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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 1997.
-------------------
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: 0-16835 (formerly 33-12125-A)
-----------------------------
SOUTHEAST ACQUISITIONS I, L.P.
------------------------------
(Exact name of registrant)
Delaware 23-2454443
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 King of Prussia Road, Radnor, PA 19087
- -------------------------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (610 964-7234)
--------------
Indicate by check mark whether the registrant (a) 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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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of Southeast Acquisitions I, L.P.
(the "Partnership") at September 30, 1997 are attached hereto as Exhibit A.
In the opinion of management, the accompanying unaudited condensed
financial statements include all adjustments, which are of a normal recurring
nature, necessary to present fairly the Partnership's financial position as of
September 30, 1997, and the results of its operations and cash flows for the
nine months ended September 30, 1997.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Background
The Partnership was formed to acquire, own and realize appreciation in a
certain 202.72 acre parcel of undeveloped land near Columbia, South Carolina
(the "Property") by holding it for investment and eventual sale. However, there
can be no assurance that the partnership's objectives will be realized. The
Partnership was scheduled to terminate on December 31, 1997, but, on November 6,
1997 the termination date was extended, by vote of the limited partners, to
December 31, 2000. (See Part II, Items 4 and 5 hereof).
Results of Operations
The Partnership had no operations from the date of its formation on
December 5, 1986 until January 2, 1987 when it acquired the Property. Since its
acquisition of the Property, the partnership offered and sold 4,225 Units of
limited partnership interests and obtained the rezoning of the Property, but has
had no other significant operations.
The Partnership's activities for the third quarter of fiscal year 1997
were primarily focused on selling the Property. Revenues for the third quarter
of 1997 consisted of interest income of $959 and partnership transfer fees of
$225. Expenses for the third quarter of 1997 consisted primarily of general and
administrative costs of $41,625, insurance of $46 and real estate taxes of $72.
General and administrative costs include a $40,000 accrual for legal and
printing costs related to the proxy statement discussed in Part II, Item 4 and
5.
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The Partnership's activities for the third quarter of fiscal year 1996
were primarily focused on selling the Property. Revenues for the third quarter
of 1996 consisted of interest income of $789 and partnership transfer fees of
$50. Expenses for the third quarter of 1996 consisted primarily of general and
administrative costs of $3,659, insurance of $46 and real estate taxes of $73.
The Partnership's activities for the third quarter of fiscal year 1995
were primarily focused on selling the Property. Revenues for the third quarter
of 1995 consisted of interest income of $423 and partnership transfer fees of
$25. Expenses for the third quarter of 1995 consisted primarily of general and
administrative costs of $1,891, insurance of $53 and real estate taxes of $72.
The Partnership's activities for the second quarter of fiscal year 1997
were primarily focused on selling the Property. Revenues for the second quarter
of 1997 consisted of interest income of $791. Expenses for the second quarter of
1997 consisted primarily of general and administrative costs of $2,034,
insurance of $46 and real estate taxes of $73.
The Partnership's activities for the second quarter of fiscal year 1996
were primarily focused on selling the Property. Revenues for the second quarter
of 1996 consisted of interest income of $762, timber sales of $54,000 and
partnership transfer fees of $75. Expenses for the second quarter of 1996
consisted primarily of general and administrative costs of $2,219, insurance of
$46 and real estate taxes of $73.
The Partnership's activities for the second quarter of fiscal year 1995
were primarily focused on selling the Property. Revenues for the second quarter
of 1995 consisted of interest income of $427 and partnership transfer fees of
$50. Expenses for the second quarter of 1995 consisted primarily of general and
administrative costs of $1,791, insurance of $52 and real estate taxes of $71.
The Partnership's activities for the first quarter of fiscal year 1997
were primarily focused on selling the Property. Revenues for the first quarter
of 1997 consisted of interest income of $706. Expenses for the first quarter of
1997 consisted primarily of general and administrative costs of $1,626,
insurance of $46 and real estate taxes of $73.
