<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 10-K/A
AMENDMENT NO. 2
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1994
[ ] 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 0-14360
NOONEY INCOME FUND LTD. II, L.P.
-------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1357693
------------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
------------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
------------------------------------------- ----------------------------------
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-------------------------------------------------------------------------------
(Title of Class)
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 [ ].
<PAGE> 2
[X] Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
As of February 1, 1995, the aggregate market value of the Registrant's units of
limited partnership interest (which constitute voting securities under certain
circumstances) held by non-affiliates of the Registrant was $19,221,000.
Documents incorporated by reference: None
<PAGE> 3
PART II
-------
ITEM 6: SELECTED FINANCIAL DATA
-------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ------------
(Not covered by independent auditors' report)
<S> <C> <C> <C> <C> <C>
Rental and other income $ 1,729,872 $ 1,843,782 $ 1,893,640 $ 1,841,982 $ 2,172,378
Net income (loss) 254,046 (1,261,814) (197,387) (3,243,787) 509,447
Data per limited partnership Unit
Net income (loss) 12.16 (65.61) (10.17) (168.06) 23.82
Cash distributions - Investment
income 12.16 -- -- -- 23.82
Cash distributions - Return of
capital 6.59 12.50 -- 20.00 26.18
Weighted average limited partnership
units outstanding 19,221 19,221 19,221 19,221 19,221
At year-end:
Total assets 9,118,452 9,287,233 10,807,797 10,988,076 14,622,412
Investment property, net 7,803,472 7,980,243 9,334,150 10,065,643 13,829,287
Partners' equity 8,689,086 8,817,462 10,334,221 10,531,608 14,183,314
<FN>
See Item 7: Management's Discussion and Analysis for discussion of comparability of items.
</TABLE>
<PAGE> 4
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------
Liquidity and Capital Resources
-------------------------------
Net increase (decrease) in cash and cash equivalents for the years ended
December 31, 1994, 1993 and 1992 are $71,825, ($233,076) and $586,454,
respectively. In 1992 the Registrant retained the cash provided by operating
activities thus resulting in an increase of $586,454. The retention of funds
was necessary to provide adequate cash flow for the upcoming capital
expenditures in 1993. Capital expenditures of $603,421 along with partner
distributions of $254,945 caused a decrease in cash and cash equivalents in
1993. However, with the retention of the cash flow provided from operations in
1992, the Registrant maintained adequate cash reserves. In 1994, the cash
provided by operating activities funded the Registrant's capital expenditures
and partner distribution. At December 31, 1994 the Registrant has cash and
cash equivalents of $1,118,033.
The Registrant expects the following capital expenditures during 1995:
<TABLE>
<CAPTION>
Tenant Alterations
and Capital
Lease Commissions Expenditures Total
----------------- ------------ --------
<S> <C> <C> <C>
Tower Industrial Bldg. (100%)<F1> $ 44,000 $ -0- $ 44,000
Leawood Fountain Plaza (24%)<F1> 74,000 10,000 84,000
Countryside Executive Ctr (50%)<F1> 23,000 46,000 69,000
Wards Corner (45%)<F1> 32,000 27,000 59,000
NorthCreek Office (45%)<F1> 23,000 25,000 48,000
----------------- ------------ --------
$196,000 $108,000 $304,000
================= ============ ========
---------------
<FN>
<F1> Represents the percentage of the Registrant's ownership in the above
mentioned properties.
</TABLE>
During 1994, capital expenditures, including tenant alterations and lease
commissions, were $275,000.
During 1995, approximately $304,000 of capital expenditures are expected by the
Registrant for its proportionate share of ownership interest in the properties.
Presently there are no contracts in place for any of these capital
expenditures. At Countryside, brick planters will be rebuilt and a portion of
the parking lot will be resurfaced. NorthCreek is scheduled for exterior
painting of all buildings. Leawood Fountain Plaza is currently undergoing
minor roof repairs and is scheduled for sidewalk repairs. At Wards Corner,
<PAGE> 5
existing interior improvements in the vacant space will be demolished and
refurbished for re-leasing purposes. All properties are scheduled to incur
leasing related capital expenditures (tenant alterations and lease commissions)
in connection with future lease negotiations. The timing and cost of these
capital expenditures will vary.
As previously disclosed, the Registrant owned three properties jointly with
Nooney Income Fund Ltd. III, L.P. ("NIF III"). NIF III was unable to service
its debt, and its percentage interests in the jointly held properties were
transferred to a subsidiary of the mortgage lender, St. Louis Investment
Properties, Inc.("SLIP"), in lieu of foreclosure. The Registrant believes SLIP
could attempt to partition those properties and force their sale at auction for
what the Registrant believes could be a very low price. This would likely
reduce the amount of any cash available for distribution to the partners when
the Registrant is dissolved. The Registrant has successfully negotiated a
contract with SLIP to purchase the partial interests ("Acquisition Interests")
in the jointly held properties (Wards Corner, Countryside, and NorthCreek).
