U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
-------------------- ------------------
Commission File Number: 1-9942
LANDSING PACIFIC FUND, INC.
(Exact name of Small Business Issuer as specified in its charter)
Maryland 94-3066597
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
155 Bovet Road, Suite 101, San Mateo, California 94402
(Address of principal executive offices)
(415) 513-5252
(Issuer's telephone number, including area code)
No change in name, address or fiscal year
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Sections
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
--- ---
The number of shares outstanding of the issuer's common stock at May 1, 1995 was
5,953,137 shares.
Transitional Small Business Disclosure Format: Yes No x
--- ---
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANDSING PACIFIC FUND, INC.
BALANCE SHEETS, MARCH 31, 1995 (Unaudited) AND
DECEMBER 31, 1994 (Amounts in thousands,
except share amounts)
- -------------------------------------------------------------------------------
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
INVESTMENTS IN REAL ESTATE:
Rental properties ............................................................................ $ 85,409 $ 88,698
Accumulated depreciation ..................................................................... (18,203) (19,169)
--------- ---------
Rental properties - net ...................................................................... 67,206 69,529
Real estate under contract for sale (net of accumulated depreciation
of $1,640 in 1995 and $28 in 1994) ........................................................ 1,788 2,150
--------- ---------
Total investments in real estate ........................................................ 68,994 71,679
--------- ---------
CASH AND CASH EQUIVALENTS .................................................................... 8,002 5,534
--------- ---------
OTHER ASSETS:
Accounts and interest receivable (net of allowance for doubtful
accounts of $83 in 1995 and $78 in 1994) ................................................... 941 1,434
Prepaid expenses, deposits, and other assets ................................................. 420 324
Deferred leasing commissions, loan costs, and other assets (net of accumulated
amortization of $1,442 in 1995
and $2,380 in 1994) ...................................................................... 1,238 1,357
--------- ---------
Total other assets ...................................................................... 2,599 3,115
--------- ---------
TOTAL ASSETS ........................................................................ $ 79,595 $ 80,328
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Notes payable ................................................................................ $ 47,819 $ 47,929
Accounts payable ............................................................................. 416 449
Other liabilities ............................................................................ 1,161 1,200
---------- ---------
Total liabilities ....................................................................... 49,396 49,578
---------- ---------
STOCKHOLDERS' EQUITY:
Shares of preferred stock, par value of $.01;
shares authorized: 5,000,000; shares issued and outstanding: none
Shares of common stock, par value of $.001;
shares authorized: 20,000,000; shares issued and
outstanding: 5,953,137 in 1995 and 1994 .................................................. 6 6
Capital in excess of par value ............................................................... 131,389 131,389
Retained deficit and accumulated distributions ............................................... (101,196) (100,645)
--------- --------
Total stockholders' equity .............................................................. 30,199 30,750
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 79,595 $ 80,328
========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1994
(Amounts in thousands, except per share amounts)
- --------------------------------------------------------------------------------
Three Months Ended
March 31
---------------------
1995 1994
------ ------
<S> <C> <C>
REVENUES:
Rental income .......................................................................... $ 2,684 $ 3,247
Other income ........................................................................... 53 14
------- -------
Total revenues .................................................................... 2,737 3,261
------- -------
EXPENSES:
Operating .............................................................................. 741 1,165
Depreciation and amortization .......................................................... 858 1,232
Interest ............................................................................... 1,192 1,064
General and administrative ............................................................. 436 534
Other expense .......................................................................... 61 102
------- -------
Total expenses .................................................................... 3,288 4,097
------- -------
Net loss ...................................................................... $ (551) $ (836)
======= =======
NET LOSS PER SHARE
(Based on weighted average number
of shares outstanding) .............................................................. $ (.09) $ (.14)
======= =======
Weighted average shares outstanding .................................................... 5,953 5,953
