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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 quarterly 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 0-15571
CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP
(Exact name or registrant as specified in its charter)
North Carolina 56-1494619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4000 Blue Ridge Road, Suite 100
Raleigh, North Carolina 27612
(Address of principal executive office)
(Zip Code)
(919) 781-1700
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
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 the past 90 days.
Yes X No _________
------
The Exhibit Index is located on Page 12.
PART I - FINANCIAL INFORMATION
Item 1. Financial Information
a) Income Statement
STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
Interest and other income $ 412 $ 874 $ 966 $ 2,245
----------- --------------------------- ------------
Total Income 412 874 966 2,245
General and Administrative expenses 6,788 10,964 14,829 21,864
----------- --------------------------- ------------
NET LOSS $ (6,376) $ (10,090) $ (13,863) $ (19,619)
=========== =========================== ============
Allocation of net loss to:
General Partner:
From other operations $ -0- $ -0- $ -0- $ -0-
----------- --------------------------- ------------
Total to General Partner -0- -0- -0- -0-
----------- --------------------------- ------------
Limited Partners:
From other operations (6,376) (10,090) (13,863) (19,619)
----------- --------------------------- ------------
(6,376) (10,090) (13,863) (19,619)
----------- --------------------------- ------------
TOTAL ALLOCATION $ (6,376) $ (10,090) $ (13,863) $ (19,619)
=========== =========================== ============
Net loss per limited
partnership unit (based on 5,900
weighted average limited
partnership units outstanding):
From other operations $ (1.08) $ (1.71) $ (2.35) $ (3.33)
----------- --------------------------- ------------
TOTAL PER UNIT $ (1.08) $ (1.71) $ (2.35) $ (3.33)
=========== =========================== ============
See notes to unaudited financial statements.
2
b) Balance Sheets
BALANCE SHEETS
June 30, 2002 December 31, 2001
(Unaudited) (Unaudited)
ASSETS
Cash $ 69,865 $ 64,999
Short-term investments 124,459 148,843
----------------- -----------------
CASH AND CASH EQUIVALENTS 194,324 13,842
Land held for investment--Note B 3,594,592 3,594,592
Other assets 5,600 4,068
------------------ ------------------
TOTAL ASSETS $ 3,794,516 $ 3,812,502
================== ==================
LIABILITIES AND PARTNERS' EQUITY
Trade accounts payable and other
accrued liabilities $ 8,262 $ 12,385
Distribution not claimed by limited partners 114,668 114,668
------------------ ------------------
TOTAL LIABILITIES $ 122,930 $ 127,053
------------------ ------------------
PARTNERS' EQUITY
General partner's equity $ -0- $ -0-
Limited partners' equity; 5,900 units
authorized, issued, and outstanding 3,671,586 3,685,449
------------------ ------------------
TOTAL PARTNERS' EQUITY $ 3,671,586 $ 3,685,449
------------------ ------------------
TOTAL LIABILITIES
AND PARTNERS' EQUITY $ 3,794,516 $ 3,812,502
================== ==================
See notes to unaudited financial statements.
3
c) Statements of Changes in Partners' Capital
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (Unaudited)
Limited General Limited
Partnership Partner's Partners'
Units Equity Equity Total
----- ------ ------ -----
Balance at
January 1, 2002 5,900 $ -0- $ 3,685,449 $ 3,685,449
Net loss for the
six months ended
June 30, 2002 -0- (13,863) (13,863)
------------------- ------------------- ----------------- -----------------
BALANCE AT
JUNE 30, 2002 5,900 $ -0- $ 3,671,586 $ 3,671,586
================== ================= ================= =================
Balance at
January 1, 2001 5,900 $ -0- $ 3,740,214 $ 3,740,214
Net loss for the
six months ended
June 30, 2001
-0- (19,619) (19,619)
------------------ ----------------- ----------------- -----------------
BALANCE AT
JUNE 30, 2001 5,900 $ -0- $ 3,720,595 $ 3,720,595
================== ================= ================= =================
See notes to unaudited financial statements.
4
d) Statements of Changes in Financial Position
STATEMENTS OF CASH FLOW (Unaudited)
Six Months Ended
June 30
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (13,863) $ (19,619)
Changes in assets and liabilities:
(Increase) decrease in other assets (1,532) (1,628)
Increase (decrease) in trade accounts payable
and distributions not claimed by
limited partners (4,123) (7,513)
------------ ------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (19,518) (28,760)
------------ ------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (19,518) (28,760)
Cash and cash equivalents at beginning
Of period 213,842 273,219
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 194,324 $ 244,459
============ ============
Supplemental disclosures of cash flow information Cash paid for interest during
the six months ended June 30 was $0 in 2002 and $0 in 2001.
