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, 1996
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
Delaware 13-3139157
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer 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
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 ____
Balance Sheets At March 31, At December 31,
1996 1995
Assets
Timber and timberland, at cost: $3,494,679 $3,494,679
Less accumulated depreciation (1,915,663) (1,915,663)
1,579,016 1,579,016
Cash and cash equivalents 2,256,804 2,332,145
Prepaid insurance 2,750 4,813
Investment in joint venture 4,539,705 4,546,246
Total Assets $8,378,275 $8,462,220
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $43,993 $28,498
Due to affiliates 85,513 139,481
Total liabilities 129,506 167,979
Partners' Capital (Deficit):
General Partner (24,766) (24,311)
Limited Partners (37,191 units outstanding) 8,273,535 8,318,552
Total Partners' Capital 8,248,769 8,294,241
Total Liabilities and Partners' Capital $8,378,275 $8,462,220
Statement of Partners' Capital (Deficit) Limited General
For the three months ended March 31, 1996 Partners Partner Total
Balance at December 31, 1995 $8,318,552 $(24,311) $8,294,241
Net loss (45,017) (455) (45,472)
Balance at March 31, 1996 $8,273,535 $(24,766) $8,248,769
Statements of Operations
For the three months ended March 31, 1996 1995
Income
Interest $32,678 $10,235
Other 715 2,715
Total income 33,393 12,950
Expenses
Property operating 22,442 27,288
General and administrative 49,882 21,456
Total expenses 72,324 48,744
Loss from operations (38,931) (35,794)
Other Income (Loss)
Income (loss) from joint venture (6,541) 15,948
Net Loss $(45,472) $(19,846)
Net Loss Allocated:
To the General Partner $(455) $(199)
To the Limited Partners (45,017) (19,647)
$(45,472) $(19,846)
Per limited partnership unit
(37,191 outstanding) $(1.21) $(.53)
Statements of Cash Flows
For the three months ended March 31, 1996 1995
Cash Flows From Operating Activities
Net loss $(45,472) $(19,846)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
(Income) loss from joint venture 6,541 (15,948)
Increase (decrease) in cash arising from changes in
operating assets and liabilities
Accounts receivable - 69,359
Prepaid insurance 2,063 2,538
Due from Joint Venture - (1,332)
Accounts payable and accrued expenses 15,495 (28,761)
Due to affiliates (53,968) 1,989
Net cash provided by (used for) operating activities (75,341) 7,999
Net increase (decrease) in cash and cash equivalents (75,341) 7,999
Cash and cash equivalents, beginning of period 2,332,145 689,002
Cash and cash equivalents, end of period $2,256,804 $697,001
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1995 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, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 and 1995 and the statement of partners'
capital (deficit) for the three months ended March 31, 1996. 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 1995, and no
material contingencies exist which would require 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 had cash and cash equivalents at March 31, 1996 of $2,256,804,
compared to $2,332,145 at December 31, 1995. The decrease is primarily due to
the payment of management fees accrued at December 31, 1995. The Partnership's
cash, along with funds generated from future timber and timberland sales, are
expected to provide sufficient liquidity for operations.
Accounts payable and accrued expenses totaled $43,993 at March 31, 1996,
compared to $28,498 at December 31, 1995. The increase is primarily
attributable to the accrual of legal fees and real estate taxes and the timing
of payment for printing expenses. Due to affiliates decreased from $139,481 at
December 31, 1995 to $85,513 at March 31, 1996. The decrease is due to the
partial payment of management fees accrued at December 31, 1995.
The Partnership currently owns approximately 2,746 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 Laurel
View tract could be sold as timberland, its greater value would be realized if
sold as a development site due to its coastal location and close proximity to
major interstate highways. It is expected that the General Partner will begin
actively marketing the tract during 1996.
Results of Operations
The Partnership's operations resulted in a net loss of $45,472 for the three
months ended March 31, 1996, compared to a net loss of $19,846, for the
corresponding period in 1995. The increase in net loss is due to net loss from
the Joint Venture during 1996 compared to net income from the Joint Venture in
1995, coupled with increases in both legal fees and professional fees in 1996.
Interest income totaled $32,678 for the three months ended March 31, 1996,
compared to $10,235, for the corresponding period in 1995. The increase is due
primarily to a higher cash balance in 1996 compared to the corresponding period
in 1995.
Property operating expenses were $22,442 for the three months ended March 31,
1996, compared to $27,288 for the corresponding period in 1995. The decrease
is due to a decline in management fees.
General and administrative expenses for the three months ended March 31, 1996
were $49,882, compared to $21,456 for the corresponding period in 1995. The
increase is primarily due to higher legal fees and higher professional fees in
connection with inventory work performed on the Claxton tract.
The Partnership recognized a loss from the Joint Venture of $6,541 for the
three months ended March 31, 1996, compared to income of $15,948 for the
corresponding period in 1995. The loss for the period ended March 31, 1996 is
mainly attributable to a lack of timber sales and the Joint Venture meeting its
normal operating expenses.
Part II Other Information
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 - The following report on
Form 8-K was filed during the quarter ended March 31, 1996:
On February 16, 1996, based upon, among other things,
the advice of Partnership counsel, Skadden, Arps,
Slate, Meagher & Flom, the General Partner adopted a
resolution that states, among other things, if a Change
of Control (as defined below) occurs, the General
Partner may distribute the Partnership's cash balances
not required for its ordinary course day-to-day
operations. "Change of Control" means any purchase or
offer to purchase more than 10% of the Units that is
not approved in advance by the General Partner. In
determining the amount of the distribution, the General
Partner may take into account all material factors. In
addition, the Partnership will not be obligated to make
any distribution to any partner, and no partner will be
entitled to receive any distribution, until the General
Partner has declared the distribution and established a
record date and distribution date for the distribution.
The Partnership filed a Form 8-K disclosing this
resolution on February 26, 1996.
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. 2
General Partner
Date: May 6, 1996 BY: /s/ Paul L. Abbott
Director, President and
Chief Financial Officer
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<PERIOD-END> Mar-31-1996
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