10QSB 1 0001.txt SECOND QUARTER 10-QSB 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 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 [ ] 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 0-16010 JOHNSTOWN/CONSOLIDATED INCOME PARTNERS (Exact name of small business issuer as specified in its charter) California 94-3004963 (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 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) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 2000
Assets Cash and cash equivalents $ 1,311 Receivables and deposits 120 Restricted escrows 182 Other assets 78 Investment property: Land $ 213 Buildings and related personal property 4,515 4,728 Less accumulated depreciation (3,074) 1,654 $ 3,345 Liabilities and Partners' (Deficit) Capital Accounts payable $ 14 Tenant security deposit liabilities 40 Accrued property taxes 33 Other liabilities 95 Mortgage note payable 2,325 Partners' (Deficit) Capital General partner $ (238) Corporate limited partner on behalf of the Unitholders - (128,810 units issued and outstanding) 1,076 838 $ 3,345
See Accompanying Notes to Financial Statements b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 (Restated) (Restated) Revenues: Rental income $ 271 $ 259 $ 545 $ 515 Other income 48 21 132 43 Total revenues 319 280 677 558 Expenses: Operating 113 104 232 214 General and administrative 75 87 141 154 Depreciation 54 78 112 121 Interest 46 46 92 92 Property taxes 18 13 33 26 Total expenses 306 328 610 607 Income (loss) from continuing operations 13 (48) 67 (49) Income from discontinued operations -- 153 -- 307 Loss on sale of discontinued operations (36) -- (71) -- Net (loss) income $ (23) $ 105 $ (4) $ 258 Net income allocated to general partner (1%) $ -- $ 1 $ -- $ 3 Net (loss) income allocated to limited partners (99%) (23) 104 (4) 255 $ (23) $ 105 $ (4) $ 258 Per unit of depositary receipt: Income (loss) from continuing operations $ 0.10 $ (0.37) $ 0.51 $ (0.38) Income from discontinued operations -- 1.18 -- 2.36 Loss on sale of discontinued operations (0.28) -- (0.54) -- Net (loss) income per unit of depositary receipt $ (0.18) $ 0.81 $ (0.03) $ 1.98 Distributions per unit of depositary receipt $ 10.33 $ -- $ 71.82 $ --
See Accompanying Notes to Financial Statements c) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Unitholders Units of Units of Depositary Depositary General Receipt Units Partner (Note A) Total Original capital contributions 129,266 $ 1 $32,317 $32,318 Partners' (deficit) capital at December 31, 1999 128,810 $ (145) $10,331 $10,186 Distribution to partners -- (93) (9,251) (9,344) Net loss for the six months ended June 30, 2000 -- -- (4) (4) Partners' (deficit) capital at June 30, 2000 128,810 $ (238) $ 1,076 $ 838
See Accompanying Notes to Financial Statements d) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 2000 1999 Cash flows from operating activities: Net (loss) income $ (4) $ 258 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 112 312 Amortization of lease commissions and loan costs 7 40 Loss on sale of discontinued operations 71 -- Change in accounts: Receivables and deposits 52 (67) Other assets 7 (10) Accounts payable (116) 10 Tenant security deposit liabilities 5 2 Accrued property taxes (34) 28 Other liabilities (36) (7) Net cash provided by operating activities 64 566 Cash flows from investing activities: Property improvements and replacements (29) (133) Net receipts from (deposits to) restricted escrows 41 (13) Lease commissions paid -- (11) Net cash provided by (used in) investing activities 12 (157) Cash flows used in financing activities: Distribution to partners (9,344) -- Net (decrease) increase in cash and cash equivalents (9,268) 409 Cash and cash equivalents at beginning of period 10,579 1,754 Cash and cash equivalents at end of period $ 1,311 $ 2,163 Supplemental disclosure of cash flow information: Cash paid for interest $ 85 $ 85
See Accompanying Notes to Financial Statements e) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of the Johnstown/Consolidated Income Partners (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 ConCap Equities, 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 six month periods ended June 30, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2000. 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, 1999. Certain reclassification have been made to the 1999 balances to conform to the 2000 presentation. Units of Depositary Receipt Johnstown/Consolidated Depositary Corporation (the "Corporate Limited Partner"), an affiliate of the General Partner, serves as a depositary of certain units of depositary receipt ("Units"). The Units represent economic rights attributable to the limited partnership interests in the Partnership and entitle the unitholders thereof ("Unitholders") to certain economic benefits, allocations and distributions of the Partnership. For this reason, partners' (deficit) capital is herein represented as an interest of the Unitholders. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Related Party Transactions The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities, as provided for in the Partnership Agreement. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following expenses were paid or accrued to an affiliate of the General Partner during the six months ended June 30, 2000 and 1999: 2000 1999 (in thousands) Asset management fees (included in general and administrative expense) $ 47 $ 47 Property management fees (included in operating expenses and income from discontinued operations) 29 50 Reimbursement for services of affiliates (included in general and administrative expenses) 20 21 The Partnership Agreement provides that the Partnership shall pay in monthly installments to the General Partner, or an affiliate, a yearly asset management fee equal to: (i) 3/8 of 1% of the original principal balance of mortgage loans outstanding at the end of the month preceding the installment payment; (ii) 1/8 of 1% of the market value of guaranteed mortgage-backed securities as of the end of the Partnership quarter immediately preceding the installment payment; and (iii) 5/8 of 1% of the purchase price of the properties plus improvements for managing the Partnership's assets. In the event the property was not owned at the beginning or end of the year, such fee shall be pro-rated for the short-year period of ownership. Under this provision, fees of approximately $47,000 were paid to the General Partner and its affiliates for both the six months ended June 30, 2000 and 1999. During the six months ended June 30, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from the Partnership's residential property for providing property management services. The Partnership paid to such affiliates approximately $29,000 and $27,000 for the six month periods ended June 30, 2000 and 1999. For the six months ended June 30, 1999, affiliates were entitled to receive varying percentages of the gross receipts from the Partnership's Florida #11 Mini-Warehouses commercial property for providing property management services. The Partnership paid to such affiliates approximately $23,000 for the six months ended June 30, 1999. These services were provided by an unrelated party for Phoenix Business Center in 1999. Both the Florida #11 Mini-Warehouse and Phoenix Business Center were sold during 1999, so no management fees were paid for these properties during the six months ended June 30, 2000. An affiliate of the General Partner received reimbursement of accountable administrative expense amounting to approximately $20,000 and $21,000 for the six months ended June 30, 2000 and 1999, respectively. AIMCO and its affiliates currently own 63,152 units of depositary receipt in the Partnership representing approximately 49.03% of the outstanding units. 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 make one or more additional offers to acquire additional units of depositary receipt in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. In this regard, on July 24, 2000, an affiliate of AIMCO commenced a tender offer to purchase any and all of the remaining units of depository receipt for a purchase price of $29.00 per unit. The offer is currently scheduled to expire on August 21, 2000. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of approximately 49.03% of the outstanding units, AIMCO is in a position to significantly influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO and its affiliates would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note D - Commitment The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital as defined in the Partnership Agreement. In the event expenditures are made from these reserves, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Reserves, including cash and cash equivalents and tenant security deposits, totaling approximately $1,352,000 at June 30, 2000, exceed the Partnership's reserve requirement of approximately $955,000. Note E - Distributions During the six months ended June 30, 2000, the General Partner declared and paid distributions of approximately $9,344,000 (approximately $9,251,000 to the limited partners or $71.82 per unit of depositary receipt). These distributions consisted of sale proceeds from the sale of Phoenix Business Center and Florida #11 Mini Warehouse of approximately $7,738,000 (approximately $7,661,000 to the limited partners or $59.48 per unit of depositary receipt) and approximately $1,606,000 (approximately $1,590,000 to the limited partners or $12.34 per unit of depositary receipt) from operations. No distributions were declared or paid during the six months ended June 30, 1999. Note F - Sale of Discontinued Operations The Partnership's two commercial properties, Florida #11 Mini Warehouse and Phoenix Business Campus, were sold during November and December of 1999, respectively. These were the only commercial properties owned by the Partnership and represented one segment of the Partnership's operations. Due to the sale of these properties, the results of the commercial segment have been shown as (loss) income from discontinued operations and loss on sale of discontinued operations. Total revenues for these properties were approximately $371,000 and $721,000 for the three and six months ended June 30, 1999. No revenues were earned by these properties during the three and six months ended June 30, 2000. Income from discontinued operations was approximately $153,000 and $307,000 for the three and six months ended June 30, 1999, respectively. The loss on sale of discontinued operations during the six months ended June 30, 2000 was due to additional legal fees and other costs relating to the property sales. Note G - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership had two reportable segments: residential properties and commercial properties. The Partnership's residential property segment consists of one apartment complex located in Independence, Missouri. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. The commercial property segment consisted of an office building located in Atlanta, Georgia, and a self-storage mini-warehouse located in Davie, Florida. The two commercial properties held by the Partnership were sold to unrelated parties during 1999. Therefore, the commercial segment is reflected as discontinued operations (see "Note F - Sale of Discontinued Operations" for further discussion regarding the commercial sales). Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments are the same as those described in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segments consisted of investment properties that offered different products and services. The reportable segments were each managed separately because they provided distinct services with different types of products and customers. Segment information for the three and six month periods ended June 30, 2000 and 1999 is shown in the tables below. The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segments (in thousands).
