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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, 1998
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 0-15699
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WINDSORPARK PROPERTIES 3, A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
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California 33-0115651
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
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6430 South Quebec Street, Englewood, Colorado 80111
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(Address of principal executive offices)
(303) 741-3707
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
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TABLE OF CONTENTS
PART I
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Page
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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 12
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2
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WINDSOR PARK PROPERTIES 3
(A California Limited Partnership)
BALANCE SHEET
(unaudited)
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<CAPTION>
June 30, 1998
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ASSETS
Property held for investment:
Land $ 1,192,600
Buildings and improvements 5,240,100
Fixtures and equipment 124,700
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6,557,400
Less accumulated depreciation (2,709,000)
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3,848,400
Investments in joint ventures and limited partnerships 1,302,900
Cash and cash equivalents 611,900
Deferred financing costs 100,000
Other assets 122,100
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Total Assets $ 5,985,300
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LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Mortgage notes payable $ 2,970,400
Accounts payable 14,900
Accrued expenses 188,000
Due to General Partners and affiliates 9,000
Tenant deposits and other liabilities 41,400
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Total Liabilities 3,223,700
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Partners' equity:
Limited partners 2,807,100
General partners (45,500)
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2,761,600
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Total Liabilities and Partners' Equity $ 5,985,300
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3
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WINDSOR PARK PROPERTIES 3
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
(unaudited)
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<CAPTION>
Three Months Ended June 30,
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1998 1997
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REVENUES
Rent and utilities $ 423,200 $ 404,200
Equity in earnings of joint ventures and limited partnerships 3,100 2,300
Interest 6,200 9,300
Other 9,300 9,900
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441,800 425,700
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COSTS AND EXPENSES
Property operating 251,500 268,600
Interest 69,900 70,000
Depreciation and amortization 52,200 53,400
General and administrative:
Related parties 8,900 19,200
Other 14,900 11,300
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397,400 422,500
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Net income $ 44,400 $ 3,200
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Net income - general partners $ 400 $ 0
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Net income - limited partners $ 44,000 $ 3,200
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Basic and dilutive earnings per limited partnership unit $ 0.23 $ 0.02
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See accompanying notes to financial statements.
4
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WINDSOR PARK PROPERTIES 3
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
(unaudited)
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<CAPTION>
Six Months Ended June 30,
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1998 1997
<S> <C> <C>
REVENUES
Rent and utilities $ 838,400 $ 799,700
Equity in earnings of joint ventures and limited partnerships 12,000 19,300
Interest 13,800 20,100
Other 20,400 21,700
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884,600 860,800
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COSTS AND EXPENSES
Property operating 484,200 494,100
Interest 139,900 140,000
Depreciation and amortization 104,400 103,000
General and administrative:
Related parties 19,000 37,900
Other 30,000 22,500
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777,500 797,500
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Net income $ 107,100 $ 63,300
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Net income - general partners $ 1,100 $ 600
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Net income - limited partners $ 106,000 $ 62,700
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Basic and dilutive earnings per limited partnership unit $ 0.55 $ 0.32
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See accompanying notes to financial statements.
5
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WINDSOR PARK PROPERTIES 3
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
(unaudited)
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Six Months Ended June 30,
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1998 1997
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Cash flows from operating activities:
Net income $ 107,100 $ 63,300
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 104,400 103,000
Equity in earnings of joint ventures and limited partnerships (12,000) (19,300)
Joint ventures' and limited partnerships cash distributions 12,000 19,300
Amortization of deferred financing costs 10,000 9,900
Loss on sale of property held for investment 0 36,900
Changes in operating assets and liabilities:
(Increase) decrease in other assets (51,300) 109,700
Accounts payable (20,200) (4,300)
Increase (decrease) in accrued expenses 89,000 (38,500)
Due to General Partners and affiliates (61,300) 0
(Decrease) increase in tenant deposits and other liabilities (21,100) 1,300
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Net cash provided by operating activities 156,600 281,300
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Cash flows from investing activities:
Investment in joint ventures and limited partnerships 0 (636,200)
Increase in property held for investment (47,000) (116,000)
Joint ventures' and limited partnerships cash distributions 120,500 53,300
Proceeds from sale of property held for investment 0 3,000
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Net cash provided by (used in) investing activities 73,500 (695,900)
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Cash flows from financing activities:
Cash distributions (142,400) (147,400)
Repurchase of limited partnership units (61,900) (14,000)
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Net cash used in by financing activities (204,300) (161,400)
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Net decrease in cash and cash equivalents (25,800) (576,000)
Cash and cash equivalents at beginning of period 586,100 1,191,800
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Cash and cash equivalents at end of period $ 611,900 $ 615,800
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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. THE PARTNERSHIP
Windsor Park Properties 3, A California Limited Partnership ("the Partnership"),
was formed in August 1985 for the purpose of acquiring and holding existing
manufactured home communities for investment. The General Partners of the
Partnership are The Windsor Corporation ("TWC"), a California corporation, and
John A. Coseo, Jr. In September 1997, Chateau Communities, Inc. ("Chateau"), a
publicly held real estate investment trust, purchased 100 percent of the shares
of the Windsor Corporation.
The Partnership was funded through a public offering of 200,000 limited
partnership units at $100 per unit which commenced in October 1985 and
terminated in September 1986. The Partnership term is set to expire in December
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.
