<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, 1999
---------------------
[ ] 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)
6160 So. Syracuse Way, Greenwood Village, Colorado 80111
---------------------------------------------------------------------
(Address of principal executive offices)
(303) 741-3707
- --------------------------------------------------------------------------------
(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 ( )
--- ----
Transitional small business disclosure format (check one): Yes [_] No [X]
<PAGE>
TABLE OF CONTENTS
PART I
------
Page
----
Item 1. Financial Statements................................2
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................8
PART II
-------
Item 6. Exhibits and Reports on Form 8-K...................11
SIGNATURE..........................................12
<PAGE>
PART I
------
Certain matters discussed under the Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Quarterly
Report on Form 10-QSB may constitute forward-looking statements for purposes of
Section 21E of the Securities Exchange Act of 1934, as amended, and as such
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Windsor Park Properties 3, a
California Limited Partnership, to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements.
1
<PAGE>
Item 1. Financial Statements
- -------
<TABLE>
<CAPTION>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------------------
(unaudited)
June 30, 1999
----------------------------
ASSETS
- ------
<S> <C>
Property held for investment:
Land $ 974,500
Buildings and improvements 4,819,100
Fixtures and equipment 149,200
----------------------------
5,942,800
Less accumulated depreciation (2,555,700)
----------------------------
3,387,100
Investments in joint ventures and limited partnerships 1,237,900
Cash and cash equivalents 51,100
Deferred financing costs 33,300
Other assets 91,900
----------------------------
Total Assets $ 4,801,300
============================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $ 1,170,400
Term loan payable 400,000
Accounts payable 1,700
Accrued expenses 237,000
Due to General Partners and affiliates 29,900
Tenant deposits and other liabilities 37,600
----------------------------
Total Liabilities 1,876,600
----------------------------
Partners' equity:
Limited partners 2,921,200
General partners 3,500
----------------------------
2,924,700
----------------------------
Total Liabilities and Partner's Equity $ 4,801,300
============================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
-------------------------
STATEMENTS OF OPERATIONS
-------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------------------------------------
1999 1998
--------------------------- ---------------------------
REVENUES
- --------
<S> <C> <C>
Rent and utilities $ 386,900 $ 423,200
Equity in earnings of joint ventures and limited partnerships 14,600 3,100
Interest 0 6,200
Gain on sale of property 424,600 0
Other 7,700 9,300
--------------------------- ---------------------------
833,800 441,800
--------------------------- ---------------------------
COSTS AND EXPENSES
- ------------------
Property operating 229,300 251,500
Interest 38,800 69,900
Depreciation and amortization 54,400 52,200
General and administrative:
Related parties 4,100 8,900
Other 21,500 14,900
--------------------------- ---------------------------
348,100 397,400
--------------------------- ---------------------------
Income before extraordinary item 485,700 44,400
Extraordinary loss from early extinguishment of debt 74,600 0
--------------------------- ---------------------------
Net income $ 411,000 $ 44,400
=========================== ===========================
Net income - general partners $ 62,900 $ 400
=========================== ===========================
Net income - limited partners $ 348,100 $ 44,000
=========================== ===========================
Basic and diluted earnings per limited partnership unit:
Income before extraordinary item $ 2.22 $ 0.23
Extraordinary loss from early extinguishment of debt (.39) 0
--------------------------- ---------------------------
Net income - limited partners $ 1.83 $ 0.23
=========================== ===========================
</TABLE>
3
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------------------------------
1999 1998
------------------------- --------------------------
REVENUES
- --------
<S> <C> <C>
Rent and utilities $ 818,100 $ 838,400
Equity in earnings of joint ventures and limited partnerships 14,800 12,000
Interest 6,000 13,800
Gain on sale of property 424,600 0
Other 16,800 20,400
------------------------- --------------------------
1,280,300 884,600
------------------------- --------------------------
COSTS AND EXPENSES
- ------------------
Property operating 475,200 484,200
Interest 108,800 139,900
Depreciation and amortization 112,100 104,400
General and administrative:
Related parties 10,700 19,000
Other 38,300 30,000
------------------------- --------------------------
745,100 777,500
