<PAGE> 1
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: 0-16601 (formerly 33-16164-LA)
------------------------------
FMG RITA RANCH LIMITED PARTNERSHIP
----------------------------------
(Exact name of registrant)
Delaware 23-2466343
- -------- ----------
(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
--- ---
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of FMG Rita Ranch Limited
partnership (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 is a Delaware limited partnership. The Partnership was
formed on January 30, 1987 by FMG Western Region Acquisitions, Inc. (the
"General Partner") and the initial limited partner, FM Initial, Inc., with an
initial contribution of $25,000 by the General Partner. The General Partner is
an indirect wholly-owned subsidiary of The Fidelity Mutual Life Insurance
Company (in Rehabilitation) ("Fidelity Mutual"). In accordance with the Amended
and Restated Limited partnership Agreement dated December 17, 1987 (the
"Partnership Agreement"), FM Initial, Inc. withdrew from the partnership upon
admittance of new limited partners. The Partnership was formed to acquire and
realize appreciation in a certain 118 acre parcel of undeveloped land near
Tucson, Arizona (the "Property") by holding it for investment and eventual sale,
although there is no assurance that this will be attained.
Results of Operations
The Partnership's revenues for the third quarter of 1997 consisted of
partnership transfer fees in the amount of $225. Expenses for the third quarter
of 1997 consisted of general and administrative costs of $1,262, management fees
of $3,750, insurance of $27 and real estate taxes of $1,983.
The Partnership's revenues for the third quarter of 1996 consisted of
interest income of $1 and partnership transfer fees of $25. Expenses for the
third quarter of 1996 consisted of general and administrative costs of $1,179,
management fees of $3,750, insurance of $35 and real estate taxes of $1,892.
The Partnership's revenues for the third quarter of fiscal year 1995
consisted of interest income of $2 and partnership transfer fees of $25.
Expenses for the third quarter of 1995
2
<PAGE> 3
consisted of general and administrative costs of $1,156, management fees of
$3,750, insurance of $30, and real estate taxes of $1,246.
The Partnership's revenues for the second quarter of 1997 consisted of
interest income of $1 and partnership transfer fees of $75. Expenses for the
second quarter of 1997 consisted of general and administrative costs of $1,655,
management fees of $3,750, insurance of $27 and real estate taxes of $2,366.
The Partnership's revenues for the second quarter of 1996 consisted of
interest income of $2 and partnership transfer fees of $25. Expenses for the
second quarter of 1996 consisted of general and administrative costs of $1,875,
management fees of $3,750, insurance of $34 and real estate taxes of $2,604.
The Partnership's revenues for the second quarter of 1995 consisted of
interest income of $2. Expenses for the second quarter of 1995 consisted of
general and administrative costs of $1,470, management fees of $3,750, insurance
of $31 and real estate taxes of $3,283.
The Partnership's revenues for the first quarter of 1997 consisted of
interest income of $2. Expenses for the first quarter of 1997 consisted of
general and administrative costs of $1,255, management fees of $3,750, insurance
of $27 and real estate taxes of $2,367.
The Partnership's revenues for the first quarter of 1996 consisted of
interest income of $2 and partnership transfer fees of $75. Expenses for the
first quarter of 1996 consisted of general and administrative costs of $1,430,
management fees of $3,750, insurance of $35 and real estate taxes of $2,604.
The Partnership's revenues for the first quarter of 1995 consisted of
interest income of $2. Expenses for the first quarter of 1995 consisted of
general and administrative costs of $1,557, management fees of $3,750, insurance
of $31 and real estate taxes of $3,282.
The General Partner has no plans to develop the Property, except for
activities including land planning, market surveys and other activities
necessary to prepare the Property for sale. There can be no assurance that
necessary funds would be available should it be desirable for the Partnership to
improve the Property to facilitate its sale.
Because of the lack of demand for industrial and commercial land in the
Tucson area and the resulting decline in the Property's value, the Partnership
was required to reduce its carrying value on the Property in 1990 and again in
1992. The General Partner believes that it would be necessary for the
Partnership to hold the property for several years, possibly decades, before the
Partnership may be able to sell the Property at a price which approximates the
price paid by the Partnership for the Property. Thus, it is unlikely that the
Property will be sold for a price which approximates the original price paid by
the Partnership for the Property.
3
<PAGE> 4
Liquidity and Capital Resources
The Partnership has no cash reserve remaining at September 30, 1997. As
shown in the accompanying financial statements, the Partnership has incurred
substantial operating losses in each of the past three years. Such losses will
continue until the Partnership begins to sell land parcels. In the partnership
agreement, the General Partner has committed to contribute up to $600,000 to the
capital of the Partnership as the need for additional working capital arises.
Cumulative amounts funded by the General Partner amounted to $294,619 at
September 30, 1997. Realization of the partnership's assets is dependent upon
the continued funding of operating deficits by the General Partner and its
affiliate. There can be no assurance, however, that the General Partner or its
affiliate will continue to fund operating deficits.
During 1992 and 1990, the Partnership recorded writedowns of $830,000
and $6,261,041 respectively.
The weak conditions in both the real estate and industrial sectors of
Tucson were responsible for nearly halting sales of undeveloped industrial land.
