<PAGE> 1
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 September 30, 1998
----------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 000-21722
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WINDSORPARK PROPERTIES 7, A CALIFORNIA LIMITED PARTNERSHIP (Exact
- -------------------------------------------------------------------------------
name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
California 33-0363181
- -------------------------------------------------------------- ---------------------------------
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
6430 S. Quebec Street, Englewood, Colorado 80111
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(Address of principal executive offices)
(303) 741-3707
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(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 ( )
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1
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TABLE OF CONTENTS
PART I
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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 9
PART II
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 12
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2
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WINDSOR PARK PROPERTIES 7
(A California Limited Partnership)
BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
September 30, 1998
-------------------------------
<S> <C>
ASSETS
Property held for investment:
Land $ 2,734,100
Buildings and improvements 10,907,600
Fixtures and equipment 196,100
-------------------------------
13,837,800
Less accumulated depreciation (2,962,800)
-------------------------------
10,875,000
Investments in joint ventures and limited partnerships 4,887,900
Cash and cash equivalents 174,100
Deferred financing costs 164,100
Other assets 166,400
-------------------------------
Total Assets $ 16,267,500
===============================
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Mortgage notes payable $ 7,220,000
Accounts payable 4,900
Accrued expenses 288,000
Tenant deposits and other liabilities 46,300
Due to General Partners and affiliates 32,000
-------------------------------
7,591,200
-------------------------------
Partners' equity:
Limited partners 8,723,300
General partners (47,000)
-------------------------------
8,676,300
-------------------------------
Total Liabilities and Partners' Equity $ 16,267,500
===============================
</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 September 30,
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1998 1997
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<S> <C> <C>
REVENUES
Rent and utilities $ 663,500 $ 620,300
Equity in earnings of joint ventures and limited partnerships 40,900 44,000
Interest 2,600 7,100
Other 8,200 11,100
------------------------- ------------------------
715,200 682,500
------------------------- ------------------------
COSTS AND EXPENSES
Property operating 289,500 280,500
Interest 166,900 168,300
Depreciation and amortization 150,800 150,800
General and administrative:
Related parties 10,500 17,600
Other 12,300 7,800
------------------------- ------------------------
630,000 625,000
------------------------- ------------------------
Net income $ 85,200 $ 57,500
========================= ========================
Net income - general partners $ 900 $ 600
========================= ========================
Net income - limited partners $ 84,300 $ 56,900
========================= ========================
Basic and Dilutive earnings per limited partnership unit $ 0.54 $ 0.36
========================= ========================
</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>
Nine Months Ended September 30,
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1998 1997
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<S> <C> <C>
REVENUES
Rent and utilities $ 1,949,300 $ 1,846,100
Equity in earnings of joint ventures and limited partnerships 97,200 119,200
Interest 13,200 33,600
Other 22,800 26,800
------------------------- ------------------------
2,082,500 2,025,700
------------------------- ------------------------
COSTS AND EXPENSES
Property operating 838,800 797,700
Interest 501,000 510,200
Depreciation and amortization 452,500 450,200
General and administrative:
Related parties 31,800 60,800
Other 47,000 29,600
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1,871,100 1,848,500
------------------------- ------------------------
Net income $ 211,400 $ 177,200
========================= ========================
Net income - general partners $ 2,100 $ 1,800
========================= ========================
Net income - limited partners $ 209,300 $ 175,400
========================= ========================
Basic and Dilutive earnings per limited partnership unit $ 1.34 $ 1.11
========================= ========================
</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)
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<CAPTION>
Nine Months Ended September 30,
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1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 211,400 $ 177,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 452,500 450,200
Equity in earnings of joint ventures and
limited partnerships (97,200) (119,200)
Joint ventures' and limited partnerships
cash distributions 97,200 119,200
(Gain) loss on sale of property held for investment 0 (2,600)
Amortization of deferred financing costs 31,900 31,800
Changes in operating assets and liabilities:
Increase in other assets (107,200) (16,800)
Decrease in accounts payable (19,800) (5,400)
Increase in accrued expenses 228,000 71,300
Decrease in due to General Partners and affiliates (66,700) 0
Decrease in tenant deposits and other liabilities (68,900) (11,000)
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Net cash provided by operating activities 661,200 694,700
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Cash flows from investing activities:
Note receivable from general partners 0 372,200
Joint ventures' and limited partnerships
cash distributions 315,800 218,200
Increase in property held for investment (68,100) (137,000)
Investment in joint venture and limited partnerships 100 (70,600)
Proceeds on sale of property held for investment 0 11,000
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Net cash provided by investing activities 247,800 393,800
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Cash flows from financing activities:
Distributions 889,800 (865,400)
Repayment of mortgage note payable (200,000) (300,000)
Repurchase of limited partnership units (123,800) (41,000)
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Net cash provided by financing activities (1,213,600) (1,206,400)
------------------------ ------------------------
Net decrease in cash and cash equivalents (304,600) (117,900)
Cash and cash equivalents at beginning of period 478,700 511,100
------------------------ ------------------------
Cash and cash equivalents at end of period $ 174,100 $ 393,200
======================== ========================
</TABLE>
See Accompanying Notes to Financial Statements
6
<PAGE> 7
WINDSOR PARK PROPERTIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. THE PARTNERSHIP
Windsor Park Properties 7, A California Limited Partnership (the Partnership),
was formed in June 1989 for the purpose of acquiring and holding existing
manufactured home communities for investment. The General Partners of the
Partnership are The Windsor Corporation ("TWC"), a California corporation, and
John A. Coseo, Jr. In September 1997, Chateau Communities, Inc. (Chateau), a
publicly held real estate investment trust, purchased 100% of the shares of the
Windsor Corporation.
