<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
Commission File #0-9305
REEVES TELECOM LIMITED PARTNERSHIP
(name changed from Reeves Telecom Associates)
---------------------------------------------------
(Exact name of registrant as specified in its charter)
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)
(516) 686-2201
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(Registrants telephone number including area code)
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>
March 31, December 31,
1999 1998
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
Assets
------
Current Assets:
Cash and cash equivalents $ 97,622 $ 69,864
Inventory 3,233 5,759
Prepaid and other current assets -- 6,409
----------- -----------
100,855 82,032
Land held for development or sale
and related buildings and
equipment, net 1,002,522 1,025,256
----------- -----------
Total Assets $ 1,103,377 $ 1,107,288
=========== ===========
Liabilities and Partners' Capital
- ---------------------------------
Current Liabilities:
Accounts payable and
accrued expenses $ 1,540,596 $ 1,494,147
Notes payable - Current
portion 136,229 139,055
----------- -----------
1,676,825 1,633,202
Notes payable - Non-Current
portion 18,024 18,570
----------- -----------
Total Liabilities 1,694,849 1,651,772
Partners' capital (591,472) (544,484)
----------- -----------
Total Liabilities and
Partners' Capital $ 1,103,377 $ 1,107,288
=========== ===========
</TABLE>
<PAGE> 3
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Operating revenues:
Property sales $ 146,778 $ 91,966
Country Club revenue 91,903 99,659
Interest income 156 548
Other income and sale of timber 31 --
----------- -----------
238,868 192,173
----------- -----------
Operating Costs and Expenses:
Direct costs of property sold 13,185 15,318
Selling, general and administrative
expenses of Country Club 97,599 92,567
Selling, general and administrative
expenses 119,952 87,603
Depreciation 17,593 16,236
Interest 37,527 30,136
----------- -----------
285,856 241,860
----------- -----------
Net Income or (Loss) ( 46,988) ( 49,687)
Partners' capital at beginning
of period ( 544,484) ( 208,569)
----------- -----------
Partners' capital at end of period $( 591,472) $( 258,256)
=========== ===========
Income or (Loss) per partnership unit $ ( 0.03) $ ( 0.03)
=========== ===========
Weighted average partnership units
issued and outstanding 1,828,148 1,828,248
</TABLE>
<PAGE> 4
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (46,988) $ (49,687)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 17,593 16,236
Change in assets and liabilities:
Decrease (Increase) in inventory 2,526 (16,572)
Decrease in other current assets 6,409 --
Decrease in Land held for
development or sale 17,185 15,318
Increase in accounts payable
and accrued expenses 46,449 37,679
---------- ----------
Net cash used in operating activities 43,174 2,974
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $ (12,044) $ (31,194)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease in notes payable) $ (3,372) $ (14,110)
---------- ----------
Net cash provided by financing
activities (3,372) (14,110)
---------- ----------
NET INCREASE (DECREASE) IN CASH $ 27,758 $ (42,330)
CASH BALANCE - BEGINNING 69,864 148,131
---------- ----------
CASH BALANCE - ENDING $ 97,622 $ 105,801
========== ==========
</TABLE>
<PAGE> 5
REEVES TELECOM LIMITED PARTNERSHIP
MARCH 31, 1999
(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 three month period ended
March 31, 1999 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999. 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, 1998 as filed
with the Securities and Exchange Commission on March 30, 1999.
Certain amounts in the income statement for the interim period
ended March 31, 1998 have been restated to conform with the
presentation of the results for the interim period ended March
31, 1999. There is no change in the net loss recorded for the
interim period ended March 31, 1998 as a result of such
restatements.
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.
For the three months ended March 31, 1999 and 1998, revenue from
land sales was $146,778 and $91,966, respectively. The
Partnership sold 19 small undeveloped lots during the first
quarter of 1999, compared to 17 such lots sold during the first
quarter of 1998. In addition, the Partnership sold 2 commercial
lots and 1 small commercial lot during the latest quarter,
whereas no such sales were recorded during the same
<PAGE> 6
REEVES TELECOM LIMITED PARTNERSHIP
MARCH 31, 1999
(Unaudited)
period last year. Management attributes the increase in revenue
to the sale of the commercial lots during the first quarter of
1999.
Revenue at Fox Squirrel Country Club during the first three
months of 1999 was $91,903 compared to $99,659 for the prior year
period. Dining Service revenue during 1999 was approximately 35%
higher than last year. Management attributes the increase
principally to the inclusion of a full three months of operations
during the first quarter of 1999, whereas last year's first
quarter revenue reflected approximately two months of operations,
due to the fact that the Partnership took over operating the
Dining Service in February 1998. Revenue from greens fees and
cart rental combined was 10% lower than last year, reflecting a
10% decline in non-member rounds. Dues collected during 1999 were
lower than in 1998, reflecting principally a slightly smaller
club membership. Revenues from the Pro Shop fell 65% compared to
the prior year period. The decline, which was expected by
Management, is due principally to a change in the mix of
merchandise sold by the Pro Shop. During the first quarter of
last year, merchandise sold included golf shoes, golf bags and
golf clubs acquired from the former manager of Fox Squirrel
following the termination of the manager's employment agreement
in February 1998. At that time, the continued sale of such
relatively high-priced items was discontinued by the Pro Shop, a
result of which is lower revenues from the sale of merchandise as
well as lower cost of goods sold in 1999 compared to 1998.
Direct cost of land sold was $13,185 and $15,318 for the periods
ending March 31, 1999 and March 31, 1998, respectively. The
decrease is due principally to the Partnership's carrying value
of the small individual lots sold, which differs depending upon,
among other factors, suitability for septic system installation.
The Partnership sold 11 suitable lots during the first quarter of
1999 and 15 suitable lots in the same period one year ago.
Selling, general and administrative expenses of Fox Squirrel were
$97,599 and $92,567 for the periods ending March 31, 1999 and
March 31, 1998, respectively. Management attributes the increase
substantially to the cost of operating the Dining Service and Pro
Shop for a full three months during 1999, compared to
approximately two months during the same period last year.
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 Country
Club. As of March 31, 1999, $190,000 of the principal has been
repaid, leaving an outstanding balance of $10,000. Pursuant to
the terms of the promissory note, the Partnership
<PAGE> 7
REEVES TELECOM LIMITED PARTNERSHIP
MARCH 31, 1999
(Unaudited)
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 14.0984% as of January 1, 1999. At March
31, 1999, $704.02 of interest due under the note was accrued and
unpaid, and $10,000 of principal remained outstanding.
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.
ITEM 6. Exhibits and Reports on Form 8-K
The Partnership filed no reports on Form 8-K for the quarter ended March
31, 1999.
<PAGE> 8
REEVES TELECOM LIMITED PARTNERSHIP
MARCH 31, 1999
(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: May 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 97,622
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,233
<CURRENT-ASSETS> 100,855
<PP&E> 1,002,522
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,103,377
<CURRENT-LIABILITIES> 1,676,825
<BONDS> 18,024
0
0
<COMMON> (591,472)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,103,377
<SALES> 146,778
<TOTAL-REVENUES> 238,868
<CGS> 13,185
<TOTAL-COSTS> 285,856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (46,988)
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,988)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,988)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
