<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee Required]
For the fiscal year ended
December 31, 1999
or
[ ] Transition Report to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee Required]
For the transition period from _______to_______
Commission File Number
33-26327-A
RAINES ROAD, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 62-1375245
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number.)
One Belle Meade Place, 4400 Harding Road, Suite 500, Nashville,
Tennessee 37205
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (615) 292-1040
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
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 at least the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is
not contained herein, and will not be contained, to the best of the
registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
[X]
The aggregate sales price of the Units of Limited Partnership
Interest to non-affiliates was $1,875,000 as of February 28, 1999.
This does not reflect market value, but is the price at which these
Units of Limited Partnership Interest were sold to the public.
There is no current market for these Units.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Incorporated by Reference in Part IV:
Prospectus of Registrant, dated April 3, 1989, as filed pursuant to
Rule 424(b) of the Securities and Exchange Commission.
<PAGE>
PART I
Item 1. Business
Raines Road, L.P. ("Registrant"), is a Delaware limited
partnership organized on December 16, 1988, pursuant to the
provisions of the Delaware Revised Uniform Limited Partnership Act,
Sections 17-101-17-1109, Title 6. The General Partner of
Registrant is 222 Raines, Ltd., a Tennessee limited partnership,
whose general partners are Steven D. Ezell, Michael A. Hartley and
222 Partners, Inc.
The Registrant's primary business is to acquire, develop and
sell certain undeveloped real properties located in Memphis,
Tennessee (the "Property"). The Registrant's investment objectives
are preservation of capital and capital appreciation through the
passage of time, growth in the surrounding areas, and the
development of the Property prior to resale.
Financial Information about Industry Segments
The Registrant's activity is within one industry segment and
geographical area. Therefore, financial data relating to the
industry segment and geographical area is included in Item 6 -
Selected Financial Data.
Narrative Description of Business
At December 31, 1999, the Registrant was holding approximately
200 acres of partially developed land on Raines Road in Memphis,
Tennessee, adjacent to the Memphis International Airport. The
Property is zoned for a wide variety of light industrial,
warehouse, office-warehouse and distribution uses. All utilities,
including water, sewer, electricity and natural gas, are available
to the Property.
Phase I of the infrastructure development was completed in
1990 and included construction and improvement of Prescott Road.
The total cost was approximately $460,000. Phase II was completed
in 1992 and consisted of extending Raines Road 5,000 feet from
Prescott Road through the Property to Tchulahoma Road. Phase II
also included clearing and rough-grading 168 acres of the Property
and removing 1.25 million cubic yards of dirt. The cost of Phase
II was approximately $1 million.
Phase III includes construction and improvement of Tchulahoma Road
through a portion of the Property. It is the General Partners'
intention at this time to only improve Tchulahoma Road as sites
contiguous to it are sold.
<PAGE>
Competition
The general partner believes that the Property provides strong
competition for purchasers or developers of land in the Memphis
Airport Area. There are a number of tracts of competitive
industrial land in the area, each offering similar pricing to
the Registrant. The general partner believes that the Property is
competitive due to its location, access and low cost to develop.
The majority of the proceeds used to purchase the Property
were from a $4,700,000 promissory note (the "Lender Financing")
maturing on December 31, 2001 to Raines Lenders, L.P. (the
"Lender"), an affiliated partnership sharing the same general
partner. The principal balance accrues interest at a simple
interest rate of 12% per annum. Prior to maturity, the Registrant
is not required to make any payments with respect to the Lender
Financing, except upon the sale, exchange or condemnation of all or
any portion of the Property. From sale proceeds, the Lender
receives a priority return of interest and principal, and 50% of
the "Net Revenues", if any. Net revenues, as defined by the
participating Loan Agreement, represent the difference between cash
proceeds earned and the following, in this order: 1) accrued but
unpaid interest and "Applicable Principal Balances"; 2) accrued
preferred return (12% on the net offering proceeds of the
Registrant) and 3) the "Applicable Equity Balance". The
"Applicable Principal Balance" is a fixed dollar amount assigned in
the loan agreement to the Property on a per acre basis to represent
a portion of the original principal amount of the Lender Financing.
