<PAGE> 1
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 March 31, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from to .
----------- ----------
Commission file number 0-15571
CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP
(Exact name or registrant as specified in its charter)
North Carolina 56-1494619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 210, 4112 Blue Ridge Road
Raleigh, North Carolina 27612
(Address of principal executive office)
(Zip Code)
(919) 781-1700
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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
----- -----
The Exhibit Index is located on Page 12.
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Information
a) Income Statement
STATEMENTS OF INCOME (Unaudited)
<TABLE>
Quarter Ended
March 31
1996 1995
---- ----
<S> <C> <C>
Timber income $ -0- $35,664
Deposits on sales contract 1,800 -0-
Interest and other income 265 198
-------- -------
Total income 2,065 35,862
General and administrative expense 9,276 11,096
-------- -------
NET INCOME (LOSS) $(7,211) $24,766
======= =======
Allocation of net income (loss) to:
General Partner $ -0- $ 248
Limited Partner (7,211) 24,518
------- -------
$(7,211) 24,766
======= =======
Net income (loss) per limited
partnership unit
(based on 5,900 weighted
average limited partnership units
outstanding) $ (1.22) $ 4.16
======= =======
</TABLE>
See notes to unaudited financial statements.
2
<PAGE> 3
b) Balance Sheets
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 618 $ 542
Short term investment 18,462 32,796
---------- ----------
CASH AND CASH EQUIVALENTS 19,080 33,338
Land held for investment--Note B 4,822,183 4,822,183
Other assets 2,352 103
---------- ----------
TOTAL ASSETS $4,843,615 $4,855,624
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Trade accounts payable and other
accrued liabilities $ 16,194 $ 20,992
Note payable to General
Partner -- Note C 16,064 16,064
---------- -----------
TOTAL LIABILITIES 32,258 37,056
PARTNERS' EQUITY
General partner's equity
Limited partners' equity; 5900
units authorized, issued,
and outstanding 4,811,357 4,818,568
---------- ----------
TOTAL LIABILITIES
AND PARTNERS' EQUITY $4,843,615 $4,855,624
========== ==========
</TABLE>
See notes to unaudited financial statements.
3
<PAGE> 4
c) Statements of Changes in Partners' Capital
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (Unaudited)
<TABLE>
Limited General Limited
Partnership Partner's Partners'
Units Equity Equity Total
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at
January 1, 1996 5,900 $ -0- $4,818,568 $4,818,568
Net loss for the
quarter ended
March 31, 1996 (7,211) (7,211)
----------- --------- ---------- ----------
BALANCE AT
MARCH 31, 1996 5,900 $ -0- $4,811,357 $4,811,357
=========== ========= ========== ==========
Balance at
January 1, 1995 5,900 $ -0- $4,820,865 $4,820,865
Net income for the
quarter ended
March 31, 1995 248 24,518 24,766
----------- -------- ---------- ----------
BALANCE AT
MARCH 31, 1995 5,900 $ 248 $4,845,383 $4,845,631
=========== ======== ========== ==========
</TABLE>
See notes to unaudited financial statements.
4
<PAGE> 5
d) Statements of Changes in Financial Position
STATEMENTS OF CASH FLOW (Unaudited)
<TABLE>
Quarter Ended
March 31
--------------
1996 1995
---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (7,211) $24,766
Increase in other assets (2,249) (2,250)
Increase (decrease) in trade accounts
payable (4,798) 6,818
-------- -------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (14,258) 29,334
FINANCING ACTIVITIES
Loan from General Partner -0- 55,000
Repayment of loan from General
Partner -0- (35,664)
-------- -------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES -0- 19,336
-------- -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (14,258) 48,670
Cash and cash equivalents at
beginning of period 33,338 4,065
-------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 19,080 $ 52,735
======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the quarters ended March 31, 1996 and 1995 for
interest was $0.
See notes to unaudited financial statements.
5
<PAGE> 6
e) Notes to Financial Statements
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1996
NOTE A - SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
Carolina Investment Partners, Limited Partnership (the "Registrant"), was
organized in 1985 to invest in real property which it will sell or lease
undeveloped or develop into office or commercial projects. Walsmith Associates
Two, a North Carolina general partnership, is the general partner (the "General
Partner").
Basis of Presentation:
The accompanying March 31, 1996 financial statements of the Registrant are
unaudited. In the opinion of the General Partner, all adjustments (consisting
of normal accruals) considered necessary for a fair presentation have been
included. Operating results for the period presented are not necessarily
indicative of the results that may be expected for the entire year.
