<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 June 30, 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
(Registrant's 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>
June 30, December 31,
1999 1998
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 134,867 $ 69,864
Inventory 4,062 5,759
Prepaid and other current assets -- 6,409
----------- -----------
138,929 82,032
Land held for development or sale
and related buildings and
equipment, net 982,716 1,025,256
----------- -----------
Total Assets $ 1,121,645 $ 1,107,288
=========== ===========
Liabilities and Partners' Capital
Current Liabilities:
Accounts payable and
accrued expenses $ 1,622,956 $ 1,494,147
Notes payable - Current
portion 144,536 139,055
----------- -----------
1,767,492 1,633,202
Notes payable - Non-Current
portion 14,273 18,570
----------- -----------
Total Liabilities 1,781,765 1,651,772
Partners' capital (660,120) (544,484)
----------- -----------
Total Liabilities and
Partners' Capital $ 1,121,645 $ 1,107,288
=========== ===========
</TABLE>
<PAGE> 3
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Operating revenues:
Property sales $ 364,982 $ 288,467
Country Club revenue 204,596 227,136
Interest income 664 1,026
Other income and sale of timber 57 --
----------- -----------
570,299 516,629
----------- -----------
Operating Costs and Expenses:
Direct costs of property sold 140,412 144,105
Selling, general and administrative
expenses of Country Club 191,474 208,128
Selling, general and administrative
expenses 241,845 202,309
Depreciation 35,041 33,027
Interest 77,163 61,252
----------- -----------
685,935 648,821
----------- -----------
Net Income or (Loss) (115,636) (132,192)
Partners' capital at beginning
of period (544,484) (208,569)
----------- -----------
Partners' capital at end of period $ (660,120) $ (340,761)
=========== ===========
Income or (Loss) per partnership unit $ ( 0.06) $ (0.07)
=========== ===========
Weighted average partnership units
issued and outstanding 1,828,148 1,828,248
</TABLE>
<PAGE> 4
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Operating revenues:
Property sales $ 218,204 $ 196,501
Country Club revenue 112,693 136,153
Interest income 508 478
Other income and sale of timber 26 --
----------- -----------
331,431 333,132
----------- -----------
Operating Costs and Expenses:
Direct costs of property sold 127,227 128,787
Selling, general and administrative
expenses of Country Club 93,875 125,264
Selling, general and administrative
expenses 121,893 113,679
Depreciation 17,448 16,791
Interest 39,636 31,116
----------- -----------
400,079 415,637
----------- -----------
Net Income or (Loss) (68,648) (82,505)
Partners' capital at beginning
of period (591,472) (258,256)
----------- -----------
Partners' capital at end of period $ (660,120) $ (340,761)
=========== ===========
Income or (Loss) per partnership unit $ (0.04) $ (0.04)
=========== ===========
Weighted average partnership units
issued and outstanding 1,828,148 1,828,248
</TABLE>
<PAGE> 5
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(115,636) $(132,192)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 35,041 33,027
Change in assets and liabilities:
Decrease (Increase) in inventory 1,697 (13,147)
Decrease in other current assets 6,409 --
Decrease in Land held for
development or sale 20,271 25,737
Increase in accounts payable
and accrued expenses 128,809 129,718
--------- ---------
Net cash used in operating activities 76,591 43,143
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $(132,401) $(174,002)
Disposition of developed property 119,629 --
--------- ---------
Net cash used in investing activities (12,772) (174,002)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable $ (6,816) $ (38,221)
Borrowing (Repayment) under line of credit (112,000) 112,000
Increase in mortgage payable 120,000 --
--------- ---------
Net cash provided by financing
activities 1,184 73,779
--------- ---------
NET INCREASE (DECREASE) IN CASH $ 65,003 $ (57,080)
CASH BALANCE - BEGINNING 69,864 148,131
--------- ---------
CASH BALANCE - ENDING $ 134,867 $ 91,051
========= =========
</TABLE>
<PAGE> 6
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (68,648) $ (82,505)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 17,448 16,791
Change in assets and liabilities:
Decrease (Increase) in inventory (829) 3,425
Decrease in other current assets -- --
Decrease in Land held for
development or sale 7,086 10,419
Increase in accounts payable
and accrued expenses 82,360 92,039
--------- ---------
Net cash used in operating activities 37,417 40,169
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $(124,357) $ (84,323)
Disposition of developed property 119,629 --
--------- ---------
Net cash used in investing activities (4,728) (84,323)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable $ (3,444) $ (24,111)