From property sales in 1990, 1991, 1994 and 1997, the cumulative
"Applicable Principal Balance" due to the Lender is $1,677,707 and
is payable from future sale proceeds, after all accrued interest is
paid.
The Registrant has no employees. Program management services
are being provided under a contractual agreement with Landmark
Realty Services Corporation, an affiliate of the general partner.
Item 2. Properties
As of December 31, 1999, Registrant owned approximately 200
acres of partially developed land in Memphis, Tennessee. See Item
1 above for more detailed description. Registrant is subject to a
first mortgage held by Raines Lenders, L.P., an affiliated
partnership sharing the same general partner.
Item 3. Legal Proceedings
Registrant is not a party to, nor is any of Registrant's
property the subject of, any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
The security holders of Registrant did not vote on any matter
during the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Units of Limited Partnership
Interest and Related Security Holder Matters
There is no established market for the Units, and it is not
anticipated that any will exist in the future. The Registrant
commenced an offering to the public on April 3, 1989 for 1,875
Units of Limited Partnership Interests. The offering of $1,875,000
was fully subscribed on September 12, 1989. As of January 31,
2000, there were 181 holders of record of the 1,875 Units of
Limited Partnership Interests.
There were no distributions made to Unit holders during 1999,
1998 and 1997. There are no material restrictions upon
Registrant's present or future ability to make distributions in
accordance with the provisions of Registrant's Limited Partnership
Agreement, other than the obligations to Raines Lenders, L.P., as
described below.
Item 6. Selected Financial Data
For the Year Ended
December 31
1999 1998 1997 1996 1995
Total revenues $ 6,428 46,746 654,127 11,266 40,628
Net loss (701,785) (655,018) (8,627) (648,034) (678,429)
Net loss per
limited partner
unit (374.29) (349.34) (4.60) (345.62) (361.83)
Total assets 5,750,799 5,860,039 6,195,673 6,111,799 6,054,735
Note payable-
private - - - - 100,000
Note payable to
affiliate 4,700,000 4,700,000 4,700,000 4,700,000 4,700,000
Accrued interest
payable to
affiliate 3,641,634 3,077,634 2,524,934 2,695,434 2,131,434
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Sales
There were no sales during 1999 and 1998.
In 1997, the Registrant sold approximately 30 acres for $2.2
million in sale proceeds. $1.1 million was escrowed for
development of the sale site and adjacent land,and $734,500 was
paid to The Lender on The Lender financing.
Comparative Analysis
Except for the land sales in 1997, the overall operations of
the Registrant have not changed significantly over the last three
years, except for the changes in interest income and property
taxes. The decline in interest income is due to the Registrant's
diminishing cash balances. Property tax expense has increased
through the years due to city and county reassessments of the
property's value. The Registrant has worked diligently with
consultants to lower the property tax expenses. The 1998 credit to
cost of land and improvements sold is due to a change in the
development costs related to the 1997 sales.
Financial Condition and Liquidity
At February 29, 2000, the Registrant has approximately $13,422
available in funds to cover operating expenses for 2000. Operating
expenses are primarily accounting fees which includes audit and
tax, and program management service fees. The cash reserves are
insufficient. If a sale of the property occurs, then funds will be
available from sale proceeds. Otherwise, the Registrant may meet
operational needs through affiliated loans.
In 1990, 1991, 1994, and 1997 the Registrant retained a
portion of the sale proceeds for development and operations and did
not use all the proceeds to make interest or principal payments to
the Lender. The Registrant made interest payments of $734,500,
$600,000 and $1,027,454 on the Lender financing in 1997, 1995 and
1991, respectively. The Registrant's and Lender's joint general
partner believes that using sales proceeds for development and
distributing only net available cash to the Lender was contemplated
by the loan agreement. However, the loan agreement is ambiguous on
this use of funds; therefore, this treatment could constitute a
default on the loan agreement. In such an event the Lender is
required to foreclose the loan and accelerated the amounts due.
Currently, the Lender has not foreclosed or accelerated the amounts
due under the loan agreement.