See notes to unaudited financial statements.
5
e) Notes to Financial Statements
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2002
NOTE A - SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
Carolina Investment Partners, Limited Partnership (the "Registrant"), was
organized in 1985 to invest in real property which it will sell or lease
undeveloped or develop into office or commercial projects. Walsmith Associates
Two, a North Carolina general partnership, is the general partner (the "General
Partner").
Basis of Presentation:
The accompanying June 30, 2002 financial statements of the Registrant are
unaudited. In the opinion of the General Partner, all adjustments (consisting of
normal accruals) considered necessary for a fair presentation have been
included. Operating results for the period presented are not necessarily
indicative of the results that may be expected for the entire year.
NOTE B - LAND HELD FOR INVESTMENT AND RELATED COMMITMENTS AND TRANSACTIONS
In July 1986, the Registrant purchased for $1,223,175 an undeveloped 16.3-acre
parcel of land in Cary, North Carolina, known as the Wellington Parcel, from
Wellington Park Associates ("WPA"), an affiliate of the General Partner. The
land was carried at the lower of (i) contract cost plus capitalized purchase and
closing costs or (ii) net realizable value. The contract under which the
Registrant purchased the parcel provides that WPA will share with the Registrant
in any profits resulting from the sale of the Wellington Parcel.
In June 1986, the Registrant purchased for approximately $3,080,200 an
undeveloped 26.7-acre parcel of land in Cary, North Carolina, known as the
Martin Parcel, from an affiliate of the General Partner. The land is carried at
the lower of (i) contract cost plus capitalized purchase and closing costs or
(ii) net realizable value.
In 1996, 1997 and 1998 the Registrant sold the Wellington Parcel to a third
party under the terms of an Agreement for the Purchase and Sale of Real Estate,
as amended ("the Agreement"), between the Registrant, Wellington Center
Associates LLC (successor to Churchill & Banks, Ltd.) ("WCA"), and ADA
Corporation of North Carolina ("ADA"), an affiliate of the Registrant's General
Partner. The total sales price for the property sold, a portion of which was
owned by ADA, was $3,927,636. This sales price was allocated among the
Registrant and ADA based upon acreage sold by each, with $3,730,963 to the
Registrant and $196,673 to ADA. As of April 9, 1998, all of the Wellington
Parcel was sold.
6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Registrant's operations resulted in net loss of $(6,376) during the quarter
ended June 30, 2002 compared to a net loss of $(10,090) during the same period
of 2001 and a net loss of $(13,863) during the six months ended June 30, 2002
compared to a net loss of $(19,619) during the same period of 2001. The primary
differences between 2002 and 2001 were:
Three Months Ended June 30:
. Expenses attributed to outside services and property taxes for the
three months ended June 30, 2001 were approximately $2,300 more
than the three months ended June 30, 2002.
Six Months Ended June 30:
. In the first six months of 2001, there was interest income from
the money market account of $1,945 compared to interest income of
$616 from the money market account in the first six months of
2002. This decrease in interest income was due to a lower average
account balance in the money market during the first half of 2002
compared to the first six months of 2001.
. Expenses attributed to outside services and property taxes for the
first six months of 2002 were approximately $3,250 less than the
first six months of 2001.
Changes in the Registrant's financial condition as of June 30, 2002, in
comparison to December 31, 2001, are primarily due to:
. Transfers made from short-term investments to cash accounts in
order to reduce accounts payable and accrued liabilities and to
pay current expenses.
As of August 10, 2002, the Registrant has $194,324 in cash and short-term
investments, which is sufficient to meet its needs during the next year.
The Registrant maintains its excess funds in a money market account and
certificates of deposit at RBC Centura Bank. The General Partner believes these
accounts are an appropriate investment of the Registrant's funds. Until its
properties are sold, placed into development and/or refinanced, the Registrant
anticipates deficits from operations and administrative expenses.
Cautionary Statement Identifying Important Factors That Could Cause the
Registrant's Actual Results to Differ From Those Projected in Forward Looking
Statements.
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this document, and
any document incorporated by reference herein, are advised that this
document and documents incorporated by reference into this document
contain both statements of historical facts and forward looking
statements. Forward looking statements are subject to certain risks and
7
uncertainties, which could cause actual results to differ materially
from those indicated by the forward looking statements. Examples of
forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earnings or loss per share,
capital expenditures, dividends, capital structure and other financial
items, (ii) statements of the plans and objectives of the Registrant or
its management, including the introduction of new products, or
estimates or predictions of actions by customers, suppliers,
competitors or regulatory authorities, (iii) statements of future
economic performance, and (iv) statements of assumptions underlying
other statements and statements about the Registrant or its business.
