UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000
Commission File Number 1-8893
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
DELAWARE 59-2501059
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(State of other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2501 S. Ocean Drive
Hollywood, Florida 33019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 927-3080
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NONE
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Former name, former address and former fiscal year, if changed since last report
Indicate by checkmark 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
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Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
CLASS Outstanding at June 30, 2000
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Limited Partnership Units 4,485,504 units
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
INDEX
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Page Number
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PART I. Financial information
Balance sheets - June 30, 2000 and
September 30, 1999 2
Statements of income - Three months and
nine months ended June 30, 2000 and 1999 3
Statements of cash flows - Three months and
nine months ended June 30, 2000 and 1999 4-5
Notes to financial statements 6
Management's discussion and analysis
of financial condition 7-8
Part II. Other information and signatures 9
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
------------- ------------
(unaudited)
ASSETS
<S> <C> <C>
Cash $ 794,449 $3,113,800
Other receivables 1,784 401,972
Property held for sale 1,379,696 2,379,916
Other assets 79,760 40,621
----------- ----------
$ 2,255,689 $5,936,309
=========== ==========
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and other
liabilities $ 169,040 $ 283,345
Partners' Equity:
4,485,504 units authorized and outstanding 2,086,649 5,652,964
----------- ----------
$ 2,255,689 $5,936,309
=========== ==========
</TABLE>
See notes to financial statements
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------- -----------------------
2000 1999 2000 1999
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Land Revenues:
Gross sales of land $ - $1,586,657 $1,316,250 $ 4,353,157
Less profit deferred until
principal collections are
received - - - 264,593
---------- ---------- ---------- -----------
- 1,586,657 1,316,250 4,088,564
Interest income 11,196 6,239 42,454 11,783
Other income 20,670 817 21,110 817
---------- ---------- ---------- -----------
31,866 1,593,713 1,379,814 4,101,164
---------- ---------- ---------- -----------
Cost and expenses:
Cost of sales - 662,145 1,075,801 2,651,335
Selling, general and
administrative expenses 120,872 299,106 427,376 799,794
Interest - 7,748 793 46,551
Depreciation and
property taxes 24,692 29,758 78,031 142,873
---------- ---------- ----------- -----------
Total costs and expenses 145,564 998,757 1,582,001 3,640,553
---------- ---------- ----------- -----------
Net income (loss) $ (113,698) $ 594,956 $ (202,187) $ 460,611
========== ========== =========== ===========
Net income (loss) per unit $ (0.03) $ 0.13 $ (0.05) $ 0.10
========== ========== =========== ===========
Weighted average number of
units outstanding 4,485,504 4,485,504 4,485,504 4,485,504
========== ========== =========== ===========
</TABLE>
See notes to financial statements
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
----------- ---------- ---------- ----------
Cash flows from operating
activities:
<S> <C> <C> <C> <C>
Cash was received from:
Collections on sales
and receivables $ - $1,586,774 $1,328,750 $3,179,838
Interest income 11,196 6,239 52,976 11,783
Sale of utility system - - 379,363 438,572
Other 8,170 817 8,610 817
----------- ---------- ---------- ----------
19,366 1,593,830 1,769,699 3,631,010
----------- ---------- ---------- ----------
Cash was expended for:
Selling, administrative
and property taxes 138,062 642,375 603,505 1,452,452
Interest paid (net of
amounts capitalized) - 7,748 793 46,551
Improvements to property 2,077 173,921 111,442 404,848
---------- ---------- ---------- ----------
140,139 824,044 715,740 1,903,851
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities (120,773) 769,786 1,053,959 1,727,159
---------- ---------- ---------- ----------
Cash flow from investing
activities:
Purchase of property and
equipment - - (9,182) -
---------- ---------- ---------- ----------
Net cash used in investing
activities - - (9,182) -
---------- ---------- ---------- ----------
Cash flow from financing
activities:
Proceeds from mortgage
notes payable, bank - - - 17,800
Payments on mortgage
payable, bank - (659,550) - (1,339,550)
Partner distributions - - (3,364,128) -
---------- ---------- ---------- ----------
Net cash used in
financing activities - (659,550) (3,364,128) (1,321,750)
---------- ---------- ---------- ----------
Net increase (decrease)
in cash (120,773) 110,236 (2,319,351) 405,409
Cash, beginning of period 915,222 301,726 3,113,800 6,553
---------- ---------- ---------- ----------
Cash, end of period $ 794,449 $ 411,962 $ 794,449 $ 411,962