======= =======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (Unaudited)
(Amounts in thousands)
- --------------------------------------------------------------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................................... $ (551) $ (836)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ............................................................... 858 1,232
Provision for doubtful accounts ............................................................. 6 46
Changes in operating assets and liabilities:
(Increase)decrease in accounts and interest receivable ...................................... 487 (43)
Increase in prepaid expenses and deposits ................................................... (96) (91)
Increase(decrease) in other liabilities ..................................................... (63) 122
Decrease in accounts payable ................................................................ (33) (34)
------- -----
Net cash provided by operating activities .............................................. 608 396
------- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of rental properties ..................................................... 2,242 1,225
Capital expenditures and construction ....................................................... (208) (995)
Increase in deferred expenses ............................................................... (64) (538)
------- -----
Net cash provided by (used in) investing activities .................................... 1,970 (308)
------- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable ................................................................. -- 240
Payments on notes payable ................................................................... (110) (381)
------- -----
Net cash used in financing activities .................................................. (110) (141)
------- -----
Increase (decrease) in cash and cash equivalents ............................................ 2,468 (53)
Cash and cash equivalents at beginning of period ............................................ 5,534 2,005
------- -----
Cash and cash equivalents at end of period .................................................. $ 8,002 $ 1,952
======= =======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
-4-
<PAGE>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF CASH FLOWS (Continued)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
(Amounts in thousands)
- -------------------------------------------------------------------------------
1995 1994
---- ----
Cash paid during the period for interest, net of $34
capitalized in 1995 and $74 in 1994. $1,235 $1,087
===== =====
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Cost of rental properties sold (net of accumulated depreciation) $2,218 $7,250
Notes payable retired or forgiven - (6,161)
Other assets and liabilities retired or forgiven 24 136
------ ------
Net proceeds from sale of rental properties $2,242 $1,225
===== =====
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
LANDSING PACIFIC FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements for Landsing Pacific
Fund, Inc. ("the Fund") should be read in conjunction with the Fund's
1994 Annual Report on Form 10-KSB. Except for the balance sheet at
December 31, 1994, the financial statements are unaudited, and certain
disclosures which would normally be included with audited statements
have been condensed or omitted. However, in the opinion of the Fund's
management, all adjustments considered necessary for a fair
presentation have been included.
Net loss per share is computed by dividing net loss by the
weighted average number of shares outstanding during the period.
Certain amounts in the 1994 financial statements have been
reclassified to conform to the 1995 presentation.
2. GAIN (LOSS) FROM SALE OF INVESTMENTS IN REAL ESTATE AND PROVISION FOR
LOSS IN VALUE
On March 30, 1995, the Fund sold the Multnomah Building and
Imperial Garage in Portland, Oregon for $2,300,000. At December 31,
1994, the carrying value of the properties were reduced to the
estimated net proceeds from sale by recording a $3,249,000 provision
for loss. Accordingly, no additional gain or loss was recognized in
1995.
As of March 31, 1995, the Inwood Shopping Center was under
contract for sale.
3. COLLATERAL FOR PARTICIPATING MORTGAGE LOAN
In March 1995, the Fund received $455,000 in final proceeds on
a participating mortgage loan collateralized by a first mortgage on
land in Sonoma, California. These funds were recognized as of December
31, 1994, as a recovery which reduced the provision for loss in value
of investments in real estate.
During 1994, an unsecured claim by the Fund for $925,000 was
recognized in the bankruptcy of a guarantor of a participating mortgage
loan, the collateral for which was foreclosed by a senior lender in
1993. The eventual maximum payment out of the bankruptcy is estimated
to be $.30 per $1.00 of claims. During the three months ended March 31,
1995, the Fund collected $7,000 from the bankruptcy estate, bringing
total distribution proceeds to $46,000.
4. NOTES PAYABLE
On March 31, 1995, the Fund was granted an extension of its
permanent loan collateralized by the Country Hills Towne Center in
Diamond Bar, California. The loan
-6-
<PAGE>
requires monthly principal and interest payments of $113,717, bears
interest at the lender's prime rate plus 1% (10% on March 31, 1995),
and matures on June 30, 1995.
