-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NGgJi4mfBnKKGPdektNXx140ZzX6hvkjQOE0p2ogFXbLPAAa3bP+XGaJsu6jL/Li dYkLwW5S8hevoKwiXunfTw== 0000835959-98-000008.txt : 19980401 0000835959-98-000008.hdr.sgml : 19980401 ACCESSION NUMBER: 0000835959-98-000008 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASHVILLE LAND FUND LTD CENTRAL INDEX KEY: 0000793935 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 621299384 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 033-05785-A FILM NUMBER: 98581605 BUSINESS ADDRESS: STREET 1: 4400 HARDING RD STREET 2: STE 500 CITY: NASHVILLE STATE: TN ZIP: 37205 BUSINESS PHONE: 6152921040 MAIL ADDRESS: STREET 1: 4400 HARDING RD STREET 2: STE 500 CITY: NASHVILLE STATE: TN ZIP: 37205 10-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20459 FORM 10-K (Mark One) [X] Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 1997 or [ ] Transition Report to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the transition period from ______to______ Commission File Number 33-5785-A NASHVILLE LAND FUND, LTD. (Exact name of Registrant as specified in its charter) Tennessee 62-1299384 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number.) One Belle Meade Place, 4400 Harding Road, Suite 500, Nashville, Tennessee 37205 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (615) 292-1040 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate sales price of the Units of Limited Partnership Interest to non-affiliates was $7,500,000 as of February 28, 1998. This does not reflect market value, but is the price at which these Units of Limited Partnership Interest were sold to the public. There is no current market for these units. PART I Item 1. Business Nashville Land Fund, Ltd. ("Registrant"), is a Tennessee limited partnership organized on March 26, 1986, pursuant to the provisions of the Tennessee Uniform Limited Partnership Act, Chapter 2, Title 61, Tennessee Code Annotated, as amended. The General Partner of Registrant is 222 Partners, Inc. Registrant's primary business is to own and hold for investment undeveloped real properties located in Goodlettsville, Sumner County and Nashville, Davidson County, Tennessee (the "Property"). Registrant's investment objectives are preservation of investment capital and appreciation of the value of the Property due to development of the immediately surrounding areas and the growth of the communities generally. Financial Information About Industry Segments The Registrant's activity, investment in land, is within one industry segment and geographical area. Therefore, financial data relating to the industry segment and geographical area is included in Item 6 - Selected Financial Data. Narrative Description of Business The Registrant is holding for investment approximately 56 sellable acres of land in various stages of development in Goodlettsville, Sumner County and Nashville, Davidson County, Tennessee. These properties will be referred to respectively as North Creek Business Park Property and Larchwood Property in the remainder of this report. The North Creek Business Park Property is approximately 43.96 acres of land. It is subdivided into 19 tracts, which are cleared, graded and improved with roads and utilities. The North Creek Business Park Property is located in the incorporated City of Goodlettsville, approximately 12 miles north of downtown Nashville, and is zoned Commercial PUD. It is intended for office users. An affiliate of the General Partner, North Creek Associates, Ltd., owns land in the immediate vicinity of North Creek Business Park. North Creek Associates, Ltd.'s land is intended primarily for retail and apartment use. The retail site, called North Creek Commons, does not directly compete with the Registrant due to their different uses. The Larchwood Property is approximately 12 acres located in Nashville, Davidson County. It is subdivided into 4 tracts, which are cleared and graded. One of the four tracts is zoned for residential use, and all remaining acreage is zoned Commercial PUD. Competition: The competition surrounding the Registrant's Property has had very little change in the recent years. The competitive sites have also seen little activity in the past year and are asking similar prices to the Registrant. The Registrant has no employees. Partnership management services are being provided under a contractual agreement with Landmark Realty Services Corporation, an affiliate of the General Partner. Item 2. Properties As of December 31, 1997, Registrant owned approximately 56 sellable acres of land in Goodlettsville, Sumner County, and Nashville, Davidson County, Tennessee. These properties consist of 44 acres in the North Creek Business Park and 12 acres of the Larchwood Property. For