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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999 Commission File Number 33-10196
CALIFORNIA ALMOND INVESTORS I
A California Limited Partnership
(Exact name of registrant as specified in the charter)
California 94-03024688
(State or other jurisdiction of (IRS Employer Identification #)
incorporation or organization)
2210 Northpoint Parkway
Santa Rosa, California 95407
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
707 - 579-3742
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of regulation S-K is not contained herein, and will not 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-K or an amendment to this
Form 10-K. [ ]
State issuers revenue for its most recent fiscal year; $519,900.00.
No market for the limited partnership units exists and therefore a market value
for such units cannot be determined.
Documents incorporated herein by reference:
Prospectus, including supplements thereto filed pursuant to Rule 424(b) under
the Securities Act of 1933 incorporated in Parts I, III, and IV.
Transitional small business disclosure format; Yes _ No X
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Page 1 or 224
Sequentially numbered pages;
Form 10KSB-1
<PAGE>
CALIFORNIA ALMOND INVESTORS I
A California Limited Partnership
PART I
Item 1. Business.
California Almond Investors I, a California Limited Partnership
(hereinafter referred to either as partnership or registrant), was organized on
November 5, 1986, as a California limited partnership under the Uniform Limited
Partnership Act of the California Corporations Code. Vintech Almond Advisers,
Inc. is the managing general partner and its sole shareholder is Donald D. Bade.
The partnership's Registration Statement, filed pursuant to the
Securities Act of 1933, was originally declared effective by the Securities and
Exchange Commission on March 6, 1987. Registrant marketed its securities
pursuant to its Prospectus dated March 6, 1987, together with supplements
thereto (hereinafter the Prospectus), which Prospectus was filed with the
Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act
of 1933 and is incorporated herein by reference.
The principal business of the partnership is to acquire, operate, and
ultimately sell income-producing almond orchards.
In March 1987, the partnership commenced an offering of $10,000,000 in
limited partnership units (units). The partnership sold a total of 12,079 units
for an aggregate capitalization in the amount of $6,039,500 as of the
termination of the offering on March 6, 1989. The net proceeds of this offering
have been used to acquire income-producing almond orchards. See Item 2 below for
a description of the partnership's properties.
THE ALMOND INDUSTRY
The value of agricultural real estate which is planted to a permanent
crop, such as almonds, is directly related to the price which can be received
for the commodity produced. The price received for the commodity is, in turn, a
function of the relationship between the supply of and demand for the commodity.
The United States' domestic supply of almonds is determined primarily
by the number of planted acres in California. The world supply is determined for
the most part by the combined production of California, Spain and Italy. Both
domestic and world almond production are subject to substantial fluctuation from
year-to-year and longer-term cycles. The demand for almonds is affected by the
domestic market, export market , exchange rate, and marketing effort. These
factors determine the price of California almonds and, thus, the price/value
ratio of California almond orchards. The general partner believes that increased
domestic consumption, expanding world markets, and diminishing supplies of
almonds should result in rising almond prices, and, thus, a rise in the value of
almond orchards over the next five years.
Almond orchards require continual attention and maintenance in order to
obtain maximum production and to safeguard the health of the almond trees. Such
maintenance includes regular or periodic fertilizing, spraying, cultivating,
pest and weed control, and physical maintenance of tree size and density. Such
maintenance also includes frequent application of irrigation water, which is
pumped from wells or delivered through irrigation canals.
Many diseases and insect pests attack almonds. At one time or another,
the almond crop may require treatment for brown rot, shot hole, leaf blight,
scab, navel orange worm, peach twig borer, mites, San Jose scale and other
problems. All known almond pests can currently be controlled with available and
permitted pesticides, and other chemical and organic agents if the farmer
properly times the application, uses the recommended dosage and obtains adequate
spray coverage of the crop. Poor results in a spray
Form 10KSB-2
<PAGE>
program are typically caused by poor timing, low dosage, or poor coverage. The
types and methods of application of pesticides and herbicides are subject to
government regulation of toxic substances, and may be increasingly regulated in
the future. Almond hulls are sold and used for livestock feed. Therefore, almond
producers sell two crops - one for human consumption and one for animal
consumption. As a result the laws and regulations governing pesticide use apply
to both the hulls and the nuts, thus limiting the types of treatment available
while the nuts are on the trees.
Another syndrome common to almond trees is noninfectious bud failure
(crazy top), which is a result of genetic abnormalities spread through the
almond nursery industry. While varieties known to be susceptible have been
identified, there is no existing preventative treatment test procedure to
preclude the incidence of this syndrome in a given orchard. Excessively hot
weather during the course of a season has been correlated with increases in the
incidence of bud failure in almond orchards. This condition, while not fatal to
the tree can, in some cases, cause productivity to suffer. When bud failure
appears in a given tree, it is a general practice to remove it and replace it
with a tree known to have been produced from a clone free of bud failure.
Almonds require at least 600 hours of dormancy below 45 degrees
Fahrenheit in order to induce heavy bloom in the spring. Under California
conditions, in most years, this chilling requirement is easily met. However, if
the weather from late November through February is warm, a poor bloom might
result. When the trees bloom in late February and early March, it is necessary
to have a maximum number of daylight hours above 55 degrees Fahrenheit in order
to obtain optimum activity of honey bees which are used to cross-pollinate the
crop. Pollination is essential in order for the almond blossoms to form an ovary
which becomes the seed for the plants. It is the seed which is the edible part
of the almond. Without adequate sunlight and sufficient high temperatures, bee
activity will be low and a light crop might result.
The almond tree is highly resistant to very low winter temperatures due
to its deciduous character. However, the almond crop is susceptible to frost
damage when the trees resume growth in the spring. If a frost occurs, it could
damage the blossoms and thereby reduce the crop for that year.
Excessive rainfall can be detrimental to production of almonds. Excess
rainfall may damage tender blossoms, promote certain root diseases, and act as
an impediment to the harvest operation if it occurs in the fall. Due to the soil
types on which almonds are grown, excess moisture precludes entry into the
orchard for several days; thus orchard operations, including harvesting, are
contingent on favorable moisture conditions.
Inadequate water supply can also be detrimental to the production of
almonds. Almonds generally require a minimum of 2.5 acre feet of water per acre
to promote optimal growth and yields. Inadequate water supplies can impair the
bloom and damage the orchards ability to produce adequate yields.