------------------------- --------------------------
Income before extraordinary item 535,200 107,100
Extraordinary loss from early extinguishment of debt 74,600 0
------------------------- --------------------------
Net income $ 460,600 $ 107,100
========================= ==========================
Net income - general partners $ 62,900 $ 1,100
========================= ==========================
Net income - limited partners $ 397,700 $ 106,000
========================= ==========================
Basic and diluted earnings per limited partnership unit:
Income before extraordinary item $ 2.48 $ 0.55
Extraordinary loss from early extinguishment of debt (.39) 0
========================= ==========================
Net income - limited partners $ 2.09 $ 0.55
========================= ==========================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
WINDSOR PARK PROPERTIES 3
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------------------
1999 1998
--------------------- ---------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 460,600 $ 107,100
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 112,100 104,400
Equity in earnings of joint ventures and limited partnerships (14,800) (12,000)
Joint ventures' and limited partnerships cash distributions 14,800 12,000
Gain on sale of property (424,600) 0
Amortization of deferred financing costs 56,700 10,000
Changes in operating assets and liabilities:
(Increase) decrease in other assets 9,700 (51,300)
Accounts payable (3,500) (20,200)
Increase (decrease) in accrued expenses 22,900 89,000
Due to General Partners and affiliates 5,700 (61,300)
(Decrease) increase in tenant deposits and other liabilities (4,800) (21,100)
--------------------- ---------------------
Net cash provided by operating activities 234,800 156,600
--------------------- ---------------------
Cash flows from investing activities:
Investment in joint venture (41,600) 0
Increase in property held for investment (127,900) (47,000)
Joint ventures' and limited partnerships cash distributions 59,700 120,500
Proceeds from sale of property 865,900 0
--------------------- ---------------------
Net cash provided by (used in) investing activities 756,100 73,500
--------------------- ---------------------
Cash flows from financing activities:
Cash distributions (140,600) (142,400)
Repurchase of limited partnership units (40,000) (61,900)
Proceeds from term loan 400,000 0
Pay off of mortgage payable (1,800,000) 0
--------------------- ---------------------
Net cash used in by financing activities (1,580,600) (204,300)
--------------------- ---------------------
Net increase (decrease) in cash and cash equivalents (589,700) 25,800
Cash and cash equivalents at beginning of period 640,800 586,100
--------------------- ---------------------
Cash and cash equivalents at end of period $ 51,100 $ 611,900
===================== =====================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
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. , a publicly
held real estate investment trust, ("Chateau"), 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.
On April 1, 1999, the Partnership sold Little Eagle, a manufactured home
community containing 96 homesites located in Indianapolis, Indiana, and nine
mobile home units to Floral Park Cemetery Association, the terms of which were
determined through arms-length negotiations between the parties. The aggregate
purchase price paid for Little Eagle and the nine mobile home units was
$925,000, net of selling expenses of approximately $90,000. The sale resulted
in a net gain on sale of $424,600. In connection with the sale, the Partnership
obtained a $400,000 term loan and paid off a related mortgage note payable of
$1,800,000, resulting in an extraordinary loss on early extinguishment of debt
of approximately $74,600. The extraordinary loss is comprised of an $18,000
prepayment penalty and a $56,600 write off of unamortized loan fees.
The Partnership was organized in October 1985 and, thus, many of our current
Limited Partners have held an investment in the Partnership for more than 13
years. The General Partners believe that many of the Limited Partners would
like to have the opportunity to achieve liquidity in their investment in the
Partnership. Accordingly, the General Partners are currently exploring possible
strategic alternatives for the Partnership with a view towards providing Limited
Partners with the opportunity to achieve liquidity in their investment. There
can, however, be no assurances that any proposal determined by the General
Partners to be in the best interests of the Limited Partners will be consummated
or that the Partnership will not continue in its current form until the end of
its stated term.
NOTE 2. BASIS OF PRESENTATION
---------------------
The balance sheet at June 30, 1999 and the related statements of operations for
the three and six months ended June 30, 1999 and 1998 and the statements of cash
flows for the six months ended June 30, 1999 and 1998 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,
1998.
