<PAGE> 1
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1997 Commission File #0-9305
REEVES TELECOM LIMITED PARTNERSHIP
(name changed from Reeves Telecom Associates)
- -------------------------------------------------------------------------------
South Carolina 57-0700063
- ------------------------ ----------------------------
(State of Incorporation) (I.R.S. Employer I.D. Number)
c/o Grace Property Management Inc.
P. O. Box 163
55 Brookville Road
Glen Head, New York 11545
- --------------------------------------------------------------------------------
(Address of General Partner) (Zip Code)
Registrants telephone number (516) 686-2201
----------------
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 ( )
<PAGE> 2
PART 1. FINANCIAL INFORMATION
REEVES TELECOM LIMITED PARTNERSHIP
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Assets
------
Current Assets:
Cash and cash equivalents $ 129,653 $ 133,919
Land held for development or sale
and related buildings and
equipment, net 1,024,379 1,037,678
---------- ----------
Total Assets $1,154,032 $1,171,597
========== ==========
Liabilities and Partners' Capital
- ---------------------------------
Current Liabilities:
Accounts payable and
accrued expenses $ 988,612 $ 900,937
Notes payable - Current
portion 96,631 96,631
---------- ----------
1,085,243 997,568
Notes payable - Non-Current
portion 124,238 153,641
---------- ----------
Total Liabilities 1,209,481 1,151,209
Partners' capital (55,449) 20,388
---------- ----------
Total Liabilities and
Partners' Capital $1,154,032 $1,171,597
========== ==========
</TABLE>
<PAGE> 3
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Operating revenues:
Land sales $146,068 $266,638
Fox Squirrel income 189,123 193,022
Interest income 1,252 996
Other income and sale of timber 1,452 7,240
-------- --------
337,895 467,896
-------- --------
Operating Costs and Expenses:
Administrative 370,929 400,610
Direct cost of land sold 12,699 144,206
Depreciation 30,104 28,534
-------- --------
413,732 573,350
-------- --------
Net Income or (Loss) (75,837) (105,454)
Partners' capital at beginning
of period 20,388 280,832
-------- --------
Partners' capital at end of
period $(55,449) $175,378
======== ========
Income or (Loss) per partnership unit
(1,828,248 units outstanding as of
June 30, 1997 and 1,828,258 units
as of June 30, 1996.) $ (0.04) $ (0.06)
======== ========
</TABLE>
<PAGE> 4
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
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<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Operating revenues:
Land sales $ 84,780 $124,481
Fox Squirrel income 104,424 108,130
Interest income 628 750
Other income and sale of timber 346 2,178
-------- --------
190,178 235,539
-------- --------
Operating Costs and Expenses:
Administrative 201,671 215,990
Direct cost of land sold 7,378 78,742
Depreciation 15,079 14,350
-------- --------
224,128 309,082
-------- --------
Net Income or (Loss) (33,950) (73,543)
Partners' capital at beginning
of period (21,499) 248,921
-------- --------
Partners' capital at end of
period $(55,449) $175,378
======== ========
Income or (Loss) per partnership unit
(1,828,248 units outstanding as of
June 30, 1997 and 1,828,258 units
as of June 30, 1996.) $ (0.02) $ (0.04)
======== ========
</TABLE>
<PAGE> 5
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
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<TABLE>
<CAPTION>
1997 1996
-------- ---------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS:
Net Income or (Loss) $(75,837) $(105,454)
Deduct Items Not Using Cash:
Depreciation 30,104 28,534
-------- ---------
TOTAL (45,733) (76,920)
-------- ---------
CHANGES IN OPERATING ASSETS AND LIABILITIES
INCREASING OR (DECREASING) CASH:
(Increase) in other assets -- (25,417)
Decrease in Land held for
development or sale 12,699 144,206
Increase or (decrease) in accounts
payable and accrued expenses 87,675 84,915
(Decrease) in notes payable (29,403) (32,660)
-------- ---------
70,971 171,044
-------- ---------
NET CASH PROVIDED OR (USED) BY
OPERATIONS $ 25,238 $ 94,124
CASH (USED) BY INVESTING ACTIVITIES:
Additions to Fixed Assets (29,504) (94,443)
CASH FROM FINANCING ACTIVITIES:
Equipment note payable -- 82,213
-------- ---------
NET INCREASE OR (DECREASE) IN CASH $ (4,266) $ 81,894
