-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S3r3nPicWpmUpFfcKJPRYAQhd0O7go8/qUbUZCGPwjecjpl1/FRnev36LBMM7ing 4mWGpZDELBwS4Ubb9AcU+A== 0000944209-97-000381.txt : 19970327 0000944209-97-000381.hdr.sgml : 19970327 ACCESSION NUMBER: 0000944209-97-000381 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970326 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DE ANZA PROPERTIES X CENTRAL INDEX KEY: 0000215628 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953005938 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-08942 FILM NUMBER: 97564062 BUSINESS ADDRESS: STREET 1: 9171 WILSHIRE BLVD STE 627 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3105501111 10-K405 1 FORM 10-K405 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) For the Year Ended December 31, 1996 [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) Commission File Number 0-8942 DE ANZA PROPERTIES-X (Exact Name of Registrant as Specified in Its Charter) California 95-3005938 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 9171 Wilshire Boulevard, Suite 627 90210 Beverly Hills, California (Zip Code) (Address of Principal Executive Offices) (310) 550-1111 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12 (b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interests (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 [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by non-affiliates of the Partnership. $22,633,000 (See Item 5 Herein) DOCUMENTS INCORPORATED BY REFERENCE. Portions of the Prospectus of the registrant, dated August 9, 1978 filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, and subsequently filed on July 11, 1989 with Form 8 are incorporated by reference in Parts I, II, III and IV hereof. Page 1 of 47 pages contained herein. Exhibit Index located on page 17 herein. PART I. ITEM 1. BUSINESS. -------- The registrant, De Anza Properties - X (the "Partnership")/1/ is a limited partnership formed on September 16, 1977 under the California Uniform Limited Partnership Act to acquire, develop, maintain and operate income- producing residential real estate properties, including apartment complexes and mobile home parks, and to engage in general business activities related thereto. The Partnership considers its business to represent one industry segment, investment in real property, specifically mobile home parks and apartment complexes. After selling two of its three properties in 1995 and 1994, as of December 31, 1996 the Partnership owned an apartment complex (the "Property"). A description of the Property owned by the Partnership is set forth in Item 2 hereof and is incorporated herein by reference. The Property was sold on February 19, 1997. On July 11, 1995, the Partnership sold Aptos Pines, its sole mobilehome park remaining after the sale of Colonies of Margate in 1994, to the Aptos Pines Homeowners Association, as further discussed in Item 7 (1), Liquidity, which is incorporated herein by reference. The Partnership's apartment project is located in an upscale urban area. The project attracts primarily young professionals and business people due in part to the property's convenient location near major office centers. The property contains recreational facilities and services that offer its residents a quality lifestyle. The apartment project competes with other apartment projects in the area, some of which are newer. Competition is a significant factor affecting the occupancy and results of operations of the Partnership's apartment project. A description of the general development of the business of the Partnership since the beginning of the year for which this report is being filed is set forth in Item 7(3), Results of Operations, and is incorporated herein by reference. Information regarding the Partnership's revenues, profitability and identifiable assets attributable to each of the Partnership's geographic areas is set forth in Item 8, Note 8 to the Financial Statements, in the Schedules of Projects' Operations attached thereto, and in the description of the Properties set forth in Item 2 hereof, which are incorporated herein by reference. The Partnership has no real estate investments which are located outside of the United States. As of the date of this report, the Partnership has no employees. - -------------------- /1/ A Registration Statement (File No. 2-59904) was filed on behalf of the Partnership by its general partners (the "General Partners"), and the securities offered and sold thereunder were units of limited partnership interests. -2- ITEM 2. PROPERTIES. ---------- The Partnership purchased three Properties using the capital raised. The Partnership sold one of its Properties -- Aptos Pines -- to a third party on July 11, 1995. See further details in Item 7(1), Liquidity, and Item 8, Note 3 to the Financial Statements, both of which are incorporated herein by reference. The Partnership sold Colonies of Margate on August 18, 1994. The Partnership also sold Woodbridge Meadows Apartments on February 19, 1997. Following is a description of each Property; for the sold properties, the descriptions are as of the time of sale. De Anza Aptos Pines. "Aptos Pines" is a mixed-aged mobile home ------------------- community primarily serving older working adults. Located on 28 acres of hillside property in Santa Cruz County, California, Aptos Pines consists of 170 homesites in a rural, wooded setting. Clubhouse facilities include a lounge with a fireplace and seating areas, as well as a billiard room, kitchen, banquet area and laundry equipment. Outdoor amenities include a pool, sun deck and whirlpool spa. Six golf courses, the Santa Cruz Yacht Harbor and Seacliff State Beach are located within ten miles of Aptos Pines. Aptos Pines is subject to the Rent Control Ordinance of the County of Santa Cruz, which limits rent increases to 50% of the Consumer Price Index of the San Francisco/Oakland/San Jose area. Residents were billed separately for all utilities. Aptos was sold on July 11, 1995 to a third party. Colonies of Margate. "Margate" is a 120-acre retirement mobile home ------------------- community in Margate, Florida, between Fort Lauderdale and Boca Raton. The 819 homesites are served by two clubhouses, both with swimming pools and one with card rooms, a pool room, exercise rooms, a kitchen and a banquet area. Outdoor recreational facilities include tennis courts, bocci and shuffleboard courts, handball courts and barbecue areas. The south side of Margate is bordered by a navigable inland waterway with a boat launch ramp and fishing area. Colonial Drive, the community's long, curvilinear entrance road, is shared by Margate Community Hospital, a nursing home and a high-rise medical office building, which provide emergency and continuing care. Residents were billed separately for all utilities. Margate was sold on August 18, 1994 to a third party. Woodbridge Meadows Apartments. "Woodbridge" is a 375-unit, 17-acre, ----------------------------- mixed-aged apartment complex located in the planned community of Woodbridge Village in the city of Irvine, California. Irvine is considered to be a highly desirable residential community near Newport Center, the Irvine industrial complex, and the yachting and beach resort city of Newport Beach. Surrounded by expensive single-family residences, Woodbridge is one of several apartment properties in Woodbridge Village. The community is densely landscaped with water streams and footbridges, as well as a clubhouse, outdoor swimming pool, two whirlpool spas, laundry facilities, and complete access to the 20 tennis courts, bike trails, adult and child social activities and other recreational facilities available to residents of the larger Woodbridge Village, including several pools, parks and barbecue areas. Woodbridge offered -3- month-to-month leases for furnished corporate units and six-month and one-year leases for other units. Rental rates included water and sewer service; tenants are billed separately for electricity and gas. For a description of the terms of encumbrances relating to the Properties, see the information set forth in Item 8, Note 4 to the Financial Statements, which is incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS. ----------------- None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. --------------------------------------------------- No matter was submitted during the quarter ended December 31, 1996. PART II. ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER ------------------------------------------------------------------ MATTERS. ------- (a) Market Information. ------------------ There is no public market for the Units of Limited Partnership Interests and it is not anticipated that a public market for them will develop. Accordingly, accurate information as to the market value of a Unit at any given date is not available. The estimated aggregate market price shown on the cover page of this report is simply the original capital contributed by the Limited Partners and should not be relied upon as indicative of any bid or ask quotations or transactions in the Limited Partnership Interests. Units are transferable only on the books and records of the Partnership and are subject to certain limitations. (b) Holders. ------- As of December 31, 1996, the approximate number of Unit holders is 1,852, including General Partners who also hold Cash General Partner Interests. -4- (c) Dividends. --------- The Partnership is a limited partnership and, accordingly, does not pay dividends. It does, however, make quarterly distributions from operations. During the years ended December 31, 1996, 1995 and 1994, $954,424, $823,430 and $853,420 ($41.73, $36.01 and $37.32 per interest held), respectively, was distributed from operations to the holders of Cash General Partner Interests and to the Limited Partners of the Partnership. In addition, during the years ended December 31, 1996, 1995 and 1994, $296,158, $255,511 and $264,816 respectively, was distributed from operations to the General Partners. During 1995 and 1994, $181,000 and $7,133,000 ($7.91 and $312.01 per interest held) respectively was distributed to the holders of Cash General Partner Interests and to the Limited Partners from the sale proceeds of Colonies of Margate. Also in 1995, $3,872,732 ($169.34 per interest held) was distributed to the holders of Cash General Partner Interests and to the Limited Partners from the sale proceeds of Aptos Pines, and $392,268 was distributed to the General Partners. -5- ITEM 6. SELECTED FINANCIAL DATA. ----------------------- The following table sets forth in comparative tabular form a summary of selected financial data for each of the Partnership's last five years:
