<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, 1998 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,
Assets 1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 91,051 $ 148,131
Inventory 13,147 --
----------- -----------
104,198 148,131
Land held for development or sale
and related buildings and
equipment, net 1,026,435 911,197
----------- -----------
Total Assets $ 1,130,633 $ 1,059,328
=========== ===========
Liabilities and Partners' Capital
Current Liabilities:
Accounts payable and
accrued expenses $ 1,301,157 $ 1,171,439
Construction loans payable 112,000 --
Notes payable - Current
portion 58,237 63,750
----------- -----------
1,471,394 1,235,189
Notes payable - Non-Current
portion -- 32,708
----------- -----------
Total Liabilities 1,471,394 1,267,897
Partners' capital (340,761) (208,569)
----------- -----------
Total Liabilities and
Partners' Capital $ 1,130,633 $ 1,059,328
=========== ===========
</TABLE>
<PAGE> 3
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------- --------
Operating revenues:
<S> <C> <C>
Property sales $ 288,467 $ 146,068
Country Club revenue 227,136 189,123
Interest income 1,026 1,252
Other income and sale of timber - 1,452
----------- ----------
516,629 337,895
----------- ----------
Operating Costs and Expenses:
Direct costs of property sold $ 144,105 $ 12,699
Selling, general and administrative
expenses of Country Club 208,128 153,508
Selling, general and administrative
expenses 202,309 169,190
Depreciation 33,027 30,104
Interest 61,252 48,231
----------- ----------
648,821 413,732
----------- ----------
Net Income or (Loss) (132,192) (75,837)
Partners' capital at beginning
of period (208,569) 20,388
----------- ----------
Partners' capital at end of period $(340,761) $(55,449)
=========== ===========
Income or (Loss) per partnership unit
(1,828,248 units outstanding as of
June 30, 1998 and June 30, 1997.) $ (0.07) $ (0.04)
=========== ===========
</TABLE>
<PAGE> 4
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- ---------
Operating revenues:
<S> <C> <C>
Property sales $ 196,501 $ 84,780
Country Club revenue 136,153 104,424
Interest income 478 628
Other income and sale of timber - 346
----------- ---------
333,132 190,178
----------- ---------
Operating Costs and Expenses:
Direct costs of property sold $ 128,787 $ 7,378
Selling, general and administrative
expenses of Country Club 125,264 88,701
Selling, general and administrative
expenses 113,679 90,301
Depreciation 16,791 15,079
Interest 31,116 22,669
----------- ----------
415,637 224,128
----------- ----------
Net Income or (Loss) (82,505) (33,950)
Partners' capital at beginning
of period (258,256) (21,499)
----------- -----------
Partners' capital at end of period $(340,761) $(55,449)
=========== ===========
Income or (Loss) per partnership unit
(1,828,248 units outstanding as of
June 30, 1998 and June 30, 1997.) $ (0.04) $ (0.02)
=========== ===========
</TABLE>
<PAGE> 5
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Loss $(132,192) $ (75,837)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 33,027 30,104
Change in assets and liabilities:
(Increase) in inventory (13,147) --
Decrease in Land held for
development or sale 25,737 12,699
Increase in accounts payable
and accrued expenses 129,718 87,675
--------- ---------
Net cash used in operating activities 43,143 54,641
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $(174,002) $ (29,504)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt $ (38,221) $ (29,403)
Borrowing under line of credit 112,000 --
--------- ---------
Net cash provided by financing
activities 73,779 (29,403)
--------- ---------
NET INCREASE (DECREASE) IN CASH $ (57,080) $ (4,266)
CASH BALANCE - BEGINNING 148,131 133,919
--------- ---------
CASH BALANCE - ENDING $ 91,051 $ 129,653
========= =========
</TABLE>
<PAGE> 6
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Loss $ (82,505) $ (33,950)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 16,791 15,079
Change in assets and liabilities:
(Decrease) in inventory 3,425 --
Decrease in Land held for
development or sale 10,419 7,378
Increase in accounts payable
and accrued expenses 92,039 66,318
--------- ---------
Net cash used in operating activities 40,169 54,825
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $ (84,323) $ (24,047)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt $ (24,111) $ (14,702)
Borrowing under line of credit 53,515 --
--------- ---------
Net cash provided by financing
activities 29,404 (14,702)
--------- ---------
NET INCREASE (DECREASE) IN CASH $ (14,750) $ 16,076
CASH BALANCE - BEGINNING 105,801 113,577
--------- ---------
CASH BALANCE - ENDING $ 91,051 $ 129,653
========= =========
</TABLE>
<PAGE> 7
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1998
(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, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. 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, 1997 as filed with the Securities and
Exchange Commission on March 31, 1998.