6
<PAGE>
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, 1999. The
combined condensed results of operations of the joint venture and limited
partnership properties for the six months ended June 30, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- ------------------------
<S> <C> <C>
Total revenues $ 878,800 $ 894,300
Expenses:
Property operating 421,800 439,400
Depreciation 235,900 221,900
Interest 189,200 213,000
General and administrative 5,400 4,200
------------------------- ------------------------
852,300 878,500
------------------------- ------------------------
Net income $ 26,500 $ 15,800
========================= ========================
</TABLE>
NOTE 4. BASIC AND DILUTED EARNINGS PER LIMITED PARTNERSHIP UNIT
-------------------------------------------------------
Basic and diluted 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, 1999 was 189,878 and 189,935 respectively; and 192,661 and
192,861 for the three and six months ended June 30, 1998, respectively.
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, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------------------------- -------------------------------------------
Per Per
Amount Unit Amount Unit
--------- ------ ------ ------
<S> <C> <C> <C> <C>
Net income
- limited partners $ 397,700 $ 2.09 $ 106,000 $ 0.55
Return of capital 0 0 34,000 0.18
Net income in excess of
distributions (264,400) (1.39) 0 0
--------------------- --------------- ---------------------- ---------------
$ 133,300 $ .70 $ 140,000 $ 0.73
===================== =============== ====================== ===============
</TABLE>
Note 6. EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT
-------------------------------------------------
The extraordinary loss in the accompanying statements of income represents a
prepayment penalty and write off of unamortized loan fees incurred in connection
with the early extinguishment of debt.
7
<PAGE>
Item 2.
- -------
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three months ended June 30, 1999 as compared to three months ended June 30, 1998
- --------------------------------------------------------------------------------
The following discussion should be read in conjunction with the financial
statements and Notes thereto included elsewhere in this Form 10-QSB.
Results of Operations
- ---------------------
The Partnership realized net income before extraordinary item of $411,000 and
$44,400 for the three months ended June 30, 1999 and 1998, respectively. Net
income per limited partnership unit before extraordinary item was $2.22 in 1999
and $0.23 in 1998 respectively. The increase in net income before extraordinary
item is primarily attributable to the $424,600 gain on sale of the Little Eagle
community.
Rent and utilities revenues decreased from $423,200 in 1998 to $386,900 in 1999
due to the sale of Little Eagle.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of four manufactured home communities in
1999. Equity in earnings of joint ventures and limited partnerships increased
from $3,100 in 1998 to $14,600 in 1999 primarily due to rental increases at the
communities.
Interest expense decreased from $69,900 in 1998 to $38,800 due to the pay off of
the $1.8 million mortgage payable in connection with the sale of Little Eagle.
Six months ended June 30, 1999 as compared to six months ended June 30, 1998
- ----------------------------------------------------------------------------
Results of Operations
- ---------------------
The Partnership realized net income before extraordinary item of $535,200 and
$107,100 for the six months ended June 30, 1999 and 1998, respectively. Net
income per limited partnership unit before extraordinary item was $2.48 in 1999
and $0.55 in 1998, respectively. The increase in net income before
extraordinary item is primarily attributable to the $424,600 gain on sale of the
Little Eagle community.
Rent and utilities revenues decreased from $838,400 in 1998 to $818,100 in 1999
due to the sale of Little Eagle.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of four manufactured home communities in
1999. Equity in earnings of joint ventures and limited partnerships remained
relatively constant at $14,800 in 1999 and $12,000 in 1998.
Interest expense decreased from $139.900 in 1998 to $108,800 in 1999 due to the
pay off of the $1.8 million mortgage payable in connection with the sale of
Little Eagle.
8
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary sources of cash during the six months ended June 30,
1999 were from the operations of its investment properties, proceeds from the
sale of the Little Eagle community, proceeds from a $400,000 term loan and cash
distributions from joint ventures. The primary uses of cash during the same
period were for cash distributions to partners and the pay off of a $1.8 million
mortgage payable.
No further investment property acquisitions are planned by the General Partners.
At June 30, 1999 the Partnership's total mortgage debt, including its
proportionate share of joint venture and limited partnership debt, was
$2,737,900, consisting of $1,470,400 of fixed rate debt and $1,267,500 of
variable rate debt. The average rate of interest on the fixed and variable rate
debt was 8.5% and 7.7%, respectively, at June 30, 1999.
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.
Inflation
- ---------
All of the leases or terms of tenants' occupancies at the properties allow for
at least annual rental adjustments. In addition, all of the leases are month-
to-month and enable the Partnership to seek market rentals upon reletting the
sites. Such leases generally minimize the risk to the Partnership of any
adverse effect of inflation.
Year 2000 Compliance
- --------------------
The General Partners have assessed the impact of the year 2000 issue on its
reporting systems and operations. The year 2000 issue exists because many
computer systems and applications abbreviate dates by eliminating the first two
digits of the year, assuming that these two digits are always "19". As a
result, date-sensitive computer programs may recognize a date using "00" as the
year 1900 rather than the year 2000. Unless corrected, the potential exists for
computer system failures or incorrect processing of financial and operational
information, which could disrupt operations.
Substantially all of the computer systems and applications and operating systems
in use in use by the Windsor Corporation and the properties have been, or are in
the process of being upgraded and modified. The Partnership is of the opinion
that, in connection with those upgrades and modifications, it has addressed
applicable year 2000 issues as they might affect the computer systems and
applications located in the Partnership's offices and properties. The
Partnership anticipates that implementation of solutions to any year 2000 issue
which it may discover will require the expenditure of sums which the Partnership
does not expect to be material.
The Partnership is exposed to the risk that one or more of its vendors or
service providers may experience year 2000 problems which impact the ability of
such vendor or service provider to provide goods and services. Due to the
availability of alternative suppliers, this is not considered as significant a
risk with respect to the suppliers of goods. The disruption of certain
services, however, such as utilities, could, depending upon the extent of the
disruption, have a material adverse impact on the Partnership's operations. To
date, the Partnership is not aware of any vendor or service provider year 2000
issue that management believes would have a material adverse impact on the
Partnership's operations. The Partnership, however, has no means of ensuring
that its vendors or service providers will be year 2000
9
<PAGE>
Partnership, however, has no means of ensuring that its vendors or service
providers will be year 2000 ready. The inability of vendors or service providers
to complete the year 2000 resolution process in a timely fashion could have an
adverse impact on the Partnership and the effect of non-compliance by vendors or
service providers is not determinable at this time. Residents who pay rent to
the Partnership do not pose year 2000 problems for the Partnership given the
type and nature of the Partnership's properties and residents.
Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from year 2000 issues, or
in certain industries, such as commercial or investment banks, could also have
an adverse impact on the Partnership. The likelihood and effect of such
disruptions is not determinable at this time.
Management expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the year
2000 issue will materially impact the financial condition or operations of the
Partnership.
10
<PAGE>
PART II
-------
Item 6. 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.
(27) Financial Data Schedule
(b) Reports on Form 8-K
On April 13, 1999 the Partnership Filed a Current Report on Form 8-
K, dated April 1, 1999, reporting the sale of the Little Eagle
community.
The pro forma Financial statements filed were as follows:
Pro Forma Condensed Balance Sheet at December 31, 1998
(Unaudited).
Pro Forma Condensed Statement of Operations for the year
ended December 31, 1998 (Unaudited).
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
By The Windsor Corporation, its general partner
By /s/ Steven G. Waite
--------------------------------
STEVEN G. WAITE
President
Date: August 13, 1999
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 51,100
<SECURITIES> 0
<RECEIVABLES> 91,900
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,942,800
<DEPRECIATION> (2,555,700)
<TOTAL-ASSETS> 4,801,300
<CURRENT-LIABILITIES> 0
<BONDS> 1,570,400
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,801,300
<SALES> 0
<TOTAL-REVENUES> 1,280,300
<CGS> 475,200
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 161,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108,800
<INCOME-PRETAX> 535,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 74,600
<CHANGES> 0
<NET-INCOME> 460,600
<EPS-BASIC> 2.09
<EPS-DILUTED> 2.09
</TABLE>
