FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period.........to.........
Commission file number 0-15758
JACQUES-MILLER INCOME FUND, L.P. II
(Name of small business issuer in its charter)
Delaware 62-1244325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 Woodmont Boulevard, Suite 420
Nashville, Tennessee 37205
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $873,130
State the aggregate market value of the voting partnership interests by non-
affiliates computed by reference to the price at which the partnership interests
were sold, or the average bid and asked prices of such partnership interests, as
of December 31, 1995. Market value information is not available. Should a
trading market develop for these interests, it is the corporate general
partners's belief that such a trading would not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Prospectus of Registrant dated October 16, 1985 (included
in Registration Statement, No.2-99745, of Registrant) are incorporated
by reference into Parts I and III.
PART I
Item 1. Description of Business
Jacques-Miller Income Fund L.P. II ("Registrant" or "Partnership") is a
Delaware limited partnership formed in July 1985 for the purpose of making first
mortgage loans, wrap-around mortgage loans and other loans secured directly or
indirectly by interests in real property substantially all of which may be made
to affiliated public and private real estate limited partnerships. The
Registrant has made loans providing, generally, for repayment of principal
between 8 and 15 years after funding.
The offering of the Registrant's limited partnership interests (the
"Interests") terminated on October 15, 1987. The Registrant received gross
proceeds from the offering of $12,390,016 and net proceeds of $11,199,960.
See "Item 6. Management's Discussion and Analysis or Plan of Operation"
for more information.
Mansion Hill Apartments in Chattanooga, Tennessee and Kingswood North
Apartments in Norcross, Georgia were acquired during 1990 through foreclosure
proceedings. During 1991, these properties were sold. During 1991, the
Registrant acquired La Plaza Apartments ("La Plaza") through similar foreclosure
proceedings and during 1992, Willow Oaks Apartments ("Willow Oaks") and Brighton
Way Apartments ("Brighton Way") were foreclosed upon by separate limited
partnerships of which the Registrant is the sole limited partner. On February
1, 1993, Brighton Way was sold, and on January 17, 1995, Willow Oaks was sold.
Both the income and expenses of operating the remaining property owned by
the Registrant are subject to factors outside of the Registrant's control, such
as oversupply of similar properties resulting from over building, increases in
unemployment or population shifts, reduced availability of permanent mortgage
funds, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside the control of the Registrant.
Effective June 30, 1989, Jacques-Miller, Inc. sold the economic benefits
and economic rights in Jacques-Miller sponsored limited partnerships, including
the Registrant, to Balanced Holdings Partners, L.P., an affiliate. Effective
December 31, 1991, an affiliate of Insignia Financial Group, Inc. ("Insignia")
of Greenville, South Carolina acquired substantially all of the assets of
Jacques-Miller, Inc.; however, such assets purchased do not include the General
Partner Interest of the Registrant.
The Registrant has no employees. Management and administrative services
are performed by Insignia Management Group, L.P., an affiliate of Insignia,
pursuant to management and administrative agreements.
The real estate business is highly competitive. The Registrant's real
property investment is subject to competition from similar types of properties
in the vicinities in which it is located and the Partnership is not a
significant factor in its industry. In addition, various limited partnerships
have been formed by related parties to engage in business which may be
competitive with the Registrant.
Item 2. Description of Properties
The following table sets forth the Registrant's investment in property:
Date of
Property Purchase Type of Ownership Use
La Plaza Apartments 10/07/91 Fee ownership subject Apartment
Altamonte Springs, FL to first and second 144 units
mortgages
Schedule of Properties:
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
<S> <C> <C> <C> <C> <C>
La Plaza Apartments $2,043,374 $ 424,285 5-25 yrs S/L $1,702,021
</TABLE>
See Note A of the financial statements included in "Item 7." for a
description of the Partnership's depreciation policy.
