UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-11027
SOUTHERN TIMBER PARTNERS I
(formerly Hutton Southern Timber Partners I)
(Exact name of registrant as specified in its charter)
Georgia 56-1303554
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY
ATTN: Andre Anderson 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(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
Balance Sheets
September 30, December 31,
Assets 1995 1994
Timber and timberland, at cost $8,215,682 $9,174,377
Less-accumulated depletion (3,814,004) (3,814,004)
Net timber and timberland 4,401,678 5,360,373
Cash and cash equivalents 1,402,292 1,428,986
Accounts Receivable - 515,767
Prepaid Insurance 13,750 5,922
Due from joint venture - 2,472
Investment in Joint Venture 1,437,931 1,433,210
Total Assets $7,255,651 $8,746,730
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $65,581 $40,189
Due to affiliates 182,287 136,953
Total Liabilities 247,868 177,142
Partners' Capital (Deficit):
General Partner (60,897) (45,263)
Limited Partners (40,000 units outstanding) 7,068,680 8,614,851
Total Partners' Capital 7,007,783 8,569,588
Total Liabilities and Partners' Capital $7,255,651 $8,746,730
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
General Limited
Partner Partners Total
Balance at December 31, 1994 $(45,263) $8,614,851 $8,569,588
Distributions (15,353) (1,518,373) (1,533,726)
Net loss (281) (27,798) (28,079)
Balance at September 30, 1995 $(60,897) $7,068,680 $7,007,783
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Timber sales $- $69,475 $- $438,094
Gain (loss) on sales of timberland 13,337 (8,682) 4,689 58,171
Interest 17,675 11,736 86,158 20,762
Other 500 450 1,610 1,555
Total Income 31,512 72,979 92,457 518,582
Expenses
Depletion - 38,254 - 193,259
Property operating 21,822 30,326 66,185 124,261
General and administrative 37,350 15,241 59,072 55,490
Total Expenses 59,172 83,821 125,257 373,010
Income (loss) from operations (27,660) (10,842) (32,800) 145,572
Other Income (Loss)
Income (loss) from joint venture (2,232) (5,113) 4,721 (9,142)
Net Income (Loss) $(29,892) $(15,955) $(28,079) $136,430
Net Income (Loss) Allocated:
To the General Partner $(299) $(160) $(281) $1,364
To the Limited Partners (29,593) (15,795) (27,798) 135,066
$(29,892) $(15,955) $(28,079) $136,430
Per limited partnership unit
(40,000 outstanding) $(.74) $(.39) $(.70) $3.38
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income (loss) $(28,079) $136,430
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion - 193,259
Gain on sales of timberland (4,689) (58,171)
(Income) loss from joint venture (4,721) 9,142
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable 515,767 -
Prepaid Insurance (7,828) -
Due from joint venture 2,472 -
Accounts payable and accrued expenses 25,392 2,584
Due to affiliates 45,334 (1,758)
Net cash provided by operating activities 543,648 281,486
Cash Flows from Investing Activities:
Proceeds from sales of timberland 963,384 552,344
Net cash provided by investing activities 963,384 552,344
Cash Flows from Financing Activities:
Distributions (1,533,726) (1,627)
Net cash used for financing activities (1,533,726) (1,627)
Net increase (decrease) in cash and cash equivalents (26,694) 832,203
Cash and cash equivalents at beginning of period 1,428,986 649,928
Cash and cash equivalents at end of period $1,402,292 $1,482,131
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1995 and the results of operations for the three
and nine months ended September 30, 1995 and 1994, cash flows for the nine
months ended September 30, 1995 and 1994, and the statement of partners'
capital (deficit) for the nine months ended September 30, 1995. Results of
operations for the periods are not necessarily indicative of the results to be
expected for the full year.
The following significant events have occurred, or material contingencies
exist, and require disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5).
Reclassifications Certain prior year amounts have been reclassified to
conform with the financial statement presentation used in 1995.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
Timber and timberland, at cost, decreased by $958,695 from $9,174,377 at
December 31, 1994, to $8,215,682 at September 30, 1995. This decrease is due
to the sale of approximately 1,751 acres of timberland, including 7,058 cords
of timber, from the Estes tract during the first nine months of 1995.
At September 30, 1995, the Partnership's cash balance totalled $1,402,292,
representing a decrease of $26,694 from $1,428,986 at December 31, 1994. The
decrease is primarily the result of the June 30, 1995 payment of a cash
distribution to the limited partners in the amount of $1,518,373, or $38 per
Unit, which was partially offset by proceeds from timberland sales during the
first nine months of 1995, and collection of accounts receivable in the first
quarter of 1995. The collection of these accounts receivable is the reason for
the $515,767 decrease in the Partnership's accounts receivable balance from
December 31, 1994 to September 30, 1995. The Partnership's cash balance, along
with funds generated from future sales of timber and timberland, are expected
to provide sufficient liquidity to enable the Partnership to meet its operating
expenses.
Accounts payable and accrued expenses totalled $65,581 at September 30, 1995,
compared to $40,189 at December 31, 1994. The increase is primarily
attributable to the accrual of 75% of the Partnership's estimated real estate
taxes for 1995 and a settlement to be paid in the fourth quarter of 1995
regarding an alleged claim against the Partnership. The increase in accounts
payable and accrued expenses was partially offset by the payment of the 1994
property appraisal fee in the first quarter of 1995 and the first quarter 1995
payment of costs related to the Partnership's investment in the joint venture.
Due to affiliates increased from $136,953 at December 31, 1994 to $182,287 at
September 30, 1995. The increase is primarily attributable to the accrual of
the Partnership's management fee for the first three quarters of 1995.
