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, 1999.
[ ] 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)
4000 Blue Ridge Road, Suite 100
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.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Information
a) Income Statement
STATEMENTS OF INCOME (Unaudited)
Three Months Ended
March 31
1999 1998
Gain on sale of land $ -0- $ 163,940
Extension fees -0- 22,766
Interest and other income 9,084 32,062
------------- ----------------
Total Income 9,084 218,768
General and
Administrative expenses 8,054 19,697
------------- ----------------
NET INCOME $ 1,030 $ 199,071
============= ================
Allocation of net income
to:
General Partner:
From Gain on sale of land $ -0- $ 1,639
From other operations 10 351
------------- ----------------
Total to General Partner 10 1,990
------------- ----------------
Limited Partners:
From Gain on sale of land -0- 162,301
From other operations 1,020 34,780
------------- ----------------
1,020 197,081
------------- ----------------
TOTAL ALLOCATION $ 1,030 $ 199,071
============= ================
Net income per
limited partnership unit
(based on 5,900 weighted
average limited partnership
units outstanding):
From Gain on sale
of land $ -0- $ 27.51
From other operations .17 5.95
------------- ----------------
TOTAL PER UNIT $ .17 $ 33.46
============= ================
===================================================================
See notes to unaudited financial statements.
2
<PAGE>
b) Balance Sheets
BALANCE SHEETS
March 31, 1999 December 31,1998
(Unaudited)
ASSETS
Cash $ 101,728 $ 110,033
Short-term investments 305,853 303,132
---------- ----------
CASH AND CASH EQUIVALENTS 407,581 413,165
Land held for investment--Note B 3,594,592 3,594,592
Other assets 5,834 2,029
---------- ----------
TOTAL ASSETS $4,008,007 $4,009,786
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Trade accounts payable and other
accrued liabilities $ 17,947 $ 14,637
Distribution not claimed by limited partners 158,442 165,922
Accounts payable-related party 3,000 1,639
---------- ----------
TOTAL LIABILITIES $ 179,389 $ 182,198
---------- ----------
PARTNERS' EQUITY
General partner's equity $ 875 $ 865
Limited partners' equity; 5900 units
authorized, issued, and outstanding 3,827,743 3,826,723
---------- ----------
TOTAL PARTNERS' EQUITY $3,828,618 $3,827,588
---------- ----------
TOTAL LIABILITIES
AND PARTNERS' EQUITY $4,008,007 $4,009,786
========== ==========
See notes to unaudited financial statements.
3
<PAGE>
c) Statements of Changes in Partners' Capital
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (Unaudited)
Limited General Limited
Partnership Partner's Partners'
Units Equity Equity Total
----- ------ ------ -----
Balance at
January 1, 1999 5,900 $ 865 $3,826,723 $3,827,588
Net income for the
three months ended
March 31, 1999 10 1,020 1,030
---------- ---------- ---------- ----------
BALANCE AT
MARCH 31, 1999 5,900 $ 875 $3,827,743 $3,828,618
========== ========== ========== ==========
Balance at
January 1, 1998 5,900 $ 5,711 $4,750,383 $4,756,094
Net income for the
three months ended
March 31, 1998 1,990 197,081 199,071
---------- ---------- ---------- ----------
BALANCE AT
MARCH 31, 1998 5,900 $ 7,701 $4,947,464 $4,955,165
========== ========== ========== ==========
See notes to unaudited financial statements.
4
<PAGE>
d) Statements of Changes in Financial Position
STATEMENTS OF CASH FLOW (Unaudited)
Three Months Ended
March 31
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,030 $ 199,071
Changes in assets and liabilities:
Decrease in land held for investment -0- 46,186
(Increase) decrease in other assets (3,805) 2,265
Increase (decrease) in trade accounts payable and (2,809) (10,188)
distributions not claimed by limited partners
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (5,584) 237,334
----------- -----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (5,584) 237,334
Cash and cash equivalents at beginning of period 413,165 1,002,868
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 407,581 $ 1,240,202
=========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest during the three months ended
March 31 was $0 in 1999 and $0 in 1998.
See notes to unaudited financial statements.
5
<PAGE>
e) Notes to Financial Statements
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1999
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, 1999 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 AND TRANSACTIONS
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 was carried at the lower of (i) contract cost plus capitalized purchase and
closing costs or (ii) net realizable value. The contract under which the
Registrant purchased the parcel provided that WPA would share with the
Registrant in any profits resulting from the 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.
