SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR TRANSITION PERIOD FROM _______________ TO _____________ .
Commission file number 0-179
PALMETTO REAL ESTATE TRUST
--------------------------
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0405064
- -------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
45 Liberty Lane
Greenville, SC 29607
- --------------- -----
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: (803) 233-6007
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) or 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 [ ]
The number of shares outstanding of the Issuer's Shares of $1 Beneficial
Interest as of March 31, 1999 was 1,770,006.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X ]
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PALMETTO REAL ESTATE TRUST
Quarterly Report on Form 10-QSB
For the Quarterly Period Ended March 31, 1999
Form 10-QSB Index
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at March 31, 1999 ....................... 1
Unaudited Statements of Income and Undistributed
Earnings for the Three Months Ended
March 31, 1999 and 1998 ......................................... 2
Unaudited Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 ......................................... 3
Notes to Unaudited Financial Statements .......................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................ 5-6
Part II. OTHER INFORMATION
Item 1. Legal Proceedings ................................................ 7
Item 2. Changes in Securities ............................................ 7
Item 3. Defaults Upon Senior Securities .................................. 7
Item 4. Submission of Matters to a Vote of Security Holders .............. 7
Item 5. Other Information ................................................ 7
Item 6. Exhibits and Reports on Form 8-K ................................. 7
Signatures ....................................................... 8
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PALMETTO REAL ESTATE TRUST
Balance Sheet
(unaudited)
March 31, 1999
Assets
- ------
Real estate investments, at cost:
Rental property, net of accumulated depreciation $ 8,956,083
Timberlands 24,864
---------
Total real estate investments 8,980,947
Other assets:
Cash 230,930
Rent receivable 21,245
Note receivable 212,157
Deferred loan expense, net of accumulated amortization 20,307
---------
Total other assets 484,639
---------
Total assets $ 9,465,586
=========
Liabilities and Shareholders' Equity
Liabilities:
Mortgage notes payable $ 6,297,500
Accounts payable and accrued expenses 108,468
Deferred revenue 144,964
Income taxes payable 1,000
---------
6,551,932
Shareholders' equity:
Shares of beneficial interest, $1 par value; 5,000,000
shares authorized; 1,770,006 shares issued and outstanding 1,770,006
Capital surplus 498,734
Undistributed earnings 644,914
---------
Total shareholders' equity 2,913,654
---------
Total liabilities and shareholders' equity $ 9,465,586
=========
The accompanying notes are an integral part of these financial statements.
1
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PALMETTO REAL ESTATE TRUST
Statements of Income and Undistributed Earnings
For the Three Months Ended March 31, 1999 and 1998
Three Months Ended
March 31,
1999 1998
------ ------
(unaudited)
Income:
Rental income $ 462,584 $ 396,105
Other income 4,859 5,646
------- -------
Total income 467,443 401,751
------- -------
Expenses:
Depreciation and amortization 70,725 65,504
Interest 136,565 126,367
Repairs and maintenance 16,087 10,824
Property taxes 45,422 39,352
General and administrative 42,511 47,250
------- -------
Total expenses 311,310 289,297
------- -------
Income from operations before income taxes 156,133 112,454
Gain on sale of real estate 2,344 2,142
------- -------
Income before income taxes 158,477 114,596
Income tax expense 1,000 1,000
------- -------
Net income 157,477 113,596
Undistributed earnings, beginning 487,437 478,152
------- -------
Undistributed earnings, ending $ 644,914 $ 591,748
======= =======
Basic earnings per share of
beneficial interest $ .09 $ .06
======= =======
The accompanying notes are an integral part of the financial statements.
2
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PALMETTO REAL ESTATE TRUST
Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
Three Months Ended
March 31,
1999 1998
------ ------
(unaudited)
Cash flows from operating activities:
Net income $ 157,477 $ 113,596
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 69,541 64,128
Amortization of deferred expenses 1,184 1,376
Gain on sale of real estate (2,344) (2,142)
(Increase) decrease in:
Rent receivable 11,045 10,888
Prepaid expense - (7,000)
Increase (decrease) in:
Accounts payable and accrued expenses (30,727) (53,396)
Income taxes payable 1,000 1,000
------- -------
Net cash provided by operating activities 207,176 128,448
------- -------
Cash flows from investing activities:
Collections of mortgage note receivable 3,331 3,866
Property additions and improvements (5,129) -
------- -------
Net cash provided by (used in) investing activities (1,798) 3,866
------- -------
Cash flows from financing activities:
Payments on mortgage notes payable (58,500) (74,278)
Borrowings on demand note payable - 165,000
Payment of dividends (216,826) (222,225)
------- -------
Net cash used in financing activities (275,326) (131,503)
------- -------
Increase (decrease) in cash (69,948) 811
Cash at beginning of period 300,878 68,524
------- -------
Cash at end of period $ 230,930 $ 69,335
======= =======
The accompanying notes are an integral part of the financial statements.
3
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PALMETTO REAL ESTATE TRUST
Notes to Financial Statements
March 31, 1999
(1) Basis of Presentation
The accompanying unaudited financial statements, which are for interim periods,
do not include all disclosures provided in the annual financial statements.