========== ========== ========== ==========
</TABLE>
See notes to financial statements
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------- ---------------------
2000 1999 2000 1999
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $ (113,698) $ 594,956 $(202,187) $ 460,611
---------- --------- --------- ---------
Adjustments to reconcile
net income (loss) to
net cash provided by
(used in) operating
activities:
Depreciation 679 165 2,038 852
Forfeited deposit on
land sales (12,500) - - -
Change in assets and
liabilities:
Increase in:
Mortgage notes and
other receivables - 17 - (595,254)
Other assets (37,012) (37,814) (31,995) (2,842)
Deposits on land sales - 100 125,100
Decrease in:
Mortgage notes and
other receivables (606) - 400,188 -
Property held for sale (401) 622,958 1,000,220 2,411,426
Accounts payable and
accrued liabilities 42,765 (410,596) (114,305) (672,734)
--------- --------- ---------- ---------
Total Adjustments (7,075) 174,830 1,256,146 1,266,548
--------- --------- ---------- ---------
Net cash flow provided
by (used in) operating
activities $(120,773) $ 769,786 $1,053,959 $1,727,159
========= ========= ========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 2000 AND 1999
1. Interim financial statements:
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three months and nine months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 30, 2000. These statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1999.
2. Income tax:
The Partnership has elected to continue its Partnership status beyond
December 31, 1997, by agreeing to pay an annual 3.5% Federal tax on its
gross income for Federal income tax purposes (principally revenues less
cost of land sold). For the nine months ended June 30, 2000 and 1999, gross
income for Federal tax payments is not material and accordingly, no
provision for Federal taxes has been provided. The partners are required to
include in their income tax returns their share of the Partnership's
taxable income or loss.
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED
June 30, 2000 AND June 30, 1999
(UNAUDITED)
Results of Operations
NOTE: Since the Partnership's activities consist principally of the sale of its
remaining properties, and the timing of closing dates for such sales is usually
subject to contingencies which often result in changes to such closing dates, a
comparison of sales and income results from comparable periods in different
years is not considered meaningful.
During the nine month periods ended June 30, 2000 and 1999, the Partnership had
net revenues totaling $1.379,814 and $4,101,164 respectively, and net a net loss
of ($202,187) or ($0.05) per unit and a net profit of $460,611 or $0.10 per
unit, respectively. During the quarter ended June 30, 2000, the Partnership did
not effect any sales of its real estate and its only revenues were derived
primarily from interest and miscellaneous other income; during the corresponding
three months of fiscal 1999 net revenues were $1,593,713.
Cost of Sales
Cost of sales relates to the sales of land as discussed above. This item varies
as a result of dissimilar profit margins and income recognition methods on the
various sales of land and buildings as discussed above. There were no sales, and
thus no costs of sale in the quarter ended June 30, 2000 and $662,145 in costs
of sales in the three months ended June 30, 1999. There were $4,353,157 of sales
during the nine months ended June 30, 1999 with cost of sales of $2,651,335 and
$1,316,250 of sales during the nine months ended June 30, 2000 with cost of
sales of $1,075,801.
Selling, Administrative and Other Expenses
Selling, general and administrative expenses were $120,872 in the quarter ended
June 30, 2000, compared with $299,109 in the corresponding quarter of 1999, the
difference resulting principally from sales commissions in the 1999 quarter. In
the three month period ended June 30, 2000 no interest was charged to operations
because all indebtedness had been paid off; interest of $7,738 was charged in
the three months ended June 30, 1999.
Liquidity and Capital Resources
Cash decreased from $3,113,800 at September 30, 1999 to $794,449 at June 30,
2000. See Financial Information - Statements of Cash Flows. The principal reason
for this decline was the payment in October 1999 of a cash distribution to unit
holders aggregating $2,242,752 and an additional cash distribution of $1,121,376
in February of 2000. The Partnership's cash balances at any particular point
depend primarily on the timing of sales of its real estate, which timing can be
affected by numerous factors. See Financial Information - Statements of Cash
Flows. During the current fiscal year, and based upon management's judgment that
ordinary operating expenses will not increase, the Partnership anticipates that
cash flow and liquidity
<PAGE>
requirements will be satisfied by cash on hand. Future sales of land are subject
to conditions which might not be satisfied, although the Partnership has no
present knowledge of circumstances which would render likely the
non-satisfaction of such conditions.
