-----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, FUOEsiK+2n0coEDLl0l3wraab8iQkfVkOb98v83aO0cxqr77iNsy7DBHcihX1d2g Sdgr+h5WMVFqoJ0/wvgizA== 0000912057-97-010442.txt : 19970328 0000912057-97-010442.hdr.sgml : 19970328 ACCESSION NUMBER: 0000912057-97-010442 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEYSTONE MORTGAGE FUND II CENTRAL INDEX KEY: 0000812084 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 954061580 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15537 FILM NUMBER: 97564887 BUSINESS ADDRESS: STREET 1: 11340 W OLYMPIC BLVD STE 300 CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 2134794121 MAIL ADDRESS: STREET 1: 11340 W OLYMPIC BLVD STREET 2: SUITE 300 CITY: LOS ANGELES STATE: CA ZIP: 90064 10-K 1 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER DECEMBER 31, 1996 0-15537 KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter.) CALIFORNIA 95-4061580 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 11340 W. OLYMPIC BOULEVARD, STE. 300 LOS ANGELES, CALIFORNIA 90064 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (310) 479-4121 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 INTEREST ------------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods 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 --- --- 1 PART I Item 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS The business of Keystone Mortgage Fund II, A California Limited Partnership (the "Partnership") was to make loans secured by deeds of trust on improved commercial and industrial real properties. As of December 31, 1996, the Partnership had one loan outstanding in the principal amount of $1,505,238. No loans were made during the year ended December 31, 1996. In 1990, the general partners informed the limited partners that all principal repayments received by the Fund will be distributed to the limited partners less required reserves. The limited partners were also informed that the Fund will no longer repurchase units or make new loans. 2 EMPLOYEES The Partnership does not have any employees. Services are performed for the Partnership by Keystone, for which it receives compensation as set forth in the Partnership Agreement. Item 2. PROPERTIES. The fund occupies space leased by Keystone Mortgage Company, and pays no rent. Item 3. LEGAL PROCEEDINGS. None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. None. Item 6. FINANCIAL INFORMATION. SELECTED FINANCIAL DATA The following table sets forth in tabular form, selected financial data for the fiscal years 1996, 1995, 1994, 1993, and 1992:
Years Ended December 31st 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Revenues $193,721 $284,771 $438,682 $556,401 $628,686 Net (loss) Income 135,681 (14,177) 318,290 473,843 537,114 Trust Deed Notes Receivable, Net 1,437,698 1,469,193 2,950,898 5,356,524 5,438,206 Total Assets 2,146,832 2,656,315 4,183,487 6,465,549 6,465,307 Net (loss) income attributable to limited partners per limited partnership unit $3.24 (0.34) 7.60 11.31 12.83
3 The following table set forth in tabular form, distributions and withdrawals for the fiscal years 1996, 1995, 1994, 1993, and 1992: Distributions 1996 1995 1994 1993 1992 - ------------- ---- ---- ---- ---- ---- and Withdrawals - --------------- General Partners None None None None $1,594 Limited Partners $655,818 $1,760,784 $2,598,372 $472,883 $1,043,556 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES: The portion of Partnership cash flow consisting of principal repayments is being distributed to the limited partners less required reserves for operating expenses. Excess cash flow is used to purchase short-term investments and these investments have maturities consistent with the timing of Partnership distributions. The Fund will no longer repurchase units. Interest income, net of Partnership expenses, is distributed to the Partners on a semi-annual basis. However, the General Partners have the right to retain up to 10% of Partnership cash flow for the purpose of maintaining an adequate liquidity. The Partnership's liquidity is primarily subject to the schedule of maturities of Partnership loans and the extent of liquidity can therefore be projected with reasonable accuracy. During 1996, the Partnership's working capital decreased $485,128. Management believes the Partnership has adequate working capital and cash reserves to carry on its business. On a short term basis, the Partnership is able to generate adequate amounts of cash to meet the Partnership's need for cash and contingencies through its receipt of monthly principal and interest payment on mortgage loans and, furthermore, as liquidity needs arise the Partnership may change the frequency of cash distributions to Limited Partners. 