<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [Fee Required]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from TO
------- -------
Commission file number 0-16642
WINDSOR PARK PROPERTIES 5, A CALIFORNIA LIMITED
-----------------------------------------------
PARTNERSHIP (Exact name of small business issuer in its charter)
California 33-0243223
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6430 South Quebec Street, Englewood, Colorado 80111
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 741-3707
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
-------------------------------------
(Title of Class)
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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $571,600
DOCUMENTS INCORPORATED BY REFERENCE: None
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I
Page
----
<S> <C> <C>
Item 1. Description of Business 3
Item 2. Description of Properties 5
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
Item 5. Market for the Partnership's Units and Related Security
Holder Matters 7
Item 6. Management's Discussion and Analysis 8
Item 7. Financial Statements 10
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 24
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act 24
Item 10. Executive Compensation 25
Item 11. Security Ownership of Certain Beneficial Owners and Management 25
Item 12. Certain Relationships and Related Transactions 26
Item 13. Exhibits and Reports on Form 8-K 27
SIGNATURES 28
</TABLE>
2
<PAGE> 3
PART I
Item 1. DESCRIPTION OF BUSINESS
Business Development
Windsor Park Properties 5, a California Limited Partnership (the Partnership),
was formed in June 1987 pursuant to the provisions of the California Uniform
Limited Partnership Act. The General Partners of the Partnership are The Windsor
Corporation, a California corporation ("The Windsor Corporation"), and John A.
Coseo, Jr. In September, 1997, Chateau Communities, Inc. (Chateau), a publicly
held real estate investment trust, purchased all of the outstanding Capital
Stock of The Windsor Corporation for 101,239 Common Shares of Chateau, and
$750,000 in cash. Following the purchase of The Windsor Corporation, Chateau
appointed a new Board of Directors and elected Steven G. Waite as the President
of The Windsor Corporation. The Partnership term is set to expire in December
2001; however, the Partnership may either be dissolved and liquidated 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.
The Partnership was organized to acquire and hold existing manufactured home
communities for investment. Its principal investment objectives are to provide
to the Limited Partners: (i) distributions of cash from operations, (ii)
preservation, protection and eventual return of the limited partners'
investment, and (iii) realization of appreciation in the value of the properties
acquired.
The Partnership was funded through a public offering of 300,000 limited
partnership units (Units). A total of 243,729 Units were sold for gross proceeds
aggregating $24,372,900. In addition, the General Partners purchased 1,000 Units
with a $100,000 note. The offering commenced in September 1987 and terminated in
September 1988. The net proceeds from the offering were originally expended for
the acquisition of undivided interests in nine fully-developed manufactured home
communities located in Arizona, Florida, Louisiana, Georgia, Michigan, and
Washington. The Partnership paid all cash for these properties.
In February 1997, the Partnership purchased a 9% 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 $207,000. 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 $273,600.
The Partnership owns interests in the following manufactured home communities at
December 31, 1997:
<TABLE>
<CAPTION>
Date
Name of Property Ownership % Acquired Location
- ---------------- ----------- -------- --------
<S> <C> <C> <C>
Lakeside 100% July 1988 Lithia Springs, Georgia
Plantation Estates 100% December 1988 Douglasville, Georgia
Town and Country Estates 42% January 1989 Tucson, Arizona
Rancho Margate 26% September 1995 Margate, Florida
Winter Haven 26% October 1995 Winter Haven, Florida
Apache East 9% February 1997 Phoenix, Arizona
Denali Park 9% February 1997 Phoenix, Arizona
</TABLE>
The above described ownership interests where the Partnership owns less than
100% of a Property, consist of ownership interests in joint ventures or limited
partnerships that own one or more manufactured home communities.
No further property financings or investment property acquisitions are planned
by the General Partners.
The overall occupancy of the seven communities owned by the Partnership at
December 31, 1997 was approximately 95%. The General Partners continue to
maintain the properties in good condition and promote them to improve occupancy.
3
<PAGE> 4
Business of Issuer
The Partnership is currently in the business of managing, holding for
investment, and eventually selling the existing manufactured home communities.
Competitors of the Partnership include other public and private limited
partnerships, individuals, corporations, and other entities engaged in real
estate investment activities. Competition for such properties varies with
changes in the supply or demand for similar or competing properties in a given
area, changes in interest rates and the availability of mortgage funds, and
changes in tax, real estate, environmental, and zoning laws.
Partnership profitability depends in part on maximizing occupancy and rental
rates in its manufactured home communities. Rents and occupancy rates are
affected by both changes in general economic conditions and changes in local
conditions such as levels of employment, supply of other comparable units or
competitive housing alternatives, zoning laws, and the availability and cost of
energy and transportation.