The Partnership's activities for the first quarter of fiscal year 1996
were primarily focused on selling the Property. Revenues for the first quarter
of 1996 consisted of interest income of $368. Expenses for the first quarter of
1996 consisted primarily of general and administrative costs of $2,057,
insurance of $46 and real estate taxes of $73.
The Partnership's activities for the first quarter of fiscal year 1995
were primarily focused on selling the Property. Revenues for the first quarter
of 1995 consisted of interest income of $510 and partnership transfer fees of
$50. Expenses for the first quarter of 1995
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consisted primarily of general and administrative costs of $1,877, insurance of
$53 and real estate taxes of $72.
Inflation did not have any material impact on operations during 1997 and
it is not expected to materially impact future operations.
The Partnership has been marketing the Property and expects that it will
dispose of the Property as conditions warrant. The Property may be sold in a
single sale or divided into parcels which will be sold separately. The timing
and manner of sale will be determined by the new General Partner of the
Partnership, Southern Management Group, LLC as a result of actions taken by the
limited partners at a meeting on November 6, 1997. The new General Partner has
the right to sell the Property without the consent of the Limited Partners
unless the sale involves more than 60% of the acreage held as of September 22,
1997, in a single transaction and the consideration is less than the Acquisition
Costs of the assets sold.
It is possible that the Partnership will build a short, stub road off
Killian Road at a future time, although there are no current plans to construct
such a road. To minimize the expense of building such a road, the Partnership
made an agreement with a timber company to timber the Property and to locate one
of their timber roads in an area where the Partnership would build the spine
road so that the clearing for the road is done at no expense to the Partnership.
The Partnership has not determined to construct the stub road as of this
date.
Liquidity and Capital Resources
The Partnership has cash reserves of $85,680 at September 30, 1997,
which will be used to cover the following estimated annual costs: $10,000 per
year for auditing, accounting, tax, legal and other administrative services,
$200 per year for insurance and $300 per year for real estate taxes. At
September 30, 1997 the Partnership accrued an additional $40,000 (1997 only)
expense for legal and printing fees related to the proxy discussed in Part II,
Item 4 and 5. In the new General Partner's opinion, the Partnership's reserves
will be sufficient for an additional three years. If there is any excess cash
remaining in the reserve account, the funds will be used to pay unforeseen
expenses. If additional unforeseen expenses are incurred or should the
Partnership decide to construct the stub road into the Property (as discussed
earlier), the reserves may be inadequate to cover the Partnership's operating
expenses. If the reserves are exhausted, the Partnership may have to dispose of
a portion of the Property or incur indebtedness on unfavorable terms.
During 1996, Management of Southeast Acquisitions, Inc. the new General
Partner commissioned an appraisal of the Property which resulted in a write-down
of $996,645.
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The old General Partner reviewed the conclusions of the 1996 appraisal,
met with the appraiser, had discussions with local real estate professionals and
developers, and believes that the appraisal is a reasonable approximation of the
current value of the Property.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Partnership is not a direct party to, nor is the Partnership's
property directly the subject of, any material legal proceedings. However, on
November 6, 1992, the Commonwealth Court of Pennsylvania issued an order placing
The Fidelity Mutual Life Insurance Company ("Fidelity Mutual"), the indirect
parent of the old General Partner of the Partnership, into rehabilitation under
the control and authority of the Pennsylvania Insurance Commissioner pursuant to
the provisions of the Pennsylvania Insurance Department Act, 40 PS Section 221.1
et seq. The Partnership is not a direct party to the order, but ownership of the
stock of (and consequently control of) the old General Partner is vested in the
Insurance Commissioner pursuant to the Order. Effective November 6, 1997, the
old General Partner was replaced by the new General Partner (see Part II, Items
4 and 5). The new General Partner is not a party to or otherwise involved in the
old General Partner's rehabilitation proceedings.
Item 2 - Changes in Securities
There was no change in the partnership's securities during the third
quarter of fiscal year 1997.
Item 3 - Defaults Upon Senior Securities
There was no default in the payment of principal, interest, a sinking or
purchase fund installment or any other default with respect to any indebtedness
of the Partnership. The Partnership has issued no preferred stock; accordingly,
there has been no arrearages or delinquencies with respect to any such preferred
stock.
Item 4 - Submission of Matters to a Vote of Security Holders
Matters submitted to the Partners for a vote during the third quarter of
1997.
On September 22, 1997, the old General Partner mailed to the
Limited Partners of the Partnership the following:
1) a letter soliciting their votes on two sets of alternative
amendments;
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2) a notice of Special Meeting of the Limited Partners on
November 6, 1997;
3) a Proxy Statement detailing the two sets of alternative
amendments to be voted on at the Special Meeting; and
4) a Proxy Card.
The First alternative amendments would make the following
modifications to the Partnership Agreement:
1) extend the Partnership until December 31, 2000
2) substitute a new general partner
3) authorize new fees, commissions and rights to sell Partnership
property for the new general partner
4) give the new general partner the exclusive right to sell
Partnership property
5) modify the Limited Partners' rights to consent to certain
sales of Partnership property
The Second alternative amendments would make the following
modifications to the Partnership Agreement:
1) extend the Partnership until December 31, 2000
2) retain the General Partner
3) authorize new fees, commissions and rights to sell Partnership
property for the General Partner
4) give the General Partner the exclusive right to sell
Partnership property
5) eliminate the Limited Partners' rights to consent to certain
sales of Partnership property
Item 5 - Other Information
At the Special Meeting on November 6, 1997, the first set of
alternative amendments received the requisite vote to be adopted and as
a result of their adoption the following modifications to the
Partnership Agreement were effective as of November 6, 1997:
- The termination date for the Partnership was extended until
December 31, 2000;
- Southern Management Group, LLC (SMG) a Tennessee Limited
Liability Company, was substituted for Southeast Acquisitions,
Inc. as the General Partner. Southern Management Group, LLC is
located in Nashville, Tennessee and has the following address:
Southern Management Group, LLC
c/o Southeast Venture Corporation, Inc.
301 South Perimeter Park Drive
Suite 115
Nashville, TN 37211
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- SMG can act as broker for the Partnership and earn commissions
on sales of the Property up to a maximum of 10% which is the
maximum commission which can be paid in total on any sale;
- Additionally, SMG is to be paid management fees of $8,100 per
year;
- SMG has now been given the exclusive right to sell the
property; and SMG can only sell 60% or more of the acreage
held as of September 22, 1997 in a single transaction if it
receives consideration equal to or greater than the Acquisition
Cost of the assets sold. Otherwise it must obtain the consent
of the majority in interest of the Limited Partners.
Item 6 - Exhibits and Reports on Form 8-K
Reports on Form 8-K
None
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Exhibit Numbers Description Page Number
- --------------- ----------- -----------
<S> <C> <C>
3.1(a) Certificate of Limited *
Partnership
3.1(b) & (4) Restated Limited Partnership **
Agreement
9 not applicable
11 not applicable
</TABLE>
* Incorporated by reference to Exhibit 3.1 filed as part of the Exhibits
to the Partnership's Registration Statement on Form S-18, Registration No.
33-12125-A.
