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 and Six Months Ended March 31, 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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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 [ ]
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 March 31, 2000
----- --------------------------------
Limited Partnership Units 4,485,504 units
<PAGE>
INDEX
Page Number
PART I. Financial Information
Balance sheets -
March 31, 2000 and
September 30, 1999 2
Statements of operations -
Three months and six months ended
March 31, 2000 and 1999 3
Statements of cash flows -
Three months and six months ended
March 31, 2000 and 1999 4-5
Notes to financial statements 6
Management's discussion and analysis
of financial condition and results
of operations 7-8
Part II. Other information and signatures 9
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
BALANCE SHEETS
March 31, September 30,
2000 1999
------------ -------------
(unaudited)
ASSETS
Cash $ 915,222 $3,113,800
Other receivables 1,179 401,972
Property held for sale 1,379,295 2,379,916
Other assets 43,427 40,621
---------- ----------
$2,339,123 $5,936,309
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and other
liabilities $ 138,776 $ 283,345
Partners' equity:
4,485,504 units authorized and
outstanding 2,200,347 5,652,964
---------- ----------
$2,339,123 $5,936,309
========== ==========
See notes to financial statements
2
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED
MARCH 31, 2000 AND 1999
(UNAUDITED)
Three Months Ended Six Months Ended
March 31, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999
------- -------- --------- --------
<S> <C> <C> <C> <C>
Land Revenues:
Gross sales of land $ 1,316,250 $ - $ 1,316,250 $ 2,766,500
Less profit deferred until
principal collections are
received - - - 264,593
----------- ----------- ----------- -----------
1 316,250 - 1,316,250 2,501,907
Interest income 15,947 4,232 31,258 5,544
Other income - - 440 11,035
----------- ----------- ----------- -----------
1,332,197 4,232 1,347,948 2,518,486
----------- ----------- ----------- -----------
Cost and expenses:
Cost of sales 1 075,801 - 1,075,801 2,000,225
Selling, general and
administrative expenses 202,712 182,251 306,504 500,688
Interest 297 14,817 793 38,803
Depreciation and
property taxes 20,349 55,258 53,339 113,115
----------- ----------- ----------- -----------
Total costs and expenses 1,299,159 252,326 1,436,437 2,652,831
----------- ----------- ----------- -----------
Net income (loss) $ 33,038 $ (248,094) $ (88,489) $ (134,345)
=========== =========== =========== ===========
Net income (loss) per unit $ 0.01 $ (0.06) $ (0.02) $ (0.03)
=========== =========== =========== ===========
Weighted average number of
units outstanding 4,485,504 4,485,504 4,485,504 4,485,504
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
Three Months Ended Six Months Ended
March 31, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999
------- -------- --------- --------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Cash was received from:
Collections on sales
and receivables $ 1,328,750 $ 50,449 $ 1,328,750 $ 1,593,064
Interest Income 15,947 4,232 41,780 5,544
Sale of utility system 379,363 438,572 379,363 438,572
Other -- -- 440 11,035
----------- ---------- ----------- -----------
1,724,060 493,253 1,750,333 2,048,215
----------- ---------- ----------- -----------
Cash was expended for:
Selling, general and
administrative, property
taxes and other expenses 255,869 293,983 440,470 810,077
Interest paid (net of
amounts capitalized) 297 14,817 793 38,803
Improvements to property
held for sale 36,462 105,450 134,338 241,962
----------- ---------- ----------- -----------
292,628 414,250 575,601 1,090,842
----------- ---------- ----------- -----------
Net cash provided by
operating activities 1,431,432 79,003 1,174,732 957,373
----------- ---------- ----------- -----------
Cash flow from investing activities:
Purchase of property
and equipment -- -- (9,182) --
----------- ---------- ----------- -----------
Net cash used in investing
activities -- -- (9,182) --
----------- ---------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Cash flow from financing activities:
Proceeds from mortgage
notes payable, bank -- -- -- 17,800
Payments on mortgage
payable, bank -- -- -- (680,000)
Partner distributions (1,121,376) -- (3,364,128) --
----------- ---------- ----------- -----------
Net cash used in financing
activities (1,121,376) -- (3,364,128) (662,200)
----------- ---------- ----------- -----------
Net increase (decrease) in cash 310,056 79,003 (2,198,578) 295,173
Cash, beginning of period 605,166 222,723 3,113,800 6,553
----------- ---------- ----------- -----------
Cash, end of period $ 915,222 $ 301,726 $ 915,222 $ 301,726
=========== ========== =========== ===========
</TABLE>
See notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
Three Months Ended Six Months Ended
March 31, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999