The Partnership was funded through a public offering of 250,000 limited
partnership units at $100 per unit, which commenced in March 1990 and terminated
in January 1992. The Partnership term is set to expire on December 31, 2005;
however, the Partnership may either be dissolved earlier or extended under
certain circumstances. The Partnership may be extended at the recommendation of
the General Partners with approval of a majority of the Limited Partners.
NOTE 2. BASIS OF PRESENTATION
The balance sheet at September 30, 1998 and the related statements of operations
for the three and nine months ended September 30, 1998 and 1997 and the
statements of cash flows for the nine months ended September 30, 1998 and 1997
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 on form 10-KSB for the year ended December 31,
1997.
NOTE 3. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS
The Partnership's investments in joint ventures and limited partnerships consist
of interests in five manufactured home communities at September 30, 1998. The
combined condensed results of operations of the joint venture and limited
partnership properties for the nine months ended September 30, 1998 and 1997 are
as follows:
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Total revenues $ 3,251,900 $ 3,094,000
Expenses:
Property operating 1,657,400 1,549,900
Interest 970,100 903,500
Depreciation 561,500 528,600
General and administrative 12,200 0
-------------------------- -------------------------
3,201,200 2,982,000
========================== =========================
Net income $ 50,700 $ 112,000
========================== =========================
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7
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NOTE 4. BASIC AND DILUTIVE EARNINGS PER LIMITED PARTNERSHIP UNIT
Basic and dilutive earnings 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
nine months ended September 30, 1998 was 155,811 and 156,123 respectively; and
157,879 and 158,136 for the three and nine months ended September 30, 1997,
respectively.
In 1997, the Partnership adopted Statement of Financial Accounting Standards No.
128 (SFAS 128), "Earnings Per Share." This accounting standard specifies new
computation, presentation, and disclosure requirements for earnings per share to
be applied retroactively. Among other things, SFAS 128 requires presentation of
basic and diluted earnings per share on the face of the income statement. The
adoption of SFAS 128 had no effect on the per unit results previously reported.
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 nine months ended September 30, 1998 and 1997
follows:
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<CAPTION>
1998 1997
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Per Per
Amount Unit Amount Unit
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<S> <C> <C> <C> <C>
Net income
- limited partners $ 209,300 $ 1.34 $ 175,400 $ 1.11
Return of capital 688,000 4.41 612,500 3.87
--------------- ------------- ------------------ -------------
$ 897,300 $ 5.75 $ 787,900 $ 4.98
=============== ============= ================== =============
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8
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WINDSOR PARK PROPERTIES 7
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three months ended September 30, 1998 as compared to three months ended
September 30, 1997
Results of Operations
The Partnership realized net income of $85,200 and $55,500 for the three months
ended September 30, 1998 and 1997, respectively. Net income per limited
partnership unit was $0.54 in 1998 compared to $0.36 in 1997. The increase in
income is attributable to the increased revenue from rental increases.
Rent and utilities revenues increased from $620,300 in 1997 to $663,500 in 1998
due to rental increases recognized at the communities.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of five joint venture and limited
partnership properties. Equity in earnings of joint ventures and limited
partnerships decreased slightly from $44,000 in 1997 to $40,900 in 1998.
Interest income decreased from $7,100 in 1997 to $2,600 in 1998 due to the
payoff received on the note receivable from General Partners and to lower cash
balances maintained by the partnership.
Property operating expenses increased from $280,500 in 1997 to $289,500 in 1998
due mainly to higher utilities, higher maintenance, and higher collection costs.
Interest expense decreased slightly from $168,300 in 1997 to $166,900 in 1998.
General and administrative expenses decreased from $25,400 in 1997 to $22,800 in
1998 due to lower employee time charges charged to the General Partners.
Nine months ended September 30, 1998 as compared to nine months ended September
30, 1997
Results of Operations
The Partnership realized net income of $211,400 and $177,200 for the nine months
ended September 30, 1998 and 1997, respectively. Net income per limited
partnership unit was $1.34 in 1998 compared to $1.11 in 1997. The increase in
income is attributable to the increased revenue from rental increases.
