<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 1996
-------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to __________________
Commission file number 000-21722
---------------------------------------------
WINDSOR PARK PROPERTIES 7, A CALIFORNIA LIMITED PARTNERSHIP
------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-0363181
- -------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
- -----------------------------------------------------------------------------
(Address of principal executive offices)
(619) 746-2411
----------------------------------------------------------
(Issuer's telephone number)
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 ( )
----- -----
1
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TABLE OF CONTENTS
PART I
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<TABLE>
<CAPTION>
Page
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<S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II
-------
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE
</TABLE>
2
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WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
June 30, 1996
-----------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 2,759,700
Buildings and improvements 10,626,200
Fixtures and equipment 155,600
-----------------
13,541,500
Less accumulated depreciation (1,637,800)
-----------------
11,903,700
Investments in joint ventures 4,880,200
Cash and cash equivalents 730,400
Note receivable from general partners 670,500
Deferred financing costs 259,200
Other assets 86,000
-----------------
$ 18,530,000
=================
LIABILITIES AND PARTNERS' EQUITY
- ------------------------------------------
Liabilities:
Mortgage notes payable $ 7,220,000
Accounts payable 22,500
Accrued expenses 128,200
Tenant deposits and other liabilities 62,200
Distribution payable 66,300
-----------------
7,499,200
-----------------
Partners' equity:
Limited partners 11,056,600
General partners (25,800)
-----------------
11,030,800
-----------------
$ 18,530,000
=================
</TABLE>
See accompanying notes to financial statements.
3
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WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
-------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------
1996 1995
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<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 585,900 $ 377,200
Equity in earnings of joint ventures 80,700 43,700
Interest 19,800 15,800
Other 5,800 6,000
-------------- -------------
692,200 442,700
-------------- -------------
COSTS AND EXPENSES
- -------------------
Property operating 253,400 155,400
Interest 165,100
Depreciation and amortization 145,400 90,400
General and administrative:
Related parties 17,700 11,900
Other 10,800 10,600
-------------- -------------
592,400 268,300
-------------- -------------
Net income $ 99,800 $ 174,400
============== =============
Net income - general partners $ 1,000 $ 1,700
============== =============
Net income - limited partners $ 98,800 $ 172,700
============== =============
Net income per limited partnership unit $ 0.62 $ 1.09
============== =============
</TABLE>
See accompanying notes to financial statements.
4
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WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
-------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
REVENUES
- ---------
Rent and utilities $ 1,161,700 $ 744,400
Equity in earnings of joint ventures 160,300 109,200
Interest 41,000 32,100
Other 12,300 19,100
------------- -------------
1,375,300 904,800
------------- -------------
COSTS AND EXPENSES
- -------------------
Property operating 497,700 301,000
Interest 327,000
Depreciation and amortization 286,600 180,000
General and administrative:
Related parties 35,200 24,800
Other 20,800 26,500
------------- -------------
1,167,300 532,300
------------- -------------
Net income $ 208,000 $ 372,500
============= =============
Net income - general partners $ 2,100 $ 3,700
============= =============
Net income - limited partners $ 205,900 $ 368,800
============= =============
Net income per limited partnership unit $ 1.30 $ 2.32
============= =============
</TABLE>
See accompanying notes to financial statements.
5
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WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 208,000 $ 372,500
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 286,600 180,000
Equity in earnings of joint ventures (160,300) (109,200)
Joint ventures' cash distributions 160,300 109,200
Loss (gain) on sale of property held for investment
and other assets 5,600 (8,900)
Amortization of deferred financing costs 21,200
Changes in operating assets and liabilities:
Other assets 27,600 (48,500)
Accounts payable (10,500) (6,700)
Accrued expenses 21,900 17,900
Tenant deposits and other liabilities 5,900 15,000
-------------- ---------------
Net cash provided by operating activities 566,300 521,300
-------------- ---------------
Cash flows from investing activities:
Increase in property held for investment (198,600) (165,200)
Joint ventures' cash distributions 163,400 1,023,900
Proceeds on sale of property held for investment
and other assets 74,900 43,000
Note receivable from general partners 17,600 11,500
Investment in joint venture (868,100)
Deposit on property (50,000)
-------------- ---------------
Net cash provided by (used in) investing activities 57,300 (4,900)
-------------- ---------------
Cash flows from financing activities:
Distributions (578,800) (562,400)
Repurchase of limited partnership units (4,200) (49,400)
-------------- ---------------
Net cash used in financing activities (583,000) (611,800)
-------------- ---------------
Net increase (decrease) in cash and cash equivalents 40,600 (95,400)
Cash and cash equivalents at beginning of period 689,800 303,600
-------------- ---------------
Cash and cash equivalents at end of period $ 730,400 $ 208,200
============== ===============
</TABLE>
See accompanying notes to financial statements.
6
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WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at June 30, 1996 and the related statements of operations for
the three and six months ended June 30, 1996 and 1995 and the statements of cash
flows for the six months ended June 30, 1996 and 1995 are unaudited. However,
in the opinion of the General Partners, they contain all adjustments, of a
normal recurring nature, necessary for a fair presentation of such financial
statements. Interim results are not necessarily indicative of results for a
full year.
