-----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, Wcfl6mnuWpJKZQ0Z9bXTo3k2jtQIBk+wYYilZD2XDiKh+MdCaHigQ/9OqsUYhukp /nj5kvlZdLH1OLcTywX1rA== 0000944209-97-000587.txt : 19970514 0000944209-97-000587.hdr.sgml : 19970514 ACCESSION NUMBER: 0000944209-97-000587 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08942 FILM NUMBER: 97602131 BUSINESS ADDRESS: STREET 1: 9171 WILSHIRE BLVD STE 627 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3105501111 10-Q 1 FORM 10-Q FOR PERIOD ENDED 03/31/97 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q --------- [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1997 [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ------------ ---------------- 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 (IRS Employer Iden- incorporation or organization) tification Number) 9171 WILSHIRE BOULEVARD, SUITE 627 BEVERLY HILLS, CALIFORNIA 90210 (Address of principal executive offices, including zip code) (310) 550-1111 (The registrant's telephone number, including area code) NO CHANGE (Former name, former address and former fiscal year, if changed since last report) 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 [_] Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule 240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered sequentially. The total number of pages contained herein is 15. 1 TABLE OF CONTENTS -----------------
PART I. FINANCIAL INFORMATION - ------- --------------------- ITEM 1. FINANCIAL STATEMENTS Balance Sheets 3 Statements of Income 5 Statements of Changes in Partners' Capital (Deficit) 6 Statements of Cash Flows 7 Notes to Financial Statements 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12 PART II. OTHER INFORMATION 14 - ------- -----------------
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DE ANZA PROPERTIES - X (A Limited Partnership) Balance Sheets (Unaudited)
March 31, December 31, 1997 1996 ---------- ------------ ASSETS CASH AND CASH EQUIVALENTS - including restricted deposits of $700,558 at March 31, 1997 and December 31, 1996 - Note 1 $1,223,898 $ 1,401,497 ACCOUNTS RECEIVABLE 52,586 11,122 PREPAID EXPENSES - 70,995 ---------- ----------- 1,276,484 1,483,614 ---------- ----------- PROPERTY AND EQUIPMENT - Notes 1, 2, 5 snd 6 Land - 2,989,265 Land improvements - 4,793,220 Buildings and improvements - 11,448,171 Furniture and equipment - 647,412 ---------- ----------- - 19,878,068 Less accumulated depreciation - 10,208,135 ---------- ----------- - 9,669,933 ---------- ----------- OTHER ASSETS Loan costs - less accumulated amortization of $56,564 at December 31, 1996 - Note 2 - 51,251 Prepaid sale costs - Notes 1 and 6 - 69,994 Other 20,000 20,000 ---------- ----------- 20,000 141,245 ---------- ----------- $1,296,484 $11,294,792 ========== ===========
See accompanying notes to financial statements. 3 DE ANZA PROPERTIES - X (A Limited Partnership) Balance Sheets (Continued) (Unaudited)
March 31, December 31, 1997 1996 ---------- ------------ LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) ACCOUNTS PAYABLE AND ACCRUED EXPENSES - including $26,907 and $19,020 due to related party at March 31, 1997 and December 31, 1996, respectively $ 274,090 $ 158,809 DEPOSITS AND ADVANCE RENTALS - 139,900 DEFERRED GAIN ON SALE - Note 5 700,558 700,558 SECURED NOTE PAYABLE - Notes 2 and 6 - 4,658,315 ---------- ----------- 974,648 5,657,582 ---------- ----------- PARTNERS' CAPITAL (DEFICIT) General partners 76,216 (3,453,230) Cash general partners, 228.5 units issued and outstanding 2,454 78,420 Limited partners, 22.640.5 units issued and outstanding 243,166 9,012,020 ---------- ----------- 321,836 5,637,210 ---------- ----------- $1,296,484 $11,294,792 ========== ===========
See accompanying notes to financial statements. 4 DE ANZA PROPERTIES - X (A Limited Partnership) Statements of Income (Unaudited)
Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ------------ ------------ INCOME Rent - Note 6 $ 509,933 $896,293 Interest and dividends 45,655 14,864 Other 19,362 29,414 Gain on sale of property and equipment - Notes 5 and 6 19,168,276 - ----------- ------------ 19,743,226 940,571 ----------- ------------ EXPENSES Interest 102,067 118,623 Salaries - including $4,256 and $4,611 paid to related party in 1997 and 1996, respectively - Note 3 98,434 68,142 Maintenance, repairs and supplies 59,890 104,039 Depreciation and amortization - Note 1 51,251 141,906 Other 44,643 84,650 Professional fees and services - including $14,222 and $27,645 paid to related party in 1997 and 1996, respectively - Note 3 43,867 90,809 Utilities 36,769 52,687 Real estate taxes 27,705 52,510 Management fees paid to related party - Note 3 26,410 46,045 Payroll taxes and employee benefits 18,751 15,173 Insurance 15,569 26,445 ----------- -------- 525,356 801,029 ----------- -------- NET INCOME $19,217,870 $139,542 =========== ======== NET INCOME GENERAL PARTNERS $ 9,339,311 $ 33,046 =========== ======== CASH GENERAL AND LIMITED PARTNERS $ 9,878,559 $106,496 =========== ======== INCOME PER 1% GENERAL PARTNER INTEREST - Note 4 $ 93,393.11 $ 330.46 =========== ======== INCOME PER CASH GENERAL AND LIMITED PARTNERSHIP UNIT - Note 4 $ 431.96 $ 4.66 =========== ========
See accompanying notes to financial statements. 5 DE ANZA PROPERTIES - X (A Limited Partnership) Statements of Changes in Partners' Capital (Deficit) (Unaudited) For the Three Months Ended March 31, 1997 and For the Year Ended December 31, 1996
Cash General General Limited Total Partners Partners Partners ------------ ----------- --------- ------------ BALANCE - January 1, 1996 $ 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 DISTRIBUTIONS TO PARTNERS (24,533,244) (5,809,865) (187,078) (18,536,301) NET INCOME - for the three months ended March 31, 1997 19,217,870 9,339,311 111,112 9,767,447 ------------ ----------- --------- ------------ BALANCE - March 31, 1997 $ 321,836 $ 76,216 $ 2,454 $ 243,166 ============ =========== ========= ============
See accompanying notes to financial statements. 6 DE ANZA PROPERTIES - X (A Limited Partnership) Statements of Cash Flows (Unaudited)
Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Gross rents received from real estate operations $ 378,007 $ 899,539 Cash paid to suppliers and employees - including $64,883 and $81,585 paid to related party in 1997 and 1996, respectively (235,788) (463,227) Interest paid (102,067) (118,623) Interest and other income received 65,605 45,090 ------------ ---------- Net cash provided by operating activities 105,757 362,779 ------------ ---------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (53,022) (34,495) Sale of property and equipment 29,433,000 - Sales costs (355,733) - ------------ ---------- Net cash provided by (used in) investing activities 29,024,245 (34,495) ------------ ---------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on secured notes payable (4,658,315) (22,657) Prepayment penalty (116,042) - Partner distributions (24,533,244) (312,645) ------------ ---------- Net cash used in financing activities (29,307,601) (335,302) ------------ ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS (177,599) (7,018) CASH AND CASH EQUIVALENTS: BALANCE AT BEGINNING OF PERIOD 1,401,497 1,388,279 ------------ ---------- BALANCE AT END OF PERIOD $ 1,223,898 $1,381,261 ============ ==========
See accompanying notes to financial statements. 7 DE ANZA PROPERTIES - X (A Limited Partnership) Statements of Cash Flows (Continued) (Unaudited)
Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ------------- ------------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income $ 19,217,870 $139,542 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 51,251 141,906 Gain on sale of property and equipment (19,168,276) - Changes in operating assets and liabilities (Increase) decrease in accounts receivable (41,464) 1,968 Decrease in prepaid expenses 70,995 26,333 Decrease in other assets - (847) Increase in accounts payable and accrued expenses 115,281 51,787 (Decrease) increase in deposits and advance rentals (139,900) 2,090 ------------ -------- Net cash provided by operating activities $ 105,757 $362,779 ============ ========
