SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
- ----- EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
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OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-14360
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NOONEY INCOME FUND LTD. II, L.P.
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(Exact name of Registrant as specified in its charter)
Missouri 43-1357693
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 N. Broadway, St. Louis, Missouri 63102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None Not Applicable
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Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(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
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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, 1999, 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. (The
aggregate market value was computed on the basis of the initial selling price of
$1,000 per unit of limited partnership interest, using the number of units not
beneficially owned on February 1, 1999, by the General Partners or holders of
10% or more of the Registrant's limited partnership interests. The initial
selling price of $1,000 per unit is not the current market value. Accurate
pricing information is not available because the value of the units of limited
partnership interests is not determinable since no active secondary market
exists. The characterization of the General Partners and 10% holders as
affiliates is for the purpose of this computation only and should not be
construed as an admission for any purpose that any such persons are, or other
persons not so characterized are not, in fact, affiliates of the Registrant).
Documents incorporated by reference:
Portions of the Prospectus of the Registrant dated February 15, 1985, as
supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933,
are incorporated by reference in Part III of this Annual Report on Form 10-K.
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PART I
ITEM 1: BUSINESS
It should be noted that this 10-K contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that involves
risk and uncertainty, including trends in the real estate investment market,
projected leasing and sales, and the future prospects for the Registrant. Actual
results could differ materially from those contemplated by such statements.
Nooney Income Fund Ltd. II, L.P. (the "Registrant") is a limited partnership
formed under the Missouri Uniform Limited Partnership Law on February 12, 1985,
to invest, on an all-cash basis, in income-producing real properties such as
shopping centers, office buildings, office/warehouse properties and other
commercial properties. The Registrant originally invested in five real
properties described in Item 2 below. The Registrant continues to own and
operate its five original properties.
The Registrant's primary investment objectives are to preserve and protect the
Limited Partners' capital, provide the maximum possible cash distributions to
the Partners, and provide for capital growth through appreciation in the value
of the Registrant's properties. The term of the Registrant is until December 31,
2085. It was originally anticipated that the Registrant would sell or finance
its properties within approximately five to ten years after their acquisition.
The depression of real estate values experienced nationwide from 1988 to 1993
lengthened this time frame in order to achieve the goal of capital appreciation.
The real estate investment market began to improve in 1994, and is expected to
further continue its improvement over the next several years. Management
believes this trend should increase the value of the Registrant's properties in
the future. The Registrant is intended to be self-liquidating and proceeds from
the sale or financing of the Registrant's real property investments will not be
invested in new properties but will be distributed to the Partners or, at the
discretion of the General Partners, applied to capital improvements to, or the
payment of indebtedness with respect to, existing properties, the payment of
other expenses or the establishment of reserves. (See Item 7: Management's
Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources - for a discussion of possible future
acquisitions and possible sales of properties.)
The business in which the Registrant is engaged is highly competitive. The
Registrant's investment properties are located in or near major urban areas and
are subject to competition from other similar types of properties in such areas.
The Registrant competes for tenants for its properties with numerous other real
estate limited partnerships, as well as with individuals, corporations, real
estate investment trusts and other entities engaged in real estate investment
activities. Such competition is based on such factors as location, rent
schedules and services and amenities provided.
The Registrant has no employees. Property management services for the
Registrant's investment properties are provided by Nooney, Inc., an affiliate of
the General Partners.
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Throughout the 10-K, references are made to the following companies listed in
Column A below. Please note that on January 28,1998, the names of said companies
were changed to the names listed in Column B below.
Column A Column B
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Nooney Company Brooklyn Street Properties, Inc.
Nooney Krombach Company Hanley Brokers, Inc.
ITEM 2: PROPERTIES
On February 20, 1985, the Registrant acquired a 24% interest as a tenant in
common in Leawood Fountain Plaza, a three building office complex in Leawood,
Kansas. Constructed in two phases in 1982 and 1983, the buildings contain
approximately 30,000, 29,000 and 26,000 net rentable square feet respectively,
or an aggregate of approximately 85,000 net rentable square feet of office
space. The buildings are located on a 7.9 acre site which provides paved parking
for 403 cars. The purchase price of the complex was $9,626,576, of which
$2,310,379 was paid by the Registrant for its 24% interest. The remaining 76%
interest was purchased by Nooney Income Fund Ltd., L.P., an affiliate of the
Registrant, as the other tenant in common. All costs and revenues attributable
to the operation of the complex are shared by the Registrant and Nooney Income
Fund Ltd., L.P. in proportion to their respective percentage interests. The
complex was 97% leased by 41 tenants at December 31, 1998. (See Item 7:
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.)
On March 20, 1986, the Registrant acquired the Tower Industrial Building, an
office warehouse located at 750-760 Tower Road in Mundelein, Illinois, a suburb
of Chicago. The purchase price of the building was $1,235,820. The one-story
concrete block building contains approximately 42,000 net rentable square feet
and is situated on a 3 acre site which provides parking for 140 cars. The
building is currently 100% leased by Baxter International Inc. (See Item 7:
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.)
On December 16, 1986, the Registrant acquired a 50% interest as a tenant in
common in Countryside Executive Center, a single story office building located
at 1210-1270 W. Northwest Highway in Palatine, Illinois, a suburb of Chicago.
The building contains approximately 91,000 net rentable square feet and is
situated on an 8.6 acre site which provides parking spaces for 467 cars, some of
which spaces are shared with adjoining properties pursuant to a mutual easement
agreement which also provides for the sharing of certain expenses. The total
purchase price of the building was $9,853,660, of which $4,926,830 was paid by
the Registrant for its 50% interest. The remaining 50% interest was purchased by
Nooney Income Fund Ltd. III, L.P., an affiliate of the Registrant, and during
1993 was transferred to a subsidiary of the mortgage lender. As of December 29,
1995, the Registrant acquired the mortgage lender's interest in Countryside
Executive Center for $1,250,000. Prior to December 29, 1995, all costs and
revenues attributable to the operation of the building were shared by the
Registrant and a subsidiary of the mortgage lender in proportion to their
respective percentage interests. Effective October 1998, the property was
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renamed Countryside Office Park. The building was 77% leased by 34 tenants at
December 31, 1998. (See Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources.)
On December 29, 1986, the Registrant acquired a 45% interest as a tenant in
common in Wards Corner Business Center A & B, a two building
office/warehouse/showroom facility located at 420-422 Wards Corner Road in
Loveland, Ohio, a suburb of Cincinnati. Effective January 1, 1996, the property
known as Wards Corner was renamed Northeast Commerce Center. The two
single-story buildings contain 50,000 net rentable square feet each, or an
aggregate of approximately 100,000 net rentable square feet. The buildings are
situated on a 7.5 acre site which provides parking for 278 cars. The total
purchase price of the buildings was $6,630,395, of which $2,983,678 was paid by
the Registrant for its 45% interest. The remaining 55% interest was purchased by
Nooney Income Fund Ltd. III, L.P., an affiliate of the Registrant, and during
1993 was transferred to a subsidiary of the mortgage lender. As of December 29,
1995, the Registrant acquired the mortgage lender's interest in Northeast
Commerce Center for $1,980,000. Prior to December 29, 1995, all costs and
revenues attributable to the operation of the buildings were shared by the
Registrant and a subsidiary of the mortgage lender in proportion to their
respective percentage interests. The buildings were 50% leased by 3 tenants at
December 31, 1998. (See Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources.)