Although the long-term trend for timber prices has been upward, prices will
continue to be subject to cyclical fluctuations. Even if timber prices improve
significantly, the Partnership intends to continue to sell timber selectively
since the Estes tract will be more valuable to a potential buyer if it contains
a sizable percentage of merchantable timber.
During the third quarter of 1995, the Partnership completed a sale for 353
acres of timberland from the Estes tract for gross proceeds of $245,729. In
addition, a Purchase and Sale Agreement was signed for 143 acres from this
tract, which is expected to close in the near future. The General Partner has
been negotiating with the State of Florida for the sale of a significant
portion of the Estes tract. A Purchase and Sale Agreement has also been signed
with the State for 1,290 acres and a second sale is being negotiated. Although
the General Partner is optimistic about both sales, there can be no assurances
that they will occur.
The General Partner continues to pursue additional timberland sales on the
Estes tract. It should be noted, however, that the market for raw land in the
area of Florida where the tract is located remains weak. Values have been
further undermined by the implementation of the State Growth Management Act
which discourages development of raw land and tree harvesting. The General
Partner is focused on efficient and responsive management of the tracts and
continues to closely monitor and evaluate market conditions in an effort to
enhance the value of the Partnership's tracts. At this time, the General
Partner intends to pursue select sales of smaller tracts of land which are more
valuable and better suited for uses other than timberland, and then market and
sell the remaining acreage as timberland.
The Partnership owns approximately 6,050 acres of timberland on the Estes tract
outright and a 24% share in the Laurel View tract, a 1,709 acre tract located
near Savannah, Georgia. Although the Laurel View tract could be sold as
timberland, the General Partner believes its primary value would be realized if
sold as a development site due to its coastal location and close proximity to
Interstate 95. The General Partner has prepared a land use plan and marketing
plan for the property. While preparations for marketing the tract are in
progress, it is difficult to predict when conditions will be best suited for a
sale as it largely depends on the pace of development in the area surrounding
the tract.
Results of Operations
The Partnership incurred net losses of $29,892 and $28,079 for the three and
nine months ended September 30, 1995, respectively, as compared to a net loss
of $15,955 and net income of $136,430, respectively, for the corresponding
periods in 1994. The net losses for the 1995 periods are mainly attributable
to the lack of timber sales in 1995, partially offset by declines in property
operating expenses. No depletion expense was recorded for the three-or
nine-month periods ending September 30, 1995 because the only timber sold in
1995 was included as part of timberland sales.
Total income for the three and nine months ended September 30, 1995, was
$31,512 and $92,457, respectively, compared with $72,979 and $518,582,
respectively, for the corresponding periods in 1994. The decrease in total
income for the three-month period in 1995, compared to the three-month period
in 1994, was mainly due to the lack of timber sales in the third quarter of
1995. This decrease was partially offset by a net gain on timberland sales of
$13,337 during the third quarter of 1995 and a net loss on timberland sales of
$8,682 during the third quarter of 1994. The decrease in total income for the
nine months ended September 30, 1995, compared to the same period in 1994, was
also mainly due to the lack of timber sales in 1995. Additionally, total
income for the nine months ended September 30, 1995, decreased due to net gains
on sales of timberland of only $4,689 in the nine months ended September 30,
1995, compared to net gains on sales of timberland of $58,171 for the
corresponding period in 1994.
Interest income totalled $17,675 and $86,158, respectively, for the three and
nine months ended September 30, 1995, compared to $11,736 and $20,762,
respectively, for the corresponding periods in 1994. The increases are
primarily the result of a higher cash balance invested during the first six
months of 1995 as a result of timberland sales since the latter part of 1994
and higher interest rates in 1995.
Property operating expenses totalled $21,822 and $66,185, respectively, for the
three and nine months ended September 30, 1995, compared to $30,326 and
$124,261, respectively, for the corresponding periods in 1994. The decreases
are primarily due to lower management fees and property maintenance expenses.
Management fees were smaller through the first nine months of 1995 because the
appraised value of the Estes tract, which is used as the basis for calculating
the management fee, was lower in 1995 due to sales from the tract in 1994.
This decrease was partially offset by an increase in the appraised value of the
Laurel View tract. Property maintenance fees were higher in 1994 due to costs
associated with cruising and controlled burning on the Estes tract. No such
expenses were incurred during the first nine months of 1995.
General and administrative expenses for the three and nine months ended
September 30, 1995 were $37,350 and $59,072, respectively, compared to $15,241
and $55,490, respectively, for the corresponding periods in 1994. The
increases are primarily attributable to a settlement to be paid in the fourth
quarter of 1995 regarding an alleged claim against the Partnership. The cost
of this settlement was mostly offset by lower audit and professional fees.
The Partnership recognized a loss from Joint Venture operations of $2,232 and
income of $4,721, respectively, for the three and nine months ended September
30, 1995, compared with losses of $5,113 and $9,142, respectively, for the
corresponding periods in 1994. The joint venture income for the nine-month
period ended September 30, 1995 is attributable to income from sales of timber
from the Laurel View tract during the first six months of 1995 in excess of
ordinary operating expenses. The joint venture losses for the three and
nine-month periods in 1994 as well as the three-month period ended September
30, 1995, were attributable to a lack of timber sales and the recording of
ordinary operating expenses.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 30, 1995.
SIGNATURES
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, thereunto duly authorized.
SOUTHERN TIMBER PARTNERS I
BY: SOUTHERN TIMBER RESOURCES CORP.
General Partner
Date: November 13, 1995
BY: /s/ Paul L. Abbott
Paul L. Abbott
Director, President and
Chief Financial Officer
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