10-Q 1 form10q-45896_9602.txt 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 and Nine Months Ended June 30, 2002 Commission File Number 1-8893 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP ---------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 59-2501059 -------------------------------------------------------------------------------- (State or other jurisdiction I.R.S. employer Identification of incorporation or Organization) 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, 2002 ----------------------- --------------------------- Limited Partnership Units 4,485,504 unit Royal Palm Beach Colony, Limited Partnership INDEX PART I. Page Number Financial Information Balance Sheets - June 30, 2002 and September 30, 2001 2 Statements of operations - Three months and nine months ended 3 June 30, 2002 and 2001 Statements of cash flows - 4-5 Three months and nine months ended June 30, 2002 and 2001 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 Royal Palm Beach Colony, Limited Partnership BALANCE SHEETS June 30, September 30, 2002 2001 ------------ ------------- (unaudited) ASSETS Cash $1,611,910 $ 515,952 Mortgage receivable 729,175 Other receivables 17,702 444,558 Property held for sale 1,024,834 Other assets 66,768 62,570 ---------- ---------- $2,425,555 $2,047,914 ========== ========== LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable and other liabilities $ 127,964 $ 203,233 ---------- ---------- Partners' equity: 4,485,504 units authorized and outstanding General partners 116,818 107,217 Limited partners 2,180,773 1,737,464 ---------- ---------- 2,297,591 1,844,681 ---------- ---------- $2,425,555 $2,047,914 ========== ========== See notes to financial statements 2