This document and any documents incorporated by reference herein also
identify important factors which could cause actual results to differ
materially from those indicated by the forward looking statements.
These risks and uncertainties include uncertainties about whether real
estate sales under contract will close, the ability of the Registrant
to sell its other real estate assets, the price of real estate sales,
environmental and similar liabilities, future operating expenses and
the adequacy of capital resources to meet future operating expenses,
which are described herein and/or in documents incorporated by
reference herein.
The cautionary statements made pursuant to the Private Litigation
Securities Reform Act of 1995 above and elsewhere by the Registrant
should not be construed as exhaustive or as any admission regarding the
adequacy of disclosures made by the Registrant prior to the effective
date of such Act. Forward looking statements are beyond the ability of
the Registrant to control and in many cases the Registrant cannot
predict what factors would cause actual results to differ materially
from those indicated by the forward looking statements.
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
8
Part II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 3.1 Amended Agreement of Limited Partnership of the
Registrant (incorporated by reference to Exhibit
4.1 to the Registrant's Annual Report filed on
Form 10-K for the year ended December 31, 1986).
Exhibit No. 10.1 Purchase Agreement between Registrant and
Walsmith Associates regarding the Martin Parcel
(incorporated by reference to Exhibit 10.1 to the
Registrant's Annual Report filed on Form 10-K for
the year ended December 31, 1986).
Exhibit No. 10.2 Offer to Purchase and Contract for the Sale and
Purchase of Real Estate, dated as of January 24,
1986, between Wellington Park Associates and the
Registrant (incorporated by reference to Exhibit
6A to the Registrant's Quarterly Report filed on
Form 10-Q for the period ended June 30, 1989).
Exhibit No. 10.3 Agreement between the North Carolina Department
of Transportation and Walsmith Associates
(incorporated by reference to Exhibit 10.3 to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1986).
Exhibit No. 10.4 Assignment and Assumption Agreement between the
Registrant and Walsmith Associates (incorporated
by reference to Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1986).
Exhibit No. 10.5 Amendment to Offer to Purchase and Contract for
the Sale and Purchase of Real Estate, dated as of
February 1, 1990, between Wellington Park
Associates and the Registrant (incorporated by
reference to Exhibit 10.6 to the Registrant's
Annual Report filed on Form 10-K for the period
ended December 31, 1989).
Exhibit No. 10.6 Agreement for the Purchase and Sale of Real
Estate, dated as of April 20, 1995, between
Churchill & Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated by
reference to Exhibit C to the Registrant's
Current Report filed on Form 8-K, dated April
9
20, 1995).
Exhibit No. 10.7 First Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of August 9,
1995, between Churchill & Banks, Ltd., ADA
Corporation of North Carolina, and the Registrant
(incorporated by reference to Exhibit C to the
Registrant's Current Report filed on Form 8-K,
dated August 9, 1995).
Exhibit No. 10.8 Second Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as of
April 19, 1996, between Churchill & Banks, Ltd.,
ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
28.5 to the Registrant's Quarterly Report filed
on Form 10-Q for the period ended March 31,
1996).
Exhibit No. 10.9 Third Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of September
10, 1996, between Churchill & Banks, Ltd., ADA
Corporation of North Carolina, and the Registrant
(incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report filed on Form 8-K,
dated September 25, 1996).
Exhibit No. 10.10 Fourth Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as of
September 1996, between Churchill & Banks, Ltd.,
ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
10.2 to the Registrant's Current Report filed on
Form 8-K, dated September 25, 1996).
Exhibit No. 10.11 Fifth Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of September
27, 1996, between Wellington Center Associates,
LLC, ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
10.3 to the Registrant's Current Report filed on
Form 8-K, dated September 25, 1996).
Exhibit No. 10.12 Sixth Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of September
12, 1997, between Wellington Center
10
Associates, LLC, ADA Corporation of North
Carolina, and the Registrant (incorporated by
reference to Exhibit 10.12 to the Registrant's
Quarterly Report on Form 10-Q, dated September
30, 1997).
Exhibit No. 10.13 Letter Agreement to amend the Agreement for the
Purchase and Sale of Real Estate, dated December
12, 1997 between Churchill & Banks, Ltd., ADA
Corporation of North Carolina, and the Registrant
(incorporated by reference to Exhibit 10.13 to
the Registrant's Quarterly Report filed on Form
10-Q for the period ended March 31, 1998).
