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 March 31, 1996
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) (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 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)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 542
Restricted--tenant security deposits 27
Accounts receivable 7
Escrow for taxes 33
Restricted escrows 125
Notes receivable (net of allowance
of $2,887) --
Other assets 130
Investment properties:
Land $ 141
Buildings and related personal property 1,909
2,050
Less accumulated depreciation (424) 1,626
$ 2,490
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 19
Tenant security deposits 27
Accrued taxes 15
Other liabilities 31
Mortgage notes payable 1,886
Partners' Capital (Deficit)
General partner $ (108)
Limited partners (12,400 units
issued and outstanding) 620 512
$ 2,490
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
March 31,
1996 1995
Revenues:
Rental income $ 182 $ 242
Other income 24 45
Total revenues 206 287
Expenses:
Operating 80 110
General and administrative 14 29
Maintenance 44 31
Depreciation -- 29
Interest 46 66
Property taxes 15 24
Total expenses 199 289
Gain on sale of property -- 856
Net income $ 7 $ 854
Net income allocated to general partner (1%) $ -- $ 8
Net income allocated to limited partners (99%) 7 846
$ 7 $ 854
Net income per partnership unit $ .56 $ 68.21
<FN>
See Accompanying Notes to Consolidated Financial Statements
c) JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Partners' capital (deficit)
at December 31, 1995 12,400 $ (108) $ 613 $ 505
Net income for the three
months ended March 31, 1996 -- 7 7
Partners' capital (deficit)
at March 31, 1996 12,400 $ (108) $ 620 $ 512
<FN>
See Accompanying Notes to Consolidated Financial Statements
d) JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net income $ 7 $ 854
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation -- 29
Amortization of discounts and loan costs 8 8
Gain on sale of property -- (856)
Change in accounts:
Restricted cash -- 64
Accounts receivable (2) 5
Escrow for taxes (15) 127
Accounts payable (19) (189)
Tenant security deposit liabilities -- (66)
Accrued taxes 15 (160)
Other liabilities (5) (56)
Net cash used in operating activities (11) (240)
Cash flows from investing activities:
Property improvements and replacements (7) (14)
Deposits to restricted escrows (14) (9)
Receipts from restricted escrows -- 463
Proceeds from sale of Willow Oaks -- 1,613
Net cash (used in) provided by
investing activities (21) 2,053
Cash flows from financing activities:
Payments on mortgage notes payable (12) (21)
Distributions -- (1,872)
Net cash used in financing activities (12) (1,893)
Net decrease in cash and cash equivalents (44) (80)
Cash and cash equivalents at beginning of period 586 744
Cash and cash equivalents at end of period $ 542 $ 664
Supplemental disclosure of cash flow information:
Cash paid for interest $ 38 $ 75
<FN>
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 the General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1996,
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1996. 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, 1995.
Accounting Change - Investments
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Partnership adopted Statement
121 in the first quarter of 1996. The effect of the adoption was not material.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Transactions With Affiliated Parties
The Partnership has outstanding notes receivable with affiliated partnerships.
No income was recorded for the years ended December 31, 1995 and 1994, as no
payments were made to the Partnership. (See "Note D" for further information
concerning the notes receivable).
Note C - Assets To Be Disposed Of
The remaining investment property has been classified as an "asset to be
disposed of" under SFAS 121 due to the intent of the Partnership Agreement not
to hold investment properties and the General Partner's intent to sell the
property. The General Partner has determined that it is in the best interests
of the Partnership to sell La Plaza, which is held by a limited partnership of
which the Partnership owns 99.9%. The General Partner is currently negotiating
a deal to sell the property to an unaffiliated third party. The General Partner
believes that the sale will occur during 1996. The General Partner believes
that the fair value of the property, less the estimated costs to sell the
property, exceeds the carrying value of the property. Accordingly, no provision
has been recorded to write-down the asset.
Note D - Notes Receivable
The Partnership holds seven notes receivable at March 31, 1996, totaling
approximately $1,599,000 with approximately $1,288,000 of related accrued
interest, all of which is fully reserved. Included in the provision for
uncollectibles is approximately $915,000 of deferred interest revenue.
Note E - 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
approximately $5,439,000. The Partnership received net proceeds of
approximately $1,613,000 after payment of closing costs. This disposition
resulted in a gain of approximately $856,000.
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 three months ended March
31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
La Plaza Apartments
Altamonte Springs, Florida 93% 92%
Results of Operations
The Partnership's net income as shown in the financial statements for the
three months ended March 31, 1996 and 1995 was $7,000 and $854,000,
respectively. The decrease in net income is primarily attributable to the gain
on the sale of Willow Oaks Apartments in 1995. The statement of operations for
the three months ended March 31, 1995, recorded the gain on the sale of Willow
Oaks and recorded the operations of Willow Oaks for seventeen days in 1995.
Also, maintenance expense increased primarily due to repairs to underground
pipes and the parking lot. Leaks in the pipes were causing the ground to sink
which resulted in damage to the parking lot. Offsetting this increase in
expense was a decrease in depreciation. Depreciation was not recorded for the
three months ended March 31, 1996, for the property as it is considered an
"asset to be disposed of" under SFAS 121.
As part of the ongoing business plan of the Partnership, the Corporate
General Partner monitors the rental market environment of its investment
property 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.
Liquidity and Capital Resources
At March 31, 1996, the Partnership reported unrestricted cash of
approximately $542,000 versus approximately $664,000 at March 31, 1995. Net
cash used in operating activities decreased as a result of the increase in
accounts payable due to timing of payments to vendors and an increase in other
liabilities due to timing of prepaid rental income from vendors. Net cash used
in investing activities increased primarily as a result of proceeds from the
sale of Willow Oaks of approximately $1,613,000 that were recognized in the
first quarter of 1995. Also, the increase is attributable to the receipts in
the first quarter of 1995 from restricted escrows to cover roof replacement
costs. Net cash used in financing activities decreased primarily due to the
distribution of approximately $1,872,000 during the first quarter of 1995. No
distributions were made during the first quarter of 1996.
The Partnership has no material capital projects scheduled to be performed in
1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations, is received from the capital
reserve account or is available from cash and cash equivalents on hand.
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. Near-term needs
include all operating, maintenance, and other expenses which are needed to
operate the Partnership's investment property in the near future. The mortgage
indebtedness of $1,886,000, 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 during the three months ended March 31, 1996,
however, during the year ended December 31, 1995, a distribution of
approximately $1,872,000 was declared and paid to the partners in connection
with the sale of Willow Oaks Apartments.
The General Partner is currently negotiating the sale of the property to an
unaffiliated third party. The remaining investment property has been classified
as an "asset to be disposed of" under SFAS 121 due to the intent of the
Partnership Agreement not to hold investment properties and the General
Partner's intent to sell the property. This transaction is expected to occur
during 1996.
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 March 31, 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.
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: May 9, 1996