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 September 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
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(Unaudited)
September 30, December 31,
1998 1997
------------ ------------
ASSETS
LAND:
Held for sale $13,873,028 $17,232,102
Subject to sale agreements 1,989,551 911,184
Subject to sale agreement with affiliate 788,287 788,287
----------- -----------
Total land 16,650,866 18,931,573
LOAN RECEIVABLE FROM AFFILIATE 7,598,415 7,598,415
CASH AND CASH EQUIVALENTS 4,313,768 5,844,446
PREPAID EXPENSES AND OTHER 171,426 167,103
----------- -----------
Total assets $28,734,475 $32,541,537
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 2,442,852 $ 4,228,540
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 162,552 106,893
----------- -----------
Total liabilities 2,605,404 4,335,433
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General partner (7,802) (9,839)
Limited partners 26,136,873 28,215,943
----------- -----------
Total partners' capital 26,129,071 28,206,104
----------- -----------
Total liabilities and partners' capital $28,734,475 $32,541,537
=========== ===========
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
9/30/98 9/30/97 9/30/98 9/30/97
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Land sales $2,520,642 $10,582,692 $5,391,715 $16,507,620
Interest on loan to affiliate 212,500 212,500 637,500 637,500
Interest on investments and other 45,768 81,305 128,113 172,369
---------- ----------- ---------- -----------
2,778,910 10,876,497 6,157,328 17,317,489
---------- ----------- ---------- -----------
EXPENSES:
Cost of land sales 867,176 6,143,843 2,625,610 9,910,299
General partner fee 64,428 79,427 196,499 250,297
Property management fee 9,000 9,000 27,000 27,000
Marketing - 6,691 10,071 16,725
Property taxes 53,572 31,520 122,470 115,984
Other operating 72,888 102,918 205,899 302,196
---------- ----------- ---------- -----------
1,067,064 6,373,399 3,187,549 10,622,501
---------- ----------- ---------- -----------
NET INCOME $1,711,846 $ 4,503,098 $2,969,779 $ 6,694,988
========== =========== ========== ===========
NET INCOME ALLOCATED TO:
General partner $ 584 $ 642 $ 2,037 977
Limited partners 1,711,262 4,502,456 2,967,742 6,694,011
---------- ----------- ---------- -----------
$1,711,846 $ 4,503,098 $2,969,779 $ 6,694,988
========== =========== ========== ===========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on
50,000 units held by limited
partners) $ 34.22 $ 90.05 $ 59.35 $ 133.88
========== =========== ========== ===========
</TABLE>
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
Limited Partners
General -------------------
Partner Number Total
Amount of Units Amount Amount
------ -------- ------ ------
BALANCE, December 31, 1997 $(9,839) 50,000 $28,215,943 $28,206,104
Net Income 2,037 - 2,967,742 2,969,779
Distributions to Limited Partners - - (5,046,812) (5,046,812)
------- ------ ----------- -----------
BALANCE, September 30, 1998 $(7,802) 50,000 $26,136,873 $26,129,071
======= ====== =========== ===========
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,969,779 $ 6,694,988
Change in assets and liabilities:
Decrease in land held for sale 3,359,074 10,397,576
Increase in land subject to sales agreements (1,078,367) (1,531,146)
Decrease (increase) in prepaid expenses and other (4,323) 7,771
Decrease in payable to general partner -- (4,054)
Increase (decrease) in accounts
payable and accrued expenses 55,659 (84,716)
----------- -----------
Net cash provided by operating activities 5,301,822 15,480,419
----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Limited partner distributions declared (5,046,812) (15,463,752)
Increase (decrease) in distribution payable (1,785,688) 9,088,252
----------- -----------
Net cash used in financing activities (6,832,500) (6,375,500)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,530,678) 9,104,919
CASH AND CASH EQUIVALENTS, beginning of period 5,844,446 2,418,201
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 4,313,768 $11,523,120
=========== ===========
<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 September 30, 1998 (the period), the Registrant
sold a 2.1 acre land parcel to an unaffiliated third party and 3.7 acres to the
State of Arizona for additional right-of-way along the future Outer Loop
Freeway. These sales provided cash proceeds of approximately $2.5 million. The
parcels had a total original cost of approximately $790,000 and closing and
other costs of approximately $80,000. These parcel sales resulted in gains
totaling approximately $1.7 million. Cash distributions declared from the parcel
sales amounted to approximately $2.4 million for the period.
At September 30, 1998, the Registrant had three parcels of land
(approximately 10 acres) under contract for sale for a purchase price of
approximately $4 million to unaffiliated third parties. The original cost of the
parcels was approximately $2 million. Approximately 77 acres (excluding the
parcels in escrow) remain available for sale within The Perimeter Center. The
Registrant has entered into preliminary negotiations for the sale of several of
the remaining land parcels. The Registrant 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 $2.8 million for the quarter ended September
30, 1998 as compared to approximately $10.9 million for the comparable quarter
in 1997. Total revenues for the nine months ended September 30, 1998 were $6.2
million as compared to $17.3 million for the same period in 1997. The average
sales price per acre of land sold during the nine months ended September 30,
1998 increased 36% to approximately $393,000 per acre from approximately
$290,000 per acre for land sold during the nine months ended September 30, 1997.
Gain as a percentage of land sale revenues increased to 51% for the nine months
ended September 30, 1998, as compared to 40% for the nine months ended September
30, 1997.
Interest and other income for the quarter decreased by $35,537 from the
comparable quarter of the prior year, resulting from a lower average cash
balance invested during the quarter ended September 30, 1998. Year-to-date
amounts were similarly affected, although to a lesser extent. Total expenses
(excluding the cost of land sales) decreased by $29,668 for the quarter as
compared to the prior year due primarily to decreases in the
<PAGE>
general partner fee ($14,999) and other operating expenses ($30,030), offset
somewhat by an increase in property tax expense ($22,052). 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. The decrease in other operating expenses resulted primarily
from a decrease in property maintenance costs, as common area maintenance fees
(based on square footage owned) are charged to all of the land owners within The
Perimeter Center (including the Registrant). Accordingly, as the Registrant
sells parcels, its common area maintenance fees decrease. Property taxes
increased, despite the sale of land parcels during the past twelve months, due
to higher assessed land values.
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 - SEPTEMBER 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: November 10, 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: November 10, 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 SEPTEMBER 30, 1998 AND THE STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,313,768
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 16,650,866
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,734,475
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,129,071
<TOTAL-LIABILITY-AND-EQUITY> 28,734,475
<SALES> 5,391,715
<TOTAL-REVENUES> 6,157,328
<CGS> 2,625,610
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,969,779
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,969,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,969,779
<EPS-PRIMARY> 59.35
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-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>
