UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] 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 0-15758
JACQUES-MILLER INCOME FUND, L.P. - II
(Exact Name of Registrant as Specified in Its Charter)
Delaware 62-1244325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACQUES-MILLER INCOME FUND, L.P. - II
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2004
Assets
Cash and cash equivalents $ 59
Note receivable from affiliated party (net of
allowance of approximately $1,002) (Note B) --
$ 59
Liabilities and Partners' (Deficiency) Capital
Liabilities
Other liabilities $ 14
Partners' (Deficiency) Capital
General partner $ (114)
Limited partners (12,400 units issued and
outstanding) 159 45
$ 59
See Accompanying Notes to Financial Statements
JACQUES-MILLER INCOME FUND, L.P. - II
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
2004 2003
Revenues:
Interest income $ -- $ 13
Expenses:
General and administrative 15 15
Net loss $ (15) $ (2)
Net loss allocated to
general partner (1%) $ -- $ --
Net loss allocated to
limited partners (99%) (15) (2)
$ (15) $ (2)
Net loss per limited
partnership unit $(1.21) $(0.16)
See Accompanying Notes to Financial Statements
JACQUES-MILLER INCOME FUND, L.P. - II
STATEMENT OF CHANGES IN PARTNERS' (DEFICIENCY) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Partners' (deficiency) capital
at December 31, 2003 12,400 $ (114) $ 174 $ 60
Net loss for the three months
ended March 31, 2004 -- -- (15) (15)
Partners' (deficiency) capital
at March 31, 2004 12,400 $ (114) $ 159 $ 45
See Accompanying Notes to Financial Statements
JACQUES-MILLER INCOME FUND, L.P. - II
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2004 2003
Cash flows from operating activities:
Net loss $ (15) $ (2)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Change in accounts:
Note receivable from affiliated party -- 730
Due to affiliates (11) --
Other liabilities 7 8
Net cash (used in) provided by operating activities (19) 736
Net (decrease) increase in cash and cash equivalents (19) 736
Cash and cash equivalents at beginning of period 78 15
Cash and cash equivalents at end of period $ 59 $ 751
See Accompanying Notes to Financial Statements
JACQUES-MILLER INCOME FUND, L.P. - II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Jacques-Miller Income Fund,
L.P. - II ("Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information 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 Jacques-Miller, Inc. (the "Corporate General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended March 31, 2004, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2004. 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, 2003. The Corporate General Partner is an affiliate of Apartment Investment
and Management Company ("AIMCO"), a publicly traded real estate investment
trust.
Note B - Note Receivable from Affiliated Party
Note receivable consists of the following (in thousands):
March 31,
2004
Note receivable $ 413
Accrued interest receivable 589
1,002
Provision for uncollectible note
receivable (including
approximately $589 of
deferred interest revenue) (1,002)
$ --
The Partnership holds a note receivable (the "Catawba Club Note") at March 31,
2004, totaling approximately $413,000 with approximately $589,000 of related
accrued interest, which matured November 1, 1997, and is fully reserved. This
promissory note bears interest at 12.5%, and is unsecured by the unrelated
partnership and is subordinated to the underlying mortgage of the unrelated
partnership. Payments on the note are restricted to excess cash flow after
payment on the first mortgage. No payments on the note were received during the
three months ended March 31, 2004 and 2003, respectively.
During the year ended December 31, 2000, the first and second mortgages
encumbering Catawba Club were replaced with a new first mortgage. However, after
payment of transaction costs and establishing a repair escrow, as required by
the lender, there were no proceeds available for a payment on the Catawba Club
Note. The note was in default at March 31, 2004. The Partnership has obtained a
default judgment with respect to the Catawba Club Note. The Corporate General
Partner is currently evaluating its options to collect upon this judgment.
During the three months ended March 31, 2003, the Partnership received full
repayment of the Quail Run note receivable. This payment occurred as a result of
the refinancing that occurred at Quail Run in November 2002. Of the payment
received, approximately $454,000 and $289,000 was attributable to the note
receivable and accrued interest, respectively. This payment satisfied in full
the obligation related to the note.
Note C - Transactions with Affiliated Parties
Other than the note receivable previously disclosed, the Partnership had the
following transactions:
An affiliate of the Corporate General Partner received reimbursements of
accountable administrative expenses amounting to approximately $7,000 and $5,000
for the three months ended March 31, 2004 and 2003, respectively, which is
included in general and administrative expenses.
Note D - Contingencies
The Partnership is unaware of any pending or outstanding litigation matters
involving itself that are not of a routine nature arising in the ordinary course
of business.
Pursuant to a formal order of investigation received by AIMCO on March 29, 2004,
the Central Regional Office of the United States Securities and Exchange
Commission is conducting an investigation relating to certain matters. AIMCO
believes the areas of investigation include AIMCO's miscalculated monthly net
rental income figures in third quarter 2003, forecasted guidance, accounts
payable, rent concessions, vendor rebates, and capitalization of expenses and
payroll. AIMCO is cooperating fully. AIMCO does not believe that the ultimate
outcome will have a material adverse effect on its consolidated financial
condition or results of operations taken as a whole. Similarly, the Corporate
General Partner does not believe that the ultimate outcome will have a material
adverse effect on the Partnership's financial condition or results of operations
taken as a whole.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Partnership's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Partnership files from time to time with the Securities and
Exchange Commission.
