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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange act of 1934 (No Fee Required). For the transition from
_________to____________
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COMMISSION FILE NO. 0-19963
TMP INLAND EMPIRE II, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0311624
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
801 N. PARKCENTER DRIVE, SUITE 235 92705
SANTA ANA, CALIFORNIA (Zip Code)
(Address of principal executive office)
(714) 836-5503
(Registrant's telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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(Title of Class)
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
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Table of Contents
Independent Auditor's Report...................................... 1
Balance Sheet..................................................... 2
Statement of Income............................................... 3
Statement of Partners' Capital.................................... 4
Statement of Cash Flows........................................... 5
Notes to Financial Statements..................................... 6-9
Supplementary Information......................................... 10
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Independent Auditor's Report
To the Partners
TMP Inland Empire II, Ltd.
(A California Limited Partnership)
We have audited the accompanying balance sheet of TMP Inland Empire II, Ltd. (A
California Limited Partnership) as of December 31, 1997, and the related
statements of income, partners' capital, and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TMP Inland Empire II, Ltd. (A
California Limited Partnership) as of December 31, 1997, and the results of its
operations and its cash flows for the year ended, in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information contained in Schedule
I is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is stated fairly in all material respects in relation to the
basic financial statements taken as a whole.
Balser, Horowitz, Frank & Wakeling
BALSER, HOROWITZ, FRANK & WAKELING
An Accountancy Corporation
Santa Ana, California January 26, 1998 except for Note 6, as to which the date
is August 3, 1998
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<TABLE>
<CAPTION>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Balance Sheet
December 31, 1997
Assets
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1997
----
<S> <C>
Cash $ 2,004
Investment in unimproved land,
at lower of cost or fair value 1,006,111
---------
Total assets $1,008,115
==========
Liabilities and Partners' Capital
---------------------------------
Due to affiliates $ 1,562
Commission payable 90,000
Franchise tax payable 800
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Total liabilities 92,362
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Partners' capital (deficit)
General partners (55,425)
Limited partners; 7,250 equity
units authorized and outstanding 971,178
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Total partners' capital 915,753
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Total liabilities and partners' capital $1,008,115
==========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
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<TABLE>
<CAPTION>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Statement of Income
For the Year Ended December 31, 1997
1997
----
<S> <C>
Income
- ------
Interest income $ 243
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Total income 243
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Expenses
- --------
Accounting 6,215
Expense reimbursements 9,790
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Total expenses 16,005
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Income or (loss) before income taxes (15,762)
State Franchise tax 800
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Net income or (loss) $ (16,562)
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Allocation of net income or (loss)
General partners, in the aggregate $ (166)
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Limited partners, in the aggregate $ (16,396)
===========
Limited partners, per equity unit $ (2.26)
</TABLE>
See Accompanying Notes and Independent Auditor's Report
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Statement of Partners' Capital
For the Year Ended December 31, 1997
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Partners' capital (deficit),
December 31, 1996 (55,259) 987,574 932,315
Net income for 1997 (166) (16,396) (16,562)
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Partners' capital (deficit),
December 31, 1997 $(55,425) $ 971,178 $ 915,753
======== ======== ========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
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<TABLE>
<CAPTION>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Statement of Cash Flows
For the Year Ended December 31, 1997
1997
----
<S> <C> <C> <C> <C> <C> <C>
Cash flow from operating activities
Net income or (loss) $ (16,562)
Adjustments to reconcile net income
or (loss) to net cash (used in)
operating activities:
Increase or (decrease) in accounts payable 1,200
Increase in carrying costs (6,111)
Net cash (used in) operating activities (21,473)
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Net (decrease) in cash (21,473)
Cash, beginning of year 23,477
Cash, end of year $ 2,004
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Supplemental disclosures of cash flow information:
Income taxes paid $ 800
Interest paid $ 0
</TABLE>
Other disclosures
The Partnership did not enter into non-cash investing or financing activities
during the year ended December 31, 1997.
The Partnership had no short-term highly liquid investments during the year
ended December 31, 1997.
See Accompanying Notes and Independent Auditor's Report
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TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 1 - Summary Of Significant Accounting Policies
Accounting Method - The Partnership's policy is to prepare its
financial statements on the accrual basis of accounting.
Organization Costs - Organization costs include expenses incurred in
the formation of the Partnership. These costs were capitalized and
amortized over a period of 40 years prior to 1992 and were changed to a
5-year amortization schedule in 1992. Organization costs were fully
amortized in 1996.
Investment in Unimproved Land - Investment in unimproved land is stated
at the lower of cost or fair value. All costs associated with the
acquisition of a property are capitalized. Additionally, the
Partnership capitalizes direct carrying costs such as interest expense
and property taxes. Such costs are added to the cost of the properties
and are deducted from the sales prices to determine gains when
properties are sold.
Syndication Costs - Syndication costs (such as commissions, printing,
and legal fees) totaling $791,514 represent costs incurred to raise
capital and, accordingly, are recorded as a reduction in partners'
capital (see Note 3).
Income Taxes - The entity is treated as a partnership for income tax
purposes and any income or loss is passed through and taxable to the
individual partners. Accordingly, there is no provision for federal
income taxes in the accompanying financial statements. However, the
minimum California Franchise tax due by the Partnership at December 31,
1997 is $800.
Cash and Cash Equivalents - For purposes of the statements of cash
flows, the Partnership considers all cash in banks and all highly
liquid investments with a maturity of three months or less to be cash
equivalents.