In the San Joaquin Valley of California, frequent high winds occur.
These are detrimental to almonds for several reason. First, the almond tree is
naturally shallow-rooted. If high winds occur immediately prior to harvest when
a tree is weighted down with nuts, it could be uprooted by the wind. If the wind
storm occurs during the bloom period, bee flight will be limited and pollination
will be impeded.
Typically an almond producer sells its crop to a processor in bulk
after harvest for a price per pound to be paid within 12 months. The buyer
agrees to adjust the price to equal the highest price paid by the buyer to any
of its growers, in order to avoid uncertainty and fluctuation in supply that
might occur if producers were to seek to sell their crops at the most
advantageous point in a market cycle. The method described above is the standard
method of contracting to purchase the annual California almond crop and, as a
result, the market price received for almonds in a given year varies little from
producer to producer. The buyer makes a partial payment once the crop is hulled,
shelled, and stored, and makes subsequent payments in installments as the crop
moves in to retail channels. Although the precise terms of payment may vary to
some extent among producers and processors, and may also vary from year-to-year,
in the general partners' experience approximately 40% of the total sales price
for a producer's almond crop is
Form 10KSB-3
<PAGE>
typically paid at harvest, 65% of the total has been received within 90 days of
harvest, 90% has been received within 6 months of harvest and the balance is
paid within 12 months of harvest. Typically, growers may contract for an advance
of up to 25% of the estimated purchase price of the crop in July, at which time
the anticipated size of the crop can be calculated with some degree of accuracy.
The amount of the processor's advance generally covers all or a substantial
portion of the growing costs incurred through that date. The remaining costs of
production and harvesting are normally recovered by the crop payments received
within 90 days of harvest (i.e., by the end of the calendar year).
The grower is paid for his crop based on several criteria. First is the
variety of nuts delivered. In California, the standard of the industry is the
NonPareil variety. Generally, the pollinator varieties, such as Mission and
Merced varieties, are considered "California" varieties, and are discounted a
few cents per meat pound below the NonPareil. However, it is horticulturally
essential to have these other varieties in the orchard to assure
cross-pollination of the NonPareil variety. The second price determinant is the
quality of the hulled and shelled nuts. If there has been an infestation of the
navel orange worm (a moth which lays its eggs on the almond trees and nuts, and
the larva of which bores into the nut and damages the kernel), there will be a
determination of the degree of affected nuts and price reduction proportional to
the degree of infestation. If foreign material is picked up in the orchard
during harvest operations, the processor would reduce the purchase price
accordingly. Thus, orchard management becomes economically significant at the
time of harvest.
As is the case with most farming operations, the almond business is
seasonal in nature. A substantial portion of the income is realized only upon
sale of the crop by the processor to whom it is sold. After the almond crop is
harvested and sold, the orchard owner must either reserve sufficient funds from
proceeds of sales of the harvested crop to cover the cost of maintenance and
harvesting for another season, or in the alternative, make arrangements for
financing production of the next year's crop. The partnership intends to
maintain reserves out of crop revenues to pay its production costs for each
succeeding year and to seek advances of the crop purchase price from processors.
The partnership intends to hold the almond orchards in which it invests
until such time as sale or other disposition appears to be advantageous with a
view to achieving the partnership's investment objectives or it appears that
such objectives will not be met. In deciding whether to sell properties, the
partnership will consider factors such as potential capital appreciation, cash
flow, and the federal income tax consequences of any such sales. The managing
general partner may exercise its discretion as to whether and when to sell a
property, and the partnership will have no obligation to sell properties at any
particular time.
Sale proceeds generally will be distributed to the partners and will
not be reinvested, so that the partnership will be self-liquidating. However,
such proceeds need not be distributed to the partners in the event that they
are, in the discretion of the managing general partner, held as working capital
reserves or used to make capital improvements to existing partnership
properties.
The managing general partner will attempt to sell the partnership
properties on an all-cash basis. However, if the managing general partner
determines that the best interests of the partnership will be furthered thereby,
the partnership may sell properties on terms such that only a portion of the
cash payable to the partnership will be received in the year of sale, with
subsequent payments spread over a number of years. Where the full sales price is
not payable in cash, the full distribution to the limited partners of the net
proceeds of any sale may be delayed until the notes are paid at maturity, or
otherwise by the buyer or, as the partnership will seek to do where the maturity
of the notes extends beyond the anticipated term of the partnership, the notes
may be sold by discounting them to lending institutions or other buyers.
As of March 12, 1991, the partnership had acquired six properties known
as Cressey, Robertson, Hooker, Clausen, Sierra II and Famoso Ranches. Each of
these properties is described below in Item 2 - Properties.
Form 10KSB-4
<PAGE>
The partnership operates only within one industry segment (agricultural
crops) and has no foreign operations or export sales. The harvest is presently
sold to a single processor for a price per pound paid within 12 months.
The partnership has no employees. All necessary administrative and
management services are performed by employees of the managing general partner,
affiliates or independent contractors. See Footnote 2 to the financial
statements included in Item 7 to this report for information regarding fees and
expense reimbursements to the general partner and its affiliates.
Item 2. Properties
A description of income-producing properties in which the partnership
has an ownership interest is as follows:
Cressey Ranch
On March 15, 1988, the partnership purchased, for approximately
$858,000 cash, from the Ray C. Meredith 1983 Living Trust, a 143-acre almond
orchard known as Cressey Ranch located near Merced, CA. The seller is not
affiliated with the general partner, the partnership, nor any of their
affiliates. The property is located in the Central San Joaquin Valley,
approximately 11 miles west of Merced.
Of the 143 acres comprising the property, approximately 140 acres are
planted with almond trees, consisting of 50% NonPareil and 50% Carmel nut
varieties. Approximately 70 acres of the almond trees were planted in 1976, 35
acres in 1979 and 35 acres in 1981. Other improvements on the property include a
900-square foot single family residence, three wells with pumps (100-horsepower,
30-horsepower and 15-horsepower turbines, and a 75-horsepower booster pump), and
a permanent, solid set sprinkler system. The property is zoned for exclusively
agricultural uses.
The area surrounding the property is used primarily for agriculture in
the form of irrigated crop land, permanent plantings such as almond orchards,
walnut groves and vineyards, and a poultry farm. The climate is warm and dry,
with relatively long frost-free growing seasons. The area typically receives
little rainfall and most crops, including almonds, require supplemental
irrigation for agricultural production at economic levels.
