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 September 30, 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
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(Exact name of registrant as specified in its charter)
Georgia 13-3139157
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY
ATTN: Andre Anderson 10285
- - --------------------------------------- --------
(Address of principal executive offices) (Zip code)
(212) 526-3237
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(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
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Balance Sheets
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September 30, December 31,
Assets 1995 1994
- - ------------- ---------- ----------
Timber and timberland, at cost $ 5,007,196 $ 5,700,697
Less accumulated depletion (2,491,940) (2,491,940)
Net timber and timberland 2,515,256 3,208,757
Cash and cash equivalents 1,370,435 689,002
Accounts receivable 73,539
Prepaid Insurance 5,922
Due from joint venture 8,494
Investment in joint venture 4,553,454 4,538,504
Total Assets $ 8,439,145 $ 8,524,218
Liabilities and Partners' Capital
- - ---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 22,170 $ 49,505
Due to affiliates 135,662 78,980
Total Liabilities 157,832 128,485
Partners' Capital (Deficit):
General Partner (24,440) (23,296)
Limited Partners (37,191 units outstanding) 8,305,753 8,419,029
Total Partners' Capital 8,281,313 8,395,733
Total Liabilities and Partners' Capital $ 8,439,145 $ 8,524,218
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Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
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Limited General
Partners Partner Total
--------- ------- ---------
Balance at December 31, 1994 $8,419,029 $(23,296) $8,395,733
Net loss (113,276) (1,144) (114,420)
Balance at September 30, 1995 $8,305,753 $(24,440) $8,281,313
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Statements of Operations
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Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
- - ------------- ------- ------- ------- --------
Loss on sales of timberland $(34,454) $ -- $(23,628) $ (8,916)
Interest 16,130 8,441 37,348 19,297
Other 930 850 4,700 4,803
Total Income (17,394) 9,291 18,420 15,184
Expenses
- - -------------
Property operating 28,287 22,930 83,150 65,681
General and administrative 24,763 24,315 64,640 72,983
Total Expenses 53,050 47,245 147,790 138,664
Loss from operations (70,444) (37,954) (129,370) (123,480)
Other Income
Income (loss) from joint venture (7,067) (16,192) 14,950 (28,951)
Net Loss $(77,511) $(54,146) $(114,420) $(152,431)
Net Loss Allocated:
To the General Partner $ (775) $ (541) $ (1,144) $ (1,524)
To the Limited Partners (76,736) (53,605) (113,276) (150,907)
$(77,511) $(54,146) $(114,420) $(152,431)
Per limited partnership unit
(37,191 outstanding) $(2.06) $(1.45) $(3.05) $(4.06)
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Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
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Cash Flows from Operating Activities: 1995 1994
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Net loss $(114,420) $(152,431)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
Loss on sales of timberland 23,628 8,916
(Income) loss from joint venture (14,950) 28,951
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable 73,539 --
Prepaid insurance 5,922 --
Due from joint venture 8,494 --
Accounts payable and accrued expenses (27,335) 3,541
Due to affiliates 56,682 (15,730)
Net cash provided by (used for) operating activities 11,560 (126,753)
Cash Flows from Investing Activities:
Proceeds from sales of timberland 669,873 65,484
Net cash provided by investing activities 669,873 65,484
Net increase (decrease) in cash and cash equivalents 681,433 (61,269)
Cash and cash equivalents at beginning of period 689,002 850,677
Cash and cash equivalents at end of period $1,370,435 $ 789,408
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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 September 30, 1995, the results of operations for the three and
nine months ended September 30, 1995 and 1994, cash flows for the nine months
ended September 30, 1995 and 1994, and the statement of partners' capital
(deficit) for the nine months ended September 30, 1995. Results of operations
for the periods are not necessarily indicative of the results to be expected
for the full year.
