<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, 1997
-------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________________ to ____________________
Commission file number 0-15700
-----------------------------------------------
WINDSOR PARK PROPERTIES 4, A CALIFORNIA LIMITED PARTNERSHIP
------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-0202608
- -------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(760) 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
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<TABLE>
<CAPTION>
Page
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<C> <S> <C>
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
</TABLE>
2
<PAGE>
WINDSOR PARK PROPERTIES 4
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
June 30, 1997
-------------
ASSETS
- ------
<S> <C>
Property held for investment:
Land $ 1,037,700
Buildings and improvements 5,474,200
Fixtures and equipment 91,100
-------------
6,603,000
Less accumulated depreciation (3,268,200)
-------------
3,334,800
Investments in joint ventures 3,458,900
Cash and cash equivalents 667,900
Deferred financing costs 78,900
Other assets 106,600
-------------
$ 7,647,100
=============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage note payable $ 1,775,000
Accounts payable 24,300
Accrued expenses 65,200
Tenant deposits and other liabilities 17,400
-------------
1,881,900
-------------
Partners' equity:
Limited partners 5,797,100
General partners (31,900)
-------------
5,765,200
-------------
$ 7,647,100
=============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
WINDSOR PARK PROPERTIES 4
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
(unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 297,300 $ 278,700
Equity in earnings of joint ventures 29,700 34,900
Interest 9,000 9,300
Other 11,400 10,500
---------- ----------
347,400 333,400
---------- ----------
COSTS AND EXPENSES
- ------------------
Property operating 191,600 172,700
Depreciation and amortization 59,900 57,400
Interest 43,100 35,500
General and administrative:
Related parties 19,300 16,600
Other 11,300 11,700
---------- ----------
325,200 293,900
---------- ----------
Net income $ 22,200 $ 39,500
========== ==========
Net income - general partners $ 200 $ 400
========== ==========
Net income - limited partners $ 22,000 $ 39,100
========== ==========
Net income per limited partnership unit $ 0.11 $ 0.19
========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
WINDSOR PARK PROPERTIES 4
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
(unaudited)
-----------
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 578,000 $ 550,300
Equity in earnings of joint ventures 71,000 70,900
Interest 16,100 19,300
Other 23,100 30,400
----------- -----------
688,200 670,900
----------- -----------
COSTS AND EXPENSES
- ------------------
Property operating 372,200 359,700
Depreciation and amortization 119,300 114,600
Interest 86,200 68,100
General and administrative:
Related parties 38,400 33,800
Other 21,300 21,500
----------- -----------
637,400 597,700
----------- -----------
Net income $ 50,800 $ 73,200
=========== ===========
Net income - general partners $ 500 $ 700
=========== ===========
Net income - limited partners $ 50,300 $ 72,500
=========== ===========
Net income per limited partnership unit $ 0.25 $ 0.36
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR PARK PROPERTIES 4
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
(unaudited)
-----------
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 50,800 $ 73,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 119,300 114,600
Equity in earnings of joint ventures (71,000) (70,900)
Joint ventures' cash distributions 71,000 70,900
Loss on sale of property held for investment 500 5,100
Amortization of deferred financing costs 6,400 6,400
Changes in operating assets and liabilities:
Other assets 41,000 (13,800)
Accounts payable 9,400 (18,100)
Accrued expenses 33,600 29,900
Tenant deposits and other liabilities (7,300) (5,100)
----------- -----------
Net cash provided by operating activities 253,700 192,200
----------- -----------
Cash flows from investing activities:
Investment in joint venture (548,500)
Joint ventures' cash distributions 131,500 83,300
Increase in property held for investment (18,700) (56,900)
Proceeds from sale of property held for investment 12,000
----------- -----------
Net cash (used in) provided by investing activities (435,700) 38,400
----------- -----------
Cash flows from financing activities:
Cash distributions (226,300) (226,300)
Repurchase of limited partnership units (29,000) (26,700)
----------- -----------
Net cash used in financing activities (255,300) (253,000)
----------- -----------
Net decrease in cash and cash equivalents (437,300) (22,400)
Cash and cash equivalents at beginning of period 1,105,200 885,500
----------- -----------
Cash and cash equivalents at end of period $ 667,900 $ 863,100
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 76,800 $ 61,600
=========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
WINDSOR PARK PROPERTIES 4
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at June 30, 1997 and the related statements of operations for
the three and six months ended June 30, 1997 and 1996 and the statements of cash
flows for the six months ended June 30, 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 25% 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 $548,500. 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 $760,000. 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 six
manufactured home communities at June 30, 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 six months ended June 30, 1997
and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Total revenues $ 1,585,100 $ 1,323,700
------------- -------------
Expenses:
Property operating 738,600 601,600
Interest 394,000 301,800
Depreciation 319,200 253,900
------------- -------------
1,451,800 1,157,300
------------- -------------
Net income $ 133,300 $ 166,400
============= =============
</TABLE>
NOTE 3. NET INCOME PER LIMITED PARTNERSHIP UNIT
---------------------------------------
Net income per limited partnership unit is calculated based on the weighted
average number of limited partnership units outstanding during the period and
the net income allocated to the Limited Partners. The weighted average number
of limited partnership units outstanding during the three and six months ended
June 30, 1997 was 196,803 and 196,891, respectively; and 198,543 and 198,935 for
the three and six months ended June 30, 1996, respectively.
