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 June 30, 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
Commission file number 0-17853
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
JUNE 30, 1998 AND DECEMBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
LAND:
Held for sale $ 16,319,066 $ 17,232,102
Subject to sale agreements 332,780 911,184
Subject to sale agreement with affiliate 788,287 788,287
------------ ------------
Total land 17,440,133 18,931,573
LOAN RECEIVABLE FROM AFFILIATE 7,598,415 7,598,415
CASH AND CASH EQUIVALENTS 2,781,850 5,844,446
PREPAID EXPENSES AND OTHER 150,142 167,103
------------ ------------
Total assets $ 27,970,540 $ 32,541,537
============ ============
LIABILITIES AND PARTNERS' CAPITAL
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 998,619 $ 4,228,540
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 111,963 106,893
------------ ------------
Total liabilities 1,110,582 4,335,433
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partner (8,386) (9,839)
Limited partners 26,868,344 28,215,943
------------ ------------
Total partners' capital 26,859,958 28,206,104
------------ ------------
Total liabilities and partners' capital $ 27,970,540 $ 32,541,537
============ ============
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
6/30/98 6/30/97 6/30/98 6/30/97
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Land sales $1,093,825 $3,030,548 $2,871,073 $5,924,928
Interest on loan to affiliate 212,500 212,500 425,000 425,000
Interest on investments and other 33,467 53,856 82,345 91,064
---------- ---------- ---------- ----------
1,339,792 3,296,904 3,378,418 6,440,992
---------- ---------- ---------- ----------
EXPENSES:
Cost of land sales 675,929 1,775,414 1,758,434 3,766,456
General partner fees 65,585 81,612 132,071 170,870
Property management fees 9,000 9,000 18,000 18,000
Marketing 6,917 6,315 10,071 10,034
Property taxes 35,803 39,999 68,898 84,464
Other operating 72,535 79,745 133,011 199,278
---------- ---------- ---------- ----------
865,769 1,992,085 2,120,485 4,249,102
---------- ---------- ---------- ----------
NET INCOME $ 474,023 $1,304,819 $1,257,933 $2,191,890
========== ========== ========== ==========
NET INCOME ALLOCATED TO:
General partner $ 561 $ 497 $ 1,453 $ 334
Limited partners 473,462 1,304,322 1,256,480 2,191,556
---------- ---------- ---------- ----------
$ 474,023 $1,304,819 $1,257,933 $2,191,890
========== ========== ========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on
50,000 units held by limited partners) $ 9.47 $ 26.09 $ 25.13 $ 43.83
========== ========== ========== ==========
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 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 1,453 - 1,256,480 1,257,933
Distribution to Limited Partners - - (2,604,079) (2,604,079)
-------- ------ ----------- -----------
BALANCE, June 30, 1998 $(8,386) 50,000 $26,868,344 $26,859,958
======= ====== =========== ===========
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,257,933 $ 2,191,890
Change in assets and liabilities:
Decrease in land held for sale 913,036 8,807,006
Decrease (increase) in land subject to sales agreements 578,404 (5,529,556)
Decrease in prepaid expenses and other 16,961 3,473
Decrease in payable to general partner -- (58,481)
Increase (decrease) in accounts
payable and accrued expenses 5,070 (46,958)
----------- -----------
Net cash provided by operating activities 2,771,404 5,367,374
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Limited partner distributions declared (2,604,079) (5,435,922)
Increase (decrease) in distribution payable (3,229,921) 1,828,922
----------- -----------
Net cash used in financing activities (5,834,000) (3,607,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (3,062,596) 1,760,374
CASH AND CASH EQUIVALENTS, beginning of period 5,844,446 2,418,201
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,781,850 $ 4,178,575
=========== ===========
</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 June 30, 1998 (the period), the Registrant sold
one 2.7 acre land parcel to an unaffiliated third party. This land sale
transaction provided cash sales proceeds of approximately $1 million. The parcel
had a total original cost of approximately $495,000 and closing and other costs
of approximately $96,000. The Registrant also sold a .86 acre easement to the
City of Scottsdale for $86,500 (the original cost of the parcel was
approximately $85,000). These parcel sales resulted in gains totaling
approximately $418,000. Cash distributions declared from the parcel sales
amounted to approximately $998,000 for the period.
At June 30, 1998, the Registrant had one parcel of land (approximately
2.1 acres) under contract for sale for a purchase price of approximately
$900,000 to an unaffiliated third party. The original cost of the parcel was
approximately $333,000. Approximately 90 acres (excluding the parcel in escrow)
remain available for sale within The Perimeter Center. The Partnership has
entered into preliminary negotiations for the sale of several of the remaining
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 $1.3 million for the quarter ended June 30,
1998 as compared to approximately $3.3 million for the comparable quarter in
1997. Total revenues for the six months ended June 30, 1998 were $3.4 million as
compared to $6.4 million for the same period in 1997. The average sales price
per acre of land sold during the six month period ended June 30, 1998 increased
17% to approximately $340,000 per acre from approximately $290,000 per acre for
land sold during the six months ended June 30, 1997. Gain as a percentage of
land sale revenues increased to 39% for the six months ended June 30, 1998, as
compared to 36% for the six months ended June 30, 1997.
Interest and other income for the quarter decreased by $20,389 from the
comparable quarter of the prior year, resulting from a lower average cash
balance invested during the June 1998 quarter. Year-to-date amounts were
similarly affected, although to a lesser extent. Total expenses (excluding the
cost of land sales) decreased by $26,831 for the 1998 quarter from the
comparable quarter of the prior year due primarily to decreases in the general
partner fee ($16,027), property taxes ($4,196) and other
<PAGE>
operating expenses ($7,210). Year-to-date expense amounts were similarly
affected. 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 decreased due to the sale of land parcels during the past twelve months.
The decrease in other operating expenses resulted primarily from a decrease in
property 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. Accordingly, as the Registrant sells
parcels, its common area maintenance fees will decrease.
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 - JUNE 30, 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: August 7, 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: August 7, 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 JUNE 30, 1998 AND
THE STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000824098
<NAME> SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 2,781,850
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 17,440,133
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,970,540
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,859,958
<TOTAL-LIABILITY-AND-EQUITY> 27,970,540
<SALES> 2,871,073
<TOTAL-REVENUES> 3,378,418
<CGS> 1,758,434
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,257,933
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,257,933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,257,933
<EPS-PRIMARY> 25.13
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF JUNE 30, 1998
ND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
BALANCE SHEET.
</LEGEND>
<CIK> 0000824134
<NAME> FFCA INVESTOR SERVICES CORPORATION 88-B
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<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>