The purchase price is $7,190,000, of which the mortgage lender will finance
100%. This transaction is subject to the approval of the limited partners. A
preliminary consent statement seeking the limited partners' approval of the
purchase was filed with the Securities and Exchange Commission on October 18,
1994. The General Partners subsequently decided to postpone seeking the
limited partners' approval pending completion of the 1994 audited financial
statements. It is now anticipated the consent statement will be sent to the
limited partners in September, 1995. The purchase of the Acquisition Interests
from SLIP will enable the Registrant to fully control its own destiny with
respect to the improvement, management and sale of its properties. The General
Partners' goal is to attempt to enhance the value of the Registrant's
properties, with the exception of Countryside, over the next several years in
order to increase the amount of any cash available for distribution to the
partners when the Registrant is dissolved. Due to market conditions, tax
burdens and other factors relating to Countryside, the Registrant intends to
attempt to sell Countryside by September 1996 if the limited partners vote in
favor of the purchase of the Acquisition Interests. The General Partners
believe that now is not the time to sell NorthCreek, Wards Corner, Leawood or
Tower Industrial, since the General Partners believe that the commercial real
estate markets in those areas will improve over the next several years.
Registrant's management is unable to predict whether the limited partners will
approve the transaction or whether SLIP would be successful in an attempt to
force a partition and sale of Countryside, NorthCreek and Wards Corner.
The future liquidity of the Registrant is dependent on its ability to fund
future capital expenditures from operations and cash reserves, maintain
occupancy and contend with the ownership issues of the jointly held properties.
Until such time as market conditions may improve and the profitable sale of the
properties may be feasible, the Registrant will continue to manage its
properties.
Results of Operations
---------------------
Total revenues for the year ended December 31, 1994, 1993 and 1992 are
$1,753,366, $1,870,153 and $1,912,903, respectively. Total revenues decreased
from 1994 to 1993 approximately 6.25% and the decrease from 1993 to 1992 is
approximately 2.25%. The decrease in revenues from 1994 to 1993 is
attributable to lower occupancy and decreases in expense recovery income. The
decrease in revenues when comparing 1993 to 1992 relates to lower average
occupancy.
<PAGE> 6
Net income (loss) for the years ended December 31, 1994, 1993 and 1992 were
$254,046, ($1,261,814) and ($197,387), respectively. The Registrant's losses
in 1993 and 1992 are attributable to asset write-downs in the amount of
$1,506,000 and $366,000, respectively (See Write-downs of the Value of Certain
Properties). Excluding the negative impact of the asset write-downs on the
Registrant's earnings, net income for the years ended December 31, 1994, 1993
and 1992 would have been $254,046, $244,186 and $168,613, respectively. The
positive trend in the Registrant's earnings without consideration to the asset
write-downs is attributable to decreases in operating expenses. The decrease
in operating expenses relates to decreases in real estate taxes, depreciation
and amortization and other operating expenses.
Net cash flow provided by operating activities for the years ended December 31,
1994, 1993 and 1992 are $706,242, $635,290 and $746,700, respectively. In
1994, the operating activities of the Registrant's properties produced cash
flow of $706,242, an increase of $70,952 when compared to 1993. When comparing
1993 to 1992, net cash provided by operating activities decreased $111,410.
The increase in cash from 1993 to 1994 along with the decrease from 1992 to
1993 relate to changes in the Registrant's receivables from year to year. In
1994, the decrease in receivables is attributable to decreases in rent
concessions, miscellaneous and rent receivable, partially offset by a decrease
in the reserve for bad debts. In 1993, receivables increased due to decreases
in the reserve for bad debts and increases in rent concession receivables,
offset by a decrease in rent receivables. During 1992, receivable decreases
are attributable to a decrease in the reserve for bad debts, offset by
increases in rent receivables.
The occupancy levels at the Registrant's properties are listed below:
<TABLE>
<CAPTION>
PROPERTY Occupancy Levels at December 31,
--------------------------------------------- --------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Tower Industrial Bldg. 100% 100% 100%
Leawood Fountain Plaza 90% 89% 92%
Countryside Executive Center 83% 82% 87%
Wards Corner 56% 82% 91%
NorthCreek Office Park 97% 85% 78%
</TABLE>
Tower Industrial Building is leased by a single tenant whose lease expires on
April 30, 2000.
At Leawood Fountain Plaza, the Registrant leased and renewed 24,337 square feet
of space which increased occupancy by 1% during 1994. The property has one
major tenant who leases more than 10% of the leasable area. This lease expires
in 1999.
During 1994, the Registrant leased 10,244 and renewed 3,983 square feet of
space at Countryside Executive Center. This activity increased occupancy by 1%.
Rental rates remained relatively flat for the year. The property has no major
tenants who occupy greater than 10% of the leasable area.
<PAGE> 7
At Wards Corner during 1994, the Registrant leased 15,000 square feet on a
short-term basis to a temporary tenant who previously leased 24,000 square
feet on a short-term basis in the fourth quarter of 1993. The short-term lease
expired and the tenant vacated the 39,000 square feet at the end of the third
quarter of 1994. In addition, 2,000 square feet was vacated during the third
quarter. This activity resulted in a decrease in occupancy from 82% in 1993 to
56% in 1994. The Registrant is actively marketing this space but has no
prospects at this time. Wards Corner has one major tenant who occupies 50% of
the property. This lease expires in December 1996.
During 1994 at NorthCreek Office Park, the Registrant successfully renegotiated
a lease with the assignee of the major tenant. This new tenant renewed for a
10-year term the lease on 23,995 square feet at a slightly lower rental rate.
This tenant also leased, for a five-year term, 6,688 square feet in another
building in the office park. In addition to the aforementioned activity, the
Registrant leased 14,451 and renewed 9,327 square feet of space . Rental rates
remained relatively flat. Occupancy increased from 85% in 1993 to 97% in 1994
as a result of this leasing activity. NorthCreek Office Park has one major
tenant, with two leases that comprise 36% of the property. These two leases
expire in December 1998 and December 2003.