Schedule of Mortgages:
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1995 Rate Amortized Date Maturity
La Plaza
1st mortgage $1,940,290 7.60% (1) 11/15/02 $1,502,719
2nd mortgage 64,166 7.60% none 11/15/02 64,166
$2,004,456
Less unamortized
present value
discounts (109,823)
Total $1,894,633
(1) The principal balance is being amortized over 257 months with a balloon
payment due November 15, 2002.
Schedule of Rental Rates and Occupancy:
Average Annual Average Annual
Rental Rates Per Unit Occupancy
Property 1995 1994 1995 1994
La Plaza $5,456 $5,327 93% 93%
As noted under "Item 1. Description of Business," the real estate industry
is highly competitive. The Partnership's property is subject to competition
from other residential apartment complexes. The Corporate General Partner
believes that the property is adequately insured. The multi-family residential
tenants' lease terms are for one year or less. No individual residential tenant
leases 10% or more of the available rental space.
Real estate taxes and rates in 1995 for the property were:
1995 1995
Billing Rate
La Plaza $58,839 2.05%
Item 3. Legal Proceedings
The Partnership is not aware of any pending or outstanding litigation that
is not of a routine nature. The General Partner believes that all such matters
are adequately covered by insurance and will be resolved without a material
effect upon the business, financial condition, statements of operations or
liquidity of the Partnership.
Item 4. Submission of Matters to a Vote of Security Holders
The Registrant did not submit any matter to a vote of its security holders
during the fiscal year covered by this report.
PART II
Item 5. Market for Partnership Equity and Related Partner Matters
There is no established market for the Units and it is not anticipated that
any will occur in the foreseeable future. As of December 31, 1995, there were
1,220 holders of record owning an aggregate of 12,400 Units.
Pursuant to the terms of the Partnership Agreement, there are restrictions
on the ability of the Limited Partners to transfer their Unit. In all cases
the General Partner must consent to any transfer.
The Revenue Act of 1987 contained provisions which have an adverse impact
on investors in "publicly traded partnerships". Accordingly, the General
Partner has established a policy of imposing limited restrictions on the
transferability of the Units in secondary market transactions. Implementation
of this policy should prevent a public trading market from developing and may
impact the ability of an investor to liquidate his investment quickly. It is
expected that such policy will remain in effect until such time, if ever, as
further clarification of the Revenue Act of 1987 may permit the Registrant to
lessen the scope of the restrictions.
During 1995, the Partnership distributed $1,851,242 to the limited partners
and $20,571 to the general partner due to the sale of Willow Oaks. There were
no distributions made during 1994. There are no material restrictions upon the
Registrant's present or future ability to make distributions in accordance with
the provisions of the Registrant's Partnership Agreement.
Item 6. Management's Discussion and Analysis or Plan of Operation
This item should be read in conjunction with the financial statements and
other items contained elsewhere in this report.
Results of Operations
The Partnership's net income as shown in the financial statements for the
year ended December 31, 1995, was $737,849 versus net income of $1,273 for the
year ended December 31, 1994. The increase in net income is primarily
attributable to the gain on the sale of Willow Oaks Apartments in 1995. Because
the apartment complex was sold on January 17, 1995, the statements of operations
are not comparable. The 1995 statement of operations was affected by the gain
on the sale of Willow Oaks and by the fact that Willow Oaks' operations were
only included for seventeen days of 1995. Also contributing to this change was
a decrease in maintenance expense at La Plaza Apartments due to a major
landscaping project done in the first quarter of 1994. In addition, other income
decreased for the Partnership due to the fact that there was only one property
in the Partnership for the majority of 1995 versus two properties in 1994.
However, other income increased for La Plaza due to additional tenant charges
resulting from strict enforcement of the property's policies.
As part of the ongoing business plan of the Partnership, the Corporate
General Partner monitors the rental market environment of its investment
property to assess the feasibility of increasing rent, maintaining or increasing
occupancy levels and protecting the Partnership from increases in expense. As
part of this plan, the Corporate General Partner attempts to protect the
Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Corporate General Partner will be able to sustain such a
plan.
