-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RagdhsLqeSYa4Lva5JuXJaZpziP0mQAydJjARa82KEhCo9xzo5EhMchDoHTFoCfy EtDdyoY6esi1IJMvFrXekw== 0000812431-96-000011.txt : 19961029 0000812431-96-000011.hdr.sgml : 19961029 ACCESSION NUMBER: 0000812431-96-000011 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961028 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSTOWN CONSOLIDATED INCOME PARTNERS 2 CENTRAL INDEX KEY: 0000812431 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 943032501 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16682 FILM NUMBER: 96648481 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391591 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 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, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period.........to......... Commission file number 0-16682 JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 (Exact name of small business issuer as specified in its charter) California 94-3032501 (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) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996 Assets Cash and cash equivalents $ 606 Accounts receivable 4 Escrows for taxes 45 Other assets 5 Investment properties: Land $ 650 Buildings and related personal property 1,537 2,187 Less accumulated depreciation (466) 1,721 $2,381 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 1 Accrued taxes 36 Other liabilities 38 Partners' Capital (Deficit) General partner $ (37) Corporate limited partners - on behalf of the Unitholders - (67,814 Units issued and outstanding) 2,343 2,306 $2,381 See Accompanying Notes to Financial Statements b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 102 $ 99 $ 303 $ 275 Other income 10 11 28 123 Total revenues 112 110 331 398 Expenses: Operating 24 25 66 71 General and administrative 11 19 51 63 Maintenance 6 5 13 17 Depreciation 19 20 59 60 Property taxes 12 11 36 35 Total expenses 72 80 225 246 Net income $ 40 $ 30 $ 106 $ 152 Net income allocated to general partner (1%) $ -- $ -- $ 1 $ 1 Net income allocated to limited partners (99%) 40 30 105 151 $ 40 $ 30 $ 106 $ 152 Net income per Unit of Depositary Receipts $ .59 $ .44 $1.55 $ 2.23 See Accompanying Notes to Financial Statements
c) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Unitholders Units of Units of Depositary Depositary General Receipts Receipts Partner (Note A) Total Original capital contributions 68,854 $ 1 $6,885 $6,886 Partners' capital (deficit) at December 31, 1995 67,814 $ (38) $2,238 $2,200 Net income for the nine months ended September 30, 1996 -- 1 105 106 Partners' capital (deficit) at September 30, 1996 67,814 $ (37) $2,343 $2,306 See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net income $ 106 $ 152 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 59 60 Change in accounts: Accounts receivable 2 -- Escrows for taxes (36) (28) Other assets 8 1 Accounts payable (4) -- Accrued taxes 36 35 Other liabilities 12 18 Net cash provided by operating activities 183 238 Cash flows from investing activities: Property improvements and replacements (1) (1) Purchase of investments -- (453) Proceeds from sale of investments -- 656 Net cash (used in) provided by investing activities (1) 202 Cash flows used in financing activities: Distributions to partners -- (200) Net increase in cash and cash equivalents 182 240 Cash and cash equivalents at beginning of period 424 152 Cash and cash equivalents at end of period $ 606 $ 392 See Accompanying Notes to Financial Statements JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of Johnstown/Consolidated Income Partners/2 (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 nine months ended September 30, 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 financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Units of Depositary Receipts Johnstown/Consolidated Depositary Corporation/2 (the "Corporate Limited Partner"), an affiliate of the former general partner, serves as a depositary of certain Units of Depositary Receipts ("Units"). The Units represent economic rights attributable to the limited partnership interests in the Partnership and entitle the holders thereof ("Unitholders") to certain economic benefits, allocations and distributions of the Partnership. Note B - Transactions with Affiliated Parties The Partnership has paid property management fees based upon collected gross rental revenues for property management services in each of the nine months ended September 30, 1996 and 1995. Property management fees of approximately $19,000 and $18,000 were paid to affiliates of the General Partner for the nine months ended September 30, 1996 and 1995, respectively. These fees are included in operating expenses. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $20,000 and $28,000 were paid to the General Partner and its affiliates for the nine months ended September 30, 1996 and 1995, respectively. In July 1995, the Partnership began insuring its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner who receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. NOTE C - COMMITMENT The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 3% 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. Cash and cash equivalents of approximately $606,000 at September 30, 1996, exceeded the Partnership's reserve requirement of approximately $73,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment property consists of a two-thirds interest in a mini-warehouse. The following table sets forth the average occupancy of the property for the nine months ended September 30, 1996 and 1995: Average Occupancy 1996 1995 Florida #6 Mini-Warehouse 92% 91% Lauderhill, Florida The Partnership realized net income of approximately $40,000 and $106,000 for the three and nine months ended September 30, 1996, compared to net income of $30,000 and $152,000 for the three and nine months ended September 30, 1995. The decrease in net income is due primarily to a decrease in other income mitigated by an increase in rental revenue. Rental income increased for the three and nine months ended September 30, 1996, compared to the corresponding periods of 1995 as a result of an increase in rental rates at the Partnership's investment property. Other income decreased due to the non-recurring nature of the dividends received on the Partnership's investment in Southmark Preferred Stock during the second quarter of 1995. Operating expenses decreased due to reduced personnel costs. General and administrative expenses decreased primarily due to reduced general partner reimbursements. Maintenance expense decreased due to reduced yard and grounds contract fees. 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 (see Part II "Item 4"). At September 30, 1996, the Partnership held cash and cash equivalents of approximately $606,000 compared to approximately $392,000 at September 30, 1995. Net cash provided by operations decreased primarily due to the partnership receiving no dividend income from the Southmark stock. Net cash provided by investing activities decreased due to the absence of proceeds from the sale of investments in 1996. The decrease in investing activities was due to the Partnership investing in shorter term cash equivalents during 1996 rather than longer term securities. Net cash used in financing activities decreased due to the absence of Partner distributions for the nine months ended September 30, 1996. 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. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. As part of the Partnership's ongoing attempt to maximize the return to the Unitholders, the Partnership is exploring the possibility of selling the commercial property in which it has invested (see Part II "Item 4"). No cash distributions were declared or paid during the nine months ended September 30, 1996, compared to cash distributions of approximately $200,000 which were declared and paid during the nine months ended September 30, 1995. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On September 20, 1996, the General Partner distributed a consent solicitation to the Limited Partners to modify the Partnership Agreement for a certain proposal (the "Proposal") as described in the proxy statement. The Registrant filed a definitive Schedule 14A Information Statement with the Securities and Exchange Commission concurrent with the distribution of the consent solicitation. The General Partner formulated the Proposal to amend the Partnership Agreement to authorize the General Partner to sell all or substantially all of the Partnership's assets to unaffiliated entities pursuant to a binding agreement to be entered into on or before June 30, 1997, at a price of not less than $2,000,000. A consequence of the closing of such a sale would likely be the dissolution and termination of the Partnership. The amendment will be approved when, and if, properly completed, unrevoked consents with respect to such sale are signed by holders of record on the record date (September 19, 1996) of at least a majority of the Units then outstanding and such consents are delivered to the Partnership, provided the requisite consents are so delivered by the expiration date (November 22, 1996). The General Partner has an option to extend the expiration date for a period of up to an additional sixty days. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. Reports on Form 8-K None. 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. JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2 By: CONCAP EQUITIES, INC. 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: October 28, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Johnstown Consolidated Income Partners/2 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000812431 JOHNSTOWN CONSOLIDATED INCOME PARTNERS/2 1,000 9-MOS DEC-31-1996 SEP-30-1996 606 0 4 0 0 0 2,187 466 2,381 0 0 0 0 0 2,306 2,381 0 331 0 0 225 0 0 0 0 0 0 0 0 106 1.55 0 The Partnership has an unclassified balance sheet. Multiplier is 1.
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