1994 Comparisons
----------------
Rental Revenues for the year ended December 31, 1994, decreased by
approximately 6.25% compared to the previous year. At Wards Corner, revenue
decreased due to lower occupancy. Revenues at Countryside Executive Center
decreased primarily due to lower expense recoveries due to a successful real
estate tax appeal and lower operating expenses, partially offset by higher
rental revenue due to higher average occupancy. Rental revenue and operating
expense recoveries at NorthCreek increased due to higher occupancy. Leawood
Fountain Plaza's revenue increased due to higher average occupancy. Tower
Industrial revenue remained flat.
Operating expenses for the year ended December 31, 1994 decreased approximately
52% compared to the previous year. The decrease is primarily due to the write-
down of investment property in 1993 (See Write-downs of the Value of Certain
Properties). Depreciation and amortization decreased in direct relation to the
writedown of the investment property partially offset by additional capital
expenditures (lease commissions and tenant alterations) at Countryside
Executive Center, NorthCreek Office Park and Leawood Fountain Plaza. In
addition, Countryside Executive Center and Wards Corner had decreases in real
estate taxes, due to successful appeals along with decreases in utilities and
general repairs. NorthCreek Office Park experienced a slight increase in
overall expenses due to higher parking lot repairs and snow removal. Tower
Industrial and Wards Corner operating expenses remained relatively flat.
1993 Comparisons
----------------
Rental revenues for the year ended December 31, 1993, decreased by
approximately 2.25% compared to the previous year. At Wards Corner, revenues
only decreased 6% due to the recovery of a $150,000 bad debt written-off in
1992. Rental revenue and expense recoveries at NorthCreek decreased 8% from
1992 due to lower average occupancy. Revenues at Countryside Executive Center
<PAGE> 8
increased over the prior year due to slightly higher average occupancy. At
Leawood Fountain Plaza and Tower Industrial revenue remained flat.
Operating expenses for the year ended December 31, 1993 increased approximately
48% compared to the previous year. The increase is primarily due to increased
investment property write-downs (See Write-downs of the Value of Certain
Properties). Depreciation and amortization decreased as a result of capital
expenditures (lease commissions and tenant alterations) becoming fully
depreciated and/or amortized in 1992 and early 1993 at Countryside Executive
Center, NorthCreek Office Park and Leawood Fountain Plaza. In addition, write-
down of investment property in 1992 contributed to the decrease in
depreciation. The decrease from 1992 to 1993 in operating expenses relates to
snow removal expenses at Countryside Executive Center and Leawood Fountain
Plaza and cleaning expenses at NorthCreek Office Park and Countryside Executive
Center. At Wards Corner operating expenses decreased due to fluctuations in
several expense categories. The remaining property, Tower Industrial, had
expenses remain relatively flat.
1992 Comparisons
----------------
Rental revenues for the year ended December 31, 1992, increased by 3% compared
to those of the previous year. At Leawood Fountain Plaza, revenues increased
12% from $226,411 in 1991 to $253,055 in 1992 due to higher occupancy. Tower
Industrial revenues increased 2% from $175,921 in 1991 to $180,109 in 1992 due
to higher minimum rent from CPI increase and higher tax participation income
from slightly higher real estate taxes. Countryside Executive Center revenues
decreased 1% from $553,938 in 1991 to $547,536 in 1992 due to lower expense
reimbursements from tenant renewals with new base years, and lower cross
easement income, partially offset by higher tax participation income. Revenues
at Wards Corner increased 2% from $382,226 in 1991 to $391,367 in 1992 due to
higher expense reimbursements and storage income, partially offset by lower tax
participation income from a decrease in real estate tax expense. NorthCreek
Office Park revenues increased 3% from $493,629 in 1991 to $507,666 in 1992 due
to higher expense reimbursements and miscellaneous income from tenant
termination fee. These are partially offset by lower minimum rents due to slow
leasing.
Operating expenses for the year ended December 31, 1992 decreased approximately
59% compared to the previous year. The decrease is primarily due to decreased
investment property write-downs (See Write-downs of the Value of Certain
Properties). Depreciation and amortization decreased in direct relation to the
writedown of the investment property partially offset by additional capital
expenditures (lease commissions and tenant alterations) at Leawood Fountain
Plaza and NorthCreek Office Park. Operating expenses at the properties were as
follows: Leawood Fountain Plaza decreased 4% from 1991 due to lower real estate
taxes and fewer vacancy expenses; Tower Industrial increased 7% when compared
to prior year due to higher real estate taxes; Countryside Executive Center
increased 1% due to increases in real estate taxes, repairs and maintenance and
vacancy expenses offset by lower parking lot expenses; Wards Corner had a
significant increase of 38% primarily due to a reserve for bad debt relating to
a major tenant, partially offset by a decrease in real estate taxes; NorthCreek
Office Park increased 6% over 1991 also due to a reserve for bad debt for one
its major tenants, partially offset by lower real estate taxes and repairs and
maintenance expenses.
<PAGE> 9
Write-downs of the Value of Certain Properties.
-----------------------------------------------
At the end of fiscal 1993 and 1992 it was determined that the fair market value
of certain properties decreased to amounts less than their respective recorded
values. As a result, aggregate write-downs of $1,560,000 and $366,000,
respectively, were recorded. The amount of the write-downs were based on the
appraised value of the properties.
