-----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, P8lQWlWWhGh8zGgJ4Hig7rpaM3FFEB2YSB5cENgbdP/ceSlY4QJdmvTAo9trSkkx G/2BFnKdJ2/tkhaZm/XXoA== 0000890566-00-000785.txt : 20000516 0000890566-00-000785.hdr.sgml : 20000516 ACCESSION NUMBER: 0000890566-00-000785 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIERRA PACIFIC DEVELOPMENT FUND II CENTRAL INDEX KEY: 0000719606 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953856271 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12036 FILM NUMBER: 633187 BUSINESS ADDRESS: STREET 1: 5850 SAN FELIPE STREET 2: STE 500 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7137066271 MAIL ADDRESS: STREET 1: 5850 SAN FELIPE STREET 2: STE 500 CITY: HOUSTON STATE: TX ZIP: 77057 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter ended March 31, 2000 ---------------------------------------------------- Commission file number 0-12036 ---------------------------------------------------- SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) State of California 95-3856271 - -------------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 5850 San Felipe, Suite 450 Houston, Texas 77057 - -------------------------------------- ----------------------------------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code: (713) 706-6271 ----------------------------------------------- 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 [ ]. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following financial statements are submitted in the next pages: PAGE NUMBER ------ Balance Sheets - March 31, 2000 and December 31, 1999..................... 4 Statements of Operations - For the Three Months Ended March 31, 2000 and 1999 ............................................................ 5 Statements of Changes in Partners' Equity - For the Year Ended December 31, 1999 and for the Three Months Ended March 31, 2000 .......... 6 Statements of Cash Flows - For the Three Months Ended March 31, 2000 and 1999 ............................................................ 7 Notes to Financial Statements ............................................ 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (a) OVERVIEW The following discussion should be read in conjunction with Sierra Pacific Development Fund II's (the Partnership) Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q. The Partnership currently owns three properties; 5850 San Felipe, Sierra Westlakes, and Sierra Southwest Pointe. In addition, the Partnership holds a 30.17% interest in Sierra Mira Mesa Partners (SMMP). (b) RESULTS OF OPERATIONS Rental income for the three months ended March 31, 2000 decreased by approximately $56,000, or 9%, primarily due to lower occupancy at Sierra Southwest Pointe. Occupancy at Sierra Southwest Pointe decreased from 94% at March 31, 1999 to 73% at March 31, 2000. At 5850 San Felipe, occupancy rose slightly from 97% to 100% between the same periods. Sierra Westlakes remained 75% occupied. The decrease in rental income was also attributable to lower common area maintenance fees billed during the quarter when compared to the same period in 1999. 2 Operating expenses for the three months ended March 31, 2000 increased by approximately $122,000, or 31%, in comparison to the corresponding period in prior year, in large part due to an increase in legal fees associated with the settlement of a lawsuit against the Partnership. Further, higher data processing costs and accounting and auditing fees were incurred during the quarter. The Partnership's share of unconsolidated joint venture income was approximately $55,000 for the three months ended March 31, 2000 compared to approximately $30,000 for the corresponding period in 1999. (c) LIQUIDITY AND CAPITAL RESOURCES In December 1999, a lawsuit was settled against the Partnership that provided for a complete release of the Partnership, general partners and all affiliates. As part of the settlement, the Partnership agreed to pay the plaintiff's attorneys' fees of $1,000,000. In February and March 2000, the Partnership made scheduled payments totaling $500,000, with the remaining $500,000 due by December 31, 2000. The Partnership is in an illiquid position as of March 31, 2000 with cash and billed rents of approximately $136,000 and current liabilities of approximately $858,000, which includes the remaining legal liability of $500,000. The Partnership's primary capital requirements will be for the construction of new tenant space. It is anticipated that these requirements will be funded from the operations of the properties and distributions from SMMP. Inflation: The Partnership does not expect inflation to be a material factor in its operations in 2000. 3 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) BALANCE SHEETS MARCH 31, 2000 AND DECEMBER 31, 1999 - --------------------------------------------------------------------------------