4 FINANCIAL CONDITION AND RESULTS OF OPERATIONS: As of December 31, 1996, the Partnership had one remaining loan outstanding in the amount of $1,505,238. Loan payments are current and the Partnership has not experienced any recent problems with delinquent payments in connection with this loan. Partnership revenue decreased 32.0% in 1996 over 1995 as compared to 35.1% decrease in 1995 over 1994. The decrease in revenue for each of these two years was primarily due to the decrease of interest income as a result of loan payoffs and the subsequent distributions of capital to Limited Partners. General and administrative expenses decreased $237,811 or 88.7% in 1996 over 1995 as compared to an increase of $254,113 in 1995 over 1994. The large increase in 1995 was due to a $249,000 charge for reimbursement of fund expenses incurred by the General Partner. Servicing related expenses decreased 10.1% in 1996 as compared to 1995, and decreased 27.3% in 1995 as compared to 1994. Net income increased $149,858 in 1996 over 1995, and decreased $332,467 in 1995 over 1994. The net income per Limited Partnership unit was determined by using a weighted average of the number of units outstanding during the applicable fiscal year. Net Income per Limited Partnership unit increased $3.58 in 1996 over 1995, and decreased $7.94 in 1995 over 1994. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Index to the financial statements of Keystone Mortgage Fund II is included in Item 14. 5 KEYSTONE MORTGAGE FUND II A CALIFORNIA LIMITED PARTNERSHIP Financial Statements December 31, 1996 and 1995 (With Independent Auditors' Report Thereon) 6 [LOGO] PEAT MARWICK LLP 725 South Figueroa Street Los Angeles, CA 90017 INDEPENDENT AUDITORS' REPORT The General Partners Keystone Mortgage Fund II, a California Limited Partnership: We have audited the accompanying balance sheets of Keystone Mortgage Fund II, a California Limited Partnership as of December 31, 1996 and 1995 and the related statements of operations, partners' capital and cash flows for each of the years in the three-year period ended December 31, 1996. These financial statements are the responsibility of the Fund'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. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Keystone Mortgage Fund II, a California Limited Partnership as of December 31, 1996 and 1995 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1996 in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP January 22, 1997 KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Balance Sheets December 31, 1996 and 1995
ASSETS 1996 1995 ---------------------- ---------------------- Current assets: Cash and cash equivalents $ 15,808 93,997 Short-term investments (market value of $684,005 in 1996 and $1,085,049 in 1995) 684,005 1,083,120 Interest receivable on trust deed note receivable 9,321 10,005 Current portion of trust deed note receivable (note 4) 39,732 36,218 ---------------------- ----------------------- Total current assets 1,397,966 1,223,340 ---------------------- ----------------------- Trust deed note receivable, net (note 4) $ 2,146,832 2,656,315 ---------------------- ----------------------- ---------------------- ----------------------- LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Accounts payable and other liabilities $ 1,295 641 Due to general partner (note 3) 250,000 249,000 ---------------------- ----------------------- Total current liabilities 260,295 249,641 ---------------------- ----------------------- Partners' capital: General partners (206,601) (207,958) Limited partners - authorized 41,459 units; outstanding 41,459 units) 2,093,138 2,614,632 ---------------------- ----------------------- Net partners' capital 1,886,537 2,406,674 ---------------------- ----------------------- $ 2,146,832 $ 2,656,315 ---------------------- ----------------------- ---------------------- -----------------------
See accompanying notes to financial statements. KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Statements of Operations Years ended December 31, 1996, 1995 and 1994