The financial statements and notes are presented as permitted by Form 10-QSB and
do not contain certain information included in the Partnership's annual
financial statements and notes.
NOTE 2. INVESTMENTS IN JOINT VENTURES
-----------------------------
The Partnership's investments in joint ventures consist of undivided interests
in three manufactured home communities in 1996 and one manufactured home
community in 1995. The combined condensed results of operations of these
properties for the six months ended June 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
Total revenues $ 1,866,800 $ 629,200
-------------- -------------
Expenses:
Property operating 867,700 284,600
Interest 481,800 14,000
Depreciation 267,000 135,700
-------------- -------------
1,616,500 434,300
-------------- -------------
Net income $ 250,300 $ 194,900
============== =============
</TABLE>
NOTE 3. NET INCOME PER LIMITED PARTNERSHIP UNIT
---------------------------------------
Net income per limited partnership unit is calculated based on the weighted
average number of limited partnership units outstanding during the period and
the net income allocated to the Limited Partners. The weighted average number
of limited partnership units outstanding during the three and six months ended
June 30, 1996 was 158,082 and 158,105, respectively; and 158,873 and 158,988 for
the three and six months ended June 30, 1995, respectively.
NOTE 4. RELATED PARTY TRANSACTIONS
--------------------------
The General Partners of the Partnership are The Windsor Corporation, a
California corporation, and John A. Coseo, Jr. (Mr. Coseo is also the
president, chief executive officer and the principal stockholder of The Windsor
Corporation).
The General Partners are entitled to receive various fees and compensation from
the Partnership which
7
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are summarized as follows:
Operational Stage
- -----------------
Investment properties acquired subsequent to November 1994 are managed by The
Windsor Corporation. For management services, Windsor receives 5% of gross
property receipts. During the three and six months ended June 30, 1996, Windsor
received fees of $9,300 and $18,100, respectively. Windsor received no fees
during the three and six months ended June 30, 1995.
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. During the three months ended June 30, 1996 and 1995, the
General Partners received cash distributions from operations of $2,900 and
$2,800, respectively; and $5,800 and $5,600 during the six months ended June 30,
1996 and 1995, respectively.
The Partnership reimburses The Windsor Corporation for certain direct expenses,
and employee, executive and administrative time, which are incurred on the
Partnership's behalf. The Partnership was charged $22,500 and $15,100 for such
costs during the three months ended June 30, 1996 and 1995, respectively; and
$44,500 and $31,100 for the six months ended June 30, 1996 and 1995,
respectively. These costs are included in property operating and general and
administrative expenses in the accompanying Statements of Operations.
NOTE 5. 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 limited partners for the six months ended June 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
------------------------- -----------------------
Per Per
Amount Unit Amount Unit
-------------- ------- ----------- --------
<S> <C> <C> <C> <C>
Net income
- limited partners $ 205,900 $ 1.30 $ 368,800 $ 2.32
Return of capital 367,100 2.32 187,600 1.18
-------------- ------- ----------- --------
$ 573,000 $ 3.62 $ 556,400 $ 3.50
============== ======= =========== ========
</TABLE>
8
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NOTE 6. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 308,500 $ --
============== ============
</TABLE>
Supplemental schedule of non-cash investing and financing
- ---------------------------------------------------------
activities:
- ----------
<TABLE>
<S> <C>
In 1995, the Partnership acquired a manufactured
home community in which a mortgage note payable
was obtained and a portion of the purchase
consideration was remitted directly by an
affiliated joint venture. The acquisition is
summarized as follows:
Total purchase consideration $ 2,100,000
New mortgage note payable, net (1,050,900)
Consideration from affiliated joint venture (937,800)
-----------------
Cash paid $ 111,300
=================
</TABLE>
9
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WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
June 30, 1996 as compared to December 31, 1995
- ----------------------------------------------
The Partnership's primary sources of cash during the six months ended June 30,
1996 were from the operations of its investment properties and joint venture
cash distributions. The primary uses of cash during the same period were for
cash distributions to partners and capital expenditures.
There have been no significant changes in the financial condition of the
Partnership since December 31, 1995. Partners' equity decreased from
$11,405,800 at December 31, 1995 to $11,030,800 at June 30, 1996 due to
distributions of $578,800 and repurchased limited partnership units of $4,200,
exceeding net income of $208,000.
At June 30, 1996, the Partnership's total mortgage debt, including its
proportionate share of joint venture debt, was $14,061,700, consisting of
$1,500,000 of fixed rate debt and $12,561,700 of variable rate debt. The fixed
rate debt was converted from variable rate debt during the second quarter in
order to reduce the Partnership's future exposure to interest rate risk. All
other terms of the fixed rate debt remain the same. The average rate of
interest on the fixed and variable rate debt was 8.8% and 8.4%, respectively, at
June 30, 1996.
The future sources of cash for the Partnership will be provided from property
operations, cash reserves, and ultimately from the sale of the properties. The
future uses of cash will be for Partnership administration, capital
expenditures, debt service, and distributions to partners. 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.