NOTE B - LAND HELD FOR INVESTMENT AND RELATED COMMITMENTS
In July, 1986, the Registrant purchased for $1,223,175 an undeveloped 16.3 acre
parcel of land in Cary, North Carolina, known as the Wellington Parcel, from
Wellington Park Associates ("WPA"), an affiliate of the General Partner. The
land is carried at the lower of (i) contract cost plus capitalized purchase and
closing costs or (ii) net realizable value. The Registrant may, at its option,
require WPA to repurchase the Wellington Parcel for approximately $3,669,000
(the "Put Option"). The contract provides that WPA will share with the
Registrant in any profits resulting from the sale of the Wellington Parcel.
More than 87.5% of the profits will be retained by the Registrant if the
Wellington Parcel is sold to a third party other than by exercise of the Put
Option by the Registrant. If the Put Option is exercised, the Registrant will
retain only 50% of the profit from sale of the Wellington Parcel.
In June, 1986 the Registrant purchased for approximately $3,080,200 an
undeveloped 26.7 acre parcel of land in Cary, North Carolina, known as the
Martin Parcel, from an affiliate of the General Partner. The land is carried
at the lower of (i) contract cost plus capitalized purchase and closing costs
or (ii) net realizable value.
6
<PAGE> 7
NOTE C - NOTE PAYABLE TO GENERAL PARTNER
On February 2, 1995 the Registrant borrowed $55,000 from its General Partner.
The note is payable upon the sale of any of the Registrant's properties or
other sources of funds that become available, but in no case later than June 1,
1996. The note bears interest at the rate of prime plus 1%, which is payable
quarterly.
7
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Registrant's operations resulted in a net loss of $7,211 during the
quarter ended March 31, 1996, compared to a net income of $24,766 during the
same period of 1995. The primary differences between 1996 and 1995 were:
1. In 1995 the Registrant had timber removed from one of its properties
resulting in income of $35,664. There was no timber sold in 1996.
2. Expenses in 1995 include the cost of appraisals for the Registrant's
properties and legal fees for the preparation of a Form 8-K.
On February 2, 1995 the Registrant borrowed $55,000 from the General
Partner to replenish its cash balance which had been depleted by operating
expenses. The note is payable upon the sale of the Registrant's properties or
other sources of funds but must be paid no later than June 1, 1996. The note
bears interest at prime plus one percent. Interest is payable quarterly.
The Registrant, Churchill & Banks, Ltd. ("Churchill & Banks"), and ADA
Corporation of North Carolina ("ADA"), which is affiliated with the General
Partner, have executed an agreement for Churchill & Banks to purchase certain
tracts of real property owned by the Registrant (the Wellington Parcel) and
ADA. The agreement was amended on August 9, 1995 and April 19, 1996. The
purchase price for the land to be received by the Registrant is $5.25 per net
square foot. The Registrant believes the Wellington Parcel is approximately
16.3 acres, which would yield a sales price of $3,727,647. Square footage is
to be verified by survey. Closing for the sale of the property is to occur on
June 24, 1996. The Purchase Agreement and the Amendment contain a number of
conditions to closing which must be satisfied prior to closing. Consequently,
although there are no indications as of May 9, 1996 that the sale will not
close as planned, there can be no assurance this Agreement will result in a
closing.
As of May 9, 1996, the Registrant has $19,397 in cash and short-term
investments, which is insufficient to meet its needs during the next year. The
General Partner anticipates the sale and closing of the Wellington Parcel (see
discussion above) in June 1996. This sale, when closed, will provide the
Registrant with funds which will be sufficient to meet its presently
anticipated needs. The Registrant expects to retain approximately $300,000
from the Wellington sale for future operating needs and distribute the
remainder to the partners in accordance with the Partnership Agreement. If the
Wellington Parcel sale does not close, the Registrant may obtain additional
financing to meet its present operating needs.
8
<PAGE> 9
The Registrant maintains its excess funds in a money market account at
Triangle Bank. The General Partner believes this account is an appropriate
investment of the Registrant's funds. Until either of the properties is sold,
placed into development and/or refinanced, the Registrant anticipates deficits
from operations and administrative expenses.
CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE THE
REGISTRANT'S ACTUAL RESULTS TO DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING
STATEMENTS.