Affect of Land Sales on Future Cash Flow
The Partnership's future revenues will depend solely upon its ability to develop
and/or sell its remaining real estate, and upon receipts from a prior sale of a
utility plant. At June 30, 2000, the Partnership retained and was holding for
sale (1) a 50% interest in 3.2 acres of commercial property in the "Crestwood"
tract in the Village of Royal Palm Beach under option for sale for a price which
would generate gross proceeds to the Partnership of approximately $400,000; (2)
a tract of 4.54 acres in the Village of Royal Palm Beach zoned for approximately
84 multi-family residential units, as to which a contract of sale for gross
proceeds of $350,000 was cancelled in May of 2000; (3) 162 lots in the vicinity
of the Village of Royal Palm Beach zoned for residential use but presently the
subject of litigation as to the availability of building permits; and (4) a
tract of approximately 20.86 acres in the Crestwood multi-family tract in the
Village of Royal Palm Beach. This tract was previously under contract of sale
for $1,870,000, which contract was cancelled during the quarter ended March 31,
2000. A new contract for sale of this property was thereupon executed for a
gross purchase price of $2,197,250 but subsequently cancelled by the proposed
purchaser.
In 1983 the Partnership's Predecessor Company sold to the Village of Royal Palm
Beach a water and sewage treatment system servicing the Village. Pursuant to the
agreement of sale ("Utility Contract"), the Partnership was entitled to receive
annual payments through 2003 based on water consumption in the Village. To date,
the Partnership has received $6,639,000 based on water consumption. In addition,
the Partnership was entitled to receive additional payments to the Partnership
equal to 25% of any "Guaranteed Revenues" (payment by developers to secure
guaranteed allocations of plant capacity) collected by the Village to a maximum
payment of $500,000, of which $331,000 has already been received. Although the
Partnership could theoretically receive an additional $4,261,000 in contingent
payments based on water consumption under the Utility Contract, it is considered
unlikely that the rate of new construction or water consumption in such area
will be sufficient to enable the Partnership to receive the full amount of such
payments prior to the expiration of the contingent payment term.
The partnership has declared aggregate distributions of $7.25 per unit since
inception through June 30, 2000. An aggregate of $6.50 per unit had been
distributed through December 16, 1992, and no further distributions were
declared until October 27, 1999, when a distribution of fifty cents ($0.50) per
unit was declared. On February 17, 2000 an additional distribution of
twenty-five cents ($0.25) per unit was declared. Total net cash flow which might
become available for additional distributions is unpredictable due to uncertain
conditions in the South Florida real estate market in which the Partnership's
remaining real estate is located, and competition from other owners and
developers of real estate in the South Florida market. These conditions will
continue to affect the realizable value of the Partnership's remaining land,
including decisions by parties holding options on the Partnership's land to
exercise such options in whole or in part. The rate of construction in the
Village of Royal Palm Beach could also significantly
<PAGE>
affect future payments to the Partnership under the Utility Contract described
in the preceding paragraph.
Environmental Matters
There are no environmental contingencies in respect of the Partnership or its
properties. Use of all of the Partnership's properties is subject to compliance
with state and county land use regulations relating to environmental matters,
which the Partnership takes into account in considering the values of its
properties.
Income Taxes
The Partnership, pursuant to the transitional grandfather rules of the Internal
Revenue Code dealing with publicly traded partnerships, reported its income as a
Partnership for taxable years through December 31, 1997. The application of the
grandfather rules terminated for taxable years commencing after December 31,
1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that
is currently governed by this provision may elect to continue its Partnership
tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal
Tax on its gross income for federal income tax purposes (principally revenues
less tax cost of land sold). The Partnership has elected to continue its
Partnership status beyond December 31, 1997. No provision for federal income tax
has been made for the nine months ended June 30, 2000 and 1999.
PART II - OTHER INFORMATION
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE>
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.
ROYAL PALM BEACH COLONY,
LIMITED PARTNERSHIP
By: Stein Management Company, Inc.
Managing General Partner
DATE: August 11, 2000 By: /s/ Irving Cowan
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Irving Cowan, President
