-----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, ERN8e4buyQjenAn+J9OLGenLmVBue/U0cXRhhGahXp12a6ah1Xmj/Hvs25r5HTgi Ho5m7R0gLjyzZ3X7NWCo3w== 0000890566-00-001290.txt : 20000922 0000890566-00-001290.hdr.sgml : 20000922 ACCESSION NUMBER: 0000890566-00-001290 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 DATE AS OF CHANGE: 20000906 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIERRA PACIFIC DEVELOPMENT FUND II CENTRAL INDEX KEY: 0000719606 STANDARD INDUSTRIAL CLASSIFICATION: 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: 701686 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 0001.txt 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 June 30, 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 - June 30, 2000 and December 31, 1999 4 Statements of Operations - For the Six Months and Three Months Ended June 30, 2000 and 1999 5 Statements of Changes in Partners' Equity - For the Year Ended December 31, 1999 and for the Six Months Ended June 30, 2000 6 Statements of Cash Flows - For the Six Months Ended June 30, 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 six months and three months ended June 30, 2000 increased by approximately $73,000, or 6%, and by approximately $129,000, or 23%, respectively, when compared to the same periods in the prior year. These increases were primarily due to higher common area maintenance fees billed at 5850 San Felipe. Supplemental billings were made in the second quarter to recover higher than anticipated prior year common area maintenance fees. Further, rental rates rose at 5850 San Felipe and Sierra Southwest Pointe. These increases in rental income were partially offset by lower occupancy at Sierra Southwest Pointe. Occupancy at Sierra Southwest Pointe decreased 2 from 85% at June 30, 1999 to 73% at June 30, 2000. At 5850 San Felipe, occupancy rose slightly from 98% to 100% between the same periods. Sierra Westlakes remained 75% occupied. Operating expenses for the six months ended June 30, 2000 increased by approximately $92,000, or 12%, 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 maintenance and repairs costs and accounting and auditing fees were incurred during the period. This increase was partially offset by a decrease in administrative costs. Operating expenses for the quarter ended June 30, 2000 decreased by approximately $30,000, or 7%, principally as a result of lower administrative costs and data processing fees. The Partnership's share of unconsolidated joint venture income was approximately $101,000 for the six months ended June 30, 2000 compared to approximately $90,000 for the corresponding period in the prior year. (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 the first quarter of 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 June 30, 2000 with cash and billed rents of approximately $298,000 and current liabilities of approximately $953,000, which includes the remaining legal liability of $500,000. The Partnership's primary capital requirements will be for the construction of new tenant space and the remaining legal obligation. 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 JUNE 30, 2000 AND DECEMBER 31, 1999 - - --------------------------------------------------------------------------------
JUNE 30, 2000 (UNAUDITED) DECEMBER 31, 1999 ------------------ ------------------ ASSETS Cash and cash equivalents ........................................................... $ 109,490 $ 260,963 Receivables: Note, net of deferred gain of $736,271 ............................................ 3,632,946 3,062,629 Unbilled rent ..................................................................... 222,696 239,271 Billed rent ....................................................................... 188,230 140,211 Due from affiliates ............................................................... 1,013,698 1,013,698 Interest .......................................................................... 236,473 0 Income-producing properties - net of accumulated depreciation and valuation allowance of $3,991,052 and $3,728,719, respectively ...................................................................... 10,324,783 10,590,651 Investment in unconsolidated joint venture .......................................... 2,141,531 3,023,177 Other assets - net of accumulated amortization of $434,421 and $393,674, respectively ............................................ 865,279 873,728 ------------------ ------------------ Total Assets ........................................................................ $ 18,735,126 $ 19,204,328 ================== ================== LIABILITIES AND PARTNERS' EQUITY Accrued and other liabilities ....................................................... $ 952,632 $ 1,452,577 Notes payable ....................................................................... 