-----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, FvvwsN+aYias1qdKpbZqYd1uR0xL+x//S0Kuyu+f4WxruC5eQ3tk9QdPxbQ6aR8M 6GyGSWZHl962Syl/vb227w== 0000890566-99-001094.txt : 19990811 0000890566-99-001094.hdr.sgml : 19990811 ACCESSION NUMBER: 0000890566-99-001094 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIERRA PACIFIC DEVELOPMENT FUND III CENTRAL INDEX KEY: 0000747680 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330043953 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14276 FILM NUMBER: 99683024 BUSINESS ADDRESS: STREET 1: 5850 SAN FELIPE SUITE 120 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7139776171 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 June 30, 1999 ---------------------------------------------------- Commission file number 0-14276 ---------------------------------------------------- SIERRA PACIFIC DEVELOPMENT FUND III (A LIMITED PARTNERSHIP) State of California 33-0043953 - --------------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 5850 San Felipe, Suite 450 Houston, Texas 77057 - --------------------------------------- --------------------------------------- (Address of principal executive offices) (Zip Code) 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 ------ Consolidated Balance Sheets - June 30, 1999 and December 31, 1998 5 Consolidated Statements of Operations - For the Six Months Ended June 30, 1999 and 1998 and For the Three Months Ended June 30, 1999 and 1998 6 Consolidated Statements of Changes in Partners' Equity - From June 5, 1984 (inception of the Partnership) to December 31, 1998 and for the Six Months Ended June 30, 1999 7 Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 1999 and 1998 8 Notes to Consolidated Financial Statements 9 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 the Partnership's Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q. The Partnership currently owns a 66.68% interest in the Sierra Vista Partnership which operated the Sierra Vista property (the "Property"). The Property was sold in October 1997. The Partnership's remaining real estate investment is an 11.88% minority interest in Sorrento I Partners ("SIP"), which operates the Sierra Sorrento I property. (b) RESULTS OF OPERATIONS The Partnership recorded other income of $11,907 during the first quarter of 1999 as a result of a refund associated with prior year operations. No rental income has been generated since the sale of the Property in 1997. 2 Operating expenses for the six months and three months ended June 30, 1999 consisted primarily of accounting and auditing costs. Operating expenses for the six months ended June 30, 1999 decreased by $14,138, in comparison to the same period in the prior year, primarily due to professional fees incurred in 1998. The Partnership's share of loss from investment in SIP was $682 for the six months ended June 30, 1999 compared to $485 for the same period in the prior year. (c) LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1999, the Partnership is in an illiquid position with cash of $665 and current liabilities of $2,400. The Partnership's primary capital requirements will be for the continued development and operation of the Sorrento I property. It is anticipated that these requirements will be funded from the operations of the property and the Partnership's joint venture partner, SMMP. As required, SMMP either advances or contributes cash to meet the Partnership's requirements. SMMP has adequate resources to make the necessary advances during the foreseeable future. (d) YEAR 2000 COMPLIANCE The Year 2000 Compliance issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Partnership's computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. As a result, many companies' software and computer systems may need to be upgraded or replaced in order to comply with Year 2000 requirements. The total cost to the Partnership of activities associated with Year 2000 Compliance is not anticipated to be material to its financial position or results of operations in any given year. In January 1999, the Partnership began utilizing a new software program to maintain books and records. The new software program is Year 2000 compliant. The total amount of potential risk that would be reasonably likely to result from Year 2000 failures cannot presently be estimated. In the event the Partnership does not properly identify Year 2000 issues in a timely manner, there can be no assurance that Year 2000 issues will not materially affect the Partnership's results. 3 The Partnership's contingency plan should systems fail due to the Year 2000 date change is to temporarily convert to a manual system. The Partnership believes it could temporarily operate on a manual system without adversely impacting operations. The preceding Year 2000 discussion contains various forward-looking statements which represent the Partnership's beliefs or expectations regarding future events. All forward-looking statements involve a number of risks and uncertainties that could cause the actual results to differ materially from projected results. 4 SIERRA PACIFIC DEVELOPMENT FUND III (A LIMITED PARTNERSHIP) CONSOLIDATED BALANCE SHEETS JUNE 30, 1999 AND DECEMBER 31, 1998 - --------------------------------------------------------------------------------
