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, 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
Georgia 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 September 30, At December 31,
1996 1995
Assets
Timber and timberland, at cost: $3,494,679 $3,494,679
Less accumulated depletion (1,915,663) (1,915,663)
1,579,016 1,579,016
Cash and cash equivalents 546,836 2,332,145
Prepaid insurance 3,918 4,813
Investment in joint venture 4,527,629 4,546,246
Total Assets $6,657,399 $8,462,220
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 34,178 $ 28,498
Due to affiliates 116,113 139,481
Total Liabilities 150,291 167,979
Partners' Capital (Deficit):
General Partner (42,182) (24,311)
Limited Partners (37,191 units outstanding) 6,549,290 8,318,552
Total Partners' Capital 6,507,108 8,294,241
Total Liabilities and Partners' Capital $6,657,399 $8,462,220
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996 Limited General
Partners Partner Total
Balance at December 31, 1995 $8,318,552 $(24,311) $8,294,241
Cash distributions (1,673,892) (16,908) (1,690,800)
Net loss (95,370) (963) (96,333)
Balance at September 30, 1996 $6,549,290 $(42,182) $6,507,108
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Loss on sales of timberland $ - $(34,454) $ - $(23,628)
Interest 17,031 16,130 79,107 37,348
Other 385 930 1,880 4,700
Total income 17,416 (17,394) 80,987 18,420
Expenses
Property operating 21,519 28,287 65,751 83,150
General and administrative 25,430 24,763 92,952 64,640
Total expenses 46,949 53,050 158,703 147,790
Loss from operations (29,533) (70,444) (77,716) (129,370)
Other Income (Loss)
Income (loss) from joint venture (5,615) (7,067) (18,617) 14,950
Net Loss $(35,148) $(77,511) $(96,333) $(114,420)
Net Loss Allocated:
To the General Partner $ (351) $ (775) $ (963) $(1,144)
To the Limited Partners (34,797) (76,736) (95,370) (113,276)
$(35,148) $(77,511) $(96,333) $(114,420)
Per limited partnership unit
(37,191 outstanding) $(.93) $(2.06) $(2.56) $(3.05)
Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities
Net loss $(96,333) $(114,420)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Loss on sales of timberland - 23,628
(Income) loss from joint venture 18,617 (14,950)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Accounts receivable - 73,539
Prepaid insurance 895 5,922
Due from related parties - 8,494
Accounts payable and accrued expenses 5,680 (27,335)
Due to affiliates (23,368) 56,682
Net cash provided by (used for) operating activities (94,509) 11,560
Cash Flows From Financing Activities
Cash distributions (1,690,800) -
Net cash used for financing activities (1,690,800) -
Cash Flows From Investing Activities
Proceeds from sales of timberland - 669,873
Net cash provided by investing activities - 669,873
Net increase (decrease) in cash and cash equivalents (1,785,309) 681,433
Cash and cash equivalents, beginning of period 2,332,145 689,002
Cash and cash equivalents, end of period $ 546,836 $1,370,435
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 September 30, 1996 and the results of operations for the three
and nine months ended September 30, 1996 and 1995, and the statements of cash
flows for the nine months ended September 30, 1996 and 1995 and the statement
of partners' capital (deficit) for the nine months ended September 30, 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 September 30, 1996 of
$546,836, compared to $2,332,145 at December 31, 1995. The decrease is
primarily due to the payment of a cash distribution to the partners on August
9, 1996, in the amount of $1,690,800 or $45.00 per limited partnership Unit.
The General Partner will continue to evaluate the Partnership's cash needs to
determine if and when future distributions should be made. The Partnership's
cash, along with funds generated from future timber and timberland sales, are
expected to provide sufficient liquidity for operations.
Due to affiliates decreased from $139,481 at December 31, 1995 to $116,113 at
September 30, 1996. The decrease is mainly due to the payment of accrued
management fees.
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. The General Partner has begun actively marketing
the Laurel View Tract, together with Southern Timber Partners I, an affiliated
Partnership, which owns a 24% interest in the tract.
During the third quarter, the Partnership entered into negotiations for sales
of individual parcels of the entire Gray tract. One of these sales was
finalized in November 1996, resulting in net proceeds to the Partnership of
$280,545. The remaining sales, which could occur in the fourth quarter, are
pending a land survey. Given this contingency, there can be no assurance the
sales will occur.
Results of Operations
The Partnership's operations resulted in net losses of $35,148 and $96,333, for
the three and nine months ended September 30, 1996, respectively, compared to
net losses of $77,511 and $114,420, for the corresponding periods in 1995. The
lower net loss for the three-month period was due to the loss on sales of
timberland in 1995. The lower net loss for the nine- month period was
primarily due to higher interest income earned in 1996 compared to 1995.
Interest income totaled $17,031 and $79,107, for the three and nine months
ended September 30, 1996, respectively, compared to $16,130 and $37,348, for
the corresponding periods in 1995. The increases are primarily due to higher
average cash balances for the first six months of 1996.
Property operating expenses were $21,519 and $65,751 for the three and nine
months ended September 30, 1996, compared to $28,287 and $83,150, for the
corresponding periods in 1995. The decreases are mainly due to a decline in
management fees.
General and administrative expenses for the three and nine months ended
September 30, 1996 were $25,430 and $92,952, compared to $24,763 and $64,640
for the same periods in 1995. The increase in the nine-month period is
primarily due to higher legal and professional fees in connection with
inventory and appraisal work performed on the Claxton Tract.
The Partnership recognized losses from the Joint Venture of $5,615 and $18,617,
for the three and nine months ended September 30, 1996, compared to a loss from
Joint Venture of $7,067 and income from Joint Venture of $14,950 for the
corresponding periods in 1995. The losses for both the three- and nine-month
periods in 1996 and the three month loss in 1995 are mainly attributable to a
lack of timber sales and the Joint Venture meeting its normal operating
expenses. The income from Joint Venture in the nine-month period in 1995 is
due to sales of timber during the first half of 1995.
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 - No reports on Form 8-K
were filed during the quarter ended September 30, 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. II
General Partner
Date: November 12, 1996 BY: /s/ Paul L. Abbott
Director and Chief Executive Officer
Date: November 12, 1996 BY: /s/ Robert J. Hellman
President and Chief Financial Officer
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 546,836
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 550,754
<PP&E> 3,494,679
<DEPRECIATION> 1,915,663
<TOTAL-ASSETS> 6,657,399
<CURRENT-LIABILITIES> 150,291
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<OTHER-SE> 6,507,108
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<INCOME-PRETAX> (96,333)
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<INCOME-CONTINUING> (96,333)
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<NET-INCOME> (96,333)
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