These unfavorable conditions have contributed to the substantial decrease in the
value of the Partnership's land.
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 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
P.S. Section 221.1 et seq. The Partnership is not a direct party to the order,
but ownership of the stock of the General Partner and the stock of the majority
Limited Partner is vested in the Insurance Commissioner pursuant to the Order.
Item 2 - Changes in Securities
There was no change in the partnership's securities during the third
quarter of 1997.
Item 3 - Defaults Upon Senior Securities
4
<PAGE> 5
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
No matters were submitted to the Partners for a vote during the third
quarter of 1997.
Item 5 - Other Information
None
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
12 not applicable
13 not applicable
</TABLE>
5
<PAGE> 6
16 not applicable
18 not applicable
19 not applicable
22 not applicable
23 not applicable
24 not applicable
25 not applicable
28 not applicable
29 not applicable
- --------------------------------------------------------------------------------
*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. 33-16164-LA.
** Incorporated by reference to Exhibit 3.2 filed as part of the
partnership's Registration Statement on Form S-18, Registration No. 33-16164-LA.
6
<PAGE> 7
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/ ARTHUR W. MULLIN President, 11/11 1997
- -------------------- Treasurer, -------
Arthur W. Mullin Director of
FMG Western
Region
Acquisitions,
Inc.
/s/ JAMES W. KELICAN, JR. Vice President, 11/11 1997
- ------------------------- Director of -------
James W. Kelican, Jr. FMG Western
Region
Acquisitions,
Inc.
</TABLE>
7
<PAGE> 8
EXHIBIT A
FMG RITA RANCH LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31
1997 1996
(Unaudited)
-------------- -----------
<S> <C> <C>
Land held for investment $ 350,000 $ 350,000
Cash and cash equivalents 519 267
-------------- -----------
$ 350,519 $ 350,267
============== ===========
</TABLE>
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<S> <C> <C>
LIABILITIES:
Accrued expenses $ 14,141 $ 9,661
Due to affiliates - 3,750
Partners' Equity 336,378 336,856
-------------- -----------
$ 350,519 $ 350,267
============== ===========
</TABLE>
1
<PAGE> 9
F M G RITA RANCH LIMITED PARTNERSHIP
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 $ - $ 1 $ 3 $ 5
Other income 225 25 300 125
------------- --------------- -------------- --------------
225 26 303 130
------------- --------------- -------------- --------------
EXPENSES:
Real estate taxes 1,983 1,892 6,716 7,100
Management fees 3,750 3,750 11,250 11,250
General and administrative 1,262 1,179 4,172 4,484
Insurance 27 35 81 104
------------- --------------- -------------- --------------
7,022 6,856 22,219 22,938
------------- --------------- -------------- --------------
NET LOSS $ (6,797) $ (6,830) $ (21,916) $ (22,808)
Partners' equity,
Beginning of period 339,388 339,025 336,856 336,613
Captial Contributions 3,787 3,750 21,438 22,140
------------- --------------- -------------- --------------
Partners' equity,
End of period $ 336,378 $ 335,945 $ 336,378 $ 335,945
============= =============== ============== ==============
Weighted Average Number of
Limited Partnership Units
Outstanding 6,707 6,707 6,707 6,707
============= =============== ============== ==============
Loss from Operations per
Limited Partnership
Interest $(1.00) $(1.00) $(3.23) $(3.36)
============= =============== ============== ==============
</TABLE>
2
<PAGE> 10
F M G RITA RANCH LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
-----------------------------------------------
1997 1996 1995
------------- ---------------- ------------
<S> <C> <C> <C>
REVENUES:
Interest income $ 3 $ 5 $ 6
Other income 300 125 25
------------- ---------------- ------------
303 130 31
------------- ---------------- ------------
EXPENSES:
Real estate taxes 6,716 7,100 7,811
Management fees 11,250 11,250 11,250
General and administrative 4,172 4,484 4,183
Insurance 81 104 92
------------- ---------------- ------------
22,219 22,938 23,336
------------- ---------------- ------------
NET LOSS $ (21,916) $ (22,808) $ (23,305)
============= ================ ============
</TABLE>
3
<PAGE> 11
F M G RITA RANCH LIMITED PARTNERSHIP
STATEMENTS 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:
Net income (loss) $ (21,916) $ (22,808) $ (23,305)
Adjustments to reconcile net
income (loss) to net cash
used in operating activities:
Increase in General Partner's
capital 21,438 22,140 23,156
Increase (decrease) in
accrued expenses 4,480 4,458 90
Increase (decrease) in
due to affiliate (3,750) (3,750) -
------------ ---------- ----------
Net cash provided by (used in)
operating activities $ 252 $ 40 $ (59)
------------ ---------- ----------
Cash, Beginning of period 267 205 292
Cash, End of period $ 519 $ 245 $ 233
============ ========== ==========
</TABLE>
4
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000820047
<NAME> FMG RITA RANCH LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 519
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 519
<PP&E> 350,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 350,519
<CURRENT-LIABILITIES> 14,141
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 336,378
<TOTAL-LIABILITY-AND-EQUITY> 350,519
<SALES> 225
<TOTAL-REVENUES> 225
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,022
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,797)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,797)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
