FORM 10-Q.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 31326, eff. 10/22/92.)
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
June 30, 2002
[ ] 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 incorporation or organization) |
(I.R.S. Employer 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
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
RAINES LENDERS, L.P.
(A Limited Partnership)
FINANCIAL STATEMENTS
(Unaudited)
INDEX
Item 1. Financial Statements
Balance Sheets as of June 30, 2002 and December 31, 2001 3
Statements of Operations for the three and six months ended June 30, 2002 and 2001 4
Statements of Cash Flows for the three and six months ended June 30, 2002 and 2001 5
Notes to Financial Statements for the three and six months ended June 30, 2002 and 2001 6
Item 2: Management's discussion and analysis of financial condition and results of operations 8
PART II. Other information 9
Item 6. Exhibits and reports on Form 8-K 9
Certifications 10
Signatures 11
RAINES LENDERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
|
June 30, 2002 |
December 31, 2001 |
|
|
ASSETS |
||
|
Cash |
$6,101 |
44 |
|
Restricted cash |
139,200 |
139,200 |
|
Land and improvements held for sale |
3,400,000 |
3,400,000 |
|
Loan costs |
4,380 |
8,761 |
|
Total assets |
$3,549,681 |
3,548,005 |
|
LIABILITIES AND PARTNERS' EQUITY |
||
|
Due to affiliate |
$5,725 |
- |
|
Accounts payable |
12,611 |
13,738 |
|
Property tax payable |
120,446 |
180,494 |
|
Note payable to bank |
471,352 |
321,352 |
|
Total Liabilities |
610,134 |
515,584 |
|
Partners' equity: |
||
|
Limited partners, 5,625 units outstanding |
2,939,547 |
3,032,421 |
|
General partner |
||
|
Total partners' equity |
2,939,547 |
3,032,421 |
|
Total liabilities and partners' equity |
$3,549,681 |
3,548,005 |
See accompanying notes to financial statements.
RAINES LENDERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
|
Three months ended |
Six months ended |
|||
|
June 30, |
||||
|
2002 |
2001 |
2002 |
2001 |
|
|
REVENUE: |
||||
|
Miscellaneous |
$- |
9,358 |
- |
8,200 |
|
Total Revenues |
- |
9,358 |
- |
8,200 |
|
Expenses |
||||
|
Franchise and excise tax expense |
(1,375) |
- |
750 |
- |
|
Property tax expense |
24,094 |
24,094 |
48,187 |
48,187 |
|
Management fees |
2,250 |
2,250 |
4,500 |
4,500 |
|
Legal and accounting fees |
20,425 |
43,665 |
23,675 |
50,965 |
|
Office administration expense |
1,583 |
1,712 |
2,352 |
2,657 |
|
Interest expense |
5,236 |
- |
9,029 |
7,348 |
|
Amortization |
2,191 |
- |
4,381 |
- |
|
Total expenses |
54,404 |
71,721 |
92,874 |
113,657 |
|
Net loss |
$(54,404) |
(62,363) |
(92,874) |
(105,457) |
|
Net loss per limited partner unit |
$(9.67) |
(11.09) |
(16.51) |
(18.75) |
|
Limited partner units outstanding |
5,625 |
5,625 |
5,625 |
5,625 |
See accompanying notes to financial statements
RAINES LENDERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
|
For the six months ended June 30, |
||
|
2002 |
2001 |
|
|
Cash flows from operating activities: |
||
|
Net loss |
$(92,874) |
(105,457) |
|
Adjustments to reconcile net loss to net cash used by operating activities: |
||
|
Increase (decrease) in due to affiliates |
5.725 |
(50,035) |
|
Decrease in restricted cash |
- |
140,774 |
|
Decrease in accounts receivable interest |
- |
6,646 |
|
Amortization |
4,381 |
- |
|
Decrease in accounts payable |
(1,127) |
(32,061) |
|
(Decrease) increase in property taxes payable |
(60,048) |
45,175 |
|
Decrease in franchise tax payable |
- |
(5,095) |
|
Net cash used by operating activities |
(143,943) |
(53) |
|
Cash flows from financing activities |
||
|
Loan proceeds |
150,000 |
- |
|
Net cash provided by financing activities |
150,000 |
- |
|
Net increase in cash |
6,057 |
- |
|
Cash at beginning of period |
44 |
54 |
|
Cash at end of period |
$6,101 |
1 |
|
Supplemental disclosure: |
||
|
Cash paid for interest |
9,029 |
7,348 |
See accompanying notes to financial statements.
RAINES LENDERS, L.P.
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2002 AND 2001
(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 accounting principles generally accepted in the United States of America. 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, 2001. 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 six month period ended June 30, 2002 may not be indicative of the results that may be expected for the year ending December 31, 2002.
B. RELATED PARTY TRANSACTIONS
The General partner and its affiliates have been actively involved in managing the Partnership. Compensation earned for these services were as follows:
|
Three months ended June 30, |
Six months ended June 30, |
|||
|
2002 |
2001 |
2002 |
2001 |
|
|
Management fees |
$2,250 |
$2,250 |
$4,500 |
$4,500 |
|
Accounting fees |
10,200 |
15,200 |
10,700 |
15,600 |
C. COMPREHENSIVE INCOME
During the three and six-month periods ended June 30, 2002, and 2001, the Partnership had no components of other comprehensive loss. Accordingly, comprehensive loss for each of the periods was the same as net loss.