From property sales in 1990, 1991, 1994 and 1997, the
cumulative Applicable Principal balance due to the Lender is
$1,677,707 and is payable from future sale proceeds, after all
accrued interest is paid.
Year 2000
In 1998, the Partnership initiated a plan ("Plan") to
identify, and remediate "Year 2000" issues within each of its
significant computer programs and certain equipment which contain
microprocessors. The Plan addressed the issue of computer programs
and embedded computer chips being unable to distinguish between the
year 1900 and the year 2000, if a program or chip uses only two
digits rather than four to define the applicable year. The
Partnership divided the Plan into five major phases-assessment,
planning, conversion, implementation and testing. The plan was
completed in mid 1999. The total remediation costs for the plan
were not material to the operations or liquidity of the
partnerships. The registrant had no significant operational
difficulties related to Year 2000 issues. Management does not
expect any future issues or operational problems related to Year
2000 issues.
Item 8. Financial Statements and Supplementary Data
RAINES ROAD, L.P.
(A Limited Partnership)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1999, 1998 AND 1997
INDEX
Page
Number
Independent Auditors' Report F-1
Financial Statements
Balance Sheets F-2
Statements of Operations F-3
Statements of Partners' Deficit F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
<PAGE>
Independent Auditors' Report
The Partners
Raines Road, L.P.:
We have audited the accompanying balance sheets of Raines Road,
L.P. (a limited partnership) as of December 31, 1999 and 1998, and
the related statements of operations, partners' deficit, and cash
flows for each of the years in the three-year period ended December
31, 1999. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Raines
Road, L.P. at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-
year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
KPMG LLP
Nashville, Tennessee
January 21, 2000
F-1
<PAGE>
RAINES ROAD, L.P.
(A Limited Partnership)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
Assets 1999 1998
<S> <C> <C>
Cash (note 5) $ 5,129 114,342
Restricted cash (note 3) 143,642 140,769
Accounts receivable from affiliate(note 2) 2,100 5,000
Land and land improvements held for
investment (notes 4 and 5) 5,599,928 5,599,928
Total assets $ 5,750,799 5,860,039
Liabilities and Partners' Deficit
Liabilities:
Note payable - affiliate (note 5) $ 4,700,000 4,700,000
Accrued interest payable to
affiliate (note 5) 3,641,634 3,077,634
Accounts payable 29,790 -
Accrued property taxes 132,255 133,500
Total liabilities 8,503,679 7,911,134
Partners' deficit:
Limited partners (1,875 units
outstanding) (2,752,880) (2,051,095)
General partner - -
Total partners' deficit (2,752,880) (2,051,095)
Commitments and contingencies
(notes 2,3 and 5)
Total liabilities and
partners' deficit $ 5,750,799 5,860,039
</TABLE>
See accompanying notes to financial statements.
F-2
RAINES ROAD, L.P.
(A Limited Partnership)
Statements of Operations
<TABLE>
Years ended December 31, 1999, 1998 and 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues
Land Sales -
Gross Proceeds $ - - 2,220,000
Cost of land and
improvements sold(note 3) - 32,995 (1,448,336)
Closing Costs (note 2) - - (142,945)
Gain on land sales - 32,995 628,719
Interest 6,428 11,401 25,408
Miscellaneous - 2,350 -
Total revenues 6,428 46,746 654,127
Expenses:
Interest expense (note 5) 564,000 564,000 564,000
Property taxes 125,115 114,724 66,478
General and administrative 1,677 2,911 15,768
Legal and accounting(note 2) 14,421 17,129 12,658
Architect & engineering fees - - 850
Property management fee(note 2) 3,000 3,000 3,000
Total expenses 708,213 701,764 662,754
Net loss $ (701,785) (655,018) (8,627)
Net loss allocated to:
General partner $ - - -
Limited partners $ (701,785) (655,018) ( 8,627)
Net loss per limited
partner unit $ (374.29) (349.34) (4.60)
Weighted average units
outstanding 1,875 1,875 1,875
</TABLE>
See accompanying notes to financial statements.
F-3
RAINES ROAD, L.P.