Three Months Ended June 30, 2000 Residential Commercial Other Totals (discontinued) Rental income $ 271 $ -- $ -- $ 271 Other income 20 -- 28 48 Interest expense 46 -- -- 46 Depreciation 54 -- -- 54 General and administrative expense -- -- 75 75 Loss on sale of discontinued operations -- (36) -- (36) Segment profit (loss) 60 (36) (47) (23) Six Months Ended June 30, 2000 Residential Commercial Other Totals (discontinued) Rental income $ 545 $ -- $ -- $ 545 Other income 30 -- 102 132 Interest expense 92 -- -- 92 Depreciation 112 -- -- 112 General and administrative expense -- -- 141 141 Loss on sale of discontinued operations -- (71) -- (71) Segment profit (loss) 106 (71) (39) (4) Total assets 2,101 -- 1,244 3,345 Capital expenditures for investment property 29 -- -- 29 Three Months Ended June 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 259 $ -- $ -- $ 259 Other income 7 -- 14 21 Interest expense 46 -- -- 46 Depreciation 78 -- -- 78 General and administrative expense -- -- 87 87 Income from discontinued operations -- 153 -- 153 Segment profit (loss) 25 153 (73) 105 Six Months Ended June 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 515 $ -- $ -- $ 515 Other income 19 -- 24 43 Interest expense 92 -- -- 92 Depreciation 121 -- -- 121 General and administrative expense -- -- 154 154 Income from discontinued operations -- 307 -- 307 Segment profit (loss) 81 307 (130) 258 Total assets 2,148 6,743 1,093 9,984 Capital expenditures for investment properties 59 74 -- 133
Note H - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Partnership from time to time. The discussion of the Partnership's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's business and results of operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the property for each of the six month periods ended June 30, 2000 and 1999. Average Occupancy Property 2000 1999 Cedar Brooke Apartments 98% 97% Independence, Missouri Results of Operations The Partnership's net loss for the six months ended June 30, 2000, was approximately $4,000 compared to net income of approximately $258,000 for the six months ended June 30, 1999. The Partnership reported net loss for the three months ended June 30, 2000 of approximately $23,000 as compared to net income of approximately $105,000 for the corresponding period of 1999. The decrease in net income for the three and six months ended June 30, 2000 is primarily attributable to the decrease in income from discontinued operations and the loss on sale of discontinued operations. The Partnership's two commercial properties, Florida #11 Mini Warehouse and Phoenix Business Campus, were sold during 1999. These were the only commercial properties owned by the Partnership and represented one segment of the Partnership's operations. Due to the sale of these properties, the results of the commercial segment have been shown as (loss) income from discontinued operations and loss on sale of discontinued operations. The additional loss on sale of discontinued operations for the six months ended June 30, 2000 is due to an increase in the estimated legal fees related to the sales and tenant improvements completed prior to the sale. The Partnership's income from continuing operations for the six months ended June 30, 2000 was approximately $67,000 compared to a loss from continuing operations of approximately $49,000 for the six months ended June 30, 1999. The Partnership's income from continuing operations for the three months ended June 30, 2000 was approximately $13,000 compared to a loss from continuing operations of approximately $48,000 for the three months ended June 30, 2000. The increase in income from continuing operations for the six months ended June 30, 2000 is due to an increase in total revenues and a decrease in total expenses. The increase in income from continuing operations for the three months ended June 30, 2000 is primarily due to an increase in total revenues. Total revenues increased for the three and six month periods due to increases in rental income and other income. Rental income increased due to increases in occupancy and average rental rates at Cedar Brooke Apartments. Other income increased primarily due to increased interest income due to higher average cash balances in interest bearing accounts. Total expenses decreased for the three month period ended June 30, 2000 primarily due to decreases in depreciation, and general and administrative expenses. Total expenses for the six months ended June 30, 2000 remained constant as decreases in depreciation and general and administrative expense were offset by increased operating expense. Depreciation expense decreased due to assets becoming fully depreciated at Cedar Brooke. General and administrative expense decreased due to reduced professional fees associated with managing the Partnership. Included in general and administrative expense for the six months ended June 30, 2000 and 1999, are reimbursements to the General Partner allowed under the Partnership Agreement associated with its management of the Partnership. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. Operating expense increased for the six months ended June 30, 2000 due to increased payroll expenses. As part of the ongoing business plan of the Partnership, the 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 expenses. As part of this plan, the 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 General Partner will be able to sustain such a plan. Liquidity and Capital Resources At June 30, 2000, the Partnership had cash and cash equivalents of approximately $1,311,000 as compared to approximately $2,163,000 at June 30, 1999. For the six months ended June 30, 2000, cash and cash equivalents decreased by approximately $9,268,000 from the Partnership's year ended December 31, 1999. The decrease in cash and cash equivalents is due to approximately $9,344,000 of cash used in financing activities, partially offset by approximately $64,000 of cash provided by operating activities and by approximately $12,000 of cash provided by investing activities. Cash used in financing activities consisted of distributions to the partners. Cash provided by investing activities consisted of net receipts from escrow accounts maintained by the mortgage lender partially offset by property improvements and replacements. The Partnership invests its working capital reserves in a money market account. The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital as defined in the Partnership Agreement. In the event expenditures are made from these reserves, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Reserves, consisting of cash and cash equivalents and tenant security deposits totaling approximately $1,352,000 at June 30, 2000, exceed the Partnership's reserve requirement of approximately $955,000. 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 investment property to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements planned for the Partnership's property are discussed below. The Partnership budgeted approximately $75,000 for capital improvements at Cedar Brooke Apartments for the year 2000 consisting primarily of carpet and vinyl replacement, roof replacements, parking lot enhancements, and appliance replacements. During the six months ended June 30, 2000, the Partnership completed approximately $29,000 of capital improvements at Cedar Brooke Apartments consisting primarily of carpet and vinyl replacement, appliance and countertop replacements, and land improvements. These improvements were funded from replacement reserves. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are currently thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness on Cedar Brooke Apartments of $2,325,000, which carries a stated interest rate of 7.33% (interest only), matures in 2003. The General Partner will attempt to refinance such indebtedness and/or sell the property prior to such maturity date. If the property cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such property through foreclosure. During the six months ended June 30, 2000, the General Partner declared and paid distributions of approximately $9,344,000 (approximately $9,251,000 to the limited partners or $71.82 per unit of depositary receipt). These distributions consisted of sale proceeds from the sale of Phoenix Business Center and Florida #11 Mini Warehouse of approximately $7,738,000 (approximately $7,661,000 to the limited partners or $59.48 per unit of depositary receipt) and approximately $1,606,000 (approximately $1,590,000 to the limited partners or $12.34 per unit of depositary receipt) from operations. No distributions were declared or paid during the six months ended June 30, 1999. The Partnership's distribution policy is reviewed on an annual basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of working capital reserves, and the timing of the debt maturity, refinancing and/or property sale. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures and required working capital reserves to permit further distributions to its partners during the remainder of 2000 or subsequent periods. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. 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 June 30, 2000. SIGNATURES In accordance with the requirements of the Exchange Act, the Partnership caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JOHNSTOWN/CONSOLIDATED INCOME PARTNERS By: CONCAP EQUITIES, INC. Its General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: