UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
-------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ------------------------
Commission file number
0-17626
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
and
FFCA INVESTOR SERVICES CORPORATION 88-B
- --------------------------------------------------------------------------------
(Exact Name of Co-Registrants as Specified in Their
Organizational Documents)
Delaware 86-0588512
- --------------------------------------------------------------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0588514
- --------------------------------------------------------------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (602) 585-4500
---------------------------
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
----- -----
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item l. Financial Statements.
------ --------------------
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
------
LAND:
Held for sale $ 16,192,164 $ 17,232,102
Subject to sale agreements 1,039,938 911,184
Subject to sale agreement with affiliate 788,287 788,287
------------ ------------
Total land 18,020,389 18,931,573
LOAN RECEIVABLE FROM AFFILIATE 7,598,415 7,598,415
CASH AND CASH EQUIVALENTS 3,272,629 5,844,446
PREPAID EXPENSES AND OTHER 167,120 167,103
------------ ------------
Total assets $ 29,058,553 $ 32,541,537
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 1,605,967 $ 4,228,540
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 68,499 106,893
------------ ------------
Total liabilities 1,674,466 4,335,433
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partner (8,947) (9,839)
Limited partners 27,393,034 28,215,943
------------ ------------
Total partners' capital 27,384,087 28,206,104
------------ ------------
Total liabilities and partners' capital $ 29,058,553 $ 32,541,537
============ ============
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUES:
Land sales $ 1,777,248 $ 2,894,380
Interest on loan to affiliate 212,500 212,500
Interest on investments and other 48,878 37,208
----------- -----------
2,038,626 3,144,088
----------- -----------
EXPENSES:
Cost of land sales 1,082,505 1,991,042
General partner fees 66,486 89,258
Property management fees 9,000 9,000
Marketing 3,154 3,720
Property taxes 33,095 44,465
Other operating 60,476 119,532
----------- -----------
1,254,716 2,257,017
----------- -----------
NET INCOME $ 783,910 $ 887,071
=========== ===========
NET INCOME ALLOCATED TO:
General partner $ 892 $ (163)
Limited partners 783,018 887,234
----------- -----------
$ 783,910 $ 887,071
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(based on 50,000 units held by limited partners) $ 15.66 $ 17.74
=========== ===========
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General ---------------------------
Partner Number Total
Amount of Units Amount Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1997 $ (9,839) 50,000 $ 28,215,943 $ 28,206,104
Net Income 892 -- 783,018 783,910
Distribution to
Limited Partners -- -- (1,605,927) (1,605,927)
------------ ------------ ------------ ------------
BALANCE, March 31, 1998 $ (8,947) 50,000 $ 27,393,034 $ 27,384,087
============ ============ ============ ============
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 783,910 $ 887,071
Adjustments to net income:
Change in assets and liabilities:
Decrease in land held for sale 1,039,938 2,143,476
Increase in land subject to sales agreements (128,754) (379,543)
Increase in prepaid expenses and other (17) (66,330)
Decrease in payable to general partner -- (473)
Increase (decrease) in accounts payable and
accrued liabilities (38,394) 9,305
----------- -----------
Net cash provided by operating activities 1,656,683 2,593,506
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Limited partner distribution declared (1,605,927) (2,667,272)
Increase (decrease) in distribution payable (2,622,573) 1,727,772
----------- -----------
Net cash used in financing activities (4,228,500) (939,500)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,571,817) 1,654,006
CASH AND CASH EQUIVALENTS, beginning of period 5,844,446 2,418,201
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 3,272,629 $ 4,072,207
=========== ===========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------ Financial Condition and Results of Operations
---------------------------------------------
Scottsdale Land Trust Limited Partnership (the Registrant) received
$50,000,000 in gross proceeds from its public offering of the Units on November
23, 1988. After deducting organizational and offering expenses, the Registrant
had $43,250,000 in net proceeds available for investment. The net proceeds were
used to purchase the property (The Perimeter Center), fund the construction of
the infrastructure and fund the $8.5 million loan to Franchise Finance
Corporation of America (FFCA), in accordance with the partnership agreement.
Pursuant to the loan agreement, FFCA makes monthly payments of interest only to
the Registrant and is current on such payments. The entire principal balance of
the loan is due in May 2000, or earlier if all of The Perimeter Center land
parcels are sold prior to that date. The Registrant's primary sources of revenue
are land sales, interest payments received from FFCA under the loan agreement
and interest earned on the Registrant's temporary investments. As land parcels
are sold, distributions of the net cash sale proceeds are made in accordance
with the partnership agreement. Once all of The Perimeter Center parcels are
sold, the Registrant will liquidate all of its other assets and distribute them
in accordance with the partnership agreement.
Funds pending distribution to the limited partners are temporarily
invested in U.S. Government Agency discount notes and bank repurchase agreements
(which are secured by United States Treasury and Government obligations).