======== =========
CASH BALANCE - BEGINNING $133,919 $ 73,860
NET INCREASE OR (DECREASE) IN
CASH, AS ABOVE (4,266) 81,894
-------- ---------
CASH BALANCE - ENDING $129,653 $ 155,754
======== =========
</TABLE>
<PAGE> 6
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS:
Net Income or (Loss) $(33,950) $(73,543)
Deduct Items Not Using Cash:
Depreciation 15,079 14,350
-------- --------
TOTAL (18,871) (59,193)
-------- --------
CHANGES IN OPERATING ASSETS AND LIABILITIES
INCREASING OR (DECREASING) CASH:
(Increase) in other assets -- (7,418)
Decrease in Land held for
development or sale 7,378 78,742
Increase or (decrease) in accounts
payable and accrued expenses 66,318 86,425
(Decrease) in notes payable (14,702) (30,288)
-------- --------
58,994 127,461
-------- --------
NET CASH PROVIDED OR (USED) BY
OPERATIONS $ 40,123 $ 68,268
CASH (USED) BY INVESTING ACTIVITIES:
Additions to Fixed Assets (24,047) (5,806)
-------- --------
NET INCREASE OR (DECREASE) IN CASH $ 16,076 $ 62,462
======== ========
CASH BALANCE - BEGINNING $113,577 $ 93,292
NET INCREASE OR (DECREASE) IN
CASH, AS ABOVE 16,076 62,462
-------- --------
CASH BALANCE - ENDING $129,653 $155,754
======== ========
</TABLE>
<PAGE> 7
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
ITEM 2. Management Discussion and Analysis of Financial Condition and
Results of Operations.
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30,
1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further
information, refer to the consolidated financial statements and
notes thereto included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1996 as filed with the
Securities and Exchange Commission on March 7, 1997.
The Partnership will adopt Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" ("SFAS No. 128") on December
31, 1997. SFAS No. 128 requires the Partnership to change its method
of computing, presenting and disclosing earnings per share
information. Upon adoption, all prior period data presented will be
restated to conform to the provisions of SFAS No. 128. Adoption of
this standard is not expected to have a material impact on the
Partnership's financial statements.
In June, 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 130 ("SFAS
No. 130"), "Reporting Comprehensive Income." The statement
establishes requirements for the disclosure and presentation of
comprehensive income and its components in full sets of financial
statements. Comprehensive income is defined as transactions and
other occurrences which are the result of nonowner changes in
equity. Nonowner equity changes, such as unrealized gains and losses
on debt securities for example, will be accumulated with net income
in determining comprehensive income. This statement will not impact
the historical financial results of the Partnership's operations.
This statement is effective for years beginning after December 15,
1997 and requires reclassification of financial statements for
earlier periods provided for comparative purposes is required.
<PAGE> 8
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
The FASB also issued Statement of Financial Accounting Standards No.
131 ("SFAS No. 131"), "Disclosures about Segments of an Enterprise
and Related Information" during June 1997. This statement provides
standards for reporting information on the operating segments of
public businesses in their annual and interim reports to
shareholders. SFAS No. 131 requires that selected financial
information be provided for segments meeting specific criteria. The
statement will not have an impact on the results of operations of
the Partnership but will expand present disclosures. This statement
becomes effective for all periods beginning after December 15, 1997.
Currently, management has not yet determined the core segments for
SFAS No. 131 reporting purposes.
For the six months ended June 30, 1997, the Partnership sold 26 lots
and generated revenue from land sales of $146,068. For the same
period in 1996, the Partnership sold 28 lots and generated revenue
from land sales of $266,638, which includes the sale of a 430-acre
tract for $85,000. Excluding such tract, revenue from land sales for
the first half of 1996 was $181,638. Management attributes the
decline in revenue to the relative mix of lots sold as to location.