On March 31, 1995, the Fund was granted an extension of its
$1,500,000 construction loan collateralized by the Country Hills Towne
Center in Diamond Bar, California. The loan bears interest at the
lender's prime rate plus 1.25% (10.25% on March 31, 1995), and matures
on June 30, 1995. The outstanding balance at March 31, 1995 was
$844,000.
Subsequent to March 31, 1995, the Fund used $1,045,000 of
excess cash to retire a $1,494,000 loan, thereby realizing a $467,000
discount granted by the lender. The loan was collateralized by the Nohr
Plaza Shopping Center in San Leandro, California.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
INTRODUCTION
The Fund's current objective is to maximize the value of the
stockholders' investment in the Fund by a merger, sale of substantially all of
its assets or, if unable to complete such a transaction on favorable terms,
liquidation of the Fund. On March 27, 1995, the Board of Directors of the Fund
approved a conditional resolution, subject to stockholder approval, to liquidate
all of the assets of the Fund in an orderly fashion and to dissolve the Fund in
accordance with a Plan of Liquidation. Following the adoption of that
resolution, however, the Fund entered into a letter of intent with JER Partners
II, L.L.C. ("JER"), to merge with JER. If that merger were consummated, the
stockholders would receive cash in exchange for the surrender of their shares.
The parties are currently negotiating the terms of a definitive agreement,
which, if executed, will provide for significant conditions to closing.
Therefore, there can be no assurance that the merger will, in fact, be
consummated.
The Fund's portfolio as of March 31, 1995 consisted of fee title
ownership of 18 properties. The Fund owns multi-tenant, light-industrial
properties, distribution centers, business parks, and shopping centers.
LIQUIDITY AND CAPITAL RESOURCES
Current projections are that capital expenditures for tenant and
building improvements will be approximately $1,300,000 for the last nine months
of 1995. The principal source of liquidity for these requirements is current
cash reserves. At March 31, 1995, the Fund's unrestricted cash and cash
equivalents were $8,002,000.
At March 31, 1995 the Fund had borrowings of $21,401,000 that mature
prior to December 31, 1995. As of March 31, 1995, the principal amount of the
Fund's debt that will mature in the next three years is as follows:
1995 - $21,401,000; 1996 - $6,188,000; 1997 - $12,537,000.
Because of the already significant amount of debt, increased borrowings
have been viewed as a limited source of long-term liquidity. Recent net losses
and the suspension of distributions in
-7-
<PAGE>
June 1992 significantly limit the Fund's ability to access sources of equity
capital. The only long-term source of liquidity to fund capital requirements and
to meet loan repayments is the sale of properties.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 Compared with the Three Months Ended March 31,
1994
Operating results for the periods ending March 31, 1995 and 1994 are not
directly comparable because of the difference in the number and magnitude of
investments held. Events which impacted the comparability of these results
include: (i) the sale of Twin Oaks Executive Center in Beaverton, Oregon on
January 20, 1994, (ii) the disposition of BancFirst and 101 Park Avenue Office
Buildings in Oklahoma City, Oklahoma on February 28, 1994, (iii) the sale of
Camden Park Shopping Center in Houston, Texas on June 7, 1994, (iv) the sale of
Franklin Business Park in Boise, Idaho on November 10, 1994, and (v) the sale of
6900 Place Shopping Center in Oklahoma City, Oklahoma on December 22, 1994.
Decreases in rental income, operating expenses and depreciation and amortization
primarily resulted from these sales.
The following supplemental information provides comparative operating
information for 1995 and 1994 including only those properties which remained in
the portfolio as of March 31, 1995.