On December 29, 1986, the Registrant acquired a 45% interest as a tenant in
common in NorthCreek Office Park, a three building office complex located at
8220, 8240 and 8260 NorthCreek Drive in Cincinnati, Ohio. Constructed in phases
in 1984 and 1986, the three-story buildings contain 19,500, 24,000 and 48,000
net rentable square feet respectively, or an aggregate of approximately 91,500
net rentable square feet. The buildings are located on a 8.4 acre site which
provides paved parking for 366 cars. The purchase price of the complex was
$11,063,260, of which approximately $4,978,467 was paid by the Registrant for
its 45% interest. The remaining 55% interest was purchased by Nooney Income Fund
Ltd. III, L.P., an affiliate of the Registrant, and during 1993 was transferred
to a subsidiary of the mortgage lender. As of December 29, 1995, the Registrant
acquired the mortgage lender's interest in NorthCreek Office Park for
$3,960,000. Prior to December 29, 1995, all costs and revenues attributable to
the operation of the complex were shared by the Registrant and a subsidiary of
the mortgage lender in proportion to their respective percentage interests. The
complex was 100% leased by 34 tenants at December 31, 1998. (See Item 7:
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.)
Reference is made to Note 6 of Notes to Financial Statements for a description
of revenues derived from major tenants.
Reference is made to Note 3 of Notes to Financial Statements filed herewith as
Exhibit 99.3 in response to Item 8 for a description of the indebtedness secured
by the Registrant's real property investments.
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The following table sets forth certain information as of December 31, 1998,
relating to the properties owned by the Registrant.
<TABLE>
<CAPTION>
===================================================================================================================================
AVERAGE
ANNUALIZED
TOTAL EFFECTIVE PRINCIPAL TENANTS
SQUARE ANNUALIZED BASE RENT PER PERCENT OVER 10% OF PROPERTY LEASE
PROPERTY FEET BASE RENT* SQUARE FOOT LEASED SQUARE FOOTAGE EXPIRATION
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<S> <C> <C> <C> <C> <C> <C>
Tower Industrial Baxter International Inc.
Building 42,000 $ 157,300 $3.73 100% (100%) 2000
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Leawood Fountain Midwest Mechanical (14%) 2001
Plaza 85,000 $ 1,375,000 $16.74 97% Family Medical Care of Kansas
City (10%) 1999
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Northeast
Commerce Center 100,000 $ 251,300 $ 5.07 50% Hill Top Research (23%) 2003
Aerospace International
(19%) 1999
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Countryside
Executive Center 91,000 $ 1,127,000 $15.91 77% Dietzgen Corporation
(14%) 2005
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NorthCreek Office Cincinnati Group Health
Park 91,500 $ 1,298,174 $14.26 100% Associates (26%), (7%) 2003, 2003
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<FN>
* Represents 100% of Base Rent. Registrant has 24% ownership in Leawood Fountain Plaza.
</FN>
===================================================================================================================================
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
The Registrant is not a party to any material pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
As of February 1, 1999 there were 1,335 record holders of Interests in the
Registrant. There is no public market for the Interests and it is not
anticipated that a public market will develop.
Cash Distributions Paid Per Limited Partnership Unit
First Quarter Second Quarter Third Quarter Fourth Quarter
1997 -0- $6.25 $6.25 -0-
1998 $12.50 -0- $6.25 -0-
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<TABLE>
ITEM 6: SELECTED FINANCIAL DATA
<CAPTION>
Year Ended December 31,
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1998 1997 1996 1995 (1) 1994
(Not covered by independent auditors' report)
<S> <C> <C> <C> <C> <C>
Rental and other income $ 3,680,649 $ 3,355,159 $ 3,502,080 $ 1,754,750 $ 1,729,872
Net income 364,096 63,587 83,571 209,517 254,046
Data per limited partnership unit:
Net income 17.83 2.66 3.69 10.17 12.16
Cash distributions - Investment income 17.83 2.66 3.69 10.17 12.16
Cash distributions - Return of capital 0.92 9.84 8.81 2.33 6.59
Weighted average limited partnership
units outstanding 19,221 19,221 19,221 19,221 19,221
At year-end:
Total assets 16,129,995 16,563,704 16,473,106 16,803,566 9,118,452
Investment property, net 14,372,757 14,744,540 14,798,098 15,166,737 7,803,472
Mortgage note payable 6,995,876 7,096,532 7,190,000 7,190,000 -
Partners' equity 8,262,543 8,280,887 8,472,267 8,643,642 8,689,086
<FN>
See Item 7: Management's Discussion and Analysis for discussion of comparability of items.
(1) Balance sheet information includes the effects of an acquisition which occurred on December 29, 1995.
</FN>
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</TABLE>
<PAGE>
ITEM: 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
Cash on hand as of December 31, 1998, is $1,249,605, a decrease of $128,533 from
the year ended December 31, 1997. The Registrant expects the capital
expenditures during 1999 will be adequately funded by current cash reserves and
the properties' operating cash flow. The anticipated capital expenditures are as
follows:
Other Leasing
Capital Capital Total
NorthCreek Office Park 0 $83,861 $83,861
Tower Industrial Building 252,000 0 252,000
Northeast Commerce Center 28,400 8,500 36,900
Countryside Executive Center 38,711 210,511 249,222
Leawood Fountain Plaza (24%) 21,022 53,133 74,155
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$340,133 $356,005 $696,138
====================================
At NorthCreek Office Park, leasing capital is anticipated for tenant
improvements and lease commissions on new and renewal deals.
At Tower Industrial Building, other capital has been budgeted for a complete
re-roofing of the building.
At Northeast Commerce Center, other capital has been budgeted for parking lot
overlay and striping, and leasing capital has been budgeted for separating
utilities to accommodate one of our existing tenants who is downsizing and the
Registrant has entered into a new lease for part of their space. At December 31,
1998, one of the major tenants vacated 50% of the property, which was one of the
two buildings at Northeast Commerce Center. The Registrant is working with a
local brokerage firm to try to re-lease the building to two tenants who wish to
use it on an office/warehouse type basis, or the Registrant would be willing to
consider selling the one building to a user who would like to occupy the entire
50,000 square feet that is vacant. Any deals brought to the Registrant by the
brokerage firm will be evaluated throughout the year. Due to the uncertainty of
re-leasing and the requirements that any potential tenant may have, no capital
has been budgeted for this re-leasing, although the Registrant will have funds
available from current cash reserves and operating results of its properties.
At Countryside Office Park, other capital has been budgeted for updating of
bathroom counters, additional light fixtures, and a new HVAC unit. Leasing
capital has been budgeted for tenant improvements and lease commissions for new
and renewal tenants.
At Leawood Fountain Plaza, leasing capital has been budgeted for tenant
improvements and lease commissions for new and renewal tenants. Other capital
budgeted is for recarpeting hallways in one building, replacing exterior
lighting throughout the property, and overlay of the parking lot.
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<PAGE>
Effective October 1998, Countryside Executive Center was renamed Countryside
Office Park. The Registrant has hired a different local brokerage firm to
attempt to get better results in leasing up the property during 1999. During
1998 occupancy increased from 72% at the beginning of the year to 77% at
year-end.
