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, 1997
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
State or Other Jurisdiction of 13-3139157
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,
1997 1996
Assets
Timber and timberland, at cost: $ -- $ 1,160,233
Cash and cash equivalents 823,361 914,981
Prepaid insurance 5,562 2,450
Due from related party 31,850 31,850
Investment in joint venture 4,494,813 4,517,604
Total Assets $ 5,355,586 $ 6,627,118
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 29,425 $ 34,800
Due to affiliates 64,667 66,535
Total Liabilities 94,092 101,335
Partners' Capital (Deficit):
General Partner (41,996) (41,996)
Limited Partners (37,191 units outstanding) 5,303,490 6,567,779
Total Partners' Capital 5,261,494 6,525,783
Total Liabilities and Partners' Capital $ 5,355,586 $ 6,627,118
Statement of Partners' Capital (Deficit)
General Limited
For the six months ended June 30, 1997 Partner Partners Total
Balance at December 31, 1996 $ (41,996) $ 6,567,779 $ 6,525,783
Cash distributions (16,154) (1,599,213) (1,615,367)
Net income 16,154 334,924 351,078
Balance at June 30, 1997 $ (41,996) $ 5,303,490 $ 5,261,494
Statements of Operations Three months Six Months
ended June 30, ended June 30,
1997 1996 1997 1996
Income
Gain on sales of timberland $ 433,981 $ -- $ 433,981 $ --
Interest 13,608 29,398 25,414 62,076
Other 1,360 780 2,400 1,495
Total income 448,949 30,178 461,795 63,571
Expenses
Property operating 15,490 21,790 34,660 44,232
General and administrative 29,451 17,640 53,266 67,522
Total expenses 44,941 39,430 87,926 111,754
Income (loss) from operations 404,008 (9,252) 373,869 (48,183)
Other Loss
Loss from joint venture (9,110) (6,461) (22,791) (13,002)
Net Income (Loss) $ 394,898 $ (15,713) $ 351,078 $ (61,185)
Net Income (Loss) Allocated:
To the General Partner $ 16,592 $ (157) $ 16,154 $ (612)
To the Limited Partners 378,306 (15,556) 334,924 (60,573)
$ 394,898 $ (15,713) $ 351,078 $ (61,185)
Per limited partnership unit
(37,191 outstanding) $10.17 $(.42) $9.01 $(1.63)
Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net income (loss) $ 351,078 $ (61,185)
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Gain on sales of timberland (433,981) --
Loss from joint venture 22,791 13,002
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Prepaid insurance (3,112) (575)
Accounts payable and accrued expenses (5,375) 3,209
Due to affiliates (1,868) (41,918)
Net cash used for operating activities (70,467) (87,467)
Cash Flows From Investing Activities
Proceeds from sales of timberland 1,594,214 --
Net cash provided by investing activities 1,594,214 --
Cash Flows From Financing Activities
Cash distributions paid (1,615,367) --
Net cash used for financing activities (1,615,367) --
Net decrease in cash and cash equivalents (91,620) (87,467)
Cash and cash equivalents, beginning of period 914,981 2,332,145
Cash and cash equivalents, end of period $ 823,361 $2,244,678
Notes to the Financial Statements
The unaudited interim financial statements should be read in
conjunction with the Partnership's annual 1996 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, 1997 and the
results of operations for the three and six months ended June 30,
1997 and 1996, cash flows for the six months ended June 30, 1997
and 1996 and the statement of partners' capital (deficit) for the
six months ended June 30, 1997. Results of operations for the
period are not necessarily indicative of the results to be
expected for the full year.
Reclassification Certain prior year amounts have been
reclassified to conform to the current year's presentation.
The following significant event has occurred subsequent to fiscal
year 1996, which requires disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5).
On April 21, 1997 the Partnership completed a combined sale of
the entire Claxton and Southern Timberland Tracts for net
proceeds of $1,594,214 and a net gain of approximately $434,000.
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources
On April 21, 1997 the Partnership completed a combined sale of
the entire Claxton and Southern Timberland Tracts for net
proceeds of $1,594,214 and a net gain of approximately $434,000.
On April 30, 1997, the Partnership paid a cash distribution to
the limited partners in the amount of $1,599,213, or $43 per
Unit, representing proceeds from the sale of the Claxton and
Southern Timberland Tracts.