Individual lots adjacent to or near the golf course, for example,
generally command a higher sales price than lots which are not so
situated. The Partnership sold fewer lots situated on or near the
golf course during the first half of this year than in the same
period last year.
Revenues at Fox Squirrel Country Club ("Fox Squirrel") for the six
months ended June 30, 1997 and 1996 were $189,123 and $193,022,
respectively, reflecting a decline in revenues from membership dues
of approximately 9% despite an increase in average dues per member.
Management attributes the decline principally to a slightly smaller
club membership. Direct operating expenses at Fox Squirrel for the
six months ended June 30, 1997 and 1996 were $153,508 and $177,256
respectively. The principal changes in individual expense items were
in equipment rental and maintenance expense. Equipment rental
expense was higher in 1997 than in 1996 since certain new equipment
was leased to replace old equipment owned by Fox Squirrel.
Maintenance expense was lower this year than last since Fox Squirrel
incurred numerous expenses relating to deferred maintenance of the
golf course during 1996 which were not incurred in 1997.
<PAGE> 9
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Revenue from tree cutting through June 30, 1997 was $692, compared
to revenue of $7,223 in the same period in 1996. As stated in recent
financial reports, Management has viewed timber cutting as a source
of temporary revenue with limited prospects in the future due to,
among other factors, the size and number of trees which may be
logged, the demand for wood pulp, and market prices in general. As
such, Management expects that, if and when realized, revenue from
tree cutting will be highly variable from quarter to quarter.
Direct cost of land sold during the six months ended June 30, 1997
and 1996 was $12,699 and $144,206, respectively. The decrease is due
principally to the sale of the approximately 430 acre tract of land
during the first quarter of 1996 as well as to a revision in the
formula for calculating the direct cost of land sold.
To provide funds for working capital and other purposes, on June 1,
1995 the partnership borrowed $200,000 from the president of the
General Partner, payable in full on June 1, 1998. The promissory
note issued bears interest at a rate equal to 6% above 12-month
LIBOR, requires interest to be paid quarterly commencing September
1, 1995, and allows for prepayment without penalty. The promissory
note is secured by a mortgage on Fox Squirrel. As of June 30, 1997,
$110,000 of the principal has been repaid, leaving an outstanding
balance of $90,000.
In April, 1997, the partnership began the installation of a
multi-user septic system which, when completed, will allow for
development of an eight-unit commercial district on approximately
two acres of land owned by the Partnership along State Route 87.
Management expects that the multi-user system will cost
approximately $45,000 and will be fully operational in August, 1997.
The Partnership intends to sell the lots within the commercial
district to one or more third parties for development but, depending
on market factors and terms that may be agreed upon, the Partnership
may itself develop one or more of such lots and lease the
storefront(s) to third parties.
<PAGE> 10
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
The improvements discussed above are representative of the
Partnership's continuing efforts to improve the development at
Boiling Spring Lakes so that the Partnership will eventually be able
to consistently generate revenues in excess of operating expenses
and capital expenditures. Management believes, however, that the
variable nature of the Partnership's revenues and its current
liquidity position raise doubts about the Partnership's ability to
fund its operations and currently planned capital programs without
obtaining additional financing. Management is not certain that
additional outside financing is available and, if available, that
such financing may be obtained on terms Management believes to be
acceptable.
<PAGE> 11
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
ITEM 6. Exhibits and Reports on Form 8-K
The Partnership filed a report on Form 8-K on April 30, 1997
relating to the change in auditors.
<PAGE> 12
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
SIGNATURE
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, thereto duly authorized.
REEVES TELECOM LIMITED PARTNERSHIP
By: Grace Property Management Inc.
General Partner
By: /s/ John S. Grace
---------------------------------------
John S. Grace
President
Dated: August 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 129653
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 129653
<PP&E> 1024379
<DEPRECIATION> 0
<TOTAL-ASSETS> 1154032
<CURRENT-LIABILITIES> 1085243
<BONDS> 124238
0
0
<COMMON> (55449)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1154032
<SALES> 146068
<TOTAL-REVENUES> 337895
<CGS> 12699
<TOTAL-COSTS> 401033
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (75837)
<INCOME-TAX> 0
<INCOME-CONTINUING> (75837)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75837)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
