1
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, 1999
or
[ ] 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: 33-22908-A
NORTH BY NORTHEAST, LTD.
(Exact name of Registrant as specified in its charter)
Tennessee 62-1356792
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification)
4400 Harding Road, Suite 500, Nashville, Tennessee 37201
(Address of principal executive office) (Zip Code)
(615) 292-1040
(Registrant's telephone number, including area code)
Former Address:
(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 at least the past 90 days.
YES X NO
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NORTH BY NORTHEAST, LTD.
(A Tennessee Limited Partnership)
FINANCIAL STATEMENTS
For The Three and Six Months Ended June 30, 1999 and 1998
INDEX
Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
3
NORTH BY NORTHEAST, LTD.
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1999 1998
CASH $ 32,667 $ 39,425
INVESTMENT IN PARTNERSHIP 123,903 32,002
Total Assets $ 156,570 $ 71,427
======= =======
PARTNERS' EQUITY
PARTNERS' EQUITY:
Limited Partners (1,875 units
outstanding) $ 164,534 $ 164,534
General Partner (7,964) (93,107)
Total Partners' Equity $ 156,570 $ 71,427
======= =======
<FN>
See accompanying notes to financial statements.
4
NORTH BY NORTHEAST, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30,
1999 1998 1999 1998
REVENUES:
Equity in income of
Partnership $ 7,015 1,692 91,901 30,013
Interest Income - (1,902) - 615
Miscellaneous - 1,482 - 1,482
Total Revenues $ 7,015 1,272 91,901 32,110
EXPENSES:
Legal & Accounting 6,283 6,474 6,758 15,774
General & Administrative - 8 - 32
Total expenses 6,283 6,482 6,758 15,806
Net income (loss)$ 732 $ (5,210) $ 85,143 $16,304
========= ========= ======== ========
Net Income (loss) per limited
partner unit $ .39 (2.78) 45.41 8.69
<FN>
See accompanying notes to financial statements
5
NORTH BY NORTHEAST, LTD.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
June 30,
1999 1998
Cash Flows from Operating Activities:
s>
Net income $ 85,143 $ 16,304
Adjustments to reconcile Net income
to Net Cash used
in Operating Activities:
Equity In Income of
Partnership (91,901) (30,013)
Decrease In Accounts Payable
to Affiliate - (88,000)
Net Cash used in Operating Activities: (6,758) (101,709)
Cash Flows from Investing Activity-
Distributions from investment
in Partnership - 125,000
Net (Decrease) Increase in Cash (6,758) 23,291
CASH AT JANUARY 1 39,425 279
CASH AT JUNE 30 $ 32,667 $ 23,570
======== ========
<FN>
See accompanying notes to financial statements.
6
NORTH BY NORTHEAST, LTD.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 1999 and 1998
(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
generally accepted accounting principles. 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, 1998. 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, 1999
may not be indicative of the results that may be expected for the
year ending December 31, 1999.
B. INVESTMENT IN LAND PARTNERSHIP
The Partnership has 50% ownership interest in North by Northeast
Land Partners, a general partnership. The remaining 50% is owned
by an unrelated Trammell Crow Company entity. Summarized results
of operations of the Land Partnership are presented below.
Statement of Operations
(Unaudited)
For The Six Months Ended June 30,
1999 1998
REVENUES:
Sales of Land and Improvements 189,066 255,000
Cost of Land and Improvements Sold - (158,507)
Selling Expenses (11,344) (18,603)
Gain on Sales of Land and Improvements 177,722 77,890
Interest - 2,264
Miscellaneous 24,025 9,988
-------- -------
TOTAL REVENUES 201,747 90,142
EXPENSES:
Partnership Admin./Prop Mgmt. fees 6,000 6,000
Legal and accounting fees 8,903 14,174
Insurance - 250
Propety Taxes 850 8,361
Land maintenance 1,937 1,332
------- ------
17,690 30,117
NET EARNINGS $ 184,057 $ 60,025
Allocation to Trammell Crow entity 92,028 30,012
Income from Investment in Partnership 92,029 30,013
6
NORTH BY NORTHEAST, LTD.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
For the Three and Six Months Ended June 30, 1999 and 1998
(Unaudited)
C. RELATED PARTY TRANSACTIONS
The General Partner and its affiliates have been actively
involved in managing the Partnership's operations.