Results of Operations
- ---------------------
Six months ended June 30, 1996 as compared to six months ended June 30, 1995
- ----------------------------------------------------------------------------
The results of operations for the six months ended June 30, 1996 and 1995 are
not directly comparable due to the purchases of interests in the Lucerne, Long
Lake Village, Garden Walk and Village Glen manufactured home communities in June
1995, June 1995, August 1995 and October 1995, respectively. The Partnership
realized net income of $208,000 and $372,500 for the six months ended June 30,
1996 and 1995, respectively. Net income per limited partnership unit was $1.30
in 1996 compared to $2.32 in 1995.
As a result of the investment property purchases described above, all major
revenue and expense categories increased in 1996, specifically, rent and
utilities revenues, equity in earnings of joint ventures, property operating
costs and depreciation and amortization.
The overall occupancy of the Partnership's five wholly owned properties was 98%
at June 30, 1996 compared to 95% for three wholly owned properties at June 30,
1995. Recent rent increases implemented at wholly owned properties include $8
per month at North Glen effective July 1995; $9 and $12 per month at Kings and
Queens and Village Glen, respectively, effective January 1996; and $8 per month
at Lucerne effective March 1996.
10
<PAGE>
Equity in earnings of joint ventures represents the Partnership's share of the
net income of three joint venture properties in 1996 and one joint venture
property in 1995. Long Lake Village and Garden Walk were purchased in 1995 as
discussed previously. The overall occupancy of the three joint venture
properties was 89% at June 30, 1996 compared to 93% for one joint venture
property at June 30, 1995. Recent rent raises implemented at joint venture
properties include $10 per month at Carefree effective September 1995, and $10
per month at both Long Lake and Garden Walk effective January 1996.
Interest income increased from $32,100 in 1995 to $41,000 in 1996 due mainly to
higher cash balances maintained by the Partnership.
Interest expense of $327,000 in 1996 represents interest incurred on three loans
totaling $7,220,000 obtained by the Partnership in 1995. The Partnership
incurred no interest expense in 1995.
General and administrative expenses increased from $51,300 in 1995 to $56,000 in
1996 due mainly to increased employee time charges by the General Partners.
Three months ended June 30, 1996 as compared to three months ended June 30, 1995
- --------------------------------------------------------------------------------
The results of operations for the three months ended June 30, 1996 and 1995 are
not directly comparable due to the purchases of interests in the Lucerne, Long
Lake Village, Garden Walk and Village Glen manufactured home communities in June
1995, June 1995, August 1995 and October 1995, respectively. The Partnership
realized net income of $99,800 and $174,400 for the three months ended June 30,
1996 and 1995, respectively. Net income per limited partnership unit was $0.62
in 1996 compared to $1.09 in 1995.
As a result of the investment property purchases described above, all major
revenue and expense categories increased in 1996, specifically, rent and
utilities revenues, equity in earnings of joint ventures, property operating
costs and depreciation and amortization.
Equity in earnings of joint ventures represents the Partnership's share of the
net income of three joint venture properties in 1996 and one joint venture
property in 1995. Long Lake Village and Garden Walk were purchased in 1995 as
discussed previously. Equity in earnings of joint ventures increased from
$43,700 in 1995 to $80,700 in 1996 due mainly to the two joint venture
purchases.
Interest income increased from $15,800 in 1995 to $19,800 in 1996 due mainly to
higher cash balances maintained by the Partnership.
Interest expense of $165,100 in 1996 represents interest incurred on three loans
totaling $7,220,000 obtained by the Partnership in 1995. The Partnership
incurred no interest expense in 1995.
General and administrative expenses increased from $22,500 in 1995 to $28,500 in
1996 due mainly to increased employee time charges by the General Partners.
11
<PAGE>
PART II
-------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
---------------------------------
a) Exhibits and Index of Exhibits
(27) Financial Data Schedule
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the period
covered by this Form 10-QSB.
12
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SIGNATURE
In accordance with the requirements of the Exchange Act the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR PARK PROPERTIES 7,
A California Limited Partnership
---------------------------------
(Registrant)
By: The Windsor Corporation, General Partner
By /s/ JOHN A. COSEO, JR.
--------------------------------------------------
JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: August 12, 1996
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF WINDSOR PARK PROPERTIES 7 AS OF JUNE 30, 1996 AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE SIX MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 730,400
<SECURITIES> 0
<RECEIVABLES> 670,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,541,500
<DEPRECIATION> 1,637,800
<TOTAL-ASSETS> 18,530,000
<CURRENT-LIABILITIES> 0
<BONDS> 7,220,000
0
0
<COMMON> 0
<OTHER-SE> 11,030,800<F1>
<TOTAL-LIABILITY-AND-EQUITY> 18,530,000
<SALES> 0
<TOTAL-REVENUES> 1,375,300
<CGS> 0
<TOTAL-COSTS> 497,700
<OTHER-EXPENSES> 342,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 327,000
<INCOME-PRETAX> 208,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 208,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 208,000
<EPS-PRIMARY> 1.30<F2>
<EPS-DILUTED> 0
<FN>
<F1> Limited and general partners equity.
<F2> Net income per limited partnership unit.
</FN>
</TABLE>