6,373,119 6,397,116 ------------------ ------------------ Total Liabilities ................................................................... 7,325,751 7,849,693 ------------------ ------------------ Partners' equity (deficit): General Partner ................................................................... (63,458) 0 Limited Partners: Class A Limited Partners: 60,000 units authorized, 56,674 issued and outstanding ................................................. 7,503,640 7,426,335 Class B Limited Partners: 60,000 units authorized, 29,979 issued and outstanding ................................................. 3,969,193 3,928,300 ------------------ ------------------ Total Partners' equity .............................................................. 11,409,375 11,354,635 ------------------ ------------------ Total Liabilities and Partners' equity .............................................. $ 18,735,126 $ 19,204,328 ================== ==================
SEE ACCOMPANYING NOTES 4 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 AND FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 - - --------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, ------------------------------ ----------------------------- 2000 1999 2000 1999 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------- ----------- ----------- ----------- REVENUES: Rental income ......................................... $ 1,266,942 $ 1,194,025 $ 699,215 $ 569,806 Interest income ....................................... 236,944 204,768 122,573 102,364 ----------- ----------- ----------- ----------- Total revenues ..................... 1,503,886 1,398,793 821,788 672,170 ----------- ----------- ----------- ----------- EXPENSES: Operating expenses .................................... 885,750 793,426 374,645 404,314 Depreciation and amortization ......................... 440,882 434,505 223,056 218,741 Interest .............................................. 223,270 214,322 111,504 106,539 ----------- ----------- ----------- ----------- Total costs and expenses ........... 1,549,902 1,442,253 709,205 729,594 ----------- ----------- ----------- ----------- (LOSS) INCOME BEFORE PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE INCOME ....................................... (46,016) (43,460) 112,583 (57,424) ----------- ----------- ----------- ----------- PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE INCOME ................................. 100,756 89,769 45,745 59,894 ----------- ----------- ----------- ----------- NET INCOME .............................................. $ 54,740 $ 46,309 $ 158,328 $ 2,470 =========== =========== =========== =========== Net income per limited partnership unit ................. $ 0.63 $ 0.53 $ 1.81 $ 0.03 =========== =========== =========== ===========
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 SIX MONTHS ENDED JUNE 30, 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, 1998) ............. (6.96) (393,677) (208,839) (602,516) $ 46,674 (555,842) Cumulative distributions (to December 31, 1998) ............. (64.80) (3,685,045) (1,947,280) (5,632,325) (46,674) (5,678,999) ------------ ------------ ------------ ------------ ------------ ------------ Partners' equity - January 1, 1999 ... 144.62 8,196,299 4,335,590 12,531,889 0 12,531,889 Net loss ............................. (13.59) (769,964) (407,290) (1,177,254) (1,177,254) ------------ ------------ ------------ ------------ ------------ ------------ Partners' equity - January 1, 2000 (audited) .......... 131.03 7,426,335 3,928,300 11,354,635 0 11,354,635 Transfer among general partner and limited partners ................... 0.74 41,861 22,144 64,005 (64,005) 0 Net income (unaudited) ............... 0.63 35,444 18,749 54,193 547 54,740 ------------ ------------ ------------ ------------ ------------ ------------ Partners' equity (deficit) - June 30, 2000 (unaudited) ......... $ 132.40 $ 7,503,640 $ 3,969,193 $ 11,472,833 $ (63,458) $ 11,409,375 ============ ============ ============ ============ ============ ============