In 1992, the general partners reduced the carrying value of Wards Corner by
$366,000 in the fourth quarter. This impairment was caused by the Registrant's
termination of a major tenant's lease in the fourth quarter of 1992. Although
negotiations with this tenant for partially delinquent rent were ongoing during
most of 1992, it was the general partners' belief that the situation would be
worked out satisfactory without the necessity of terminating the lease. It was
during the fourth quarter of 1992 that the tenant informed the Registrant that
they would be vacating Wards Corner and moving to a new location.
In 1993, the general partners recorded aggregate write-downs of $1,506,000.
Specifically, the general partners reduced the carrying value of Wards Corner
Business Center by $203,000, Countryside Executive Center by $1,206,000 and
NorthCreek Office Park by $97,000.
Although tenant occupancy and rental rates at Wards Corner during 1993 were no
different than 1992, the appraiser, in completing his 1993 appraisal, had
access to current comparable sales information of similar properties which
indicated a reduction in the appraised value. Until the Registrant received
the appraisal in January of 1994, the Registrant was unaware of the lower
comparable sales information and thus wrote the property down as of the end of
the fourth quarter when it received the information.
At Countryside Executive Center, the Registrant executed numerous new and
renewal leases throughout all of 1993 at declining rental rates. During the
fourth quarter as part of the Registrant's annual budgeting process, the
cumulative effect of the decrease in rental rates on an annual basis was
analyzed. The Registrant had reviewed quarterly market studies of rental
rates, but no definitive trend indicating an impairment was apparent. The
Countryside write-down of $1,206,000 was based on the Registrant's recognition
of the cumulative effect of the decrease in rental rates and the appraiser
obtaining more current information on the sales comparisons of similar
properties in the northwest Chicago area. The appraiser gave more weight to
the sales comparisons approach to value in his 1993 appraisal than he had in
the 1992 appraisal.
The NorthCreek write-down of $97,000 was caused by the renegotiation of the
major tenant lease, which negotiations were ongoing during 1993. A new lease
was finalized on December 1, 1993 at a lower rental rate than the tenant had
been paying. The final rental rate was not known until shortly before the
lease was signed.
Inflation
---------
The effects of inflation did not have a material impact upon the Registrant's
operations in fiscal 1994, and are not expected to materially affect the
Registrant's operation in 1995.
<PAGE> 10
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
Financial Statements of the Registrant are filed herewith as Exhibit 99.3 and
are incorporated herein by reference (see Item 14(a)(1)). The supplementary
financial information specified by Item 302 of Regulation S-K is not
applicable.
PART IV
-------
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------
(a) The following documents are filed as a part of this report:
1. Financial Statements (filed herewith as Exhibit 99.3):
Independent Auditors' Report
Balance sheets
Statements of operations
Statements of partners' equity (deficit)
Statements of cash flows
Notes to financial statements
2. Financial Statement Schedules (filed herewith as Exhibit 99.3):
Schedule - Reconciliation of partners' equity (deficit)
Schedule III - Real estate and accumulated depreciation
All other schedules are omitted because they are inapplicable or not
required under the instructions.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the
Registrant filed no reports on Form 8-K.
(c) Exhibits:
See Exhibit Index on Page 12.
(d) Not applicable.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NOONEY INCOME FUND LTD. II, L.P.
Date: September 13, 1995 By: /S/ GREGORY J. NOONEY, JR.
---------------------------------
Gregory J. Nooney, Jr.
General Partner
Nooney Income Investments Two, Inc.
By: /S/ GREGORY J. NOONEY, JR.
---------------------------------
Gregory J. Nooney, Jr.
Chairman of the Board and
Chief Executive Officer
By: /S/ PATRICIA A. NOONEY
---------------------------------
Patricia A. Nooney - Director
Senior Vice President and
Secretary
BEING A MAJORITY OF THE DIRECTORS
<PAGE> 12
EXHIBIT INDEX
Exhibit
Number Description
------- ----------------------------------------------------------------------
99.3 Financial Statements and Schedules
<PAGE> 1
Deloitte & EXHIBIT 99.3
Touche LLP
--------------------- --------------------------------------------------------
[CORPORATE LOGO] One City Centre Telephone: (314) 342-4900
St. Louis, Missouri 63101
INDEPENDENT AUDITORS' REPORT To the Partners of
Nooney Income Fund Ltd. II, L.P.:
We have audited the accompanying balance sheets of Nooney Income Fund Ltd. II,
L.P. (a limited partnership) as of December 31, 1994 and 1993, and the related
statements of operations, partners' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1994. Our audits also
included the financial statement schedules listed in the Index at Item 14 (a)2.
These financial statements and financial statement schedules are the
responsibility of the Partnership's general partners. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the Partnership's general partners, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Nooney Income Fund, Ltd. II, L.P. as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
As discussed in Note 1 to the financial statements, management has successfully
negotiated a contract to purchase the remaining undivided interests of
Countryside Executive Center, Wards Corner Business Center A & B and NorthCreek
Office Park.