D. LIQUIDITY
The Partnership has suffered recurring losses from operations and has a net working capital deficiency at June 30, 2002. At June 30, 2002, the Partnership had unrestricted cash of $6,101, liabilities to non-affiliated entities of $604,409. The cash is insufficient to fund ongoing operations. The Partnership owns total assets with a carrying value of $3,549,681 and has liabilities of $610,134. If funds are not sufficient to fund operations in 2002, the General Partner can defer the collection of fees for certain affiliated expenses and can provide advances until cash becomes available. The partnership has drawn $471,352 on a line of credit collateralized by the land and improvements held for sale, which is due December 21, 2002. The Partnership does not have the funds to repay the amount drawn. If the Partnership is unable to renew or extend the due date on the amount drawn, it will be in default of its agreement. As a result, a default under the line of credit would have a material ly adverse effect upon us and could make it necessary for us to seek protection from our creditors under federal bankruptcy law or deliver the collateral to the bank.
RAINES LENDERS, L.P.
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (cont.)
For the Three and Six Months Ended June 30, 2002 AND 2001
(Unaudited)
D. IMPAIRMENT
Effective January 1, 2002 the Financial Accounting Standards Board (FASB) issued the Statement of Financial Accounting Standard Number 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations for the Quarter Ended June 30, 2002.
The Registrant had no land sales during the first six months of 2002 or 2001. Operating expenses of the Registrant are comparable with prior quarters.
Financial Condition and Liquidity
As of June 30, 2002 the Registrant had $6,101 in cash. This balance is not sufficient to meet the operating needs of the Registrant. The Partnership has suffered recurring losses from operations and has a net working capital deficiency at June 30, 2002. At June 30, 2002, the Partnership had unrestricted cash of $6,101, liabilities to non-affiliated entities of $604,409. The Partnership owns assets with a net book value of $3,549,681 and has liabilities of $610,134. If funds are not sufficient to fund operations in 2002, the General Partner can defer the collection of fees for certain affiliated expenses and can provide advances until cash becomes available. The Partnership obtained a line of credit (LOC) of $600,000 which bears interest at prime rate with a floor of 4.0% and a ceiling of 24.0% (4.75% at December 31, 2001). The Partnership had drawn $321,352 against the line at December 31, 2001and has drawn down an additional $150,000 during 2002. The Line of credit i s collateralized by the land and improvements held for sale. The LOC requires monthly payments of accrued interest to be paid with the balance of the amount drawn due on December 21, 2002. The Partnership does not have the funds to repay the amount drawn. If the Partnership is unable to renew or extend the due date on the amount drawn, it will be in default of its agreement. As a result, a default under the line of credit would have a material adverse effect upon us and could make it necessary for us to seek protection from our creditors under federal bankruptcy law or deliver the collateral to the bank.
Critical Accounting Policies
Land and improvements held for sale are reported at the lower of the carrying value or estimated fair value less estimated costs to sell (Fair Value). To determine the Fair Value, management estimates the future discounted net cash flows using a discount rate commensurate with the risk associated with the property. If this land is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated Fair Value. Inherent in the calculation of future discounted net cash flows are certain significant management judgments and estimates including, among others, liquidation period, discount rate, selling price, and costs to sell, which significantly impact the estimated Fair Value.
Contractual Obligations and Commitments
At June 30, 2002, the Partnership has no capital lease obligations, operating leases, unconditional purchase obligations or other long term obligations. The Partnership does not enter into derivative transactions. The partnership has a line of credit of $600,000 at a bank and has drawn down $471,352 on the line at June 30, 2002. Interest on this amount is at the prime rate and amounts drawn down are due December 21, 2002. At June 30, 2002 and December 31, 2001, the Partnership has cash balances of $139,200 restricted by the City of Memphis to be used to fund property improvements, consisting of road and utility work. This restricted cash secures a letter of credit in the same amount to ensure the required developments are made. The Partnership may also borrow from the General Partner in order to meet cash flow needs and may have amounts payable to the General Partner for management fees or other services. At June 30, 2002 and December 31, 2001, the Partnership had no non-interest bearing borrowings from the General Partner. Transactions with the General Partner and affiliates are discussed in footnote B to the financial statements.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on form 8-K
(a) Exhibits
(b) No 8-K's have been filed during this quarter.
RAINES LENDERS, L. P.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connections with the Report of Raines Lenders, L.P., on Form 10-Q for the quarter ended June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I Steven D. Ezell, Chief Executive Officer of Raines Lenders, L.P., certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 14, 2002 By: Steven D. Ezell
Chief Executive Officer
In connections with the Report of Raines Lenders, L.P., on Form 10-Q for the quarter ended June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I Michael A. Hartley, Chief Financial Officer of Raines Lenders, L.P., certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 14, 2002 By: Michael A. Hartley
Chief Financial Officer
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: August 14, 2002 |
By: /s/ Steven D. Ezell |
|
General Partner
|
By: 222 PARTNERS, INC.
General Partners
|
Date: August 14, 2002 |
By: /s/ Michael A. Hartley |
|
Secretary/Treasurer |