The future liquidity of the Registrant is dependent on its ability to fund
future capital expenditures and mortgage payments from operations and cash
reserves, maintain occupancy and sell Countryside Office Park at a price
sufficient to satisfy required obligations. Until such time as the real estate
market fully recovers, the Registrant will continue to manage the properties to
achieve its investment objectives.
Results of Operations
The results of operations for the Registrant's properties for the years ended
December 31, 1998, 1997 and 1996 are detailed in the schedule below. Expenses of
the Registrant are excluded.
<TABLE>
<CAPTION>
NorthCreek Tower Northeast Countryside Leawood
Office Park Industrial Commerce Office Park Fountain
(100%) (100%) (100%) (100%) Plaza (24%)
----------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1998
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Revenues $1,377,291 $202,221 $692,068 $1,025,373 $307,888
Expenses 1,199,133 108,696 723,378 988,862 264,297
--------------------------------------------------------------------------------
Net Income (Loss) $ 178,158 $ 93,525 $(31,310) $ 36,511 $ 43,591
1997
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Revenues $1,303,843 $196,947 $676,065 $ 905,834 $283,881
Expenses 1,222,155 106,565 625,690 975,298 263,850
--------------------------------------------------------------------------------
Net Income (Loss) $ 81,688 $ 90,382 $ 50,375 $ (69,464) $ 20,031
1996
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Revenues $1,387,766 $199,099 $582,345 $ 1,068,983 $286,674
Expenses 1,171,977 109,090 671,080 1,087,519 278,219
---------------------------------------------------------------------------------
Net Income (Loss) $ 215,789 $ 90,009 $(88,735) $ (18,536) $ 8,455
</TABLE>
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1998 Property Comparisons
At NorthCreek Office Park, revenues increased $73,448 when comparing 1998 to
1997. The increase in income is due to an increase in base rental income
($57,197) and an increase in escalation income ($14,784). Expenses were
relatively stable, decreasing $23,022 when comparing the two years. The decrease
in expenses was due to decreases in interest ($6,252), depreciation ($8,588),
and amortization ($6,348).
The operations at Tower Industrial Building remain stable as the building
continues to be occupied by a single tenant which has an annual base rental
increase equal to 50% of the CPI in the greater Chicago area.
Operating results at Northeast Commerce Center decreased when comparing 1998 to
1997. Revenues were relatively stable, increasing ($16,003) due to an increase
in miscellaneous non-rental income ($9,629), and an increase in base rental
income ($7,357). Expenses at Northeast Commerce Center increased $97,688 when
comparing 1998 to 1997. The increase in expenses is due to an increase in real
estate taxes ($55,325) due to a decrease in the real estate tax accrual caused
by a lower assessment in the prior year. In addition, parking lot landscaping
expenses increased ($7,710) and fire and crime prevention costs increased
($7,619). Amortization expenses increased ($20,178).
At Countryside Office Park, revenues increased $119,539 due to an increase in
base rental income ($197,868), an increase in real estate tax reimbursement
income ($11,678), partially offset by a decrease in miscellaneous rental income
($93,781). In 1997, the Registrant had received significant miscellaneous rental
income for a tenant who paid hold over rent for approximately six months during
that year. Expenses at Countryside Office Park increased ($13,564) when
comparing year-end results for 1998 to the prior year. Significant fluctuations
occurred in amortization which increased ($79,731), repair and maintenance
expense which increased $28,703, and real estate tax expense which decreased
($100,428). Amortization increased in 1998 due to tenant alterations and lease
commissions incurred in the fourth quarter of 1997. The decrease in real estate
tax expense is a result of a tax consultant fee which was paid in 1997 which was
not incurred again in 1998. As a result of the increase in income and expenses,
net income increased $105,976 when comparing 1998 to 1997.
At Leawood Fountain Plaza, revenues increased ($24,007) when comparing 1998
year-end results to the prior year. The increase in revenue can be attributed to
an increase in base rental income ($35,794), partially offset by an decrease in
escalation income ($12,953). The increase in base rental income is due to the
higher occupancy level the property maintained throughout 1998 as compared to
1997. Expenses during 1998 were relatively stable when compared to the prior
year. The result of the stable expense level when combined with the significant
increase in base rental income resulted in net income ($23,560) higher than the
prior year.
The Registrant has a first mortgage with a floating interest rate of 3/4% over
the then published prime rate of the lender. The properties which are collateral
for this loan are NorthCreek Office Park, Countryside Office Park and Northeast
Commerce Center. The balance of the loan as of December 31, 1998, is $6,995,876.
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The interest rate at year end was 8.5%. The mortgage note agreement provides for
a 3.25% interest rate on outstanding principal if a compensating balance is
maintained during the immediately preceding month. During 1998 the Partnership
decreased interest expense by approximately $64,000 from the compensating
balance clause.
The occupancy levels at the Registrant's properties as of December 31, 1998,
1997 and 1996 are detailed in the schedule below.
Occupancy rates at December 31,
1998 1997 1996
-------------------------
NorthCreek Office Park 100% 89% 98%
Tower Industrial 100% 100% 100%
Northeast Commerce Center 50% 94% 87%
Countryside Executive Center 77% 72% 61%
Leawood Fountain Plaza 97% 89% 92%
For the quarter ended December 31, 1998, occupancy at NorthCreek Office Park
increased from 96% at the beginning of the quarter to 100% at the end of the
quarter. During the quarter, two tenants signed new leases for 2,933 square
feet, two tenants renewed their leases for 3,479 square feet, and no tenants
vacated. For the year, six tenants signed new leases for 14,506 square feet,
eleven tenants renewed their leases for 15,289 square feet, and three tenants
vacated 5,067 square feet. NorthCreek Office Park has one major tenant which
occupies space under two leases which, together, comprise 33% of the available
space. These leases both expire in December 2003.
Tower Industrial Building is leased by a single tenant whose lease expires on
April 30, 2000. The Registrant is currently working on a renewal with this
tenant.
At Northeast Commerce Center, one tenant signed a new lease for an additional
5,878 square feet and renewed its lease for 17,122 square feet, and one tenant
vacated 50,000 square feet. The leasing activity which occurred in the fourth
quarter was all of the leasing activity at the property for 1998. As previously
discussed, the Registrant is working with a local Cincinnati brokerage firm to
find replacement tenant(s) or to sell the one building which is vacant.
Northeast Commerce Center has two major tenants which occupy 23% and 19% of the
space with lease expirations of 2003 and 1999. The tenant occupying 19% of the
space has notified the Registrant that they will be vacating. The Registrant's
brokerage company is working on re-leasing the space.
During the fourth quarter at Countryside Office Park, three tenants signed new
leases for 2,529 square feet, two tenants renewed their leases for 3,905 square
feet, and one tenant vacated 937 square feet. During 1998, nine tenants signed
new leases for 16,563 square feet, seven tenants renewed their leases for 5,417
square feet, and eight tenants vacated 11,871 square feet. There is one major
tenant at Countryside who occupies 14% of the space with a lease which expires
in 2005.
During the fourth quarter at Leawood Fountain Plaza, occupancy increased from
95% to 97%. During the quarter, two tenants signed new leases for 2,567 square
feet, three tenants renewed their leases for 13,164 square feet, and one tenant
vacated 560 square feet. During the year, the Registrant signed new leases with
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seven tenants for 6,743678 square feet, renewed seven tenants' leases for 19,155
square feet, and three tenants vacated 2,626 square feet. The property has two
major tenants, one who occupies 14% of the space with a lease which expires in
October 2001 and the other major tenant occupies 10% of the space with a lease
which expires in July 1999, respectively. The Registrant is currently working
with the tenant whose leases expires duirng 1999 for a long-term renewal.