In 1996, 1997 and 1998 the Registrant sold the Wellington Parcel to a third
party under the terms of an Agreement for the Purchase and Sale of Real Estate,
as amended ("the Agreement"), between the Registrant, Wellington Center
Associates LLC (successor to Churchill & Banks, Ltd.) ("WCA"), and ADA
Corporation of North Carolina ("ADA"), an affiliate of the Registrant's General
Partner. The total sales price for the property sold, a portion of which was
owned by ADA, was $3,927,636. This sales price was allocated among the
Registrant and ADA based upon acreage sold by each, with $3,730,963 to the
Registrant and $196,673 to ADA. As of April 9, 1998, all of the Wellington
Parcel was sold.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Registrant's operations resulted in net income of $1,030 during the quarter
ended March 31, 1999 compared to a net income of $199,071 during the same period
of 1998. The primary differences between 1999 and 1998 were:
o In the first quarter of 1998, there was a gain of $163,940 from the
sale of approximately .61 acres of the Registrant's Wellington Parcel
and a late closing penalty of $22,765 and interest of $25,930. There
was no sale of land in the first quarter of 1999; the only income of
the Registrant during the first quarter of 1999 was $9,084 of
interest.
o Expenses in 1998 included $4,300 for additional outside services.
These fees were higher due to additional procedures required in
relation to the land sale and distribution that occurred in 1998 (see
discussion below).
o Expenses in 1999 attributable to property taxes decreased
approximately $1,000. These taxes were lower due to the sales of land
during 1998.
Changes in the Registrant's financial condition as of March 31, 1999, in
comparison to December 31, 1998, are primarily due to:
o Reclassification of checks that were classified as liabilities to the
limited partners. These checks, totaling $6,820 as of March 31, 1999,
have reduced cash and accounts payable.
As of May 5, 1999, the Registrant has $409,420 in cash and short-term
investments, which is sufficient to meet its needs during the next year.
The Registrant maintains its excess funds in a money market account and
certificates of deposit at Triangle Bank. The General Partner believes these
accounts are an appropriate investment of the Registrant's funds. Until its
properties are sold, placed into development and/or refinanced, the Registrant
anticipates deficits from operations and administrative expenses.
YEAR 2000
The Registrant has assessed the potential impact of the year 2000 issue on the
Registrant's operations. The Registrant believes that the Registrant does not
need to take any significant actions to address the Year 2000 issue and that the
impact of the Year 2000 issue will not materially affect the Registrant of the
Registrant's business, results of operations or financial condition. The
Registrant does not believe that the Year 2000 issue will materially affect the
Martin Parcel.
7
<PAGE>
Due to the infrequent transfer of the Registrant's partnership interests and the
Registrant's use of paper records regarding the accounts of its partners (as a
supplement to the Registrant's computer systems), the Registrant does not
believe that the Year 2000 issues will materially affect the Registrant's
internal accounting or management systems. The Registrant will not make any
significant expenditures for computer equipment or software upgrades.
After brief discussion with Triangle Bank regarding the Year 2000 issue, the
Registrant does not believe that the Year 2000 issue will materially affect its
excess funds held at Triangle Bank. After brief discussions with the
Registrant's General Partner regarding the Year 2000 issue, the Registrant does
not believe that the Year 2000 issue will materially affect the General
Partner's ability to perform any of its duties in connection with the
Registrant. The Registrant does not believe that that Registrant is vulnerable
to any other third party failures to remedy their own Year 2000 issues.
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 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
8
<PAGE>
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
9
<PAGE>
Part II
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit No. 3.1 Amended Agreement of Limited Partnership of
the Registrant (incorporated by reference
to Exhibit 4.1 to the Registrant's Annual
Report filed on Form 10-K for the year
ended December
31, 1986).
Exhibit No. 10.1 Purchase Agreement between Registrant and
Walsmith Associates regarding the Martin
Parcel (incorporated by reference to
Exhibit 10.1to the Registrant's Annual
Report filed on Form 10-K for the year
ended December 31,
1986).