See notes to financial statements 3

See notes to financial statements 5 Royal Palm Beach Colony, Limited Partnership NOTES TO FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED JUNE 30, 2002 AND 2001 Note 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, 2002, are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2002. 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, 2001. Note 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). Selling, general and administrative expenses include Federal tax of $19,800 and $33,791 for the three and nine months ended June 30, 2002, respectively. Such amounts were not material for the three and nine months ended June 30, 2001 and accordingly, no provision for Federal taxes was provided. The partners are required to include in their income tax returns their share of the Partnership's taxable income or loss. 6 Part II. Other Information and Signatures ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED June 30, 2002 and June 30, 2001 (UNAUDITED) Results of Liquidation Activities; Intended Liquidation of the Partnership -------------------------------------------------------------------------- The Partnership's principal business has been to operate, manage and dispose of the assets which were transferred to it in 1985 by Royal Palm Beach Colony, Inc, the predecessor of the Partnership (the "Predecessor Company"). -------------------- Since the effective date of the predecessor company's liquidation, the Partnership has engaged in a program of asset disposition resulting in the sale of assets for an aggregate gross consideration of $83,322,000. The partnership has declared aggregate distributions of $34,538,605 ($7.70) per Unit since inception through March 31, 2002, including a distribution of $0.25 per share paid to Unit holders of record as of January 21, 2002. It is considered likely that, contingent on the collection in October, 2002 of the purchase money mortgage receivable described below, a further distribution of between ten cents and fifteen cents per Unit will be made prior to December 31, 2002. In view of the Partnership's disposition of its last remaining real estate assets as discussed below, the Managing General Partner is considering the liquidation of the Partnership. Although the precise mechanism for such liquidation has not been determined, it is likely that its remaining cash, (less reserves for contingent liabilities), would be distributed to holders of Partnership Units on approximately December 20,2002 and the effective date of the liquidation would occur shortly thereafter. On the Effective Date of the liquidation, the Partnership Units would no longer be transferable, such Units would be deemed cancelled in complete liquidation of each Unitholder's interest in the Partnership, and undivided interests in the Contingent Utility Payment described below would be distributed to the partners pro rata in accordance with their percentage interests in the Partnership. The respective interests of the Unitholders in such Contingent Utility Payment would not be transferable and no certificates representing such undivided interests would be issued. Collection and distribution of the Contingent Utility Payment to each record holder of Partnership Units would be administered by an escrow agent, liquidating agent, or paying agent and distributed when, as and if collected. At such time as the procedures for liquidation of the Partnership have been determined, the Partnership will notify each record holder of Units in writing of the procedures to be implemented and provide relevant financial and tax information. The Partnership will remain subject to public reporting requirements under the Securities and Exchange Act of 1934 through the Effective Date of its liquidation. 7 Results of Operations --------------------- NOTE: Since the Partnership's activities have consisted principally of the sale of its remaining properties, and the timing of closing dates for such sales has usually been subject to contingencies which often resulted in changes to such closing dates, a comparison of sales and income results with comparable periods in different years is not considered meaningful. During the nine month periods ended June 30, 2002 and June 30, 2001, the Partnership had land sale revenues totaling $3,413,002 and $580,000 respectively, and net income of $1,574,286 or $0.35 per Unit and a net loss of ($160,966) or ($0.04) per Unit, respectively. Net income during the quarters ended June 30, 2002 and June 30, 2001 was $700,917 or $0.16 per Unit and $41,654 or $0.01 per Unit, respectively. Land sales revenues during the nine-month period were derived solely from (a) the sale during the quarter ended June 30, 2002 of approximately 20 acres in a multi-family tract in the Village of Royal Palm Beach for gross proceeds of $1,428,000 including a purchase money mortgage note of $729,175 payable in October, 2002 together with interest at the rate of ten percent (10%) per annum (b) the sale during the quarter ended March 31, 2002 of a tract of a 1.6 acre for gross proceeds of approximately $355,000 and (c) the sale during the quarter ended December 31, 2001 for gross proceeds of approximately $1,630,000 of a tract of approximately 162 lots located in the Village of Royal Palm Beach. Contingent Utilities Payments ------------------------------ 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 June 30, 2002 the Partnership had received total payments of $7,158,000 in "consumption" payments and $361,000 in Guaranteed payments under the Utility Contract. As the result of water usage restrictions imposed by governmental authorities the period through which Contingent Utility Payments will be computed has been extended through August 11, 2004. The highest annual Contingent Payment made by the Village under the Utility Agreement during the past 10 years was $519,000 and the most recent payment, in January 2002, was $442,000. However, the amount of past payments is not necessarily indicative of future payment levels. The Partnership can not predict the level of future Contingent Payments, since the amount depends entirely on the number of new residences constructed and hooked up to the water plant during the period for which Contingent Payments will be due. Future new residential construction will be the result of independent and unrelated housing decisions made by individual land owners in the community served by the water plant. In turn, such decisions are likely to be affected by economic conditions, including the state of the general economy and the level of interest rates, which cannot be predicted. Remaining Assets ---------------- As a result of the sales described above, the Partnership has completed the sale of substantially all of its real estate assets, other than for certain parcels considered unsaleable and which the Partnership intends to abandon or donate to a local or state agency. Its remaining assets other than such isolated parcels consisted of: (a) the purchase money mortgage referred to in the preceding paragraph, plus 8 (b) the Contingent Utilities Contract Receivable described above; and (c) cash of approximately $1,612,000. See the Financial statements annexed hereto. Selling, Administrative and Other Expenses ------------------------------------------- Selling, general and administrative expenses were $378,399 in the three months ended June, 2002, compared with $115,555 in the corresponding quarter of 2001. For the nine-month periods ending June, 2002 and 2001, selling, general and administrative expenses were $707,470 and $359,937, respectively. The differing selling, general and administrative expenses resulted principally from different commission expenses related to land revenues during the relevant periods. 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 and nine month periods ended June 30, 2002 was $369,799 and $1,131,265, respectively, as compared with $92,878 and $386,355 during the three and nine month periods ended June 30 2001. Liquidity and Capital Resources ------------------------------- Cash increased from $1,293,671 at March 31, 2002 to $1,611,910 at June 30, 2002, resulting principally from the sale in April 2002 of approximately 20 acres in a multi-family tract in the "Crestwood" tract in the Village of Royal Palm Beach as reported under "Results of Operations." During the current fiscal year, the Partnership does not anticipate the receipt of any additional revenues; however, based upon management's judgment that ordinary operating expenses will decrease, the Partnership anticipates that cash flow and liquidity requirements will be satisfied by cash on hand at June, 2002. Income Taxes ------------ See Note 2 to the Financial statements. PART II - OTHER INFORMATION (a) Exhibits - None (b) Reports on Form 8-K - None 9 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: September 13, 2002 10

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