SEE ACCOMPANYING NOTES 6 SIERRA PACIFIC DEVELOPMENT FUND II (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 - - -------------------------------------------------------------------------------- 2000 1999 (UNAUDITED) (UNAUDITED) ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ...................................... $ 54,740 $ 46,309 Adjustments to reconcile net income to cash used in operating activities: Depreciation and amortization ................. 440,882 434,505 Partnership's share of unconsolidated joint venture income ........................ (100,756) (89,769) Increase in rent receivable ................... (31,444) (28,359) Increase in interest receivable ............... (236,473) (203,876) Decrease in other receivables ................. 0 7,946 Increase in other assets ...................... (73,665) (35,967) Decrease in accrued and other liabilities ..... (499,945) (249,356) ----------- ----------- Net cash used in operating activities ......... (446,661) (118,567) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Loan to affiliate of the general partner ...... (570,317) 0 Payments for property additions ............... (90,471) (198,863) ----------- ----------- Net cash used in investing activities ......... (660,788) (198,863) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on notes payable ........... (23,997) (11,674) Contributions to unconsolidated joint venture . (23,000) 0 Distributions from unconsolidated joint venture 1,002,973 0 Borrowings from affiliate ..................... 0 306,184 ----------- ----------- Net cash provided by financing activities ..... 955,976 294,510 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS ......... (151,473) (22,920) CASH AND CASH EQUIVALENTS - Beginning of period ... 260,963 71,180 ----------- ----------- CASH AND CASH EQUIVALENTS - End of period ......... $ 109,490 $ 48,260 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for property taxes $ 223,178 $ 210,731 =========== =========== Cash paid during the period for interest ...... $ 223,270 $ 191,335 =========== =========== 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 June 30, 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 six months ended June 30, 2000 and 1999 are affiliate transactions as follows: June 30 ----------------------- 2000 1999 ----------------------- Management fees $ 62,065 $ 55,105 Administrative fees 143,040 163,402 Leasing fees 46,960 12,173 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 June 30, 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 six months ended June 30, 2000 and 1999 follows: 8 Sierra Pacific Development Fund II Notes to Financial Statements (Unaudited) Page two June 30 ------------------------ 2000 1999 ------------------------ Rental income $ 1,096,679 $1,059,081 Total revenues 1,220,016 1,170,121 Operating expenses 446,008 361,757 Share of unconsolidated joint venture income (loss) 81,931 (36,566) Net income 326,619 269,349 As of June 30, 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 six months ended June 30, 2000 and 1999 follows: SCP SVP SIIP -------------------------------------------------------- June 30 June 30 June 30 -------------------------------------------------------- 2000 1999 2000 1999 2000 1999 -------------------------------------------------------- Rental income $489,777 $448,066 $ 0 $ 0 $699,130 $554,777 Total revenues 489,777 448,066 0 11,907 710,335 554,777 Operating expenses 268,936 247,078 13,735 14,577 236,241 243,567 Extraordinary loss (46,020) 0 0 0 0 0 Net (loss) income (149,586) (50,053) (13,735) (2,670) 214,281 (92,300) 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. During the quarter ended March 31, 2000, an amount was transferred between the partners' equity accounts such that 99% of cumulative operating income, gains, losses, deductions and credits of the Partnership is allocated among the limited partners and 1% is allocated to the general partner. Management does not believe that the effect of this transfer is significant. 5. PENDING TRANSACTION CGS Real Estate Company, Inc. (CGS), an affiliate of the general partner, is in the process of developing a plan pursuant to which the properties owned by the Partnership would be combined with the properties of other real estate partnerships managed by CGS and its affiliates. These limited partnerships own office properties, industrial properties, shopping centers, and residential apartment properties. It is expected that the acquirer would in the future qualify as a real estate investment trust. Limited partners would receive shares of common stock in the acquirer, which would be listed on a national securities exchange or the NASDAQ national market system. 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: AUGUST 14, 2000 /s/ THOMAS N. THURBER --------------- ----------------------------------------------------- Thomas N. Thurber President and Director Date: AUGUST 14, 2000 /s/ G. ANTHONY EPPOLITO --------------- ----------------------------------------------- G. Anthony Eppolito Chief Accountant 11 EX-27 2 0002.txt
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIERRA PACIFIC DEVELOPMENT FUND II JUNE 30, 2000 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-2000 JUN-30-2000 109,490 0 647,399 0 0 543,193 14,315,835 3,991,052 18,735,126 952,632 6,373,119 0 0 0 11,409,375 18,735,126 1,266,942 1,503,886 0 885,750 440,882 0 223,270 54,740 0 54,740 0 0 0 54,740 .63 .63
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