The soils found on the property are Delhi and Hilmar sands, and are
suitable for almond production. The topography of the property is level, with
zero-to-3% slope. The property's source of water consists of underground water
delivered by the pumps and wells located on the property. The general partner
believe that this source will provide an adequate supply of water for irrigation
during the partnership's anticipated holding period.
Set forth below is a table summarizing crop production on the property.
Gross Almond Pounds
Producing Production Produced
Year Acres (in Pounds) Per Acre
---- ----- ----------- --------
1986 140.0 61,700 440
1987 140.0 276,200 1,973
1988 140.0 166,183 1,187
1989 140.0 303,360 2,167
1990 140.0 358,325 2,559
1991 140.0 199,960 1,428
1992 140.0 237,242 1,694
1993 140.0 203,820 1,456
Form 10KSB-5
<PAGE>
1994 140.0 270,819 1,934
1995 140.0 94,025 672
1996 140.0 173,281 1,238
1997 140.0 259,667 1,855
1998 140.0 132,124 944
1999 140.0 148,041 1,057
The trees are planted in a density of approximately 87 per acre, with a
total of approximately 12,000 producing trees. The tress are in good condition.
The property is subject to the terms and conditions of the Williamson
Land Act, which requires that the land be used exclusively for agricultural
purposes, and assures that the land will, therefore, be assessed for real estate
tax purposes solely on its value for agricultural uses.
Robertson Ranch
On August 15, 1988, the partnership purchased, for approximately
$232,050 cash from John and Carol Van Curen a 35.7 acre almond orchard known as
Robertson Ranch located near Chowchilla, California. The seller is not
affiliated with the general partner, the partnership, nor any for their
affiliates.
The property is located in the Central San Joaquin Valley,
approximately two miles south of Chowchilla in Madera County, California, at the
intersection of State Highway 152 and County Road 4.
Of the 35.7 acres comprising the property, approximately 33.5 acres are
planted with almond trees consisting of 50% NonPareil and 50% Carmel nut
varieties. Approximately one-half of the acreage was planted in 1981 and the
remaining acres in 1982. Other improvements on the property include a well with
a 50-horsepower pump and an underground concrete irrigation pipeline. The
property is zoned for exclusively agricultural uses.
The area surrounding is used primarily for agriculture and its related
industries. The climate is warm and dry, with a relatively long frost-free
growing season. The area typically receives little rainfall and most crops,
including almonds, require supplemental irrigation for agricultural production
at economic levels.
The soils found on the property are suitable for almond production. The
topography of the property is level. The property has two potential source of
water; water purchased from the Chowchilla Water District, and underground water
delivered by the pump and well located on the property. The partnership prefers
to irrigate primarily with water purchased from the water district because it is
less expensive than pumping well water. The water is distributed by means of
flood irrigation.
Set forth below is a table summarizing crop production on the property.
Gross Almond Pounds
Producing Production Produced
Year Acres (in Pounds) Per Acre
---- ----- ----------- --------
1986 33.5 13,494 403
1987 33.5 49,336 1,473
1988 33.5 50,285 1,501
1989 33.5 45,789 1,367
1990 33.5 76,083 2,271
1991 33.5 58,690 1,752
Form 10KSB-6
<PAGE>
1992 33.5 31,376 937
1993 33.5 64,435 1,9223
1994 33.5 94,324 2,816
1995 33.5 22,151 661
1996 33.5 43,751 1,306
1997 33.5 62,182 1,856
1998 33.5 57,780 1,725
1999 33.5 98,322 2,935
The trees are planted in a density of approximately 75 per acre. The
trees are generally in good condition.
The property is subject to the terms and conditions of the Williamson
Land Act, which requires that the land be used exclusively for agricultural
purposes, and assures that the land will, therefore, be assessed for real estate
tax purposes solely on its value for agricultural uses.
Hooker Ranch
On March 15, 1989, the partnership purchased, for approximately
$1,527,500 cash from Hooker Grain Company an almond orchard known as Hooker
Ranch. The seller is not affiliated with the general partner, the partnership,
nor any of their affiliates.
The property is located in the San Joaquin Valley of California,
approximately seven miles east of the town of Hickman, which is approximately 14
miles northwest of Modesto in east central Stanislaus County.
The property comprises approximately 241 gross acres, with
approximately 233 acres planted with almond trees. The almond trees were planted
in 1981, and consist of 50% NonPareil, 25% Carmel, and 25% Fritz nut varieties.
The trees are planted in a density of approximately 95 per acre and are
generally in good condition. Other improvements on the property include a solid
set underground sprinkler system and two electric turbine pumps, a
150-horsepower primary pump, and a 125-horsepower standby pump. The property has
historically received all of its irrigation water from the Turlock Irrigation
District. A new well was drilled on the property in 1992 as a backup source in
case district water is reduced because of the drought. The property is zoned for
exclusively agricultural uses.
The area surrounding the property is used primarily for agriculture and
its related industries. The topography of the property varies from rolling to
level. The climate is dry with temperatures typically hot in the summer and mild
in the winter, with a relatively long growing season. The property may be
susceptible to frost during cold periods, especially in low areas with little
air movement. The area typically receives little rainfall and most crops,
including almonds, require supplemental irrigation for agricultural production
at economic levels. The soils found on the property are suitable for almond
production.
Set forth below is a table summarizing crop production on the property.
Gross Almond Pounds
Producing Production Produced
Year Acres (in Pounds) Per Acre
---- ----- ----------- --------
1986 233.0 114,429 492
1987 233.0 492,372 2,117
1988 233.0 116,638 501
1989 233.0 534,393 2,294
1990 233.0 511,185 2,193
1991 233.0 442,028 1,897
Form 10KSB-7
<PAGE>
1992 233.0 515,471 2,212
1993 233.0 372,591 1,599
1994 233.0 680,511 2,920
1995 233.0 151,402 650
1996 233.0 415,681 1,784
1997 233.0 548,057 2,352
1998 233.0 349,220 1,499
1999 233.0 378,193 1,623
The property's source of irrigation water is the Turlock Irrigation
District main canal which borders the southern perimeter of the property and
carries water from nearby Turlock Lake. Water for irrigation is pumped directly
from the canal by the primary electric turbine pump located on the property and
is distributed through the underground solid set sprinklers which run down each
tree line. The general partner believe that this source will provide an adequate
supply of water for irrigation during the partnership's anticipated holding
period.