In connection with the "safe "harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this document, and
any document incorporated by reference herein, are advised that this
document and documents incorporated by reference into this document
contain both statements of historical facts and forward looking
statements. Forward looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from
those indicated by the forward looking statements. Examples of forward
looking statements include, but are not limited to (i) projections of
revenues, income or loss, earnings or loss per share, capital
expenditures, dividends, capital structure and other financial items,
(ii) statements of the plans and objectives of the Registrant or its
management, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulatory
authorities, (iii) statements of future economic performance, and (iv)
statements of assumptions underlying other statements and statements
about the Registrant or its business.
This document and any documents incorporated by reference herein also
identify important factors which could cause actual results to differ
materially from those indicated by the forward looking statements. These
risks and uncertainties include uncertainties about whether real estate
sales under contract will close, the ability of the Registrant to sell
its other real estate assets, the price of real estate sales,
environmental and similar liabilities, future operating expenses and the
adequacy of capital resources to meet future operating expenses, which
are described herein and/or in documents incorporated by reference
herein.
The cautionary statements made pursuant to the Private Litigation
Securities Reform Act of 1995 above and elsewhere by the Registrant
should not be construed as exhaustive or as any admission regarding the
adequacy of disclosures made by the Registrant prior to the effective
date of such Act. Forward looking statements are beyond the ability of
the Registrant to control and in many cases the Registrant cannot predict
what factors would cause actual results to differ materially from those
indicated by the forward looking statements.
9
<PAGE> 10
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) 27 - Financial Data Schedule (For SEC Use Only).
28.5 - Second Amendment For the Purchase and Sale of Real Estate.
(b) No reports on Form 8-K were filed during the quarter ending
March 31, 1996.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAROLINA INVESTMENT PARTNERS
LIMITED PARTNERSHIP (Registrant)
BY: WALSMITH ASSOCIATES TWO,
General Partner
/s/ Alton L. Smith, III
-------------------------------------
Alton L. Smith, III, General Partner
Date: May 14, 1996.
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
S-K Reference
and Exhibit Sequential
Number Description Page Number
- ------------- ----------- -----------
<S> <C> <C>
27 Financial Data Schedule (For SEC
Use Only)
28.1 Offer to Purchase and Contract for The Quarterly
the Sale and Purchase of Real Report on Form
Estate dated as of January 24, 1986, 10-Q for the
between Wellington Park Associates Quarter ended
and the Registrant June 30, 1989.
Page 12.
28.2 Amendment to Offer to Purchase and Annual Report
Contract for Sale of Real Estate on Form 10-K
dated as of February 1, 1990 for the Year
between the Registrant and ended December
Wellington Park Associates 31, 1989.
Page 28.
28.3 Agreement for the Purchase and Sale Form 8-K dated
of Real Estate dated as of April 20, April 20, 1995.
1995 between the Registrant, Churchill Page 5.
& Banks, Ltd., and ADA Corporation of
North Carolina
28.4 First Amendment to the Agreement for Form 8-K dated
the Purchase and Sale of Real Estate August 9, 1995.
dated August 9, 1995 between the Page 4.
Registrant, Churchill & Banks, Ltd.,
and ADA Corporation of North Carolina
28.5 Second Amendment To Agreement For The Page 28.5-1.
Purchase And Sale Of Real Estate
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP FOR
THE THREE MONTHS ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 19,080
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,352
<PP&E> 4,822,183
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,843,615
<CURRENT-LIABILITIES> 32,258
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,811,357
<TOTAL-LIABILITY-AND-EQUITY> 4,843,615
<SALES> 0
<TOTAL-REVENUES> 2,065
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,276
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,211)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,211)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 28.5
SECOND AMENDMENT TO AGREEMENT FOR THE
PURCHASE AND SALE OF REAL ESTATE
THIS SECOND AMENDMENT to Agreement for the Purchase and Sale of Real
Estate ("Amendment") dated this 19th Day of April, 1996, by and between CAROLINA
INVESTMENT PARTNERS, a North Carolina Limited Partnership, ADA CORPORATION OF
NORTH CAROLINA, a North Carolina corporation (hereinafter collectively referred
to as "Sellers"), and CHURCHILL & BANKS, LTD., a Rhode Island Corporation
(hereinafter referred to as "Purchaser").