7
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NOTE 4. 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, losses and cash distributions of the Partnership during the
operational stage are allocated 99% to the Limited Partners and 1% 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 $22,600 and $19,300 for such costs during
the three months ended June 30, 1997 and 1996, respectively; and $44,900 and
$39,000 during the six months ended June 30, 1997 and 1996, 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 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.
The General Partners received cash distributions of $2,300 during both the six
months ended June 30, 1997 and 1996. The General Partners received no cash
distributions during the three months ended June 30, 1997 and 1996.
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, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
Per Per
Amount Unit Amount Unit
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Net income
- limited partners $ 50,300 $ 0.25 $ 72,500 $ 0.36
Return of capital 173,700 0.89 151,500 0.77
----------- ------- ----------- --------
$ 224,000 $ 1.14 $ 224,000 $ 1.13
=========== ======= =========== ========
</TABLE>
8
<PAGE>
WINDSOR PARK PROPERTIES 4
-------------------------
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
June 30, 1997 as compared to December 31, 1996
- ----------------------------------------------
The Partnership's primary sources of cash during the six months ended June 30,
1997 were from the operations of its investment properties and distributions
from joint ventures. The primary uses of cash during the same period were for
an investment in a joint venture, debt service and cash distributions to
partners.
In February 1997, the Partnership purchased a 25% interest in the Apache East
Estates and Denali Park Estates manufactured home communities located in
Phoenix, Arizona. The Partnership's cost of its equity interest in the
communities was $548,500. 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 $760,000. 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.
At June 30, 1997 the Partnership's total mortgage debt, including its
proportionate share of joint venture debt, was $5,183,600, consisting of
$2,675,000 of fixed rate debt and $2,508,600 of variable rate debt. The average
rate of interest on the fixed and variable rate debt was 8.9% and 9.0%,
respectively at June 30, 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, cash
distributions to partners and debt service. The General Partners believe that
the future sources of cash are sufficient to meet the working capital
requirements of the Partnership for the foreseeable future.
Results of Operations
- ---------------------
Six months ended June 30, 1997 as compared to six months ended June 30, 1996
- ----------------------------------------------------------------------------
The results of operations for the six months ended June 30, 1997 and 1996 are
not directly comparable due to the purchase of interests in the Apache East
Estates and Denali Park Estates manufactured home communities in February 1997,
as discussed previously. The Partnership realized net income of $50,800 and
$73,200 for the six months ended June 30, 1997 and 1996, respectively. Net
income per limited partnership unit was $0.25 in 1997 and $0.36 in 1996.
Rent and utilities revenues increased from $550,300 in 1996 to $578,000 in 1997.
The overall occupancy level of the Partnership's two wholly-owned properties
decreased from 75% at June 30, 1996 to 71% at June 30, 1997. The overall
decrease in occupancy is attributable to the Sunrise Village community in Cocoa,
Florida where continued weakness in the local economy is responsible for lower
occupancy levels and revenues. However, more than offsetting the decrease in
revenues at Sunrise Village were increased revenues at Sunset Vista due to a $20
per month rent increase effective May 1997, and lower 1997 rent concessions.
