<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 June 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: 0-18454 (formerly 33-26759)
SOUTHEAST ACQUISITIONS III, L.P.
(Exact name of registrant)
Delaware 23-2532708
(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 Southeast Acquisitions III, L.P.
(the "Partnership") at June 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
June 30, 1997, and the results of its operations and cash flows for the six
months ended June 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
the following properties by holding them for investment and eventual sale (each
a "Property," collectively the "Properties"): 211 acres of undeveloped land in
Fulton County Georgia; 265 acres of undeveloped land in Henry County, Georgia;
24 acres of undeveloped land near Nashville, Tennessee; 48 acres of undeveloped
land near Fort Myers, Florida; and 51 acres of undeveloped land near Columbia,
South Carolina. There can be no assurance that the Partnership's objectives will
be realized.
Results of Operations
The Partnership had no operations from the date of its formation on
November 4, 1988 until June 1, 1989 when it acquired the first property and sold
6,215 Units of limited partnership interest. During 1989, the Partnership
acquired four additional Properties and sold 6,185 additional units of limited
partnership interest.
The Partnership's activities for the second quarter of 1997 were
primarily focused on attempting to sell certain of the Properties. During the
second quarter of 1997, the Partnership sold 7.16 acres of the Columbia, South
Carolina property for a gain of $91,709. Revenues for the second quarter of 1997
consisted of interest income of $5,421 and partnership transfer fees of $175.
Expenses for the second quarter of 1997 consisted of general and administrative
costs of $2,602, management fees of $6,221, real estate taxes of $8,822 and
insurance costs of $127.
The Partnership's activities for the second quarter of 1996 were
primarily focused on attempting to sell certain of the Properties. Revenues for
the second quarter of 1996 consisted of interest income of $3,337, timber sales
of $14,199 and partnership transfer fees of $150. Expenses
2
<PAGE> 3
for the second quarter of 1996 consisted of general and administrative costs of
$2,948, management fees of $6,221, real estate taxes of $8,910 and insurance
costs of $127.
The Partnership's activities for the second quarter of 1995 were
primarily focused on attempting to sell certain of the Properties. Revenues for
the second quarter of 1995 consisted of interest income of $6,970 and
partnership transfer fees of $200. Expenses for the second quarter of 1995
consisted of general and administrative costs of $3,173, management fees of
$6,221, real estate taxes of $11,873 and insurance of $151.
The Partnership's activities for the first quarter of 1997 were
primarily focused on attempting to sell certain of the Properties. Revenues for
the first quarter of 1997 consisted of interest income of $3,613 and partnership
transfer fees of $150. Expenses for the first quarter of 1997 consisted of
general and administrative costs of $1,940, management fees of $6,222, real
estate taxes of $8,913 and insurance costs of $127.
The Partnership's activities for the first quarter of 1996 were
primarily focused on attempting to sell certain of the Properties. During the
first quarter of 1996, the Partnership sold 5 acres of the Henry County, Georgia
property for a gain of $33,572. Revenues for the first quarter of 1996 consisted
of interest income of $2,973 and partnership transfer fees of $175. Expenses for
the first quarter of 1996 consisted of general and administrative costs of
$2,153, management fees of $6,222, real estate taxes of $9,931 and insurance
costs of $127.
The Partnership's activities for the first quarter of 1995 were
primarily focused on attempting to sell certain of the Properties. Revenues for
the first quarter of 1995 consisted of interest income of $6,500 and partnership
transfer fees of $200. Expenses for the first quarter of 1995 consisted of
general and administrative costs of $5,667, management fees of $6,222, real
estate taxes of $11,873 and insurance of $150.
Inflation did not have any material impact on operations during 1996
and it is not expected to materially impact future operations.
The General Partner has the right to sell the Properties without the
consent of the Limited Partners if the net proceeds of the sale will be
sufficient to return the Limited Partners' Capital Contribution plus their 10%
Non-Compounded Cumulative Annual Return. The General Partner believes that the
Partnership's cash reserves will be sufficient to last for an additional three
years, assuming no significant increases in expenses and no funding for the
construction of sewer to the Fulton County Property. However, if the reserves
are exhausted and the partnership is unable to borrow funds, the Partnership may
have to sell some or all of the Properties on unfavorable terms.
The General Partner has no plans to develop the Properties, except for
activities including rezoning, land planning, market surveys and other
activities necessary to prepare the Properties
3
<PAGE> 4
for sale. There can be no assurance that necessary funds would be available
should it be desirable for the Partnership to improve the Properties to
facilitate their sale.
Liquidity and Capital Resources
At June 30, 1997, the Partnership had available cash in the amount of
$544,967. A cash reserve in the amount of $175,000 will be set aside and used to
cover the following estimated annual costs: $16,194 annual administration fee to
the General Partner (1997) only, $10,000 per year for auditing, accounting, tax,
legal and other administrative services, $525 per year for insurance and $36,000
per year for real estate taxes. The additional funds currently on hand will most
likely be distributed after additional sales occur. In the General Partner's
opinion, the Partnership's reserves will be sufficient for an additional three
years. However, if unforeseen expenses are incurred or if the Partnership goes
forward with the construction to bring sewer to the Fulton County Property then
the reserves may be inadequate to cover the Partnership's operating expenses. If
the reserves are exhausted, the Partnership may have to dispose of some or all
of the Properties or incur indebtedness on unfavorable terms.
During 1996, appraisals were performed on the Partnership's properties
causing the Partnership to write-down the Columbia, South Carolina property by
$50,560, the Fulton County, Georgia property by $3,622,126 and the Fort Myers,
Florida property by $676,200.