JUNE 30, 1999 DECEMBER 31, 1998 ------------- ----------------- ASSETS Cash and cash equivalents ...................... $ 665 $ 935 ------------- ----------------- Total Assets ................................... $ 665 $ 935 ============= ================= LIABILITIES AND PARTNERS' EQUITY Due to affiliate ............................... $ 2,400 $ 0 Investment in unconsolidated joint venture ................................ 333,678 332,996 ------------- ----------------- Total Liabilities .............................. 336,078 332,996 ------------- ----------------- Minority interest in consolidated joint venture ................................ 4,091 4,981 ------------- ----------------- Partners' equity (deficit): General Partner .............................. (339,504) (337,042) Limited Partners: 60,000 units authorized, 36,521 issued and outstanding .............. 0 0 ------------- ----------------- Total Partners' equity (deficit) ............... (339,504) (337,042) ------------- ----------------- Total Liabilities and Partners' equity ......... $ 665 $ 935 ============= =================
UNAUDITED SEE ACCOMPANYING NOTES 5 SIERRA PACIFIC DEVELOPMENT FUND III (A LIMITED PARTNERSHIP) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 AND FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998 - --------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, -------------------------- -------------------------- 1999 1998 1999 1998 -------- -------- -------- -------- REVENUES: Other income ............................................. $ 11,907 $ 93,656 $ 0 $ 93,656 -------- -------- -------- -------- Total revenues ...................................... 11,907 93,656 0 93,656 -------- -------- -------- -------- EXPENSES: Operating expenses ....................................... 14,577 28,715 780 7,863 -------- -------- -------- -------- Total expenses ...................................... 14,577 28,715 780 7,863 -------- -------- -------- -------- (LOSS) INCOME BEFORE PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE (LOSS) INCOME ........................................... (2,670) 64,941 (780) 85,793 -------- -------- -------- -------- PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE (LOSS) INCOME ............................. (682) (485) (115) 818 -------- -------- -------- -------- (LOSS) INCOME BEFORE MINORITY INTEREST'S SHARE OF CONSOLIDATED JOINT VENTURE LOSS (INCOME) ........................................... (3,352) 64,456 (895) 86,611 -------- -------- -------- -------- MINORITY INTEREST'S SHARE OF CONSOLIDATED JOINT VENTURE LOSS (INCOME) ............................................ 890 (22,411) 260 (29,607) -------- -------- -------- -------- NET (LOSS) INCOME .......................................... $ (2,462) $ 42,045 $ (635) $ 57,004 ======== ======== ======== ========
UNAUDITED SEE ACCOMPANYING NOTES 6 SIERRA PACIFIC DEVELOPMENT FUND III (A LIMITED PARTNERSHIP) CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT) FROM JUNE 5, 1984 (INCEPTION OF PARTNERSHIP) TO DECEMBER 31, 1998 AND FOR THE SIX MONTHS ENDED JUNE 30, 1999 - --------------------------------------------------------------------------------
LIMITED PARTNERS TOTAL ------------------------- GENERAL PARTNERS' PER UNIT TOTAL PARTNER EQUITY -------- ----------- ----------- ----------- Proceeds from sale of partnership units ............................................... $ 250.00 $ 9,222,500 -- $ 9,222,500 Underwriting commissions and other organization expenses ................................. (37.00) (1,364,985) -- (1,364,985) Repurchase of 369 partnership units ............................... (0.18) (85,005) -- (85,005) Cumulative net income (loss) (to December 31, 1998) .......................................... (201.63) (7,363,663) $ (315,520) (7,679,183) Cumulative distributions (to December 31, 1998) .......................................... (11.19) (408,847) (21,522) (430,369) -------- ----------- ----------- ----------- Partners' equity (deficit) - January 1, 1999 ...................... 0 0 (337,042) (337,042) Net loss .......................................................... 0 0 (2,462) (2,462) -------- ----------- ----------- ----------- Partners' equity (deficit) - June 30, 1999 ........................ $ 0 $ 0 $ (339,504) $ (339,504) ======== =========== =========== ===========
UNAUDITED SEE ACCOMPANYING NOTES 7 SIERRA PACIFIC DEVELOPMENT FUND III (A LIMITED PARTNERSHIP) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 - -------------------------------------------------------------------------------- 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income .................................... $ (2,462) $ 42,045 Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities: Partnership's share of unconsolidated joint venture loss ............................... 682 485 Minority interest's share of consolidated joint venture (loss) income ...................... (890) 22,411 Decrease in other receivables ...................... 0 6,137 Decrease in accrued and other liabilities .......... 