9
<PAGE>
Equity in earnings of joint ventures represents the Partnership's share of the
net income of six manufactured home communities in 1997 and four communities in
1996 (as mentioned previously, two joint venture interests were acquired in
February 1997). Equity in earnings of joint ventures remained essentially level
at $71,000 in 1997 compared to $70,900 in 1996. As projected, the Apache East
Estates and Denali Park Estates communities have incurred book losses since
their acquisition, resulting in level equity in earnings of joint ventures in
1997 despite two additional properties. However, after adding back noncash
depreciation expense, these properties are generating cash flow to the
Partnership as expected. The overall occupancy of the Partnership's six joint
venture properties was 90% at June 30, 1997, compared to 96% for four properties
at June 30, 1996. Recent rent increases include $10 and $12 per month at Big
Country effective February 1997 and 1996, respectively; $10 per month at Harmony
Ranch effective October 1996; and $12 and $9 per month at Rancho Margate and
Winter Haven, respectively, effective January 1997.
Interest income decreased from $19,300 in 1996 to $16,100 in 1997 due mainly to
lower cash balances maintained by the Partnership.
Property operating expenses increased from $359,700 in 1996 to $372,200 in 1997.
The increase is due mainly to higher repairs and maintenance expenses.
Interest expense increased from $68,100 in 1996 to $86,200 in 1997, due mainly
to the $375,000 loan draw taken by the Partnership in December 1996.
General and administrative expense increased from $55,300 in 1996 to $59,700 in
1997, due mainly to higher employee time charges from the General Partners,
resulting from the addition of new investment properties to the portfolio.
Three months ended June 30, 1997 as compared to three months ended June 30, 1996
- --------------------------------------------------------------------------------
The results of operations for the three months ended June 30, 1997 and 1996 are
not directly comparable due to the purchase of interests in the Apache East
Estates and Denali Park Estates manufactured home communities in February 1997,
as discussed previously. The Partnership realized net income of $22,200 and
$39,500 for the three months ended June 30, 1997 and 1996, respectively. Net
income per limited partnership unit was $0.11 in 1997 and $0.19 in 1996.
Rent and utilities revenues increased from $278,700 in 1996 to $297,300 in 1997,
for the reasons discussed previously.
Equity in earnings of joint ventures represents the Partnership's share of the
net income of six manufactured home communities in 1997 and four communities in
1996 (as mentioned previously, two joint venture interests were acquired in
February 1997). Equity in earnings of joint ventures decreased from $34,900 in
1996 to $29,700 in 1997, for the reasons discussed previously.
Property operating expenses increased from $172,700 in 1996 to $191,600 in 1997.
The overall increase is comprised mainly of higher repairs and maintenance
costs.
Interest expense increased from $35,500 in 1996 to $43,100 in 1997 due to the
$375,000 loan draw taken by the Partnership in December 1996.
General and administrative expense increased from $28,300 in 1996 to $30,600 in
1997 due mainly to higher employee time charges from the General Partners
resulting from the addition of new investment properties to the portfolio.
10
<PAGE>
PART II
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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
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 this 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 4.
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 4,
A California Limited Partnership
--------------------------------
(Registrant)
By: The Windsor Corporation, General Partner
By /s/ JOHN A. COSEO, JR.
------------------------------------------
JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: August 11, 1997
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF WINDSOR PARK PROPERTIES 4 AS OF JUNE 30, 1997 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE SIX MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 667,900
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,603,000
<DEPRECIATION> 3,268,200
<TOTAL-ASSETS> 7,647,100
<CURRENT-LIABILITIES> 0
<BONDS> 1,775,000
0
0
<COMMON> 0
<OTHER-SE> 5,765,200<F1>
<TOTAL-LIABILITY-AND-EQUITY> 7,647,100
<SALES> 0
<TOTAL-REVENUES> 688,200
<CGS> 0
<TOTAL-COSTS> 372,200
<OTHER-EXPENSES> 179,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,200
<INCOME-PRETAX> 50,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 50,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,800
<EPS-PRIMARY> 0.25<F2>
<EPS-DILUTED> 0
<FN>
<F1>Limited and general partners equity.
<F2>Net income per limited partnership unit.
</FN>
</TABLE>