The General Partner has reviewed the assumptions and conclusions of the
appraisals, had discussions with real estate professionals and developers, and
believes that the appraisals are a reasonable approximation of the current value
of the properties.
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 proceeding. 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 (and consequently control of) the General 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 1997.
4
<PAGE> 5
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
No matters were submitted to the Partners for a vote during the second
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
16 not applicable
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
18 not applicable
19 not applicable
22 not applicable
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. 33-26759.
** Incorporated by reference to Exhibit 3.2 filed as part of the
Partnership's Registration Statement on Form S-18, Registration No. 33-26759.
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.
Signature Title Date
/s/ Arthur W. Mullin President, 8/11/1997
- ----------------------------- Treasurer,
Arthur W. Mullin Director of
Southeast
Acquisitions,
Inc.
/s/ James W. Kelican, Jr. Vice President, 8/11/1997
- ----------------------------- Director of
James W. Kelican, Jr. Southeast
Acquisitions,
Inc.
7
<PAGE> 8
EXHIBIT A SOUTHEAST ACQUISITIONS III, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited)
---------- -----------
<S> <C> <C>
ASSETS
Land held for sale, net $1,255,500 $1,255,500
Land held for investment 3,154,324 3,261,558
Cash and cash equivalents 544,967 359,293
Prepaid insurance 127 -
---------- ----------
$4,954,918 $4,876,351
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses $ 27,800 $ 9,105
Due to affiliates 3,584 9,806
Partners' Equity 4,923,534 4,857,440
---------- ----------
$4,954,918 $4,876,351
========== ==========
</TABLE>
1
<PAGE> 9
SOUTHEAST ACQUISITIONS III, L.P.
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 5,421 $ 3,227 $ 9,034 $ 6,200
Gain on sale of land 91,709 - 91,709 33,572
Timber revenue - 14,199 - 14,199
Other income 175 150 325 325
---------- ---------- ---------- ----------
97,305 17,576 101,068 54,296
---------- ---------- ---------- ----------
EXPENSES:
General and administrative 2,602 2,948 4,542 5,101
Management fee 6,221 6,221 12,443 12,443
Real estate taxes 8,822 8,910 17,735 17,941
Insurance 127 127 254 254
---------- ---------- ---------- ----------
17,772 18,206 34,974 35,739
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 79,533 $ (630) $ 66,094 18,557
Partners' equity,
Beginning of period 4,844,001 9,182,725 4,857,440 9,163,538
---------- ---------- ---------- ----------
Partners' equity,
End of period $4,923,534 $9,182,095 $4,923,534 $9,182,095
========== ========== ========== ==========
Weighted Average Number
of Limited Partnership
Units Outstanding 12,400 12,400 12,400 12,400
========== ========== ========== ==========
Income (Loss) from Operations
per Limited Partnership
Interest $ 6.34 $ (.05) $ 5.27 $ 1.48
========== ========== ========== ==========
</TABLE>
2
<PAGE> 10
SOUTHEAST ACQUISITIONS III, L.P.
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
--------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Interest income $ 9,034 $ 6,200 $ 13,470
Gain on sale of land 91,709 33,572 -
Timber revenue - 14,199 -
Other income 325 325 400
---------- ---------- -----------
101,068 54,296 13,870
---------- ---------- -----------
EXPENSES:
General and administrative 4,542 5,101 8,840
Management fee 12,443 12,443 12,443
Real estate taxes 17,735 17,941 23,746
Insurance 254 254 301
---------- ---------- -----------
34,974 35,739 45,330
---------- ---------- -----------
NET INCOME (LOSS) $ 66,094 $ 18,557 $ (31,460)
Partners' equity,
Beginning of period 4,857,440 9,163,538 10,350,770
Partners' equity,
End of period $4,923,534 $9,182,095 $10,319,310
========== ========== ===========
Weighted Average Number
of Limited Partnership
Units Outstanding 12,400 12,400 12,400
========== ========== ===========
Income (Loss) from Operations
per Limited Partnership
Interest $ 5.27 $ 1.48 $ (2.51)
========== ========== ===========
</TABLE>
3
<PAGE> 11
SOUTHEAST ACQUISITIONS III, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
-----------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Proceeds from sale of land $198,943 $ 60,683 $ -
Interest income received 9,034 6,200 13,470
Other income received 325 325 400
Timber revenue received - 14,199 -
Cash paid for operating expenses (22,628) (22,805) (28,982)
-------- -------- --------
Net cash flows (used in)
operating activities 185,674 58,602 (15,112)
Cash, beginning of period 359,293 258,680 556,074
-------- -------- --------
Cash, end of period $544,967 $317,282 $540,962
======== ======== ========
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 66,094 $ 18,557 $(31,460)
Adjustments to reconcile net income (loss)
to net cash provided by
operating activities:
Decrease in due from General Partner - - 3,584
Increase in accrued expenses 18,695 20,147 19,136
Decrease in due to affiliates (6,222) (6,222) (6,222)
Decrease in assets 107,234 26,247 -
Increase in prepaid expenses (127) (127) (150)
-------- -------- --------
Net cash provided by (used in)
operating activities $185,674 $ 58,602 $(15,112)
======== ======== ========
</TABLE>
4
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000846014
<NAME> SOUTHEAST ACQUISITIONS III, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 544,967
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 127
<INVENTORY> 0
<CURRENT-ASSETS> 545,094
<PP&E> 4,409,824
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,954,918
<CURRENT-LIABILITIES> 31,384
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,923,534
<TOTAL-LIABILITY-AND-EQUITY> 4,954,918
<SALES> 101,068
<TOTAL-REVENUES> 101,068
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 34,974
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 66,094
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,094
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