further information, see Item 1 above. Item 3. Legal Proceedings Registrant is not a party to, nor is any of Registrant's property the subject of, any material legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders The security holders of Registrant did not vote on any matter during the fiscal year covered by this report. PART II Item 5. Market for Registrant's Units of Limited Partnership Interest and Related Security Holder Matters There is no established market for the Units, and it is not anticipated that any will exist in the future. The Registrant commenced an offering to the public on June 26, 1986 of 7,500 Units of limited partnership interests at $1,000 per Unit. The offering of $7,500,000 was fully subscribed and closed on July 31, 1986. As of February 28, 1998, there were 462 holders of record of the 7,500 Units of limited partnership interests. There are no material restrictions upon Registrant's present or future ability to make distributions in accordance with the provisions of Registrant's Limited Partnership Agreement. Item 6. Selected Financial Data For the Year Ended December 31, 1997 1996 1995 1994 1993 Total Revenue $106,214 48,475 441,335 124,358 183,105 Net Earnings (loss) 3,346 (935,415) 242,773 11,389 74,306 Net Earnings (loss) per limited partner unit $.45 (124.72) 32.37 1.52 9.91 Total Assets 4,204,625 4,220,840 5,159,939 6,430,985 6,390,008 Cash Distributions per limited partner unit - - 200 - 20 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Sales In November 1997, The Registrant sold 1.47 acres of the Larchwood property for approximately $320,000. Proceeds were retained to meet operating expenses. In August, 1996, the Registrant sold .64 acres of the Larchwood Property for approximately $108,000. In 1995, the Registrant sold approximately one acre for approximately $184,000. Also during 1995, the Registrant received $1,490,292 as payment of interest and principal on the Note receivable. These proceeds together with the sale proceeds were used to make a $1.5 million distribution to the partners. Analysis of Operations Operations of the Registrant are consistent through the years except for the following. The decline in interest income is due to the retirement of the Note Receivable in 1995. Asset writedown expense in 1996 relates to the Registrant's reevaluation of the carrying value of land and improvements held for investment under Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This Statement, which was initially adopted January 1, 1996, requires that long-lived assets and certain identifiable intangibles be reviewed for impairment on a property by property basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The valuation of the land held is re-evaluated each year. Several of the accounts of the Registrant fluctuated due to the receipt of the Stewart's Ferry Note receivable in September 1995. The majority of the Registrant's interest income was from this note receivable. The minimal interest income in 1997 and 1996 is due to the lack of income from this note due to its retirement in 1995. The income from profit participation relates to the note receivable from Stewart's Ferry Joint Venture that was received as part of the sale proceeds from the 1987 land sale to Stewart's Ferry. The Partnership received an equity participation agreement during negotiations with the borrower. The agreement generally provided for the proceeds from the sale of the secured land to be allocated as follows: 1) a full repayment of principal and all accrued interest, 2) the borrower receiving $871,986, and 3) any remaining proceeds from the sale of the land securing the note were to be divided equally between the borrower and the Partnership. In September 1995, the land was sold. The note receivable was collected in full and a profit participation of $245,659 was recognized by the Partnership. This income was a singular event and will not recur. The 1995 commission expense relates to the 1987 land sale to Stewart's Ferry Joint Venture which incurred a commission of $208,152. $124,152 was paid in 1987. The remaining $84,000 plus interest was to be paid upon collection of the note receivable. In error, the unpaid part of the commission was not accrued in 1987. This error was not noticed until payment of the commission in 1995. Management decided not to treat the late commission as a prior period adjustment because it was less than 4% of the original sale proceeds and less than 2% of Partners' equity. The commission expense was recognized in 1995 when paid. Generally, all commissions on land sales are paid at the date of the sale and are reflected as selling expenses. We have considered the impact of the Year 2000 issues on our computer systems and