Certain matters discussed herein are forward-looking statements about
the business, financial condition and prospects of the Partnership. The
actual results could differ materially from those indicated by such
forward-looking statements because of various risks and uncertainties.
Such risks and uncertainties may include, but are not limited to,
regional and national economic conditions, changes in consumer demand
for real estate, changes in interest rates and the availability of
credit to the Partnership and/or potential purchasers of real estate,
changes in state and federal regulations relating to environmental and
health matters, and, in connection with Fox Squirrel, weather conditions
and changes in employee relations which may adversely affect the ability
of the Partnership to maintain Fox Squirrel as desired. The Partnership
cannot control these risks and uncertainties and, in many cases, cannot
predict the risks and uncertainties that could cause its actual results
to differ materially from those indicated by the forward-looking
statements. The Partnership undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
The Partnership will adopt Statement of Financial Accounting Standards
No. 131 "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131") on December 31, 1998. SFAS No. 131
establishes standards for the way that public business enterprises
report information about operating segments in financial statements and
requires that those enterprises report selected information about
operating segments in its interim financial reports issued to
shareholders. It also establishes standards for related
<PAGE> 8
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1998
(Unaudited)
- -------------------------------------------------------------------
disclosures about products and services, geographic areas, and major
customers. The Partnership has yet to determine the impact, if any, of
adoption of the new pronouncement.
Revenue from real estate operations for the six months ended June 30,
1998 was $288,467, comprised of revenue from the sales of 25 individual
undeveloped lots for an aggregate of $157,467 and gross proceeds from
the sale of one "spec house" of $131,000. Revenue for the same period in
1997 was $146,068, generated from the sale of 26 individual undeveloped
lots. No "spec houses" were sold during the first six months of 1997.
Management attributes the increase in revenues largely to the sale of
the "spec house" during 1998 and 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 more lots situated on or near the golf
course during the first half of this year than in the same period last
year.
Revenue at Fox Squirrel Country Club ("Fox Squirrel") for the six months
ended June 30, 1998 and 1997 were $227,136 and $189,123, respectively.
Management attributes the increase in revenue largely to the
Partnership's assuming the interim operation of the Pro Shop and Dining
Service at Fox Squirrel in February 1998. Prior to such time, the Pro
Shop and Dining Service were operated by the Manager of Fox Squirrel for
his own account and not for the benefit of the Partnership. As stated in
the Partnership's Form 10-K for the fiscal year ended December 31, 1997,
the Partnership and the Manager concluded an agreement pursuant to
which, among other things, the Manager's employment agreement and
related agreement to operate the Dining Service were canceled. Apart
from the effect of revenue from the Pro Shop and Dining Service, revenue
at Fox Squirrel during the first half of 1998 was marginally higher than
in the same period in 1997, with higher revenue from dues offsetting
lower revenue from cart rentals resulting from a lower number of rounds
played during the first half of 1998 than in the same period one year
ago. Direct operating expenses at Fox Squirrel for the six months ended
June 30, 1998 and 1997 were $208,128 and $153,508, respectively.
Management attributes the increase largely to the Partnership's
operation of the Pro Shop and Dining Service at Fox Squirrel beginning
in February, 1998.
Direct cost of property sold during the six months ended June 30, 1998
and 1997 was $144,105 and $12,699, respectively. The increase is due to
the costs associated with the sale of one "spec house".
<PAGE> 9
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1998
(Unaudited)
- -------------------------------------------------------------------
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, 1998, $180,000 of the principal
has been repaid, leaving an outstanding balance of $20,000. Pursuant to
the terms of the promissory note, the Partnership will be charged
interest on the remaining balance at an annual rate equal to three
percent (3%) above the rate provided for in the promissory note, or
11.84375% as of June 1, 1998, the date on which the principal was due.
Management believes 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> 10
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1998
(Unaudited)
- -------------------------------------------------------------------
ITEM 6. Exhibits and Reports on Form 8-K
The Partnership filed no reports on Form 8-K for the quarter ended June
30, 1998.
<PAGE> 11
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1998
(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, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 91,051
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 13,147
<CURRENT-ASSETS> 104,198
<PP&E> 1,026,435
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,130,633
<CURRENT-LIABILITIES> 1,471,394
<BONDS> 0
0
0
<COMMON> (340,761)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,130,633
<SALES> 288,467
<TOTAL-REVENUES> 516,629
<CGS> 144,105
<TOTAL-COSTS> 587,569
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,252
<INCOME-PRETAX> (132,192)
<INCOME-TAX> 0
<INCOME-CONTINUING> (132,192)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (132,192)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
