<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1996
--------------
Commission file number 0-12523
-------
JES PROPERTIES LIMITED PARTNERSHIP
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0756362
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 10025, Federal Station
Greenville, South Carolina 29603
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 242-0029
- --------------------------------------------------- --------------
Former name, former address and former fiscal year,
- ---------------------------------------------------
if changed since last report: N/A
- ---------------------------- ---
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 and (2) has been
subject to the filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
JES Properties Limited Partnership
Condensed Balance Sheet (Unaudited)
March 31, 1996
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 18,015
Note receivable, including interest of $44,238 (Note 3) 977,100
Less: Sales commissions payable, including interest of $19,747 (159,419)
Unamortized discount (8,150)
Deferred gross profit on sale (809,531)
---------
-0-
---------
Total assets $ 18,015
=========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Accounts payable $ 7,500
Partners' capital (deficit):
General partners 13,260
Limited partners (2,745)
---------
10,515
---------
Total liabilities and partners' capital (deficit) $ 18,015
=========
</TABLE>
See accompanying notes.
<PAGE> 3
JES Properties Limited Partnership
Condensed Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
-------------------------
<S> <C> <C>
Interest income $ 3 $ 370
Expenses:
Administrative, including management fees of $1,250
(1996 and 1995) to the general partners 18,812 17,696
-------------------------
Net (loss) $(18,809) $(17,326)
=========================
Net (loss) attributable to general partners (1.5%) $ (282) $ (260)
Net (loss) attributable to limited partners (98.5%) (18,527) (17,066)
-------------------------
(18,809) $(17,326)
=========================
Net (loss) per limited partnership unit (599,868 units) $ (.03) $ (.03)
=========================
</TABLE>
See accompanying notes.
<PAGE> 4
JES Properties Limited Partnership
Condensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
-------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $(18,809) $ (17,326)
Increase in accounts receivable - (9,500)
Increase in accounts payable 7,500 5,340
-------------------------
Net cash used in operating activities (11,309) (21,486)
FINANCING ACTIVITIES
Distributions paid (2,765) -
-------------------------
Net cash used in financing activities (2,765) -
-------------------------
(Decrease) in cash and cash equivalents (14,074) (21,486)
Cash and cash equivalents at beginning of period 32,089 24,434
-------------------------
Cash and cash equivalents at end of period $ 18,015 $ 2,948
=========================
</TABLE>
See accompanying notes.
<PAGE> 5
JES Properties Limited Partnership
Notes to Condensed Financial Statements (Unaudited)
March 31, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month period
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information, refer
to the financial statements and footnotes thereto included in the Partnership's
annual report on Form 10-KSB for the year ended December 31, 1995.
2. INCOME TAXES
The entity has been treated as a partnership for income tax purposes.
Accordingly, no taxes are provided on income of the Partnership. Taxable
income or loss of the Partnership is reported in the income tax returns of its
partners.
3. SALE OF PARTNERSHIP ASSETS AND NOTE RECEIVABLE
In connection with the sale of its assets to Horsham Properties Limited, the
Partnership received cash of $3,800,000 and a $3,820,000 purchase money
promissory note ("the Note"). The Note bears interest at a stated rate of
6.97% per annum with interest only payments due on August 1, of 1988 G 1990.
Pursuant to the terms of the note, Horsham exercised its option to defer the
interest payments due on August 1, 1988, 1989 and 1990. Interest at 11.97% per
annum accrues on any deferred interest payment. On August 1, 1991 and
continuing each year on August 1 until the Note is paid in full, Horsham is to
pay the Partnership consecutive annual installments of $1,000,000 (or such
lesser sum as required to fully satisfy the Note), which shall be applied first
to interest currently due and payable, second to accrued but unpaid interest
and third to principal. On August 16, 1991, 1992, 1993, 1994 and 1995 the
Partnership received the first five $1,000,000 payments from Horsham.
<PAGE> 6
JES Properties Limited Partnership
Notes to Condensed Financial Statements (Unaudited) (continued)
3. SALE OF PARTNERSHIP ASSETS AND NOTE RECEIVABLE (CONTINUED)
Profits related to the note receivable are being deferred under the cost
recovery method of accounting for sales of real estate. Interest income on the
note receivable and amortization of the present value discount are credited to
deferred gross profit and interest expense on the unpaid sales commissions is
charged to deferred gross profit in accordance with the cost recovery method.