WITNESSETH:
WHEREAS, Sellers and Purchaser entered into that certain Agreement for
the Purchase and Sale of Real Estate ("Purchase Agreement") dated April 29,
1995, of certain real estate located in Cary, North Carolina, as the same is
more particularly described in the Purchase Agreement; and
WHEREAS, Sellers and Purchaser entered into a certain First Amendment of
the Purchase and Sale Agreement on August 9, 1995, extending the Closing Date
for the purchase of said real estate to February 9, 1996 with two (2) successive
thirty (30) day extension periods thereafter; and
WHEREAS, Sellers and Purchaser entered into a certain Letter Agreement
on February 8, 1996 extending the Closing Date to February 23, 1996, reaffirming
therein the aforementioned two (2) successive thirty (30) day extension periods
to run from February 23, 1996; and
WHEREAS, Purchaser has exercised its rights to said two (2) extension
periods, and
WHEREAS, Purchaser has requested and Seller has agreed to further extend
the Closing Date;
NOW, THEREFORE, The first sentence of Section 3.1, Closing, is hereby
deleted and replaced with the following provision: --------
1) The conveyance of title, payment of the Purchase Price and
performance of other specified obligations of the Parties to
be performed at the closing (herein called the "Closing") shall
occur on April 23, 1996; provided, however, that Purchaser
shall have the right to extend the Closing for two (2)
successive thirty (30) day extension periods (each said thirty
(30) day period hereinafter referred to as a "Closing Extension
Period") upon payment to Sellers of Five Thousand ($5,000.00)
Dollars per Closing Extension Period, which sum(s) shall be
non-refundable, and shall not apply to purchase price.
2) This Amendment shall be binding upon and inure to the
benefit of the successors and assigns of the respective parties.
1
<PAGE> 2
3) This Amendment shall be construed under and in accordance with
the laws of the State of North Carolina.
Except as herein expressly modified, all of the terms and conditions of
the Purchase Agreement hereby remain in full force and effect.
IN WITNESS WHEREOF, this Amendment of Agreement for the Purchase and
Sale of Real Estate has been duly executed by the parties hereto the date and
year first above written.
PURCHASE:
CHURCHILL & BANKS, LTD.
ATTEST:
/s/ Muriel A. Lanfredi BY: /s/ Richard P. Baccari
- --------------------------- ------------------------------------
Secretary Richard P. Baccari, C.E.O.
(Corporate Seal)
SELLER:
CAROLINA INVESTMENT PARTNERS
ATTEST:
By: /s/ Alton L. Smith, General Partner
- --------------------------- ------------------------------------
Secretary General Partner
(Corporate Seal)
ADA CORPORATION OF NORTH CAROLINA
ATTEST:
/s/ Pamela G. Gay BY: /s/ Donald F. Walston
- --------------------------- ------------------------------------
Secretary President
(Corporate Seal)
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
I, Muriel A. Lanfredi, a Notary Public in and for the aforesaid County
and State, certify that Richard P. Baccari personally came before me this day
and acknowledged that he is Chief Executive Officer of Churchill & Banks, Ltd.,
a Rhode Island corporation, and that by authority duly given and as the act of
the corporation the foregoing instrument was signed in its name by its Chief
Executive Officer, sealed with its corporate seal, and attested by its
Secretary.
Witness my hand and seal, this 19th Day of April, 1996.
/s/ Muriel A. Lanfredi
-------------------------------
Notary Public
My Commission Expires: 1/19/98
2
<PAGE> 3
STATE OF NORTH CAROLINA
COUNTY OF WAKE
I, Kathleen M. Sorrentino, a Notary Public in and for the aforesaid
County and State, certify that Alton L. Smith, III, General Partner of Carolina
Investment Partners, a North Carolina limited partnership, personally appeared
before me this day and acknowledged the due execution of the foregoing
instrument.
Witness my hand and seal, this the 19th Day of April, 1996.
/s/ Kathleen M. Sorrentino
---------------------------------
Notary Public
My Commission Expires: 12-26-2002
STATE OF NORTH CAROLINA
COUNTY OF WAKE
I, Kathleen M. Sorrentino, a Notary Public in and for the aforesaid
County and State, certify that Pamela G. Gay personally came before me this day
and acknlowledged that (s)he is a Secretary of ADA CORPORATION OF NORTH
CAROLINA, a North Carolina Corporation, and that by authority duly given as the
act of the corporation the foregoing instrument was signed in its name by its
____ President, sealed with its corporate seal and attested by its Secretary.
Witness my hand and seal, this the 19th Day of April, 1996.
/s/ Kathleen M. Sorrentino
-------------------------------------
Notary Public
My Commission Expires: 12-26-2002
3