MARCH 31, 2000 DECEMBER 31, 1999 --------------- --------------- (UNAUDITED) ASSETS Cash and cash equivalents ........................................................ $ 23,153 $ 260,963 Receivables: Note, net of deferred gain of $736,271 ......................................... 3,466,553 3,062,629 Unbilled rent .................................................................. 237,144 239,271 Billed rent .................................................................... 112,487 140,211 Due from affiliates ............................................................ 1,013,698 1,013,698 Interest ....................................................................... 114,176 0 Income-producing properties - net of accumulated depreciation and valuation allowance of $3,886,195 and $3,728,719, respectively ................................................................... 10,473,255 10,590,651 Investment in unconsolidated joint venture ....................................... 2,265,201 3,023,177 Other assets - net of accumulated amortization of $408,815 and $393,674, respectively ......................................... 788,661 873,728 --------------- --------------- Total Assets ..................................................................... $ 18,494,328 $ 19,204,328 =============== =============== LIABILITIES AND PARTNERS' EQUITY Accrued and other liabilities .................................................... $ 858,033 $ 1,452,577 Notes payable .................................................................... 6,385,248 6,397,116 --------------- --------------- Total Liabilities ................................................................ 7,243,281 7,849,693 --------------- --------------- Partners' equity (deficit): General Partner ................................................................ (65,041) 0 Limited Partners: Class A Limited Partners: 60,000 units authorized, 56,674 issued and outstanding .............................................. 7,401,124 7,426,335 Class B Limited Partners: 60,000 units authorized, 29,979 issued and outstanding .............................................. 3,914,964 3,928,300 --------------- --------------- Total Partners' equity ........................................................... 11,251,047 11,354,635 --------------- --------------- Total Liabilities and Partners' equity ........................................... $ 18,494,328 $ 19,204,328 =============== ===============
SEE ACCOMPANYING NOTES 4 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 - --------------------------------------------------------------------------------
2000 1999 --------------- --------------- (UNAUDITED) (UNAUDITED) REVENUES: Rental income ............................................................................... $ 567,727 $ 624,219 Interest income ............................................................................. 114,371 102,404 --------------- --------------- Total revenues ........................................................... 682,098 726,623 --------------- --------------- EXPENSES: Operating expenses .......................................................................... 511,105 389,112 Depreciation and amortization ............................................................... 217,826 215,764 Interest .................................................................................... 111,766 107,783 --------------- --------------- Total costs and expenses ................................................. 840,697 712,659 --------------- --------------- (LOSS) INCOME BEFORE PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE INCOME ............................................................................. (158,599) 13,964 --------------- --------------- PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE INCOME ....................................................................... 55,011 29,875 --------------- --------------- NET (LOSS) INCOME ............................................................................. $ (103,588) $ 43,839 =============== =============== Net (loss) income per limited partnership unit ................................................ $ (1.18) $ 0.51 =============== ===============
SEE ACCOMPANYING NOTES 5 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 - --------------------------------------------------------------------------------