Years Ended December 31, 1996 1995 1994 1993 1992 ----------- ----------- ----------- ----------- ----------- Operating revenues: $ 3,917,209 $ 4,274,052 $ 6,894,031 $ 7,775,005 $ 7,464,567 Gain on sale of property & equipment: 143,365 2,258,041 15,297,374 - - Net income from continuing operations: $ 1,346,746 3,260,442 16,080,772 573,956 569,040 Net income from continuing operations per cash general and limited partner interest /1/: 44.94 125.85 680.60 20.36 18.91 Total assets: 11,294,792 11,387,725 13,998,705 19,147,277 19,448,646 Long-term obligations: 4,658,315 4,752,430 4,837,624 18,296,772 18,458,814 Cash distributions per partnership interest: 1. Limited Partner /2/: 41.73 213.27 349.34 42.92 42.71 2. Cash General Partner /2/: 41.73 213.27 349.34 42.92 42.71 3. General Partner (based on each 1% General Partner Interest) /3/: 2,961.58 6,477.79 2,648.16 2,283.24 3,086.94
- ------------------------ Assets have been disposed of during 1995 and 1994 which materially affects the comparability reflected in the selected financial data. The above selected financial data should be read in conjunction with the financial statements and the related notes appearing elsewhere in this annual report. /1/ Net income from continuing operations per cash general and limited partner interest is based on the aggregate number of such interests outstanding (22,869 units) during each year. /2/ Cash distributions per limited partner and cash general partner interest are based on the aggregate number of such interests outstanding (22,869 units) during each year. /3/ The calculations are based on 1% of the total subordinated general partner interests. See Item 12(b), General Partner Interests. -6- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS. --------------------- (1) and (2) Liquidity and Capital Resources. ------------------------------- The Partnership's quick ratios were 1.7:1 and 1.6:1 including unrestricted cash balances of $700,939 and $544,356 at December 31, 1996 and December 31, 1995, respectively. The increase in the ratio is primarily due to the increased cash balance. The Partnership's cash balance is its immediate source of liquidity. On a long-term basis, the Partnership's liquidity is sustained primarily from cash flow from operations, which during 1996 was approximately $1,541,000. The Partnership sold Aptos Pines to a non-profit mutual benefit corporation formed by the Aptos Pines Homeowners' Association on July 11, 1995. See further detailed discussion of the transaction in Item 8, Note 3 to the Financial Statements, which is incorporated herein by reference. As a consequence of the sale in 1994 of Margate, three reserve accounts were established as follows: 1) The MHC Reserve in the amount of $181,000 was established as a requirement of the Amended Acquisition Agreement between MHC and the Partnership. The funds were released in full in 1995 and distributed to the Cash General and Limited Partners. 2) The General Reserve is maintained in a separate interest bearing trust account, pursuant to the terms of a trust agreement between the Partnership, as the beneficiary, and Mr. Gelfand, as trustee, with an all cash fund in the amount of $557,192. Pursuant to the terms of a contribution agreement entered into among all of the partnerships and/or liquidating trusts whose properties were acquired in the MHC transaction described above, funds in the General Reserve may be used to discharge or satisfy the Partnership's pro rata portion of any contingent liabilities of any of the liquidating trusts or partnerships, and to discharge or satisfy any liabilities of Mr. Gelfand and his affiliates. Such liabilities may include any legal expenses incurred by the liquidating trusts, the partnerships, Mr. Gelfand and his affiliates personally, in the defense or resolution of any claim or action arising out of the MHC transaction, including claims arising out of indemnification obligations. In August 1997, assuming no claims are threatened or pending, all funds remaining in the General Reserve will be released to the Partnership. 3) The amount of the Independent Committee Reserve for the Partnership was initially $286,731. The funds held in the Independent Committee Reserve are invested in an interest bearing account (but not in derivative securities) pursuant to the terms of the Independent Committee Trust Agreement, between the Partnership as beneficiary, and Citicorp Trust N.A. as trustee for the benefit of the Partnership's Independent Committee. Pursuant to the terms of a contribution agreement among all of the partnerships/liquidating trusts, each partnership/liquidating trust, including the Partnership, will contribute a pro rata portion of any claim for indemnification made by the Independent Committee regardless of which specific partnership or partnerships, if less than all, a claim relates to. In August 1996, $143,365 of the reserve was -7- released to the Partnership from the Independent Committee Reserve and assuming no claims against the Independent Committee Reserve have been made or threatened, the remaining $143,365, will be released in August 1997. The Independent Committee in its sole discretion may extend the term of the Independent Committee Reserve Trust for an additional year. In the future, liquidity may improve to the extent that funds are released from the General Reserve and/or the Independent Committee Reserve. However, the Partnership sold Woodbridge Meadows on February 19, 1997 and expects to wind up its operations in 1997 and dissolve. Other than as described above, there are no known material trends, favorable or unfavorable, in the Partnership's liquidity and capital resources. The Partnership does not contemplate any material changes in the mix of its capital resources, other than as described above. (3) Results of Operations. --------------------- Since Aptos Pines was sold July 11, 1995 and Margate was sold in August, 1994, a comparison of operations including Aptos Pines and Margate would not be meaningful. However, a comparison can be made excluding these operations. Rental income increased 2.5% in 1996 over 1995 due to increased occupancy. Rental income increased 0.3% in 1995 over 1994 due to increased rents being mostly offset by decreased occupancy at Woodbridge. Competition mostly arises from Irvine Apartment Communities whose numerous properties dominate the local luxury apartment market. Average occupancy at Woodbridge for the last three years is as follows: Average Occupancy -----------------
1996 1995 1994 ---- ---- ---- Woodbridge Meadows 96% 94% 96%
Other income increased in 1996 over 1995 due to higher Woodbridge Meadows occupancy and increased fee income reimbursing partnership costs to record transfers of limited partner interests. Interest income increased in 1995 over 1994 due to increased cash balances as a result of higher investment balances and higher interest rates received. Expenses during 1996 decreased 15.6% over 1995 mostly due to the Partnership ceasing Woodbridge Meadows depreciation when it listed the property for sale in 1996 at a value greatly exceeding its book value. Interest expense decreased due to increasing principal amortization of the secured note payable. Partly offsetting these decreases were increases in utilities, maintenance and other expenses largely due to increased occupancy. Additionally, salaries increased with more leasing personnel and professional fees and services increased largely due to costs of responding to offers by Moraga Capital, LLC for the Partnership's limited partner interests. -8- Expenses during 1995 increased 1.0% over 1994. Professional fees and services increased due to increased legal costs associated with Moraga Capital, LLC's offer to purchase Limited Partner units. Insurance premiums at Woodbridge increased 54% over 1994 largely as a result of the January 1994 Northridge earthquake centered approximately 70 miles from Woodbridge. Other expenses increased due to the design and production of a new brochure in 1995 to promote the property's recent upgrades. Offsetting these increases was a decrease in depreciation due to the declining balance method of depreciation. Also, interest expense decreased due to increasing principal amortization of the secured note payable and interest on a short-term loan in 1994 not repeated in 1995. Other than as described above, there are no known trends or uncertainties which have had or can be reasonably expected to have a material effect on continuing operations. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ------------------------------------------- See Index to Financial Statements set forth in Item 14 of this Annual Report on Form 10-K. The material contained in such Financial Statements, Notes and Supplementary Schedules is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE. -------------------- None. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP. --------------------------------------------------- (a) General Partners ---------------- The Partnership is a limited partnership and has no executive officers or directors. De Anza Corporation has served as the Operating General Partner of the Partnership since May 31, 1990 and its directors and policy making executive officers are described below together with the names and ages of the other General Partners, each of whom has served in that capacity since the creation of the Partnership. -9-
Name of General Partners Age - ------------------------ --- De Anza Corporation (Operating General Partner) N/A Herbert M. Gelfand 65 Benjamin L. Susman 73 Harold H. Benjamin 72 Jack Bevash 72 Name of Directors/Key Executive Officers of De Anza Corporation, Operating General Partner - ------------------------------------------------- Michael D. Gelfand 42 David G. Licht 72 Sheila M. Schrank 41
