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FORM 10-Q.-QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
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 period ended September 30, 2000
[ ] 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: 33-26327
RAINES LENDERS, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 62-1375240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification)
4400 Harding Road, Suite 500, Nashville, Tennessee 37205
(Address of principal executive office) (Zip Code)
(615) 292-1040
(Registrant's telephone number, including area code)
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
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statement.
INDEX
Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
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<TABLE>
RAINES LENDERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
<CAPTION>
ASSETS
September 30, December 31,
2000 1999
<S> <C> <C>
CASH $ 563 $ 254
NOTE RECEIVABLE FROM AFFILIATE 4,700,000 4,700,000
INTEREST RECEIVABLE
FROM AFFILIATE-net of allowance
for impairment of $1,580,711 932,923 932,923
LOAN COSTS, less accumulated
amortization of $201,943 in
2000 and $188,602 in 1999 29,307 42,648
Total Assets $5,662,793 $5,675,825
========== =========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Loan Payable To
Affiliate $ 58,600 $ 27,100
PARTNERS' EQUITY:
Limited Partners (5,625 units
outstanding) 5,604,193 5,648,725
General Partners - -
Total Partners' equity 5,604,193 5,648,725
TOTAL LIABILITIES AND
PARTNERS' EQUITY $5,662,793 $5,675,825
========= =========
<FN>
See notes to financial statements.
</TABLE>
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<TABLE>
RAINES LENDERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
REVENUES:
Interest $ - $ - $ - $ -
EXPENSES:
Legal & Accounting 400 400 11,586 10,146
Mortgage Servicing
Fee 2,250 2,250 6,750 6,750
General and
Administrative 676 - 2,265 279
State tax 3,530 - 10,590 -
Amortization 4,447 4,447 13,341 13,341
----- ----- ----- ------
Total Expenses 11,303 7,097 44,532 30,516
NET LOSS $(11,303) $(7,097) $(44,532)$(30,516)
Net Loss per limited
partner unit $ (2.01) $ (1.26) $ (7,92) $ (5.43)
See Notes to Financial Statements
</TABLE>
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<TABLE>
RAINES LENDERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
2000 1999
<S> <C> <C>
Cash flows from Operating Activities:
Net Loss $(44,532) $ (30,516)
Adjustments to reconcile
Net Loss to Net Cash
used by Operating
Activities:
Amortization of deferred
loan costs 13,341 13,341
-------- -------
Net cash used by Operating
Activities (31,191) (17,175)
Cash flows from Financing Activities:
Loan Payable to
affiliate 31,500 25,000
Advance to affiliate - (7,300)
Net cash provided by Financing
Activities 31,500 17,700
NET INCREASE
IN CASH 309 525
CASH AT JANUARY 1, 254 362
CASH AT SEPTEMBER 30, $ 563 $ 887
====== ======
<FN>
See notes to financial statements.
</TABLE>
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RAINES LENDERS, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30,2000 and 1999
(Unaudited)
A. ACCOUNTING POLICIES
The unaudited financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and note disclosures required by
generally accepted accounting principles. These statements should
be read in conjunction with the financial statements and notes
thereto included in the Partnership's Form 10-K for the year ended
December 31, 1999. In the opinion of management such financial
statements include all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the
Partnership's financial position and results of operations. The
results of operations for the nine month period ended September 30,
2000 may not be indicative of the results that may be expected for
the year ending December 31, 2000.
B. RELATED PARTY TRANSACTIONS
The General Partner and its affiliates have been actively
involved in managing the Partnership, and complying with the terms
of the Lender Financing as described in the Prospectus dated April
3, 1989. Compensation earned for these services were as follows:
2000 1999
Mortgage Servicing Fee $6,750 $6,750
Accounting Fees $8,643 $2,200
C. COMPREHENSIVE INCOME
During the three and nine month periods ended September 30,
2000, and 1999, the Partnership had no components of other
comprehensive income. Accordingly, comprehensive loss for each of
the periods was the same as net loss.