All of the Partnership's properties are located in or near large urban areas.
Accordingly, they compete for rentals not only with other manufactured home
communities but with apartments and any other form of low cost housing that
might exist.
The Partnership's profitability also depends on the minimization of both
property and partnership administration expenses. Expenses are affected by
changes in general economic trends and changes in local conditions such as
prevailing wages, utility rates, insurance costs, and real estate taxation
practices.
The Partnership has no employees. Partnership administrative services are
provided by The Windsor Corporation, which is reimbursed for costs incurred on
behalf of the Partnership. Chateau Communities, Inc. employs all of the
properties' on-site personnel and is reimbursed by the Partnership for all such
costs.
4
<PAGE> 5
Item 2. DESCRIPTION OF PROPERTIES
The Partnership owns interests in seven properties at December 31, 1997. The
Partnership operates the properties as manufactured home communities, renting
space to manufactured home tenants on a month-to-month basis. The properties
compete for rentals with other manufactured home communities and apartments in
their local markets. All properties are encumbered. It is the General Partners'
opinion that the properties are in good condition and are adequately insured.
<TABLE>
<CAPTION>
Rancho Lakeside
Margate -------- Winter Haven
------- Lithia ------------
Margate, Springs, Winter Haven,
Location Florida Georgia Florida
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Ownership 26% 100% 26%
Date Acquired 9/95 7/88 10/95
Acreage 29 31 30
Number of Spaces 245 103 238
Monthly Rents (1) $ 363 $ 199 $ 220
Occupancy Level:
December 31, 1997 96% 93% 99%
Real estate taxes $ 144,800 $ 14,100 $ 35,600
Federal tax basis (3) $1,662,400 $1,194,900 $ 794,200
Mortgage Information:
Balance payable $3,663,600 $1,097,000 $1,610,300
Interest rate 9.29% 8.97% 9.29%
Amortization period 30 years -- 30 years
Maturity date 7/23 9/02 6/23
Balance due at maturity $ 0 $1,097,000 $ 0
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
Town and
Plantation Country
Estates Estates Apache East
------- ------- -----------
Douglasville, Tucson, Phoenix,
Location Georgia Arizona Arizona
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Ownership 100% 42% 9%
Date Acquired 12/88 1/89 2/97
Acreage 23 38 16
Number of Spaces 138 320 123
Monthly Rents (1) $ 193 $ 202 $ 220
Occupancy Level:
December 31, 1997 88% 96% 81%
Real estate taxes $ 14,400 $ 31,700 $ 17,400
Federal tax basis (3) $ 1,226,800 $1,499,600 $ 201,800
Mortgage Information:
Balance payable (2) $1,550,000 $3,040,000
Interest rate (2) 8.97% 8.38%
Amortization period (2) -- 24 years
Maturity date (2) 9/02 3/06
Balance due at maturity (2) $1,550,000 $2,583,200
</TABLE>
<TABLE>
<CAPTION>
Denali
Park
----
Phoenix,
Location Arizona
- -----------------------------------------------------------------------------------------
<S> <C>
Percentage of Ownership 9%
Date Acquired 2/97
Acreage 33
Number of Spaces 162
Monthly Rents (1) $ 202
Occupancy Level:
December 31, 1997 81%
Real estate taxes $ 23,600
Federal tax basis (3) $ 260,400
Mortgage Information:
Balance payable (4)
Interest rate (4)
Amortization period (4)
Maturity date (4)
Balance due at maturity (4)
</TABLE>
(1) Average rental rates in effect on December 31, 1997.
(2) Same mortgage note payable as Lakeside.
(3) For income tax purposes, the properties and their components are
depreciated using both straight-line and accelerated methods over
useful lives ranging from 5 to 40 years.
(4) Same mortgage note payable as Apache East.
6
<PAGE> 7
Item 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Partnership is a party or of which any
of its properties is the subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders for a vote during the fourth
quarter of the fiscal year covered by this report.
PART II
Item 5. MARKET FOR THE PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
A public market for the Partnership's units does not exist and is not likely to
develop. As of December 31, 1997, there were approximately 3,140 persons holding
an aggregate of 238,637 units.
Cash distributions paid to limited partners since December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Per $1,000
Originally
Date Paid Amount (1) Invested (2)
- --------- ---------- ------------
<S> <C> <C>
August 1997 $100,000 $4.09
February 1997 $100,000 $4.09
August 1996 $100,000 $4.09
February 1996 $100,000 $4.09
</TABLE>
(1) Amounts exclude General Partner participation.