The Registrant reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of a property may not
be recoverable. The Registrant considers a history of operating losses or a
change in occupancy to be primary indicators of potential impairment. The
Registrant deems the Property to be impaired if a forecast of undiscounted
future operating cash flows directly related to the Property, including disposal
value, if any, is less than its carrying amount. If the Property is determined
to be impaired, the loss is measured as the amount by which the carrying amount
of the Property exceeds its fair value. Fair value is based on quoted market
prices in active markets, if available. If quoted market prices are not
available, an estimate of fair value is based on the best information available,
including prices for similar properties or the results of valuation techniques
such as discounting estimated future cash flows. Considerable management
judgment is necessary to estimate fair value. Accordingly, actual results could
vary significantly from such estimates.
Year 2000 issues
Information Technology Systems
The Registrant utilizes computer software for its corporate and real property
accounting records and to prepare its financial statements, as well as for
internal accounting purposes. The vendor of the Registrant's software has
informed the Registrant that it is Year 2000 compliant. The Registrant believes
after reasonable investigation that its information technology hardware is Year
2000 compliant. However, in the event that such systems should fail, as a
contingency plan, the Registrant could prepare all required accounting entries
manually, without incurring material additional operating expenses.
Non-Information Technology Systems
At the request of the Registrant, its property managers have completed their
review of the major date-sensitive non-information technology systems such as
the elevators, heating, ventilating, air conditioning and cooling ("HVAC")
systems, locks, and other like systems in the Registrant's properties and have
determined that such systems are materially Year 2000 compliant. In some of the
Registrant's properties, its property managers have utilized the services of
third-party consultants in making this determination, while in other properties,
the property managers have internally made such determinations. The Registrant
does not separately track the internal costs incurred for its Year 2000 project.
The Registrant does not believe that the Year 2000 issue will pose significant
problems to the Registrant's Information technology systems and non-Information
technology systems, or that resolution of any potential problems with respect to
such systems will have a material effect on the Registrant's financial condition
or results of operations.
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Material Third Parties' Systems Failures
The most reasonably likely worst case scenario facing the Registrant as a result
of the Year 2000 problem would be the inability of its tenants to pay rent as a
result of a breakdown in such tenants' (or their financial service providers')
computer systems or the refusal of such tenants to pay their rent as a result of
the Registrant's inability to provide services due to non-Information technology
systems failure. Failure in a tenant's computer systems may cause delays in such
tenant's ability to process its accounting records and to make timely rent
payments. However, any such delays in rent payments, whether caused by systems
failure of tenant, property manager or a combination of the two, should not have
a materially adverse effect on the Registrant's business or results of
operations.
Risks
While delays caused by failure of the tenants' or the property managers'
accounting or supply systems would likely not adversely affect the Registrant's
business or results of operations, non-Information technology systems failure in
the Registrant's properties could lead to tenants attempting to withhold their
rent payments, which could materially adversely effect the Registrant's
business, results of operations and financial condition as a result of increased
legal costs. The Registrant believes that such material effect is primarily
limited to items of a utility nature furnished by third parties to the
Registrant and a wide universe of other customers. Included are items such as
electricity, natural gas, telephone service and water, all of which are not
readily susceptible to alternate sources and which in all likelihood should be
available in some form. The Registrant has been unable to obtain assurances from
such utility companies as to their Year 2000 compliance, and does not expect
that such assurances will be forthcoming.
Such non-Information technology systems failure could force tenants to use the
stairs in such properties, rather than the elevators. However, none of the
properties owned by the Registrant is a high-rise building where such an
elevator failure could cause a material adverse effect to the operations of its
tenants, although such failure could make it impossible for any disabled tenants
or any disabled customers to access such properties. Moreover, as previously
discussed, the Registrant may suffer adverse effects in its results of
operations and financial condition as a result of utility or HVAC failures, for
example. Such events could lead the tenants of the Registrant to withhold rent,
in the event that the Registrant's properties are not usable for their intended
purposes. The Registrant does not believe that rent abatement would be a lawful
tenant remedy for short-term obligations unless such failures extend for a
period of 30 consecutive days. The Registrant intends to pursue its remedies for
any such breach of its rent obligations by a Tenant expeditiously and to the
full extend permitted by law.
1998 Comparisons
For the year ended December 31, 1998, the Registrant's consolidated revenues
were $3,680,649 compared to $3,356,773 for the year ended December 31, 1997.
Revenues increased $323,876 or 10% when comparing the two years. The increase in
revenue is due to an increase in base rental income at the Registrant's
properties as previously described.
For the year ended December 31, 1998, consolidated expenses were $3,316,553
compared to $3,293,186 for the year ended December 31, 1997. Thus, total
expenses increased $23,367. The increase in expenses was a result of an increase
-13-
<PAGE>
in depreciation and amortization ($84,450), an increase in repair and
maintenance ($41,342), and an increase in other operating expenses ($48,189),
offset by a decrease in real estate taxes ($63,257), and a decrease in
professional services ($89,196). Net income was $364,096 as compared to $63,587
for the prior year. Net cash provided by operating activities was $643,655 for
the year ended December 31, 1998. The cash was used to provide capital
improvements to the properties of $289,092, pay distributions to partners of
$382,440 and decrease the outstanding balance of the mortgage loan by $100,656.
1997 Comparisons
For the year ended December 31, 1997, the Registrant's consolidated revenues
were $3,356,773 compared to $3,509,669 for the year ended December 31, 1996.
Thus, revenues decreased $152,896 when comparing the two years. This decrease in
revenue is due to a decrease in base rental income at Countryside Executive
Center and NorthCreek Office Park.
For the year ended December 31, 1997, consolidated expenses were $3,293,186 as
compared to $3,426,098 for the year ended 1996. Expenses decreased due to a
decrease in real estate tax expense ($156,800) due to the decreased real estate
tax assessment , a decrease in other operating expenses ($45,874), partially
offset by an increase in professional services ($92,379). Net income for the
year ended 1997 was $63,587 as compared to $83,571 for the year ended 1996.
During 1997, net cash provided by operating activities was $954,807. This cash
was used to provide capital improvements to the properties of $551,260, cash
distributions to partners were paid in the amount of $254,967, and principal
payments on the mortgage loan were made in the amount of $93,468.
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operations in fiscal 1998 and are not expected to materially affect the
Registrant's operation in l999.
Interest Rates
Interest rates on floating rate debt went down in 1997 and fluctuated throughout
1998, ending the year lower than the prior year end. Future increases in the
prime interest rate can adversely affect the operations of the Registrant.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrant considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments". The
Registrant had no holdings of derivative financial or commodity instruments at
December 31, 1998. A review of the Registrant's other financial instruments and
risk exposures at that date revealed that the Registrant had minor exposure to
interest rate risk due to the floating rate first mortgage debt of $6,995,876.
The Registrant utilized sensitivity analyses to assess the potential effect of
this risk and concluded that near-term changes in interest rates should not
materially adversely affect the Registrant's financial position, results of
operations or cash flows.