Sales commissions and related interest are payable only out of collections on
the note receivable and these funds have been placed in an interest-bearing
escrow account for the payment of these commissions pending resolution of the
litigation described in Note 4.
Interest income on the Note is being accrued at an imputed interest rate of
9.5% and deferred in accordance with the cost recovery methods of accounting
for sales of real estate.
4. LITIGATION
On May 10, 1989, a group of 17 Limited Partners, derivatively on behalf of the
Partnership, filed a suit against the Partnership's General Partners and
Padmar, Inc. in the Court of Common Pleas, Greenville, South Carolina. The
plaintiffs allege, among other things, that the General Partners did not have
authority to consummate the sale to Horsham on August 18, 1987. All defendants
denied plaintiffs' allegations, and the General Partners, by counterclaim,
sought indemnification from the Partnership of their expenses and attorneys'
fees incurred in defense of the suit, which through March 31, 1996 are in
excess of $450,000.
On November 13, 1995, the South Carolina Court of Appeals affirmed the trial
court's finding that the General Partners lacked authority to consummate the
sale, but reduced the damages awarded by the lower court against the General
Partners and Padmar from $6,868,162 to $1,317,581. Defendants intend to file a
Petition for Certiorari with the South Carolina Supreme Court seeking to have
that court review and reverse the Appellate Court's decision.
The defendants continue to believe that their defenses and their counterclaim
are meritorious; but the ultimate outcome of the litigation and its affect on
the Partnership cannot be predicted with certainty.
<PAGE> 7
[ERNST & YOUNG LLP LOGO] - Two Insignia Financial Plaza - Phone: 864 242 5740
Suite 800
P.O. Box 10647
Greenville
South Carolina 29603
Independent Accountants' Review Report
The Partners
JES Properties Limited Partnership
We have reviewed the accompanying condensed balance sheet of JES Properties
Limited Partnership as of March 31, 1996, and the related condensed statements
of operations for the three-month periods ended March 31, 1996 and 1995 and the
condensed statements of cash flows for the three-month periods ended March 31,
1996 and 1995. These financial statements are the responsibility of the
Partnership's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
April 18, 1996
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Administrative expenses have increased as the professional fees incurred for
the preparation of the Partnership's Federal and state tax returns and the
annual audit have increased. Should additional funds be needed to meet
operating expenses, prior to the receipt of the next note payment from Horsham,
the Partnership will seek to re-establish a short-term line of credit with a
bank.
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements at March 31, 1996, and for the three-month period then
ended, have been reviewed, prior to filing, by independent auditors, Ernst &
Young LLP, and their report is included herein.
<PAGE> 9
Part II. Other Information
Item 1. Legal Proceedings
On May 10, 1989, a group of 17 Limited Partners, derivatively on behalf of the
Partnership, filed a suit against the Partnership's General Partners and
Padmar, Inc. in the Court of Common Pleas, Greenville, South Carolina. The
plaintiffs allege, among other things, that the General Partners did not have
authority to consummate the sale to Horsham on August 18, 1987. All defendants
denied plaintiffs' allegations, and the General Partners, by counterclaim,
sought indemnification from the Partnership of their expenses and attorneys'
fees incurred in defense of the suit, which through March 31, 1996 are in
excess of $450,000.
On November 13, 1995, the South Carolina Court of Appeals affirmed the trial
court's finding that the General Partners lacked authority to consummate the
sale, but reduced the damages awarded by the lower court against the General
Partners and Padmar from $6,868,162 to $1,317,581. Defendants intend to file a
Petition for Certiorari with the South Carolina Supreme Court seeking to have
that court review and reverse the Appellate Court's decision.
The defendants continue to believe that their defenses and their counterclaim
are meritorious; but the ultimate outcome of the litigation and its affect on
the Partnership cannot be predicted with certainty.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
27 Financial Data Schedule (for SEC use only)
<PAGE> 10
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.
JES PROPERTIES LIMITED PARTNERSHIP
By: /s/ Kenneth R. Padgett, Jr.
---------------------------------------------------
Kenneth R. Padgett, Jr.
Managing General Partner
May 6, 1996
---------------------------------------------------
(Date)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1996 FORM 10QSB FOR JES PROPERTIES LIMITED PARTNERSHIP AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10QSB.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 18,015
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,015
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,015
<CURRENT-LIABILITIES> 7,500
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,515
<TOTAL-LIABILITY-AND-EQUITY> 18,015
<SALES> 0
<TOTAL-REVENUES> 3
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,812
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,809)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,809)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,809)
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0
</TABLE>