(2) Computed based on $24,472,900 original investment.
Cash distributions paid to the General Partners since December 31, 1995 were
$4,000. The General Partners expect that the Partnership will make cash
distributions on a semi-annual basis in the future.
7
<PAGE> 8
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the financial
statements and Notes thereto included elsewhere in this Annual Report. Certain
statements in this discussion constitute "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Partnership or industry to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
Liquidity and Capital Resources
The Partnership's primary sources of cash during the years ended December 31,
1997 and 1996 were from the operations of its investment properties, cash
distributions from joint ventures and limited partnerships. The primary uses of
cash during the same period were for investments in joint ventures and cash
distributions to partners.
In February 1997, the Partnership purchased a 9% 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 $207,000. 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 $273,600. The loan initially bears interest at 8.375%. In
March 2000 and March 2003, the interest rate adjusts to the yield on the 3 year
Treasury Note plus 2.2%. The loan is due in March 2006.
At December 31, 1997, the Partnership's total mortgage debt, including its
proportionate share of joint venture debt, was $3,392,800, consisting entirely
of variable rate debt. The average rate of interest on this debt was 9.05% at
December 31, 1997.
Pursuant to the Partnership Agreement, net profits from the sale of Partnership
properties should be allocated first to each partner with a negative capital
account balance in an amount equal to the amount of the negative capital account
of each partner. Subsequent to the issuance of the 1995 financial statements,
the general partners determined that the financial statements did not properly
reflect the income allocation provisions of the Partnership Agreement.
Accordingly, partners' equity as December 31, 1994, has been restated from the
amounts previously reported to properly allocate net profits from the sale of
Partnership properties among the partners in accordance with the provisions of
the Partnership Agreement.
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.
8
<PAGE> 9
Results of Operations
The results of operations for the years ended December 31, 1997 and 1996. The
Partnership realized net income of $9,200 ($0.04 per limited partnership unit)
for the year ended December 31, 1997 and incurred a net loss of $23,600 ($0.10
per limited partnership unit) for the year ended December 31, 1996.
Rent and utilities revenues increased from $436,300 in 1996 to $470,700 in 1997.
The overall occupancy of the Partnership's two wholly-owned properties increased
from 88% at December 31, 1996 to 90% at December 31, 1997. In addition, a $6 and
$5 per month rent increase was implemented at both the Lakeside and Plantation
communities, respectively, effective April 1997.
Equity in earnings of joint ventures represents the Partnership's share of the
net income of the Town and Country Estates, Rancho Margate and Winter Haven
manufactured home communities and since their purchase in February 1997, the
Apache East and Denali Park communities. Equity in earnings of joint ventures
decreased from $83,100 in 1996 to $68,600 in 1997, due mainly to losses recorded
at Apache East and Denali Park in 1997. The overall occupancy of the
Partnership's five joint venture properties was 93% at December 31, 1997. Recent
rent increases implemented include $9 and $12 per month at Winter Haven and
Rancho Margate, respectively, effective January 1997.
Interest income decreased from $34,400 in 1996 to $19,900 in 1997 due mainly to
lower average cash balances maintained by the Partnership.
Property operating costs decreased from $292,800 in 1996 to $266,000 in 1997.
The decrease is attributable mainly to higher promotional costs in 1996. The
Partnership had been offering financial incentives to prospective residents in a
successful effort to improve occupancy at both the Lakeside and Plantation
communities.
Interest expense remained relatively flat in 1997 from the same period in 1996.
General and administrative expense decreased slightly from $89,900 in 1996 to
$83,700 in 1997.
New Accounting Standards
In 1997, the Partnership adopted SFAS No. 128, "Earnings Per Share." This
accounting standard specifies new computation, presentation and disclosure
requirements for earnings per share to be applied retroactively. Among other
things, SFAS No. 128 requires presentation of basic and diluted earnings per
share on the face of the income statement. The adoption of SFAS 128 had no
effect on the per unit results reported.
Year 2000 Compliance
The Partnership is currently engaged in a review with its software vendors to
ensure all systems are modified for year 2000 compliance. Since all systems are
owned and maintained by third party vendors, the Partnership believes that the
additional cost for compliance will not be material to future results of
operations, financial condition or cash flows of the Partnership.