1996 1995 1994 Revenue: Interest on trust deed notes receivable $ 117,787 185,897 377,649 Investment income 75,934 98,874 61,033 ------------------ ----------------- ------------------ 193,721 284,771 438,682 ------------------ ----------------- ------------------ Expenses: Provision for losses on trust deed note receivable (note 4) -- -- 64,000 Servicing-related expenses (note 3) 27,664 30,761 42,318 General and administrative expenses (note 3) 30,376 268,187 14,074 ------------------ ----------------- ------------------ 58,040 298,948 120,392 ------------------ ----------------- ------------------ Net income (loss) $ 135,681 (14,177) 318,290 ------------------ ----------------- ------------------ ------------------ ----------------- ------------------ Weighted average number of limited partnership units outstanding 41,459 41,459 41,459 ------------------ ----------------- ------------------ ------------------ ----------------- ------------------ Net income (loss) attributable to limited partners per limited partnership unit $ 3.24 (0.34) 7.60 ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
See accompanying notes to financial statements. KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Statements of Partners' Capital Years ended December 31, 1996, 1995 and 1994
GENERAL LIMITED PARTNERS PARTNERS TOTAL ---------------- ---------------- ---------------- Balance at December 31, 1993 $ (210,999) 6,672,716 6,461,717 Net income for 1994 3,183 315,107 318,290 Net distributions - $62.67 per limited partnership unit -- (2,598,372) (2,598,372) ---------------- ---------------- ---------------- Balance at December 31, 1994 (207,816) 4,389,451 4,181,635 Net loss for 1995 (142) (14,035) (14,177) Net distributions - $42.47 per limited partnership unit -- (1,760,784) (1,760,784) ---------------- ---------------- ---------------- Balance at December 31, 1995 (207,958) 2,614,632 2,406,674 Net income for 1996 1,357 134,324 135,681 Net distributions - $15.82 per limited partnership unit -- (655,818) (655,818) ---------------- ---------------- ---------------- Balance at December 31, 1996 $ (206,601) 2,093,138 1,886,537 ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
See accompanying notes to financial statements. KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Statements of Cash Flows Years ended December 31, 1996, 1995 and 1994
GENERAL LIMITED PARTNERS PARTNERS TOTAL ---------------- ---------------- ---------------- Cash flows from operating activities: Net income (loss) $ 135,681 (14,177) 318,290 Amortization of net origination fees (1,700) (1,700) (2,310) Changes in operating assets and liabilities: Interest receivable on trust deeds 684 11,435 17,308 Accounts payable and other liabilities 654 (1,211) (1,980) Due to general partner 10,000 249,000 - Other assets -- -- 1,294 ---------------- ---------------- ---------------- Net cash provided by operating activities 145,319 243,347 331,602 ---------------- ---------------- ---------------- Cash flows from investing activities: Collection of trust deed notes receivable 33,195 1,483,373 2,407,936 Purchase of short-term investments (1,100,099) (4,700,155) (3,400,965) Proceeds from maturities of short-term investments 1,499,214 4,621,000 2,397,000 ---------------- ---------------- ---------------- Net cash provided by investing activities 432,310 1,404,218 1,403,971 ---------------- ---------------- ---------------- Cash flows used in financing activities - distributions to partners (655,818) (1,760,784) (2,598,372) ---------------- ---------------- ---------------- Decrease in cash and cash equivalents (78,189) (113,219) (861,799) Cash and cash equivalents at beginning of year 93,997 207,216 1,069,015 ---------------- ---------------- ---------------- Cash and cash equivalents at end of year $ 15,808 93,997 207,216 ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
See accompanying notes to financial statements. KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements December 31, 1996 and 1995 (1) ORGANIZATION AND PARTNERSHIP AGREEMENT Keystone Mortgage Fund II, a California Limited Partnership (Fund II) was formed on May 7, 1986 for the purpose of investing in short- to intermediate-term loans secured by deeds of trust on commercial and industrial real property. Profits and losses are generally allocated 1% to the general partners and 99% to the limited partners. To the extent property is obtained as satisfaction of loan obligation, any net gain resulting from the sale of such property, determined using cost before any previous write-downs, would be allocated 24% to the general partners and 76% to the limited partners. Distributions are allocated in the same manner as profits and losses except that any distribution of principal repayments of trust deed notes receivable are made 100% to the limited partners. Effective January 1, 1992, the partnership agreement was amended to allow for distributions to the partners on a semiannual basis rather than on a quarterly basis. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS Fund II considers all highly liquid investments with a maturity of three months or less when purchased to be equivalent to cash. SHORT-TERM INVESTMENTS Fund II invests in various bank notes and U.S. Government securities with original maturities between three months and six months. Fund II accounts for short-term investments under Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). In accordance with SFAS 115, Fund II classifies its investment in debt securities as held-to-maturity securities and such short-term investments are stated at cost as the Fund intends to hold these securities to maturity. At December 31, 1996 and 1995, short-term investments consisted of U.S. Government agency notes with remaining maturities of less than five months. At December 31, 1996 and 1995, these securities had an unrealized gain of $0 and $1,929, respectively, and there were not unrealized losses. USES OF ESTIMATES Management of Fund II has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from these estimates. TRUST DEED NOTE RECEIVABLE The trust deed note receivable is accounted for under the provisions of Statement of Financial Accounting Standards No. 114 (SFAS 114), "Accounting by Creditors for Impairment of a Loan," and Statement of Financial Accounting Standards No. 118 (SFAS 118), "Accounting by Creditors for Impairments of a Loan - Income Recognition and Disclosures." Under SFAS 114, a loan is impaired 12 when it is "probable" that a creditor will be unable to collect all amounts due (i.e., both principal and interest) according to the contractual terms of the loan agreement. The measurement of impairment may be based on (1) the present value of the expected future cash flows of the impaired loan discounted at the loan's original effective interest rate, (2) the observable market price of the impaired loan or (3) the fair value of the collateral of a collateral-dependent loan. The amount by which the recorded investment of the loan exceeds the measure of the impaired loan is recognized by recording a valuation allowance with a corresponding charge to provision for loan losses. ALLOWANCE FOR LOSSES ON TRUST DEED NOTE RECEIVABLE An analysis of the collectibility of the trust deed note receivable is performed by management on a regular basis. Management considers such factors as current economic conditions and interest rates, the borrower's ability to repay and repayment performance, probability of foreclosure and estimated collateral values in determining any allowance need. Management has provided a valuation allowance of $64,000 as of December 31, 1996 and 1995. ORIGINATION FEES Fees from the origination of trust deed notes receivable and certain direct origination costs are recognized over the contractual life of such trust deed notes receivable using methods which generally produce a level-yield on the unpaid loan balance. INTEREST INCOME ON TRUST DEED NOTES RECEIVABLE Interest income on trust deed notes receivable is accrued as it is earned. Interest receivable which is deemed uncollectible is excluded from interest income. Trust deed notes receivable are placed on nonaccrual status after being delinquent 90 days. At December 31, 1996 and 1995, there were no trust deed notes receivable on nonaccural status. INCOME TAXES No provision has been made for income taxes in the accompanying financial statements, inasmuch as the liability for taxes arising from the transactions of Fund II is the responsibility of the partners. INCOME AND DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT Net income and distributions per limited partnership unit are based on the net income and distributions attributable to the limited partners and the weighted average number of limited partnership units outstanding during each period. (3) RELATED PARTY TRANSACTIONS The general partners of Fund II are Keystone Mortgage Company (managing general partner), John P. Sullivan and Christopher E. Turner. Messrs. Sullivan and Turner are officers/directors of Keystone Mortgage Company. As compensation for servicing trust deed notes receivable, Fund II pays an annual fee equal to 1/2 of 1% of the average, outstanding trust deed notes receivable principal balances, computed as of the end of each month, to Keystone Mortgage Company. Servicing-related expenses include approximately $8,000 in 1996, $10,000 in 1995 and $20,000 in 1994 of servicing feeds paid to Keystone Mortgage Company. 