Estimates - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and revenues and
expenses during the reporting period. Actual results could differ from
these estimates.
<PAGE>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 1 - Summary Of Significant Accounting Policies (Continued)
Concentration - All unimproved land parcels held for investment are
located in the Inland Empire area of Southern California. The eventual
sales price of all parcels is highly dependent on the real estate
market condition. The Partnership attempts to mitigate any potential
risk by monitoring the market condition and holding the land parcels
until the real estate market recovers.
Note 2 - Organization Of The Partnership
On July 26, 1988, the Partnership was formed with TMP Properties (A
California General Partnership) and TMP Investments, Inc. (A California
Corporation) as the general partners. The partners of TMP Properties
are William O. Passo, Anthony W. Thompson and Scott E. McDaniel.
William O. Passo and Anthony W. Thompson were the shareholders of TMP
Investments, Inc. until October 1, 1995, when they sold their shares to
TMP Group, Inc., and then they became the shareholders of TMP Group,
Inc.
The Partnership originally acquired three separate parcels of
commercially zoned real property in San Bernardino County, California.
The properties were to be held for investment, appreciation, and
ultimate sale and/or improvement of all or a portion thereof, either
alone or in conjunction with a joint venture partner. Two of the three
properties were sold in 1989.
The partnership agreement provides for two types of investments:
Individual Retirement Accounts (IRA) and others. The IRA minimum
purchase requirement of $2,000 and all others were a minimum purchase
requirement of $5,000. The maximum liability of the limited partners is
the amount of their capital contribution.
Note 3 - Partners' Contributions
The Partnership offered for sale 7,250 units at $1,000 each to
qualified investors. As of December 31, 1989, all 7,250 units had been
sold for total limited partner contributions of $7,250,000. There have
been no contributions made by the general partners. As described in
Note 1, syndication costs have been recorded as a reduction in
partners' capital.
<PAGE>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 4 - Allocation Of Profits, Losses And Cash Distributions
Profits, losses and cash distributions are allocated 99% to the limited
partners and 1% to the general partners until the limited partners have
received an amount equal to their capital contributions plus a
cumulative, non-compounded return of 6% per annum on their adjusted
capital contributions. At that point, the limited partners are
allocated 85% and the general partners 15% of profits, losses and cash
distributions. There were no distributions in 1997.
Note 5 - Related Party Transactions
Syndication costs (see Note 1) netted against partners' capital
contributions include $725,000 in selling commissions paid in prior
years to TMP Capital Corp. for the sale of partnership units of which a
portion was then paid to unrelated registered representatives. William
O. Passo and Anthony W. Thompson were the shareholders of TMP Capital
Corp. until October 1, 1995, when they sold their shares to TMP Group,
Inc.
Investment in unimproved land includes acquisition fees of $198,874
paid in prior years to TMP Properties and TMP Investments, Inc., the
general partners, for services rendered in connection with the
acquisition of the properties.
The Partnership was charged $9,790 during the year ended December 31,
1997 by the general partner and an affiliated company of the general
partner for office, secretarial and advertising expenses. At December
31, 1997 the Partnership had a payable of $1,562 to the general partner
and the affiliated company.
<PAGE>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 5 - Related Party Transactions (Continued)
At December 31, 1997 $90,000 in sales commission was payable to Regal
Realty,a company wholly owned by Scott E.McDaniel,for services rendered
relating to sales of properties prior to 1990. Mr. McDaniel is a
partner of TMP Properties and he was a shareholder of TMP Investments,
Inc. until September 1993 when he sold his shares to Mr. Passo and Mr.
Thompson. Ultimate payment of such sales commission is contingent on
the limited partners receiving an amount equal to their capital
contributions plus a cumulative, non-compounded return of 6% per
annum on their adjusted capital contribution.
Note 6 - Re-statement and re-issuance of 1997 financial statements
In compliance with Statement of Financial Accounting Standards No. 121
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of (SFAS 121), the 1996 financial statements
reported an expense for the decline in fair value of unimproved land of
$2,659,615. The 1997 financial statements originally issued with the
auditor's report dated January 28, 1998 reported $1,692,884 of income
due to appreciation in fair value of land. Current clarification
reveals that SFAS 121 does not provide for recording appreciation in
fair value of an asset even in view of previously recording a decline
in value. Therefore, these financial statements have been re-stated to
remove the appreciation in fair value of land.
In addition, certain carrying costs of land that were previously
capitalized have been re-stated as current expenses in the amount of
$16,005.
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE II, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1997
COSTS CAPITALIZED Gross
SUBSEQUENT amount
TO ACQUISITION at which Estimated
--------------------
Initial Carrying Carried at Accumulated Date of Date Depreciable
Description of Assets Encumbrances Costs Improvements Costs Year-End Depreciation Construction Acquired Life
- --------------------- ------------ ----- ------------ ----- -------- ------------ ------------ -------- ----
1997
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
Fontana, CA -0- $3,427,133 -0- $238,593 $3,665,726 -0- n/a 10/25/88 n/a
=== ========= === ======= ========= ===
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of carrying amount
- ---------------------------------
1997
----
<S> <C> <C>
Beginning balance $3,659,615
Additions
Improvements 0
Property taxes 6,111
-----
Total additions 6,111
-----
3,665,726
Allowance for decline in fair value
of unimproved land (2,659,615)
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Ending balance $1,006,111
==========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