The property is subject to the terms and conditions of the Williamson
Land Act, which requires that the land be used exclusively for agricultural
purposes and assures that the land will, therefore, be assessed for real estate
tax purposes solely on its value for agricultural uses.
Clausen Ranch
On April 21, 1989, the partnership purchased, for approximately
$625,000 cash, from Wesley and Elaine Smith a 91-acre almond orchard known as
Clausen Ranch. The seller is not affiliated with the general partner, the
partnership, or any of their affiliates. The property is located in the Central
San Joaquin Valley near the town of Le Grand in Merced County, California.
Of the 91 acres comprising the property, approximately 83 acres are
planted with almond trees consisting of 50% NonPareil and 50% Carmel nut
varieties. The first planting of 70 acres took place in 1979 and the remaining
13 acres were planted in 1981. Other improvements on the property include a
2-bedroom house, a 36' x 54' Butler building, a 36' x 51' galvanized iron
building, a permanent, solid set sprinkler system and two wells with a 75
horsepower diesel-powered pump and a 25 horsepower pump. The 75 horsepower
diesel powered pump has been changed to electric. The property is zoned for
exclusively agricultural uses.
All of the land in the vicinity of the property is devoted to
agriculture. The climate is hot and dry in the summer and generally mild in the
winter. The area typically receives little rainfall and most crops, including
almonds, require supplemental irrigation for agricultural production at economic
levels.
The soils found on the property are Wyman Loam, Yokohl Loam, Madera
Loam and San Joaquin Loam, and are suitable for almond production. The
topography of the property is generally level. The property's source of water
consists of underground water delivered by the pumps and wells located on the
property. The general partner believe that this source will provide an adequate
supply of water for irrigation during the partnerships anticipated holding
period.
Set forth below is a table summarizing crop production on the property.
Gross Almond Pounds
Producing Production Produced
Year Acres (in Pounds) Per Acre
---- ----- ----------- --------
1986 83.0 8,311 100
1987 83.0 130,452 1,572
1988 83.0 137,863 1,661
Form 10KSB-8
<PAGE>
1989 83.0 112,137 1,351
1990 83.0 135,035 1,627
1991 83.0 59,845 721
1992 83.0 90,412 1,089
1993 83.0 52,789 636
1994 83.0 78,773 949
1995 83.0 41,165 496
1996 83.0 52,523 632
1997 83.0 125,402 1,511
1998 83.0 78,038 940
1999 83.0 58,647 707
The trees are planted to a density of approximately 91 trees per acre.
The trees are generally in good condition and capable for production consistent
with those of good quality orchards.
The property is subject to the terms of the Williamson Land Act which
requires that the land will be assessed for real estate tax purposes solely on
its value for agricultural uses.
Sierra II Ranch
On December 18, 1989, the partnership purchased for approximately
$297,000 cash, from Daniel Bellin a 44-acre almond orchard known as Sierra II
Ranch. The seller is not affiliated with the general partner, the partnership,
or any of their affiliates. The property is located in the south/central part of
the San Joaquin Valley near the town of Pixley in Tulare County, California.
Of the 44 acres comprising the property, there are 41.4 net acres of
almond orchard. The trees were planted in 1979 and consist of one-third Butte,
one-third Rubi and one-third Mission nut varieties. Other improvements on the
property consist of a well with an estimated depth of 500 feet, a 100 horsepower
electric turbine pump, approximately 1380 feet of 14 inch underground concrete
pipeline, and a 58 irrigation valves, each with a 12 inch diameter concrete
riser and a 6 inch diameter valve. The property is zoned for exclusively
agricultural uses.
All of the land in the vicinity of the property is devoted to
agriculture. The climate is hot and dry in the summer and generally mild in the
winter. The area typically receives little rainfall and most crops, including
almonds require supplemental irrigation for agricultural production at economic
levels.
The soil on the property is all Hesperia sandy loam, a Class One soil
with good crop adaptability. The land has been all leveled to facilitate
irrigation. The property's primary source of water consists of underground water
delivered by the well and pump located on the property. It's other source is
canal water from the Pixley Irrigation District. The general partner believes
that this source will provide an adequate supply of water for irrigation during
the partnership's anticipated holding period.
Set forth below is a table summarizing crop production on the property.
Gross Almond Pounds
Producing Production Produced
Year Acres (in Pounds) Per Acre
---- ----- ----------- --------
1988 41.4 81,682 1,973
1989 41.4 61,396 1,483
1990 41.4 74,086 1,790
1991 41.4 53,568 1,294
1992 41.4 71,696 1,731
1993 41.4 42,317 1,022
Form 10KSB-9
<PAGE>
1994 41.4 45,045 1,088
1995 41.4 22,252 537
1996 41.4 36,451 880
1997 41.4 67,948 1,641
1998 41.4 46,207 1,116
1999 41.4 49,180 1,188
The trees are planted in a density of 90 trees per acre and the orchard
is in good condition, having been well maintained.
Famoso Ranch
On June 7, 1990, the partnership purchased for approximately $586,000
cash, from Peter Constantine Stiney an 81.87 acre almond orchard known as the
Famoso Ranch. The seller is not affiliated with the general partner, the
partnership, or any of their affiliates. The property is located in the south
/central part of the San Joaquin Valley near the town of Famoso in Kern County,
California.
Of the 81.87 acres comprising the property, there are 78 net acres of
almond orchard. The trees were planted in 1980 and consist of two-thirds
NonPareil, one-sixth Mission and one-sixth Merced nut varieties. The property
purchases water from the Southern San Joaquin Municipal Water District and also
has a water/well sharing agreement with the adjacent land owner for use of the
underground lines to and from the water district turnout and well. Zoning on
this orchard is strictly agricultural only.
All of the land in the vicinity of the property is devoted to
agriculture. The climate is hot and dry in the summer and generally mild in the
winter. The area typically receives little rainfall and most crops, including
almonds require supplemental irrigation for agricultural production at economic
levels. The soils on the property are comprised of McFarland Loam, Delano Sandy
Loam and Zerker Sandy Clay Loam.
Set forth below is a table summarizing crop production on the property.