Pursuant to the Partnership's Third Amended and Restated Agreement of Limited Partnership as amended, (the "Partnership Agreement"), the General Partners will retain their respective positions until their death, insanity, bankruptcy, disability, removal, or withdrawal. De Anza Corporation, the Operating General Partner of the Partnership, is wholly owned by Herbert M. Gelfand. De Anza Corporation was formed as a California corporation in 1984 and since October 1985, has been available to serve as a general partner of real estate partnerships previously sponsored by De Anza Group, Inc. or Mr. Gelfand. De Anza Corporation currently serves as the operating general partner of one other real estate partnership and is the liquidating agent for three other partnerships which are dissolving. Herbert M. Gelfand served as the Operating General Partner of the Partnership from its inception to May 31, 1990 and currently serves as a general partner of five affiliated partnerships. Mr. Gelfand is currently the Operating General Partner of four of the five affiliated partnerships, the first of which was formed in 1969. Mr. Gelfand was also the founder, and together with his wife, Beverly J. Gelfand, were the principal shareholders of De Anza Group, Inc. which was sold August 18, 1994. Mr. Gelfand served as its Chairman of the Board of Directors until its sale. From 1986 to 1990, Mr. Gelfand was also its Chief Executive Officer. In addition, Mr. Gelfand is the Chairman of the Board of Directors of De Anza Corporation. He is a member of the Bar of the State of California and was engaged in the private practice of law from 1956 through 1977 and from 1970 until 1975, Mr. Gelfand was a partner in the predecessor to the firm of Benjamin and Susman, a Law Corporation (and thereafter was counsel to that firm until 1977), which predecessor law firm performed legal services for all but one of the affiliated partnerships. Mr. Gelfand is married to Beverly J. Gelfand, who served as a director of De Anza Group, Inc. until its sale, and is the father of Michael D. Gelfand, Director, President, Chief Financial Officer and Treasurer of De Anza Corporation. Benjamin L. Susman is an inactive member of the Bar of the State of California and was engaged in the private practice of law from 1951 until his retirement in 1980. He was, until his retirement, a -10- partner in the law firm of Benjamin and Susman, a Law Corporation, which performed legal services for the Partnership in prior years. He has served as a general partner in ten public and private real estate limited partnerships. Mr. Susman is currently retired. Mr. Susman is not actively engaged in the management of the Partnership. Harold H. Benjamin is a member of the Bar of the State of California and was engaged in the private practice of law from 1950 until his retirement in 1982. He was a member of the Board of Directors and an Officer of Deauville Real Estate Corporation and Conventional Mortgage Corporation, and a partner in the law firm of Benjamin and Susman, a Law Corporation, which performed legal services for the Partnership. He serves as a general partner in 13 private and public real estate limited partnerships. He is currently Executive Director of Wellness Community, Santa Monica, California. Mr. Benjamin is not actively engaged in the management of the Partnership. Jack Bevash has, since 1964, been the principal executive of Jack Bevash Associates, a planning and architectural firm which has directed the master planning for projects located in California, Hawaii and other regions. From 1959 to 1964, he was the principal associate in charge of planning for William L. Pereira & Associates, another planning and architectural firm, and in this capacity supervised the development of master plans for the Irvine Ranch in Orange County, California. Mr. Bevash is not actively engaged in the management of the Partnership. Michael D. Gelfand is a director, President, Chief Financial Officer and Treasurer of De Anza Corporation, and is President of and sole shareholder of Terra Vista Management, Inc. a real estate management company that currently manages Woodbridge and properties owned by other affiliated partnerships. Mr. Gelfand joined De Anza Group, Inc. in 1978 and is the son of Herbert M. Gelfand and Beverly J. Gelfand. He received a B.S. degree from Claremont Men's College in 1977. Mr. Gelfand is a previous member of the Board of Directors of the National Campground Owner's Association, and is a licensed NASD General Securities Principal. David G. Licht has been an attorney practicing in California since 1950, and is the senior member of Licht & Licht, a Professional Corporation, specializing in business law. He became a director of De Anza Group, Inc. in April 1980 and served until its sale. He has served as a Director of De Anza Corporation since its inception. He also served as the Secretary of De Anza Group, Inc. from April 1980 until February 1981, and is a general partner in an affiliated partnership. Sheila M. Schrank became Vice President - Controller of De Anza Corporation in October 1990. Prior to that, Ms. Schrank served as Assistant Vice President from 1983-1990, after having served as Assistant Controller since 1982. From 1976 to June 1982, she served in various accounting and data processing functions at De Anza Accounting Corporation, a former affiliate of the Operating General Partner. -11- (b) Independent Committee. --------------------- The Partnership created an independent committee (the "Independent Committee") to review and evaluate certain "Interested Partner" and "Fundamental" transactions. These transactions are defined in the Partnership Agreement, which is incorporated herein by reference, and are to be reviewed prior to the expenditure of significant sums in connection with the pursuit of any such transactions. The Independent Committee was created pursuant to an amendment to the Partnership Agreement which was adopted at the May 31, 1990 Special Meeting of the Limited Partners. The members of the Independent Committee are Frederick M. Nicholas, Arthur W. Schmutz and Ira Yellin. The appointment of these individuals to the Independent Committee was approved and ratified by vote of the Limited Partners at the May 31, 1990 Special Meeting of the Limited Partners. None of the members of the Independent Committee has had any prior dealings or affiliation with the Partnership or the General Partners. Frederick M. Nicholas, age 75 is President and the principal shareholder of The Hapsmith Company since it was formed. The Hapsmith Company specialized in commercial real estate development. Mr. Nicholas attended the University of Southern California, where he received an AB degree in 1947 and a JD degree in 1952. Mr. Nicholas was the Chairman of the Board of Trustees for the Museum of Contemporary Art, Los Angeles, California. Arthur W. Schmutz, age 74 has been a partner at Gibson, Dunn & Crutcher, a law firm, from 1960 to 1986 and an advisory partner at the same law firm from 1987 to the present. Mr. Schmutz has been practicing law in California since 1953 and his areas of specialty include securities, real estate, corporate and general commercial law. He received his AB degree from Johns Hopkins University in 1949 and an LLB degree from Harvard Law School in 1952. Ira Yellin, age 56 served as Executive Vice President of The Hapsmith Company from 1975 to 1985. From 1985 to 1997, he was the President and principal shareholder of The Yellin Company, which is engaged in general real estate investment, development and management. Currently, Mr. Yellin is Senior Vice President of Catellus Development Corp. Mr. Yellin received an AB degree from Princeton University in 1962. He also received an LLB degree from Harvard Law School in 1965 and an LLM degree from the University of California, Berkeley, in 1966. ITEM 11. EXECUTIVE COMPENSATION. ---------------------- The Partnership does not have directors, a chief executive officer or any other executive officers. The following table sets forth, for the years ended December 31, 1996, 1995 and 1994, information regarding compensation (including distributions) exceeding $100,000 paid to the General Partners of the Partnership and compensation paid by the Partnership to the Operating General Partner's President. None of the four most highly compensated officers of the Operating General Partner received reimbursement from the Partnership exceeding $100,000 each during the years ended December 31, 1996, 1995 and 1994. -12-
Summary Compensation Table -------------------------- Name and Other Annual All Other Principal Position Year Salary Bonus Compensation Compensation/1/ - ---------------------------------------- ---- ------ ----- ------------- --------------- Herbert M. Gelfand, General Partner 1996 $-0- $-0- $-0- $120,873 1995 $-0- $-0- $-0- $250,828 1994 $-0- $-0- $-0- $100,600 Michael D. Gelfand, President of De Anza Corporation, Operating General Partner 1996 $-0- $-0- $-0- $ 4,338/2/ 1995 $-0- $-0- $-0- $ 9,489 1994 $-0- $-0- $-0- $ 3,879
Information contained in Item 13 of this Annual Report on Form 10-K is incorporated herein by reference. COMPENSATION OF DIRECTORS. The Partnership does not have directors. De Anza Corporation, the Operating General Partner, has directors, none of whom received compensation for the year ended December 31, 1996, from the Partnership. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. There is no compensation committee for the Partnership or the Operating General Partner. The President of the Operating General Partner participates in deliberations regarding executive officer compensation. Payments of compensation by the Partnership are governed by the Partnership Agreement and described in the Prospectus under the heading "Compensation and Fees of General Partners", page 10, which is incorporated herein by reference. EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS. In the event a General Partner (other than the Operating General Partner) withdraws as a General Partner of the Partnership, such individual may either (i) upon payment of $1,000 to the Partnership, - ------------------------- /1/ The compensation specified in this column represents distributions attributable to incentive interests held by the General Partners pursuant to the Partnership Agreement described under the heading "Compensation and Fees of General Partners - Operational Stage, General Partners Incentive Interest", page 11 of the Prospectus, which is incorporated herein by reference. /2/ Michael D. Gelfand was assigned a portion of the economic benefits of Herbert M. Gelfand's General Partner Interest. -13- continue as a Limited Partner (but without the right to vote as a Limited Partner), and thereafter receive all profits, losses and cash distributions to which he would have been entitled as a General Partner, or (ii) sell his interest to the Partnership or the remaining General Partners at a price and on such terms agreed upon by the withdrawing General Partner and De Anza Corporation, the Partnership's Operating General Partner. In the event the withdrawing General Partner elects to sell his interest in the Partnership, he must first offer to sell such interest to the Partnership. If such offer is not accepted by a majority in interest of the Partnership's Limited Partners within 30 days after the Partnership's receipt of the notice of withdrawal, then the withdrawing General Partner shall offer his interest for sale to the remaining General Partners, who shall have the right to accept such offer for a period of 30 days. In the event a General Partner is removed as a General Partner by vote of a majority in interest of the Limited Partners, such General Partner shall automatically become a Limited Partner and if the vote of a majority in interest of the Limited Partners so requires, sell his interest to the Limited Partners who shall purchase such interest on behalf of the Partnership. If a removed General Partner is required by the Limited Partners to sell his interest in the Partnership, the amount to be paid for such interest shall be computed as of the date of the consummation of the purchase and in accordance with Section 15 of the Partnership's Partnership Agreement, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. -------------------------------------------------------------- (a) Security Ownership of Certain Beneficial Owners. -----------------------------------------------
Name & Address of Amount & Nature of Title of Class Beneficial Owner Beneficial Ownership Percent of Class - -------------- ----------------- -------------------- ---------------- Limited Partnership Moraga Capital, LLC 3,281 UNITS/1/ 14.4%(1) Interests: MacKenzie Patterson DIRECT 1640 School Street, #103 Moraga, CA 94556
- ------------------------- /1/ Moraga Capital, LLC, an affiliate of MacKenzie Partners, completed a tender offer for Limited Partner Units on January 31, 1996, whereupon Moraga and its members, including MacKenzie, were the beneficial owners of 3,281 units as reported in Amendment No. 3 to Schedule 14D-1 amending Schedule 13D, dated February 1, 1996. -14- (b) Security Ownership of Management. --------------------------------
Amount & Nature of Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class - -------------- ------------------------ -------------------- ---------------- General Partner Interests: Herbert M. Gelfand 37.98870% 37.98870% TTEE Benjamin L. Susman 9.13097% 9.13097% TTEE Harold H. Benjamin 8.60487% 8.60487% TTEE Jack Bevash 4.29693% 4.29693% TTEE De Anza Corporation 1.07423% 1.07423% DIRECT -------- -------- All GeneralPartners and directors/key executive officers of De Anza Corporation as a group (9): 61.0957%/2/ 61.0957%/2/ =========== =========== Limited Partnership Interests:/3/ /4/ Herbert M. Gelfand 147.25133 UNITS * TTEE Herbert M. Gelfand 1.25042 UNITS * BY SPOUSE Benjamin L. Susman 20.22292 UNITS * TTEE Harold H. Benjamin 20.21046 UNITS TTEE Jack Bevash 20.10844 UNITS * TTEE ---- All General Partners and directors/key executive officers of De Anza Corporation as a group (9): 209.04357 UNITS * =========
* Less than 1% (c) Changes in Control. ------------------ - ------------------------- /2/ Beneficial ownership excludes the assignment by a Beneficial Owner of any economic interests to others; however, it does include the economic interest if the Beneficial Owner is the assignee. /3/ Includes Cash General Partner Interests where applicable. /4/ Since Aubrey Meyerson ceased being a General Partner upon his death in October 1995, the General Partners now hold less than 1% of the Limited Partnership interests. -15- None. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. ---------------------------------------------- For the year ended December 31, 1996, Terra Vista Management, Inc., an affiliate of the Operating General Partner, was paid management fees of $192,085. In addition, one or more affiliates of the Operating General Partner or Terra Vista Management, Inc., for the year ended December 31, 1996, were reimbursed $155,840 for the costs of goods and services provided that were necessary for the operation of the Partnership and its property. A portion of the foregoing fees were for compensation to executives as set forth in Item 11 above. See Item 8, Note 6 to the Financial Statements for discussion of Terra Vista Management, Inc.'s affiliation with the Partnership and actual transaction amounts which is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. --------------------------------------------------------------- (a) 1. Index to Financial Statements for the years ended December 31, 1996, 1995, and 1994 that are filed as part of this report:
PAGE ---- Independent Auditor's Report........................................... 22 Balance Sheets, December 31, 1996 and 1995............................. 24 Statements of Income for the years ended December 31, 1996, 1995 and 1994.................................. 26 Statements of Changes in Partners' Capital (Deficit) for the period January 1, 1994 to December 31, 1996............... 27 Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.................................. 28 Notes to Financial Statements.......................................... 30 Schedules of Projects' Operations for the years ended December 31, 1996, 1995 and 1994.................................. 41 Schedule of Distributable Income, Partners' Distributions and Reserves for the years ended December 31, 1996, 1995 and 1994.................................. 44
-16- 2. All Schedules have been omitted since they are not required, not applicable or the information is included in the Financial Statements or notes thereto. 3. The following index sets forth the exhibits required to be filed by Item 601 of Regulation S-K:
EXHIBIT NO. PAGE - ----------- ---- 3.1 Third Amended and Restated Agreement of Limited Partnership effective as of May 31, 1990. (See Exhibit 3.1 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990, incorporated herein by reference.) 3.2 First Amended to Third Amended and Restated Agreement of Limited Partnership effective as of April 9, 1992. (See Exhibit 3.2 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1992, incorporated herein by reference.) 10.1 Secured Promissory Note in the amount of $13,510,000 and Mortgage and Security Agreement dated July 26, 1990. (See Exhibit 4.2 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990, incorporated herein by reference.) 10.2 Promissory Notes in the amount of $6,000,000 Security Agreement, Collateral Assignment of Leases and Rents, Deed of Trust and Assignment of Rents dated June 28, 1979. (See Exhibit 10.6 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1991, incorporated herein by reference.) 10.3 Amended Acquisition Agreement and Joint Escrow Instructions dated May 9, 1994 by and between De Anza Properties-X and MHC Operating Limited Partnership respecting Colonies of Margate, as executed. (See Exhibit 10.8 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference.) 10.4 General Reserve Contribution Agreement dated August 1, 1994 between the Partnership, affiliated partnerships, the Herbert M. and Beverly J. Gelfand Family Trust, and Herbert M. Gelfand as trustee. (See Exhibit 10.10 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference.)
-17-
EXHIBIT NO. PAGE - ----------- ---- 10.5 Independent Committee Reserve Contribution Agreement dated August 1, 1994 between the Partnership, affiliated partnerships, and Citicorp Trust N.A. as trustee. (See Exhibit 10.11 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference.) 10.6 Independent Committee Trust Agreement dated August 1, 1994 by and between the Partnership and Citicorp Trust N.A. as Trustee. (See Exhibit 10.12 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference.) 10.7 General Reserve Trust Agreement dated August 1, 1994 by and between the Partnership, the Herbert M. and Beverly J. Gelfand Family Trust, and Herbert M. Gelfand as Trustee. (See Exhibit 10.13 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference.) 10.8 Woodbridge/Terra Vista Management Agreement dated August 18, 1994. (See Exhibit 10.1 in the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, incorporated herein by reference.) 10.9 Contract to sell Woodbridge dated October 7, 1996. (See Exhibit 10.1 on Form 10-Q for the quarter ended September 30, 1996 incorporated herein by reference.)
(b) Reports on Form 8-K. None. (c) The information set forth in Item 14(a)(3) of this Annual Report on Form 10-K is incorporated herein by reference. (d) All information required by Regulation S-X will be furnished by the Partnership to its partners in its annual report. Therefore, this Item is not applicable. -18- SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DE ANZA PROPERTIES - X (a California limited partnership) By DE ANZA CORPORATION (a California corporation) Operating General Partner By /s/Michael D. Gelfand --------------------- Michael D. Gelfand President and Chief Financial Officer Date: March 26, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/Herbert M. Gelfand --------------------- Herbert M. Gelfand, Chairman of the Board Of Directors of De Anza Corporation, the Operating General Partner Date: March 26, 1997 By /s/Michael D. Gelfand --------------------- Michael D. Gelfand, Director of De Anza Corporation, the Operating General Partner Date: March 26, 1997 By /s/David Licht -------------- David Licht, Director of De Anza Corporation, the Operating General Partner Date: March 26, 1997 -19- DE ANZA PROPERTIES - X (A LIMITED PARTNERSHIP) AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES December 31, 1996 and 1995 De Anza Properties - X (A Limited Partnership) December 31, 1996 and 1995 CONTENTS Report of Independent Auditors............................................ 1 Audited Financial Statements Balance Sheets............................................................ 3 Statements of Income...................................................... 5 Statement of Changes in Partners' Capital (Deficit)....................... 6 Statements of Cash Flows.................................................. 7 Notes to Financial Statements............................................. 9 Other Financial Information Schedules of Projects' Operations......................................... 20 Schedules of Distributable Income, Partners' Distributions and Reserves... 23