applications and developed a remediation plan. We expect the cost of upgrading computers and software to be immaterial to the Partnership. Financial Condition and Liquidity At February 28, 1998 $87,975 was held in cash and cash equivalents to cover partnership administrative expenses. The General Partner believes that the 1998 cash expenses will remain comparable to those incurred in the recent past. Therefore, the present cash balances should provide sufficient liquidity for 1998. Sales of the land held for investment are the Registrant's primary sources of additional capital resources and liquidity. Item 8. Financial Statements and Supplementary Data The Financial Statements required by Item 8 are filed at the end of this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant Registrant does not have any directors or officers. 222 Partners, Inc. is the General Partner of the Registrant and as such has general responsibility and ultimate authority in matters affecting Registrant's business. 222 Partners Inc. 222 Partners, Inc. was formed in September, 1986 and serves as co-general partner for several other real estate investment limited partnerships. The executive officers and directors of 222 Partners, Inc. are W. Gerald Ezell, Steven D. Ezell, and Michael A. Hartley. Officers and Directors of 222 Partners, Inc. are as follows: W. Gerald Ezell, age 67, serves on the Board of Directors of 222 Partners, Inc. Until November, 1985, Mr. Ezell had been for over 20 years an agency manager for Fidelity Mutual Life Insurance Company and a registered securities principal of Capital Analysts Incorporated, a wholly owned subsidiary of Fidelity Mutual Life Insurance Company. Steven D. Ezell, age 45, is the President and sole shareholder of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. Mr. Ezell is President and 50% owner of Landmark Realty Services Corporation. For the prior four years, Mr. Ezell was involved in property acquisitions for Dean Witter Realty Inc. in New York City, most recently as Senior Vice President. Steven D. Ezell is the son of W. Gerald Ezell. Michael A. Hartley, age 38, is Secretary/Treasurer and a Vice President of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. He is Vice President and 50% owner of Landmark Realty Services Corporation. Prior to joining Landmark in 1986, Mr. Hartley was Vice President of Dean Witter Realty Inc., a New York-based real estate investment firm. Item 11. Executive Compensation During 1997, Registrant was not required to and did not pay remuneration to any executives, partners of the General Partner or any affiliates, except as set forth in Item 13 of this report, "Certain Relationships and Related Transactions." The General Partner does participate in the profits, losses and distributions of the Registrant as set forth in the Partnership Agreement. Item 12. Security Ownership of Certain Beneficial Owners and Management As of February 28, 1998 no person or "group" (as that term is used in Section 13(d) (3) of the Securities Exchange Act of 1934) was known by the Registrant to beneficially own more than five percent of the Units of Registrant. As of the above date, the Registrant knew of no officers or directors of 222 Partners, Inc. that beneficially owned any of the units of the Registrant. There are no arrangements known by the Registrant, the operation of which may, at a subsequent date, result in a change in control of the Registrant. Item 13. Certain Relationships and Related Transactions No affiliated entities have, for the year ending December 31, 1997, earned or received compensation or payments for services from the Registrant in excess of $60,000. For a listing of miscellaneous transactions with affiliates which were less than $60,000 refer to Note 4 of the Financial Statements included herein. PART IV Item 14. Exhibits Financial Statement Schedules and Reports on Form 8-K (a) (1) Financial Statements Independent Auditors' Report F-1 Financial Statements Balance Sheets F-2 Statements of Operations F-3 Statements of Partners' Equity F-4 Statements of Cash Flows F-5 Notes to Financial Statements F-6 (2) Financial Statement Schedules Independent Auditors' Report S-1 Schedule III - Real Estate and Accumulated Depreciation S-2 (3) Exhibits 3 Amended and Restated Certificate and Agreement of limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated June 26, 1986 filed pursuant to Rule 424 (b) of the Securities and Exchange Commission. 22 Subsidiaries - Registrant has no subsidiaries. 27 Financial Data Schedule (b) No reports on Form 8-K have been filed during the last quarter of 1997. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. NASHVILLE LAND FUND, LTD. By: 222 Partners, Inc. General Partner DATE: March 31, 1998 By:/s/ Steven D. Ezell President and Director DATE: March 31, 1998 By:/s/ Michael A. Hartley Secretary Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. NASHVILLE LAND FUND, LTD. By: 222 Partners, Inc. General Partner DATE: March 31, 1998 By:/s/ Steven D. Ezell President and Director DATE: March 31, 1998 By:/s/ Michael A. Hartley Secretary/Treasurer Supplement Information to be Furnished with Reports filed Pursuant to Section 15(d) of the Act by Registrant Which Have Not Registered Securities Pursuant to Section 12 of the Act: No annual report or proxy material has been sent to security holders. Independent Auditors' Report The Partners Nashville Land Fund, Ltd.: We have audited the accompanying balance sheets of Nashville Land Fund, Ltd. (a limited partnership) as of December 31, 1997 and 1996, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nashville Land Fund, Ltd. at December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. As discussed in Note 1, the Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of"on January 1, 1996. KPMG Peat Marwick LLP Nashville, Tennessee January 30, 1998 F-1 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Balance Sheets December 31, 1997 and 1996 Assets 1997 1996 Cash and cash equivalents $ 257,190 153,733 Restricted Cash (note 2) 22,000 - Land and improvements held for investment, less valuation allowance of $877,154 in 1997 and 1996 (note 3) 3,925,143 4,066,832 Other assets 292 275 __________ _________ Total assets $ 4,204,625 4,220,840 Liabilities and Partners' Equity Liabilities: Accounts payable $ - 74 Accrued property taxes 12,975 32,462 ______ ______ Total liabilities 12,975 32,536 Partners' equity: Limited partners, 7,500 units outstanding 4,191,564 4,188,218 Special limited partner 4 4 General partner 82 82 Total partners' equity 4,191,650 4,188,304 Commitments (note 4) Total liabilities and partners' equity $ 4,204,625 4,220,840 See accompanying notes to financial statements. F-2 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Statements of Operations For the Years Ended December 31, 1997, 1996 and 1995 1997 1996 1995 Revenue: Sale of land and improvements $ 320,390 107,812 184,109 Cost of land and improvements sold (189,530) (48,686) (85,036) Selling expenses (note 4) (28,245) (17,284) (16,414) Gain on sale of land 102,615 41,842 82,659 Interest 2,841 6,133 112,587 Income from profit participation on note receivable - - 245,659 Miscellaneous 758 500 430 Total revenues 106,214 48,475 441,335 Expenses: Writedown of land held for investment (note 3) - 877,154 - Commissions - - 100,000 State income tax - 8,829 - Partnership and property management fees (note 4) 14,000 14,000 14,000 Association fees (note 5) 23,339 24,691 27,567 Legal and accounting fees (note 4)19,393 17,499 16,006 Architect and engineering fees 8,575 7,307 4,443 General and administration 5,153 2,293 2,562 Property taxes 32,408 32,117 33,984 Total expenses 102,868 983,890 198,562 Net earnings (loss) $ 3,346 (935,415) $ 242,773 Net earnings (loss) allocated to: General partner $ - (18) - Special limited partner - (1) - Limited partners 3,346 (935,396) 242,773 Net earnings (loss) per limited partnership unit: $ .45 (124.72) 32.37 Weighted average units outstanding 7,500 7,500 7,500 See accompanying notes to financial statements. F-3 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Statements of Partners' Equity Years ended December 31, 1997, 1996 and 1995 Special Limited limited General partners partner partner Total units amount Balance at December 31, 1994 7,500 $ 6,380,841 5 100 6,380,946 Distributions to partners(note 5) - (1,500,000) - - (1,500,000) Net earnings - 242,773 - - 242,773 ______ _________ ______ _____ ______ Balance at December 31, 1995 7,500 5,123,614 5 100 5,123,719 Net loss - (935,396) (1) (18) (935,415) ______ _________ ______ _____ ______ Balance at December 31, 1996 7,500 4,188,218 4 82 4,188,304 Net earnings - 3,346 - - 3,346 ------ --------- ------ ----- ------ Balance at December 31, 1997 7,500 $ 4,191,564 4 82 4,191,650 See accompanying notes to financial statements. F-4 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Statements of Cash Flows Years ended December 31, 1997, 1996, and 1995 1997 1996 1995 Cash flows from operating activities: Net earnings (loss) $ 3,346 (935,415) 242,773 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Cost of land and improvements sold 189,530 48,686 85,036 Cost of land improvements (59,341) - - Writedown of land and improvements held for investment - 877,154 - Increase in restricted cash (22,000) - Increase in other assets (17) - - Increase in accrued interest receivable - - 267,193 Decrease in accrued property taxes (19,487) (2,774) (1,015) Decrease in accounts payable (74) (910) (12,804) Return of development fees 11,500 3,150 - Net cash provided by (used in) operating activities 103,457 (10,109) 581,183 Cash flows from investing activities- Payment received on note receivable - - 978,014 Cash flows from financing activities- Distributions to partners - - (1,500,000) Net increase (decrease) in cash and cash equivalents 103,457 (10,109) 59,197 Cash and cash equivalents at beginning of year 153,733 163,842 104,645 Cash and cash equivalents at end of year $257,190 153,733 163,842 Supplemental disclosures of cash flow information: 1997 1996 1995 Cash paid for state income taxes $ - 8,829 - See accompanying notes to financial statements. F-5 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements December 31, 1997 and 1996 (1) Summary of Significant Accounting Policies (a) Organization Nashville Land Fund, Ltd. (the Partnership) is a Tennessee Limited Partnership organized in March, 1986 to acquire, own, and hold for investment certain parcels of undeveloped real property located in Metropolitan Nashville, Davidson County, and Sumner County, Tennessee. 222 Partners, Inc. is the general partner of the Partnership. The Partnership prepares financial statements and income tax returns on the accrual basis of accounting. In the event that the Partnership has short- term cash deficiencies, the General Partner can defer the collection of fees for certain related party expenses or grant interest-free loans from related parties until cash becomes available. (b) Estimates Management of the partnership has made certain estimates and assumptions to prepare these financial statements in accordance with generally accepted accounting principles. These estimates include the determination of the estimated fair value of the land held for investment in accordance with the provisions of SFAS No. 121. Actual results could differ from those estimates. (c) Cash and Cash Equivalents The Partnership considers all short-term investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash belonging to the Partnership is combined in an account with funds from other partnerships related to the general partner. (d) Land and Improvements Held for Investment Land and improvements held for investment are recorded at cost and include two tracts of undeveloped land representing approximately 103 and 102 acres in 1997 and 1996, respectively. Approximately 56 acres of the land are available for sale with the remainder being flood plain, roads, and landscaping. Land costs include amounts incurred to acquire and develop the land, including interest and property taxes, during the development period. F-6 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements (1) Summary of Significant Accounting Policies (continued) Costs to hold land, including interest and property taxes, are charged to expense once development is substantially complete. Land improvement costs incurred include development costs expended subsequent to the acquisition of a tract. The Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of" on January 1, 1996. This Statement requires that long- lived assets to be disposed of be reported at the lower of the carrying amount or fair value less estimated costs to sell. The fair value of the assets can be determined externally, using appraisals, or internally using discounted future net cash flows. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value less estimated costs to sell of the assets. If impaired, management establishes an allowance for impairment with a corresponding charge to earnings. Losses upon the sale of the assets are recognized against the allowance to the extent available. The initial adoption of SFAS No. 121 did not have a material impact on the Partnership's financial position, results of operations, or liquidity. During 1996, as a result of revisions in management's assumptions used in determining the properties' estimated fair values, a valuation allowance of $877,154 was charged to operations and recorded as a reduction in the carrying value of the land and improvements held for investment. See note 3. (e) Income Recognition Income from sales of land and improvements held for investment is generally recorded on the accrual basis when the buyer's financial commitment is sufficient to provide economic substance to the transaction, and when other criteria of SFAS No. 66 " Accounting for Sales of Real Estate" are satisfied. For sales of real estate where both cost recovery is reasonably certain and the collectibility of the contract price is reasonably assured, but the F-7 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements (1) Summary of Significant Accounting Policies (continued) transaction does not meet the remaining requirements to be recorded on