Table 1
Proforma Operating Results
Including Only Properties Held Throughout 1995 and 1994
(Excludes Properties Disposed)
(Amounts in thousands)
For the Three Months Ended
March 31
---------------------------
1995 1994
---- ----
Revenues ......................................... $ 2,737 $ 2,568
Operating expenses ............................... 741 819
-------- --------
Income from property operations .............. 1,996 1,749
Interest expense ................................. 1,192 946
General and administrative ....................... 436 534
Other expense .................................... 61 102
-------- --------
Funds from operations(1) ..................... 307 167
Depreciation and amortization .................... 858 1,010
-------- --------
Loss before operating results of disposed
properties ..................................... (551) (843)
Operating results of disposed properties ......... -- 7
-------- --------
Net loss ..................................... $ (551) $ (836)
======== ========
-8-
<PAGE>
(1)Funds from operations means net income(loss), excluding gain(loss) on the
sale of real estate and provision for losses, plus depreciation and
amortization. Funds from operations should not be considered an alternative to
net income as an indicator of the Fund's operating performance or to cash flows
as a measure of liquidity. However, the Fund believes that analysts of real
estate investment trusts consider funds from operations to be useful in
comparing results in the industry.
The discussion of changes in results of operations which follows is
based on the proforma comparison of operating results excluding disposed
properties as presented in Table 1.
Operating expenses decreased 10% in 1995 primarily as a result of
reduced property tax assessments and maintenance and repair costs at several
properties.
Interest expense was 26% higher in 1995 as compared with 1994 primarily
as a result of the effect of increases in the prime rate on the Fund's variable
rate debt.
General and administrative expense declined by 18% in 1995 due to a
reduction in personnel in 1994 and a decline in corporate legal costs.
Other expense was comprised of merger/liquidation costs and terminated
property sale transactions in 1995 and terminated common share offering and loan
refinancing negotiation costs in 1994.
Funds from operations in the three months ended March 31, 1995
increased 84% as compared with the same period in 1994 primarily as a result of
the decreases in expenses discussed above.
Depreciation and amortization expense decreased 15% in 1995 due to the
impact of property writedowns to net realizable value in June and December 1994.
POTENTIAL FACTORS AFFECTING FUTURE OPERATING RESULTS
As discussed above under Liquidity and Capital Resources, if the Fund
is unable to complete a near-term merger or sale to a single purchaser of
substantially all of the assets of the Fund, then, subject to stockholder
approval, a liquidation of individual properties would occur. As properties are
sold, the effect would be to decrease the contribution of such properties to
overall Fund operating results. Because certain of the Fund's general and
administrative expenses are fixed rather than variable, the decreased
contribution from properties which are sold would result in a decrease in total
Fund operating results.
If the stockholders approve a proposed Plan of Liquidation, all of the
Fund's investments would no longer be held for long-term investment. To the
extent that the estimated net realizable value of a property which is currently
held for long-term investment is less than its net book value, a loss would be
recognized.
Since 84% of the Fund's debt bears variable rate interest, increases or
decreases in the prime rate will increase or decrease the Fund's interest
expense.
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.1 Rights Agreement dated as of July 26, 1990 between Landsing
Pacific Fund and Gemysis, Inc. as Rights Agent. Incorporated
by reference to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1990.
10.2 Amendment to Rights Agreement dated July 8, 1993 between
Landsing Pacific Fund and Registrar and Transfer Company.
Incorporated by reference to Amendment No. 4 to Form S-3 filed
with Commission on February 11, 1994.
10.3 Settlement Agreement and Release of Claims, dated October 15,
1992, between Landsing Pacific Fund, Pacific Coast Capital,
The Landsing Corporation, and Gary K. Barr (without exhibits).
Incorporated by reference to Exhibit 10.2 to Annual Report on
Form 10-K for the year ended December 31, 1992.
10.4* Landsing Pacific Fund Management Incentive Plan dated May 17,
1993. Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended June 30, 1993.
10.5* Employee Stock Incentive Plan. Incorporated by reference to
Amendment No. 4 to Form S-3 filed with the Commission on
February 11, 1994.
