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 September 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-15758
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) (Zip Code)
Issuer's telephone number (615) 648-3301
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)
September 30, 1995
Assets
Cash:
Unrestricted $ 621,037
Restricted--tenant security deposits 26,545
Accounts receivable 8,131
Escrow for taxes 60,570
Restricted escrows 104,172
Notes receivable (net of allowance
of $2,751,816) 0
Other assets 132,798
Investment properties:
Land $ 141,367
Buildings and related personal property 1,893,990
2,035,357
Less accumulated depreciation (394,101) 1,641,256
$2,594,509
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 18,340
Tenant security deposits 26,036
Accrued taxes 46,467
Other liabilities 45,537
Mortgage notes payable 1,903,357
Partners' Capital (Deficit)
General partners $ (107,978)
Limited partners (12,400 units
issued and outstanding) 662,750 554,772
$2,594,509
[FN]
See Accompanying Notes to Financial Statements
b) JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Rental income $177,135 $591,882 $602,194 $1,739,863
Other income 17,915 34,606 73,467 78,258
Total revenues 195,050 626,488 675,661 1,818,121
Expenses:
Operating 77,175 186,902 235,389 560,674
General and administrative 29,519 12,672 90,274 60,235
Property management fees 9,322 30,022 35,364 88,633
Maintenance 27,126 63,418 81,959 218,898
Depreciation 29,780 112,258 88,056 333,859
Interest 46,275 163,998 158,225 496,820
Property taxes 15,951 58,050 54,567 174,223
Total expenses 235,148 627,320 743,834 1,933,342
Casualty gain -- 173,693 -- 173,693
Gain on sale of property -- -- 855,585 --
Net income (loss) $(40,098) $172,861 $787,412 $ 58,472
Net income (loss) allocated
to general partners (1%) $ (401) $ 1,729 $ 7,874 $ 585
Net income (loss) allocated
to limited partners (99%) (39,697) 171,132 779,538 57,887
$(40,098) $172,861 $787,412 $ 58,472
Net income (loss) per limited
partnership unit $ (3.20) $ 13.77 $ 62.87 $ 4.66
[FN]
See Accompanying Notes to Financial Statements
c) JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Limited
Partnership General Limited
Units Partners Partners Total
Partners' capital (deficit)
at December 31, 1994 12,400 $ (95,281) $ 1,734,454 $ 1,639,173
Net income for the nine months
ended September 30, 1995 -- 7,874 779,538 787,412
Distributions paid to
partners -- (20,571) (1,851,242) (1,871,813)
Partners' capital (deficit)
at September 30, 1995 12,400 $(107,978) $ 662,750 $ 554,772
[FN]
See Accompanying Notes to Financial Statements
d) JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net income $ 787,412 $ 58,472
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation 88,056 333,859
Amortization of discounts and loan costs 23,313 65,880
Casualty gain -- (173,693)
Gain on sale of property (855,585) --
Change in accounts:
Restricted cash 61,055 (7,237)
Accounts receivable 1,886 (4,189)
Escrows for taxes 95,615 (93,673)
Other assets 1,115 --
Accounts payable (178,505) (1,097)
Tenant security deposit liabilities (63,904) 8,037
Accrued taxes (129,515) 90,814
Deferred revenue 200,137 194,840
Other liabilities (36,607) 4,624
Net cash (used in) provided by
operating activities (5,527) 476,637
Cash flows from investing activities:
Property improvements and replacements (34,396) (90,016)
Deposits to restricted escrows (41,259) (411,739)
Receipts from restricted escrows 462,765 14,577
Increase in notes receivable-affiliates (200,137) (194,840)
Proceeds from sale of Willow Oaks 1,612,842 --
Insurance proceeds from property damage -- 273,852
Net cash provided by (used in)
investing activities 1,799,815 (408,166)
Cash flows from financing activities:
Payments on mortgage notes payable (44,945) (117,777)
Distributions (1,871,813) --
Net cash used in financing activities (1,916,758) (117,777)
Net decrease in cash (122,470) (49,306)
Cash at beginning of period 743,507 686,331
Cash at end of period $ 621,037 $ 637,025
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 152,555 $ 430,940
[FN]
See Accompanying Notes to Financial Statements
e) JACQUES-MILLER INCOME FUND, L.P. II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements 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 the Corporate General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the nine month
period ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. 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, 1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B - Notes Receivable
The Partnership holds seven notes receivable at September 30, 1995, totaling
$1,599,397 with $1,152,419 of related accrued interest, all of which is fully
reserved. Included in the provision for uncollectibles is $779,337 of deferred
interest revenue.