Gross Almond Pounds
Producing Production Produced
Year Acres (in Pounds) Per Acre
---- ----- ----------- --------
1987 78.0 92,045 1,180
1988 78.0 160,835 2,062
1989 78.0 218,022 2,795
1990 78.0 151,819 1,946
1991 78.0 93,846 1,203
1992 78.0 70,507 904
1993 78.0 65,507 840
1994 78.0 150,316 1,927
1995 78.0 65,743 843
1996 78.0 93,524 1,199
1997 78.0 93,986 1,205
1998 78.0 53,718 689
1999 78.0 141,517 1,814
The trees are planted in a density of 79 trees per acre and the orchard
is in good condition, having been well maintained.
The property is subject to the terms of the Williamson Land Act which
requires that the land will be assessed for real estate tax purposes solely on
its value for agricultural uses.
Form 10KSB-10
<PAGE>
Farm Management Services.
Charterhill Pacific was hired as the farm manager for the partnership.
Under this agreement, Charterhill Pacific assumed the primary responsibility for
the farm management activities of the partnership properties. Fees paid to the
property management company were approximately $115 per cultivated acre, plus
7.5% of the net crop proceeds from such acreage.
The agreement with Charterhill Pacific has been extended through
December 31, 2001. The sole shareholder of Charterhill Pacific is related to the
sole shareholder of the Managing General Partner.
Item 3. Legal Proceedings.
There are currently no legal proceedings concerning the partnership.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders, through
the solicitation of proxies or otherwise during the fourth quarter of the fiscal
year ended December 31, 1999.
PART II
Item 5. Market for the Registrant's Equity and Related Security Holder Matters.
The limited partnership unit holders are entitled to certain
distributions as provided in the partnership agreement. No market for individual
limited partnership units exists nor is expected to develop and transfers of
units are registered under the terms of the limited partnership agreement. See
the limited partnership agreement which is Exhibit B to the Prospectus, attached
as Exhibit 3 to this report.
As of March 8, 2000 the approximate number of holders of limited
partnership units was 795. Joint owners (including but not limited to joint
tenants, tenants in common and husband and wife) are shown on the partnership's
records as a single record holder and, therefore, are counted as one.
Form 10KSB-11
<PAGE>
Distributions
<TABLE>
Set forth below is a schedule of distributions made to the limited
partners in 1993, 1994, 1995, 1996, 1997, 1998 and 1999. The source of
distributions was a combination of crop revenue, interest income, rental income,
and capital contributions.
<CAPTION>
1999 1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
January 162,450 $162,450 $114,000 $ 85,500 $ 57,000 $ 57,000 $ 57,000
February
March
April 162,450 $162,450 114,000 85,500 57,000 57,000 57,000
May
June
July 57,000 $162,450 114,000 85,500 57,000 57,000 57,000
August
September
October 0 $162,450 114,000 85,500 57,000 57,000 57,000
November
December
Total Distributions 381,900 $649,800 $456,000 $342,000 $228,000 $228,000 $228,000
======== ======== ======== ======== ======== ======== ========
</TABLE>
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
As of March 12, 1991, the partnership had acquired six properties, the
Cressey, Robertson, Hooker, Clausen, Sierra II, and Famoso Ranches. It is
anticipated that purchase of the Famoso ranch will be the last property acquired
by the partnership.
In order to maintain sufficient reserves to meet the operating needs of
the partnership, the partnership obtained a mortgage on the Hooker Ranch in
1990. The mortgage note is payable in semi-annual payments of $12,000, with the
final balloon payment of $240,000 due in 2005. Interest on the note is currently
being accrued at the rate of 8.1% and is subject to periodic adjustment.
The partnership generally receives payments from crop sales in
installments over the twelve months following harvest. The partnership retained
sufficient cash proceeds from the 1999 crop and has secured sufficient
additional crop financing necessary to sustain production of the 2000 crop. The
portion of the additional financing expected for the 2000 crop, if needed, will
be supplied by the almond processor. This practice is common to the industry
since final cash receipts for any crop year may extend beyond twelve months from
the harvest. The General Partner believes that these sources provide adequate
capital for the operating needs of the Partnership in 2000.
Form 10KSB-12
<PAGE>
No distributions were made in 1991, as sufficient cash funds were not available
for distribution due to the unexpected downturn in the 1990 price of almonds.
Distributions were started in 1992 at an annual rate of 4% per annum return to
the limited partners. In 1996 the distributions were increased to 6% per annum,
and to 8% per annum in 1997. Distributions were increased to 12% per annum in
1998. In 1999 distributions were started at the rate of 12% per annum, but due
to the collapes of the almond market, distributions were decreased to 3% per
annum in July 1999, and suspened in October 1999.
Results of Operations
Combined harvest from the partnerships properties yielded 873,900
pounds of almonds in 1999 and 717,087 pounds of almonds in 1998. These yields
represent average pounds produced per acre of 1,436 in 1999 and 1,178 in 1998.
The increase in production in 1999 was industry wide and was due to the good
weather during the bloom period in March. The determination of the final
settlement price for the 1999 almonds will not be determined until the fall of
2000 and is subject to variation based upon market conditions. The 1999 crop
price estimate is $0.68 per pound compared to $1.39 per pound in 1998. Based on
available information at this time, the General Partner feels confident that the
expected final sales price of $0.68 per pound will be achieved.
Farming costs for the partnership on a per acre basis were $1,322 in
1999 and , $1,488 in 1998. Farming costs vary largely depending on the
characteristics of a given orchard, including the availability of sufficient
water. At this time, the General Partner believes that water costs will continue
to increase in the future but will not significantly increase the farming costs
due to the availability of well water.
General and Administrative expenses are primarily comprised of
accounting, computer services, management services, and other professional fees.
Such amounts were $160,500 in 1999 and $182,300 in 1998. The General Partner
anticipate similar levels of general and administrative costs in the future.
Item 7. Financial Statements and Supplementary Data
Form 10KSB-13
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
None
PART III
Item 9. Directors, Executive Officers, Promoters, and Control Persons of the
Registrant: Compliance with Section 16a of the Exchange Act.
The managing general partner of the partnership is Vintech Almond
Advisers, Inc. The managing general partner makes investment decisions and
otherwise has sole responsibility for managing the business affairs of the
partnership.
Vintech Almond Advisers, Inc. is a California corporation which was
formed, in November 1986, for the purpose of acting as managing general partner.
