<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
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, 1997
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange act of 1934 (No Fee Required).
For the transition from _________to____________
------------------
COMMISSION FILE NO. 0-20120
TMP INLAND EMPIRE VII, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0416043
(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
-------------------------------------
(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. [ ]
<PAGE>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership
Financial Statements
December 31, 1997
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........................................ 10-12
<PAGE>
Independent Auditor's Report
To the Partners
TMP Inland Empire VII, Ltd.
(A California Limited Partnership)
We have audited the accompanying balance sheet of TMP Inland Empire VII, 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 VII, Ltd. (A
California Limited Partnership) as of December 31, 1997 and the results of its
operations and its cash flows for the year then 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 and Wakeling
BALSER, HOROWITZ, FRANK & WAKELING
An Accountancy Corporation
Santa Ana, California January 26, 1998 except for Note 7, as to which the date
is August 3, 1998
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership)
Balance Sheet
December 31, 1997
Assets
1997
----
<S> <C>
Cash $ 96,862
Investment in unimproved land,
at lower of cost or fair value 2,414,401
Prepaid expenses 32,220
-------------
Total assets $2,543,483
=============
Liabilities and Partners' Capital
Due to affiliates $ 10,809
Accrued interest payable 27,934
Franchise tax payable 800
Property tax payable 26,214
Notes payable 613,454
------------
Total liabilities 679,211
============
Partners' capital (deficit)
General partners (58,285)
Limited partners; 8,700 equity units
authorized and outstanding 1,922,557
---------
Total partners' capital 1,864,272
---------
Total liabilities and partners' capital $ 2,543,483
============
</TABLE>
See Accompanying Notes and Independent Auditor's Report
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership)
Statement of Income
For the Year Ended December 31, 1997
1997
Income
<S> <C>
Interest income $ 1,139
-------------
Total income 1,139
=============
Expenses
Accounting 6,173
General partner fees 15,419
Expense reimbursements 19,240
-------------
Total expenses 40,832
=============
Income or (loss) before income taxes (39,693)
State franchise tax 800
-------------
Net income or (loss) $ (40,493)
==============
Allocation of net income or (loss)
General partners, in the aggregate $ (405)
==============
Limited partners, in the aggregate $ (40,088)
==============
Limited partners, per equity unit
$ (4.61)
==============
</TABLE>
See Accompanying Notes and Independent Auditor's Report
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE VII, 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 (57,880) 1,962,645 1,904,765
------- --------- ---------
Net income or (loss) for 1997 (405) (40,088) (40,493)
------- --------- ---------
Partners' capital (deficit)
December 31, 1997 $(58,285) $1,922,557 $1,864,272
======== ========== ==========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership)
Statement of Cash Flows
For the Year Ended December 31, 1997
1997
----
<S> <C>
Cash flow from operating activities
Net income or (loss) $ (40,493)
Adjustments to reconcile net income or (loss)
to net cash (used in) operating activities:
Change in accrued interest payable (56,431)
Increase or (decrease) in due to affiliates 10,106
Increase or (decrease) in property tax payable (61,280)
Increase in carrying costs (114,401)
Increase in prepaid expenses (32,220)
-------------
Net cash (used in) operating activities (294,719)
-------------
Cash flow from financing activities
Issuance of notes payable 383,826
-------------
Net cash provided by financing activities 383,826
-------------
Net increase or (decrease) in cash 89,107
Cash, beginning of year 7,755
-------------
Cash, end of year $ 96,862
=============
Supplemental disclosures of cash flow information
Income taxes paid $ 800
=============
Interest paid $ 18,131
==============
</TABLE>
Other disclosures
The Partnership did not enter into any non-cash investing activities, but had
non-cash financing activities (see Note 6). It did not have any short-term
highly liquid investments during the year ended December 31, 1997.
See Accompanying Notes and Independent Auditor's Report
<PAGE>
TMP INLAND EMPIRE VII, 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.
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.