13 KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements, Continued Prior to 1995, Keystone Mortgage Company did not pass through to Fund II expenses that Keystone Mortgage Company incurred related to operation of Fund II as allowed by Fund II's partnership agreement. During 1995, Keystone Mortgage Company made a decision to charge Fund II for reimbursement of such expenses incurred by Keystone Mortgage Company from inception of Fund II and, accordingly, requested payment from Fund II. The expense reimbursement totals $249,000 and is included in general and administrative expenses for the year ended December 31, 1995 in the accompanying statement of operations and in due to general partner in the accompanying balance sheets as of December 31, 1996 and 1995. Expense reimbursements totaling $10,000 relating to 1996 are included in general and administrative expenses for the year ended December 31, 1996 in the accompanying statement of operations and in due to general partner in the accompanying balance sheet as of December 31, 1996. (4) TRUST DEED NOTE RECEIVABLE Trust deed note receivable consists of the following at December 31: MONTHLY PAYMENT, INCLUDING INTEREST 1996 1995 ---------- ---------- --------- First trust deed on industrial building located in Van Nuys, California, interest rate, adjusted every six months at 2.65% plus 11th District monthly weighted average cost of funds, due February 1, 1999 $ 12,529 1,505,238 1,538,433 ---------- ---------- Less: Current portion 39,732 36,218 Net deferred origination fees 3,540 5,240 Allowance for loss 64,000 64,000 --------- --------- Net noncurrent trust deeds note receivable $1,397,966 1,432,975 --------- --------- --------- --------- The estimated fair value of the trust deed note receivable at December 31, 1996 and 1995 is equivalent to the carrying value. Minimum future payments of principal at December 31, 1996 are as follows: 1997 $ 39,732 1998 44,639 1999 and thereafter $1,420,867 ---------- $1,505,238 ---------- ---------- 14 KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements, Continued (5) RECONCILIATION OF NET INCOME BETWEEN FINANCIAL STATEMENTS AND PARTNERSHIP TAX RETURN (UNAUDITED) The difference between the net income for financial reporting purposes and the net income for Federal income tax purposes per the partnership tax return is summarized as follows: 1996 1995 1994 -------- -------- -------- Net income (loss) for financial reporting purposes $135,681 (14,177) 318,290 Interest revenue on mortgage loans previously recognized for tax purposes (1,700) (1,700) (2,310) Provisions for losses on trust deed notes receivable -- -- 64,000 Other, net -- (23) 518 -------- -------- -------- Net income (loss) for Federal income tax purposes $133,981 (15,900) 380,498 -------- -------- -------- -------- -------- -------- 15 Item 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVES OFFICERS. The affairs of the Partnership are managed by the Managing General Partner, Keystone Mortgage Company, and the Individual General Partners, John P. Sullivan and Christopher E. Turner. KEYSTONE MORTGAGE COMPANY Keystone Mortgage Company, A California Corporation ("Keystone"), has been engaged in the mortgage banking business since 1957. Keystone is a member of the Mortgage Bankers Association of America, the California Mortgage Bankers Association and the Southern California Mortgage Bankers Association. Keystone originates and services real estate loans on behalf of more than ten national life insurance companies, a savings bank, a commercial bank and various trust funds. In addition, Keystone and certain officers have been, and continue to be joint venture partners in the development of real estate with several of the life insurance companies for which Keystone acts as a mortgage loan correspondent. Keystone currently services a portfolio of loans in principal amount in excess of $350,000,000 and has originated loans in original principal amount in excess of $1,000,000,000 since its inception in 1957. Other activities of Keystone include property management and the sale and leasing real estate. Keystone is a licensed real estate broker in the State of California. Keystone Mortgage Company is also the Managing General Partner of Keystone Mortgage Fund, a California limited partnership. DIRECTORS AND OFFICERS The directors and executive officers of Keystone Mortgage Company are: NAME AGE TITLE DATE OF - ---- --- ----- APPT. ------- John P. Sullivan 71 President and Chairman of the Board 1957 Christopher E. Turner 63 Executive Vice President and Director 1972 Ron N. Buchanan 50 Vice President 1978 Sandra B. Coopersmith 58 Vice