/S/ DELOITTE & TOUCHE LLP
March 24, 1995
-------------------
Deloitte Touche
Tohmatsu
International
-------------------
<PAGE> 2
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
-------------------------------------------------------------------------------
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS (Notes 2 and 3) $ 1,118,033 $ 1,046,208
ACCOUNTS RECEIVABLE - No allowance for doubtful
accounts considered necessary (Note 2) 108,832 196,813
INVESTMENT PROPERTY (Notes 1, 2 and 8):
Land and improvements 1,674,836 1,674,836
Buildings 10,260,354 10,034,329
----------- -----------
11,935,190 11,709,165
Less accumulated depreciation 4,131,718 3,728,922
----------- -----------
7,803,472 7,980,243
DEFERRED EXPENSES - At amortized cost (Note 2) 88,115 63,969
----------- -----------
TOTAL $ 9,118,452 $9,287,233
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 42,775 $ 51,107
Accrued real estate taxes 290,572 325,578
Accrued sewer expenses (Note 6) 32,400 31,162
Refundable tenant deposits 63,619 61,924
----------- -----------
Total liabilities 429,366 469,771
PARTNERS' EQUITY 8,689,086 8,817,462
----------- -----------
TOTAL $ 9,118,452 $ 9,287,233
=========== ===========
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 3
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
---------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
----------- ------------ -----------
<S> <C> <C> <C>
REVENUES:
Rental and other income (Notes 2, 4 and 7) $ 1,729,872 $ 1,843,782 $1,893,640
Interest 23,494 26,371 19,263
----------- ------------ -----------
Total revenues 1,753,366 1,870,153 1,912,903
EXPENSES:
Interest 1,238 1,238 1,238
Depreciation and amortization (Note 2) 459,247 475,591 547,068
Real estate taxes 331,245 405,246 433,374
Property management fees - related party
(Note 2) 105,854 104,619 106,656
Repairs and maintenance 118,850 120,209 108,212
Other operating expenses (includes $25,000 in
1994, 1993 and 1992) (Note 2) 482,886 519,064 547,742
Writedown of investment property (Note 8) 1,506,000 366,000
----------- ------------ -----------
Total expenses 1,499,320 3,131,967 2,110,290
----------- ------------ -----------
NET INCOME (LOSS) $ 254,046 $(1,261,814) $ (197,387)
=========== ============ ===========
NET INCOME (LOSS) ALLOCATION:
General partners $ 20,380 $ (725) $ (1,974)
Limited partners $ 233,666 $(1,261,089) $ (195,413)
LIMITED PARTNERS DATA (Note 2):
Net income (loss) per unit $ 12.16 $ (65.61) $ (10.17)
=========== ============ ===========
Cash distributions - Investment income per unit $ 12.16 $ -- $ --
=========== ============ ===========
Cash distributions - Return of capital per unit $ 6.59 $ 12.50 $ --
=========== ============ ===========
Weighted average limited partnership units
outstanding 19,221 19,221 19,221
=========== ============ ===========
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 4
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
---------------------------------------------------------------------------------------------
<CAPTION>
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
BALANCE (DEFICIT), JANUARY 1, 1992 $10,638,433 $ (106,825) $10,531,608
Net loss (195,413) (1,974) (197,387)
------------ ------------ ------------
BALANCE (DEFICIT), DECEMBER 31, 1992 10,443,020 (108,799) 10,334,221
Net loss (1,261,089) (725) (1,261,814)
Cash distributions (240,262) (14,683) (254,945)
------------ ------------ ------------
BALANCE (DEFICIT), DECEMBER 31, 1993 8,941,669 (124,207) 8,817,462
Net income 233,666 20,380 254,046
Cash distributions (360,410) (22,012) (382,422)
------------ ------------ ------------
BALANCE (DEFICIT), DECEMBER 31, 1994 $ 8,814,925 $ (125,839) $ 8,689,086
============ ============ ============
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 5
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 254,046 $(1,261,814) $ (197,387)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Writedown of investment property -- 1,506,000 366,000
Depreciation 428,766 451,328 525,739
Amortization of deferred expenses 30,481 24,263 21,329
Net changes in accounts affecting operations:
Accounts receivable 87,981 (59,956) 65,209
Deferred expenses (54,627) (20,726) (51,298)
Accounts payable and accrued expenses (8,332) 16,100 (3,820)
Accrued real estate taxes (35,006) (26,483) 14,393
Accrued sewer expenses 1,238 1,237 1,237
Refundable tenant deposits 1,695 5,341 5,298
------------ ------------ ------------
Net cash provided by operating activities 706,242 635,290 746,700
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to investment property (251,995) (603,421) (160,246)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Cash distributions to partners (382,422) (254,945) --
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 71,825 (223,076) 586,454
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,046,208 1,269,284 682,830
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,118,033 $ 1,046,208 $ 1,269,284
============ ============ ============
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 6
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. BUSINESS
Nooney Income Fund Ltd. II, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of Missouri on
February 13, 1985 for the purpose of investing in income-producing real
properties, such as shopping centers, office buildings, warehouses and
other commercial properties.
The Partnership has an undivided interest in the following properties:
<TABLE>
<CAPTION>
Property Undivided Interest
------------------------------------------------------- ------------------
<C> <C>
Leawood Fountain Plaza 24%
Countryside Executive Center 50%
Wards Corner Business Center A & B 45%
NorthCreek Office Park 45%
</TABLE>
In addition, the Partnership owns 100% of the Tower Industrial Building.
The Partnership's proportionate share of the results of operations of the
partially-owned properties are included in the statements of operations
presented. The Partnership's proportionate share of the assets and
liabilities of the partially-owned properties are included in the balance
sheets presented.
The Partnership owned three properties jointly with Nooney Income Fund Ltd.
