<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 September 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
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(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>
September 30, December 31,
1999 1998
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 136,601 $ 69,864
Inventory 4,092 5,759
Prepaid and other current assets 2,900 6,409
----------- -----------
143,593 82,032
Land held for development or sale
and related buildings and
equipment, net 965,348 1,025,256
----------- -----------
Total Assets $ 1,108,941 $ 1,107,288
=========== ===========
Liabilities and Partners' Capital
Current Liabilities:
Accounts payable and
accrued expenses $ 1,723,780 $ 1,494,147
Notes payable - Current
portion 134,849 139,055
----------- -----------
1,858,629 1,633,202
Notes payable - Non-Current
portion 10,442 18,570
----------- -----------
Total Liabilities 1,869,071 1,651,772
Partners' capital (760,130) (544,484)
----------- -----------
Total Liabilities and
Partners' Capital $ 1,108,941 $ 1,107,288
=========== ===========
</TABLE>
<PAGE> 3
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Operating revenues:
Property sales $ 463,539 $ 370,276
Country Club revenue 285,179 344,041
Interest income 1,548 1,532
Other income and sale of timber 1,323 --
----------- -----------
751,589 715,849
----------- -----------
Operating Costs and Expenses:
Direct costs of property sold 145,934 151,048
Selling, general and administrative
expenses of Country Club 291,610 330,320
Selling, general and administrative
expenses 359,168 301,802
Depreciation 51,957 46,500
Interest 118,566 94,534
----------- -----------
967,235 924,204
----------- -----------
Net Income or (Loss) (215,646) (208,355)
Partners' capital at beginning
of period (544,484) (208,569)
----------- -----------
Partners' capital at end of period $ (760,130) $ (416,924)
=========== ===========
Income or (Loss) per partnership unit $ (0.12) $ (0.11)
=========== ===========
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 SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Operating revenues:
Property sales $ 98,557 $ 81,809
Country Club revenue 80,583 116,905
Interest income 884 506
Other income and sale of timber 1,266 --
----------- -----------
181,290 199,220
----------- -----------
Operating Costs and Expenses:
Direct costs of property sold 5,522 6,943
Selling, general and administrative
expenses of Country Club 100,136 122,192
Selling, general and administrative
expenses 117,323 99,493
Depreciation 16,916 13,473
Interest 41,403 33,282
----------- -----------
281,300 275,383
----------- -----------
Net Income or (Loss) (100,010) (76,163)
Partners' capital at beginning
of period (660,120) (340,761)
----------- -----------
Partners' capital at end of period $ (760,130) $ (416,924)
=========== ===========
Income or (Loss) per partnership unit $ (0.05) $ (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 NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(215,646) $(208,355)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 51,957 46,500
Change in assets and liabilities:
Decrease (Increase) in inventory 1,667 (11,223)
Decrease in other current assets 3,509 --
Decrease in land held for
development or sale 145,934 39,048
Increase in accounts payable
and accrued expenses 229,633 219,393
--------- ---------
Net cash provided by operating activities 217,054 85,363
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $(137,983) $(217,520)
--------- ---------
Net cash used in investing activities (137,983) (217,520)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable $ (20,334) $ (52,331)
Borrowing (Repayment) under line of credit (112,000) 112,000
Increase in mortgage payable 120,000 --
--------- ---------
Net cash provided (used) by financing
activities (12,334) 59,669
--------- ---------
NET INCREASE (DECREASE) IN CASH $ 66,737 $ (72,488)
CASH BALANCE - BEGINNING 69,864 148,131
--------- ---------
CASH BALANCE - ENDING $ 136,601 $ 75,643
========= =========
</TABLE>
<PAGE> 6
REEVES TELECOM LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(100,010) $ (76,163)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 16,916 13,473
Change in assets and liabilities:
Decrease (Increase) in inventory (30) 1,924
Increase in other current assets (2,900) --
Decrease in land held for
development or sale 5,522 13,311
Increase in accounts payable
and accrued expenses 100,824 89,675
--------- ---------
Net cash provided by operating activities 20,322 42,220
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of land improvements,
buildings and equipment $ (5,070) $ (43,518)
--------- ---------
Net cash used in investing activities (5,070) (43,518)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable $ (13,518) $ (14,110)
--------- ---------
Net cash used in financing activities (13,518) (14,110)
--------- ---------
NET INCREASE (DECREASE) IN CASH $ 1,734 $ (15,408)
CASH BALANCE - BEGINNING 134,867 91,051
--------- ---------
CASH BALANCE - ENDING $ 136,601 $ 75,643
========= =========
</TABLE>
<PAGE> 7
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 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 nine month period ended
September 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 nine months ended September 30, 1999 and 1998, revenue
from property sales was $463,539 and $370,276, respectively. The
Partnership sold 54 small undeveloped lots during the first three
quarters of 1999, as well as 2 commercial lots, one small
commercial lot and one parcel of unplatted, undeveloped land
comprising approximately 1-1/2 acres. In addition, the
Partnership sold one developed lot during the first nine months
of 1999 for $138,000. By comparison, during the same period of
1998, the Partnership sold 37 small undeveloped lots and one
developed lot, the latter 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 developed lots
<PAGE> 8
REEVES TELECOM LIMITED PARTNERSHIP
September 30, 1999
(Unaudited)
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 nine months of 1999 was
$285,179, compared to $344,041 for the same period in 1998.