Results of Operations
The Partnership's net loss for the three months ended March 31, 2004 was
approximately $15,000 compared to a net loss of approximately $2,000 for the
three months ended March 31, 2003. The increase in net loss is attributable to a
decrease in total revenues. The decrease in total revenues is attributable to
three months of interest income recognized on the Quail Run note receivable
during the three months ended March 31, 2003. The Partnership currently holds a
note from an unrelated partnership, which requires payments from excess cash
flow after payments of the mortgage of the unrelated partnership (see discussion
below).
Liquidity and Capital Resources
At March 31, 2004, the Partnership held cash and cash equivalents of
approximately $59,000 compared to approximately $751,000 at March 31, 2003. Cash
and cash equivalents decreased approximately $19,000 from December 31, 2003. The
decrease is due to cash used in operating activities. The Partnership invests
its working capital reserves in interest bearing accounts.
The Corporate General Partner monitors developments in the area of legal and
regulatory compliance and is studying new federal laws, including the
Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 mandates or suggests
additional compliance measures with regard to governance, disclosure, audit and
other areas. In light of these changes, the Partnership expects that it will
incur higher expenses related to compliance, including increased legal and audit
fees.
The Partnership holds a note receivable (the "Catawba Club Note") at March 31,
2004, totaling approximately $413,000 with approximately $589,000 of related
accrued interest, which matured November 1, 1997, and is fully reserved. During
the year ended December 31, 2000, the first and second mortgages encumbering
Catawba Club were replaced with a new first mortgage. However, after payment of
transaction costs and establishing a repair escrow, as required by the lender,
there were no proceeds available for a payment on the Catawba Club Note. The
note was in default at March 31, 2004. The Partnership has obtained a default
judgment with respect to the note. The Corporate General Partner is currently
evaluating its options to collect upon this judgment. Payments on the note are
restricted to excess cash flow after payment on the first mortgage. No payments
on the note were received during the three months ended March 31, 2004 and 2003,
respectively.
During the three months ended March 31, 2003, the Partnership received full
repayment of the Quail Run note receivable. This payment occurred as a result of
the refinancing that occurred at Quail Run in November 2002. Of the payment
received, approximately $454,000 and $289,000 was attributable to the note
receivable and accrued interest, respectively. This payment satisfied in full
the obligation related to the note.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from the collection of notes receivable and the availability of cash reserves.
There can be no assurance, however, that the Partnership will generate
sufficient funds from collection of the remaining note receivable to permit
distributions to its partners during the remainder of 2004 or subsequent
periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 4,059.01 limited partnership units
(the "Units") in the Partnership representing 32.73% of the outstanding Units at
March 31, 2004. A number of these Units were acquired pursuant to tender offers
made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates
will acquire additional units of limited partnership interest in the Partnership
in exchange for cash or a combination of cash and units in AIMCO Properties,
L.P., the operating partnership of AIMCO, either through private purchases or
tender offers. Under the Partnership Agreement, unitholders holding a majority
of the Units are entitled to take action with respect to a variety of matters
which would include voting on certain amendments to the Partnership Agreement
and voting to remove the Corporate General Partner. Although the Corporate
General Partner owes fiduciary duties to the limited partners of the
Partnership, the Corporate General Partner also owes fiduciary duties to AIMCO
as its sole stockholder. As a result, the duties of the Corporate General
Partner, as corporate general partner, to the Partnership and its limited
partners may come into conflict with the duties of the Corporate General Partner
to AIMCO, as its sole stockholder.
ITEM 3. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Corporate General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Corporate General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
3.1 Partnership Agreement, incorporated herein by reference
to the Partnership's Registration Statement, dated
October 16, 1985 (2-99745), as filed pursuant to Rule
424(b)(the "Registration Statement")
4 Form of Certificate representing interests in the
Partnership, incorporated herein by reference to Exhibit
4 to the Registration Statement on Form S-11 dated
October 16, 1985, Registration Number 2-99745 is
incorporated herein by reference.
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 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 filed during the quarter ended March 31, 2004.
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.
JACQUES-MILLER INCOME FUND, L.P. - II
By: Jacques-Miller, Inc
Corporate General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President
and Chief Accounting Officer
Date: May 13, 2004
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Jacques-Miller
Income Fund, L.P.-II;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 13, 2004
/s/Martha L. Long
Martha L. Long
Senior Vice President of
Jacques-Miller, Inc., equivalent of
the chief executive officer of the
Partnership
Exhibit 31.2
CERTIFICATION
I, Thomas M. Herzog, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Jacques-Miller
Income Fund, L.P.-II;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 13, 2004
/s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President and Chief
Accounting Officer of
Jacques-Miller, Inc., equivalent of
the chief financial officer of the
Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Jacques Miller Income
Fund, L.P. II (the "Partnership"), for the quarterly period ended March 31, 2004
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Martha L. Long, as the equivalent of the chief executive officer of
the Partnership, and Thomas M. Herzog, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: May 13, 2004
/s/Thomas M. Herzog
Name: Thomas M. Herzog
Date: May 13, 2004
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.