(A Limited Partnership)
Statements of Partners' Deficit
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Limited General
partners partner Total
Units Amounts
<S> <C> <C> <C> <C>
Balance at
December 31, 1996 1,875 $(1,387,450) - (1,387,450)
Net loss - (8,627) - (8,627)
Balance at
December 31, 1997 1,875 (1,396,077) - (1,396,077)
Net Loss - (655,018) - (655,018)
Balance at
December 31, 1998 1,875 (2,051,095) - (2,051,095)
Net Loss - (701,785) - (701,785)
Balance at
December 31, 1999 1,875 $(2,752,880) - (2,752,880)
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
RAINES ROAD, L.P.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
Cash flows from operating activities:
Net loss $ (701,785) (655,018) (8,627)
Adjustments to reconcile net
loss to net cash provided by
(used) in operating activities:
Cost of land and improvements held
for investment - - (1,224,398)
Cost of land and
improvements sold - 32,995 1,448,336
(Increase)decrease in
restricted cash (2,873) 239,429 (223,957)
(Increase)decrease in accounts
receivable from affiliate 2,900 (5,000) -
Increase (decrease) in accrued
interest payable 564,000 552,700 (170,500)
Increase (decrease) in
accounts payable 29,790 (221,982) 217,126
(Decrease)Increase in accrued
property taxes (1,245) 72,540 19,065
Net cash (used in)provided
by operating activities (109,213) 15,664 57,045
Net (decrease)increase
in cash (109,213) 15,664 57,045
Cash at beginning of year 114,342 98,678 41,633
Cash at end of year $ 5,129 114,342 98,678
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ - 11,300 734,500
See accompanying notes to financial statements.
F-5
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
(1) Summary of Significant Accounting Policies
(a) Organization
Raines Road, L.P. (the Partnership) is a Delaware
limitedpartnership organized on December 16, 1988 to
acquire several contiguous, undeveloped tracts of land
in Memphis, Tennessee for the purpose of developing and
selling parcels of real estate. The General Partner is
222 Raines, Ltd., whose general partners are Steven D.
Ezell, Michael A. Hartley, and 222 Partners, Inc. The
Partnership prepares financial statements and income tax
returns on the accrual method of accounting. The
financial statements include only those assets,
liabilities and results of operations which relate to the
Partnership. In the event that the Partnership has
short-term cash deficiencies, the General Partner
believes it can defer the collection of fees for certain
related party expenses or grant interest-free loans from
related parties until cash becomes available.
(b) Estimates
Management of the Partnership has made estimates and
assumptions to prepare these financial statements in
accordance with generally accepted accounting principles.
These estimates include the determination of the
estimated fair value of the Partnership's land and
improvements. Actual results could differ from those
estimates.
(c) Cash
Cash belonging to the Partnership is combined in an
account with funds from other partnerships related to the
general partner.
(d) Land and Improvements Held for Investment
Land and improvements held for investment are recorded at
cost and include approximately 200 acres at December 31,
1999 and 1998. Interest expense on the note payable to
affiliate, insurance, and property taxes were capitalized
as carrying costs of the property during the development
period. F-6
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(d) Land and Improvements Held for Investment(continued)
Costs to hold land, including interest, insurance, and
property taxes are charged to expense once the develop-
ment of the property is substantially complete. Land
improvement costs incurred and capitalized include
development costs expended subsequent to the acquisition
of a tract of land.
Long-lived assets to be disposed of be reported at the
lower of the carrying amount or fair value less estimated
costs to sell. The fair value of the assets can be
determined externally, using appraisals, or internally
using discounted future net cash flows. If such assets
are considered impaired, the impairment to be recognized
is measured by the amount by which the carrying amount of
the assets exceeds the fair value of the assets less
estimated costs to sell. Impairment is recognized
through the establishment of an allowance for impairment
with a corresponding charge to operations. Losses upon
the sale of the assets are charged to the allowance.
Based upon management's analysis of discounted future net
cash flows, the Partnership's land and improvements held
for investment does not meet definitions of impairment.
Accordingly, land held for investment is recorded at cost
with no allowance for impairment necessary.