III, L.P. (NIF III). NIF III was unable to service its debt, and its
percentage interests in the jointly-held properties were transferred to a
subsidiary of the mortgage lender in lieu of foreclosure. The Partnership
has entered into a purchase and sale contract with the subsidiary of the
mortgage lender to purchase the partial interests of Countryside Executive
Center, Wards Corner Business Center A & B and NorthCreek Office Park (the
"Acquisition Interests"). The contract provides for a closing date no
later than June 30, 1995. The purchase price is $7,190,000 of which the
mortgage lender will finance 100%. The proposed financing provides for
interest at the lenders corporate base rate plus 3/4%. Interest only will
be due during the first year of the loan. The second, third, fourth and
fifth years of the loan, monthly principal payments of $7,789, $8,388,
$9,587 and $9,587, respectively, plus accrued interest will be due. The
remaining unpaid principal balance is due at the end of the fifth year of
the loan. The loan will be secured by 100% of Countryside Executive
Center, Wards Corner Business Center A & B and NorthCreek Office Park and
is recourse to the Partnership. The purchase and sale contract is
contingent upon the Partnership obtaining the approval of the limited
partners. If management is unsuccessful in negotiations or limited partner
approval is not received, the subsidiary of the mortgage lender could
attempt to partition the properties and force their sale.
<PAGE> 7
If management is successful in purchasing the Acquisition Interests,
management plans to attempt to sell 100% of Countryside Executive Center
(Countryside) as soon as practicable because of local market conditions,
tax burdens and other factors related specifically to this property. At
December 31, 1994, the Partnership's proportionate share of the net assets
of Countryside was $375,881. For the year ended December 31, 1994, the
Partnership's proportionate share of total revenues was $553,433, of total
expenses was $589,994 and of net loss was $36,561.
The Partnership's management is unable to predict whether the limited
partners will approve the transaction or whether the subsidiary of the
mortgage lender would be successful in an attempt to force a partition and
sale of the properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements include only those assets, liabilities and results
of operations of the partners which relate to the business of Nooney Income
Fund Ltd. II, L.P. The statements do not include any assets, liabilities,
revenues or expenses attributable to the partners' individual activities.
No provision has been made for federal and state income taxes since these
taxes are the personal responsibility of the partners.
The corporate general partner is a partially-owned subsidiary of Nooney
Company. One of the individual general partners is an officer, director
and shareholder of Nooney Company. Another individual general partner's
spouse is a shareholder of Nooney Company. Nooney Company is also an
economic assignee of two former individual general partners. Nooney
Krombach Company, a wholly-owned subsidiary of Nooney Company, manages the
Partnership's real estate for a management fee. Property management fees
paid to Nooney Krombach Company were $105,854, $104,619 and $106,656 for
the years ended December 31, 1994, 1993 and 1992, respectively.
Additionally, the Partnership pays Nooney Krombach Company $25,000 annually
as reimbursement for administrative services including accounting, issuing
and transferring of units, data processing and investor communications.
Investment property is recorded at the lower-of-cost or net realizable
value. The net realizable value of the Partnership's investment property
is based on current appraisals.
Land improvements and buildings are depreciated over their estimated useful
lives using the straight-line method.
Lease agreements are accounted for as operating leases and rentals from
such leases are reported as revenues ratably over the terms of the leases.
Certain lease agreements provide for rent concessions. At December 31,
1994, accounts receivable include approximately $91,000 ($136,000 in 1993)
of accrued rent which is not yet due under the terms of various lease
agreements.
Included in rental and other income are amounts received from tenants under
provisions of lease agreements which require the tenants to pay additional
rent equal to specified portions of certain expenses such as real estate
taxes, insurance, utilities and common area maintenance. The income is
recorded in the same period that the related expense is incurred.
Net Operating Cash Income, as defined in the Partnership Agreement, is
distributed quarterly as follows: (1) 90% pro rata to the limited partners;
<PAGE> 8
(2) 9% to the individual general partners as their annual Partnership
Management Fee; and (3) 1% to the individual general partners.
In the event it is determined after the close of a fiscal year that the
limited partners have not received their 7-1/2% non-cumulative preference
as defined in the Partnership Agreement, then the individual general
partners return to the partnership a portion of their distributions
received as their 9% annual Partnership Management Fee until the limited
partners have received their 7-1/2% non-cumulative preference. The
individual general partners are not required to return any amount in excess
of one-half of the 9% Partnership Management Fee received. If Net
Operating Cash Income for any fiscal year is not sufficient to pay the
limited partners any portion of their 7-1/2% non-cumulative preference, the
unpaid amount does not accrue to future fiscal years. The annual
Partnership Management Fee is a cumulative preference. The preferential
return can be distributed only through cash distributed as a result of a
Major Capital Event (as defined) or cash distributed upon dissolution of
the partnership. Such preferred distribution is only allowed after the
general and limited partners receive amounts equal to their adjusted
capital accounts and the limited partners receive an 11% cumulative return.
Through December 31, 1994, Partnership Management Fees totaling $225,415
have not been paid under the limitations stated above. Based upon the
priorities of cash to be distributed, management believes that the
likelihood of payment of the $225,415 is remote.
For financial statement and income tax reporting, the income from
operations is allocated as follows: first, a special allocation of gross
income to the individual general partners in the amount equal to the annual
partnership management fee distributed to the individual general partners
during the period; then, the remainder is allocated 1% to the individual
general partners and 99% pro rata to the limited partners based upon the
relationship of original capital contributions of the limited partners.
Limited partnership per unit computations are based on the weighted average
number of limited partnership units outstanding during the period.