Exhibit No. 10.2 Offer to Purchase and Contract for the Sale
and Purchase of Real Estate, dated as of
January 24, 1986, between Wellington Park
Associates and the Registrant (incorporated
by reference to Exhibit 6A to the
Registrant's Quarterly Report filed on Form
10-Q for the period ended June 30, 1989).
Exhibit No. 10.3 Agreement between the North Carolina
Department of Transportation and Walsmith
Associates (incorporated by reference to
Exhibit 10.3 to the Registrant's Annual
Report on Form 10-K for the year ended
December 31,
1986).
Exhibit No. 10.4 Assignment and Assumption Agreement between
the Registrant and Walsmith Associates
(incorporated by reference to Exhibit 10.4
to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1986).
Exhibit No. 10.5 Amendment to Offer to Purchase and Contract
for the Sale and Purchase of Real Estate,
dated as of February 1, 1990, between
Wellington Park Associates and the
Registrant (incorporated by reference to
Exhibit 10.6 to the Registrant's Annual
Report filed on Form 10-K for the period
ended December 31, 1989).
Exhibit No. 10.6 Agreement for the Purchase and Sale of Real
Estate, dated as of April 20, 1995, between
10
<PAGE>
Churchill & Banks, Ltd., ADA Corporation of
North Carolina, and the Registrant
(incorporated by reference to Exhibit C to
the Registrant's Current Report filed on
Form 8-K, dated April 20, 1995).
Exhibit No. 10.7 First Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as
of August 9, 1995, between Churchill &
Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated
by reference to Exhibit C to the
Registrant's Current Report filed on Form
8-K, dated August 9, 1995).
Exhibit No. 10.8 Second Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as
of April 19, 1996, between Churchill &
Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated
by reference to Exhibit 28.5 to the
Registrant's Quarterly Report filed on Form
10-Q for the period ended March 31, 1996).
Exhibit No. 10.9 Third Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as
of September 10, 1996, between Churchill &
Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated
by reference to Exhibit 10.1 to the
Registrant's Current Report filed on Form
8-K, dated September 25, 1996).
Exhibit No. 10.10 Fourth Amendment to the Agreement for
the Purchase and Sale of Real Estate, dated
as of September __, 1996, between Churchill
& Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated
by reference to Exhibit 10.2 to the
Registrant's Current Report filed on Form
8-K, dated September 25, 1996).
Exhibit No. 10.11 Fifth Amendment to the Agreement for
the Purchase and Sale of Real Estate, dated
as of September 27, 1996, between
Wellington Center Associates, LLC, ADA
Corporation of North Carolina, and the
Registrant (incorporated by reference to
Exhibit 10.3 to the Registrant's Current
Report filed on Form 8-K, dated
11
<PAGE>
September 25, 1996).
Exhibit No. 10.12 Sixth Amendment to the Agreement for
the Purchase and Sale of Real Estate, dated
as of September 12, 1997, between
Wellington Center Associates, LLC, ADA
Corporation of North Carolina, and the
Registrant (incorporated by reference to
Exhibit 10.12 to the Registrant's Quarterly
Report on Form 10-Q, dated September 30,
1997).
Exhibit No. 10.13 Letter Agreement to amend the Agreement
for the Purchase and Sale of Real Estate,
dated December 12, 1997 between Churchill &
Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated
by reference to Exhibit 10.13 to the
Registrant's Quarterly Report filed on Form
10-Q for the period ended March 31, 1998).
Exhibit No. 10.14 Eight Amendment to the Agreement for
the Purchase and Sale of Real Estate, dated
March 24, 1998 between Churchill & Banks,
Ltd., ADA Corporation of North Carolina,
and the Registrant (incorporated by
Reference to Exhibit 10.14 to the
Registrant's Quarterly Report filed on Form
10-Q for the period ended March 31, 1998).
Exhibit No. 27 Financial Data Schedule
(b) Reports on Form 8-K. None
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
By: /s/ Alton L. Smith III
-----------------------------------
Alton L. Smith III, General Partner
Date: May 14, 1999.
12
<PAGE>
INDEX
TO EXHIBITS
Exhibit No. Description Page
----------- ----------- ----
3.1 Amended Agreement of Limited
Partnership of the Registrant
(incorporated by reference to
Exhibit 4.1 to the Registrant's
Annual Report filed on Form 10-K
for the year ended December 31,
1986).