** Incorporated by reference to Exhibit 3.2 filed as part of the
Partnership's Registration Statement on Form S-18, Registration No. 33-12125-A
12 not applicable
13 not applicable
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16 not applicable
18 not applicable
19 not applicable
22 not applicable
23 not applicable
24 not applicable
25 not applicable
27 Financial Data Schedule
28 not applicable
29 not applicable
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ RICHARD W. SORENSON Member of
- ----------------------- Southern 11/11 1997
Richard W. Sorenson Management -------
Group, LLC
</TABLE>
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EXHIBIT A
SOUTHEAST ACQUISITIONS I, L.P.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30,
1997 December 31,
(Unaudited) 1996
------------- ------------
<S> <C> <C>
Land held for sale, net $ 2,520,000 $ 2,520,000
Cash and cash equivalents 85,680 91,596
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$ 2,605,680 $ 2,611,596
============= ============
</TABLE>
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<S> <C> <C>
Accrued expenses $ 45,093 $ 8,049
Partners' Equity 2,560,587 2,603,547
------------- ------------
$ 2,605,680 $ 2,611,596
============= ============
</TABLE>
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SOUTHEAST ACQUISITIONS I, L.P.
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 959 $ 789 $ 2,456 $ 1,919
Timber revenue - - - 54,000
Other income 225 50 225 125
------------- ------------- ------------- -------------
1,184 839 2,681 56,044
------------- ------------- ------------- -------------
EXPENSES:
General and administrative 41,625 3,659 45,285 7,935
Real estate taxes 72 73 218 219
Insurance 46 46 138 138
------------- ------------- ------------- -------------
41,743 3,778 45,641 8,292
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (40,559) $ (2,939) $ (42,960) $ 47,752
Partners' equity,
Beginning of period 2,601,146 3,608,522 2,603,547 3,557,831
------------- ------------- ------------- -------------
Partners' equity,
End of period $ 2,560,587 $ 3,605,583 $ 2,560,587 $ 3,605,583
============= ============= ============= =============
Weighted Average Number
of Limited Partnership
Units Outstanding 4,225 4,225 4,225 4,225
============= ============= ============= =============
Income (Loss) from Operations
per Limited Partnership
Interest $ (9.50) $ (.68) $ (10.06) $ 11.18
============= ============= ============= =============
</TABLE>
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SOUTHEAST ACQUISITIONS I, L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
---------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Interest income $ 2,456 $ 1,919 $ 1,360
Timber revenue - 54,000 -
Other income 225 125 125
------------- ------------- -------------
2,681 56,044 1,485
------------- ------------- -------------
EXPENSES:
General and administrative 45,285 7,935 5,559
Real estate taxes 218 219 215
Insurance 138 138 158
------------- ------------- -------------
45,641 8,292 5,932
------------- ------------- -------------
NET INCOME (LOSS) $ (42,960) $ 47,752 $ (4,447)
============= ============= =============
</TABLE>
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SOUTHEAST ACQUISITIONS I, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30
--------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest income received $ 2,456 $ 1,919 $ 1,360
Timber revenue received - 54,000 -
Other income received 225 125 125
Cash paid for operating expenses (8,597) (9,936) (9,556)
---------- ---------- ----------
Net cash (used in)
operating activities (5,916) 46,108 (8,071)
Cash and cash equivalents,
beginning of period 91,596 47,623 55,969
---------- ---------- ----------
Cash and cash equivalents,
end of end of period $ 85,680 $ 93,731 $ 47,898
========== ========== ==========
</TABLE>
RECONCILIATION OF NET INCOME(LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
<TABLE>
<S> <C> <C> <C>
Net Income(Loss) $ (42,960) $ 47,752 $ (4,447)
Adjustments to reconcile net income(loss)
to net cash (used in) provided
by operating activities:
Increase (decrease) in accrued expenses 37,044 (1,644) (1,599)
Increase (decrease) in due
to affiliates - - (2,025)
---------- ---------- ----------
Net cash provided by (used in)
operating activities $ (5,916) $ 46,108 $ (8,071)
========== ========== ==========
</TABLE>
4
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810994
<NAME> SOUTHEAST ACQUISITIONS I, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 85,680
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 85,680
<PP&E> 2,520,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,605,680
<CURRENT-LIABILITIES> 45,093
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,560,587
<TOTAL-LIABILITY-AND-EQUITY> 2,506,680
<SALES> 1,184
<TOTAL-REVENUES> 1,184
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41,743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (40,559)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,559)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
