UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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: 0-11894
SOUTHERN TIMBER PARTNERS 2
(Exact name of registrant as specified in its charter)
Georgia 13-3139157
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at March 31, 1995 and December 31, 1994 3
Statement of Partners' Capital for the three months
ended March 31, 1995 3
Statements of Operations for the three months ended
March 31, 1995 and 1994 4
Statements of Cash Flows for the three months ended
March 31, 1995 and 1994 4
Notes to the Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II OTHER INFORMATION
Items 1-6 7
Signatures 8
Balance Sheets
March 31, December 31,
Assets 1995 1994
Timber and timberland, at cost $ 5,700,697 $ 5,700,697
Less-accumulated depletion (2,491,940) (2,491,940)
Net timber and timberland 3,208,757 3,208,757
Cash and cash equivalents 697,001 689,002
Accounts receivable 4,180 73,539
Prepaid insurance 3,384 5,922
Due from joint venture 9,826 8,494
Investment in joint venture 4,554,452 4,538,504
Total Assets $ 8,477,600 $ 8,524,218
Liabilities and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 20,744 $ 49,505
Due to affiliates 80,969 78,980
Total Liabilities 101,713 128,485
Partners' Capital (Deficit):
General Partner (23,495) (23,296)
Limited Partners
(37,191 units outstanding) 8,399,382 8,419,029
Total Partners' Capital 8,375,887 8,395,733
Total Liabilities
and Partners' Capital $ 8,477,600 $ 8,524,218
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1995
General Limited Total
Partner Partners Partners
Balance at December 31, 1994 $(23,296) $8,419,029 $8,395,733
Net loss (199) (19,647) (19,846)
Balance at March 31, 1995 $(23,495) $8,399,382 $8,375,887
Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Interest $ 10,235 $ 5,352
Other 2,715 3,388
Total Income 12,950 8,740
Expenses
Property operating 27,288 21,403
General and administrative 21,456 29,972
Total Expenses 48,744 51,375
Loss from operations (35,794) (42,635)
Other Income (Loss)
Income (loss) from joint venture 15,948 (6,363)
Net Loss $ (19,846) $ (48,998)
Net Loss Allocated:
To the General Partner $ (199) $ (490)
To the Limited Partners (19,647) (48,508)
$ (19,846) $ (48,998)
Per limited partnership unit
(37,191 outstanding) $ (.53) $ (1.30)
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (19,846) $ (48,998)
Adjustments to reconcile net loss
to net cash provided by
(used for) operating activities:
(Income) loss from joint venture (15,948) 6,363
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Accounts receivable 69,359 -
Prepaid insurance 2,538 -
Due from joint venture (1,332) -
Accounts payable and accrued
expenses (28,761) (9,257)
Due to affiliates 1,989 (29,012)
Net cash provided by (used for)
operating activities 7,999 (80,904)
Net increase (decrease) in cash
and cash equivalents 7,999 (80,904)
Cash and cash equivalents
at beginning of period 689,002 850,677
Cash and cash equivalents at end of period $ 697,001 $ 769,773
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of March 31, 1995 and the results of operations and cash flows for
the three months ended March 31, 1995 and 1994 and statement of changes in
partners' capital (deficit) for the three months ended March 31, 1995. Results
of operations for the period are not necessarily indicative of the results to
be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
The Partnership's cash balance at March 31, 1995 was $697,001, largely
unchanged from $689,002 at December 31, 1994. The Partnership's cash, along
with funds generated from future timber and timberland sales, are expected to
provide sufficient liquidity for operations.
The Partnership's accounts receivable balance decreased from $73,539 at
December 31, 1994 to $4,180 at March 31, 1995. The decrease resulted from the
collection in 1995 of net proceeds from the December 21, 1994 closing on the
sale of timberland on the Gray tract.
The Partnership currently owns approximately 6,400 acres of timberland
outright, in addition to a 76% share in the Laurel View tract (the "Joint
Venture"), a 1,709 acre tract located near Savannah, Georgia. While the
long-term trend for timber and timberland prices has been upward, prices are
subject to cyclical fluctuations. Despite the general strengthening of the
real estate construction market, the market for raw land in the area where the
Partnership's tracts are located continues to remain stagnant. As a result,
the Partnership is only pursuing select timberland sales at this time. It is
likely that any increase in the land's value will be largely attributable to
the aging of the premerchantable timber stands.
While the Laurel View tract could be sold as timberland, its primary value
would be realized if sold as a development site due to its coastal location and
close proximity to major interstate highways. The initial step in marketing
the tract, the formulation of a land use plan, was recently completed. The
plan is currently being incorporated into a more comprehensive marketing plan.
Results of Operations
The Partnership's operations resulted in net losses of $19,846 and $48,998 for
the periods ended March 31, 1995 and 1994, respectively. The decrease in net
loss is primarily attributable to income generated from the Joint Venture.
Interest income totalled $10,235 for the period ended March 31, 1995, compared
to $5,352 for the corresponding period in 1994. The increase is primarily
attributable higher interest rates in 1995 earned on the Partnership's average
cash balance.
The Partnership recognized income from the Joint Venture of $15,948 for the
period ended March 31, 1995 as compared to a loss of $6,363 for the
corresponding period in 1994. The joint venture income in 1995 is attributable
to income from timber sales recognized in the first quarter of 1995 in excess
of ordinary operating expenses. The joint venture loss in 1994 was
attributable to a lack of timber sales and the recording of ordinary operating
expenses.
Property operating expenses were $27,288 for the period ended March 31, 1995 as
compared to $21,403 for the corresponding period in 1994. The increase is due
to higher management fees attributable to the increase in the appraised value
of the Laurel View tract at December 1994.
General and administrative expenses for the periods ended March 31, 1995 and
1994 were $21,456 and $29,972, respectively. The decrease is primarily due to
a decline in audit and legal fees.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on
Form 8-K were filed during the
quarter ended March 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOUTHERN TIMBER PARTNERS 2
BY: TIMBER RESOURCES CORP. II
General Partner
Date: May 12, 1995
BY: /s/Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President and
Chief Financial Officer
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