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.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has two General Partners. The background and experience of the
General Partners are as follows:
The General Partner of the Registrant responsible for all aspects of the
Registrant's operations is Nooney Income Investments Two, Inc., a Missouri
corporation. Nooney Income Investments Two, Inc. was formed in November 1984 for
the purpose of being a general and/or limited partner in the Registrant and
other limited partnerships.
John J. Nooney is a Special General Partner of the Partnership and as such, does
not exercise control of the affairs of the Partnership.
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The General Partners will continue to serve as General Partners until their
withdrawal or their removal from office by the Limited Partners.
Certain of the General Partners act as general partners of limited
partnerships and hold directorships of companies with a class of securities
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 or
subject to the requirements of Section 15(d) of the Act. A list of such
directorships, and the limited partnerships for which the General Partners serve
as general partners, is filed herewith as Exhibit 99.1 and incorporated herein
by reference.
ITEM 11: EXECUTIVE COMPENSATION
The General Partners are entitled to a share of distributions and a share of
profits and losses as more fully described under the headings "Compensation to
General Partners and Affiliates" on pages 26-27 and "Profits and Losses for Tax
Purposes; Distributions; and Expenses of General Partners" on pages A-17 to A-22
of the Prospectus of the Registrant dated February 15, 1985, as supplemented and
filed pursuant to Rule 424(c) of the Securities Act of 1933 (the "Prospectus"),
which are incorporated herein by reference.
During 1998, cash distributions of $22,046 were paid to the General Partners by
the Registrant.
See Item 13 below for a discussion of transactions between the Registrant and
certain affiliates of the General Partners.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
On or about November 20, 1997, a Schedule 13D ("Schedule 13D") setting forth the
following information was filed with the SEC by Everest Properties II, LLC
("Everest"), Millenium Investors, LLC ("Millenium") and KM Investments, LLC
("KM"). The Schedule 13D indicates that Everest is the beneficial owner of 929
Interests, or approximately 4.8% of the total outstanding Interests, and that
Everest has sole voting power and sole dispositive power with respect to all of
such Interests. The Schedule 13D also indicates that KM is the beneficial owner
of 929 Interests, or approximately 4.8% of the total outstanding Interests, and
that KM has sole voting power and sole dispositive power with respect to all of
such Interests. The Schedule 13D further indicates that Millenium is the
beneficial owner of 121 Interests, or approximately 0.6% of the total
outstanding Interests, and has sole voting power and sole dispositive power with
respect to all of such Interests. The Schedule 13D reports that Everest serves
as the manager of each of Millenium and KM and that because it serves in such
capacity for KM and because it owns a majority interest in the majority member
of KM, it may be deemed to beneficially own the Interests directly owned by KM.
[The Schedule 13D indicates that although each of Everest, Millenium and KM deny
that they are members of a "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
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<PAGE>
Schedule 13D was filed as a precaution because the individuals performing
management services for Everest Properties, LLC, which owns a majority interest
in Everest, and Everest are substantially the same and such entities have agreed
to submit a joint proposal for the sale of their Interests to the General
Partner and to share information regarding such proposal. Section 13(d)(3) of
the Exchange Act provides that when two or more persons act as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding, or disposing of securities of an issuer, such syndicate or group shall
be deemed a "person" for purposes of filing Schedule 13D]. The principal
business address of each of each of Everest, Millenium and KM is 199 South Los
Robles Avenue, Suite 440, Pasadena, California 91101.
(b) Security Ownership of Management.
None of the General Partners is known to the Registrant to be the beneficial
owner, either directly or indirectly, of any Interests in the Registrant.
(c) Changes in Control.
There are no arrangements known to the Registrant, the operation of which may at
a subsequent date result in a change in control of the Registrant.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others.
Certain affiliates of the General Partners are entitled to certain fees and
other payments from the Registrant in connection with certain transactions of
the Registrant as more fully described under the headings "Compensation to
General Partners and Affiliates" on pages 26-27 and "Management" on pages 23-25
of the Prospectus, which are incorporated herein by reference.
Nooney, Inc., the manager of the Registrant's properties, is a wholly-owned
subsidiary of CGS Real Estate Company, an affiliate of the General Partner.
Nooney, Inc. is entitled to receive monthly compensation from the Registrant for
property management and leasing services, plus administrative expenses. During
fiscal 1998 the Registrant paid property management fees of $215,198 to Nooney,
Inc. and $40,000 as reimbursement for indirect expenses incurred in connection
with management of the Registrant.
See Item 11 above for a discussion of cash distributions paid to the General
Partners during the year ended December 31, 1998.
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(b) Certain Business Relationships.
The relationship of certain of the General Partners to certain of their
affiliates is set forth in Item 13(a) above. Also see Item 13(a) above for a
discussion of amounts paid by the Registrant to the General Partners or their
affiliates during the year ended December 31, 1998 in connection with various
transactions.
(c) Indebtedness of Management.
Not Applicable.
(d) Transactions with promoters.
Not Applicable.
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<PAGE>
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.
3. Exhibits:
See Exhibit Index on Page 21.
(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 21.
(d) Not applicable.
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<PAGE>
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: March 31, 1999 Nooney Income Investments Two, Inc.
----------------------------- General Partner
By:/s/ William J. Carden
William J. Carden - Director
Chairman of the Board and
Chief Executive Officer
By:/s/ Gregory J. Nooney, Jr.
Gregory J. Nooney, Jr. - Director
Vice Chairman
BEING A MAJORITY OF THE DIRECTORS
OF NOONEY INCOME INVESTMENTS TWO, INC.
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
3 Amended and Restated Agreement and Certificate of Limited
Partnership dated February 3, 1986, is incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1986, as filed
pursuant to Rule 13a-1 of the Securities Exchange Act of
1934 (File No. 0-14360).
10 Management Contract between Nooney Income Fund Ltd. II
and Nooney Management Company (now Nooney, Inc.)
dated March 12, 1985, is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 31, 1985, as filed pursuant to Rule 15d-1 of
the Securities Exchange Act of 1934 (File No. 2-94533).
99.1 List of Directorships filed in response to Item 10.
99.2 Pages 23-27 and A-17 - A-22 of the Prospectus of the
Registrant dated February 15, 1985, as supplemented and
filed pursuant to Rule 424(c) of the Securities Act of
1933 are incorporated by reference.
99.3 Financial Statements and Schedules.
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EXHIBIT 99.1
Below each General Partner's name is a list of the limited partnerships, other
than the Registrant, for which the General Partner serves as a general partner
and the companies for which the General Partner serves as a director. The list
includes only those limited partnerships and companies which have a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934 or are subject to the requirements of Section 15(d) of the Act.
John J. Nooney
Limited Partnerships:
Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P.
Nooney Real Property Investors-Four, L.P.
-22-
Exhibit 99.3
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, 1998 and 1997, and the related
statements of operations, partners' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1998. Our audits also included
the financial statement schedules listed in the index at Item 14(a)2. These
financial statements are the responsibility of the Partnership's general
partners. Our responsibility is to express an opinion on these financial
statements 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, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 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.