Its sole shareholder is Donald D. Bade.
KEY MANAGEMENT AND ADMINISTRATIVE PERSONNEL
The key management personnel of Vintech Almond Advisors and Charterhill
Pacific, the management company, have many years of proven experience in all
phases of the agricultural business and real estate investments including
day-to-day administration, management, farming, and marketing. A brief synopsis
of the background of some of the key management personnel is listed below:
Donald D. Bade
Mr. Bade, age 63, is president and chief financial officer of Vintech
Almond Advisors. He graduated from Stanford University in 1958, with a BA degree
in Economics. His agricultural investment career began in 1971, and since that
time he has been instrumental in the negotiation, purchase, and sale of over
$200 million dollars of agricultural real estate in the San Joaquin Valley of
California. Since 1971, he has personally managed or had the management
responsibility for over 10,000 acres of permanent crops, all located in the San
Joaquin Valley.
David A. Bade
Mr. Bade, age 37, is the president and chief financial officer of
Charterhill Pacific, as well as the sole shareholder. Charterhill Pacific was
founded by David Bade in 1991. He graduated from California State
University-Chico in 1985 with a BS degree in Agriculture and Business. It's main
business is the management of investments and farm properties.
Form 10KSB-14
<PAGE>
Item 10. Executive Compensation.
The partnership does not pay or employ directly any directors or
officers. Compensation to the directors and officers of Vintech Almond Advisors,
Inc., is based on Vintech Almond Advisors income from all activities rather than
from the results of the partnership in particular.
The partnership has not established any plans pursuant to which cash or
non-cash compensation has been paid or distributed during the last fiscal year
or is proposed to be paid or distributed in the future, nor has the partnership
issued or established any options or rights relating to the acquisition of its
securities or any plans therefore. However, companies related to the general
partner have received and are expected to receive certain allocations,
distributions, and other amounts pursuant to the partnership's limited
partnership agreement and the management agreement between the partnership and
Charterhill Pacific, Inc. (See Note 2 to the financial statements.)
Item 11. Security Ownership of Certain Beneficial Owners and Management.
There is no person known to the partnership who owns beneficially or of
record more than 5% of the voting securities of the partnership. The
partnership's general partner owns no voting securities of the partnership.
However, the general partner has discretionary control over most of the
decisions made by or for the partnership pursuant to the terms of the
partnership's limited partnership agreement. The partnership has no directors or
officers. The executive officers of the general partner of the partnership, as a
group, own less than 1% of the partnership's voting securities.
Charterhill Pacific, Inc. has contracted to manage the administration
of the partnership and the farming operations. of the partnership (See Footnote
2 to the financial statements.)
There are no arrangements known to the partnership, the operations of
which may, at a subsequent date, result in a change in control of the
partnership.
Item 12. Certain Relationships and Related Transactions.
The partnership pays or has paid certain fees to related parties. See
Note 2 of the financial statements.
Form 10KSB-15
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a). Exhibits
3.* Partnership agreement included in the Prospectus (Exhibit
28.1)
10.1* Farm Management Agreement incorporated by reference to Exhibit
10.1 to the Registration Statement, filed November 17, 1986
10.2* Amendments to the Farm Management Agreement
10.3* Property purchase agreement for Cressey Ranch, incorporated by
reference to Exhibit 10.1 to post-effective amendment Number
3, filed May 25, 1988 (File 33-10196)
10.4* Property purchase agreement for Robertson Ranch, incorporated
by reference to Exhibit 10.1 to post-effective amendment
Number 4, filed August 15, 1988 (File 33-10196)
10.5* Property purchase agreement for Hooker Ranch, incorporated by
reference to Exhibit 10.1 to post-effective amendment Number
5, filed February 9, 1989
10.6* Property purchase agreement for Clausen Ranch, incorporated by
reference to Exhibit 10.1 (Form 8-K filed May 4, 1989)
28.1* Prospectus filed pursuant to Rule 424(b) of the Securities Act
of 1933
28.2* Supplement Number 1 to the Prospectus filed pursuant to Rule
424(b) of the Securities Act of 1933
28.3* Supplement Number 2 to the Prospectus filed pursuant to Rule
424(b) of the Securities Act of 1933
28.4* Supplement Number 3 to the Prospectus filed pursuant to Rule
424(b) of the Securities Act of 1933
28.5* Supplement Number 4 to the Prospectus pursuant to Rule 424(b)
of the Securities Act of 1933
* Previously Filed
(b). Reports On Form-8K
None
Form 10KSB-16
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
The Partnership has decided to take advantage of the "Safe Harbor" provision of
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). In that
connection, this annual report of Form 10-KSB includes forward looking
statements concerning the Partnership. The forward looking statements are made
pursuant to the Reform Act.
There are many factors that could cause the events in such forward looking
statement to not occur, including but not limited to general or specific
economic conditions, the ability and willingness of the Partnership's customer
to purchase the Partnership's product, the perceived absolute or relative
overall value of this product by the purchaser, including quality and price, the
weather or affect of weather on the Partnership's orchards and their ability to
produce product, the amount and rate of growth and the Partnership's selling,
general and administrative expenses, difficulties in obtaining materials,
supplies and equipment, the making or incurring or any expenditures, the affect
of and changes in laws and regulations, other activities of government agencies
and similar organizations.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CALIFORNIA ALMOND INVESTORS I
A California Limited Partnership
By: Vintech Almond Advisers Inc.
Its Managing General Partner
By: _____________________________ March 15, 1999
David A. Bade, President --------------
Date
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 date indicated.
________________________ Director, Vintech Almond Advisers, Inc. March 15, 1999
David A. Bade Principal Executive Officer --------------
Principal Financial Officer Date
Principal Accounting Officer of
the Registrant and
Vintech Almond Advisers, Inc.
Form 10KSB-17
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEPENDENT AUDITOR'S REPORT
AND
FINANCIAL STATEMENTS
DECEMBER 31, 1999 and 1998
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT ............................................. F-1
FINANCIAL STATEMENTS
Balance sheets ...................................................... F-2
Statements of operations ............................................ F-3
Statements of partners' equity ...................................... F-4
Statements of cash flows ............................................ F-5
Notes to financial statements ....................................... F-6
- --------------------------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
California Almond Investors I
(A California Limited Partnership)
We have audited the accompanying balance sheets of California Almond Investors I
(A California Limited Partnership), as of December 31, 1999 and 1998, and the
statements of operations, partners' equity and cash flows for each of the years
then ended. 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 audits 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 our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of California Almond Investors I
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the years then ended, in conformity with generally accepted
accounting principles.