See accompanying notes to financial statements. 8 DE ANZA PROPERTIES - X (A Limited Partnership) Notes to Financial Statements (Unaudited) March 31, 1997 and December 31, 1996 and For the Three Months Ended March 31, 1997 and 1996 NOTE 1 - BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been included. Operating results during the three months ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1996. 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 and certificates of deposit, with original maturities ranging generally from one to three months. The Partnership considers all such items to be cash equivalents. Depreciation ------------ Pursuant to generally accepted accounting principles the Partnership ceased to depreciate Woodbridge Meadows Apartments ("Woodbridge") from the time it determined to sell the property (see Note 6). NOTE 2 - SECURED NOTE PAYABLE Secured note payable at March 31, 1997 and December 31, 1996 consisted of:
March 31, December 31, 1997 1996 --------- ------------ Note collateralized by first trust deed, payable in monthly installments of $47,093, including interest at 10%, maturing in 2014. The note was repaid February 19, 1997 upon sale of Woodbridge (see Note 6). $ - $4,658,315 ========= ==========
NOTE 3 - 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 (OGP), was paid a management fee in the amount of 5% of the annual gross receipts 9 DE ANZA PROPERTIES - X (A Limited Partnership) Notes to Financial Statements (Continued) (Unaudited) March 31, 1997 and December 31, 1996 and For the Three Months Ended March 31, 1997 and 1996 NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued) from the operations of the Partnership's properties. The payment of this fee is subordinated to the priority 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 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. On August 18, 1994, subsequent to the sale of Colonies of Margate and the property management business of De Anza Group, Inc. (DAG), as discussed in Note 5, the property management of Woodbridge was assumed by Terra Vista Management, Inc. (Terra Vista). Terra Vista is wholly owned by Michael D. Gelfand, president of the OGP and the son of Herbert M. Gelfand. Herbert M. Gelfand, together with Beverly Gelfand, is the sole shareholder of the OGP and an individual general partner. Terra Vista was paid $26,410 and $46,045 for management fees during the three months ended March 31, 1997 and 1996, respectively. In addition, Terra Vista was paid $38,473 and $35,540 during the three months ended March 31, 1997 and 1996, respectively, for performing bookkeeping, regional management, computer, disposition and investor relations services necessary for the operation of the Partnership and its properties. NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND CASH GENERAL AND LIMITED PARTNERSHIP UNIT 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 Statements of Income and Changes in Partners' Capital (Deficit) and the number of units outstanding (22,869 units). The general partners' share of net income has not been included in this computation. Income per 1% general partner interest was computed based on the general partners' share of net income as reflected on the Statements of Income and Changes in Partners' Capital (Deficit). NOTE 5 - SALE OF COLONIES OF MARGATE On August 18, 1994, the Partnership sold Colonies of Margate to an affiliate of Manufactured Home Communities, Inc. (MHC), a real estate investment trust, as part of an overall transaction for the sale of the related property management business of DAG and other mobile home communities affiliated with DAG. 10 DE ANZA PROPERTIES - X (A Limited Partnership) Notes to Financial Statements (Continued) (Unaudited) March 31, 1997 and December 31, 1996 and For the Three Months Ended March 31, 1997 and 1996 NOTE 5 - SALE OF COLONIES OF MARGATE (Continued) In connection with the sale, the Partnership established various reserves totaling $1,024,923. The $1,024,923 was used to establish the following reserves: MHC Reserve $181,000 General Reserve 557,192 Independent Committee Reserve 286,731
The MHC Reserve was required by MHC. It was released in 1995, at which time the gain on sale was recognized. The General Reserve and Independent Committee Reserve were established to fund contingent liabilities that may arise out of the MHC transaction. In August 1996, $143,366 of the Independent Committee Reserve was released and the gain on sale was recognized and included in net income. On March 4, 1997, the Partnership distributed the $143,366 to the cash general and limited and general partners. 