Management attributes declines in every revenue category
principally to adverse weather conditions. Fox Squirrel Country
Club was closed for the last sixteen days of September due to
flooding following Hurricane Floyd, a "500-year storm" which made
landfall near Southport, North Carolina and which dropped a
reported 16 inches of rain in the region. The volume of standing
water prevented the golf course from re-opening for play until
the second week of October, when the back nine holes were
re-opened. The entire golf course was re-opened for play
approximately one week later, after Hurricane Irene and other
storms caused further flooding in the region. Earlier in the
year, unusually warm weather throughout the Northeast resulted in
fewer golfers visiting the Myrtle Beach, SC - Wilmington, NC
corridor to play golf.
Direct cost of property sold was $145,934 for the first three
quarters of 1999, compared to $151,048 for the same period last
year. Management attributes the decline principally to the total
cost basis of the developed lot sold during 1998 being higher
than that of the developed lot sold this year. Such difference
more than offset the higher total cost basis of undeveloped lots
sold during 1999 than in 1998.
Selling, general and administrative expenses for the nine months
ended September 30, 1999 were $359,168, compared to $301,802 for
the same period one year ago. Management attributes the increase
principally to higher legal costs resulting from litigation as
well as to higher interest costs resulting from a higher level of
interest-bearing accrued expenses outstanding.
Selling, general and administrative expenses at Fox Squirrel
Country Club for the nine months ended September 30, 1999 were
$291,610, compared to $330,320 for the same period one year ago.
Management attributes the decrease principally to lower
maintenance costs, wages and payroll taxes, which more than
offset increases in advertising and equipment rental.
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. All outstanding principal and interest under the promissory
note were paid in full in July 1999.
<PAGE> 9
REEVES TELECOM LIMITED PARTNERSHIP
September 30, 1999
(Unaudited)
There can be no assurance that the transaction described in Part
II, Item 5 will, in fact, close. If such transaction does not
close, Management will continue to seek a buyer for all or
substantially all 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 will remain focused on
selling individual lots and smaller parcels of real estate.
In the absence of a bulk sale such as that described in Part II,
Item 5, 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.
PART II. OTHER INFORMATION.
Item 5. Other Information.
As stated in the Partnership's Form 8-K filed on August 19, 1999,
the Partnership has agreed to sell approximately 4,833 acres of
its land located in the City of Boiling Spring Lakes, North
Carolina at a price of $450 cash per acre, for an aggregate sales
price of $2,174,850. The purchaser, The Nature Conservancy, is a
non-profit organization involved in the preservation of wetlands
and woodlands. The Nature Conservancy stated that the transaction
is contingent upon the approval of the purchase price by its
national committee. The total number of acres and the aggregate
consideration are subject to a survey to be completed prior to
closing. Management expects that this transaction will occur in
one or more closings that take place during the fourth quarter of
1999 or the first half of 2000.
Until a determination is made of the actual number of acres to be
sold in the transaction, Management believes any pro forma
financial information would be potentially misleading.
Accordingly, the Partnership will report pro forma financial
information as soon as practicable following a determination of
the number of acres to be sold.
Item 6. Exhibits and Reports on Form 8-K.
During the three months ended September 30, 1999, the Partnership
filed one report on Form 8-K, which report is incorporated herein
by reference. The report, dated August 17, 1999, relates to the
transaction described in Part II, Item 5.
<PAGE> 10
REEVES TELECOM LIMITED PARTNERSHIP
SEPTEMBER 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: November 12, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 136,601
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 4,092
<CURRENT-ASSETS> 143,593
<PP&E> 965,348
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,108,941
<CURRENT-LIABILITIES> 1,858,629
<BONDS> 10,442
0
0
<COMMON> (760,130)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,108,941
<SALES> 463,539
<TOTAL-REVENUES> 751,589
<CGS> 145,934
<TOTAL-COSTS> 967,235
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (215,646)
<INCOME-TAX> 0
<INCOME-CONTINUING> (215,646)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (215,646)
<EPS-BASIC> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
