $0.71
======== ===== ======== =====
</TABLE>
NOTE 7. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $64,200 $29,400
======= =======
Supplemental schedule of non-cash investing and
- -----------------------------------------------
financing activities:
--------------------
In 1996, the Partnership acquired the Trailmont
community. 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:
Total property cost $ 2,114,500
Note payable proceeds, net (1,005,000)
Existing property financing
proceeds to seller (1,021,500)
------------
Cash paid $ 88,000
============
</TABLE>
8
<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
- ------------------------------
March 31, 1997 as compared to December 31, 1996
- -----------------------------------------------
The Partnership's primary sources of cash during the three months ended March
31, 1997 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 an investment in a joint venture, an advance to an affiliated
entity and cash distributions to partners.
In February 1997, the Partnership purchased a 29% interest in the Apache East
Estates and Denali Park Estates manufactured home communities located in
Phoenix, Arizona. The remaining interests in the communities were purchased by
affiliated entities. The Partnership's cost of its equity interest in the
properties was $636,200. In connection with the purchase, the joint venture
obtained a mortgage loan of $3,040,000, collateralized by the communities. The
Partnership's share of the loan is $881,600. The loan initially bears interest
at 8.375%. In March 2000 and March 2003, the interest rate adjusts to the yield
on the 3 year Treasury Note plus 2.2% and the loan is due in March 2006.
No further investment property acquisitions are planned by the General Partners.
In connection with the purchase of the Apache East Estates and Denali Park
Estates manufactured home communities, the Partnership provided a $244,000
advance to an affiliated entity. The advance bears interest at prime plus 2%
and was fully collected in April 1997.
At March 31, 1997 the Partnership's total mortgage debt, including its
proportionate share of joint venture debt, was $4,152,000, consisting of
$3,270,400 of fixed rate debt and $881,600 of variable rate debt. The average
rate of interest on the fixed and variable rate debt was 8.8% and 8.4%,
respectively at March 31, 1997.
The future sources of cash for the Partnership will be provided from property
operations, cash reserves and ultimately from the sale of property. The future
uses of cash will be for Partnership administration, capital expenditures and
distributions to partners. The General Partners believe that the future sources
of cash are sufficient to meet the working capital requirements of the
Partnership for the foreseeable future.
Results of Operations
- ---------------------
Three months ended March 31, 1997 as compared to three months ended March 31,
- -----------------------------------------------------------------------------
1996
- ----
The results of operations for the three months ended March 31, 1997 and 1996 are
not directly comparable due to the purchases of the Trailmont, Apache East
Estates and Denali Park Estates communities in January 1996, February 1997 and
February 1997, respectively. The Partnership realized net income of $60,100 and
$27,400 for the three months ended March 31, 1997 and 1996, respectively. Net
income per limited partnership unit was $0.30 in 1997 and $0.14 in 1996.
As a result of the investment property purchases described above, all major
revenue and expense
9
<PAGE>
categories increased in 1997, specifically rent and utilities revenues, equity
in earnings of joint ventures, property operating costs, and deprecation and
amortization.
The overall occupancy of the Partnership's five wholly-owned communities
increased from 80% at March 31, 1996 to 89% at March 31, 1997. Recent rent
increases implemented include $5 per month at both Pondarosa and Little Eagle
effective January 1997; $20 per month at The Pines effective March 1997; and $20
per month at Shady Hills effective January 1997.
Equity in earnings of joint ventures represents the Partnership's share of the
net income of two manufactured home communities in 1996 and four manufactured
home communities in 1997 (as mentioned previously, two joint venture interests
were acquired in February 1997). Equity in earnings of joint ventures increased
from $10,600 in 1996 to $17,000 in 1997 due mainly to the purchase of the two
additional joint venture interests. The overall occupancy of the Partnership's
four joint venture properties was 88% at March 31, 1997, compared to 92% for two
properties at March 31, 1996. Recent rent increases include $10 and $12 per
month at Big Country effective February 1997 and 1996, respectively, and $10 per
month at Harmony Ranch effective October 1996.
Interest expense increased from $53,300 in 1996 to $70,000 in 1997, due mainly
to the loan obtained by the Partnership in connection with the acquisition of
the Trailmont community in January 1996.
General and administrative expense increased from $27,400 in 1996 to $29,900 in
1997, due mainly to higher employee time charges from the General Partners.
10
<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
1) A Form 8-K (dated March 5, 1997) was filed with regards to the
Partnership's acquisition of interests in the Apache East Estates
and Denali Park Estates manufactured home communities located in
Phoenix, Arizona.
The item reported in this current report was Item 2 (acquisition
or disposition of assets).
2) A Form 8-K/A (dated April 28, 1997) was filed with regards to the
Partnership's acquisition of interests in the Apache East Estates
and Denali Park Estates manufactured home communities located in
Phoenix, Arizona.
The items reported in this current report were Item 2
(acquisition or disposition of assets) and Item 7 (financial
statements, proforma financial information and exhibits).
A summary of the financial information included in the report
follows:
a) Financial Statements and Proforma Financial Information of
Apache East Estates and Denali Park Estates Manufactured
Home Communities.
b) Proforma Financial Information of Windsor Park Properties 3.
11
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR PARK PROPERTIES 3,
A California Limited Partnership
--------------------------------
(Registrant)
By: The Windsor Corporation, General Partner
By /s/ JOHN A. COSEO, JR.
------------------------------
JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: May 12, 1997
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET OF WINDSOR PARK PROPERTIES 3 AS OF MARCH 31, 1997 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE THREE MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 370,700
<SECURITIES> 0
<RECEIVABLES> 244,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,354,600
<DEPRECIATION> 2,454,800
<TOTAL-ASSETS> 6,179,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,970,400
0
0
<COMMON> 0
<OTHER-SE> 3,031,600<F1>
<TOTAL-LIABILITY-AND-EQUITY> 6,179,000
<SALES> 0
<TOTAL-REVENUES> 435,100
<CGS> 0
<TOTAL-COSTS> 225,500
<OTHER-EXPENSES> 79,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70,000
<INCOME-PRETAX> 60,100
<INCOME-TAX> 0
<INCOME-CONTINUING> 60,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,100
<EPS-PRIMARY> 0.30<F2>
<EPS-DILUTED> 0
<FN>
<F1>Limited and general partners equity.
<F2>Net income per limited partnership unit.
</FN>
</TABLE>