Note C - Sale of Willow Oaks
On January 17, 1995, the Partnership sold Willow Oaks to an unaffiliated
party. The buyer assumed the mortgages payable to Bank of America. The total
outstanding balance on the mortgage notes payable, including interest, was
$5,438,551. The Partnership received net proceeds of $1,612,842 after payment
of closing costs. This disposition resulted in a gain of $855,585.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership consists of one investment property. The following table
sets forth the average occupancy for this property for the nine months ended
September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
La Plaza Apartments
Altamonte Springs, Florida 93% 94%
The Partnership's net income as shown in the financial statements for the
nine months ended September 30, 1995, was $787,412 with the third quarter having
a loss of $40,098. The Partnership reported net income of $58,472 and $172,861
for the corresponding periods in 1994. The increase in net income is primarily
attributable to the gain on the sale of Willow Oaks Apartments in 1995. Because
the apartment complex was sold on January 17, 1995, the statements of operations
are not comparable. The 1995 statement of operations was affected by the gain
on the sale and by the fact that Willow Oaks' operations were only included for
seventeen days of 1995. Also contributing to this change was a decrease in
maintenance expense at La Plaza Apartments due to a major landscaping project
done in the first quarter of 1994. In addition, other income increased due to
additional tenant charges at La Plaza, resulting from strict enforcement of the
property's policies.
As part of the ongoing business plan of the Partnership, the Corporate
General Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Corporate General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.
At September 30, 1995, the Partnership reported unrestricted cash of $621,037
versus $637,025 at September 30, 1994. Net cash used in operating activities
increased primarily due to a decrease in accounts payable at Willow Oaks as a
result of the payment of roofing and water damage expenses accrued at year end.
In addition, other liabilities including prepaid rent and accrued interest were
paid due to the sale of Willow Oaks. Depreciation and amortization also
decreased due to Willow Oaks being sold in January. Also contributing to the
change was a decrease in accrued taxes due to the early payment of 1994 taxes in
the first quarter of 1995 in connection with the sale of Willow Oaks. This
decrease was partially offset by the change in escrows for taxes. Furthermore,
the increase in net income is offset by the gain on the sale of Willow Oaks.
Net cash provided by investing activities increased due to proceeds from the
sale of Willow Oaks of approximately $1,613,000. Also contributing to the change
was an increase in receipts from restricted escrows to cover roof replacement
costs. These escrows were established in the third quarter of 1994 with
insurance proceeds from property damage and were held by the mortgage company.
Net cash used in financing activities increased primarily due to the
distribution of approximately $1,872,000 during the first quarter of 1995.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the partnership. The
mortgage indebtedness of $1,903,357, net of discount, is amortized over 257
months. In addition, the mortgage notes encumbering La Plaza Apartments require
balloon payments on November 15, 2002, at which time the property will either be
sold or refinanced. On January 17, 1995, Willow Oaks Apartments' mortgage was
assumed by the purchaser. Future cash distributions will depend on the levels
of net cash generated from operations, refinancings, property sales and the
availability of portions of the funds described in the preceding paragraph. No
cash distributions were paid in 1994. During the nine months ended September
30, 1995, a distribution of $1,871,813 was declared and paid to the partners in
connection with the sale of Willow Oaks Apartments.
It is the Corporate General Partner's intent to sell La Plaza, which is held
by a limited partnership of which the Partnership owns 99.9%, during 1995. The
Corporate General Partner is currently negotiating a deal to sell the property
to a potential purchaser. Currently, the potential purchaser, an unaffiliated
third party, has not signed the sales contract due to an easement problem with
a neighboring party. Therefore the Corporate General Partner cannot guarantee
this sale will close.
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, 1995.
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/ C. David Griffin
C. David Griffin
President
Chief Executive Officer
Date: November 3, 1995