10-Q 1 form10q40019-89.txt ROYAL PALM UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 2001 Commission File Number 1-8893 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) DELAWARE 59-2501059 -------------------------------------------------------------------------------- (State of other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 2501 S. Ocean Drive Hollywood, Florida 33019 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (954) 927-3080 -------------- NONE -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by checkmark 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 the past 90 days. YES [ X ] NO [ ] Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. CLASS Outstanding at June 30, 2001 -------------------------- ---------------------------- Limited Partnership Units 4,485,504 units INDEX Page Number ----------- PART I. Financial Information Balance sheets - June 30, 2001 and September 30, 2000 2 Statements of operations - Three months and nine months ended June 30, 2001 and 2000 3 Statements of cash flows - Three months and nine months ended June 30, 2001 and 2000 4-5 Notes to financial statements 6 Management's discussion and analysis of financial condition and results of operations 7-8 Part II. Other information and signatures 9

~~Three~~ROYAL ~~Months~~PALM ~~Ended~~BEACH ~~Six~~COLONY, ~~Months~~LIMITED ~~Ended~~PARTNERSHIP ~~March~~BALANCE ~~31,~~SHEETS ~~March~~June 3130, ~~--------------------~~September ~~---------------------~~30, 2001 2000 ~~2001 2000~~ ----------- ----------- ~~-----------~~(unaudited) ~~-----------~~ASSETS ~~Land~~Cash ~~revenues~~ $ ~~330~~609,~~000~~317 $ 1812,~~316,250~~520 $Other ~~330,000~~receivables $ 1,~~316~~169 549,~~250~~482 ~~Interest~~Property ~~income~~held ~~11,920~~for ~~15,947~~sale 211,~~458~~018,380 311,~~258~~366,915 Other ~~income~~assets --85,674 ~~-- 10~~55,~~000~~994 ~~440~~ ----------- ----------- ~~----------- ----------- 341,920~~ $1,~~332~~714,~~197~~540 ~~361~~$2,~~458 1~~784,~~347,948~~911 ~~-----------~~========== ~~-----------~~========== ~~-----------~~LIABILITIES ~~-----------~~AND ~~Cost~~PARTNERS' ~~and~~EQUITY ~~expenses~~Liabilities: ~~Cost~~Accounts ofpayable ~~sales 293,477 1,075,801 293,477 1,075,801 Selling, general~~ and ~~administrative~~other ~~expenses~~liabilities ~~170,968~~$ ~~204~~202,~~071~~747 ~~244,382~~$ ~~306~~215,~~504~~551 ~~Interest~~ -- ~~297~~ -- ~~793 Property taxes 12,154 18,990 25,719 53,339~~ ------~~-----~~ ----------- ~~-----------~~Partners' ~~-----------~~equity: ~~Total~~4,485,504 ~~costs~~units authorized and ~~expenses~~outstanding ~~476,599~~ 1,~~299~~511,~~159~~793 ~~563~~2,~~578 1~~569,~~436,437~~360 ----------- ----------- ~~----------- ----------- Net income (loss)~~ $ ~~(134~~1,~~679) $ 33~~714,~~038~~540 $ ~~(202~~2,~~120) $ (88~~784,~~489)~~911 =========== =========== =========== =========== Net income (loss) per unit $ (0.03) $ 0.01 $ (0.05) $ (0.02) =========== =========== =========== =========== Weighted average number of units outstanding 4,485,504 4,485,504 4,485,504 4,485,504 =========== =========== =========== ===========