LIMITED PARTNERS TOTAL ---------------------------- GENERAL PARTNERS' PER UNIT CLASS A CLASS B TOTAL PARTNER EQUITY ------------ ------------ ------------ ------------ ------------ ------------ Proceeds from sale of partnership units ................. $ 250.00 $ 14,392,000 $ 7,579,000 $ 21,971,000 $ 21,971,000 Underwriting commissions and other organization expenses ... (33.68) (1,939,045) (1,021,124) (2,960,169) (2,960,169) Repurchase of 1,231 partnership units ............................ 0.06 (177,934) (66,167) (244,101) (244,101) Cumulative net income (loss) (to December 31, 1999) ............ (20.55) (1,163,641) (616,129) (1,779,770) $ 46,674 (1,733,096) Cumulative distributions (to December 31, 1999) ............ (64.80) (3,685,045) (1,947,280) (5,632,325) (46,674) (5,678,999) ------------ ------------ ------------ ------------ ------------ ------------ Partners' equity - January 1, 2000 (audited) ......... 131.03 7,426,335 3,928,300 11,354,635 0 11,354,635 Cumulative adjustment of net loss allocation ........................ 0.74 41,861 22,144 64,005 (64,005) 0 Net loss (unaudited)................. (1.18) (67,072) (35,480) (102,552) (1,036) (103,588) ------------ ------------ ------------ ------------ ------------ ------------ Partners' equity (deficit) - March 31, 2000 (unaudited) ....... $ 130.59 $ 7,401,124 $ 3,914,964 $ 11,316,088 $ (65,041) $ 11,251,047 ============ ============ ============ ============ ============ ============
SEE ACCOMPANYING NOTES 6 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 - --------------------------------------------------------------------------------
2000 1999 ----------- ----------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income .................................................................................. $ (103,588) $ 43,839 Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities: Depreciation and amortization .................................................................... 217,826 215,764 Partnership's share of unconsolidated joint venture income ........................................................................... (55,011) (29,875) Decrease (increase) in rent receivable ........................................................... 29,851 (47,884) Increase in interest receivable .................................................................. (114,176) (101,859) Decrease in other receivables .................................................................... 0 7,946 Decrease in other assets ......................................................................... 44,169 67,879 Decrease in accrued and other liabilities ........................................................ (594,544) (104,146) ----------- ----------- Net cash (used in) provided by operating activities .............................................. (575,473) 51,664 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Loan to affiliate of the general partner ......................................................... (403,924) 0 Payments for property additions .................................................................. (58,318) (119,778) ----------- ----------- Net cash used in investing activities ............................................................ (462,242) (119,778) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on notes payable .............................................................. (11,868) (6,952) Distributions from unconsolidated joint venture .................................................. 811,773 0 Borrowings from affiliate ........................................................................ 0 11,055 ----------- ----------- Net cash provided by financing activities ........................................................ 799,905 4,103 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS ............................................................ (237,810) (64,011) CASH AND CASH EQUIVALENTS - Beginning of period ...................................................... 260,963 71,180 ----------- ----------- CASH AND CASH EQUIVALENTS - End of period ............................................................ $ 23,153 $ 7,169 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for property taxes ................................................... $ 223,178 $ 210,727 =========== =========== Cash paid during the period for interest ......................................................... $ 111,766 $ 107,783 =========== ===========
SEE ACCOMPANYING NOTES 7 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (Unaudited) - -------------------------------------------------------------------------------- 1. BASIS OF FINANCIAL STATEMENTS In the opinion of Sierra Pacific Development Fund II's (the Partnership) management, these unaudited financial statements reflect all adjustments which are necessary for a fair presentation of its financial position at March 31, 2000 and results of operations and cash flows for the periods presented. All adjustments included in these statements are of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Annual Report of the Partnership for the year ended December 31, 1999. 