Reserves remaining in the Registrant are approximately $1.7 million. These
reserves may be used from time to time to pay amounts assessed by the city or
county taxing authorities for developmental or other costs.
During the quarter ended March 31, 1998 (the period), the Registrant
sold two land parcels aggregating 5.1 acres to unaffiliated third parties. Land
sale transactions during the quarter provided aggregate cash sales proceeds of
approximately $1.8 million. The parcels had a total original cost of
approximately $911,000 and closing and other costs of approximately $171,000.
These parcel sales resulted in gains totaling approximately $695,000. Cash
distributions declared from the parcel sales amounted to $1.6 million for the
period.
At March 31, 1998, the Registrant had one parcel of land (approximately
10.5 acres) under contract for sale for a purchase price of approximately $4.2
million to an unaffiliated third party. The original cost of the parcel is
approximately $1 million. Approximately 85 acres (excluding the parcel in
escrow) remain available for sale within The Perimeter Center and the
Partnership has entered into preliminary negotiations for the sale of several
land parcels. The Partnership cannot determine which, if any, of these
negotiations will result in the sale of a land parcel and, therefore, cannot
predict the timing or amount of any future cash distributions.
Land sales comprise the majority of the total revenues of the Registrant.
Total revenues were approximately $2 million for the quarter ended March 31,
1998 as compared to approximately $3 million for the comparable quarter in 1997.
The average sales price per acre of land sold during the period increased 22% to
approximately $348,500 per acre from approximately $286,500 per acre for land
sold during the quarter ended March 31, 1997. Gain as a percentage of land sale
revenues increased to 39% for the quarter ended March 31, 1998, as compared to
31% for the quarter ended March 31, 1997.
Interest and other income for the period increased by $11,670 over the
comparable period of the prior year due to the increase in temporary investment
securities resulting from a higher average cash balance invested during the
March 1998 quarter. This high cash balance results from net sale proceeds held
during the quarter prior to distribution of the cash to the limited partners.
Total expenses (excluding the cost of land sales) decreased by $93,764 for the
period from the comparable period of the prior year due primarily to decreases
in the general partner fee ($22,772), property taxes ($11,370) and other
operating expenses ($59,056). The general partner fee decreased during the
period because the fee is based on Assets Under Management, as defined in the
partnership agreement, and as parcels are sold the general partner fee is
reduced accordingly. Property taxes
<PAGE>
decreased due to the sale of land parcels during 1997. The decrease in other
operating expenses resulted primarily from a decrease in repairs and maintenance
costs. In January 1997, the Perimeter Center Owners' Association (the
Association) began paying for all common area maintenance required at the
Perimeter Center and is assessing common area maintenance fees to all of the
land owners within the Perimeter Center (including the Registrant). The
Registrant is charged a common area maintenance fee (based on square footage
owned) by the Association.
In the opinion of management, the financial information included in this
report reflects all adjustments necessary for fair presentation. All such
adjustments are of a normal recurring nature.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 88-B
---------------------------------------
BALANCE SHEET - MARCH 31, 1998
------------------------------
ASSETS
Cash $100
Investment in Scottsdale Land Trust Limited Partnership, at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent $100
----
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
Note: FFCA Investor Services Corporation 88-B (88-B) was organized on
August 11, 1987 to act as the assignor limited partner in Scottsdale Land Trust
Limited Partnership (SLT). The assignor limited partner is the owner of record
of the limited partnership units of SLT. All rights and powers of 88-B have been
assigned to the holders, who are the registered and beneficial owners of the
units. Other than to serve as assignor limited partner, 88-B has no other
business purpose and will not engage in any other activity or incur any debt.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
By FFCA MANAGEMENT COMPANY LIMITED
PARTNERSHIP
General Partner
By PERIMETER CENTER MANAGEMENT COMPANY
Corporate General Partner
Date: May 11, 1998 By /s/ John Barravecchia
---------------------------------------------
John Barravecchia, Executive Vice President,
Treasurer and Chief Financial Officer
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 88-B
Date: May 11, 1998 By /s/ John Barravecchia
-------------------------------------------------------
John Barravecchia, President, Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1998 AND THE STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 824098
<NAME> SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,272,629
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 18,020,389
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,058,553
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 27,384,087
<TOTAL-LIABILITY-AND-EQUITY> 29,058,553
<SALES> 1,777,248
<TOTAL-REVENUES> 2,038,626
<CGS> 1,082,505
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 783,910
<INCOME-TAX> 0
<INCOME-CONTINUING> 783,910
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 783,910
<EPS-PRIMARY> 15.66
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
BALANCE SHEET.
</LEGEND>
<CIK> 824134
<NAME> FFCA INVESTOR SERVICES CORPORATION 88-B
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