The Partnership considers all highly liquid debt instruments with a
maturity of three months or less at date of purchase to be cash
equivalents.
Deferred expenses consist of lease fees which are amortized over the terms
of their respective leases.
Certain reclassifications have been made to the 1993 and 1992 financial
statements to conform with the 1994 presentation.
3. CASH EQUIVALENTS
Cash equivalents consist of bank repurchase agreements of $675,000 at
December 31, 1994 ($550,000 at December 31, 1993).
<PAGE> 9
4. RENTAL REVENUES UNDER OPERATING LEASES
Minimum future rental revenues under noncancelable operating leases in
effect as of December 31, 1994 are as follows:
<TABLE>
<C> <C>
1995 $1,133,000.00
1996 863,000.00
1997 421,000.00
1998 244,000.00
1999 190,000.00
Remainder 555,000.00
-------------
Total $3,406,000.00
=============
</TABLE>
5. FEDERAL INCOME TAX STATUS
The general partners believe, based on opinion of legal counsel, that
Nooney Income Fund Ltd. II, L.P. is considered a partnership for income tax
purposes. Selling commissions and offering expenses incurred in connection
with the sale of limited partnership units are not deductible for income
tax purposes and therefore increase the partners' bases. Investment
properties are depreciated for income tax purposes using rates which differ
from rates used for computing depreciation for financial statement
reporting. Rents received in advance are includable in taxable income in
the year received. Rent concessions, recognized ratably over lease terms
for financial statement purposes, are includable in taxable income in the
year rents are received. Losses in connection with the writedown of
investment property are not recognized for tax purposes until the property
is disposed.
The comparison of financial statement and income tax reporting is as
follows:
<TABLE>
<CAPTION>
Financial Income
Statement Tax
------------ ------------
<S> <C> <C>
1994:
Net income $ 254,046 $ 114,775
Partners' equity 8,689,086 14,698,146
1993:
Net loss $(1,261,814) $ (241,634)
Partners' equity 8,817,462 14,965,793
1992:
Net loss $ (197,387) $ (68,480)
Partners' equity 10,334,221 15,462,372
</TABLE>
<PAGE> 10
6. ACCRUED SEWER EXPENSES
The Partnership's estimated obligation for construction of a sewer system
at one of its properties was accrued when the Partnership acquired the
property. Payments on the obligation are anticipated to begin in 1995.
7. MAJOR TENANT
A substantial amount of the Partnership's revenue in 1994 was derived from
two major tenants whose rentals amounted to $194,000 for each tenant or 11%
of total revenues for each tenant. No individual tenant accounted for more
than 10% of revenue in 1993. A substantial amount of the Partnership's
revenue in 1992 was derived from one major tenant whose rental amounted to
$218,000 or 11% of total revenues.
8. WRITEDOWN OF INVESTMENT PROPERTY
In 1992, the general partners reduced the carrying value of Wards Corner
Business Center by $366,000 in the fourth quarter which reduced the
carrying amount of the property to an amount equal to the appraised value.
This impairment was caused by the Registrant's termination of a major
tenant's lease in the fourth quarter of 1992. In 1993, the general
partners reduced the carrying value of Countryside Executive Center by
$1,206,000, NorthCreek Office Park by $97,000 and Wards Corner Business
Center by $203,000 to amounts equal to the appraised values. These
adjustments were made in the fourth quarter as a result of lease
renegotiations that took place and market information that became available
at that time. No such writedowns were necessary in 1994.
* * * * * *
<PAGE> 11
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
------------------------------------------------------------------------------------------------------------
The reconciliation of partners' equity (deficit) between financial statement and income tax reporting is as
follows:
<CAPTION>
December 31, 1994
----------------------------------------
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance (deficit) per statement of partners' equity $ 8,814,925 $ (125,839) $ 8,689,086
Add:
Selling commissions and other offering costs not deductible
for income tax purposes 2,411,625 2,411,625
Prepaid rents included in income for income tax purposes 10,620 107 10,727
Master lease income included in income for income tax 118,404 1,196 119,600
purposes
Writedown of investment property not recognized for income
tax purposes 5,202,450 52,550 5,255,000
------------ ------------ ------------
Total 16,558,024 (71,986) 16,486,038
Less:
Excess depreciation and amortization deducted for income tax
purposes 1,662,220 34,784 1,697,004
Rent concessions not recognized for income tax purposes 89,979 909 90,888
------------ ------------ ------------
Balance (deficit) per tax return $14,805,825 $ (107,679) $14,698,146
============ ============ ============
<PAGE> 12
<CAPTION>
December 31, 1993
----------------------------------------
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance (deficit) per statement of partners' equity $ 8,941,669 $ (124,207) $ 8,817,462
Add:
Selling commissions and other offering costs not deductible
for income tax purposes 2,411,625 2,411,625
Prepaid rents included in income for income tax purposes 23,259 235 23,494
Master lease income included in income for income tax
purposes 118,404 1,196 119,600
Writedown of investment property not recognized for income
tax purposes 5,202,450 52,550 5,255,000
------------ ------------ ------------
Total 16,697,407 (70,226) 16,627,181
Less:
Excess depreciation and amortization deducted for income tax
purposes 1,492,267 33,068 1,525,335