Report of Independent Auditors To the Partners De Anza Properties - X Beverly Hills, California We have audited the accompanying balance sheets of De Anza Properties - X, a Limited Partnership (the Partnership), as of December 31, 1996 and 1995, and the related statements of income, changes in partners' capital (deficit) and cash flows for the years ended December 31, 1996, 1995 and 1994. 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 audits. We conducted our audits 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 audits provide a reasonable basis for our opinion. As discussed in Note 3 to the financial statements, the Partnership sold two of its properties on July 11, 1995 and on August 18, 1994. The assets and operations of the properties sold represented a significant portion of the Partnership's total assets and results of operations. On March 4, 1997, the Partnership sold its remaining operating property. As discussed in Note 1 to the financial statements, in 1996 the partnership changed its method of accounting for long-lived assets and long-lived assets to be disposed of. 1 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years ended December 31, 1996, 1995 and 1994, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary Schedules I and II are presented for the purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ERNST & YOUNG, LLP January 28, 1997, except for Note 8 as to which the date is March 4, 1997, Los Angeles, California 2 De Anza Properties - X (A Limited Partnership) Balance Sheets
December 31, 1996 1995 -------- --------- ASSETS CASH AND CASH EQUIVALENTS, including restricted cash of $700,558 and $843,923 at December 31, 1996 and 1995, respectively (Notes 1 and 3) $ 1,401,497 $ 1,388,279 ACCOUNTS RECEIVABLE 11,122 10,812 PREPAID EXPENSES 70,995 70,222 ----------- ----------- 1,483,614 1,469,313 ----------- ----------- PROPERTY AND EQUIPMENT (Notes 1, 3, 5, 8 and 9) Land 2,989,265 2,989,265 Land improvements 4,793,220 4,704,170 Buildings and improvements 11,448,171 11,448,171 Furniture and equipment 647,412 623,498 ----------- ----------- 19,878,068 19,765,104 Less accumulated depreciation 10,208,135 9,921,679 ----------- ----------- 9,669,933 9,843,425 ----------- ----------- OTHER ASSETS Loan costs, less accumulated amortization of $56,564 and $53,484 in 1996 and 1995, respectively (Notes 1 and 5) 51,251 54,331 Prepaid sale costs (Notes 1 and 3) 69,994 - Other 20,000 20,656 ----------- ----------- 141,245 74,987 ----------- ----------- $11,294,792 $11,387,725 =========== ===========
See accompanying report of independent auditors and notes to financial statements. 3 De Anza Properties - X (A Limited Partnership) Balance Sheets (Continued)
December 31, 1996 1995 -------- --------- LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) ACCOUNTS PAYABLE AND ACCRUED EXPENSES, including $19,020 and $11,305 due to related parties at December 31, 1996 and 1995, respectively (Note 6) $ 158,809 $ 127,389 DEPOSITS AND ADVANCE RENTALS 139,900 122,937 UNRECOGNIZED GAIN (Note 3) 700,558 843,923 SECURED NOTE PAYABLE (Note 5) 4,658,315 4,752,430 ----------- ----------- 5,657,582 5,846,679 ----------- ----------- PARTNERS' CAPITAL (DEFICIT) General partners (3,453,230) (3,476,003) Cash general partners, 228.5 units issued and outstanding 78,420 77,686 Limited partners, 22,640.5 units issued and outstanding 9,012,020 8,939,363 ----------- ----------- 5,637,210 5,541,046 ----------- ----------- $11,294,792 $11,387,725 =========== ===========
See accompanying report of independent auditors and notes to financial statements. 4 De Anza Properties - X (A Limited Partnership) Statements of Income
Year ended December 31, 1996 1995 1994 ----------- ----------- ----------- INCOME Gain on sale of property and equipment (Note 3) $ 143,365 $2,258,041 $16,322,297 Unrecognized gain (Note 3) - - (1,024,923) ---------- ---------- ----------- Net gain recognized 143,365 2,258,041 15,297,374 Rent (Note 4) 3,713,584 3,935,175 6,346,217 Utilities - 143,232 359,265 Other 136,390 120,967 150,677 Interest and dividends 67,235 74,678 37,872 ---------- ---------- ----------- 4,060,574 6,532,093 22,191,405 ---------- ---------- ----------- EXPENSES Interest 471,805 481,556 1,360,876 Maintenance, repairs and supplies 363,384 377,233 670,009 Other 302,870 293,714 354,340 Salaries, including $20,819, $22,186 and $44,958 paid to related parties in 1996, 1995 and 1994, respectively (Note 6) 297,085 323,316 555,829 Depreciation and amortization 289,536 659,185 1,210,415 Professional fees and services, including $101,646, $127,517 and $232,581 paid to related parties in 1996, 1995 and 1994, respectively (Note 6) 223,469 238,546 367,705 Real estate taxes 208,208 237,816 473,999 Utilities 202,441 284,007 540,032 Management fees, including $192,085, $187,208 and $313,036 paid to related parties in 1996, 1995 and 1994, respectively (Note 6) 192,085 211,442 326,742 Insurance 103,924 102,215 120,570 Payroll taxes and employee benefits 59,021 62,621 130,116 ---------- ---------- ----------- 2,713,828 3,271,651 6,110,633 ---------- ---------- ----------- NET INCOME $1,346,746 $3,260,442 $16,080,772 ========== ========== =========== NET INCOME GENERAL PARTNERS $ 318,931 $ 382,274 $ 516,098 ========== ========== =========== CASH GENERAL AND LIMITED PARTNERS $1,027,815 $2,878,168 $15,564,674 ========== ========== =========== INCOME PER 1% GENERAL PARTNER INTEREST (Note 7) $ 3,189.31 $ 3,822.74 $ 5,160.98 ========== ========== =========== INCOME PER CASH GENERAL AND LIMITED PARTNERSHIP UNIT (Note 7) $ 44.94 $ 125.85 $ 680.60 ========== ========== ===========
See accompanying report of independent auditors and notes to financial statements. 5 De Anza Properties - X (A Limited Partnership) Statement of Changes in Partners' Capital (Deficit) Years Ended December 31, 1996, 1995 and 1994
Cash General General Limited Partners Partners Partners Total (Note 2) (Note 2) (Note 2) ------------ ----------- -------- ----------- BALANCE - January 1, 1994 $ (23,991) $(3,461,780) $ 21,940 $ 3,415,849 DISTRIBUTIONS TO PARTNERS (8,251,236) (264,816) (79,798) (7,906,622) NET INCOME - for the year ended December 31, 1994 16,080,772 516,098 155,517 15,409,157 ----------- ----------- -------- ----------- BALANCE - December 31, 1994 7,805,545 (3,210,498) 97,659 10,918,384 DISTRIBUTIONS TO PARTNERS (5,524,941) (647,779) (48,731) (4,828,431) NET INCOME - for the year ended December 31, 1995 3,260,442 382,274 28,758 2,849,410 ----------- ----------- -------- ----------- BALANCE - December 31, 1995 5,541,046 (3,476,003) 77,686 8,939,363 DISTRIBUTIONS TO PARTNERS (1,250,582) (296,158) (9,536) (944,888) NET INCOME - for the year ended December 31, 1996 1,346,746 318,931 10,270 1,017,545 ----------- ----------- -------- ----------- BALANCE - December 31, 1996 $ 5,637,210 $(3,453,230) $ 78,420 $ 9,012,020 =========== =========== ======== ===========
See accompanying report of independent auditors and notes to financial statements. 6 De Anza Properties - X (A Limited Partnership) Statements of Cash Flows
Year Ended December 31, 1996 1995 1994 ----------- ----------- ----------- OPERATING ACTIVITIES Gross rents received from real estate operations $ 3,726,152 $ 4,101,943 $ 7,289,290 Cash paid to suppliers and employees, including $347,925, $344,199 and $596,597 paid to related parties in 1996, 1995 and 1994, respectively (Note 6) (1,921,184) (2,148,160) (4,661,509) Interest paid (471,805) (481,556) (1,360,876) Interest and other income received 207,710 189,311 187,650 ----------- ----------- ------------ Net cash provided by operating activities 1,540,873 1,661,538 1,454,555 ----------- ----------- ------------ INVESTING ACTIVITIES Additions to property and equipment (112,964) (348,519) (286,938) Sale of property and equipment - 4,325,000 23,704,420 Sales costs (69,994) (71,498) (539,156) Escrow deposits - 100 (100) ----------- ----------- ------------ Net cash (used in) provided by investing activities (182,958) 3,905,083 22,878,226 ----------- ----------- ------------ FINANCING ACTIVITIES Principal payments on secured notes payable (94,115) (85,194) (13,459,150) Proceeds from unsecured note payable - - 200,000 Principal payment of unsecured note payable - - (200,000) Prepayment penalty - - (1,618,831) Loan costs - - (1,000) Partner distributions (1,250,582) (5,524,941) (8,251,236) ----------- ----------- ------------ Net cash used in financing activities (1,344,697) (5,610,135) (23,330,217) ----------- ----------- ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,218 (43,514) 1,002,564 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,388,279 1,431,793 429,229 ----------- ----------- ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,401,497 $ 1,388,279 $ 1,431,793 =========== =========== ============
See accompanying report of independent auditors and notes to financial statements. 7 De Anza Properties - X (A Limited Partnership) Statements of Cash Flows (Continued)
Year Ended December 31, 1996 1995 1994 ----------- ----------- ------------ RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income $1,346,746 $ 3,260,442 $ 16,080,772 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of property and equipment (143,365) (2,258,041) (15,297,374) Depreciation and amortization 289,536 659,185 1,210,415 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (310) 66,243 (1,228) (Increase) decrease in prepaid expenses (773) (3,122) 20,452 Increase in mobile homes held for resale - - (75,119) Decrease in other assets 656 1,806 10,627 Increase (decrease) in accounts payable and accrued expenses 31,420 (62,394) (491,392) Increase (decrease) in deposits and advance rentals 16,963 (2,581) (2,598) ---------- ----------- ------------ Net cash provided by operating activities $1,540,873 $ 1,661,538 $ 1,454,555 ========== =========== ============
