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 June 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 June 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 2,244,678 2,332,145
Prepaid insurance 5,388 4,813
Investment in joint venture 4,533,244 4,546,246
Total Assets $8,362,326 $8,462,220
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 28,707 $ 28,498
Due to affiliates 100,563 139,481
Total liabilities 129,270 167,979
Partners' Capital (Deficit):
General Partner (24,923) (24,311)
Limited Partners (37,191 units outstanding) 8,257,979 8,318,552
Total Partners' Capital 8,233,056 8,294,241
Total Liabilities and Partners' Capital $8,362,326 $8,462,220
Statement of Partners' Capital (Deficit) Limited General
For the six months ended June 30, 1996 Partners Partner Total
Balance at December 31, 1995 $8,318,552 $(24,311) $8,294,241
Net loss (60,573) (612) (61,185)
Balance at June 30, 1996 $8,257,979 $(24,923) $8,233,056
Statements of Operations
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
Income
Gain on sales of timberland $ 0 $10,826 $ 0 $10,826
Interest 29,398 10,983 62,076 21,218
Other 780 1,055 1,495 3,770
Total income 30,178 22,864 63,571 35,814
Expenses
Property operating 21,790 27,575 44,232 54,863
General and administrative 17,640 18,421 67,522 39,877
Total expenses 39,430 45,996 111,754 94,740
Loss from operations (9,252) (23,132) (48,183) (58,926)
Other Income (Loss)
Income (loss) from joint venture (6,461) 6,069 (13,002) 22,017
Net Loss $(15,713) $(17,063) $(61,185) $(36,909)
Net Loss Allocated:
To the General Partner $ (157) $ (170) $ (612) $ (369)
To the Limited Partners (15,556) (16,893) (60,573) (36,540)
$(15,713) $(17,063) $(61,185) $(36,909)
Per limited partnership unit
(37,191 outstanding) $(.42) $(.45) $(1.63) $(.98)
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net loss $(61,185) $(36,909)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Gain on sales of timberland 0 (10,826)
(Income) loss from joint venture 13,002 (22,017)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Accounts receivable 0 73,539
Prepaid insurance (575) 5,076
Due from related parties 0 (1,332)
Accounts payable and accrued expenses 209 (26,669)
Due to affiliates (38,918) 32,026
Net cash provided by (used for) operating activities (87,467) 12,888
Cash Flows From Investing Activities
Proceeds from sales of timberland 0 42,071
Net cash provided by investing activities 0 42,071
Net increase (decrease) in cash and cash equivalents (87,467) 54,959
Cash and cash equivalents, beginning of period 2,332,145 689,002
Cash and cash equivalents, end of period $2,244,678 $743,961
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 June 30, 1996 and the
results of operations for the three and six months ended June 30,
1996 and 1995, and the statements of cash flows for the six
months ended June 30, 1996 and 1995 and the statement of changes
in partners' capital (deficit) for the six months ended June 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 June 30, 1996 of
$2,244,678, compared to $2,332,145 at December 31, 1995. The
decrease is primarily due to the payment of accrued management fees. The
Partnership's cash, along with funds generated from future timber
and timberland sales, are expected to provide sufficient
liquidity for operations. On August 9, 1996, the Partnership
paid a cash distribution to limited partners in the amount of
$1,673,892 or $45.00 per Unit. The distribution was paid out of
the Partnership's cash reserves to Unitholders of record on July
1, 1996. The General Partner will continue to evaluate the
Partnership's cash needs to determine if and when future
distributions should be made.
Due to affiliates decreased from $139,481 at December 31, 1995 to
$100,563 at June 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% interest 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 net losses of $15,713
and $61,185, respectively, for the three and six months ended
June 30, 1996, compared to net losses of $17,063 and $36,909,
respectively, for the corresponding periods in 1995. The higher
net loss for the six-month period is primarily due to a net loss
from the Joint Venture during 1996 compared to net income from
the Joint Venture in 1995, coupled with higher expenses in 1996,
which was partially offset by an increase in interest income.
Interest income totaled $29,398 and $62,076, respectively, for
the three and six months ended June 30, 1996, compared to $10,983
and $21,218, respectively, for the corresponding periods in 1995.
The increases are due primarily to higher average cash balances
in 1996.
Property operating expenses were $21,790 and $44,232 for the
three and six months ended June 30, 1996, compared to $27,575 and
$54,863, 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 six months
ended June 30, 1996 were $17,640 and $67,522, compared to $18,421
and $39,877 for the corresponding periods in 1995. The increase
in the six-month period is primarily due to higher legal and
professional fees in connection with inventory and appraisal work
performed on the tracts.
The Partnership recognized losses from the Joint Venture of
$6,461 and $13,002, respectively, for the three and six months
ended June 30, 1996, compared to income of $6,069 and $22,017,
for the corresponding periods in 1995. The losses for both
periods in 1996 are 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 - No reports on Form 8-K
were filed during the quarter ended June 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: Southern Timber Resources Corp. II
General Partner
Date: August 12, 1996 BY: /s/ Paul L. Abbott
Director and Chief Executive Officer
Date: August 12, 1996 BY: /s/ Robert J. Hellman
President and Chief Financial Officer
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
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<ALLOWANCES> 0
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