9
<PAGE> 10
Item 7. FINANCIAL STATEMENTS
The following financial statements are filed as a part of this report:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants 11
Balance Sheet as of December 31, 1997 13
Statements of Operations for the years ended
December 31, 1997 and 1996 14
Statements of Partners' Equity for the years ended
December 31, 1997 and 1996 15
Statements of Cash Flows for the years ended
December 31, 1997 and 1996 16
Notes to Financial Statements 17
</TABLE>
10
<PAGE> 11
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners
Windsor Park Properties 5
(A California Limited Partnership)
Englewood, Colorado
We have audited the accompanying balance sheet of Windsor Park Properties 5, a
California Limited Partnership, (the Partnership) as of December 31, 1997 and
the related statements of operations, partners' equity and cash flows for the
year ended December 31, 1997. These financial statements are the responsibility
of the General Partners. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 that our audit provides 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 Windsor Park Properties 5 as of
December 31, 1997 and the results of its operations and its cash flows for the
year ended December 31, 1997 in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Denver, Colorado
March 30, 1998
11
<PAGE> 12
INDEPENDENT AUDITORS' REPORT
The Partners
Windsor Park Properties 5
(A California Limited Partnership)
Escondido, California
We have audited the accompanying statements of operations, partners' equity and
cash flows of Windsor Park Properties 5 (the Partnership) for the year ended
December 31, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations of Windsor Park Properties 5 and its cash
flows for the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Costa Mesa, California
February 28, 1997
12
<PAGE> 13
WINDSOR PARK PROPERTIES 5
(A California Limited Partnership)
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C>
ASSETS
Property held for investment, net $ 2,643,900
Investments in joint ventures and limited partnerships 2,324,500
Cash and cash equivalents 376,900
Deferred financing costs, net 42,800
Other assets 29,000
-----------------
Total Assets $ 5,417,100
=================
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Mortgage note payable $ 1,097,000
Accounts payable 4,900
Accrued expenses 19,400
Tenant deposits and other liabilities 34,900
Due to General Partners and affiliates 21,000
-----------------
Total Liabilities 1,177,200
-----------------
Partners' equity:
Limited partners 4,218,000
General partners 21,900
-----------------
4,239,900
-----------------
Total Liabilities and Partner's Equity $ 5,417,100
=================
</TABLE>
See Accompanying Notes to Financial Statements
13
<PAGE> 14
WINDSOR PARK PROPERTIES 5
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For The Year Ended December 31,
------------------------------
1997 1996
------------- -------------
<S> <C> <C>
REVENUES
Rent and utilities $ 470,700 $ 436,300
Equity in earnings of joint ventures and limited partnerships 68,600 83,100
Interest 19,900 34,400
Other 12,400 14,200
------------- -------------
571,600 568,000
------------- -------------
COSTS AND EXPENSES
Property operating 266,000 292,800
Depreciation and amortization 108,100 106,800
Interest 104,600 102,100
General and administrative:
Related parties 46,600 50,800
Other 37,100 39,100
------------- -------------
562,400 591,600
------------- -------------
Net (loss) income $ 9,200 $ (23,600)
============= =============
Net (loss) income - general partners $ 100 $ (200)
============= =============
Net (loss) income - limited partners $ 9,100 $ (23,400)
============= =============
Basic and dilutive earnings (loss) per limited partnership unit $ .04 $ (.10)
============= =============
</TABLE>
See Accompanying Notes to Financial Statements
14
<PAGE> 15
WINDSOR PARK PROPERTIES 5
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 and 1996
<TABLE>
<CAPTION>
Units
Subscription
General Limited Note
Partners Partners Receivable Total
-------- -------- ---------- -----
<S> <C> <C> <C> <C>
Balance at
December 31, 1995 26,000 4,659,400 (100,000) 4,585,400
Cash distributions (2,000) (200,000) (202,000)
Net loss (200) (23,400) (23,600)
Repurchase of limited
partnership units (7,100) (7,100)
--------- ----------- --------- ----------
Balance at
December 31, 1996 23,800 4,428,900 (100,000) 4,352,700
--------- ----------- --------- ----------
Cash distributions (2,000) (200,000) (202,000)
Net income 100 9,100 9,200
Repayment of
Subscription N/R 100,000 100,000
Repurchase of limited
partnership units (20,000) (20,000)
--------- ----------- --------- ----------
Balance at
December 31, 1997 $ 21,900 $ 4,218,000 $ -- $4,239,900
========= =========== ========= ==========
</TABLE>
See Accompanying Notes to Financial Statements
15
<PAGE> 16
WINDSOR PARK PROPERTIES 5
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Year Ended December 31,
-------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ 9,200 $ (23,600)
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 108,100 106,800
Equity in earnings of joint ventures and limited partnerships (68,600) (83,100)
Joint ventures' and limited partnerships cash distributions 68,600 83,100
Amortization of deferred financing costs 9,000 9,100
Loss on sale of property held for investment 5,300
Changes in operating assets and liabilities:
Other assets 17,100 13,000
(Decrease) increase in Accounts payable (15,000) 10,400
Due to General Partners and affiliates 21,000
Accrued expenses (9,400) (3,400)