Organization Costs - Organization costs include expenses incurred in
the formation of the Partnership that have been capitalized and that
are being amortized over a period of 40 years prior to 1992 and 5 years
beginning 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 all direct carrying costs (such as interest
expense and property taxes). These 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 $1,007,223 represent costs incurred to raise
capital and, accordingly, are recorded as a reduction in partners'
capital (see Note 3).
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.
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.
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.
<PAGE>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 2 - Organization of the Partnership
On July 20, 1990, 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, 1996, when they sold their shares to
TMP Group, Inc., and then became the shareholders of TMP Group, Inc.
The Partnership originally acquired four separate parcels of unimproved
real property in Riverside and San Bernardino Counties, California.
During 1992, one additional parcel in Riverside County was purchased by
the partnership. 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.
The partnership agreement provides for two types of investments:
Individual Retirement Accounts (IRA) and others. The IRA minimum
purchase requirement was $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 8,700 units at $1,000 each to
qualified investors. As of December 31, 1992, all 8,700 units had been
sold for total limited partner contributions of $8,700,000. 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.
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 83.5% and the general partners 16.5% of profits, losses and
cash distributions. There were no distributions in 1997.
<PAGE>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 5 - Related party transactions
Syndication costs (see Note 1) include $870,000 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, 1996, when they sold
their shares to TMP Group, Inc.
Investment in unimproved land includes acquisition fees of $500,000
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 paid $15,419 in partnership management fees to the
general partners for the year ended December 31, 1997. The Partnership
was also charged $10,468 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 $10,809, to the general partner and the
affiliated company.
Note 6 - Notes payable
The Partnership entered into loan agreements with an outside party who
provided engineering service for various land parcels. The total loan
amount of $317,704 accrues interest at 10% per annum, and the interest
is payable on or before March 1, 1997. The principal amount is payable
in full upon sale of the land parcels or upon recordation of the final
tract maps for the same parcels and is secured by those parcels. The
loans are guaranteed by the three general partners of TMP Properties
and by TMP Properties.
The Partnership entered into a loan agreement with an outside party by
offering parcels owned by the partnership as collateral. The total loan
amount of $125,000 accrues interest at 14% per annum, and the interest
is payable monthly beginning April 1, 1997. This note matures in
February of 1999.
The Partnership entered into a loan agreement with an outside party by
offering parcels owned by the partnership as collateral. The total loan
amount of $170,750 accrues interest at 13.5% per annum, and the
interest is payable monthly beginning November 8, 1997. This note
matures in October of 1999.
<PAGE>
TMP INLAND EMPIRE VII, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 7 - 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 to Be Disposed Of
(SFAS 121), the financial statements reported an expense for the
decline in fair value of unimproved land of $3,546,049 and $2,117,773
for 1996 and 1995, respectively. The 1997 financial statements
originally issued with the auditor's report dated January 28, 1998
reported $1,824,767 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 has 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
$40,832.
<TABLE>
Note 8 - Property taxes payable
<CAPTION>
Property taxes payable at December 31, 1997 are as follows:
<S> <C> <C>
1996 $ 26,214
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE VII, 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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
Perris, CA -0- $ 1,859,244 0 $179,961 $2,039,205 -0- n/a 2/21/91 n/a
Unimproved land -
Victorville, CA -0- 1,937,240 0 182,631 2,119,871 -0- n/a 11/13/90 n/a
Unimproved land -
Adelanto, CA -0- 451,137 0 48,907 500,044 -0- n/a 12/3/90 n/a
Unimproved land -
Victorville, CA -0- 2,003,109 $236,116 332,062 2,571,287 -0- n/a 7/2/91 n/a
Unimproved land -
Riverside, CA -0- 672,441 0 175,375 847,816 -0- n/a 8/25/92 n/a
- ------- ------- ------- ------- - - -- --
-0- $6,923,171 $236,116 $918,936 $8,078,223 -0-
=== ========== ======== ======== ========== ===
Reconciliation of carrying amount
Beginning balance $7,963,822
Additions
Improvements $ 0
Carrying costs 114,401
-------
Total additions 114,401
-------
Ending balance 8,078,223
Less allowance for decline in the
fair value of unimproved land (5,663,822)
----------
$2,414,401
==========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