Santa Rosa, California
February 9, 2000
Page F-1
<PAGE>
<TABLE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1999 and 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
ASSETS
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 346,900 $ 1,296,700
Accounts receivable 314,000 440,400
Receivable from general partner 58,200 --
Receivable from limited partners 8,200 --
Deferred crop costs 185,100 174,100
Advances for farm costs 31,800 --
----------- -----------
Total current assets 944,200 1,911,200
----------- -----------
PROPERTY AND EQUIPMENT
Land 1,100,800 1,100,800
Orchards 2,216,700 2,216,700
Equipment 1,158,900 1,158,900
Buildings 141,100 141,100
----------- -----------
4,617,500 4,617,500
Less accumulated depreciation (3,021,900) (2,741,000)
----------- -----------
1,595,600 1,876,500
----------- -----------
Total assets $ 2,539,800 $ 3,787,700
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 35,600 $ 18,800
Current maturities of long-term debt 24,000 24,000
Payables to general partner and related parties -- 21,000
Distributions payable to limited partners -- 74,900
----------- -----------
Total current liabilities 59,600 138,700
LONG-TERM DEBT, less current maturities 336,000 360,000
PARTNERS' EQUITY 2,144,200 3,289,000
----------- -----------
Total liabilities and partners' equity $ 2,539,800 $ 3,787,700
=========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
- ------------------------------------------------------------------------------------------------------------------------------------
Page F-2
</FN>
</TABLE>
<PAGE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
1999 1998
----------- -----------
REVENUES
Crops $ 492,100 $ 1,154,100
Interest and other 27,800 58,000
----------- -----------
519,900 1,212,100
----------- -----------
EXPENSES
Operating 805,000 906,200
Depreciation 280,900 280,200
General and administrative 160,500 182,300
Interest 36,500 38,800
----------- -----------
1,282,900 1,407,500
----------- -----------
NET LOSS $ (763,000) $ (195,400)
=========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (63.17) $ (16.18)
=========== ===========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
Page F-3
<PAGE>
<TABLE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
December 31, 1999 and 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Limited
Partnership Limited General
Units Partners Partner Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 12,079 $ 4,242,000 $ 5,300 $ 4,247,300
Cash distributions -- (724,700) (38,200) (762,900)
Net loss -- (193,400) (2,000) (195,400)
----------- ----------- ----------- -----------
Balance, December 31, 1998 12,079 3,323,900 (34,900) 3,289,000
Cash distributions -- (381,800) -- (381,800)
Net loss -- (755,400) (7,600) (763,000)
----------- ----------- ----------- -----------
Balance, December 31, 1999 12,079 $ 2,186,700 $ (42,500) $ 2,144,200
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
- ------------------------------------------------------------------------------------------------------------------------------------
Page F-4
</FN>
</TABLE>
<PAGE>
<TABLE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1999 and 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (763,000) $ (195,400)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation 280,900 280,200
Changes in:
Accounts receivable 126,400 433,500
Receivable from general partner (58,200) --
Receivable from limited partners (8,200) --
Deferred crop costs (11,000) 24,900
Advances for farm costs (31,800) 1,400
Accounts payable and accrued liabilities 16,800 (12,800)
Payable to general partner and related parties (21,000) (45,000)
----------- -----------
Net cash provided (used) by operating activities (469,100) 486,800
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (456,700) (684,100)
Payments on long-term debt (24,000) (24,000)
----------- -----------
Net cash used by financing activities (480,700) (708,100)
----------- -----------
DECREASE IN CASH (949,800) (221,300)
CASH, beginning of year 1,296,700 1,518,000
----------- -----------
CASH, end of year $ 346,900 $ 1,296,700
=========== ===========
SUPPLEMENTAL CASH-FLOW INFORMATION
Cash paid during the year for:
Interest $ 36,500 $ 38,800
Non-cash financing activities:
Distributions payable to:
Limited partners $ -- $ 74,900
General partner $ -- $ 3,900
<FN>
The accompanying notes are an integral part of these financial statements.
- ------------------------------------------------------------------------------------------------------------------------------------
Page F-5
</FN>
</TABLE>
<PAGE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Description of operations - California Almond Investors I (A California Limited
Partnership) (the Partnership), owns and operates income-producing almond
orchards in the California Central Valley. Almonds are sold to a sole processor
at prevailing market rates. Vintech Almond Advisers, Inc., is the managing
general partner. Donald Bade is the sole shareholder of Vintech Almond Advisers,
Inc. The Partnership was organized in November 1986 and commenced operations in
February 1988, when minimum funding levels were attained. The Partnership is to
continue until December 2016, unless sooner terminated. The original limited
partner capital contribution of $1,000 ($500 per unit) was made by Vintech,
Inc., a company wholly owned by Donald Bade.
Revenue recognition - Revenue is recognized after harvest at an estimated price
per pound to be received over a twelve-month period. The final price is equal to
the highest price paid by the buyer to any of its growers. Differences between
estimated and actual revenues are recognized in the subsequent year's income
statement. The Partnership's revenue includes proceeds from crop insurance,
which pays if the almond crop yields less than the insured amount. The
Partnership recognized $44,300 of revenue from crop insurance for the year ended
December 31, 1998. No crop insurance was received for the year ended December
31, 1999.
Property and equipment - Property and equipment are stated at cost, including
acquisition fees and other closing costs, and are depreciated using the
straight-line method over estimated useful lives of 12 years for orchards and
equipment and 27.5 years for buildings.
Deferred crop costs - Costs incurred subsequent to harvest are generally related
to the following year's growing crop and are deferred until that crop is
harvested and sold.
Cash distributions - Cash distributions to limited partners are based on a
weighted average of limited partnership units outstanding. Distributions per
partnership unit were $31.62 and $60.00 for the years ended December 31, 1999
and 1998, respectively.
Allocation of net income (loss) per limited partnership unit - Net income (loss)
is allocated to the limited partners based on a weighted average of 12,079
limited partnership units outstanding for the years ended December 31, 1999 and
1998.
Income taxes - Net income or loss is allocated to the partners as specified in
the partnership agreement and is reported on their respective income tax
returns; therefore, no provision for income taxes is reflected in the
accompanying financial statements.