(Decrease) increase in Tenant deposits and
other liabilities (1,600) 1,500
------------- -------------
Net cash provided by operating activities 143,700 113,800
------------- -------------
Cash flows from investing activities:
Joint ventures' and limited partnerships cash distributions 61,200 27,000
Increase in property held for investment (15,400) (25,500)
Investments in joint ventures and limited partnerships (225,200) --
Proceeds from sale of property held for investment 10,800 --
------------- -------------
Net cash (used in) provided by investing activities (168,600) 1,500
------------- -------------
Cash flows from financing activities:
Cash distributions (202,000) (202,000)
Repurchase of limited partnership units (20,000) (7,100)
Payment of deferred financing costs -- (200)
Proceeds from payment of subscription receivable 100,000
------------- -------------
Net cash used in financing activities (122,000) (209,300)
------------- -------------
Net decrease in cash and cash equivalents (146,900) (94,000)
Cash and cash equivalents at beginning of year 523,800 617,800
------------- -------------
Cash and cash equivalents at end of year $ 376,900 $ 523,800
============= =============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (none capitalized) $ 103,314 $ 93,500
============= =============
</TABLE>
See Accompanying Notes to Financial Statements
16
<PAGE> 17
WINDSOR PARK PROPERTIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership
Windsor Park Properties 5, A California Limited Partnership (the Partnership),
was formed in June 1987 for the purpose of acquiring and holding existing
manufactured home communities for investment. The General Partners of the
Partnership are The Windsor Corporation("TWC"), a California corporation, and
John A. Coseo, Jr. In September 1997, Chateau Communities Inc., (Chateau), a
publicly held real estate investment trust, purchased 100 percent of the shares
of the Windsor Corporation.
The Partnership was funded through a public offering of 244,729 limited
partnership units at $100 per unit which commenced in September 1987 and
terminated in September 1988. The Partnership term is set to expire in December
2001; 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.
The following is a summary of the Partnership's significant accounting policies:
Property Held For Investment
Property held for investment is recorded at the lower of cost or net realizable
value and depreciated over various estimated useful lives (buildings and
improvements - 5 to 20 years; fixtures and equipment - 3 to 5 years) using the
straight-line method. When assets are sold or otherwise disposed of, the cost
and related accumulated depreciation are removed from the accounts, and any gain
or loss is included in net income. Repairs and maintenance are charged to
operations as incurred.
In 1996, the Partnership adopted Statement of Financial Accounting Standards No.
121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and Assets
to be Disposed of." SFAS 121 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that their
carrying value may not be recoverable. The adoption of SFAS 121 had no effect on
reported results in 1996.
For the years ended December 31, 1997 and 1996, permanent impairment conditions
did not exist at the Partnership's property.
Investments in Joint Ventures and Limited Partnerships
The investments in joint ventures are accounted for utilizing the equity method
as the properties are subject to joint control requiring approval or mutual
agreement of the investees. The investment in Limited Partnerships is also
accounted for utilizing the equity method as the Limited Partners have
significant rights.
17
<PAGE> 18
Financing Costs
Financing costs are amortized to interest expense over the life of the note
utilizing a method, which approximates the effective interest method.
Income Taxes
Under provisions of the Internal Revenue Code and the California Revenue and
Taxation Code, partnerships are generally not subject to income taxes. The tax
effect of any income or loss accrues to the individual partners.
Basic and Dilutive Earnings per Limited Partnership Unit
Basic and dilutive earnings per limited partnership unit are calculated based on
the weighted average number of limited partnership units outstanding during the
year and the net (loss) income allocated to the Limited Partners. Basic and
dilutive earnings per limited partnership unit are the same, as the Partnership
has no dilutive securities. The weighted average number of limited partnership
units outstanding during the years ended December 31, 1997 and 1996 was 239,644
and 241,330, respectively.
In 1997, the Partnership adopted Statement of Financial Accounting Standards No.
128 (SFAS 128), "Earnings Per Share." This accounting standard specifies new
computation, presentation, and disclosure requirements for earnings per share to
be applied retroactively. Among other things, SFAS 128 requires presentation of
basic and diluted earnings per share on the face of the income statement. The
adoption of SFAS 128 had no effect on the per unit results previously reported.
Statements of Cash Flows
For purposes of the statements of cash flows, the Partnership considers all
highly-liquid instruments purchased with an original maturity of three months or
less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
Rental income is recognized when earned and due from residents. The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and renewable upon the consent of both parties or, in some
instances, as provided by statute.