See accompanying report of independent auditors and notes to financial statements. 8 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS The Partnership invests its cash not needed for working capital in highly liquid short-term investments consisting primarily of money market funds. The Partnership considers such items to be cash equivalents. Restricted cash at December 31, 1996 and 1995 is comprised of the cash reserves established in connection with the sale of certain property described in Note 3. The Partnership maintains some of its cash in bank deposit accounts which, at times, may exceed the federally insured limits. No losses have been experienced to date related to such accounts. The Partnership places its cash and cash equivalents with quality financial institutions and believes it is not exposed to any significant concentrations of credit risk on cash and cash equivalents. FINANCIAL INSTRUMENTS The carrying value of the Partnership's cash and cash equivalents, accounts receivable and accounts payable approximates their fair value at December 31, 1996, due to the short maturity of these instruments. The carrying value of the note payable approximates fair value at December 31, 1996, based on the current borrowing rates for similar obligations. LOAN COSTS The costs incurred in obtaining financing are capitalized and amortized over the terms of the respective loans. The loan costs pertaining to the loan secured by Colonies of Margate were written off upon the sale of the property (see Note 3). USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at December 31, 1996 and 1995 and revenues and expenses for the years ended December 31, 1996, 1995 and 1994. Actual results could differ from those estimates. See accompanying report of independent auditors and notes to financial statements. 9 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) PROPERTY AND EQUIPMENT In 1996, the Partnership adopted Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Property and equipment were stated at cost at December 31, 1995. Depreciation is computed using the declining-balance method based on estimated useful lives as follows:
Years ------- Land improvements 35 Buildings and improvements 15 - 20 Furniture and equipment 5 - 8 Mobile homes 7 Transportation equipment 3 - 6
Maintenance and repairs are expensed as incurred. In July 1996, the Partnership began actively marketing the sale of its remaining property, Woodbridge Meadows Apartments. In accordance with Statement of Financial Accounting Standards No. 121, the Partnership ceased depreciating the assets' carrying value at that time. See accompanying report of independent auditors and notes to financial statements. 10 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) INCOME TAXES Since the Partnership's income is allocated to the partners, there is no provision for income taxes reflected in the accompanying financial statements. The amount of income for federal tax purposes for the years ended December 31, 1996, 1995 and 1994 was $1,032,148, $3,488,188 and $17,582,090, respectively. The income for federal tax purposes was calculated as follows:
December 31, 1996 1995 1994 ---------- ---------- ----------- Net income per financial statements $1,346,746 $3,260,442 $16,080,772 Tax basis depreciation in excess of financial statements depreciation (189,195) 63,140 (17,233) Financial statements amortization in excess of tax basis amortization - - 10,848 Gain on sale of property and equipment (143,365) 164,606 1,579,179 Other - net 17,962 - (71,476) ---------- ---------- ----------- Income for federal tax purposes $1,032,148 $3,488,188 $17,582,090 ========== ========== ===========
Partners' capital as reflected on the financial statements differs from the amount reflected on the Partnership's federal tax return for the years ended December 31, 1996, 1995 and 1994. Partners' capital is reconciled as follows:
December 31, 1996 1995 1994 ---------- ---------- ----------- Partners' capital per financial statements $5,637,210 $5,541,046 $ 7,805,545 Syndication costs 2,368,296 2,368,296 2,368,296 Accumulated depreciation difference 303,171 (105,572) (642,595) Deferred expense 431,202 431,202 431,202 Aggregate of differences described in the preceding reconciliation (314,598) 227,746 1,501,316 Financial statement basis of deferred gain 843,923 1,024,923 - Other 5,150 5,150 65,781 ---------- ---------- ----------- Partners' capital per federal tax return $9,274,354 $9,492,791 $11,529,545 ========== ========== ===========
See accompanying report of independent auditors and notes to financial statements. 11 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 2. PARTNERSHIP AGREEMENT The Partnership was formed on September 16, 1977 to acquire and operate income- producing residential real properties. The Partnership owns and operates Woodbridge Meadows Apartments, a 375-unit apartment complex in Irvine, California which was sold during 1997 (see Note 8). The Partnership also owned Aptos Pines, a 170-space community in Aptos, California, which was sold in 1995 and Colonies of Margate, an 819-space community in Margate, Florida, which was sold in 1994 (see Note 3). A cash general partner is a general partner who purchased limited partnership units and, to the extent of these contributions, will participate in the benefits of Partnership ownership in the same manner as a limited partner. The partnership agreement provides that distributable cash, as defined, will be distributed to the cash general and limited partners, up to a sum equivalent to 6% per annum of their adjusted cash capital contributions, as defined. Cash is then distributed 5.2736% to the cash general and limited partners and 94.7264% to the general partners, up to a sum equivalent to 2% per annum of the aggregate adjusted cash capital contributions of the cash general and limited partners. Any additional cash is distributed 76.3184% to the cash general and limited partners and 23.6816% to the general partners. Net income is allocated in the same proportion as cash distributions to partners; however, general partners receive a minimum 1% allocation. If no distributions are made, the net income is allocated 85.7910% to the cash general and limited partners and 14.2090% to the general partners. Losses are allocated 85.7910% to the cash general and limited partners and 14.2090% to the general partners. See accompanying report of independent auditors and notes to financial statements. 12 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 3. SALE OF PROPERTY AND EQUIPMENT COLONIES OF MARGATE In 1993, the Partnership entered into negotiations through De Anza Group, Inc. (DAG), the former parent company of the operating general partner, for the sale of Colonies of Margate (Margate). On January 19, 1994, the Partnership entered into an Acquisition Agreement to sell Margate to MHC Operating Limited Partnership (MHC). The sale was part of an overall transaction for the sale of the related management business of DAG and other mobile home communities affiliated with DAG. The sale closed escrow on August 18, 1994. The sales price for Margate was $23,147,228. Additional proceeds of $557,192, which were included in the sales prices for calculating the gain on sale of property and equipment, were received from MHC to fund a General Reserve. Excess proceeds of $7,133,000 were distributed to the cash general and limited partners as a return of capital on September 16, 1994, after repayment of debt of $13,523,715, sales and closing costs of $644,488, a prepayment penalty of $1,618,831, and $784,386 set aside toward various required reserves. The Partnership has been charged with certain costs for the transaction, some of which were based upon an allocation of costs from the overall transaction with MHC. Such transaction costs have been capitalized and deducted in the determination of net gain on the sale of the Partnership's property and equipment. Transaction and closing costs charged to the Partnership totaled $644,488 as of December 31, 1994. In addition to the $784,386, funds from operations totaling $240,537 were used to establish the following cash reserves: MHC Reserve $181,000 General Reserve 557,192 Independent Committee Reserve 286,731
See accompanying report of independent auditors and notes to financial statements. 13 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 3. SALE OF PROPERTY AND EQUIPMENT (Continued) COLONIES OF MARGATE (Continued) The MHC Reserve was required by the Amended Acquisition Agreement. The General Reserve and Independent Committee Reserve were established to fund contingent liabilities that may arise out of the MHC transaction. During 1995, the MHC Reserve was released in full and distributed to the cash general and limited partners as a return of original capital. During 1996, $143,365 of the Independent Committee Reserve was released from restricted cash. Pursuant to the guidelines of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate," the Partnership deferred in 1994 the recognition of gain on that portion of the sale proceeds represented by the MHC Reserve, General Reserve and Independent Committee Reserve, totaling $1,024,923. During the years ended December 31, 1996 and 1995, the Partnership recognized as income $143,365 attributable to the Independent Committee Reserve released and $181,000 attributable to the MHC Reserve released, respectively. APTOS PINES On July 11, 1995, Aptos Pines (Aptos) was sold to a non-profit mutual benefit corporation formed by the Aptos Pines Homeowners' Association. The sales price for Aptos was $4,325,000, all cash, and an additional $35,000 was received as reimbursement of capital outlays related to the newly constructed sewer system. The Partnership incurred sales and closing costs of approximately $56,200, distributed $4,265,000 of the proceeds to the cash general, limited and general partners, and reserved the remaining $38,800. A portion of the distribution to the cash general and limited partners represents a return of original capital. WOODBRIDGE MEADOWS In October 1996, the Partnership entered into a contract with J.F. Shea Co., Inc. to sell its remaining property, Woodbridge Meadows (see Note 8). See accompanying report of independent auditors and notes to financial statements. 14 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 4. TENANT LEASES Apartment units are leased for periods of less than one year or on a month-to- month basis. The Partnership accounts for all leases as operating leases. Rental revenue is reported ratably over the lease terms. The annual rents from noncancelable operating leases from tenants for the year ending December 31, 1997 is $640,105. 5. SECURED NOTE PAYABLE Secured note payable at December 31, 1996 and 1995 consisted of:
December 31, 1996 1995 ---------- ---------- Note collateralized by first trust deed on the Woodbridge Meadows property, payable in monthly installments of $47,093, including interest at 10%, maturing in 2014 $4,658,315 $4,752,430 ========== ==========
The annual maturities on the secured note payable for the years subsequent to December 31, 1996 are as follows:
Year Ending December 31, ------------ 1997 $ 103,970 1998 114,857 1999 126,884 2000 140,171 2001 154,848 Thereafter 4,017,585 ---------- $4,658,315 ==========
The entire note will be paid off upon the sale of Woodbridge Meadows. See accompanying report of independent auditors and notes to financial statements. 15 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 6. TRANSACTIONS WITH RELATED PARTIES Pursuant to a former management agreement dated October 1, 1985, De Anza Assets, Inc., a former affiliate of the operating general partner, was paid a management fee in the amount of 5% of the annual gross receipts from the operations of the Partnership's properties. The payment of this fee is subordinated to the distributions to the cash general and limited partners of 6% of their adjusted capital contributions each year and is noncumulative, except in the case of a sale, refinancing or other disposition of the Partnership's properties. In that case, the difference between the management fee actually paid and the management fee that would have been paid if it were not subordinated is payable out of the proceeds from the sale, refinancing or other disposition after payment of the limited partners' priority return and capital contribution and the general partners' incentive interest. Management fees of $238,218 were paid to De Anza Assets, Inc. during the year ended December 31, 1994. On August 18, 1994, subsequent to the sale of the Colonies of Margate and the property management business of DAG, as discussed in Note 3, the property management of Woodbridge Meadows Apartments was assumed by Terra Vista Management, Inc. (Terra Vista). Terra Vista is wholly owned by Michael D. Gelfand, president of the operating general partner and the son of Herbert M. Gelfand. Herbert M. Gelfand, together with Beverly Gelfand, was the sole shareholder of the operating general partner and the controlling shareholder of DAG prior to the sale. Terra Vista was paid $192,085, $187,208 and $74,818 for management fees during the years ended December 31, 1996, 1995 and 1994, respectively. In addition, DAG or a wholly owned subsidiary was paid $198,746 for the year ended December 31, 1994, and Terra Vista Management, Inc. or De Anza Leasing Corporation, a related party and affiliate of the Operating General Partner, respectively, was paid $155,840, $156,991 and $84,815 for the years ended December 31, 1996 and 1995 and for the period from August 18, 1994 through December 31, 1994, respectively, for performing bookkeeping, regional management, computer, disposition and investor relations services necessary for the operation of the Partnership and its properties. See accompanying report of independent auditors and notes to financial statements. 16 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 7. INCOME PER 1% GENERAL PARTNERSHIP INTEREST AND CASH GENERAL AND LIMITED PARTNERSHIP UNIT Income per 1% general partner interest was computed based on the general partners' share of net income as reflected on the statement of changes in partners' capital (deficit). Income per cash general and limited partnership unit was computed based on the cash general and limited partners' share of net income as reflected on the statement of changes in partners' capital (deficit) and the number of units outstanding (22,869 units in each year). 8. SUBSEQUENT EVENT SALE OF WOODBRIDGE MEADOWS On or about October 7, 1996, the Partnership entered into an agreement to sell Woodbridge Meadows Apartments (Woodbridge) to J.F. Shea Co., Inc. or an affiliate (Buyer) for $29,600,000. As a result of renegotiations with the Buyer following completion of Buyer's inspections, the sales agreement was amended on January 15, 1997 to reduce the sale price to $29,433,000, all cash. The closing occurred February 19, 1997. Net sale proceeds, after repayment of mortgage debt of $4,757,740 (including a prepayment penalty of $116,042), broker's commission of $261,330 and estimated transaction costs of $164,398, totaled approximately $24,249,532. The net proceeds were distributed to the cash general and limited and general partners on March 4, 1997. Following the release of the remaining Colonies of Margate sale reserves, the Partnership will cease operations, commence liquidation and dissolve. See accompanying report of independent auditors and notes to financial statements. 17 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years ended December 31, 1996, 1995 and 1994 9. SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
INITIAL COST TO THE PARTNERSHIP ------------------------------------ COST BUILDINGS, CAPITALIZED IMPROVEMENTS, SUBSEQUENT FURNITURE AND TO DESCRIPTION ENCUMBRANCES LAND EQUIPMENT ACQUISITION - ----------------------------------------------------------------------------------------------------- Woodbridge Meadows apartment complex, Irvine, California $4,658,315 $2,700,000 $11,343,940 $5,834,128 ==================================================================== GROSS AMOUNT CARRIED AT CLOSE OF PERIOD ENDED DECEMBER 31, 1996 ------------------------------------------ LIFE ON WHICH DEPRECIATION IN LATEST BUILDINGS, INCOME IMPROVEMENTS, STATEMENT IS FURNITURE AND ACCUMULATED DATE OF COMPUTED DESCRIPTION LAND EQUIPMENT TOTAL DEPRECIATION CONSTRUCTION ACQUISITION YEARS - ------------------------------------------------------------------------------------------------------------------------------------ Woodbridge Meadows apartment complex, Irvine, California $2,989,265 $16,888,803 $19,878,068/(1)/ $10,208,135 1978 - 1979 11/13/78 5 to 35 ==============================================================================================================
(1) Aggregate cost for federal income tax purposes is $19,878,067. See accompanying report of independent auditors and notes to financial statements. 18 De Anza Properties - X (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 10. RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION
BUILDINGS, IMPROVEMENTS, FURNITURE AND LAND EQUIPMENT TOTAL ----------- ------------- ----------- REAL ESTATE: Balance at January 1, 1994 $ 6,515,774 $24,023,684 $30,539,458 Additions during 1994 - 286,938 286,938 Reductions due to sale of property and equipment during 1994 (2,455,440) (5,279,978) (7,735,418) ----------- ----------- ----------- Balance at December 31, 1994 4,060,334 19,030,644 23,090,978 Additions during 1995 - 348,519 348,519 Reductions due to sale of property and equipment during 1995 (1,071,069) (2,603,324) (3,674,393) ----------- ----------- ----------- Balance at December 31, 1995 2,989,265 16,775,839 19,765,104 Additions during 1996 - 112,964 112,964 ----------- ----------- ----------- Balance at December 31, 1996 $ 2,989,265 $16,888,803 $19,878,068 =========== =========== =========== ACCUMULATED DEPRECIATION: Balance at January 1, 1994 $12,933,755 Depreciation charged to expense during 1994 862,298 Reduction due to sale of property and equipment during 1994 (3,047,859) ----------- Balance at December 31, 1994 10,748,194 Depreciation charged to expense during 1995 656,105 Reduction due to sale of property and equipment during 1995 (1,482,620) ----------- Balance at December 31, 1995 9,921,679 Depreciation charged to expense during 1996 286,456 ----------- Balance at December 31, 1996 $10,208,135 ===========
See accompanying report of independent auditors and notes to financial statements. 19 SCHEDULE I Page 1 of 3 De Anza Properties-X (A Limited Partnership) Schedule of Projects' Operations
YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------------------------------------------ WOODBRIDGE MEADOWS DE ANZA PROPERTIES-X TOTALS ------------------------------------------------------------------------------------------ % OF % OF % OF AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME ------------------------------------------------------------------------------------------ INCOME Gain on sale of property and equipment (Note 3) - - $ 143,365 64.28% $ 143,365 3.53% Rent (Note 4) $3,713,584 96.77% - - 3,713,584 91.45 Other 123,973 3.23 12,417 5.57 136,390 3.36 Interest and dividends - - 67,235 30.15 67,235 1.66 ------------------------------------------------------------------------------------------ 3,837,557 100.00 223,017 100.00 4,060,574 100.00 ------------------------------------------------------------------------------------------ EXPENSES Interest 471,805 12.29 - - 471,805 11.62 Maintenance, repairs and supplies 362,999 9.46 385 0.17 363,384 8.95 Other 235,157 6.13 67,713 30.36 302,870 7.46 Salaries, including $20,819 paid to related parties (Note 6) 279,364 7.28 17,721 7.95 297,085 7.32 Depreciation and amortization 289,536 7.54 - - 289,536 7.13 Professional fees and services, including $101,646 paid to related parties (Note 6) 104,472 2.72 118,997 53.36 223,469 5.50 Real estate taxes 208,208 5.43 - - 208,208 5.13 Utilities 202,205 5.27 236 0.11 202,441 4.99 Management fees paid to related party (Note 6) 192,085 5.01 - - 192,085 4.73 Insurance 103,524 2.70 400 0.18 103,924 2.56 Payroll taxes and employee benefits 59,021 1.54 - - 59,021 1.45 ------------------------------------------------------------------------------------------ 2,508,376 65.37 205,452 92.13 2,713,828 66.84 ------------------------------------------------------------------------------------------ NET INCOME $1,329,181 34.63% $ 17,565 7.87% $1,346,746 33.16% ==========================================================================================
See accompanying report of independent auditors and notes to financial statements. 20 SCHEDULE I Page 2 of 3 De Anza Properties-X (A Limited Partnership) Schedule of Projects' Operations