These unaudited financial statements should be read in conjunction with the
financial statements and the footnotes thereto contained in the Annual Report
on Form 10-KSB for the year ended December 31, 1998 of Palmetto Real Estate
Trust (the "Trust"), as filed with the Securities and Exchange Commission.
(2) Interim Periods
In the opinion of the Trust, the accompanying unaudited financial statements
contain all adjustments (which are of a normal recurring nature) necessary for
a fair presentation of the financial statements. The results of operations for
the three months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the full year.
4
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
- -------------------
There have been no significant changes in the Trust's liquidity or financial
condition since December 31, 1998 other than debt payments and dividend
payments. At present, there are no large capital expenditures planned that
would present a liquidity problem.
Results of Operations - Three months ended March 31, 1999 compared to three
months ended March 31, 1998.
- -----------------------------
Income from operations for the three months ended March 31, 1999 increased
approximately 39% as compared to the same period in 1998. Rental income
increased due to higher rental rates and the acquisition of new rental property
in the fourth quarter of 1998.
Interest expense, depreciation, and property taxes increased during the first
quarter of 1999 compared to the first quarter of 1998 as a result of acquiring
new property during the fourth quarter of 1998. Also, additional repairs and
maintenance of heating systems, roof repairs, and parking lots were required
during the first quarter of 1999.
Year 2000 Compliance Issues
- ---------------------------
The Trust has established a plan to address Year issues. Successful
implementation of this plan will eliminate any extraordinary expenses related
to Year 2000 issue. The Trust has purchased software updates from its sole
data processing vendor which are Year 200 compliant. The Trust has a
reasonable basis to conclude that the Year 2000 issues will not materially
affect future financial results, or cause reported financial information not to
be necessarily indicative of future operating results or future financial
condition.
5
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There are no material pending legal proceedings, other than ordinary routine
litigation incidental to its business, to which the Palmetto Real Estate Trust
is a party or to which any of its property is the subject.
Item 2. Changes in Securities
---------------------
There have been no changes in securities during the reporting period.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A. Exhibit Description 27 Financial Data Schedule
B. Reports on Form 8-K: None.
6
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SIGNATURES
In accordance with 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.
PALMETTO REAL ESTATE TRUST
May 3, 1999 By: /s/ Bill Franks
- ----------- ---------------
Date Bill Franks
Property Manager
(Principal Financial and Accounting Officer)
May 3, 1999 By: /s/ James A. Boling
- ----------- -------------------
Date James A. Boling
Chairman
(Principal Executive Officer)
7
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PALMETTO REAL ESTATE TRUST
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X
Commercial and Industrial Companies
Item Financial Data as of
Number Item Description March 31, 1999
- ------- ---------------- --------------
5-02(1) Cash and cash items $ 230,930
5-02(2) Marketable securities -
5-02(3)(a)(1) Notes and accounts receivable - trade 233,402
5-02(4) Allowances for doubtful accounts -
5-02(6) Inventory -
5-02(9) Total current assets -
5-02(13) Property, plant and equipment 12,715,347
5-02(14) Accumulated depreciation 3,734,400
5-02(18) Total assets 9,465,586
5-02(21) Total current liabilities 108,468
5-02(22) Bonds, mortgages and similar debt 6,297,500
5-02(28) Preferred stock-mandatory redemption -
5-02(29) Preferred stock-no mandatory redemption -
5-02(30) Common stock 1,770,006
5-02(31) Other stockholders' equity 1,143,648
5-02(32) Total liabilities and stockholders' equity 9,465,586
5-03(b)(1)(a) Net sales of tangible products -
5-03(b)(1) Total revenues 467,443
5-03(b)2(a) Cost of tangible goods sold -
5-03(b)2 Total costs and expenses applicable to sales and revenues 311,310
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Exhibit 27.1 (continued)
PALMETTO REAL ESTATE TRUST
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X (continued)
Commercial and Industrial Companies
Item Financial Data as of
Number Item Description March 31, 1999
5-03(b)3 Other costs and expenses $ -
5-03(b)5 Provision for doubtful accounts and notes -
5-03(b)(8) Interest and amortization of debt discount 136,565
5-03(b)(10) Income before taxes and other items 158,477
5-03(b)(11) Income tax expense 1,000
5-03(b)(14) Income/loss continuing operations 157,477
5-03(b)(15) Discontinued operations -
5-03(b)(17) Extraordinary items -
5-03(b)(18) Cumulative effect-changes in accounting principles -
5-03(b)(19) Net income or loss 157,477
5-03(b)(20) Earnings per share-basic .09
5-03(b)(20) Earnings per share- diluted .09
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 230930
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<RECEIVABLES> 233402
<ALLOWANCES> 0
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<DEPRECIATION> 3734400
<TOTAL-ASSETS> 9465586
<CURRENT-LIABILITIES> 108468
<BONDS> 6297500
0
0
<COMMON> 1770006
<OTHER-SE> 1143648
<TOTAL-LIABILITY-AND-EQUITY> 9465586
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