Exhibit No. 10.14 Eighth Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated March 24,
1998 between Churchill & Banks, Ltd., ADA
Corporation of North Carolina, and the Registrant
(incorporated by Reference to Exhibit 10.14 to
the Registrant's Quarterly Report filed on Form
10-Q for the period ended March 31, 1998).
Exhibit No. 99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit No. 99.2 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K. None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAROLINA INVESTMENT PARTNERS
LIMITED PARTNERSHIP (Registrant)
BY: WALSMITH ASSOCIATES TWO,
General Partner
By: /s/ Alton L. Smith III
-----------------------
Alton L. Smith III, General Partner
Date: August 10, 2002
11
INDEX
TO EXHIBITS
Exhibit No. Description Page
----------- ----------- ----
3.1 Amended Agreement of Limited Partnership of the
Registrant (incorporated by reference to Exhibit
4.1 to the Registrant's Annual Report filed on
Form 10-K for the year ended December 31, 1986).
10.1 Purchase Agreement between Registrant and
Walsmith Associates regarding the Martin Parcel
(incorporated by reference to Exhibit 10.1 to the
Registrant's Annual Report filed on Form 10-K for
the year ended December 31, 1986).
10.2 Offer to Purchase and Contract for the Sale and
Purchase of Real Estate, dated as of January 24,
1986, between Wellington Park Associates and the
Registrant (incorporated by reference to Exhibit
6A to the Registrant's Quarterly Report filed on
Form 10-Q for the period ended June 30, 1989).
10.3 Agreement between the North Carolina Department
of Transportation and Walsmith Associates
(incorporated by reference to Exhibit 10.3 to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1986).
10.4 Assignment and Assumption Agreement between the
Registrant and Walsmith Associates (incorporated
by reference to Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1986).
12
10.5 Amendment to Offer to Purchase and Contract for
the Sale and Purchase of Real Estate, dated as of
February 1, 1990, between Wellington Park
Associates and the Registrant (incorporated by
reference to Exhibit 10.6 to the Registrant's
Annual Report filed on Form 10-K for the period
ended December 31, 1989).
10.6 Agreement for the Purchase and Sale of Real
Estate, dated as of April 20, 1995, between
Churchill & Banks, Ltd., ADA Corporation of North
Carolina, and the Registrant (incorporated by
reference to Exhibit C to the Registrant's
Current Report filed on Form 8-K, dated April 20,
1995).
10.7 First Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of August 9,
1995, between Churchill & Banks, Ltd., ADA
Corporation of North Carolina, and the Registrant
(incorporated by reference to Exhibit C to the
Registrant's Current Report filed on Form 8-K,
dated August 9, 1995).
10.8 Second Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as of
April 19, 1996, between Churchill & Banks, Ltd.,
ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
28.5 to the Registrant's Quarterly Report filed
on Form 10-Q for the period ended March 31,
1996).
10.9 Third Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of September
10, 1996, between Churchill & Banks, Ltd., ADA
Corporation of North Carolina, and the Registrant
13
(incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report filed on Form 8-K,
dated September 25, 1996).
10.10 Fourth Amendment to the Agreement for the
Purchase and Sale of Real Estate, dated as of
September 1996, between Churchill & Banks, Ltd.,
ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
10.2 to the Registrant's Current Report filed on
Form 8-K, dated September 25, 1996).
10.11 Fifth Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of September
27, 1996, between Wellington Center Associates,
LLC, ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
10.3 to the Registrant's Current Report filed on
Form 8-K, dated September 25, 1996).
10.12 Sixth Amendment to the Agreement for the Purchase
and Sale of Real Estate, dated as of September
12, 1997, between Wellington Center Associates,
LLC, ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
10.12 to the Registrant's Quarterly Report filed
on Form 10-Q for the period ended September 30,
1997).
10.13 Letter Agreement to amend the Agreement for the
Purchase and Sale of Real Estate, dated as of
December 12, 1997, between Churchill & Banks,
Ltd., ADA Corporation of North Carolina, and the
Registrant (incorporated by reference to Exhibit
10.13 to the Registrant's Quarterly
14
Report filed on Form 10-Q for the period ended
March 31, 1998).
10.14 Eighth Amendment to the Agreement for the 19
Purchase and Sale of Real Estate, dated as of
March 24, 1998 between Wellington Center
Associates, LLC, ADA Corporation of North
Carolina, and the Registrant (incorporated by
reference to Exhibit 10.14 to the Registrant's
Quarterly Report filed on Form 10-Q for the
period ended March 31, 1998).
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
15