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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 JUNE 30, 1998.
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
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of FMG Rita Ranch Limited
partnership (the "Partnership") at June 30, 1998 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
June 30, 1998, and the results of its operations and cash flows for the three
months ended June 30, 1998.
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 had no revenues for the second quarter of 1998.
Expenses for the second quarter of 1998 consisted of general and administrative
costs of $2,067, management fees of $3,750, insurance of $29 and real estate
taxes of $2,238.
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
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general and administrative costs of $1,875, management fees of $3,750, insurance
of $34 and real estate taxes of $2,604.
The Partnership had no revenues for the first quarter of 1998. Expenses
for the first quarter of 1998 consisted of general and administrative costs of
$3,367, management fees of $3,750, insurance of $30 and real estate taxes of
$2,239.
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 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. Class "A" Business Park lots dominate the industrial land sales market.
Sale prices range from $1.00 to $2.15 per square foot for 5 to 20 acre parcels.
There have not been any bulk sale transactions since the RTC was disposing of
it's properties. 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. The Partnership anticipates a sale price of
$4,000 to $5,000 per acre.
During 1990 and 1992, the Partnership recorded writedowns of $6,261,041
and $830,000 respectively.
Liquidity and Capital Resources
The Partnership has no cash reserve remaining at June 30, 1998. 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
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$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
$314,923 at June 30, 1998. 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.
The property is listed for sale with Grubb & Ellis of Tucson, Arizona.
The listing is from March 1, 1998 to November 30, 1998. A sale price of $4,000
to $5,000 an acre is anticipated.
Impact of Year 2000
The Partnership's management has assessed the Year 2000 technology
issue, and has developed an action plan to address the issue. Management
believes that its action plan will be implemented and completed in a timely
fashion, and that it will not materially affect the Partnership's future
operating results or future financial condition.
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 second
quarter of 1998.
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.
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Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to the Partners for a vote during the
second quarter of 1998.
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
16 not applicable
18 not applicable
19 not applicable
22 not applicable
</TABLE>
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<TABLE>
<S> <C>
23 not applicable
24 not applicable
25 not applicable
28 not applicable
29 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. 33-16164-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.
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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/ ARTHUR W. MULLIN President, 8/5 1998
- -------------------- Treasurer, --------
Arthur W. Mullin Director of
FMG Western
Region
Acquisitions,
Inc.
/s/ JAMES W. KELICAN, JR. Vice President, 8/5 1998
- ------------------------- Director of --------
James W. Kelican, Jr. FMG Western
Region
Acquisitions,
Inc.
</TABLE>
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EXHIBIT A
FMG RITA RANCH LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited)
-------------- --------------
<S> <C> <C>
ASSETS
- ------
Land held for sale, net $ 350,000 $ 350,000
Cash and cash equivalents 519 519
Prepaid Insurance 30 -
-------------- --------------
$ 350,549 $ 350,519
============== ==============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accrued expenses $ 10,852 $ 9,906
Due to affiliates - 3,750
Partners' Equity 339,697 336,863
-------------- --------------
$ 350,549 $ 350,519
============== ==============
</TABLE>
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F M G RITA RANCH LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
(Unaudited)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 0 $ 1 $ 0 $ 3
Other income 0 75 0 75
--------------- ---------------- ---------------- ---------------
0 76 0 78
--------------- ---------------- ---------------- ---------------
EXPENSES:
Real estate taxes 2,238 2,366 4,477 4,733
Management fees 3,750 3,750 7,500 7,500
General and administrative 2,067 1,655 5,434 2,910
Insurance 29 27 59 54
--------------- ---------------- ---------------- ---------------
8,084 7,798 17,470 15,197
--------------- ---------------- ---------------- ---------------
NET LOSS $ (8,084) $ (7,722) $ (17,470) $ (15,119)
Partners' equity,
Beginning of period 338,460 338,217 336,863 336,856
Captial Contributions 9,321 8,893 20,304 17,651
--------------- ---------------- ---------------- ---------------
Partners' equity,
End of period $ 339,697 $ 339,388 $ 339,697 $ 339,388
=============== ================ ================ ===============
Weighted Average Number of
Limited Partnership Units
Outstanding 6,707 6,707 6,707 6,707
=============== ================ ================ ===============
Loss from Operations per
Limited Partnership
Interest $ (1.19) $ (1.14) $ (2.57) $ (2.23)
=============== ================ ================ ===============
</TABLE>
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F M G RITA RANCH LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS AND PARTNERS'
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
------------------------------------------------------
1998 1997 1996
--------------- ---------------- --------------
<S> <C> <C> <C>
REVENUES:
Interest income $ 0 $ 3 $ 4
Other income 0 75 100
--------------- ---------------- --------------
0 78 104
--------------- ---------------- --------------
EXPENSES:
Real estate taxes 4,477 4,733 5,208
Management fees 7,500 7,500 7,500
General and administrative 5,434 2,910 3,305
Insurance 59 54 69
--------------- ---------------- --------------
17,470 15,197 16,082
--------------- ---------------- --------------
NET LOSS $ (17,470) $ (15,119) $ (15,978)
Partners' equity,
Beginning of period 336,863 336,856 336,613
Capital Contributions 20,304 17,651 18,390
--------------- ---------------- --------------
Partners' equity,
End of period $ 339,697 $ 339,388 $ 339,025
=============== ================ ==============
Weighted Average Number of
Limited Partnership Units
Outstanding 6,707 6,707 6,707
=============== ================ ==============
Loss from Operations per
Limited Partnership Interest $ (2.57) $ (2.23) $ (2.36)
=============== ================ ==============
</TABLE>
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F M G RITA RANCH LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
-----------------------------------------------
1998 1997 1996
-------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (17,470) $ (15,119) $ (15,978)
Adjustments to reconcile net
income (loss) to net cash
used in operating activities:
Increase in General Partner's
capital 20,304 17,651 18,390
(Increase) in prepaid expenses (30) (27) (35)
Increase (decrease) in
accrued expenses 946 1,272 1,416
Increase (decrease) in
due to affiliate (3,750) (3,750) (3,750)
--------------- ------------- -------------
Net cash provided by (used in)
operating activities $ 0 $ 27 $ 43
--------------- ------------- -------------
Cash, Beginning of period 519 267 205
Cash, End of period $ 519 $ 294 $ 248
=============== ============= =============
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000820047
<NAME> FMG RITA RANCH LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 519
<SECURITIES> 0
<RECEIVABLES> 30
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 350,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 350,549
<CURRENT-LIABILITIES> 10,852
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 339,697
<TOTAL-LIABILITY-AND-EQUITY> 350,549
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,470
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17,470)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,470)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