Rent concessions not recognized for income tax purposes 134,692 1,361 136,053
------------ ------------ ------------
Balance (deficit) per tax return $15,070,448 $ (104,655) $14,965,793
============ ============ ============
<PAGE> 13
<CAPTION>
December 31, 1992
----------------------------------------
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance (deficit) per statement of partners' equity $10,443,020 $ (108,799) $10,334,221
Add:
Selling commissions and other offering costs not deductible
for income tax purposes 2,411,625 2,411,625
Prepaid rents included in income for income tax purposes 21,282 215 21,497
Master lease income included in income for income tax
purposes 118,404 1,196 119,600
Writedown of investment property not recognized for income
tax purposes 3,711,510 37,490 3,749,000
------------ ------------ ------------
Total 16,705,841 (69,898) 16,635,943
Less:
Excess depreciation and amortization deducted for income tax
purposes 1,056,187 28,664 1,084,851
Rent concessions not recognized for income tax purposes 87,833 887 88,720
------------ ------------ ------------
Balance (deficit) per tax return $15,561,821 $ (99,449) $15,462,372
============ ============ ============
</TABLE>
<PAGE> 14
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
------------------------------------------------------------------------------------------------------------
<CAPTION>
Column A Column B Column C
--------------------------------------------- ------------ -----------------------------------------------
Initial Cost to Partnership
-----------------------------------------------
Land and
Description Encumbrances Improvements Buildings Total
--------------------------------------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Leawood Fountain Plaza Office Complex
(24% undivided interest), Leawood, Kansas $ -- $ 318,962 $ 1,991,417 $ 2,310,379
Tower Industrial Building,
Mundelein, Illinois 193,744 1,042,076 1,235,820
Countryside Executive Center
(50% undivided interest), Palatine, Illinois 623,919 4,302,911 4,926,830
NorthCreek Office Park
(45% undivided interest), Cincinnati, Ohio 338,850 4,639,617 4,978,467
Wards Corner Business Center A & B
(45% undivided interest), Cincinnati, Ohio 199,361 2,784,317 2,983,678
----------- -------------- -------------- --------------
Total $ -- $ 1,674,836 $14,760,338 $16,435,174
=========== ============== ============== ==============
<CAPTION>
Column A Column D Column E
--------------------------------------------- --------------- --------------------------------------------
Gross Amount at Which
Costs Carried at Close of Period
Capitalized --------------------------------------------
Subsequent to Land and
Description Acquisition<F1> Improvements Buildings Total
--------------------------------------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Leawood Fountain Plaza Office Complex
(24% undivided interest), Leawood, Kansas $ (690,623) $ 318,962 $ 1,300,794 $ 1,619,756
Tower Industrial Building,
Mundelein, Illinois 193,744 1,042,076 1,235,820
Countryside Executive Center
(50% undivided interest), Palatine, Illinois (2,657,715) 623,919 1,645,196 2,269,115
NorthCreek Office Park
(45% undivided interest), Cincinnati, Ohio (397,477) 338,850 4,242,140 4,580,990
Wards Corner Business Center A & B
(45% undivided interest), Cincinnati, Ohio (754,169) 199,361 2,030,148 2,229,509
--------------- ------------- ------------- -------------
Total $ (4,499,984) $ 1,674,836 $ 10,260,354 $ 11,935,190
=============== ============= ============= =============
<PAGE> 15
<CAPTION>
Column A Column F Column G Column H Column I
--------------------------------------------- ------------ ------------ ---------- ---------------------
Life on
Which Depreciation
Accumulated Date of Date in Latest Income
Depreciation Construction Acquired Statement is Computed
------------ ------------ ---------- ---------------------
<S> <C> <C> <C> <C>
Leawood Fountain Plaza Office Complex
(24% undivided interest), Leawood, Kansas $ 698,130 1982-1983 2/20/85 30 years
Tower Industrial Building,
Mundelein, Illinois 306,834 1974 3/20/86 30 years
Countryside Executive Center
(50% undivided interest), Palatine, Illinois 1,052,169 1975 12/16/86 30 years
NorthCreek Office Park
(45% undivided interest), Cincinnati, Ohio 1,395,178 1984-1986 12/29/86 30 years
Wards Corner Business Center A & B
(45% undivided interest), Cincinnati, Ohio 679,407 1985 12/29/86 30 years
------------ ------------ ---------- ---------------------
Total $ 4,131,718
============
---------------
<FN>
<F1> Amounts show are net of assets written-off and the following writedowns to reflect appraised values:
Leawood Fountain Plaza Office Complex $ 754,000
Countryside Executive Center 3,256,000
NorthCreek Office Park 484,000
Wards Corner Business Center A & B 761,000
</TABLE>
<PAGE> 16
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $11,709,165 $12,660,831 $13,242,097
Add - Cost of improvements 251,995 603,421 160,246
Less:
Writedown of investment property (1,506,000) (366,000)
Cost of disposals (25,970) (49,087) (375,512)
------------ ------------ ------------
Balance at end of period $11,935,190 $11,709,165 $12,660,831
============ ============ ============
Reconciliation of amounts in Column F:
(B) Balance at beginning period $ 3,728,922 $ 3,326,681 $ 3,176,454
Add - Provision during period 428,766 451,328 525,739
Less - Depreciation on disposals (25,970) (49,087) (375,512)
------------ ------------ ------------
Balance at end of period $ 4,131,718 $ 3,728,922 $ 3,326,681
============ ============ ============
(C) The aggregate cost of real estate owned for
federal income tax purposes $17,190,190 $16,964,165 $16,409,831
============ ============ ============
</TABLE>