Borrowing (Repayment) under line of credit (112,000) 53,515
Increase in mortgage payable 120,000 --
--------- ---------
Net cash provided by financing
activities 4,556 29,404
--------- ---------
NET INCREASE (DECREASE) IN CASH $ 37,245 $ (14,750)
CASH BALANCE - BEGINNING 97,622 105,801
--------- ---------
CASH BALANCE - ENDING $ 134,867 $ 91,051
========= =========
</TABLE>
<PAGE> 7
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 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 six
month period ended June 30, 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 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 six months ended June 30, 1999 and 1998, revenue from property
sales was $364,982 and $288,467, respectively. The Partnership sold 38
small undeveloped lots during the first half of 1999, as well as 2
commercial lots and one small commercial lot. By comparison, during the
first six months of 1998, the Partnership sold 25 small undeveloped
lots and no commercial lots. In addition, the Partnership sold one
developed lot during the first half of 1999 for $138,000, compared to
one such lot sold during the same period last year for $131,000. As
used above, a "developed" lot is one on which the Partnership has built
a house with the intent of selling both the house and the lot to
generate a profit exceeding that which the Partnership would earn had
it sold only the undeveloped lot. The Partnership generally has had not
more than two
<PAGE> 8
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1999
(Unaudited)
developed lots available for sale at any time. Management attributes
the increase in revenues to the sale of the commercial lots as well as
to the greater number of undeveloped lots sold during 1999 than last
year, which, in turn, is due principally to a stronger regional real
estate market than in the same period of 1998.
Country club revenue for the first half of 1999 was $204,596, compared
to $227,136 for the same period last year. Greens fees and cart rental
revenue combined fell approximately 5% from last year, reflecting a
decline in non-member rounds played. Management attributes the decline
principally to the unusually warm Spring in the Northeast, which
reduced the number of golfers from the Northeast visiting the Myrtle
Beach, SC - Wilmington, NC corridor. Revenue from dues fell
approximately 18%, reflecting, in part, a slightly reduced membership
and, in part, the timing of collections. Revenue from the Pro Shop
declined approximately 50% from last year. Management expected the
decline following the discontinuance of most "large ticket" golf
merchandise, such as golf bags and golf clubs.
Direct cost of property sold for the six months ended June 30, 1999 and
1998 was $140,412 and $144,106 respectively.
Selling, general and administrative expenses were $241,845 and $202,309
for the first six months of 1999 and 1998, respectively. The increase
is due principally to higher costs associated with litigation during
1999 than during 1998.
Selling, general and administrative expenses at Fox Squirrel Country
Club were $191,474 for the six months ending June 30, 1999, compared to
$208,128 for the same period in 1998. Decrease in wages and payroll
taxes were partially offset by increases in expenses relating to
equipment rental and maintenance.
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. At June 30, 1999,
interest totaling $1,077.87 remained accrued and unpaid, and the
outstanding principal was $10,000.00. All of such amounts were paid in
July 1999.
Although Management continues to seek a buyer for all or a substantial
portion of the Partnership's assets, in view of the failure of past
efforts to effect such a bulk sale, there can be no assurance that
Management's efforts in this regard can be achieved on terms favorable
to the Partnership. Accordingly, the Partnership's real estate
activities remain focused on selling individual lots and smaller
parcels of real estate.
<PAGE> 9
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 1999
(Unaudited)
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 June
30, 1999.
<PAGE> 10
REEVES TELECOM LIMITED PARTNERSHIP
JUNE 30, 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: August 13, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 134,867
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 4,062
<CURRENT-ASSETS> 138,929
<PP&E> 982,716
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,121,645
<CURRENT-LIABILITIES> 1,767,492
<BONDS> 14,273
0
0
<COMMON> (660,120)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,121,645
<SALES> 364,982
<TOTAL-REVENUES> 570,299
<CGS> 140,412
<TOTAL-COSTS> 685,935
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (115,636)
<INCOME-TAX> 0
<INCOME-CONTINUING> (115,636)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (115,636)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