January 29, 1999
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
ASSETS 1998 1997
CASH AND CASH EQUIVALENTS $ 1,249,605 $ 1,378,138
ACCOUNTS RECEIVABLE (net of allowance of
$255,409 in 1998 and $233,702 in 1997) 205,323 152,950
PREPAID EXPENSES AND OTHER ASSETS 21,505 17,052
INVESTMENT PROPERTY:
Land 2,618,857 2,618,857
Buildings and improvements 13,618,572 13,517,224
----------- -----------
16,237,429 16,136,081
Less accumulated depreciation 4,691,263 4,194,255
----------- -----------
11,546,166 11,941,826
Investment property held for sale 2,826,591 2,802,714
----------- -----------
Total investment property 14,372,757 14,744,540
DEFERRED EXPENSES - At amortized cost 280,805 271,024
----------- -----------
TOTAL $16,129,995 $16,563,704
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 160,061 $ 480,609
Accrued real estate taxes 499,728 556,902
Refundable tenant deposits 211,787 148,774
Mortgage note payable 6,995,876 7,096,532
----------- -----------
Total liabilities
7,867,452 8,282,817
PARTNERS' EQUITY 8,262,543 8,280,887
----------- -----------
TOTAL $16,129,995 $16,563,704
=========== ===========
See notes to financial statements.
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------
1998 1997 1996
REVENUES:
Rental and other income $3,680,649 $3,355,159 $3,502,080
Interest 1,614 7,589
---------- ---------- ----------
Total revenues
3,680,649 3,356,773 3,509,669
EXPENSES:
Interest 584,329 595,696 614,006
Depreciation and amortization 755,447 670,997 652,940
Real estate taxes 534,592 597,849 754,649
Property management fees - related party 215,198 201,992 211,474
Repairs and maintenance 334,606 293,264 306,146
Professional services 135,134 224,330 131,951
Other operating expenses (includes
$40,000 in each year to related party) 757,247 709,058 754,932
---------- ---------- ----------
Total expenses 3,316,553 3,293,186 3,426,098
---------- ---------- ----------
NET INCOME $ 364,096 $ 63,587 $ 83,571
========== ========== ==========
NET INCOME ALLOCATION:
General partners $ 21,480 $ 12,529 $ 12,729
Limited partners $ 342,616 $ 51,058 $ 70,842
LIMITED PARTNERS' DATA:
Net income per unit $ 17.83 $ 2.66 $ 3.69
========== ========== ==========
Cash distributions - Investment
income per unit $ 17.83 $ 2.66 $ 3.69
========== ========== ==========
Cash distributions - Return of
capital per unit $ 0.92 $ 9.84 $ 8.81
========== ========== ==========
Weighted average limited
partnership units outstanding 19,221 19,221 19,221
========== ========== ==========
See notes to financial statements.
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------
Limited General
Partners Partners Total
BALANCE (DEFICIT), JANUARY 1, 1996 $ 8,770,185 $ (126,543) $ 8,643,642
Net income 70,842 12,729 83,571
Cash distributions (240,263) (14,683) (254,946)
----------- ----------- -----------
BALANCE (DEFICIT), DECEMBER 31, 1996 8,600,764 (128,497) 8,472,267
Net income 51,058 12,529 63,587
Cash distributions (240,263) (14,704) (254,967)
----------- ----------- -----------
BALANCE (DEFICIT), DECEMBER 31, 1997 8,411,559 (130,672) 8,280,887
Net income 342,616 21,480 364,096
Cash distributions (360,394) (22,046) (382,440)
----------- ----------- -----------
BALANCE (DEFICIT), DECEMBER 31, 1998 $ 8,393,781 $ (131,238) $ 8,262,543
=========== =========== ===========
See notes to financial statements.
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 364,096 $ 63,587 $ 83,571
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 660,875 604,818 593,828
Amortization of deferred expenses 94,572 66,179 59,112
Net changes in accounts affecting
operations:
Accounts receivable (52,373) 66,705 100,860
Prepaid expenses and other assets (4,453) (6,864) (5,749)
Deferred expenses (104,353) (215,064) 38,465
Accounts payable and accrued
expenses (320,548) 377,278 (148,448)
Accrued real estate taxes (57,174) (25,580) (23,629)
Refundable tenant deposits 63,013 23,748 12,992
----------- ----------- -----------
Net cash provided by
operating activities 643,655 954,807 711,002
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to investment property (289,092) (551,260) (225,189)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (382,440) (254,967) (254,946)
Mortgage principal payments (100,656) (93,468)
----------- ----------- -----------
Net cash used in financing
activities (483,096) (348,435) (254,946)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (128,533) 55,112 230,867
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 1,378,138 1,323,026 1,092,159
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END
OF YEAR 1,249,605 $ 1,378,138 $ 1,323,026
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during the
year for interest $ 537,963 $ 609,879 $ 599,823
=========== =========== ===========
See notes to financial statements.
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------
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's portfolio is comprised of a 24% undivided interest in an
office complex in Leawood, Kansas (Leawood Fountain Plaza); an office
warehouse in Mundelein, Illinois (Tower Industrial Building); a single
story office building in Palatine, Illinois (Countryside Executive Center);
an office/warehouse/showroom facility in Cincinnati, Ohio (Northeast
Commerce Center); and an office complex in Cincinnati, Ohio (NorthCreek
Office Park). The proportionate share of these properties owned by the
Partnership generated 8.5%, 5.6%, 28.5%, 19.2% and 38.2% of rental and
other income, respectively, for the year ended December 31, 1998. Effective
October 1, 1998, the property known as Countryside Executive Center was
renamed Countryside Office Park.
It is management's intent to sell Countryside Office Park (Countryside) as
soon as practicable because of local market conditions, tax burdens and
other factors related specifically to this property.
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 preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Prior to October 31, 1997, the corporate general partner was a
partially-owned subsidiary of Nooney Company. One of the individual general
partners was an officer, director and shareholder of Nooney Company.
Another individual general partner's spouse was a shareholder of Nooney
Company. Nooney Company was also an economic assignee of two former
individual general partners. Nooney Krombach Company, a wholly-owned
subsidiary of Nooney Company, managed the Partnership's real estate for a
management fee. Property management fees paid to Nooney Krombach Company
were $171,525 and $211,474 for the years ended December 31, 1997 and 1996,
respectively. Additionally, the Partnership paid Nooney Krombach Company
$33,334 in 1997 and $40,000 in 1996 as reimbursement for management
services and indirect expenses in connection with the management of the
Partnership.
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<PAGE>
On October 31, 1997, Nooney Company sold its 75% interest in Nooney Income
Investments Two, Inc., the corporate general partner of the Registrant to
S-P Properties, Inc., a California corporation, which in turn is a
wholly-owned subsidiary of CGS Real Estate Company, Inc., a Texas
corporation. Simultaneously, Gregory J. Nooney, Jr., an individual general
partner and PAN, Inc., a corporate general partner, sold their economic
interests to S-P Properties, Inc. and resigned as general partners. CGS
Real Estate also purchased the real estate management business of Nooney
Krombach Company and formed Nooney, Inc. to perform the management of the
Partnership. Property management fees paid to Nooney, Inc. were $215,198
and $30,467 for the years ended December 31, 1998 and 1997, respectively.
Additionally, the Partnership paid Nooney, Inc. $40,000 in 1998 and $6,666
in 1997 as reimbursement for management services and indirect expenses in
connection with the Partnership.
Investment property is recorded at the lower of cost or net realizable
value. The Partnership reviews long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of a
property may not be recoverable. The Partnership considers a history of
operating losses or a change in occupancy to be primary indicators of
potential impairment. The Partnership deems the property to be impaired if
a forecast of undiscounted future operating cash flows directly related to
the property, including disposal value if any, is less than its carrying
amount. If the property is determined to be impaired, the loss is measured
as the amount by which the carrying amount of the property exceeds its fair
value. Fair value is based on quoted market prices in active markets, if
available. If quoted market prices are not available, an estimate of fair
value is based on the best information available, including prices for
similar properties or the results of valuation techniques such as
discounting estimated future cash flows. Considerable management judgment
is necessary to estimate fair value. Accordingly, actual results could vary
significantly from such estimates.