F-7
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(e) Income Recognition
Income from sales of land and improvements held for
investment is generally recorded on the accrual basis
when the buyer's financial commitment is sufficient to
provide economic substance to the transaction, and when
other criteria of SFAS No. 66 "Accounting for Sales of
Real Estate" are satisfied. For sales of real estate
where both cost recovery is reasonably certain and the
collectibility of the contract price is reasonably
assured, but the transaction does not meet the remaining
requirements to be recorded on the accrual basis, profit
is deferred and recognized under the installment method,
which recognizes profit as collections of principal are
received. If developments subsequent to the adoption of
the installment method occur which cause the transaction
to meet the requirements of the full accrual method, the
remaining deferred profit is recognized at that time.
Any losses on sales of real estate are recognized at the
time of the sale.
(f) Income Taxes
No provision has been made in the financial statements
for Federal or state income taxes, since such taxes are
the responsibilities of the partners.
Annually, the partners receive, from the Partnership, IRS
Form K-1's, which provide them with their respective
share of taxable income or losses, deductions, and
other tax related information. The only difference
between the tax basis and reported amounts of the
Partnership's assets and liabilities relates to the
valuation of land held for investment. For income tax
purposes certain costs were capitalized as additional
land improvement costs.
(g) Partnership Allocations
Net profits, losses and distribution of cash flow of the
Partnership are allocated to the Partners in accordance
with the Partnership agreement as follows:
F-8
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(g) Partnership Allocations(continued)
Partnership net profits are allocated first to any
partner with a negative balance in their capital account,
determined at the end of the taxable year as if the
Partnership had distributed cash flow, in proportion to
the negative capital balance account of all partners
until no partner's capital account is negative. Net
profit allocations are then made to the limited partners
up to the difference between their capital account
balances and the sum of their adjusted capital
contributions (capital balance, net of cumulative cash
distributions in excess of preferred returns - 12% annual
cumulative return on capital contributed). Any remaining
net profit allocations are then made to the limited
partners until the taxable year in which cumulative
profits to the limited partners equal their adjusted
capital contribution plus an unpaid preferred return (12%
annual cumulative return on capital contributed). Net
profits are then allocated to the general partner until
the ratio of the general partner's capital account
balance to the capital account balances, in excess of
adjusted capital contributions and unpaid preferred
return, of all limited partners is 27% to 73%.
Thereafter, profits are generally allocated 27% to the
general partner and 73% to the limited partners. Net
losses are allocated to the partners in proportion to
their positive capital accounts.
Partnership distributions are allocated 99% to the
limited partners and 1% to the general partner in an
amount equal to their preferred return (12% annual,
cumulative return on capital contributed), 99% to the
limited partners and 1% to the general partner until the
limited partners have received an amount equal to their
adjusted capital contributions, and then 73% to the
limited partners and 27% to the general partner.
Cumulative unpaid preferred returns are $2,362,500 at
December 31, 1999.
F-9
<PAGE>
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(h) Comprehensive Income
Comprehensive income is defined as the change in equity
of a business enterprise, during a period, associated
with transactions and other events and circumstances from
non-owner sources. It includes all changes in equity
during a period except those resulting from investments
by owners and distributions to owners. During the three
years ended December 31, 1999, the Partnership had no
components of other comprehensive income. Accordingly,
comprehensive income for each of the years was the same
as net loss.
(2) Related Party Transactions
The General Partner and its affiliates have been actively
involved in managing the Partnership. Affiliates of the
General Partner receive fees and commissions for
performing certain services. Expenses incurred for these
services are as follows:
1999 1998 1997
Accounting fees $ 2,600 2,100 2,100
Property management fee 3,000 3,000 3,000
Real estate sales commission - - 88,000
Accounts receivable
from affiliate 2,100 5,000 -
(3) Restricted Cash
At December 31, 1999 and 1998, the Partnership had restricted cash
balances of $143,642 and $140,769, respectively, to be used to fund
property improvements consisting of road and utility work. In
1998, the Partnership received excess escrowed development funds
from the escrow agent. The development payable related to these
escrowed funds, also overestimated, was reduced by the excess cash
received. Cost of land sold and land improvements, also effected
by this development, was reduced. This restricted cash securs a
letter of credit in the same amount to ensure that the required
developments are made.