President 1975 Melinda F. Love 42 Vice President 1984 Norma Foster 57 Vice President 1986 John G. Sullivan 35 Vice President 1992 Mark G. Sullivan 40 Secretary 1984 JOHN P. SULLIVAN has been in mortgage banking in California since 1953, and since 1957, he has served as president of Keystone. He was a founding 16 member of American Real Estate Association, and has been a director of the Southern California Mortgage Bankers Association, a member of the International Council of Shopping Centers, and a member of the Executive Committee of the Southern California Economic and Job Development Council of the Los Angeles Chamber of Commerce. He has served as a director of a savings and loan association, a lecturer at Stanford University and the School of Mortgage Banking at Michigan State, and a lecturer on the subject of shopping center financing at the University of California at Los Angeles. CHRISTOPHER E. TURNER has been active in mortgage banking in California since 1963, and since 1972, he has served as executive vice president of Keystone. Prior to joining Keystone, Mr. Turner was employed at the University of California at Los Angeles in the real estate research program where he worked for three years as a graduate research economist after receiving his MBA degree. He lectured on the subject of real estate appraising and investments at the University of Southern California from 1967 to 1974 and lectured on the subject of industrial real estate at the University of California at Los Angeles in 1974 and 1975 in the real estate extension program. Mr. Turner has also lectured at the Schools of Mortgage Banking at Stanford University and Houston University. He is a member of the American Industrial Real Estate Association and the Urban Land Institute, the National Mortgage Bankers Association and the American Society of Real Estate Counselors. He has also served on the research committee of the National Mortgage Bankers Association and on the Board of Governors of the American Industrial Real Estate Association. RON N. BUCHANAN joined Keystone in 1972 and currently serves as vice president. Prior to his association with Keystone, he was employed by Security Pacific National Bank in the construction loan department. He is an active member in the American Industrial Real Estate Association and has served on its Board of Directors. Mr. Buchanan has been a lecturer in real estate finance in the University of California at Los Angeles extension program since 1976. SANDRA B. COOPERSMITH has been with Keystone since 1967. Her present responsibilities include management of the loan closing and loan servicing departments. For a year prior to her employment at Keystone, she was the corporate treasurer of a Los Angeles-based mortgage banking company. She has also been a manager of the real estate division of a Los Angeles-based financial institution, overseeing field inspectors, loan officers, credit checkers and loan processors. She is a past president and life member of the Los Angeles Escrow Association. MELINDA F. LOVE has been with Keystone since 1978 and was appointed vice president in 1984. Prior to joining Keystone, she was a mortgage analyst in the real estate department of Farmers New World Life Insurance Company. She is an active member in the American Industrial Real Estate Association, of which she has served as affiliate representative on the Board of Directors; she is also a member of the Southern California Mortgage Bankers Association of which she was the 1988 co-chairman of the Income Property Roundtable Committee, the 1989 assistant treasurer, 1990 treasurer and serves as a 17 Director for 1991. NORMA FOSTER joined Keystone in 1980 and was appointed vice president in late 1986. Ms. Foster currently serves as Business Manager for Keystone and in addition to her administrative and management responsibilities handles limited partnership accounting. Since 1962, Ms. Foster has been involved in international banking, accounting and corporate administration. Ms. Foster holds an MBA in management from University of California at Los Angeles. JOHN G. SULLIVAN has been with Keystone since 1984 and was appointed assistant vice president in 1987. He is an active member of the International Council of Shopping Centers, American Industrial Real Estate Association, and the Ventura county Economic Development Association. He holds a bachelors degree in business economics from the University of California at Santa Barbara. John G. Sullivan is not related to either John P. Sullivan, an Individual General Partner, or Mark G. Sullivan. MARK