18
<PAGE> 19
NOTE 2. PARTNERSHIP AGREEMENT
In accordance with the Partnership Agreement, the maximum liability of the
Limited Partners is the amount of their capital contributions. The number of
limited partnership units outstanding at December 31, 1997 and 1996 was 238,637
and 240,634, respectively, which represented capital contributions of
$23,863,700 and $24,063,400, respectively. During the years ended December 31,
1997 and 1996, the Partnership repurchased 1,997 units and 1,188 units,
respectively, for $20,000 and $7,100, respectively. The General Partners owned
1,039 units at both December 31, 1997 and 1996.
The General Partners are entitled to receive from the Partnership various fees
and compensation which are summarized as follows:
Operational Stage
The 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 TWC for certain direct expenses and employee,
executive and administrative time incurred on the Partnership's behalf. The
Partnership was charged $52,800 and $58,200 for such costs during the years
ended December 31, 1997 and 1996, respectively. These costs are included in
property operating and general and administrative expenses in the accompanying
statements of operations. As of December 31, 1997, the partnership owed TWC
$6,300.
Liquidation Stage
During the Partnership's liquidation stage, the total compensation paid to all
persons for the sale of investment properties is limited to competitive real
estate commissions, not to exceed 6% of the contract price for the sale of the
property. The General Partners may receive up to one-half of the competitive
real estate commission, not to exceed 3%, if they provide a substantial amount
of services in the sales effort. The General Partners' commission is
subordinated to the Limited Partners' receiving a 9% cumulative, non-compounded
annual return (Preferred Return) on their original capital investments. No
commissions were paid to the General Partners during the years ended December
31, 1997 and 1996.
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 their Preferred
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 $2,000 for each of the years
ended December 31, 1997 and 1996.
19
<PAGE> 20
NOTE 3. PROPERTY HELD FOR INVESTMENT
Property held for investment consists of two manufactured home communities
summarized as follows:
<TABLE>
<CAPTION>
Name of Property Date Acquired Location
---------------- ------------- --------
<S> <C> <C>
Lakeside July 15, 1988 Lithia Springs, Georgia
Plantation Estates December 30, 1988 Douglasville, Georgia
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C>
Land $ 1,507,800
Buildings and improvements 2,065,600
Fixtures and equipment 34,300
-----------------
3,607,700
Less accumulated depreciation (963,800)
-----------------
$ 2,643,900
=================
</TABLE>
NOTE 4. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS
The Partnership's investments in joint ventures consist of interests in five
manufactured home communities summarized as follows:
<TABLE>
<CAPTION>
Ownership
Name of Property Percentage Date Acquired Location
- ---------------- ---------- ------------- --------
<S> <C> <C> <C>
Town and Country Estates 42% January 17, 1989 Tucson, Arizona
Rancho Margate 26% September 20, 1995 Margate, Florida
Winter Haven 26% October 11, 1995 Winter Haven, Florida
Apache East 9% February 18 1997 Phoenix, Arizona
Denali Park 9% February 18, 1997 Phoenix, Arizona
</TABLE>
The remaining interests in the communities are owned by affiliated California
limited partnerships, which have the same General Partners as the Partnership.
In February 1997, the Partnership purchased a 9% 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 $207,000. In connection with the purchase, the limited
partnerships obtained a $3,040,000 loan, collateralized by the communities.
20
<PAGE> 21
The combined condensed financial position and results of operations of the joint
ventures and limited partnerships (including Apache East and Denali Park since
their purchase) are as follows:
<TABLE>
<CAPTION>
Financial Position
December 31, 1997
-----------------
<S> <C>
Property held for investment, net $ 18,478,400
Cash 176,600
Other assets 353,400
-----------------
Total assets $ 19,008,400
=================
Mortgage notes payable $ 9,863,900
Accounts payable 40,500
Other liabilities 95,500
-----------------
Total liabilities 9,999,900
Partners' equity 9,008,500
-----------------
$ 19,008,400
=================
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------
Results of Operations 1997 1996
------------- -------------
<S> <C> <C>
Property revenues $ 2,937,600 $ 2,319,600
------------- -------------
Expenses:
Property operating 1,428,100 1,056,000
Interest 837,700 628,800
Depreciation 550,800 379,100
------------- -------------
2,816,600 2,063,900
------------- -------------
Net income $ 121,100 $ 255,700
============= =============
</TABLE>
NOTE 5: MORTGAGE NOTE PAYABLE
In September 1995, the Partnership obtained a $1,097,000 mortgage loan
collateralized by the Lakeside and Plantation Estates communities. The loan is
payable in monthly interest only installments bearing interest at 90-day LIBOR
plus 2.95% (8.97% at December 31, 1997) and is due in September 2002.