the accrual basis, profit is deferred and recognized under the installment method, which recognizes profit as collections of principal are received. If developments subsequent to the adoption of the installment method occur which cause the transaction to meet the requirements of the full accrual method, the remaining deferred profit is recognized at that time. Any losses on sales of real estate are recognized at the time of the sale. (f) Income Taxes No provision has been made in the financial statements for Federal income taxes, since such taxes are the responsibilities of the partners. The partnership is subject to a 6% state tax on certain interest income. Additionally, the partners receive, from the partnership, IRS Form K-1's which provides them with their share of taxable income (or losses), deductions, and other tax information. The primary difference between the tax basis and reported amounts of the Partnership's assets and liabilities relates to the valuation of land held for investment. F-8 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements (1) Summary of Significant Accounting Policies (continued) (g) Partnership Allocations Net profits, losses and distributions of cash flow of the Partnership are allocated to the partners in accordance with the Partnership agreement as follows: Partnership net profits are allocated first to any partner with a negative balance in their capital account, determined at the end of the taxable year as if the Partnership had distributed cash flow, in proportion to the negative capital balance account of all partners until no partner's capital account is negative. Net profit allocations are then made to the limited partners up to the difference between their capital account balances and the sum of their adjusted capital contributions (capital balance, net of cumulative cash distributions in excess of preferred returns - 10% annual cumulative return on capital contributed) and unpaid preferred returns. Any remaining net profits are allocated to the limited partners until the taxable year in which cumulative distributions to the limited partners equal their adjusted capital contribution plus an unpaid preferred return. Net profits are then allocated to the general partner until the ratio of the general partner's capital account balance to the capital account balances in excess of adjusted capital contributions and unpaid preferred return of all limited partners is 28% to 72%. Thereafter, profits are generally allocated 28% to the general partner and 72% to the limited partners. Net losses are allocated to the partners in proportion to their positive capital accounts. F-9 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements (1) Summary of Significant Accounting Policies (continued) Partnership distributions are allocated to the limited partners in an amount equal to their preferred return (10% annual cumulative return on capital contributed) to the extent unpaid to date. Any remaining distributions are allocated 99% to the limited partners and 1% to the general partner until the limited partners have received an amount equal to their adjusted capital contributions, and thereafter, 72% to the limited partners and 28% to the general partner. Cumulative unpaid preferred returns are $5,016,558 and $4,266,558 at December 31, 1997 and 1996, respectively. (2) Restricted Cash At December 31, 1997, the Partnership has restricted cash balances of $22,000 to be used to fund property improvements, consisting of utility work. (3) Land and Improvements Held for Investment The components of land and improvements held for investment at December 31, are as follows: 1997 1996 Land $ 2,726,651 2,771,203 Improvements 2,075,646 2,172,783 Valuation Allowance (877,154) (877,154) $ 3,925,143 4,066,832 The aggregate cost for federal income tax purposes was $5,069,648 and $5,067,590 at December 31, 1997 and 1996, respectively. At January 1, 1996, based upon an internal discounted cash flow analysis, the carrying values of the land and improvements was not less than its estimated fair value. During the year ended December 31, 1996, management revised its estimated sellout period and discount rate resulting in a decline in the estimated fair value below the carrying value. F-10 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements December 31, 1997 and 1996 (3) Land and Improvements Held for Investment (continued) Accordingly, the carrying amounts of the assets were written down, through the establishment of a valuation allowance, to their estimated fair values less costs to sell, as estimated based on the Partnership's experience in disposing of these properties. The resulting non-cash charge, as identified on the accompanying financial statements, reduced