0 (4,660) -------- -------- Net cash (used in) provided by operating activities (2,670) 66,418 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Loan from affiliate ................................ 2,400 0 Loan to affiliate .................................. 0 (78,533) -------- -------- Net cash provided by (used in) financing activities 2,400 (78,533) -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS .............. (270) (12,115) CASH AND CASH EQUIVALENTS Beginning of period ................................. 935 14,602 -------- -------- CASH AND CASH EQUIVALENTS End of period ....................................... $ 665 $ 2,487 ======== ======== UNAUDITED SEE ACCOMPANYING NOTES 8 SIERRA PACIFIC DEVELOPMENT FUND III (A LIMITED PARTNERSHIP) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------------------------------------ 1. ORGANIZATION In April 1993, the Partnership created a general partnership (Sorrento I Partners) with Sierra Mira Mesa Partners ("SMMP") to facilitate cash contributions by SMMP for the continued development and operation of the Sierra Sorrento I property. In February 1994, the Partnership formed a joint venture with SMMP known as Sierra Vista Partners to facilitate cash contributions by SMMP for the continued development and operation of the Sierra Vista property. The Partnership Agreements of Sorrento I Partners and Sierra Vista Partners (the "Agreements") were amended effective January 1, 1995 to consider both contributions and distributions when calculating each partners' percentage interest at January 1 of each year as called for by the Agreements. Accordingly, on January 1, 1999, the Partnership's interest in Sorrento I Partners was increased from 11.41% to 11.88% and the Partnerships's interest in Sierra Vista Partners was increased from 65.49% to 66.68% to reflect 1998 contributions and distributions. In October 1997, the Sierra Vista property was sold for $5,630,000. The Partnership received cash proceeds of $2,141,000 from the sale and the purchaser assumed the Partnership's debt on the property. In accordance with the joint venture agreement, these proceeds were distributed to SMMP. Under the terms of the agreement, SMMP receives preferential cash distributions of available "Distributable Funds" from the sale of the property to the extent of its capital contributions. SMMP had made net contributions of $3,335,000 to the Partnership through the sale date. The Partnership's remaining real estate investment is an 11.88% minority interest in the Sierra Sorrento I property. Because the Partnership owns less than 50% of this property, it records its interest in Sorrento I Partners as an investment in an unconsolidated joint venture using the equity method of accounting. Thus, the Sierra Sorrento I property is not reflected as an asset on the Partnership's balance sheet nor is the debt on this property reflected in the balance sheet. 2. BASIS OF FINANCIAL STATEMENTS The accompanying unaudited consolidated condensed financial statements include the accounts of the Partnership and Sierra Vista Partners, a majority owned joint venture at June 30, 1999. All significant intercompany balances and transactions have been eliminated in consolidation. UNAUDITED 9 Sierra Pacific Development Fund III Notes to Consolidated Financial Statements Page two In the opinion of the Partnership's management, these unaudited financial statements reflect all adjustments which are necessary for a fair presentation of its financial position at June 30, 1999 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, 1998. 3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE Sorrento I Partners ("SIP") was formed on April 1, 1993 between the Partnership and Sierra Mira Mesa Partners, an affiliate, to develop and operate the real property known as Sierra Sorrento I (the "Property"), an industrial building located in San Diego, California. At June 30, 1999, the Partnership has a 11.88% equity interest with its contribution of Sierra Sorrento I and the related debt. This investment is stated at cost and is adjusted for the Partnership's share in earnings or losses and cash contributions to or distributions from the joint venture (equity method). Summarized income statement information for SIP for the six months ended June 30, 1999 and 1998 follows: JUNE 30 --------------------------- 1999 1998 -------- -------- Rental income ...................... $141,818 $140,505 Total revenue ...................... 141,818 140,505 Operating expenses ................. 55,969 51,658 Net loss ........................... 5,737 4,254 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, 36,521. UNAUDITED 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 None. 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 III a Limited Partnership S-P PROPERTIES, INC. General Partner Date: AUGUST 4, 1999 /S/ THOMAS N. THURBER -------------- ---------------------------- Thomas N. Thurber President and Director Date: AUGUST 4, 1999 /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 III JUNE 30, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1999 JUN-30-1999 665 0 0 0 0 665 0 0 665 2,400 0 0 0 0 (339,504) 665 0 11,907 0 14,577 0 0 0 (2,462) 0 (2,462) 0 0 0 (2,462) 0 0
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