Buildings and improvements are depreciated over 30 years 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,
1998, accounts receivable include approximately $121,500 ($47,000 in 1997)
of accrued rent concessions 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;
(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
-29-
<PAGE>
limited partners receive an 11% cumulative return. Through December 31,
1998, Partnership Management Fees totaling $316,180 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
$316,180 is remote and therefore was not accrued on the balance sheet.
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 primarily of lease fees which are amortized over
the terms of their respective leases.
The Partnership adopted SFAS No. 130, Reporting Comprehensive Income, which
requires entities to report changes in equity that result from transactions
and economic events other than those with shareholders. The Partnership had
no other comprehensive income items, accordingly net income and other
comprehensive income are the same.
3. MORTGAGE NOTE PAYABLE
Mortgage note payable as of December 31, 1998 and 1997, consists of the
following:
1998 1997
Note payable to bank, principal of $9,587,
and interest due monthly at bank's prime
rate (7.75% at December 31, 1998) plus .75%
maturing December 28, 2002 $6,995,876 $7,096,532
========== ==========
The mortgage note is collateralized by deeds of trust and assignment of
rents on investment property (Countryside, Northeast Commerce Center and
NorthCreek Office Park) with a net book value of $12,769,000 at December
31, 1998. The mortgage note agreement provides for a 3.25% interest rate on
outstanding principal if a compensating balance is maintained during the
immediately preceding month. During 1998 and 1997, the Partnership
decreased interest expense by approximately $64,000 and $60,000,
respectively, from the compensating balance clause.
Principal payments required during the next five years are as follows:
1999 $ 115,044
2000 115,044
2001 132,000
2002 6,633,788
----------
Total $6,995,876
==========
-30-
<PAGE>
In accordance with Statement of Financial Accounting Standards No. 107,
Disclosures About Fair Value of Instruments, the estimated fair value of
mortgage notes payable with maturities greater than one year is determined
based on rates currently available to the Partnership for mortgage notes
with similar terms and remaining maturities. The carrying amount and
estimated fair market value of the Partnership's debt at December 31, 1998
and 1997 are equal due to the adjustable rate feature of the note and the
terms are consistent with those the Partnership could currently obtain.
4. RENTAL REVENUES UNDER OPERATING LEASES
Minimum future rental revenues under noncancelable operating leases in
effect as of December 31, 1998 are as follows:
1999 $2,589,000
2000 1,909,000
2001 1,605,000
2002 1,227,000
2003 836,000
Remainder 288,000
----------
Total $8,454,000
==========
In addition, certain lease agreements require tenant participation in
certain operating expenses. Tenant participation in expenses included in
revenues approximated $61,000, $43,000 and $38,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.
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 write-down of investment property
are not recognized for tax purposes until the property is disposed.
-31-
<PAGE>
The comparison of financial statement and income tax reporting is as
follows:
Financial Income
Statement Tax
1998:
Net income (loss) $ 364,096 $ (5,791)
Partners' equity 8,262,543 13,324,011
1997:
Net income (loss) $ 63,587 $ (8,137)
Partners' equity 8,280,887 13,712,242
1996:
Net income (loss) $ 83,571 $ (265,962)
Partners' equity 8,472,267 13,975,346
6. MAJOR TENANT
A substantial amount of the Partnership's revenue in 1998 was derived from
two major tenants whose rentals amounted to approximately $427,000 and
$367,000 or 11.6% and 10.0%, respectively, of total revenues. A substantial
amount of the Partnership's revenue in 1997 was derived from two major
tenants whose rentals amounted to approximately $500,000 and $408,000 or
14.9% and 12.2%, respectively, of total revenues. A substantial amount of
the Partnership's revenue in 1996 was derived from two major tenants whose
rentals amounted to approximately $469,000 and $374,000 or 13.3% and 10.6%,
respectively, of total revenues.
-32-
<PAGE>
7. BUSINESS SEGMENTS (in thousands)
The Partnership has five reportable operating segments: Leawood Fountain
Plaza, Tower Industrial, Countryside Executive Center, Northeast Commerce
Center, and NorthCreek Office Park. The Partnership's management evaluates
performance of each segment based on profit or loss from operations before
allocation of property writedowns, general and administrative expenses,
unusual and extraordinary items, and interest. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies (see Note 2).
(In thousands) 1998 1997 1996
Revenues:
Leawood Fountain Plaza $ 307.9 $ 283.9 $ 286.7
Tower Industrial 202.2 196.9 199.1
Countryside Executive Center 1,025.4 905.8 1,069.0
Northeast Commerce Center 692.1 676.1 582.3
NorthCreek Office Park 1,377.3 1,303.8 1,387.8
----------- ----------- -----------
$ 3,604.9 $ 3,366.5 $ 3,524.9
=========== =========== ===========
Operating profit:
Leawood Fountain Plaza $ 43.6 $ 20.0 $ 8.5
Tower Industrial 93.5 90.4 90.0
Countryside Executive Center 36.5 (69.5) (18.5)
Northeast Commerce Center (31.3) 50.4 (88.7)
NorthCreek Office Park 178.2 81.7 215.8
----------- ----------- -----------
$ 320.5 $ 173.0 $ 207.1
=========== =========== ===========
Capital expenditures:
Leawood Fountain Plaza $ 36.1 $ 29.0 $ 32.8
Tower Industrial
Countryside Executive Center 138.0 313.3 117.8
Northeast Commerce Center 68.3 74.6
NorthCreek Office Park 115.0 140.7
----------- ----------- -----------
$ 289.1 $ 551.3 $ 255.2
=========== =========== ===========
Depreciation and amortization:
Leawood Fountain Plaza $ 90.8 $ 91.4 $ 93.7
Tower Industrial 41.6 41.6 41.6
Countryside Executive Center 151.8 72.0 77.3
Northeast Commerce Center 265.4 245.2 177.5
NorthCreek Office Park 359.3 374.3 328.8
----------- ----------- -----------
$ 908.9 $ 824.5 $ 718.9
=========== =========== ===========
Assets:
Leawood Fountain Plaza $ 1,476.0 $ 1,531.3
Tower Industrial 914.8 965.5
Countryside Executive Center 8,653.8 8,623.5
Northeast Commerce Center 4,606.2 4,929.7
NorthCreek Office Park 6,992.8 7,323.9
----------- -----------
$ 22,643.6 $ 23,373.9
=========== ===========
-33-
<PAGE>
Reconciliations of segment data to the Partnership's consolidated data
follow:
(In thousands) 1998 1997 1996
Net income (loss):
Segments $ 320.5 $ 173.0 $ 207.1
Other income (expense) 75.7 (9.7) (15.2)
General and administrative expenses (32.1) (99.7) (108.3)
--------- --------- ---------
$ 364.1 $ 63.6 $ 83.6
========= ========= =========
Revenues:
Segments $ 3,604.9 $ 3,366.5 $ 3,524.9
Corporate and other 75.7 (9.7) (15.2)
--------- --------- ---------
$ 3,680.6 $ 3,356.8 $ 3,509.7
========= ========= =========
Assets:
Segments $22,643.6 $23,373.9
Corporate and other (6,513.6) (6,810.2)
--------- ---------
$16,130.0 $16,563.7
========= =========
Depreciation and amortization:
Segments $ 908.9 $ 824.5 $ 718.9
Corporate and other (153.5) (153.5) (66.0)
--------- --------- ---------
$ 755.4 $ 671.0 $ 652.9
========= ========= =========
* * * * * *
-34-
<PAGE>
<TABLE>
<CAPTION>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1998, 1997 AND 1996
- ------------------------------------------------------------------------------------------------------------------------------------
The reconciliation of partners' equity (deficit) between financial statement and income tax reporting is as follows:
December 31, 1998
----------------------------------------------
Limited General
Partners Partners Total
<S> <C> <C> <C>
Balance (deficit) per statement of partners' equity $ 8,393,781 $(131,238) $ 8,262,543
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 6,356 64 6,420
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 16,132,616 (77,428) 16,055,188
Less:
Excess depreciation and amortization deducted for income tax purposes 2,553,625 43,789 2,597,414
Insurance premiums deducted for income tax purposes 12,120 122 12,242
Rent concessions not recognized for income tax purposes 120,306 1,215 121,521
----------- --------- -----------
Balance (deficit) per tax return $13,446,565 $(122,554) $13,324,011
=========== ========= ===========
December 31, 1997
----------------------------------------------
Limited General
Partners Partners Total
Balance (deficit) per statement of partners' equity $ 8,411,559 $(130,672) $ 8,280,887
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 70,438 711 71,149
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 16,214,476 (76,215) 16,138,261
Less:
Excess depreciation and amortization deducted for income tax purposes 2,337,626 41,606 2,379,232
Insurance premiums deducted for income tax purposes
Rent concessions not recognized for income tax purposes 46,319 468 46,787
----------- --------- -----------
Balance (deficit) per tax return $13,830,531 $(118,289) $13,712,242
=========== ========= ===========
<PAGE>
December 31, 1996
----------------------------------------------
Limited General
Partners Partners Total
Balance (deficit) per statement of partners' equity $ 8,600,764 $(128,497) $ 8,472,267
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 (23,551) (238) (23,789)
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 16,309,692 (74,989) 16,234,703
Less:
Excess depreciation and amortization deducted for income tax purposes 2,160,116 39,814 2,199,930
Insurance premiums deducted for income tax purposes
Rent concessions not recognized for income tax purposes 58,833 594 59,427
----------- --------- -----------
Balance (deficit) per tax return $14,090,743 $(115,397) $13,975,346
=========== ========= ===========
-35-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C
-------- -------- --------
Initial Cost to Partnership
----------------------------------------
Buildings and
Description Encumbrances Land Improvements 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
NorthCreek Office Park, Cincinnati, Ohio 338,850 4,639,617 4,978,467
Northeast Commerce Center, Cincinnati, Ohio 199,361 2,784,317 2,983,678
Countryside Office Park, NorthCreek Office Park and Northeast
Commerce Center 6,995,876
---------- --------- ----------- -----------
- 1,050,917 10,457,427 11,508,344
Countryside Office Park, Palatine, Illinois 623,919 4,302,911 4,926,830
---------- --------- ----------- -----------
Total $6,995,876 $1,674,836 $14,760,338 $16,435,174
========== ========== =========== ===========
Column D Column E
-------- --------
Gross Amount at Which
Costs Carried at Close of Period
Capttalized ----------------------------------------
Subsequent to Buildings and
Description Acquisition(1) Land Improvements Total
Leawood Fountain Plaza Office Complex (24% undivided interest),
Leawood, Kansas $ (625,612) $ 318,962 $ 1,365,805 $ 1,684,767
Tower Industrial Building, Mundelein, Illinois 2,841 193,744 1,044,917 1,238,661
NorthCreek Office Park, Cincinnati, Ohio 3,728,715 1,370,100 7,337,082 8,707,182
Northeast Commerce Center, Cincinnati, Ohio 1,623,141 736,051 3,870,768 4,606,819
Countryside Office Park, NorthCreek Office Park and Northeast
Commerce Center
---------- ---------- ----------- -----------
4,729,085 2,618,857 13,618,572 16,237,429
Countryside Office Park, Palatine, Illinois (1,033,777) 1,356,419 2,536,634 3,893,053(2)
---------- ---------- ----------- -----------
Total $3,695,308 $3,975,276 $16,155,206 $20,130,482
========== ========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on Which
Depreciation in
Accumulated Date of Date Latest Income
Depreciation Construction Acquired Statement is Computed
<S> <C> <C> <C> <C>
Leawood Fountain Plaza Office Complex (24% undivided interest),
Leawood, Kansas $ 871,838 1982-1983 2/20/85 30 years
Tower Industrial Building, Mundelein, Illinois 447,860 1974 3/20/86 30 years
NorthCreek Office Park, Cincinnati, Ohio 2,170,842 1984-1986 12/29/86 30 years
Northeast Commerce Center, Cincinnati, Ohio 1,200,723 1985 12/29/86 30 years
-----------
4,691,263
Countryside Office Park, Palatine, Illinois 1,066,462 (2) 1975 12/16/86 30 years
-----------
1,066,462
Total $ 5,757,725
===========
<FN>
(1) Amounts shown are net of assets written-off and the following writedowns to reflect appraised values:
Leawood Fountain Plaza Office Complex $ 754,000
NorthCreek Office Park 484,000
Northeast Commerce Center 761,000
Northeast Commerce Center 3,256,000
(2) Amount is shown net in the financial statements $2,826,591.
(Continued)
</FN>
-36-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $ 19,981,023 $ 19,569,732 $ 19,442,902
Add - Cost of improvements 289,092 551,260 225,189
Less - Cost of disposals (139,633) (139,969) (98,359)
------------ ------------ ------------
Balance at end of period $ 20,130,482 $ 19,981,023 $ 19,569,732
============ ============ ============
Reconciliation of amounts in Column F:
(B) Balance at beginning period $ 5,236,483 $ 4,771,634 $ 4,276,165
Add - Provision during period 660,875 604,818 593,828
Less - Depreciation on disposals (139,633) (139,969) (98,359)
------------ ------------ ------------
Balance at end of period $ 5,757,725 $ 5,236,483 $ 4,771,634
============ ============ ============
(C) The aggregate cost of real estate
owned for federal income tax purposes $ 25,385,482 $ 25,236,023 $ 24,824,732
============ ============ ============
-37-
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR NOONEY INCOME FUND LTD. II, L.P. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000757764
<NAME> INCOME FUND LTD. II, L.P.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,249,605
<SECURITIES> 0
<RECEIVABLES> 205,323
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,476,433
<PP&E> 16,237,429
<DEPRECIATION> 4,691,263
<TOTAL-ASSETS> 16,129,995
<CURRENT-LIABILITIES> 659,789
<BONDS> 6,995,876
<COMMON> 0
0
0
<OTHER-SE> 8,262,543
<TOTAL-LIABILITY-AND-EQUITY> 16,129,995
<SALES> 3,682,488
<TOTAL-REVENUES> 4,008,203
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,759,269
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 584,329
<INCOME-PRETAX> 664,605
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 664,605
<EPS-PRIMARY> 17.83
<EPS-DILUTED> 0
</TABLE>