Concentrations of credit risk - Certain financial instruments, primarily cash
and accounts receivable, potentially subject the Partnership to concentrations
of credit risk. Cash deposited in bank demand deposit accounts is in excess of
FDIC insurance thresholds. The Partnership deposits excess cash into a money
fund account that invests primarily in U. S. Treasury securities. Concentrations
of credit risk, with respect to accounts receivable, are directly related to the
well being of the sole almond processor purchasing the Partnership's crop. The
harvest is sold to a single processor for a price per pound paid within 12
months. The Partnership's management does not believe significant credit risk
exists at December 31, 1999.
- --------------------------------------------------------------------------------
Page F-6
<PAGE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions affecting the reported amounts of assets, liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities. Significant
estimates include the estimated price per pound of the current year's crop, the
collectability of estimated amounts due from the almond buyer, and the useful
life of depreciable assets. The estimated price per pound is dependent on the
crop yield and other factors, such as decisions of the California Almond Control
Board related to the supply of almonds to be released in the marketplace. The
amounts estimated could differ significantly from actual results.
Fair value of financial instruments - The Partnership measures its financial
assets and liabilities in accordance with generally accepted accounting
principles. The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
For certain of the Partnership's financial instruments, including cash, accounts
receivable, and accounts payable, the carrying amount approximates fair value
because of the short maturities. The carrying amount of Partnership borrowings
under the long-term debt agreement approximates fair value because current
interest rates available to the Partnership for similar debt are approximately
the same.
NOTE 2 - TRANSACTIONS WITH THE GENERAL PARTNER AND RELATED PARTIES
The Partnership has an agreement with Charterhill Pacific, a California
Corporation controlled by David A. Bade, son of Donald Bade, to manage all
Partnership operations and to supervise and manage farming operations of the
orchards. Under the Partnership Management Agreement, which expires December 31,
2001, Charterhill Pacific is paid approximately $ 8,100 per month, adjusted
annually for increases in the Consumer Price Index, plus expenses. Under the
Farm Management Agreement, Charterhill Pacific is paid approximately $114 per
acre per year, adjusted annually for increases in the Consumer Price Index, plus
expenses. The Farm Management Agreement also provides payment of an incentive
fee equal to 7.5% of cash flow from operations, as defined in the Agreement. The
Farm Management Agreement may be terminated at any time upon 120 days' notice.
Under the partnership agreement, the managing general partner is allowed a
partnership management fee equal to 5% of annual distributions subject to
certain limitations. During the year ended December 31, 1999, the managing
general partner received distributions based on an estimate of distributions for
the year. Due to the low crop price and resulting net loss, distributions were
reduced from the original estimate, resulting in an overpayment to the managing
general partner. The amount of the overpayment is recorded as a receivable from
the general partner and will be withheld from future distributions. Amounts paid
or accrued to Charterhill Pacific and to the general partner in 1999 and 1998
were as follows:
1999 1998
-------- --------
Charterhill Pacific:
Partnership Management Agreement $105,500 $110,600
Farm Management Agreement 81,200 140,000
General Partner 20,100 40,200
-------- --------
$206,800 $290,800
======== ========
- --------------------------------------------------------------------------------
Page F-7
<PAGE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
NOTE 2 - TRANSACTIONS WITH THE GENERAL PARTNER AND RELATED PARTIES (Continued)
Future minimum payments under the Partnership Management Agreement are as
follows:
Year Ending December 31,
------------------------
2000 $ 97,200
2001 97,200
---------
$ 194,400
=========
NOTE 3 - LONG-TERM DEBT
1999 1998
--------- ---------
Mortgage note, with variable interest at 8.10% and
subject to adjustment in January 2000;
semi-annual principal repayments of $12,000
are due January 1 and July 1, with a balloon
payment in January 2005; secured by a deed of
trust on an almond orchard and associated
equipment with a net book value at December
31, 1999 and 1998, of approximately $575,500
and $680,000, respectively $ 360,000 $ 384,000
Less current maturities (24,000) (24,000)
--------- ---------
$ 336,000 $ 360,000
========= =========
Principal maturities for succeeding years are as follows:
Year Ending December 31,
------------------------
2000 $ 24,000
2001 24,000
2002 24,000
2003 24,000
2004 24,000
Thereafter 240,000
---------
$ 360,000
=========
- --------------------------------------------------------------------------------
Page F-8
<PAGE>
CALIFORNIA ALMOND INVESTORS I
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
NOTE 4 - PARTNERS' EQUITY
The partnership agreement entitles limited partners to a 12% per year
cumulative, but not compounded, priority return on unreturned capital. Such
cumulative priority returns of approximately $4,698,600 have not been fully paid
as of December 31, 1999. Unreturned capital is defined, in general, as the
limited partners' capital contribution reduced by proceeds from the sale of the
Partnership or the Partnership's property. Cash distributions are determined by
the general partner based on the Partnership's working capital needs.
Distributions paid or payable totaled $381,900 and $762,900 for the years ended
December 31, 1999 and 1998, respectively.
Cash distributions on the sale or liquidation of the Partnership are allocated
first to the limited partners in an amount equal to their capital contribution
of $6,039,500, and then 99% to the limited partners in an amount equal to the
sum of their cumulative priority return.
In general, income is allocated in proportion to cash contributions until
cumulative income allocations equal cumulative cash distributions, then 1% is
allocated to general partners and 99% to limited partners. Losses are generally
allocated 1% to general partners and 99% to limited partners.
NOTE 5 - RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
<TABLE>
The differences between the accrual method of accounting for income tax
reporting and accrual method of accounting used in the accompanying financial
statements are as follows:
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Net loss - financial statements $ (763,000) $ (195,400)
Differences resulting from depreciation and amortization 55,700 55,400
----------- -----------
Net loss - income tax method $ (707,300) $ (140,000)
=========== ===========
Taxable loss per limited partnership unit $ (58.56) $ (11.59)
=========== ===========
Partners' equity - financial statements $ 2,144,100 $ 3,289,000
Differences resulting from:
Depreciation and amortization 586,500 530,800
Sales commissions 513,400 513,400
Syndication costs 332,200 332,200
----------- -----------
Partners' equity - income tax method $ 3,576,200 $ 4,665,400
=========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
Page F-9
</TABLE>