See notes to financial statements 2

ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED) Three Months Ended ~~Six~~Nine Months Ended ~~March~~June 3130, ~~March~~June 3130, ----------------------------~~---~~ ---------------------------~~----~~ 2001 2000 2001 2000 ----------- ----------- ----------- ----------- ~~Cash~~Land ~~flows~~revenues ~~from operating activities: Cash was received from: Collections on sales and receivables~~ $ ~~330~~250,000 $ ~~1,328,750~~-- $ ~~330~~580,000 $ 1,~~328~~316,~~750~~250 Interest ~~Income~~income 11,~~920~~343 1511,~~947~~196 2132,~~458~~801 4142,~~780~~454 ~~Sale~~Other ofincome ~~utility~~287 ~~system 548~~20,~~317~~670 ~~379~~10,~~363~~287 ~~548~~21,~~317~~110 ~~379,363 Other~~ -- -- ~~10,000 440~~ -------~~----~~ ----------- ----------- ----------- ~~890~~261,~~237~~630 131,~~724,060~~866 ~~909~~623,~~775~~088 1,~~750~~379,~~333~~814 ----------- ----------- ----------- ----------- ~~Cash~~Cost ~~was~~and ~~expended for~~expenses: ~~Selling~~Cost of sales 92,878 ~~general~~-- ~~and~~386,355 ~~administrative~~1,075,801 ~~property~~Selling, ~~taxes~~general and ~~other~~administrative expenses ~~182~~115,~~207~~555 ~~255~~121,~~869~~551 ~~297~~359,~~933~~937 ~~440~~429,~~470~~414 Interest ~~paid (net of amounts capitalized)~~ -- ~~297~~ -- ~~793 Improvements to property held for sale 478 36,462 5,834 134,338~~ --~~---------~~ ~~-----------~~793 ~~-----------~~Property ~~-----------~~taxes ~~182~~11,~~685~~543 ~~292~~24,~~628~~013 ~~303~~37,~~767~~262 ~~575~~75,~~601~~993 ----------- ----------- ----------- ----------- ~~Net~~Total ~~cash~~costs ~~provided~~and byexpenses ~~operating activities 707~~219,~~552~~976 1145,~~431,432~~564 ~~606~~783,~~008~~554 1,~~174~~582,~~732~~001 ----------- ----------- ----------- ----------- ~~Cash~~Net ~~flow~~income ~~from investing activities: Purchase of property and equipment -- -- --~~ (~~9,182~~loss) ~~-----------~~$ ~~-----------~~41,654 ~~-----------~~$ ~~----------- Net cash used in investing activities -- -- --~~ (9113,~~182~~698) ~~-----------~~$ ~~----------- ----------- ----------- Cash flow from financing activities: Partner distributions --~~ (1160,~~121,376~~466) --$ (3202,~~364,128~~187) ~~-----------~~=========== ~~-----------~~=========== ~~-----------~~=========== ~~-----------~~=========== Net ~~cash~~income ~~used~~(loss) inper ~~financing~~unit ~~activities~~$ --0.01 $ (~~1,121,376~~0.03) --$ (~~3,364,128~~0.04) ~~-----------~~$ ~~----------- ----------- ----------- Net increase~~ (~~decrease~~0.05) in=========== ~~cash~~=========== ~~707,552~~=========== ~~310,056~~=========== ~~606,008~~Weighted ~~(2,198,578)~~average ~~Cash,~~number ~~beginning~~ of ~~period~~units ~~710,976~~outstanding ~~605~~4,~~166 812~~485,~~520~~504 34,~~113~~485,~~800~~504 ~~----------- ----------- ----------- ----------- Cash~~4, ~~end of period $ 1~~485,~~418,528~~504 ~~$ 915~~4,~~222 $ 1~~485,~~418,528~~504 ~~$ 915,222~~ =========== =========== =========== ===========