Rent and utilities revenues increased from $1,846,100 in 1997 to $1,949,300 in
1998 due to rental increases recognized at the communities.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of five joint venture and limited
partnership properties. Equity in earnings of joint ventures and limited
partnerships decreased from $119,200 in 1997 to $97,200 in 1998, primarily due
to losses incurred at the Apache East, Denali Park and Long Lake communities.
9
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Interest income decreased from $33,600 in 1997 to $13,200 in 1998 due to the
payoff received on the note receivable from General Partners and lower cash
balances maintained by the partnership.
Property operating expenses increased from $797,700 in 1997 to $838,800 in 1998
due mainly to higher utilities and higher collection costs.
Interest expense decreased from $510,200 in 1997 to $501,000 in 1998 due to
lower interest rates on the variable rate debt.
General and administrative expenses decreased from $90,400 in 1997 to $78,800 in
1998 due to lower employee charges charged to the General Partners.
Changes in Financial Condition
The Partnership's primary sources of cash during the nine months ended September
30, 1998 were from the operations of its investment properties and cash
distributions from joint ventures. The primary uses of cash during the same
period were for cash distributions to partners, and the repayment of a mortgage
note payable.
No further investment property acquisitions are planned by the General Partners.
At September 30, 1998 the Partnership's total mortgage debt, including its
proportionate share of joint venture and limited partnership debt, was
$14,852,100, consisting of $1,500,000 of fixed rate debt and $13,352,100 of
variable rate debt. The average rate of interest on the fixed and variable rate
debt was 8.8% and 8.6%, respectively at September 30, 1998.
The future sources of cash for the Partnership will be provided from property
operations, cash reserves, and ultimately from the sale of property. The future
uses of cash will be for Partnership administration, capital expenditures,
distributions to partners and debt service. 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.
In 1997, the Partnership adopted Statement of Financial Accounting Standards No.
128 (SFAS 128), "Earnings Per Share." This accounting standard specifies new
computation, presentation, and disclosure requirements for earnings per share to
be applied retroactively. Among other things, SFAS 128 requires presentation of
basic and diluted earnings per share on the face of the income statement. The
adoption of SFAS 128 had no effect on the per unit results previously reported.
Management continues to assess the impact of the Year 2000 Issue on its
reporting systems and operations. The Year 2000 Issue exists because many
computer systems and applications abbreviate dates by eliminating the first two
digits of the year, assuming that these two digits are always "19". As a
result, date-sensitive computer programs may recognize a date using "00" as the
year 1900 rather than the year 2000. Unless corrected, the potential exists for
computer system failures or incorrect processing of financial and operational
information, which could disrupt operations.
To help facilitate the Partnership's continued growth, substantially all of the
computer systems and applications in use in its home office and properties have
been, or are in the process of being upgraded and modified. The Partnership is
of the opinion that, in connection with those upgrades and modifications, it has
addressed applicable Year 2000 Issues as they might affect the computer systems
and applications located in the Partnership's offices and properties. The
Partnership anticipates that implementation of solutions to any Year 2000 Issue
which it may discover will require the expenditure of sums which the Partnership
does not expect to be material.
The Partnership is exposed to the risk that one or more of its vendors or
service providers may experience Year 2000 problems which impact the ability of
such vendor or service provider to provide goods and services. Due to the
availability of alternative suppliers, this is not considered as significant a
risk with respect to the suppliers of goods. The disruption of certain services,
however, such as utilities, could, depending upon the extent of the disruption,
have a material adverse impact on the Partnership's operations. To date, the
Partnership is not aware of any vendor or service provider Year 2000 issue that
management believes would have a material adverse impact on the Partnership's
operations. The Partnership, however, has no means of ensuring that its vendors
or service providers will be Year 2000 ready. The inability of vendors or
service providers to complete the Year 2000 resolution process in a timely
fashion could have an adverse impact on the Partnership and the effect of
non-compliance by vendors or service providers is not determinable at this time.
Residents who pay rent to the Partnership do not pose Year 2000 problems for the
Partnership given the type and nature of the Partnership's properties and
residents.
Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from Year 2000 issues,
or in certain industries, such as commercial or investment banks, could also
have an adverse impact on the Partnership. The likelihood and effect of such
disruptions is not determinable at this time.
Management expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the Year
2000 Issue will materially impact the financial condition or operations of the
Partnership.
10
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PART II
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits and Index of Exhibits
(27.1) Financial Data Schedule
(b) Reports on Form 8-K
None
11
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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/ Steven G. Waite
------------------------------
STEVEN G. WAITE
President
Date: November 13, 1998
12
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EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 174,100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,837,800
<DEPRECIATION> (2,962,800)
<TOTAL-ASSETS> 11,267,500
<CURRENT-LIABILITIES> 0
<BONDS> 7,220,000
0
0
<COMMON> 0
<OTHER-SE> 8,676,300
<TOTAL-LIABILITY-AND-EQUITY> 16,267,500
<SALES> 0
<TOTAL-REVENUES> 2,082,500
<CGS> 0
<TOTAL-COSTS> 1,370,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 501,000
<INCOME-PRETAX> 211,400
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211,400
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.34
</TABLE>
