UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________to _________
Commission file number 0-15758
JACQUES-MILLER INCOME FUND, L.P. - II
(Exact Name of Small Business Issuer 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)
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
JACQUES-MILLER INCOME FUND, L.P. - II
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2005
Assets
Cash and cash equivalents $ 12
Note receivable (net of allowance of approximately
$1,067) (Note B) --
$ 12
Liabilities and Partners' (Deficiency) Capital
Liabilities
Other liabilities $ 9
Partners' (Deficiency) Capital
General partner $ (114)
Limited partners (12,400 units issued and
outstanding) 117 3
$ 12
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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues: $ -- $ -- $ -- $ --
Expenses:
General and administrative 8 16 13 31
Net loss $ (8) $ (16) $ (13) $ (31)
Net loss allocated to general
partner (1%) $ -- $ -- $ -- $ --
Net loss allocated to limited
partners (99%) (8) (16) (13) (31)
$ (8) $ (16) $ (13) $ (31)
Net loss per limited partnership
unit $(0.65) $(1.29) $(1.05) $(2.50)
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, 2004 12,400 $ (114) $ 130 $ 16
Net loss for the six months
ended June 30, 2005 -- -- (13) (13)
Partners' (deficiency) capital
at June 30, 2005 12,400 $ (114) $ 117 $ 3
See Accompanying Notes to Financial Statements
JACQUES-MILLER INCOME FUND, L.P. - II
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2005 2004
Cash flows from operating activities:
Net loss $ (13) $ (31)
Adjustments to reconcile net loss to net cash
used in operating activities:
Change in accounts:
Due from/to affiliates 6 (9)
Other liabilities (3) 11
Net cash used in operating activities (10) (29)
Net decrease in cash and cash equivalents (10) (29)
Cash and cash equivalents at beginning of period 22 78
Cash and cash equivalents at end of period $ 12 $ 49
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 (the "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 six months ended
June 30, 2005, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2005. 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, 2004. 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
Note receivable consists of the following (in thousands):
June 30,
2005
Note receivable $ 413
Accrued interest receivable 654
1,067
Provision for uncollectible note
receivable (including
approximately $654 of
deferred interest revenue) (1,067)
$ --
The Partnership holds a note receivable (the "Catawba Club Note" or the "Note")
at June 30, 2005, totaling approximately $413,000 with approximately $654,000 of
related accrued interest, which matured November 1, 1997, and is fully reserved.
The Note was in default at June 30, 2005. The Partnership has obtained a default
judgment with respect to the Catawba Club Note and the Corporate General Partner
is currently evaluating its options to collect upon this judgment. The Note
bears interest at 12.5%, and is unsecured by an unrelated partnership and is
subordinated to the underlying mortgage of the respective partnership. Payments
on the Catawba Club Note are restricted to excess cash flow after payment on the
first mortgage. No payments on the Note were received during the six months
ended June 30, 2005 and 2004.
Note C - Transactions with Affiliated Parties
An affiliate of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $13,000 for the
six months ended June 30, 2004, which is included in general and administrative
expenses. There were no such expenses incurred for the six months ended June 30,
2005.
Note D - Contingencies
The Partnership is unaware of any pending or outstanding litigation matters that
are not of a routine nature arising in the ordinary course of business.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, AIMCO believes the areas of investigation have included AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates,
capitalization of payroll and certain other costs, tax credit transactions and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. 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.
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; litigation, including costs associated with
prosecuting and defending claims and any adverse outcomes. 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 and six months ended June 30, 2005 was
approximately $8,000 and $13,000 compared to net loss of approximately $16,000
and $31,000 for the three and six months ended June 30, 2004, respectively. The
decrease in net loss for the three and six months is attributable to a decrease
in general and administrative expenses which is due to decreases in
reimbursement of accountable administrative expenses and the cost of the annual
audit. 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 June 30, 2005, the Partnership held cash and cash equivalents of
approximately $12,000 compared to approximately $49,000 at June 30, 2004. Cash
and cash equivalents decreased approximately $10,000 from December 31, 2004. 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. For example, 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.
The Partnership holds a note receivable (the "Catawba Club Note" or the "Note")
at June 30, 2005, totaling approximately $413,000 with approximately $654,000 of
related accrued interest, which matured November 1, 1997, and is fully reserved.
The Note was in default at June 30, 2005. The Partnership has obtained a default
judgment with respect to the Catawba Club Note and the Corporate General Partner
is currently evaluating its options to collect upon this judgment. The Note
bears interest at 12.5%, and is unsecured by an unrelated partnership and is
subordinated to the underlying mortgage of the respective partnership. Payments
on the Catawba Club Note are restricted to excess cash flow after payment on the
first mortgage. No payments on the Note were received during the six months
ended June 30, 2005 and 2004.
The Partnership made no distributions during the six months ended June 30, 2005
and 2004. Future cash distributions will depend on the levels of net cash
generated from the collection of the note receivable and the availability of
cash reserves. The Partnership's cash available for distribution is reviewed on
a monthly basis. There can be no assurance, however, that the Partnership will
generate sufficient funds from collection of the note receivable to permit
distributions to its partners during the remainder of 2005 or subsequent
periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 4,059.10 limited partnership units
(the "Units") in the Partnership representing 32.73% of the outstanding Units at
June 30, 2005. 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 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 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See Exhibit Index.
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/Stephen B. Waters
Stephen B. Waters
Vice President
Date: August 12, 2005
EXHIBIT INDEX
Exhibit
3 Partnership Agreement is incorporated by reference to Exhibit A of the
Prospectus contained in the Registrant's Registration Statement (2-99745)
as filed with the Commission pursuant to Rule 424(b) under the Act.
4 Form of Certificate representing interests in the Registrant. (Exhibit 4
to Registration Statement on Form S-II dated October 16, 1985,
Registration Number 2-99745 is incorporated herein by reference.
10A Promissory Note dated July 20, 1990 in the amount of $476,000.00 payable
to the Registrant executed by Balanced Holding Partners, L.P. (Filed as
Exhibit 10A to Form 10K for the year ended December 30, 1990, and
incorporated herein by reference.)
10B Settlement Agreement dated July 25, 1991 between Jacques-Miller Income
Fund L.P. II and Balanced Holdings Partners, L.P., Jacques-Miller, Inc.,
and Jacques-Miller Mortgage, Inc. of Tennessee. (Filed as Exhibit 10B to
Form 10K for the year ended December 31, 1991, and incorporated herein by
reference.)
10C Advisory Agreement, dated December 30, 1991, between Jacques-Miller Income
Fund L.P. II and Insignia GP Corporation. (Filed as Exhibit 10C to Form
10K for the year ended December 31, 1991, and 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 of the equivalent of the Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: August 12, 2005
/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, Stephen B. Waters, 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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: August 12, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President 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 June 30, 2005
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 Stephen B. Waters, 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: August 12, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: August 12, 2005
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.