FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period.........to.........
Commission file number 0-17568
BRUNNER COMPANIES INCOME PROPERTIES L.P. II
(Exact name of small business issuer as specified in its charter)
Delaware 31-1247944
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENT OF NET ASSETS IN LIQUIDATION
(Unaudited)
(in thousands)
June 30, 1996
Assets
Cash ZERO
Liabilities
Estimated costs during the period of
liquidation (Notes A and B) ZERO
Net assets in liquidation (Note A) ZERO
See Accompanying Notes to Financial Statements
b) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(in thousands)
(Unaudited)
Six Months Ended
June 30, 1996
Net assets in liquidation at December 31, 1995 $ 88
Changes in net assets in liquidation attributable to:
Decrease in unrestricted cash (170)
Decrease in restricted cash-tenant security deposits (5)
Decrease in accounts receivable (3)
Decrease in tax and insurance escrows (46)
Decrease in restricted escrow (136)
Decrease in investment properties (6,133)
Decrease in accounts payable 2
Decrease in tenant security deposits 5
Decrease in accrued taxes 42
Decrease in other liabilities 58
Decrease in mortgage notes payable 6,133
Decrease in estimated costs during the
period of liquidation 165
Net assets in liquidation at June 30, 1996 $ 0
See Accompanying Notes to Financial Statements
c) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENTS OF OPERATIONS
(in thousands except per unit data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1995
Revenues:
Rental income $ 810 $1,669
Other income 5 10
Total revenues 815 1,679
Expenses:
Operating 113 203
General and administrative 28 57
Depreciation 243 483
Interest 730 1,444
Property taxes 57 115
Total expenses 1,171 2,302
Net loss $ (356) $ (623)
Net loss allocated to general
partner (1%) $ (4) $ (6)
Net loss allocated to Class A (349) (611)
limited partners (98.01%)
Net loss allocated to Class B (3) (6)
limited Partners (.99%)
$ (356) $ (623)
Net loss per limited
partnership unit $ (.41) $ (.71)
<FN>
See Accompanying Notes to Financial Statements
d) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended
June 30,
1995
Cash flows from operating activities:
Net loss $ (623)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 483
Amortization of loan costs and leasing
commissions 71
Change in accounts:
Restricted cash (1)
Accounts receivable 38
Tax and insurance escrows 122
Other assets (20)
Accounts payable (13)
Tenant security deposit liabilities 5
Accrued taxes (103)
Other liabilities 46
Net cash provided by
operating activities 5
Cash flows from investing activities:
Property improvements and replacements (52)
Deposits to restricted escrow (625)
Receipts from restricted escrows 209
Net cash used in investing activities (468)
Cash flows from financing activities:
Loan extension costs (58)
Net cash used in financing activities (58)
Net decrease in cash (521)
Cash at beginning of period 730
Cash at end of period $ (209)
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,461
See Accompanying Notes to Financial Statements
e) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1996
Note A - Basis of Presentation
On September 30, 1995, the Partnership adopted the liquidation basis of
accounting. Throughout 1995, the Managing General Partner marketed the
Partnership's properties for sale and sought to refinance the mortgage notes
payable on a long-term basis. These efforts were unsuccessful and the mortgage
notes payable matured on September 1, 1995, with the lender subsequently
indicating its intent to foreclose on the properties. On December 21, 1995, the
lender foreclosed on Cumberland Plaza, located in McMinnville, Tennessee.
Subsequently, on December 26, 1995, the lender foreclosed on Cunningham Place
and Hampton Plaza, both located in Clarksville, Tennessee. On January 17, 1996,
the lender foreclosed on Pinecrest Plaza, located in Morehead, Kentucky.
As a result of the foregoing, the Partnership changed its basis of accounting
for its financial statements at September 30, 1995, from the going concern basis
of accounting to the liquidation basis of accounting. Consequently, assets were
valued at estimated net realizable value and liabilities were presented at their
estimated settlement amounts, including estimated costs associated with carrying
out the liquidation.
The investment properties were adjusted to their estimated net realizable value.
Prior to the change from the going concern basis to the liquidation basis of
accounting, investment properties were stated at the lower of cost or estimated
fair value.
As a result of the foreclosures, the Partnership was liquidated during the
second quarter of 1996. Final costs to terminate the partnership were paid and
remaining cash of approximately $75,000 was distributed to the limited partners.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
under the liquidation basis of accounting and with the instructions to Form 10-
QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the Managing
General Partner, all adjustments considered necessary for a fair presentation on
the liquidation basis have been included. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the fiscal year ended December 31, 1995.
Note B - Adjustment to Liquidation Basis of Accounting
At September 30, 1995, in accordance with the liquidation basis of accounting,
assets were adjusted to their estimated net realizable value and liabilities
were adjusted to their estimated settlement amount including estimated costs
associated with carrying out the liquidation. The net adjustment required to
convert to the liquidation basis of accounting was an increase in net assets of
approximately $130,000. Significant adjustments are summarized as follows:
Increase (Decrease)
in Net Assets
(in thousands)
Adjustment from book value of investment
properties to estimated net realizable value $(2,308)
Adjustment to record estimated liabilities
associated with the liquidation (Note A) (152)
Adjustment of debt to settlement amount 2,928
Adjustment of other assets and liabilities (338)
Net increase in net assets $ 130
Expense reimbursements of approximately $28,000 relating to the liquidation
period during 1996 were accrued in the adjustment to record estimated
liabilities associated with the liquidation and paid to affiliates of the
Managing General Partner during 1996.
Item 2. Management's Discussion and Analysis
On September 30, 1995, the Partnership adopted the liquidation basis of
accounting. Throughout 1995, the Managing General Partner marketed the
Partnership's properties for sale and sought to refinance the mortgage notes
payable on a long-term basis. These efforts were unsuccessful and the mortgage
notes payable matured on September 1, 1995, with the lender subsequently
indicating its intent to foreclose on the properties. On December 21, 1995, the
lender foreclosed on Cumberland Plaza, located in McMinnville, Tennessee.
Subsequently, on December 26, 1995, the lender foreclosed on Cunningham Place
and Hampton Plaza, both located in Clarksville, Tennessee. On January 17, 1996,
the lender foreclosed on Pinecrest Plaza, located in Morehead, Kentucky.
As a result of the foregoing, the Partnership changed its basis of accounting
for its financial statements at September 30, 1995, from the going concern basis
of accounting to the liquidation basis of accounting. Consequently, assets have
been valued at estimated net realizable value and liabilities are presented at
their estimated settlement amounts, including estimated costs associated with
carrying out the liquidation. The valuation of assets and liabilities
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the liquidation. The actual realization of assets
and settlement of liabilities could be higher or lower than amounts indicated
and is based upon the Managing General Partner's estimates as of the date of the
financial statements.
The investment properties were adjusted to their estimated net realizable value.
The net realizable value for Pinecrest was calculated based on purchase offers
received by the Managing General Partner. Prior to the change from the going
concern basis to the liquidation basis of accounting, investment properties were
stated at the lower of cost or estimated fair value.
As a result of the foreclosures, the Partnership was liquidated during the
second quarter of 1996. Final costs to terminate the partnership were paid and
remaining cash of approximately $75,000 was distributed to the limited partners.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an
exhibit to this report.
b) Reports on Form 8-K:
No reports were filed for the quarter ended June 30,
1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRUNNER COMPANIES INCOME PROPERTIES L.P. II,
a Delaware limited partnership
By: Brunner Management Limited
Partnership, an Ohio limited Partnership, its
General Partner
By: 104 Management, Inc., an Ohio corporation,
its Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: August 9, 1996