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
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period.........to.........
Commission file number 0-17568
BRUNNER COMPANIES INCOME PROPERTIES L.P. II
(Exact name of small business issuer as specified in its charter)
Delaware 31-1247944
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(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 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
a) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENT OF NET ASSETS IN LIQUIDATION
(Unaudited)
(in thousands)
March 31, 1996
Assets
Cash $ 99
Liabilities
Estimated costs during the period of
liquidation (Notes A and B) 20
Net assets in liquidation (Note A) $ 79
See Accompanying Notes to Financial Statements
b) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(in thousands)
Three Months Ended
March 31, 1996
Net assets in liquidation at December 31, 1995 $ 88
Changes in net assets in liquidation attributable to:
Decrease in unrestricted cash (71)
Decrease in restricted cash-tenant security deposits (5)
Decrease in accounts receivable (3)
Decrease in tax and insurance escrows (46)
Decrease in restricted escrow (136)
Decrease in investment properties (6,133)
Decrease in accounts payable 2
Decrease in tenant security deposits 5
Decrease in accrued taxes 42
Decrease in other liabilities 58
Decrease in mortgage notes payable 6,133
Decrease in estimated costs during the
period of liquidation 145
Net assets in liquidation at March 31, 1996 $ 79
See Accompanying Notes to Financial Statements
c) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENTS OF OPERATIONS
(in thousands except per unit data)
(Unaudited)
Three Months Ended
March 31,
1995
Revenues:
Rental income $ 785
Other income 5
Total revenues 790
Expenses:
Operating 58
General and administrative 29
Property management fees 25
Depreciation 240
Amortization 7
Interest 714
Property taxes 58
Tenant reimbursements (74)
Total expenses 1,057
Net loss $ (267)
Net loss allocated to general
partner (1%) $ (3)
Net loss allocated to Class A limited (261)
partners (98.01%)
Net loss allocated to Class B limited
Partners (.99%) (3)
$ (267)
Net loss per limited partnership unit $ (.31)
See Accompanying Notes to Financial Statements
d) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended
March 31,
1995
Cash flows from operating activities:
Net loss $ (267)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 240
Amortization of loan costs and leasing
commissions 27
Change in accounts:
Restricted cash (1)
Accounts receivable 5
Tax and insurance escrows 117
Other assets (29)
Accounts payable (16)
Tenant security deposit liabilities 1
Accrued taxes (101)
Other liabilities 24
Net cash used in
operating activities --
Cash flows from investing activities:
Property improvements and replacements (49)
Deposits to restricted escrow (525)
Receipts from restricted escrows 49
Net cash used in investing activities (525)
Cash flows from financing activities:
Loan extension costs (58)
Net cash used in financing activities (58)
Net decrease in cash (583)
Cash at beginning of period 730
Cash at end of period $ 147
Supplemental disclosure of cash flow information:
Cash paid for interest $ 767
See Accompanying Notes to Financial Statements
e) BRUNNER COMPANIES INCOME PROPERTIES L.P. II
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
Note A - Basis of Presentation
On September 30, 1995, the Partnership adopted the liquidation basis of
accounting. Throughout 1995, the Managing General Partner marketed the
Partnership's properties for sale and sought to refinance the mortgage notes
payable on a long-term basis. These efforts were unsuccessful, the mortgage
notes payable matured on September 1, 1995, and the lender indicated its intent
to foreclose on the properties. On December 21, 1995, the lender foreclosed on
Cumberland Plaza, located in McMinnville, Tennessee. Subsequently, on December
26, 1995, the lender foreclosed on Cunningham Place and Hampton Plaza, both
located in Clarksville, Tennessee. On January 17, 1996, the lender foreclosed
on Pinecrest Plaza, located in Morehead, Kentucky. As a result of the
foreclosures, the Partnership will be liquidated in 1996.
As a result of the foregoing, the Partnership changed its basis of accounting
for its financial statements at September 30, 1995, from the going concern basis
of accounting to the liquidation basis of accounting. Consequently, assets have
been valued at estimated net realizable value and liabilities are presented at
their estimated settlement amounts, including estimated costs associated with
carrying out the liquidation. The valuation of assets and liabilities
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the liquidation. The actual realization of assets
and settlement of liabilities could be higher or lower than amounts indicated
and is based upon the Managing General Partner's estimates as of the date of the
financial statements.