21
<PAGE> 22
NOTE 6. NOTE RECEIVABLE FROM GENERAL PARTNERS
At the close of the offering in September 1988, the General Partners purchased
1,000 limited partnership units with a $100,000 promissory note. The note
receivable is accounted for as a reduction of Limited Partners' equity in 1996.
The unit subscription note became due in September 1997 and was repaid by the
general partners.
NOTE 7. 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 the Limited Partners for the years ended December 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
------------------------ ------------------------
Per Per
Amount Unit Amount Unit
------ ---- ------ ----
<S> <C> <C> <C> <C>
Net income
- - Limited Partners $ 9,100 $ .04 $ $
Return of capital 190,900 .79 200,000 .83
---------- ---------- ---------- ----------
$ 200,000 $ .83 $ 200,000 $ .83
========== ========== ========== ==========
</TABLE>
NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash equivalents, receivables, accounts payable, accrued
expenses and other liabilities approximate fair value because of the short
maturity of the financial instruments. The mortgage note payable bears interest
at a variable rate indexed to LIBOR; therefore, the General Partners believe the
carrying value of the note approximates fair value.
22
<PAGE> 23
NOTE 9. CONTINGENCIES
The Partnership, as an owner of real estate, is subject to various environmental
laws. Compliance by the Partnership with existing laws has not had a material
effect on the results of operations, financial condition or cash flows of the
Partnership, nor does management believe it will have a material impact in the
future.
NOTE 10. RELATED PARTY TRANSACTIONS
Chateau and/or its predecessor have been providing property management services
to the Partnership since 1992. For this service, Chateau is paid a property
management fee, which is based on a percentage of actual gross receipts of the
properties. The total management fees paid to Chateau were $23,800 and $21,700
for the years ended December 31, 1997 and 1996, respectively. In addition
certain direct expenses are paid by Chateau on behalf of the Partnership and
then reimbursed by the Partnership. These amounts were $54,900 and $54,600 for
the years ended December 31, 1997 and 1996, respectively.
23
<PAGE> 24
PART III
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements over accounting or financial disclosure with the
independent accountants for the Partnership.
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The general partners of the Partnership are The Windsor Corporation, and John A.
Coseo, Jr.
In July 1994, The Windsor Corporation merged into Windsor Group, Inc., a
majority-owned subsidiary. In conjunction with the merger, Windsor Group, Inc.
changed its name to The Windsor Corporation, hereafter, ("The Windsor
Corporation").
These utilities were incorporated in 1977 and 1992, respectively, to engage in
the real estate syndication business. Historically, they have concentrated
solely on the acquisition, management, and sale of fully-developed manufactured
home communities through the investment programs which they sponsor.
The executive officers of The Windsor Corporation do not receive direct
compensation from the Partnership in these capacities and are only required to
spend such time on the Partnership's affairs as is deemed necessary. Substantial
amounts of these officers' time is spent on matters unrelated to the
Partnership.
The names, ages, and nature of the positions held by the directors and executive
officers of The Windsor Corporation follow:
<TABLE>
<CAPTION>
Name Age Office
----------------------- ----------- ----------------------
<S> <C> <C>
Steven G. Waite 43 President and Director
Gary P. McDaniel 52 Director
C.G. Kellogg 54 Director
</TABLE>
A brief background of the general partners, directors and certain executive
officers of The Windsor Corporation follows.
Steven G. Waite (43) joined The Windsor Corporation in August 1997 as President.
Since 1991, until his involvement with Windsor, Mr. Waite served as Vice
President/General Manager of the Communities Division at Clayton Homes. He was
responsible for the original start up of this division, and subsequently built
it into a successful and profitable area of Clayton Homes, expanding from eight
communities to 67 communities. In addition, Mr. Waite has over eight years of
experience in the manufactured home community-lending arena. He earned a
Bachelor of Arts degree from the University of Colorado and a Master of Business
Administration from the University of Alabama. Mr. Waite is active in the
Manufactured Housing Institute.
Gary P. McDaniel (52) a director of The Windsor Corporation, has been Chief
Executive Officer and a director of Chateau Communities, Inc. ("Chateau") since
February 1997. He served as the Chairman of the Board, President and Chief
Executive Officer for ROC Communities, Inc., which merged with Chateau in 1997.
Since 1993, he has been an executive and shareholder of ROC and its predecessors
since 1979, and has been active in the manufactured home industry since 1972.