------- -------- --------- --------
<S> <C> <C> <C> <C>
Net income (loss) $ 33,038 $(248,094) $ (88,489) $ (134,345)
----------- --------- ----------- -----------
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 680 246 1,359 687
Change in assets and
liabilities:
Decrease in:
Mortgage notes and
other receivables 390 722 439,021 400,793 --
Property held for sale 1,042,093 (18,907) 1,000,621 1,788,468
Other assets 465 17,388 5,017 34,972
Accounts payable and
accrued liabilities (48,066) (160,651) (157,069) (262,138)
Increase in:
Deposits on land sales 12,500 50,000 12,500 125,000
Mortgage notes and other
receivables -- -- -- (595,271)
----------- --------- ----------- -----------
Total adjustments 1,398,394 327,097 1,263,221 1,091,718
----------- --------- ----------- -----------
Net cash flow provided by
operating activities $ 1,431,432 $ 79,003 $ 1,174,732 $ 957,373
=========== ========= =========== ===========
</TABLE>
See notes to financial statements
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED
MARCH 31, 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 six months ended March 31,
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 six months ended March 31, 2000 and 1999
gross income for Federal Tax purposes is not material and accordingly
no provisions 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.
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<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SIX MONTHS ENDED
March 31, 2000 AND March 31, 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 six month periods ended March 31, 2000 and 1999, the
Partnership had net revenues totaling $1,347,948 and $2,518,486 respectively,
and net a net loss of ($88,489) or ($0.02) per unit and of ($134,345) or ($0.03)
per unit, respectively. During the quarter ended December 31, 1999, the
Partnership did not effect any sales of its real estate and its only revenues
were derived primarily from interest payments on a certificate of deposit held.
During the quarter ended March 31, 2000, the Company resold 45 residential lots
in the Crestwood single family tract (which had been reacquired in 1999 as a
result of the Partnership's acceptance of a deed in lieu of foreclosure) for
gross proceeds or $1,316,250 and net proceeds after real estate taxes and
brokerage commissions of $1,092,000.
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 March 31, 1999 and $1,075,801 in
costs of sales in the three months ended March 31, 2000. There were $2,766,502
of sales during the six months ended March 31, 1999 with cost of sales of
$2,000,225 and $1,316,250 of sales during the six months ended March 31, 2000
with cost of sales of $1,075,801.
Selling, Administrative and Other Expenses
Selling, general and administrative expenses were $202,712 in the quarter ended
March 31, 2000, compared with $182,251 in the corresponding quarter of 1999.
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<PAGE>
In The six month period ended March 31, 2000 only $793 in interest was charged
to operations because all indebtedness had been paid off; interest of $38,803
was charged in the six months ended March 31, 1999 in respect of loans
outstanding during that period.
Liquidity and Capital Resources
Cash decreased from $3,113,800 at September 30, 1999 to $915,222 at March 31,
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 $2,242,742 and an additional cash distribution of $1,121,376
in February 0f 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 requirements will be satisfied by land sales and
contingent utility receipts described under "Utility Contingent Receivable" in
Item 2 the Incorporated 1999 10-K. 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 March 31, 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 $250,000; (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 22 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 executed during May of 2000,
for a gross purchase price of $2,197,250. The closing of this transaction is
subject to due diligence review by the
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<PAGE>
purchaser and, thereafter, to numerous land use and other contingencies and is
not expected to occur until early 2001.
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 March 31, 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 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
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<PAGE>
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 six months ended March 31, 2000 and 1999.
10
<PAGE>
PART II - OTHER INFORMATION
(a) Exhibits -
99- Real estate Sales Contract between Registrant and
EB Developers, Inc. relating to approximately 20.82
acres in the Village of Royal Palm Beach, executed May
12, 2000.
(b) Reports on Form 8-K - None
11
<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: May 31, 2000 By: /s/ Irving Cowan
------------------------------
Irving Cowan, President
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