No significant event has occurred subsequent to fiscal year 1994 which requires
disclosure in this interim report per Regulation S-X, Rule 10-01, Paragraph
(a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
- - -------------------------------
The Partnership's cash balance at September 30, 1995 was $1,370,435, compared
to $689,002 at December 31, 1994. The increase is primarily attributable to
proceeds from the sale of 1259 acres of timberland during 1995 for gross
proceeds of approximately $690,900. 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 $0 at September 30, 1995. The decrease resulted from the
collection in 1995 of net proceeds from a December 21, 1994 closing on the sale
of timberland from the Gray tract.
Accounts payable and accrued expenses totalled $22,170 at September 30, 1995,
compared to $49,505 at December 31, 1994. The decrease is primarily
attributable to the payment of real estate taxes and professional fees related
to the joint venture. Due to affiliates increased from $78,980 at December 31,
1994 to $135,662 at September 30, 1995. The increase is primarily attributable
to the timing of payments of management fees.
The Partnership completed a sale of 1,185 acres from the Claxton tract early in
the third quarter and entered into a Purchase and Sale Agreement on November 9,
1995, for an additional sale of 1,757 acres from the Claxton tract. This sale
is pending and subject to final approval by the General Partner.
The Partnership currently owns approximately 5,100 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.
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 General Partner has prepared
a land use plan which is being incorporated into a more comprehensive marketing
plan. While preparations are underway for marketing the tract, it is difficult
to predict when conditions will be best suited for a sale as it largely depends
on the pace of development in the area surrounding the tract.
Results of Operations
- - ---------------------
The Partnership's operations resulted in net losses of $77,511 and $114,420,
respectively, for the three and nine months ended September 30, 1995, compared
to net losses of $54,146 and $152,431, respectively, for the corresponding
periods in 1994. The increase in net loss for the three-month period is
primarily attributable to a $34,454 net loss from the sale of 1,185 acres in
the Claxton tract. This was partially offset by higher interest income. The
decrease in net loss for the nine-month period is mainly due to income
generated from the Joint Venture totalling $14,950, compared to a loss
totalling $28,951 during the same period in 1994.
Interest income totalled $16,130 and $37,348, respectively, for the three and
nine months ended September 30, 1995, compared to $8,441 and $19,297,
respectively, for the corresponding periods in 1994. The increases are
primarily attributable to the Partnership's substantially higher average cash
balance due to the receipt of proceeds from the sale of timberland and higher
interest rates.
Property operating expenses were $28,287 and $83,150, respectively, for the
three and nine months ended September 30, 1995, compared to $22,930 and
$65,681, respectively, for the corresponding periods in 1994. The increases
are due to higher management fees attributable to the increase in the appraised
value of the Laurel View tract in December 1994, which is used as part of the
basis for calculating management fees.
General and administrative expenses for the three and nine months ended
September 30, 1995 were $24,763 and $64,640, respectively, compared to $24,315
and $72,983, respectively, for the corresponding periods in 1994. The decrease
for the nine-month period is primarily due to a decline in audit and legal
fees, partially offset by a slight increase in partnership servicing fees for
accounting, investor reporting and tax preparation.
The Partnership recognized a net loss from the Joint Venture of $7,067 and net
income of $14,950 respectively, for the three and nine months ended September
30, 1995, compared to net losses of $16,192 and $28,951, respectively, for the
corresponding periods in 1994. The net loss for the three-month period ended
September 30, 1995 is mainly attributable to a lack of timber sales during the
three-month period and the Joint Venture meeting its normal operating expenses.
The joint venture income for the nine-month period ended September 30, 1995 is
attributable to income from sales of timber from the Laurel View tract during
the nine-month period in excess of ordinary operating expenses. The Joint
Venture losses in 1994 were attributable to a lack of timber sales and the
recording of ordinary operating expenses.
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PART II OTHER INFORMATION
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Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 1995.
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SIGNATURES
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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: November 13, 1995
BY: /s/ Paul L. Abbott
Paul L. Abbott
Director, President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PP&E> 5,007,196
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<NET-INCOME> (114,420)
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