The Partnership's sole remaining timberland asset is a 76%
interest in a joint venture (the "Joint Venture") which owns the
Laurel View Tract, a 1,709 acre tract located near Savannah,
Georgia. The remaining 24% interest in the Joint Venture is
owned by an affiliated partnership, Southern Timber Partners 1.
The partnerships began actively marketing the parcel for sale,
and during 1996 engaged the services of CB Commercial, a national
commercial real estate brokerage firm. The General Partner has
been in discussions with several possible buyers, but to date, no
final agreements have been reached. Although the Partnership
will attempt to sell the Laurel View Tract during 1997, there can
be no assurance a sale will occur within this time frame or that
any particular price will be obtained.
The Partnership had cash and cash equivalents at June 30, 1997 of
$823,361 compared to $914,981 at December 31, 1996. The decrease
is primarily due to distributions to the limited partners and the
payment of property operating and general and administrative
expenses in excess of interest and other income in 1997. The
Partnership's cash, along with funds generated from future
timberland sales from the Joint Venture, are expected to provide
sufficient liquidity for operations.
Accounts payable and accrued expenses totaled $29,425 at
June 30, 1997, compared to $34,800 at December 31, 1996. The
decrease is primarily attributable to the payment of audit,
professional fees and postage expenses.
Results of Operations
The Partnership's operations resulted in net income of $394,898
and $351,078, respectively, for the three and six months ended
June 30, 1997, compared to net losses of $15,713 and $61,185,
respectively, for the corresponding periods in 1996. The change
from net loss to net income for the three-month period is
primarily due to an increase in total income resulting from the
gain on the sale of the Claxton and Southern Timberland Tracts,
which was partially offset by an increase in total expenses and
loss from the Joint Venture. The change from net loss to net
income for the six-month period is primarily due to an increase
in total income resulting from the gain on the sale of the
Claxton and Southern Timberland Tracts and a decrease in total
expenses, which was partially offset by an increase in loss from
the Joint Venture.
The Partnership generated total income of $448,949 and $461,795
for the three and six months ended June 30, 1997, respectively,
compared to total income of $30,178 and $63,571 for the
corresponding periods in 1996. The increases in total income for
the 1997 periods are primarily attributable to the gain on sales
of timberland, which was partially offset by decreases in
interest income. Interest income totaled $13,608 and $25,414 for
the three and six months ended June 30, 1997, respectively,
compared to $29,398 and $62,076, respectively, for the
corresponding periods in 1996. The decreases are primarily the
result of a lower average cash balances in 1997.
Total expenses were $44,941 and $87,926 for the three and six
months ended June 30, 1997, compared to $39,430 and $111,754 for
the corresponding periods in 1996. The increase for the
three-month period is primarily the result of higher general and
administrative expenses, which were partially offset by lower
property operating expenses. The decrease for the six-month
period is primarily the result of lower property operating and
general and administrative expenses. General and administrative
expenses for the three and six months ended June 30, 1997 were
$29,451 and $53,266, respectively, compared to $17,640 and
$67,522 for the same periods in 1996. During the 1997 periods,
certain expenses incurred by an unaffiliated third party service
provider in servicing the Partnership, which were voluntarily
absorbed by affiliates of the General Partner in prior periods,
were reimbursable to the General Partner and its affiliates. For
the six-month period, these expenses were partially offset by
lower appraisal and other professional fees, resulting in a
decrease in general and administrative expenses for the 1997
period.
Property operating expenses were $15,490 and $34,660 for the
three and six months ended June 30, 1997, respectively, compared
to $21,790 and $44,232 for the corresponding periods in 1996.
The decreases are mainly due to a decline in real estate fees for
1997 due to the sale of timberland.
The Partnership recognized losses from joint venture of $9,110
and $22,791 for the three and six months ended June 30, 1997,
respectively, compared with losses from joint venture of $6,461
and $13,002 for the corresponding periods in 1996. The increased
losses from joint venture are mainly attributable to the payment
of joint venture general and administrative expenses in 1997,
whereas no such costs were incurred during 1996.
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, 1997.
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: August 13, 1997 BY: /s/Paul L. Abbott
Director and Chief Executive Officer
Date: August 13, 1997 BY: /s/Robert J. Hellman
President and Chief Financial Officer
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<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 823,361
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<RECEIVABLES> 31,850
<ALLOWANCES> 0
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