F-10
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
(4) Land and Improvements Held for Investment
The components of land and improvements held for investment at
December 31, 1998 and 1998 are as follows:
Land and carrying costs $ 3,947,078
Land improvements 1,652,850
$ 5,599,928
Aggregate cost of land and improvements held for investment for
federal income tax purposes was $7,392,325 at December 31, 1999 and
1998.
(5) Note Payable - Affiliate
The note payable to affiliate represents a $4,700,000 note payable
to Raines Lenders, L.P. (Lender), an affiliate sharing the same
General Partner. The note accrues simple interest at an annual
rate of 12% plus additional interest equal to 50% of "net
revenues", as defined in the Participating Loan Agreement. The
note is secured by a mortgage on land and improvements held for
investment by the Partnership and by a security interest in any
cash reserves or investment securities held by the Partnership.
Interest and principal payments become due upon the sale of the
collateral or any portion thereof to the extent cash is available,
but no later than December 31, 2001. In 1999 and 1998, there were
no land sales and the Partnership paid $-0- and $11,300
respectively in interest payments to the Lender. In 1997, the
Partnership sold 26.6 acres of land, recognizing a gain of
$628,719 and paid $734,500 in interest payments to the Lender.
Due to anticipated future requirements for additional development
and operations, the Partnership retained certain proceeds from
sales and has not paid the additional amounts of interest and/or
applicable principal balance to the Lender. The Partnership's and
Lender's joint general partner believes that retaining sales
proceeds for development and distributing only net available cash
to the Lender was contemplated by the note agreement. However, the
note agreement does not
F-11
RAINES ROAD, L.P.
(A Limited Partnership)
Notes to Financial Statements
(5) Note Payable - Affiliate(continued)
explicitly authorize this use of funds; therefore, this treatment
could constitute a default on the note agreement. In such an event,
Lender is required to foreclose the note and accelerate the amounts
due. To date, the Lender has not foreclosed or accelerated the
amounts due under the note agreement. Of the $4,700,000 total
principal balance outstanding, the applicable principal balance due
to Lender is $1,677,707 at December 31, 1999 and 1998.
Interest expense associated with the note payable to affiliate in
1999, 1998, and 1997 was $564,000.
F-12
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant does not have any directors or officers. 222
Raines, Ltd. is the general partner. Steven D. Ezell, Michael A.
Hartley and 222 Partners, Inc. are the general partners of the
general partner and as such have general responsibility and
ultimate authority in matters affecting Registrant's business.
The general partners of 222 Raines, Ltd. are as follows:
Steven D. Ezell
Steven D. Ezell, age 46, is a general partner of 222 Raines,
Ltd. He is the President and sole shareholder of 222 Partners,
Inc. He has been an officer of 222 Partners, Inc. from September
17, 1986 through the current period. Mr. Ezell is President and
50% owner of Landmark Realty Services Corporation. For the prior
four years, Mr. Ezell was involved in property acquisitions for
Dean Witter Realty Inc. in New York City, most recently as Senior
Vice President. Steven D. Ezell is the son of W. Gerald Ezell.
Michael A. Hartley
Michael A. Hartley, age 40, is a general partner of 222
Raines, Ltd. He is the Secretary/Treasurer and a Vice President of
222 Partners, Inc. He has been an officer of 222 Partners, Inc.
from September 17, 1986 through the current period. Mr. Hartley is
Vice President and 50% owner of Landmark Realty Services
Corporation. Prior to joining Landmark in 1986, Mr. Hartley was
Vice President of Dean Witter Realty Inc., a New York-based real
estate investment firm.
222 Partners Inc.
222 Partners, Inc. was formed in September, 1986 and serves as
general partner for several other real estate investment limited
partnerships. The directors of 222 Partners, Inc. are W. Gerald
Ezell, Steven D. Ezell, and Michael A. Hartley.