10.1 Purchase Agreement between
Registrant and Walsmith Associates
regarding the Martin Parcel
(incorporated by reference to
Exhibit 10.1to the Registrant's
Annual Report filed on Form 10-K
for the year ended December 31,
1986).
10.2 Offer to Purchase and Contract for
the Sale and Purchase of Real
Estate, dated as of January 24,
1986, between Wellington Park
Associates and the Registrant
(incorporated by reference to
Exhibit 6A to the Registrant's
Quarterly Report filed on Form
10-Q for the period ended June 30,
1989).
10.3 Agreement between the North
Carolina Department of
Transportation and Walsmith
Associates (incorporated by
reference to Exhibit 10.3 to the
Registrant's Annual Report on Form
10-K for the year ended December
31, 1986).
10.4 Assignment and Assumption
Agreement between the Registrant
and Walsmith Associates
(incorporated by reference to
Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K for the
year
13
<PAGE>
ended December 31, 1986).
10.5 Amendment to Offer to Purchase and
Contract for the Sale and Purchase
of Real Estate, dated as of
February 1, 1990, between
Wellington Park Associates and the
Registrant (incorporated by
reference to Exhibit 10.6 to the
Registrant's Annual Report filed
on Form 10-K for the period ended
December 31, 1989).
10.6 Agreement for the Purchase and
Sale of Real Estate, dated as of
April 20, 1995, between Churchill
& Banks, Ltd., ADA Corporation of
North Carolina, and the Registrant
(incorporated by reference to
Exhibit C to the Registrant's
Current Report filed on Form 8-K,
dated April 20, 1995).
10.7 First Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of August 9,
1995, between Churchill & Banks,
Ltd., ADA Corporation of North
Carolina, and the Registrant
(incorporated by reference to
Exhibit C to the Registrant's
Current Report filed on Form 8-K,
dated August 9, 1995).
10.8 Second Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of April 19,
1996, between Churchill & Banks,
Ltd., ADA Corporation of North
Carolina, and the Registrant
(incorporated by reference to
Exhibit 28.5 to the Registrant's
Quarterly Report filed on Form
10-Q for the period ended June 30,
1996).
10.9 Third Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of September 10,
1996, between Churchill & Banks,
14
<PAGE>
Ltd., ADA Corporation of North
Carolina, and the Registrant
(incorporated by reference to
Exhibit 10.1 to the Registrant's
Current Report filed on Form 8-K,
dated September 25, 1996).
10.10 Fourth Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of September __,
1996, between Churchill & Banks,
Ltd., ADA Corporation of North
Carolina, and the Registrant
(incorporated by reference to
Exhibit 10.2 to the Registrant's
Current Report filed on Form 8-K,
dated September 25, 1996).
10.11 Fifth Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of September 27,
1996, between Wellington Center
Associates, LLC, ADA Corporation
of North Carolina, and the
Registrant (incorporated by
reference to Exhibit 10.3 to the
Registrant's Current Report filed
on Form 8-K, dated September 25,
1996).
10.12 Sixth Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of September 12,
1997, between Wellington Center
Associates, LLC, ADA Corporation
of North Carolina, and the
Registrant (incorporated by
reference to Exhibit 10.12 to the
Registrant's Quarterly Report
filed on Form 10-Q for the period
ended September 30, 1997).
10.13 Letter Agreement to amend the
Agreement for the Purchase and
Sale of Real Estate, dated as of
December 12, 1997, between
Churchill &
15
<PAGE>
Banks, Ltd., ADA Corporation of
North Carolina, and the Registrant
(incorporated by reference to
Exhibit 10.13 to the Registrant's
Quarterly Report filed on Form 10-Q
for the period ended March 31,
1998).
10.14 Eight Amendment to the Agreement
for the Purchase and Sale of Real
Estate, dated as of March 24, 1998
between Wellington Center
Associates, LLC, ADA Corporation
of North Carolina, and the
Registrant (incorporated by
reference to Exhibit 10.14 to the
Registrant's Quarterly Report
filed on Form 10-Q for the period
ended March 31, 1998).
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 407,581
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 407,581
<PP&E> 3,594,592
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,008,007
<CURRENT-LIABILITIES> 179,389
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,828,618
<TOTAL-LIABILITY-AND-EQUITY> 4,008,007
<SALES> 0
<TOTAL-REVENUES> 9,084
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,054
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,030
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,030
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,030
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