See notes to financial statements 3

ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED) Three Months Ended ~~Six~~Nine Months Ended ~~March~~June 3130, ~~March~~June 3130, ----------------------------- --------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- ~~Net~~Cash ~~income~~flows ~~(loss)~~from operating activities: Cash was received from: Collections on sales and receivables $ ~~(134~~250,~~679)~~000 $ ~~33,038~~-- $ ~~(202~~580,~~120)~~000 $ ~~(88~~1,~~489)~~328,750 Interest Income 11,343 11,196 32,801 52,976 Sale of utility system -- -- 548,317 379,363 Other 287 8,170 10,287 8,610 ----------- ----------- ----------- ----------- ~~Adjustments~~261,630 to19,366 ~~reconcile~~1,171,405 ~~net~~1,769,699 ~~loss~~----------- to----------- ~~net~~----------- ~~cash~~----------- ~~provided~~Cash bywas ~~operating~~expended ~~activities~~for: ~~Depreciation~~Selling, administrative and ~~amortization~~property ~~679~~taxes ~~680~~173,449 1138,~~358~~062 1471,~~359~~382 ~~Change~~603,505 inInterest ~~assets~~paid ~~and~~(net ~~liabilities:~~of ~~Decrease~~amounts ~~in:~~capitalized) ~~Mortgage~~-- ~~notes~~-- ~~and~~-- ~~other~~793 ~~receivables~~Improvements ~~547,379~~to ~~390~~property 291 2,~~722~~077 ~~547~~6,~~379~~125 ~~400~~111,~~793~~442 ~~Property~~----------- ~~held~~----------- ~~for~~----------- ~~sale~~----------- ~~287~~173,~~955~~740 1140,~~042,093~~139 ~~286~~477,~~557~~507 1715,~~000,621~~740 ~~Other~~----------- ~~assets~~----------- 5----------- ----------- Net cash provided by (used in) operating activities 87,~~252~~890 ~~465~~(120,773) 26693,~~100~~898 51,~~017~~053,959 ~~Accounts~~----------- ~~payable~~----------- ----------- ----------- Cash flow from investing activities: Purchase of property and ~~accrued~~equipment ~~liabilities~~-- ~~966~~-- -- (489,~~066~~182) ----------- ----------- ----------- ----------- Net cash used in investing activities -- -- -- (539,~~266~~182) ----------- ----------- ----------- ----------- Cash flow from financing activities: Partner distributions (~~157~~897,~~069~~101) ~~Increase~~-- ~~in:~~(897,101) ~~Deposits~~(3,364,128) on----------- ~~land~~----------- ~~sales~~----------- ----------- 12Net cash used in financing activities (897,~~500~~101) -- 12(897,~~500~~101) (3,364,128) ----------- ----------- ----------- ----------- ~~Total~~Net ~~adjustments~~decrease ~~842~~in cash (809,~~231~~211) 1(120,~~398~~773) (203,~~394~~203) ~~808~~(2,~~128~~319,351) Cash, beginning of period 1,~~263~~418,~~221~~528 915,222 812,520 3,113,800 ----------- ----------- ----------- ----------- ~~Net~~Cash, ~~cash~~end ~~flow~~of ~~provided~~period ~~by operating activities~~ $ ~~707~~609,~~552~~317 $1 794,~~431,432~~449 $ ~~606~~609,~~008~~317 $1 794,~~174,732~~449 =========== =========== =========== ===========