D. FORECLOSURE
On November 9, 2000, the Registrant began the process of
foreclosing on the note from Raines Road, L.P. after the debtor
defaulted on the note agreement and the general partner determined
that the value of the underlying collateral could not result in
full payment of the debt and accrued interest. The foreclosure is
expected to take place in the fourth quarter of 2000, and the
Registrant will receive all land and cash held by Raines Road, L.P.
The assets received will be recorded at their fair values. Any
excess of the balance of the note receivable and accrued interest
over the fair value of the assets received in foreclosure will be
recognized as a loss in the fourth quarter.
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Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of operations for the quarter and nine months ended
September 30, 2000 and 1999.
The Partnership's primary business is to lend monies to Raines
Road, L.P. ("the Borrower"). The Registrant continues its policy
implemented in 1998 of not recognizing interest income for
financial reporting purposes on the Lender Financing. The Lender
financing has been placed on non-accrual status in accordance with
the Registrant's policy for impaired notes. There are no interest
or principal payments due to the Partnership until the Property
securing the Partnership's loan or portions thereof are sold, or
December 31, 2001, whichever is earlier.
Due to the nature of the Registrant, all activity is a result of
transactions in Raines Road, L.P., the borrower. The Borrower had
no property sales during the first nine months of 2000. The
cumulative applicable principal balance unpaid as of September 30,
2000 is $1,677,707 and is payable from future sales proceeds after
all accrued interest is paid.
Operations of the Registrant are minimal and have remained
comparable to prior quarters, except for state tax expense which
includes estimated Tennessee franchise and excise tax of $10,590.
Due to new legislation in Tennessee, partnerships are required to
pay franchise and excise tax beginning January 1, 2000.
Financial Condition and Liquidity
As of September 30, 2000,the Registrant had $563 in cash. This
balance is not sufficient to meet the operating needs of the
Registrant. Unless the Borrower makes a payment from sale proceeds
or released cash reserves on the Lender Financing to provide the
Registrant with sufficient operating funds, the General Partner is
expected to assist the Registrant in meeting operational needs
through affiliated loans. As of September 30, 2000 these
affiliated loans totalled $58,600.
On November 9, 2000, the Registrant began the process of
foreclosing on the note to Raines Road, L.P. after the debtor
defaulted on the note agreement and the general partner determined
that the value of the underlying collateral could not result in
full payment of the debt and accrued interest. The foreclosure is
expected to take place in the fourth quarter of 2000, and the
Registrant will receive all land ands cash held by Raines Road,
L.P. The assets received will be recorded at their fair values.
Any excess of the balance of the note receivable and accrued
interest over the fair value of the assets received in foreclosure
will be recognized as a loss in the fourth quarter.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 established reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts. Under SFAS No. 133, the Company would
recognize all derivatives as either assets or liabilities, measured
at fair value, in the statement of financial position. In July
1999, SFAS No. 137 "Accounting for Derivative Instruments and
Hedging Activities - Deferral of Effective Date of FASB No. 133, An
Amendment of FASB Statement No. 133" was issued deferring the
effective date of SFAS No. 133 to fiscal years beginning after June
15, 2000. In June 2000, SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an Amendment
of FASB No. 133" was issued clarifying the accounting for
derivatives under the new standard. The General Partner believes
these pronouncements will have no impact on its consolidated
financial statements.
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 establishes specific criterion
for revenue recognition. In June 2000, the Securities and Exchange
Commission issued ("SAB 101B"), which amends SAB 101 no later than
the fourth quarter of its fiscal year ending December 31, 2000.
The General Partner believes that this SAB will have no impact on
the Company's revenue recognition and presentation policies.
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Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No 8-K's have been filed during this quarter.
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SIGNATURES
Pursuant to the requirements 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 LENDERS, L.P.
By: 222 RAINES LTD.
General Partner
Date: November 14, 2000 By: /s/ Steven D. Ezell
General Partner
By: 222 PARTNERS, INC.
General Partners
Date: November 14, 2000 By: /s/ Michael A. Hartley
Secretary/Treasurer