the 1996 net income by $877,154. Management believes that the estimates used in evaluating the adoption of SFAS No.121 were reasonable. However, actual expenses and cash flows could differ from these estimates. (4) Related Party Transactions The general partner and its affiliates have been actively involved in managing the Partnership. Affiliates of the general partner receive fees for performing certain services. Expenses incurred for these services for the years ended December 31, 1997, 1996, and 1995 are as follows: 1997 1996 1995 Partnership and property management fees $ 14,000 14,000 14,000 Accounting fees 2,600 2,300 2,000 Real estate sales commissions - - 5,523 Office Administration Fees 1,250 - - (5) Association Fees During 1989, an owners' association was formed to manage a portion of the land and improvements held for investment. The Partnership incurred association fees totaling $23,339 in 1997, $24,691 in 1996, and $27,567 in 1995, which relate to the Partnership's pro rata share of the owners' association expenses, consisting primarily of electricity costs, irrigation, and landscape maintenance. (6) Distributions For the year ended December 31, 1995, the Partnership made distributions to the limited partners of $1,500,000 ($200 per unit). There were no distributions in 1997 and 1996. F-11 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Notes to Financial Statements (7) Fair Value of Financial Instruments At December 31, 1997 and 1996, the Partnership had financial instruments including cash and cash equivalents, accounts payable, and accrued property taxes. The carrying amounts of cash and cash equivalents, accounts payable and accrued property taxes approximate their fair value because of the short maturity of those financial instruments. F-12 Independent Auditors' Report The Partners Nashville Land Fund, Ltd.: Under date of January 30, 1998, we reported on the balance sheets of Nashville Land Fund, Ltd. as of December 31, 1997 and 1996, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1997. These financial statements and our report thereon are included elsewhere herein. In connection with our audits of the aforementioned financial statements, we have also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. As discussed in Note 1, the Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of" on January 1, 1996. KPMG Peat Marwick LLP Nashville, Tennessee January 30, 1998 S-1 NASHVILLE LAND FUND, LTD. (A Limited Partnership) Schedule III Real Estate and Accumulated Depreciation Initial Cost to Cost capitalized Gross amount at Partnership subsequent which carried to acquisition at close of period
Description Encum- Land Building Improve- Carrying Land Building Total Accumu- Date of Date brances & improvements costs & improve- lated de construc acquired ments ments preciation tion - ------------ ------ ---- ---------------- -------- ---- -------- ----- ------- ------- ---- North Creek Business Park 44 acres $- 1,791,926 - 993,067 98,215 1,791,926 1,091,282 2,883,208 - 6/16/86 Larchwood Property 12 acres $- 456,273 - 532,952 52,710 456,273 585,662 1,041,935 - - 7/31/87 Total $- 2,248,199 - 1,526,019 150,925 2,248,199 1,676,944 3,925,143 *Assets scheduled above represent land and non-depreciable land improvements, therefore accumulated depreciation and depreciable lives are non applicable.
S-2 Schedule III NASHVILLE LAND FUND, LTD. (A Limited Partnership) Real Estate and Accumulated Depreciation December 31, 1997 1997 1996 1995 (1) Balance at beginning $ 4,066,832 4,995,822 5,080,858 of Period Additions during period: Improvements 59,341 - - ________ ________ _________ 59,341 - - Deductions during period: Cost of real estate sold 189,530 48,686 85,036 Asset Writedown - 877,154 - Other- reimbursement of development fees from municipality 11,500 3,150 - ________ ________ ________ 201,030 928,990 85,036 Balance at end of period $ 3,925,143 4,066,832 4,995,822 (2) Aggregate cost for Federal income tax purposes $ 5,069,648 5,067,590 5,120,859 See accompanying independent auditors' report. S-3 Exhibits Filed Pursuant to Item 14 (a) (3): NASHVILLE LAND FUND, LTD. (A Tennessee Limited Partnership) Exhibit Index Exhibit 3 Amended and Restated Certificate and Agreement of limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated June 26, 1986 filed pursuant to Rule 424 (b) of the Securities and Exchange Commission. 22 Subsidiaries - Registrant has no subsidiaries. 27 Financial Data Schedule EX-27 2
5 0000793935 NASHVILLE LAND FUND, LTD 12-MOS DEC-31-1997 DEC-31-1997 257,190 0 0 0 0 0 3,925,143 0 4,204,625 12,975 0 0 0 0 4,191,564 4,204,625 320,390 106,214 189,530 217,775 102,868 0 0 3,346 0 3,346 0 0 0 3,346 .45 .45
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