YEAR ENDED DECEMBER 31, 1995 ------------------------------------------------------------------------------------------------ APTOS PINES WOODBRIDGE MEADOWS DE ANZA PROPERTIES-X TOTALS ------------------------------------------------------------------------------------------------ % OF % OF % OF % OF AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME ------------------------------------------------------------------------------------------------ INCOME Gain on sale of property and equipment (Note 3) $2,077,041 81.95% - - $ 181,000 70.79% $2,258,041 34.57% Rent (Note 4) 313,099 12.35 $3,622,076 96.80% - - 3,935,175 60.25 Utilities 143,232 5.65 - - - - 143,232 2.19 Other 1,330 0.05 119,637 3.20 - - 120,967 1.85 Interest and dividends - - - - 74,678 29.21 74,678 1.14 ------------------------------------------------------------------------------------------------ 2,534,702 100.00 3,741,713 100.00 255,678 100.00 6,532,093 100.00 ------------------------------------------------------------------------------------------------ EXPENSES Interest - - 481,556 12.87 - - 481,556 7.37 Maintenance, repairs and supplies 25,429 1.00 351,804 9.40 - - 377,233 5.78 Other 9,230 0.36 239,462 6.40 45,022 17.61 293,714 4.50 Salaries, including $22,186 paid to related parties (Note 6) 38,577 1.52 264,214 7.06 20,525 8.03 323,316 4.95 Depreciation and amortization 46,107 1.82 613,078 16.38 - - 659,185 10.09 Professional fees, including $127,517 paid to related parties (Note 6) 42,057 1.66 120,725 3.23 75,764 29.63 238,546 3.65 Real estate taxes 27,226 1.07 210,590 5.63 - - 237,816 3.64 Utilities 93,109 3.67 190,654 5.10 244 0.10 284,007 4.35 Management fees, including $187,208 paid to related party 24,234 0.96 187,208 5.00 - - 211,442 3.24 Insurance 8,441 0.33 93,579 2.50 195 0.08 102,215 1.56 Payroll taxes and employee benefits 10,339 0.41 52,282 1.40 - - 62,621 0.96 ------------------------------------------------------------------------------------------------ 324,749 12.80 2,805,152 74.97 141,750 55.45% 3,271,651 50.09 ------------------------------------------------------------------------------------------------ NET INCOME $2,209,953 87.20% $ 936,561 25.03% $113,928 44.55% $3,260,442 49.91% ================================================================================================
See accompanying report of independent auditors and notes to financial statements. 21 SCHEDULE I Page 3 of 3 De Anza Properties-X (A Limited Partnership) Schedule of Projects' Operations
YEAR ENDED DECEMBER 31, 1994 --------------------------------------------------------------------------------------------------- APTOS PINES COLONIES OF WOODBRIDGE DE ANZA MARGATE MEADOWS PROPERTIES-X TOTALS --------------------------------------------------------------------------------------------------- % OF % OF % OF % OF % OF AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME ------------------------------------------------------------------------------------------------- INCOME Gain on sale of property and equipment (Note 3) - - $16,322,297 92.42% - - - - $16,322,297 73.55% Unrecognized gain (Note 3) - - (1,024,923) (5.80) - - - - (1,024,923) (4.62) ------------------------------------------------------------------------------------------------- Net gain recognized - - 15,297,374 86.62 - - - - 15,297,374 68.93 Rent (Note 4) $577,154 76.09% 2,157,533 12.21 $3,611,530 96.87% - - 6,346,217 28.60 Utilities 179,358 23.65 179,907 1.02 - - - - 359,265 1.62 Other 2,009 0.26 24,712 0.14 116,518 3.13 $ 7,438 16.92% 150,677 0.68 Interest - - 1,339 0.01 - - 36,533 83.08 37,872 0.17 ------------------------------------------------------------------------------------------------- 758,521 100.00 17,660,865 100.00 3,728,048 100.00 43,971 100.00 22,191,405 100.00 ------------------------------------------------------------------------------------------------- EXPENSES Interest 236 0.03 863,147 4.89 489,583 13.13 7,910 17.99 1,360,876 6.13 Maintenance, repairs and supplies 55,355 7.30 270,360 1.53 344,294 9.24 - - 670,009 3.02 Other 22,477 2.96 72,848 0.42 232,241 6.23 26,774 60.89 354,340 1.60 Salaries, including $44,958 paid to related parties (Note 6) 65,724 8.66 203,563 1.15 245,381 6.58 41,161 93.61 555,829 2.50 Depreciation and amortization 91,820 12.11 456,229 2.58 657,216 17.63 5,150 11.71 1,210,415 5.45 Professional fees and services, including $232,581 paid to related parties (Note 6) 92,361 12.18 113,009 0.64 122,236 3.28 40,099 91.19 367,705 1.66 Real estate taxes 43,574 5.74 220,269 1.25 210,156 5.64 - - 473,999 2.14 Utilities 150,230 19.81 194,060 1.10 195,024 5.23 718 1.63 540,032 2.43 Management fees, including $313,036 paid to related parties (Note 6) 31,971 4.21 108,368 0.61 186,403 5.00 - - 326,742 1.47 Insurance 11,341 1.50 48,298 0.27 60,931 1.63 - - 120,570 0.54 Payroll taxes and employee benefits 17,482 2.30 58,690 0.33 53,944 1.45 - - 130,116 0.59 ------------------------------------------------------------------------------------------------- 582,571 76.80 2,608,841 14.77 2,797,409 75.04 121,812 277.02 6,110,633 27.53 ------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $175,950 23.20% $15,052,024 85.23% $ 930,639 24.96% $(77,841) (177.02)% $16,080,772 72.47% =================================================================================================
See accompanying report of independent auditors and notes to financial statements. 22 SCHEDULE II Page 1 of 3 De Anza Properties - X (A Limited Partnership) Schedule of Distributable Income, Partners' Distributions and Reserves
YEAR ENDED DECEMBER 31, ----------------------------------------- 1996 1995 1994 ----------------------------------------- Net income $1,346,746 $ 3,260,442 $ 16,080,772 Add (deduct) adjustments per partnership agreement: Gain on sale of property (143,365) (2,258,041) (15,297,374) Depreciation and amortization 289,536 659,185 1,210,415 Debt amortization (94,115) (85,194) (135,433) Net change in accruals 46,544 (15,576) (474,766) Release of prior year's reserves 3,223,465 2,741,590 2,476,212 ----------------------------------------- Cash available for distribution (1) 4,668,811 4,302,406 3,859,826 ----------------------------------------- Cash distributions: Cash general and limited partners - 6% per annum of average adjusted capital contributions of $4,882,268, $7,236,764 and $13,977,956 in 1996, 1995 and 1994, respectively 292,936 434,206 838,677 General partners - 1.89% per annum of average adjusted capital contributions of $4,882,268, $7,236,764 and $13,977,956 in 1996, 1995 and 1994, respectively 92,496 137,102 264,816 Cash general and limited partners - additional distributions 661,488 389,224 14,743 General partners- additional distributions 203,662 118,409 - ----------------------------------------- Total distributions 1,250,582 1,078,941 1,118,236 ----------------------------------------- Reserves from operations (2) $3,418,229 $ 3,223,465 $ 2,741,590 =========================================
See accompanying report of independent auditors and notes to financial statements. 23 SCHEDULE II Page 2 of 3 De Anza Properties - X (A Limited Partnership) Schedule of Distributable Income, Partners' Distributions and Reserves (Continued)
YEAR ENDED DECEMBER 31, -------------------------------------------- 1996 1995 1994 -------------------------------------------- Proceeds from sales or refinancing of properties available for distribution or reserves (2)(3) - $ 4,268,814 $ 7,917,386 Distribution to cash general and limited partners (3) - (4,053,732) (7,133,000) Distribution to general partners (3) - (392,268) - Use of reserves for capital improvements - (163,300) - Release of prior year's reserves $2,323,978 2,664,464 1,880,078 -------------------------------------------- Reserves from sale and refinancing of properties (2)(3)(4) $2,323,978 $ 2,323,978 $ 2,664,464 ============================================ Distributions to cash general and limited partners per original $1,000 investment From operations Amount $ 41.75 $ 36.02 $ 37.33 ============================================ Percent (of adjusted capital) 19.55% 11.38% 6.11% ============================================ From sales or refinancing (2)(3) Amount - $ 177.34 $ 312.04 ============================================ Percent (of original capital) - 17.73% 31.20% ============================================
See accompanying report of independent auditors and notes to financial statements. 24 SCHEDULE II Page 3 of 3 De Anza Properties - X (A Limited Partnership) Schedule of Distributable Income, Partners' Distributions and Reserves (Continued) /(1)/ Cash available for distribution represents amounts as defined by the partnership agreement. /(2)/ The operating general partner has exercised its discretion in reserving amounts in excess of required reserves for operations, additions to property and equipment, and future distributions. /(3)/ On August 18, 1994, the Partnership sold Colonies of Margate for a price of $23,147,228, and additional proceeds of $557,192 were received to fund a General Reserve. After repayment of debt of $13,523,715, sales and closing costs of $644,488 and a prepayment penalty of $1,618,831, the Partnership netted proceeds of $7,917,386. Of this amount, $7,133,000 was distributed in September 1994 to the cash general and limited partners, representing a return of original capital. The balance of $784,386 is being held to fund certain required reserves (see Note 3). On July 11, 1995, the Partnership sold Aptos Pines for an all cash price of $4,325,000. After payment of sales and closing costs of $56,200 and reserving $3,800, the balance of $4,265,000 was distributed to cash general and limited partners, representing a return of original capital, and to general partners (see Note 3). In 1995, the MHC Reserve of $181,000 reserved from the sale of the Colonies of Margate was released and distributed to the cash general and limited partners as a return of original capital (see Note 3). In 1996, $143,366, one-half of the Independent Committee Reserve reserved from the sale of the Colonies of Margate was released. /(4)/ Included in the reserves from sales and refinancing of properties is $700,558, $843,923 and $1,024,923 at December 31, 1996, 1995 and 1994, respectively, in specific reserves established to fund contingent liabilities that may arise from the MHC transaction. See accompanying report of inependent auditors and notes to financial statements. 25 EX-27 2 FINANCIAL DATA SCHEDULE--ARTICLE V
5 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 1,401,497 0 11,122 0 0 1,483,614 19,878,068 10,208,135 11,294,792 402,679 4,658,315 0 0 0 5,637,210 11,294,792 3,713,584 4,060,574 0 1,952,487 289,536 0 471,805 1,346,746 0 1,346,746 0 0 0 1,346,746 44.94 44.94 EPS is per limited partnership unit.
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