Compensation earned for the services in the first six months
were as follows:
1999 1998
Accounting fees $ 1,750 $ -
Commissions on miscellaneous income 11,344 $ -
D. COMPREHENSIVE INCOME
During the three and six month periods ended June 30, 1999,
and 1998, the Partnership had no components of other
comprehensive income. Accordingly, other comprehensive income
for each of the periods was the same as net income (loss).
E. SUBSEQUENT EVENT
In July 1999, the Partnership sold the remaining land for net
proceeds of approximately $210,000. The General Partner will
dissolve the Partnership in 1999.
7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Due to the nature of the Partnership, the majority of its activity
on a regular basis is to reflect the activity from the investment
in North By Northeast Land Partners. The operations of the
Partnership revolve around that of the Land Partnership.
In 1999, the Land Partnership participated in the sales proceeds of
an outlying parcel previously sold due to contractual obligations
in the original sale agreement. In 1998, the Land Partnership sold
approximately 2 acres for $255,000. From the sale proceeds
$250,000 was distributed to the partners of the Land Partnership.
The Registrant received $125,000. In July 1999, the Partnership
sold the remaining land for proceeds of approximately $210,000.
The Registrant will retire any current payables and distribute the
remaining cash proceeds to the partners and then dissolve the
partnership.
Operations of the Registrant have remained comparable and are
expected to be comparable in the future except for the fluctions in
income described above and the decline in legal and accounting
expense. The decline in legal and accounting expense is due
additional expenses incurred in 1998 with the retirement of the
Lender Financing.
Year 2000
In 1998, the Partnership initiated a plan ("Plan") to identify, and
remediate "Year 2000" issues within each of its significant
computer programs and certain equipment which contain
microprocessors. The Plan is addressing the issue of computer
programs and embedded computer chips being unable to distinguish
between the year 1900 and the year 2000, if a program or chip uses
only two digits rather than four to define the applicable year.
The Partnership has divided the Plan into five major
phases-assessment, planning, conversion, implementation and
testing. After completing the assessment and planning phases
earlier year, the Partnership is currently in the conversion,
implementation, and testing phases. Systems which have been
determined not to be Year 2000 compliant are being either replaced
or reprogrammed, and thereafter tested for Year 2000 compliance.
The Plan anticipates that by mid-1999 the conversion,
implementation and testing phases will be completed. Management
believes that the total remediation costs for the Plan will not be
material to the operations or liquidity of the Partnership.
The Partnership is in the process of identifying and contacting
critical suppliers and other vendors whose computerized systems
interface with the Partnership's systems, regarding their plans and
progress in addressing their Year 2000 issues. The Partnership has
received varying information from such third parties on the state
of compliance or expected compliance. Contingency plans are being
developed in the event that any critical supplier or customer is
not compliant.
The failure to correct a material Year 2000 problem could result in
an interruption in, or failure of, certain normal business
activities or operations. Such failures could materially and
adversely affect the Partnership's operations, liquidity and
financial condition. Due to the general uncertainty inherent in
the Year 2000 problem, resulting in part from the uncertainty of
the Year 2000 readiness of third-party suppliers and customers, the
Partnership is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on
the Partnership's operations, liquidity or financial condition.
Financial Condition and Liquidity
The General Partner does not intend to further develop the property
except development required by sales contracts.
At July 30, 1999, the Registrant had $32,267 in funds to meet its
future operational needs. The General Partner believes that
the present cash balance will be sufficient to cover the operating
expenses for the year.
8
PART II. OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No 8-K's have been filed during this quarter.
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.
NORTH BY NORTHEAST, LTD.
By: 222 NORTH, LTD.
General Partner
Date: August 13, 1999 By: /s/ Steven D. Ezell
General Partner
By: 222 PARTNERS, INC.
General Partner
Date: August 13, 1999 By: /s/ Michael A. Hartley
Secretary/Treasurer