Other directors of 222 Partners, Inc. are as follows:
W. Gerald Ezell, age 69, serves on the Board of Directors of
222 Partners, Inc. Until November, 1985, Mr. Ezell had been for
over 20 years an agency manager for Fidelity Mutual Life Insurance
Company and a registered securities principal of Capital Analysts
Incorporated, a wholly owned subsidiary of Fidelity Mutual Life
Insurance Company.
Item 11. Executive Compensation
During 1999, Registrant was not required to and did not pay
remuneration to any executives, partners of the general partner or
any affiliates, except as set forth in Item 13 of this report,
"Certain Relationships and Related Transactions."
The general partner does participate in the profits, losses
and distributions of the Registrant as set forth in the Partnership
Agreement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of January 31, 2000 no person or "group" (as that term is
used in Section 13(d) (3) of the Securities Exchange Act of 1934)
was known by the Registrant to beneficially own more than five
percent of the Units of Registrant.
As of the above date, the Registrant knew of no officers or
directors of 222 Partners, Inc. that beneficially owned any of the
units of the Registrant.
There are no arrangements known by the Registrant, the
operation of which may, at a subsequent date, result in a change in
control of the Registrant.
Item 13. Certain Relationships and Related Transactions
During 1997, Landmark Realty Services Corp., an affiliate of the
Registrant, received a real estate commission of $88,000. No other
affiliated entities have earned compensation for services from the
Registrant in excess of $60,000. For a listing of all miscellaneous
transactions with affiliates which were less than $60,000 refer to Note
2 to the Financial Statements in Item 8.
The Registrant borrowed $4,700,000 from Raines Road, L.P., an
affiliated partnership, during 1989. Accrued interest on such loan was
$3,641,634 at December 31, 1999.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) (1) Financial Statements
See Financial Statements Index in Item 8. hereof.
(2) Financial Statement Schedule
See Financial Statement Schedule Index at page 25
hereof.
(3) Exhibits
3 Amended and restated Certificate and Agreement of
Limited Partnership, incorporated by reference to
Exhibit A to the Prospectus of Registrant dated
April 3, 1989 filed pursuant to Rule 424(b) of
the Securities and Exchange Commission.
10A Participating Loan Agreement by and among Raines
Lenders, L.P. and the Registrant, incorporated by
reference to Exhibit 10.1 to Registrant's Form S-
18 Registration Statement as filed on January 3,
1989.
10B Deed of Trust, Assignment of Leases and Security
Agreement by and among Raines Lenders, L.P. and
the Registrant, incorporated by reference to
Exhibit 10.2 of the Registrant's Form S-18
Registration Statement as filed on January 3,
1989.
10C Participating Mortgage Note of Owner to Lender
incorporated by reference to Exhibit 10.3 to
Registrant's Form S-18 Registration Statement as
filed on January 3, 1989.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last
quarter of 1999.
<PAGE>
Financial Statement Schedule Filed Pursuant to Item 14(a)(2):
RAINES ROAD, L.P.
(A Limited Partnership)
ADDITIONAL INFORMATION
FOR THE YEAR ENDED
DECEMBER 31, 1998
INDEX
Page
Number
Additional financial information furnished
pursuant to the requirements of Form 10-K:
Financial Statement Schedule -
Independent Auditors' Report S-1
Schedule III - Real Estate and Accumulated
Depreciation S-2
All other Schedules have been omitted because they are
inapplicable, not require or the information is included in the
Financial Statements or notes thereto.
<PAGE>
Independent Auditors' Report
The Partners
Raines Road, L.P.:
Under date of January 21, 2000, we reported on the balance sheets
of Raines Road, L.P. as of December 31, 1999 and 1998, and the
related statements of operations, partners' deficit, and
cash flows for each of the years in the three-year period ended
December 31, 1999. These financial statements and our report
thereon are included elsewhere herein. In connection with our
audit of the aforementioned financial statements, we have also
audited the related financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Partnership's management. Our responsibility
is to express an opinion on this financial statement schedule based
on our audit.
In our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG LLP
Nashville, Tennessee
January 21, 2000
S-1
<TABLE> Schedule III
RAINES ROAD, LTD.