G. SULLIVAN has been the secretary of Keystone since early 1984. Mr. Sullivan has experience in the analysis and development of commercial real estate projects. He holds a bachelor degree in science and geology from the University of California at Santa Barbara. He is the son of John P. Sullivan. No director of executive officer of Keystone, within the preceding five year period, has filed a petition under Federal Bankruptcy laws, or has been convicted in a criminal proceeding or is named subject of a pending criminal proceeding. Item 11. EXECUTIVE COMPENSATION. Compensation for services rendered by the General Partners on behalf of the Partnership for the fiscal years 1994, 1995 and 1996 is as follows:
Compensation Paid Name of Individual or Accrued for Cash or Group Service Rendered in 1994 1995 1996 Bonus - -------------------------------------------------------------------------------- Keystone Mortgage Co. Loan Servicing Fees $20,000 $10,000 $8,000 None John P. Sullivan Management Fees None None None None Christopher E. Turner Management Fees None None None None
In addition, the General Partners of the Partnership are entitled to receive certain cast distributions and allocations of income or loss. No such distributions or allocations were made for fiscal years 1994, 1995 or 1996. Prior to 1995, Keystone did not pass expenses that Keystone Mortgage Company incurred relating to the operation of the Partnership as allowed by the Partnership agreement. During 1995 Keystone made a decision to charge the 18 Partnership for such expenses from the inception of the Partnership. The expense reimbursement totals $249,000 and such amount was recorded as general and administrative expense during 1995. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. No one holder of Units owns more than five percent of the total Units. (b) SECURITY OWNERSHIP OF MANAGEMENT. The Individual General Partners are also officers or directors of Keystone. None of the General Partners hold Units in the Partnership. (c) CHANGES IN CONTROL. A majority in interest of the Limited Partners may at any time, by vote or written consent, remove any General Partner, with or without cause. Upon such removal, the General Partner so removed shall have no further liability as a General Partner of the Partnership and the Partnership Agreement shall be amended to state that the General Partner so removed is no longer a General Partner of the Partnership. After said removal, the interest of the General Partner in the Partnership shall automatically convert to a limited partnership interest and the General Partner shall have, with respect thereto, all rights and powers of a Limited Partner. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The Partnership is strictly prohibited from making any loan or participating in any other transaction involving the General Partners, or any of them, their affiliates, or any officer or director or employee of any those entities under any circumstances. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K. 19 (a) (1) The following financial statements of Keystone Mortgage Fund II are in Item 8: Report of Independent Auditors.........................................7 Balance Sheets as of December 31, 1996 and 1995........................8 Statements of Operation for the Years Ended December 31, 1996, 1995 and 1994...................................9 Statement of Partners' Capital for the Years Ended December 31, 1996, 1995 and 1994.....................10 Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994...........................11 Notes to Financial Statements.........................................12 (a) All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instruction or are inapplicable, and therefore have been omitted. (b) No reports on Form 8-K were filed by the registrant during the last quarter of the period covered by this report. 20 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. KEYSTONE MORTGAGE FUND II, A CALIFORNIA LIMITED PARTNERSHIP Date: March , 1997 /s/ --------------------------------- Keystone Mortgage Company By: John P. Sullivan, President Date: March , 1997 /s/ --------------------------------- John P. Sullivan General Partner Date: March , 1997 /s/ --------------------------------- Christopher E. Turner General Partner 21 EX-27 2 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1996 DEC-31-1996 15,808 684,005 1,447,019 0 0 748,866 0 0 2,146,832 260,295 0 0 0 0 1,886,537 2,146,832 0 193,721 0 0 58,040 0 0 135,681 0 135,681 0 0 0 135,681 0 0
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