FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
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 September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.........to.........
Commission file number 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.)
102 Woodmont Boulevard, Suite 420
Nashville, Tennessee, 37205
(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 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 the past 90
days. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
a)
JACQUES-MILLER INCOME FUND, L.P. - II
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1998
Assets
Cash and cash equivalents $745
Notes receivable (net of allowance
of $3,250) --
Other assets 25
$770
Liabilities and Partners' (Deficit) Capital
Liabilities
Other liabilities $ 16
Partners' (Deficit) Capital
General partner $(106)
Limited partners (12,400 units
issued and outstanding) 860 754
$770
See Accompanying Notes to Consolidated Financial Statements
b)
JACQUES-MILLER INCOME FUND, L.P. - II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Other income $ 9 $ 10 $ 26 $ 28
Expenses:
General and administrative 10 9 48 27
Net (loss) income $ (1) $ 1 $ (22) $ 1
Net (loss) income allocated
to general partner (1%) $ -- $ -- $ -- $ --
Net (loss) income allocated
to limited partners (99%) (1) 1 (22) 1
$ (1) $ 1 $ (22) $ 1
Net (loss) income per limited
partnership unit $ (.08) $ 0.08 $ (1.77) $ .08
See Accompanying Notes to Consolidated Financial Statements
c)
JACQUES-MILLER INCOME FUND, L.P. - II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Partners' (deficit) capital
at December 31, 1997 12,400 $ (106) $ 882 $ 776
Net loss for the nine months
ended September 30, 1998 -- -- (22) (22)
Partners' (deficit) capital
at September 30, 1998 12,400 $ (106) $ 860 $ 754
See Accompanying Notes to Consolidated Financial Statements
d)
JACQUES-MILLER INCOME FUND, L.P. - II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net (loss) income $ (22) $ 1
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Change in accounts:
Interest receivable 1 78
Other assets (25)
Other liabilities 2 (5)
Net cash (used in) provided by operating
activities (44) 74
Net (decrease) increase in cash and cash equivalents (44) 74
Cash and cash equivalents at beginning of period 789 736
Cash and cash equivalents at end of period $ 745 $ 810
See Accompanying Notes to Consolidated Financial Statements
e)
JACQUES-MILLER INCOME FUND, L.P. - II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Jacques-Miller
Income Fund, L.P. - II ("Partnership") 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 "General Partner") all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1998 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-KSB for the
fiscal year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has outstanding notes receivable with five affiliated
partnerships. During March 1997, the Partnership accepted a payment of
approximately $78,000 in full satisfaction of the two notes receivable on
Governour's Square. The outstanding balances for these two notes receivable
totaled approximately $296,000, including accrued interest, of which $218,000
was fully reserved. (See "Note C" for further information concerning the notes
receivable).
NOTE C - NOTES RECEIVABLE
The Partnership holds five notes receivable at September 30, 1998, totaling
approximately $1,422,000 with approximately $1,828,000 of related accrued
interest, all of which is fully reserved. Included in the provision for
uncollectibles is approximately $1,232,000 of deferred interest revenue.
Additionally, these five notes are due from affiliated partnerships. These five
promissory notes are unsecured by the related partnerships and are subordinated
to the underlying mortgages of the respective partnerships. One note in the
amount of approximately $413,000 with accrued interest due in the amount of
approximately $306,000, the "Catawba Club Note," matured November 1, 1997. A
second note in the amount of approximately $399,000 with accrued interest due in
the amount of approximately $283,000, the "Tall Oaks Note," also matured
November 1, 1997. A third note in the amount of approximately $455,000 with
accrued interest due in the amount of approximately $344,000, the "Quail Run
Note," matured June 1, 1997. A fourth note in the amount of $70,000 with
accrued interest due in the amount of approximately $481,000, the "Highridge
Note," matured May 1, 1996. All four of these notes were in default at
September 30, 1998. The fifth note in the amount of $86,000 with accrued
interest due in the amount of approximately $415,000, the "Woodlawn Village
Note", matured January 1, 1998 and was in default at September 30, 1998.