Mr. McDaniel is also a trustee of Windsor Real Estate Investment Trust 8, which
is advised by The Windsor Corporation. Mr. McDaniel has been active in several
state and national manufactured home associations, including associations in
Florida and Colorado. In 1996, he was named "Industry Person of the Year" by the
National Manufactured Housing Industry Association. Mr. McDaniel is on the Board
of Directors of the Manufactured Housing Institute. He is a graduate of the
University of Wyoming and served as a Captain in the United States Air Force.
24
<PAGE> 25
C.G. ("Jeff") Kellogg (54) has been President and a director of Chateau since
its inception and was Chief Executive Officer of Chateau from its inception to
February 1997. For the five years preceding the formation of Chateau. Mr.
Kellogg was President and Chief Operating Officer of Chateau Estates. He is
extremely active in local and national industry associations, often in
leadership positions. Mr. Kellogg is a past President of the Michigan
Manufactured Housing Association and served on the Manufactured Housing
Institute's Community Operations Committee. He is a graduate of Michigan
Technological University with a B.S. in Civil Engineering.
John A. Coseo, Jr. (58) the other general partner of the Partnership was the
founder of The Windsor Corporation in 1977 and has been actively involved in all
facets of the manufactured housing business since that time, Mr. Coseo resigned
from his positions as director and executive officer of The Windsor Corporation
in 1997. From 1979 to the present, Mr. Coseo has acted as general partner or
advisor in the acquisition and management of 56 manufactured home communities
throughout the United States. Mr. Coseo is a general partner of seven limited
partnerships which have registered their securities under the Securities and
Exchange Act of 1934.
Item 10. EXECUTIVE COMPENSATION
The Partnership has not paid and does not propose to pay any remuneration or
retirement benefits to John A. Coseo, Jr. or the directors or executive officers
of The Windsor Corporation. Refer to Item 12 (Certain Relationships and Related
Transactions) for cash distributions and expense reimbursements paid to The
Windsor Corporation by the Partnership.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
No person is known by the Partnership to be the beneficial owner of
more than 5% of the limited partnership units.
(b) Security Ownership of Management
The following table presents certain information regarding the number
of units owned, directly or indirectly, by (i) each General Partner and
(ii) all General Partners as a group as of December 31, 1997:
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units of Limited John A. Coseo, Jr.,
Partnership Interest a General Partner 39 .016%
Units of Limited The Windsor Corporation,
Partnership Interest a General Partner 1,000 .416%
----- ----
Units of Limited All General Partners as
Partnership Interest a group 1,039 .432%
===== ====
</TABLE>
25
<PAGE> 26
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following table reflects all compensation paid to the General Partners
during the years ended December 31, 1997 and 1996.
<TABLE>
<CAPTION>
Form of Compensation and Entity Receiving 1997 1996
---- ----
<S> <C> <C>
Expense reimbursement - The Windsor Corporation $ 52,800 $ 58,200
Cash distributions - The Windsor Corporation $ 2,000 $ 2,000
</TABLE>
26
<PAGE> 27
Item 13. 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. 33-15878 and
incorporated herein by reference.
(27) - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last
quarter of the period covered by this Form 10-KSB.
27
<PAGE> 28
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 on this 31st day of
March, 1998.
WINDSOR PARK PROPERTIES 5
A California Limited Partnership
By: THE WINDSOR CORPORATION
By: /s/Steven G. Waite
--------------------------------
STEVEN G. WAITE
President
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 dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/Steven G. Waite President of The Windsor Corporation, a March 31, 1998
- ------------------------- general partner.
STEVEN G. WAITE
/s/Gary P. McDaniel Director of The Windsor Corporation, a March 31, 1998
- ------------------------- general partner.
GARY P. MCDANIEL
/s/C.G. Kellogg Director of The Windsor Corporation, a March 31, 1998
- ------------------------- general partner.
C.G. KELLOGG
/s/John A. Coseo, Jr. General Partner March 31, 1998
- -------------------------
JOHN A. COSEO, JR.
</TABLE>
28
<PAGE> 29
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
(3) - Certificate and Agreement of Limited Partnership filed
as Exhibit A to Registration Statement No. 33-15878 and
incorporated herein by reference.
(27) - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 376,900
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,607,800
<DEPRECIATION> 963,800
<TOTAL-ASSETS> 5,417,100
<CURRENT-LIABILITIES> 80,200
<BONDS> 1,097,000
0
0
<COMMON> 0
<OTHER-SE> 4,239,900
<TOTAL-LIABILITY-AND-EQUITY> 5,417,100
<SALES> 0
<TOTAL-REVENUES> 571,700
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 458,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104,600
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,300
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
