<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 September 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>
September 30, December 31,
1997 1996
(UNAUDITED) (AUDITED)
------------- ------------
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 176,340 $ 133,919
Land held for development or sale
and related buildings and
equipment, net 1,014,444 1,037,678
----------- ----------
Total Assets $ 1,190,784 $1,171,597
=========== ==========
Liabilities and Partners' Capital
Current Liabilities:
Accounts payable and
accrued expenses $ 1,066,971 $ 900,937
Notes payable - Current
portion 96,631 96,631
----------- ----------
1,163,602 997,568
Notes payable - Non-Current
portion 110,445 153,641
----------- ----------
Total Liabilities 1,274,047 1,151,209
Partners' capital (83,263) 20,388
----------- ----------
Total Liabilities and
Partners' Capital $ 1,190,784 $1,171,597
=========== ==========
</TABLE>
<PAGE> 3
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Operating revenues:
Land sales $ 250,606 $ 353,345
Fox Squirrel income 292,496 275,626
Interest income 2,298 2,310
Other income and sale of timber 1,452 11,902
--------- ---------
546,852 643,183
--------- ---------
Operating Costs and Expenses:
Administrative 583,061 591,283
Direct cost of land sold 21,775 191,168
Depreciation 45,667 43,781
--------- ---------
650,503 826,232
--------- ---------
Net Income or (Loss) (103,651) (183,049)
Partners' capital at beginning
of period 20,388 280,832
--------- ---------
Partners' capital at end of
period $ (83,263) $ 97,783
========= =========
Income or (Loss) per partnership unit
(1,828,248 units outstanding as of
September 30, 1997 and 1,828,258
units as of September 30, 1996.) $ (0.06) $ (0.10)
========= =========
</TABLE>
<PAGE> 4
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Operating revenues:
Land sales $ 104,538 $ 86,707
Fox Squirrel income 103,373 82,604
Interest income 1,046 1,314
Other income and sale of timber -- 4,662
--------- ---------
208,957 175,287
--------- ---------
Operating Costs and Expenses:
Administrative 212,132 190,673
Direct cost of land sold 9,076 46,962
Depreciation 15,563 15,247
--------- ---------
236,771 252,882
--------- ---------
Net Income or (Loss) (27,814) (77,595)
Partners' capital at beginning
of period (55,449) 175,378
--------- ---------
Partners' capital at end of
period $ (83,263) $ 97,783
========= =========
Income or (Loss) per partnership unit
(1,828,248 units outstanding as of
September 1997 and 1,828,258
units as of September 30, 1996.) $ (0.02) $ (0.04)
========= =========
</TABLE>
<PAGE> 5
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS:
Net Income or (Loss) $(103,651) $(183,049)
Deduct Items Not Using Cash:
Depreciation 45,667 43,781
--------- ---------
TOTAL (57,984) (139,268)
--------- ---------
CHANGES IN OPERATING ASSETS AND LIABILITIES
INCREASING OR (DECREASING) CASH:
(Increase) in other assets -- (22,835)
Decrease in Land held for
development or sale 21,775 191,168
Increase or (decrease) in accounts
payable and accrued expenses 166,034 141,163
(Decrease) in notes payable (43,196) (42,593)
--------- ---------
144,613 266,903
--------- ---------
NET CASH PROVIDED OR (USED) BY
OPERATIONS 86,629 127,635
CASH (USED) BY INVESTING ACTIVITIES:
Additions to Fixed Assets (44,208) (130,599)
CASH FROM FINANCING ACTIVITIES:
Equipment note payable -- 82,213
--------- ---------
NET INCREASE OR (DECREASE) IN CASH $ 42,421 $ 79,249
========= =========
CASH BALANCE - BEGINNING $ 133,919 $ 73,860
NET INCREASE OR (DECREASE) IN
CASH, AS ABOVE 42,421 79,249
--------- ---------
CASH BALANCE - ENDING $ 176,340 $ 153,109
========= =========
</TABLE>
<PAGE> 6
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS:
Net Income or (Loss) $ (27,814) $ (77,595)
Deduct Items Not Using Cash:
Depreciation 15,563 15,247
--------- ---------
TOTAL (12,251) (62,348)
--------- ---------
CHANGES IN OPERATING ASSETS AND LIABILITIES
INCREASING OR (DECREASING) CASH:
(Increase) in other assets -- 2,582
Decrease in Land held for
development or sale 9,076 46,962
Increase or (decrease) in accounts
payable and accrued expenses 78,359 56,248
(Decrease) in notes payable (13,793) (9,933)
--------- ---------
73,642 95,859
--------- ---------
NET CASH PROVIDED OR (USED) BY
OPERATIONS 61,391 33,511
CASH (USED) BY INVESTING ACTIVITIES:
Additions to Fixed Assets (14,704) (36,156)
--------- ---------
NET INCREASE OR (DECREASE) IN CASH $ 46,687 $ (2,645)
========= =========
CASH BALANCE - BEGINNING $ 129,653 $ 155,754
NET INCREASE OR (DECREASE) IN
CASH, AS ABOVE 46,687 (2,645)
--------- ---------
CASH BALANCE - ENDING $ 176,340 $ 153,109
========= =========
</TABLE>
<PAGE> 7
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 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 nine month period ended September
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 filled 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.
<PAGE> 8
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 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 nine months ended September 30, 1997, the Partnership
sold 45 lots and generated revenue from land sales of
$250,606. For the same period in 1996, the Partnership sold
38 lots and generated revenue from land sales of $353,345,
which includes the sale of a 430-acre tract for $85,000.
Excluding such tract, revenue from land sales for the first
nine months of 1996 was $268,345. 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 three quarters of this year than in the same period
last year.
Revenues at Fox Squirrel Country Club ("Fox Squirrel") for the
nine months ended September 30, 1997 and 1996 were $292,496
and $275,626, respectively. Management attributes the increase
principally to more greens fees resulting from a higher number
of rounds played in 1997 than in 1996. Direct operating
expenses at Fox Squirrel for the nine months ended September
30, 1997 and 1996 were $241,011 and $255,323, 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. Wages were also lower in 1997 than in
1996 due in part to timing differences in payroll and in part
to manpower requirements in 1996 in connection with deferred
maintenance efforts.
<PAGE> 9
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 30, 1997
(Unaudited)
-------------------------------------------------------------------
Revenue from tree cutting through September 30, 1997 was $692,
compared to revenue of $11,881 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 nine months ended
September 30, 1997 and 1996 was $21,775 and $191,168,
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 September 30, 1997, $120,000
of the principal has been repaid, leaving an outstanding
balance of $80,000.
<PAGE> 10
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 30, 1997
(Unaudited)
- -------------------------------------------------------------------------------
In September 1997, the partnership completed the installation
of a multi-user septic system which will allow for
development of an eight-unit commercial district on
approximately two acres of land owned by the Partnership
along State Route 87. 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.
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
SEPTEMBER 30, 1997
(Unaudited)
- -------------------------------------------------------------------------------
ITEM 6. Exhibits and Reports on Form 8-K
The Partnership filed no reports on Form 8-K for the quarter
ended September 30, 1997.
<PAGE> 12
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 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: November 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 176,340
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 176,340
<PP&E> 1,014,444
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,190,784
<CURRENT-LIABILITIES> 1,163,602
<BONDS> 110,445
0
0
<COMMON> (83,263)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,190,784
<SALES> 250,606
<TOTAL-REVENUES> 546,852
<CGS> 21,775
<TOTAL-COSTS> 650,503
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (103,651)
<INCOME-TAX> 0
<INCOME-CONTINUING> (103,651)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (103,651)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