(A Limited Partnership)
Real Estate and Accumulated Depreciation
Initial Cost to Cost capitalized Gross amount at
Partnership subsequent which carried
to acquisition at close of period
<CAPTION>
Description Encum- Land Building Improve- Carrying Land Building Total Accumu- Date of Date
brances & improve- ments costs & improve- lated de- construc- acquired
ments ments preciation tion
<S>________ <C>___ <C>_ <C>_____ <C>_____ <C>_____ <C>_ <C>_____ <C>__ <C>____ <C>____ <C>_
200 acres of land
held for investment
in Memphis,
Tennessee $4,700,000 3,306,457 - 1,652,850 640,621 3,947,078 1,652,850 5,599,928 - 5/90-12/92 4/11/89
</TABLE>
Schedule III
RAINES ROAD, L.P.
(A Limited Partnership)
Real Estate and Accumulated Depreciation (continued)
December 31, 1999
1999 1998 1997
(1) Balance at beginning of
period $ 5,599,928 5,632,923 5,856,861
Additions during period:
Improvements - - 1,224,398
Other - carrying costs - (32,995) -
Deductions during period:
Cost of real estate sold - - 1,448,336
Balance at end
of period $ 5,599,928 5,599,928 5,632,923
(2) Aggregate cost for Federal
income tax purposes $ 7,392,325 7,392,325 7,430,492
See accompanying independent auditors' report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RAINES ROAD, L.P.
By: 222 Raines, Ltd.
General Partner
DATE: January 31, 2000 By: /s/ Steven D. Ezell
General Partner
DATE: January 31, 2000 By: /s/ Michael A. Hartley
General Partner
By: 222 Partners, Inc.
General Partner
DATE: January 31, 2000 By: /s/ Michael A. Hartley
Secretary/Treasurer
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 dates
indicated.
RAINES ROAD, L.P.
By: 222 Raines, Ltd.
General Partner
DATE: January 31, 2000 By: /s/ Steven D. Ezell
General Partner
DATE: January 31, 2000 By: /s/ Michael A. Hartley
General Partner
By: 222 Partners, Inc.
General Partner
DATE: January 31, 2000 By: /s/ Michael A. Hartley
Secretary/Treasurer Supplement
Information to be Furnished with Reports filed
Pursuant to Section 15(d) of the Act by Registrant Which Have Not
Registered Securities Pursuant to Section 12 of the Act:
No annual report or proxy material has been sent to security
holders.
<PAGE>
Exhibits filed to Item 14(a)(3):
RAINES ROAD, L.P.
(A Delaware Limited Partnership)
Exhibit Index
Exhibit
3 Amended and Restated Certificate and Agreement of Limited
Partnership, incorporated by reference to Exhibit A to
the Prospectus of Registrant dated April 3, 1989 filed
pursuant to Rule 424(b) of the Securities and Exchange
Commission.
10A Participating Loan Agreement by and among Raines Road,
L.P. and Raines Lenders, L.P., incorporated by reference
to Exhibit 10.1 to registrant's Form S-18 Registration
Statement as filed on January 3, 1989.
10B Deed of Trust, Assignment of Leases and Security
Agreement by and among Raines Lenders, L.P. and the
Registrant, incorporated by reference to Exhibit 10.2 of
the Registrant's Form S-18 Registration Statement as
filed on January 3, 1989.
10C Participating Mortgage Note of Raines Road, L.P. to
Raines Lenders, L.P., incorporated by reference to
Exhibit 10.3 to Registrant's Form S-18 Registration
Statement as filed on January 4, 1989.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000845397
<NAME> RAINES ROAD, LTD.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,129
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,599,928
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,750,799
<CURRENT-LIABILITIES> 162,045
<BONDS> 4,700,000
0
0
<COMMON> 0
<OTHER-SE> (2,752,880)
<TOTAL-LIABILITY-AND-EQUITY> 5,748,699
<SALES> 0
<TOTAL-REVENUES> 6,428
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 144,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 564,000
<INCOME-PRETAX> (701,785)
<INCOME-TAX> 0
<INCOME-CONTINUING> (701,785)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (701,785)
<EPS-BASIC> (374.29)
<EPS-DILUTED> (374.29)
</TABLE>