See notes to financial statements 4

See notes to financial statements 5 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED JUNE 30, 2001 AND 2000 1. Interim financial statements: The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2001. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000. 2. Income tax: The Partnership has elected to continue its Partnership status beyond December 31, 1997, by agreeing to pay an annual 3.5% Federal tax on its gross income for Federal income tax purposes (principally revenues less cost of land sold). For the nine months ended June 30, 2001 and 2000, gross income for Federal tax payments is not material and accordingly, no provision for Federal taxes has been provided. The partners are required to include in their income tax returns their share of the Partnership's taxable income or loss. 6 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND SIX MONTHS ENDED June 30, 2001 AND June 30, 2000 (UNAUDITED) Results of Operations --------------------- NOTE: Since the Partnership's activities consist principally of the sale of its remaining properties, and the timing of closing dates for such sales is usually subject to contingencies which often result in changes to such closing dates, a comparison of sales and income results from comparable periods in different years is not considered meaningful. During the nine month periods ended June 30, 2001 and June 30, 2000, the Partnership had land sale revenues totaling $580,000 and $1,316,2250 respectively, and a net loss of ($160,466) or ($0.04) per unit and a net loss of ($202,187) or ($0.05) per unit, respectively. During the quarter ended June 30, 2001 the Partnership's land sale revenues were $250,000, derived from the sale of a tract of approximately 4.54 acres in the Village of Royal Palm Beach zoned for multi-family residential units. During the corresponding quarter of 2000, the partnership had no land sale revenues. Net income (loss) during the quarters ended June 30, 2001 and June 30, 2000 was $41,654 or $0.01 per Unit and ($113,698) or ($0.03) per Unit Selling, Administrative and Other Expenses ------------------------------------------ Selling, general and administrative expenses were $359,937 in the nine months ended June 30, 2001, compared with $429,414 in the corresponding quarter of 2000, the reduction resulting principally from lower commission expenses due to lower land sales during the period. Liquidity and Capital Resources ------------------------------- Cash decreased from $812,520 at September 30, 2000 to $609,317 at June 30, 2001, resulting principally from from an excess of selling, general and administrative costs, and property taxes, plus a distribution to partners of $897,101 paid in the quarter ended June 30, 2001, over cash received from land sales ($580,000) and contingent Utility Contract income ($548,000 - as described below under "Affect of Land Sales on Future Cash Flow." The Partnership's cash balances at any particular point depend primarily on the timing of sales of its real estate, which timing can be affected by numerous factors. During the current fiscal year, and based upon management's judgment that ordinary operating expenses will not increase, the Partnership anticipates that cash flow and liquidity requirements will be satisfied by cash on hand. Future sales of land are 7 subject to conditions which might not be satisfied, although the Partnership has no present knowledge of circumstances which would render likely the non-satisfaction of such conditions. Cost of Sales ------------- Cost of sales relates to the sales of land as discussed above. This item varies as a result of dissimilar profit margins and income recognition methods on the various sales of land and buildings as discussed above. The cost of sales for the three months ended June 30, 2001 was $92,878 as compared with no cost of sales during the three months ended June 30, 2000. Affect of Land Sales on Future Cash Flow ---------------------------------------- The Partnership's future revenues will depend solely upon its ability to develop and/or sell its remaining real estate, and upon receipts from a prior sale of a utility plant. As of June 30, 2001, the Partnership retained and was holding for sale: (1) a 50% interest in 3.2 acres of commercial property in the "Crestwood" tract in the Village of Royal Palm Beach under option for sale for a price which would generate gross proceeds to the Partnership of approximately $400,000; (2) 162 lots in the vicinity of the Village of Royal Palm Beach zoned for residential use but presently the subject of litigation as to the availability of building permits; and (3) a tract of approximately 20 acres in the Crestwood multi-family tract in the Village of Royal Palm Beach. In 1983 the Partnership's Predecessor Company sold to the Village of Royal Palm Beach a water and sewage treatment system servicing the Village. Pursuant to the agreement of sale ("Utility Contract"), the Partnership was entitled to receive annual payments through 2003 based on water consumption in the Village. Through December 29, 2000 the Partnership had received total payments of $6,639,000 in "consumption" payments and $331,935 in Guaranteed payments under the Utility Contract, and received approximately $548,000 in January, 2001 in respect of the year 2000. The Utility Contract will expire in 2003. Since the highest annual payment in the previous ten years was $427,000, it is considered extremely unlikely that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the maximum remaining $4,261,000 in contingent payments under the Utility Contract prior to the expiration of the contingent payment term. The partnership has declared aggregate distributions of $33,417,005 ($7.45) per unit since inception through June 30, 2001, including $897,101 paid in the quarter ended June 30, 2001. Total net cash flow which might become available for additional distributions is unpredictable due to uncertain conditions in the South Florida real estate market in which the Partnership's remaining real estate is located, and competition from other owners and developers of real estate in the South Florida market. These conditions will continue to affect the realizable value of the Partnership's remaining land, including 8 decisions by parties holding options on the Partnership's land to exercise such options in whole or in part. Environmental Matters --------------------- There are no environmental contingencies in respect of the Partnership or its properties. Use of all of the Partnership's properties is subject to compliance with state and county land use regulations relating to environmental matters, which the Partnership takes into account in considering the values of its properties. Income Taxes ------------ See Note 2 to the Financial statements. 9 PART II - OTHER INFORMATION (a) Exhibits - None (b) Reports on Form 8-K - None 10 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. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP By: Stein Management Company, Inc. Managing General Partner By: /s/ Irving Cowan ----------------------- Irving Cowan, President DATE: August 14, 2001

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