10.6* 1993 Directors Stock Incentive Plan. Incorporated by reference
to Amendment No. 4 to Form S-3 filed with the Commission on
February 11, 1994.
10.7 Agreement dated June 18, 1993. Incorporated by reference to
Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993.
10.8* Severance Payment Plan for Executive Officers dated as of
November 1, 1994. Incorporated by reference to Exhibit 10.8 to
Annual Report on Form 10KSB for the year ended December 31,
1994.
* Management contract or compensatory plan or arrangement.
b. Reports on Form 8-K
The Fund filed a report on Form 8-K dated January 20, 1995, which
disclosed that on December 15, 1994 the Fund announced discussions regarding a
potential sale of its real estate assets had been terminated. In addition, on
December 27, 1994, the Fund announced that it had received $1.7 million in
partial satisfaction of a loan and had sold the 6900 Place Shopping Center in
Oklahoma City, Oklahoma for $2.7 million.
-10-
<PAGE>
The Fund filed a report on Form 8-K dated April 13, 1995, which
disclosed that on April 12, 1995 the Fund signed a nonbinding letter of intent
to enter into a merger transaction in which JER Partners II, L.L.C., an
affiliate of J.E. Robert Companies, would acquire all of the outstanding stock
of the registrant.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LANDSING PACIFIC FUND, INC.
Date: May 12, 1995 /s/ Joseph M. Mock
------------------------------------
Joseph M. Mock
Executive Vice President
Date: May 12, 1995 /s/ Dean Banks
------------------------------------
Dean Banks
Chief Financial Officer
<PAGE>
E X H I B I T I N D E X
Exhibit Number Exhibit Description
10.1 Rights Agreement dated as of July 26, 1990 between Landsing
Pacific Fund and Gemysis, Inc. as Rights Agent. Incorporated
by reference to Quarterly Report on Form 10-Q for the quarter
ended June 30 1990.
10.2 Amendment to Rights Agreement dated July 8, 1993 between
Landsing Pacific Fund and Registrar and Transfer Company.
Incorporated by reference to Amendment No. 4 to Form S-3 filed
with the Commission on February 11, 1994.
10.3 Settlement Agreement and Release of Claims, dated October 15,
1992, between Landsing Pacific Fund, Pacific Coast Capital,
The Landsing Corporation, and Gary K. Barr (without exhibits).
Incorporated by reference to Exhibit 10.2 to Annual Report on
Form 10-K for the year ended December 31, 1992.
10.4 Landsing Pacific Fund Management Incentive Plan dated May 17,
1993. Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended June 30, 1993.
10.5 Employee Stock Incentive Plan. Incorporated by reference to
Amendment No. 4 to Form S-3 filed with the Commission on
February 11, 1994.
10.6 1993 Directors Stock Option Plan. Incorporated by reference to
Amendment No. 4 for Form S-3 filed with the Commission on
February 11, 1994.
10.7 Agreement dated June 18, 1993. Incorporated by reference to
Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993.
10.8 Severance Payment Plan for Executive Officers dated as of
November 1, 1994. Incorporated by reference to Exhibit 10.8 to
Annual Report on Form 10KSB for the year ended December 31,
1994.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
financial statements included in the Form 10-QSB for the period ended March 31,
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 8002
<SECURITIES> 0
<RECEIVABLES> 1024
<ALLOWANCES> 83
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 87197
<DEPRECIATION> 18203
<TOTAL-ASSETS> 79595
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 6
0
0
<OTHER-SE> 30193
<TOTAL-LIABILITY-AND-EQUITY> 79595
<SALES> 2684
<TOTAL-REVENUES> 2737
<CGS> 0
<TOTAL-COSTS> 741
<OTHER-EXPENSES> 858
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1192
<INCOME-PRETAX> (551)
<INCOME-TAX> 0
<INCOME-CONTINUING> (551)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (551)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