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 sales proceeds represented by the MHC Reserve, Independent Committee Reserve and General Reserve, totaling $1,024,923. As these reserves are released or expended, gain on sale will be recognized. At March 31, 1997 and December 31, 1996, $700,558 of sale proceeds have been deferred and are included in deferred gain on sale, as reflected in the balance sheets. NOTE 6 - SALE OF WOODBRIDGE MEADOWS APARTMENTS On February 19, 1997, the Partnership sold its sole remaining property, Woodbridge, to Heritage Square Apartments, a general partnership, as to a 90% interest and Arroyo Grande Investment Company, a limited liability company, as to a 10% interest, as tenants in common, for $29,433,000, all cash. The Buyers are affiliates of J.F. Shea Co., Inc. 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 $164,397, totaled approximately $24,249,533. 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. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- The Partnership's quick ratio increased to 1.9:1 from 1.7:1, including unrestricted cash balances of $523,340 and $700,939 at March 31, 1997 and December 31, 1996, respectively. The increase is due to a decrease in deposits and advance rentals and the payoff of mortgage debt. The Partnership's cash balance is its immediate source of liquidity. On February 19, 1997, the Partnership sold Woodbridge, as discussed in Note 6 to the financial statements, and expects to wind up its operations in 1997 and dissolve. Since the Partnership no longer has real estate operations its sole liquidity source is its cash balance. Liquidity may improve to the extent that funds are released from the General Reserve and/or the Independent Committee Reserve. However, the Partnership expects to distribute these funds, net of any future operating expenditures and contingencies, if any, as part of its dissolution. Other than as described elsewhere, there are no known trends, demands, commitments, events or uncertainties known to the Partnership which are reasonably likely to materially affect the Partnership's liquidity. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Results of Operations - --------------------- The comparison of results of operations for the three months ended March 31, 1997 and 1996 is dominated by the sale of Woodbridge. Rental and other income decreased 42.8% during the three months ended March 31, 1997 over the same period in 1996. Interest and dividend income increased during the three months ended March 31, 1997 over the same period in 1996 because interest was earned on sale proceeds held for a short period until their distribution. Expenses decreased 34.4% during the three months ended March 31, 1997 over the same period in 1996, primarily due to the sale of Woodbridge on February 19, 1997. Additionally, according to generally accepted accounting principles, from the time the Partnership determined to sell Woodbridge it ceased to depreciate the carrying value of the assets. This decrease in depreciation expense is offset in part by the write off of loan costs in 1997 following the repayment of mortgage debt with Woodbridge sale proceeds and higher salary costs in 1997 attributable to severance salaries and bonuses paid to Woodbridge employees. 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. 13 PART II. OTHER INFORMATION ITEM NUMBER - ----------- 1. LEGAL PROCEEDINGS No new material legal proceedings were commenced during the three months ended March 31, 1997 and there are none pending. 2. CHANGES IN SECURITIES None. 3. DEFAULTS UPON SENIOR SECURITIES None. 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 5. OTHER INFORMATION None. 6. EXHIBITS AND REPORTS ON FORM 8-K Form 8-K filed March 3, 1997 relating to the Woodbridge sale on February 19, 1997. 14 PART II. OTHER INFORMATION (Continued) SIGNATURES Pursuant to the requirements 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 (Registrant) By DE ANZA CORPORATION A California Corporation Operating General Partner Date: May 13, 1997 By /s/ Michael D. Gelfand ---------------------- Michael D. Gelfand President and Chief Financial Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1,223,898 0 52,586 0 0 1,276,484 0 0 1,296,484 274,090 0 0 0 0 321,836 1,296,484 509,933 19,743,226 0 372,038 51,251 0 102,067 19,217,870 0 0 19,217,870 19,168,276 0 19,217,870 431.96 431.96 EPS is per limited partnership unit
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