NOTE 2. BASIS OF PRESENTATION
The balance sheet at June 30, 1998 and the related statements of operations for
the three and six months ended June 30, 1998 and 1997 and the statements of cash
flows for the six months ended June 30, 1998 and 1997 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 on form 10-KSB for the year ended December 31,
1997.
NOTE 3. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS
The Partnership's investments in joint ventures and limited partnerships consist
of interests in four manufactured home communities at June 30, 1998. The
combined condensed results of operations of the joint venture and limited
partnership properties for the six months ended June 30, 1998 and 1997 are as
follows:
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1998 1997
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Total revenues $ 894,300 $747,100
Expenses:
Property operating 439,400 357,300
Depreciation 221,900 191,400
Interest 213,000 151,800
General and administrative 4,200 0
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878,500 700,500
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Net income $ 15,800 $ 46,600
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NOTE 4. BASIC AND DILUTIVE EARNINGS PER LIMITED PARTNERSHIP UNIT
Basic and dilutive earnings 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, 1998 was 192,661 and 192,861, respectively; and 195,996
and 196,153 for the three and six months ended June 30, 1997, respectively.
In 1997, the Partnership adopted Statement of Financial Accounting Standards No.
128 (SFAS 128), "Earnings Per Share." This accounting standard specifies new
computation, presentation, and disclosure requirements for earnings per share to
be applied retroactively. Among other things, SFAS 128 requires presentation of
basic and diluted earnings per share on the face of the income statement. The
adoption of SFAS 128 had no effect on the per unit results previously reported.
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 six months ended June 30, 1998 and 1997 follows:
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1998 1997
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Per Per
Amount Unit Amount Unit
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Net income
- limited partners $106,000 $ 0.55 $ 62,700 $ 0.32
Return of capital 34,000 0.18 77,300 0.39
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$140,000 $ 0.73 $140,000 $ .071
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8
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WINDSOR PARK PROPERTIES 3
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three months ended June 30, 1998 as compared to three months ended June 30, 1997
Results of Operations
The Partnership realized net income of $44,400 and $3,200 for the three months
ended June 30, 1998 and 1997, respectively. Net income per limited partnership
unit was $0.23 in 1998 and $0.02 in 1997 respectively. The increase in revenue
is attributable to the lower property operating costs and the increased revenue
received from rental increases.
Rent and utilities revenues increased from $404,200 in 1997 to $423,200 in 1998
due to rent increases realized at the properties.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of four manufactured home communities in
1998. Equity in earnings of joint ventures and limited partnerships increased
from 2,300 in 1997 to $3,100 in 1998.
Interest income decreased from $9,300 in 1997 to $6,200 in 1998 due mainly to
lower cash balances maintained by the Partnership.
Property operating expenses decreased from $268,600 in 1997 to $251,500 in 1998
due to lower maintenance costs and lower marketing costs.
General and administrative expenses decreased from $30,500 in 1997 to $23,800 in
1998 due mainly to lower employee time charges from the General Partners.
Six months ended June 30, 1998 as compared to six months ended June 30, 1997
Results of Operations
The Partnership realized net income of $107,100 and $63,300 for the six months
ended June 30, 1998 and 1997, respectively. Net income per limited partnership
unit was $0.55 in 1998 and $0.32 in 1997 respectively. The increase in revenue
is attributable to the lower property operating costs and the increased revenue
received from rental increases.
Rent and utilities revenues increased from $799,700 in 1997 to $838,400 in 1998
due to rent increases realized at the properties.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of four manufactured home communities in
1998. Equity in earnings of joint ventures and limited partnerships decreased
from 19,300 in 1997 to $12,000 in 1998 primarily due to the losses realized at
Apache East and Denali Park.
Interest income decreased from $20,100 in 1997 to $13,800 in 1998 due mainly to
lower cash balances maintained by the Partnership.
Property operating expenses decreased from $494,100 in 1997 to $484,200 in 1998
due to lower maintenance costs and lower marketing costs.
9
<PAGE> 10
General and administrative expenses decreased from $60,400 in 1997 to $49,000 in
1998 due mainly to lower employee time charges from the General Partners.
Changes in Financial Condition
The Partnership's primary sources of cash during the six months ended June 30,
1998 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 the repurchase of partnership
units.
No further investment property acquisitions are planned by the General Partners.
At June 30, 1998 the Partnership's total mortgage debt, including its
proportionate share of joint venture and limited partnership 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 June 30, 1998.
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.
In 1997, the Partnership adopted Statement of Financial Accounting Standards No.
128 (SFAS 128), "Earnings Per Share." This accounting standard specifies new
computation, presentation, and disclosure requirements for earnings per share to
be applied retroactively. Among other things, SFAS 128 requires presentation of
basic and diluted earnings per share on the face of the income statement. The
adoption of SFAS 128 had no effect on the per unit results previously reported.
10
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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
11
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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/ Steven G. Waite
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STEVEN G. WAITE
President
Date: August 13, 1998
12
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 611,900
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,557,400
<DEPRECIATION> 2,709,000
<TOTAL-ASSETS> 5,985,300
<CURRENT-LIABILITIES> 253,300
<BONDS> 2,970,400
0
0
<COMMON> 0
<OTHER-SE> 2,761,600
<TOTAL-LIABILITY-AND-EQUITY> 5,985,300
<SALES> 0
<TOTAL-REVENUES> 884,600
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 637,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139,900
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,100
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
</TABLE>