The investment properties were adjusted to their estimated net realizable value.
The net realizable value for Pinecrest was calculated based on purchase offers
received by the Managing General Partner. Prior to the change from the going
concern basis to the liquidation basis of accounting, investment properties were
stated at the lower of cost or estimated fair value.
The statement of net assets in liquidation as of March 31, 1996, includes
approximately $20,000 of accrued costs that the Managing General Partner
estimates will be incurred during the period of liquidation, based on the
assumption that the liquidation process will be completed during the second
quarter of 1996. The costs include payments for the settlement of outstanding
liabilities, and anticipated costs to terminate the Partnership. Because the
success in realization of assets and the settlement of liabilities is based on
the Managing General Partner's best estimates, the liquidation period may be
shorter than projected or it may be extended beyond the projected period.
Note A - Basis of Presentation (continued)
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
under the liquidation basis of accounting 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 Managing
General Partner, all adjustments considered necessary for a fair presentation on
the liquidation basis have been included. 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, 1995.
Note B - Adjustment to Liquidation Basis of Accounting
At September 30, 1995, in accordance with the liquidation basis of accounting,
assets were adjusted to their estimated net realizable value and liabilities
were adjusted to their estimated settlement amount including estimated costs
associated with carrying out the liquidation. The net adjustment required to
convert to the liquidation basis of accounting was an increase in net assets of
approximately $130,000. Significant adjustments are summarized as follows:
Increase (Decrease)
in Net Assets
(in thousands)
Adjustment from book value of investment
properties to estimated net realizable value $(2,308)
Adjustment to record estimated liabilities
associated with the liquidation (Note A) (152)
Adjustment of debt to settlement amount 2,928
Adjustment of other assets and liabilities (338)
Net increase in net assets $ 130
Item 2. Management's Discussion and Analysis
On September 30, 1995, the Partnership adopted the liquidation basis of
accounting. Throughout 1995, the Managing General Partner marketed the
Partnership's properties for sale and sought to refinance the mortgage notes
payable on a long-term basis. These efforts were unsuccessful, the mortgage
notes payable matured on September 1, 1995, and the lender indicated its intent
to foreclose on the properties. On December 21, 1995, the lender foreclosed on
Cumberland Plaza, located in McMinnville, Tennessee. Subsequently, on December
26, 1995, the lender foreclosed on Cunningham Place and Hampton Plaza, both
located in Clarksville, Tennessee. On January 17, 1996, the lender foreclosed
on Pinecrest Plaza, located in Morehead, Kentucky. As a result of the
foreclosures, the Partnership will be liquidated in 1996.
As a result of the foregoing, the Partnership changed its basis of accounting
for its financial statements at September 30, 1995, from the going concern basis
of accounting to the liquidation basis of accounting. Consequently, assets have
been valued at estimated net realizable value and liabilities are presented at
their estimated settlements amounts, including estimated costs associated with
carrying out the liquidation. The valuation of assets and liabilities
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the liquidation. The actual realization of assets
and settlement of liabilities could be higher or lower than amounts indicated
and is based upon the Managing General Partner's estimates as of the date of the
financial statements.
The investment properties were adjusted to their estimated net realizable value.
The net realizable value for Pinecrest was calculated based on purchase offers
received by the Managing General Partner. Prior to the change from the going
concern basis to the liquidation basis of accounting, investment properties were
stated at the lower of cost or estimated fair value.
The statement of net assets in liquidation as of March 31, 1996, includes
approximately $20,000 of accrued costs that the Managing General Partner
estimates will be incurred during the period of liquidation, based on the
assumption that the liquidation process will be completed during the second
quarter of 1996. The costs include payments for the settlement of outstanding
liabilities and anticipated costs to terminate the Partnership. Because the
success in realization of assets and the settlement of liabilities is based on
the Managing General Partner's best estimates, the liquidation period may be
shorter than projected or it may be extended beyond the projected period.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an
exhibit to this report.
b) Reports on Form 8-K:
No reports were filed for 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.
BRUNNER COMPANIES INCOME PROPERTIES L.P. II,
a Delaware limited partnership
By: Brunner Management Limited
Partnership, an Ohio limited Partnership, its
General Partner
By: 104 Management, Inc., an Ohio corporation,
its Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: May 15, 1996