Payments on these notes are restricted to excess cash flow after payment of the
first and second mortgages and are dependent on excess cash flow from the
properties or sales proceeds. Tall Oaks was sold in May of 1998 and the
Partnership has agreed to accept one third of the net proceeds in settlement of
the Tall Oaks note. Additionally, the Partnership has agreed to accept one
third of the net sales proceeds in settlement of the Woodlawn Village Note, upon
the sale of the Woodlawn Village property. The Partnership is currently seeking
to receive full payment and resolution on each of the three remaining notes and
recently filed a legal action to recover the amounts due on the Catawba Club and
Quail Run notes. However, there can be no assurance that these transactions
will close or that the Partnership will receive any repayments. All of the
above notes are fully reserved.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's net loss for the nine months ended September 30, 1998, was
approximately $22,000 compared to net income of approximately $1,000 for the
nine months ended September 30, 1997. The Partnership experienced a net loss
for the three months ended September 30, 1998 of approximately $1,000 versus net
income of approximately $1,000 for the same period in 1997. The decrease in net
income is directly attributable to the increase in general and administrative
expenses due to an increase in costs associated with the administration of the
Partnership.
At September 30, 1998, the Partnership has cash and cash equivalents of
approximately $745,000 versus approximately $810,000 at September 30, 1997.
There was a net cash decrease for the nine months ended September 30, 1998 of
approximately $44,000 compared to an increase of approximately $74,000 for the
same period in 1997. Net cash used in operating activities increased due to the
increase in net loss as described above and due to an increase in other assets
attributable to payment of a legal retainer related to the collection of notes
receivable. Additionally, in 1997, the Partnership received a payment on a
prior outstanding note receivable (as discussed below) with no such repayment in
1998.
During 1996, the Partnership agreed to accept a payment of approximately $78,000
in 1997 as full satisfaction of the two notes receivable on Governour's Square.
The outstanding balances for these two notes receivable totaled approximately
$296,000, including accrued interest, of which $218,000 was fully reserved.
Governour's Square sold its sole operating property and the majority of the
sales proceeds were used to pay off the first mortgage.
The Partnership holds five notes receivable at September 30, 1998, totaling
approximately $1,422,000 with approximately $1,828,000 of related accrued
interest, all of which is fully reserved. Included in the provision for
uncollectibles is approximately $1,232,000 of deferred interest revenue.
Additionally, these five notes are due from affiliated partnerships. These five
promissory notes are unsecured by the related partnerships and are subordinated
to the underlying mortgages of the respective partnerships.
One note in the amount of approximately $413,000 with accrued interest due in
the amount of approximately $306,000, the "Catawba Club Note," matured November
1, 1997. A second note in the amount of approximately $399,000 with accrued
interest due in the amount of approximately $283,000, the "Tall Oaks Note," also
matured November 1, 1997. A third note in the amount of approximately $455,000
with accrued interest due in the amount of approximately $344,000, the "Quail
Run Note," matured June 1, 1997. A fourth note in the amount of $70,000 with
accrued interest due in the amount of approximately $481,000, the "Highridge
Note," matured May 1, 1996. All four of these notes were in default at
September 30, 1998. The fifth note in the amount of $86,000 with accrued
interest due in the amount of approximately $415,000, the "Woodlawn Village
Note," matured January 1, 1998 and was in default at September 30, 1998.
Payments on these notes are restricted to excess cash flow after payment of the
first and second mortgages and are dependent on excess cash flow from the
properties or sales proceeds. Tall Oaks was sold in May of 1998 and the
Partnership has agreed to accept one third of the net proceeds in settlement of
the Tall Oaks Note. Additionally, the Partnership has agreed to accept one
third of the net sales proceeds in settlement of the Woodlawn Village Note, upon
the sale of the Woodlawn Village property. The Partnership is currently seeking
to receive full payment and resolution on each of the three remaining notes and
recently filed an action to recover the amounts due on the Catawba Club and
Quail Run notes. However, there can be no assurance that these transactions
will close or that the Partnership will receive any repayments. All of the
above notes are fully reserved.
Year 2000
The Partnership is dependent upon the General Partner and Insignia Financial
Group, Inc. ("Insignia") for management and administrative services. Insignia
has completed an assessment and will have to modify or replace portions of its
software so that its computer systems will function properly with respect to
dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is
estimated to be completed no later than December 31, 1998, which is prior to any
anticipated impact on its operating systems. The General Partner believes that
with modifications to existing software and conversions to new software, the
Year 2000 Issue will not pose significant operational problems for its computer
systems.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1998.
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.
as Corporate General Partner
By: /s/ C. David Griffin
C. David Griffin
President
Chief Executive Officer
Date: November 16, 1998