2. RELATED PARTY TRANSACTIONS Included in the financial statements for the three months ended March 31, 2000 and 1999 are affiliate transactions as follows: MARCH 31 ----------------------- 2000 1999 ---------- ---------- Management fees $ 29,800 $ 25,320 Administrative fees 69,864 62,297 Leasing fees 18,141 3,571 3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE Sierra Mira Mesa Partners (SMMP) was formed in 1985 between the Partnership and Sierra Pacific Pension Investors '84 (SPPI'84), an affiliate, to develop and operate the real property known as Sierra Mira Mesa, an office building, located in San Diego, California. The Partnership's initial ownership interest in SMMP was 51%; the remaining 49% was owned by SPPI'84. Effective December 31, 1996, the general partners amended the partnership agreement to allow for adjustments in the sharing ratio each year based upon the relative net contributions and distributions since inception of each general partner. At March 31, 2000 the Partnership's interest in SMMP is 30.17%; the remaining 69.83% interest is owned by SPPI'84. The consolidated financial statements of SMMP include the accounts of SMMP and Sorrento I Partners, a majority owned California general partnership. Summarized income statement information for SMMP for the three months ended March 31, 2000 and 1999 follows: 8 Sierra Pacific Development Fund II Notes to Financial Statements (Unaudited) Page two March 31 ------------------------ 2000 1999 ----------- ---------- Rental income $ 556,156 $ 500,720 Total revenues 617,334 556,010 Operating expenses 219,914 190,270 Share of unconsolidated joint venture income (loss) 45,176 (25,266) Net income 175,848 87,978 As of March 31, 2000, SMMP holds a 43.92% interest in Sorrento II Partners (SIIP), a California general partnership with Sierra Pacific Institutional Properties V formed in 1993; a 5.08% interest in Sierra Creekside Partners (SCP), a California general partnership with Sierra Pacific Development Fund formed in 1994; and a 33.36% interest in Sierra Vista Partners (SVP), a California general partnership with Sierra Pacific Development Fund III formed in 1994. Summarized income statement information for these Partnerships, which are accounted for by SMMP under the equity method, for the three months ended March 31, 2000 and 1999 follows:
SCP SVP SIIP -------------------------- -------------------------- ------------------------- MARCH 31 MARCH 31 MARCH 31 -------------------------- -------------------------- ------------------------- 2000 1999 2000 1999 2000 1999 --------- --------- --------- --------- --------- --------- Rental income ................. $ 229,440 $ 214,772 $ 0 $ 0 $ 385,844 $ 260,066 Total revenues ................ 229,440 214,772 0 11,907 397,049 260,066 Operating expenses ............ 154,180 126,351 13,665 13,797 124,762 123,578 Extraordinary loss ............ 46,020 0 0 0 0 0 Net (loss) income ............. (124,683) (36,421) (20,154) (2,457) 127,660 (63,391)
9 Sierra Pacific Development Fund II Notes to Financial Statements (Unaudited) Page three 4. PARTNERS' EQUITY Equity and net income (loss) per limited partnership unit is determined by dividing the limited partners' share of the Partnership's equity and net income (loss) by the number of limited partnership units outstanding, 56,674 Class A and 29,979 Class B. Partners' equity accounts have been adjusted to reflect an allocation of cumulative net loss to the partners in accordance with the agreement of limited partnership. This agreement provides that 99% of operating income, gains, losses, deductions and credits of the Partnership shall be allocated among the limited partners and 1% be allocated to the general partner. Prior year balances have not been adjusted because management does not believe that the effects of these adjustments are significant to the prior year partners' equity balances. 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following Exhibits are filed herewith pursuant to Rule 601 of Regulation S-K. Exhibit Number Description of Exhibit - ----------- ----------------------------- 27 Financial Data Schedule (b) Reports on Form 8-K A Form 8-K was filed in April 2000 reporting a change in the Partnership's Certifying Accountant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report be signed on its behalf by the undersigned thereunto duly authorized. SIERRA PACIFIC DEVELOPMENT FUND II a Limited Partnership S-P PROPERTIES, INC. General Partner Date: MAY 10, 2000 /S/ THOMAS N. THURBER ------------ ----------------------------------------------- Thomas N. Thurber President and Director Date: MAY 10, 2000 /S/ G. ANTHONY EPPOLITO ------------ ----------------------------------------------- G. Anthony Eppolito Chief Accountant 11 EX-27 2
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIERRA PACIFIC DEVELOPMENT FUND II MARCH 31, 2000 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 MAR-31-2000 23,153 0 463,807 0 0 249,816 14,359,450 3,886,195 18,494,328 858,033 6,385,248 0 0 0 11,251,047 18,494,328 567,727 682,098 0 511,105 217,826 0 111,766 (103,588) 0 (103,588) 0 0 0 (103,588) (1.20) (1.20)
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