<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
[ ] 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 0-15571
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 13.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Information
a) Income Statement
STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Timber income $ -0- $ -0- $ -0- $ 35,664
Deposits on sales contract 9,500 -0- 11,300 -0-
Interest and other income 159 439 424 637
------------- -------------- ------------- ----------------
Total 9,659 439 11,724 36,301
General and
administrative expenses 13,166 12,653 22,442 23,749
------------- -------------- ------------- ----------------
NET INCOME
(LOSS) $ (3,507) $ (12,214) $ (10,718) $ 12,552
============= ============== ============= ================
Allocation of net income
(loss) to:
General Partner $ -0- $ (122) $ -0- $ 126
Limited Partners (3,507) (12,092) (10,718) 12,426
------------- -------------- ------------- ----------------
$ (3,507) $ (12,214) $ (10,718) $ 12,552
============= ============== ============= ================
Net income (loss) per
limited partnership unit
(based on 5,900 weighted
average limited partnership
units outstanding) $ (.59) $ (2.05) $ (1.82) $ 2.11
============= ============== ============= ================
</TABLE>
See notes to unaudited financial statements.
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b) Balance Sheets
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 227 $ 542
Short-term investment 15,595 32,796
---------- ----------
CASH AND CASH EQUIVALENTS 15,822 33,338
Land held for investment--Note B 4,822,183 4,822,183
Other assets 1,603 103
---------- ----------
TOTAL ASSETS $4,839,608 $4,855,624
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Trade accounts payable and other
accrued liabilities $ 15,694 $ 20,992
Note payable to General
Partner -- Note C 16,064 16,064
---------- ----------
TOTAL LIABILITIES 31,758 37,056
PARTNERS' EQUITY
General partner's equity -0- -0-
Limited partners' equity; 5900 units
authorized, issued, and outstanding 4,807,850 4,818,568
---------- ----------
TOTAL LIABILITIES
AND PARTNERS' EQUITY $4,839,608 $4,855,624
========== ==========
</TABLE>
See notes to unaudited financial statements.
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c) Statements of Changes in Partners' Capital
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (Unaudited)
<TABLE>
<CAPTION>
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
six months ended
June 30, 1996 -0- -0- (10,718) (10,718)
----- ------ ---------- ----------
BALANCE AT
JUNE 30, 1996 5,900 $ -0- $4,807,850 $4,807,850
----- ------ ---------- ----------
Balance at
January 1, 1995 5,900 $ -0- $4,820,865 $4,820,865
Net income for the
six months ended
June 30, 1995 -0- 126 12,426 12,552
----- ------ ---------- ----------
BALANCE AT
JUNE 30, 1995 5,900 $ 126 $4,833,291 $4,833,417
----- ------ ---------- ----------
</TABLE>
See notes to unaudited financial statements.
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d) Statements of Changes in Financial Position
STATEMENTS OF CASH FLOW (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(10,718) $ 12,552
Increase in other assets (1,500) (1,500)
Increase (decrease) in trade accounts payable (5,298) 3,568
-------- --------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (17,516) 14,620
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 (17,516) 33,956
Cash and cash equivalents at beginning
of period 33,338 4,065
-------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 15,822 $ 38,021
======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest during the six months ended
June 30 was $671 in 1996 and $756 in 1995.
See notes to unaudited financial statements.
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e) Notes to Financial Statements
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 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 June 30, 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.
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NOTE C - NOTE PAYABLE TO GENERAL PARTNER
On February 2, 1995 the Registrant borrowed $55,000 from its General Partner.
This note, which was paid down to a principal balance of $16,064, matured on
June 1, 1996. The Registrant has signed a new note dated June 1, 1996 for
$16,064, payable to its General Partner. The new 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, 1997. The note bears interest at
the rate of prime plus 1%, which is payable quarterly.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Registrant's operations resulted in a net loss of $3,507 and $10,718
during the quarter and six months ended June 30, 1996, respectively, compared
to a net loss of $12,214 and net income of 12,552 during the same periods of
1995. The primary differences between 1996 and 1995 were:
Quarter Ended June 30
In 1996 the Registrant received $9,500 in non-refundable deposits for
extensions of the Closing Date on the Wellington Parcel contract (see
discussion below).
Six Months Ended June 30
1. In 1996 the Registrant received $11,300 in non-refundable deposits for
extensions of the Closing Date on the Wellington Parcel contract.
2. 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.
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. In February and March 1995, the Registrant had timber removed from
its properties generating income of $35,644, which was repaid against the loan
from the General Partner. Further payments reduced the note balance to
$16,064. The note matured on June 1, 1996. A new note for $16,064 dated June
1, 1996 was issued. The new 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,
1997. 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
August 14, 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 August 5, 1996 that the sale will not
close as planned, there can be no assurance this Agreement will result in a
closing.
As of August 5, 1996, the Registrant has $17,103 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
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August, 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 need to obtain additional financing to meet its
present operating needs.
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
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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.
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Item 6. Exhibits and Reports on Form 8-K
(a) 27 - Financial Data Schedule (For SEC Use Only).
(b) No reports on Form 8-K were filed during the quarter ending June 30,
1996.
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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
------------------------------------
Alton L. Smith, III, General Partner
Date: August 6 , 1996.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
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 Quarterly Report
Purchase And Sale Of Real Estate dated on Form 10-Q for the
April 19, 1996 between the Registrant, Quarter ended March
Churchill & Banks, Ltd., and ADA 31, 1996.
Corporation of North Carolina Page 28.5-1.
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CAROLINA INVESTMENT PARTNERS FOR THE 3 MONTHS
ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 15,822
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,603
<PP&E> 4,822,183
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,839,608
<CURRENT-LIABILITIES> 31,758
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,807,850
<TOTAL-LIABILITY-AND-EQUITY> 4,839,608
<SALES> 0
<TOTAL-REVENUES> 9,659
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,166
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,507)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