Liquidity and Capital Resources
At December 31, 1995, the Partnership reported unrestricted cash of
$586,116 versus $743,507 at December 31, 1994. Net cash used in operating
activities increased primarily due to a decrease in accounts payable at Willow
Oaks as a result of the accrual of roofing and water damage expenses at December
31, 1994. In addition, tenant security deposits decreased due to the sale of
Willow Oaks in January 1995. Depreciation and amortization also decreased due
to Willow Oaks being sold in January 1995. Also contributing to the change was
a decrease in accrued taxes due to the payment of 1994 taxes in the first
quarter of 1995, which was partially offset by the change in tax escrows.
Furthermore, the increase in net income is offset by the gain on the sale of
Willow Oaks. Net cash provided by investing activities increased due to
proceeds from the sale of Willow Oaks. Also contributing to the change was an
increase in net receipts from restricted escrows to cover roof replacement
costs. Net cash used in financing activities increased primarily due to the
distribution made during 1995.
The Partnership has no material capital projects scheduled to be performed
in 1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or if received from the
capital reserve account.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. Near-term needs
include all operating, maintenance and other expenses which are needed to
operate the Partnership's investment property in the near future. The mortgage
indebtedness of $1,894,633, net of discount, is amortized over 257 months. In
addition, the mortgage notes encumbering La Plaza Apartments require balloon
payments on November 15, 2002, at which time the property will either be sold or
refinanced. On January 17, 1995, Willow Oaks Apartments' mortgage was assumed
by the purchaser. Future cash distributions will depend on the levels of net
cash generated from operations, refinancings, property sales and the
availability of portions of the funds described in the preceding paragraph. No
cash distributions were paid in 1994. During the year ended December 31, 1995,
a distribution of $1,871,813 was declared and paid to the partners in connection
with the sale of Willow Oaks Apartments.
It was the General Partner's intent to sell La Plaza, which is held by a
limited partnership of which the Partnership owns 99.9%, during 1995, however,
this transaction did not occur. The General Partner is currently negotiating a
deal to sell the property to a potential purchaser. This transaction is now
expected to take place in early 1996. Currently, the potential purchaser, an
unaffiliated third party, has not agreed to purchase the property nor has the
Partnership agreed to sell the property.
Item 7. Financial Statements
JACQUES-MILLER INCOME FUND, L.P. II
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheet--December 31, 1995
Consolidated Statements of Operations--Years ended December 31, 1995 and
1994
Consolidated Statements of Changes in Partners' Capital (Deficit)--Years
ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows--Years ended December 31, 1995 and
1994
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Jacques-Miller Income Fund, L.P. II
We have audited the accompanying consolidated balance sheet of Jacques-Miller
Income Fund, L.P. II (A Limited Partnership) as of December 31, 1995, and the
related consolidated statements of operations, changes in partners' capital
(deficit) and cash flows for each of the two years in the period ended December
31, 1995. These financial statements are the responsibility of the
Partnership's management. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Jacques-Miller
Income Fund, L.P. II (A Limited Partnership) as of December 31, 1995, and the
consolidated results of its operations and its cash flows for each of the two
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 15, 1996
JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED BALANCE SHEET
December 31, 1995
Assets
Cash:
Unrestricted $ 586,116
Restricted--tenant security deposits 26,202
Accounts receivable 5,329
Escrows for taxes 17,269
Restricted escrows 111,611
Notes receivable (net of allowance of
$2,819,297) --
Other assets 134,331
Investment property:
Land $ 141,367
Buildings and related personal property 1,902,007
2,043,374
Less accumulated depreciation (424,285) 1,619,089
$ 2,499,947
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 37,894
Tenant security deposits 26,202
Other liabilities 36,009
Mortgage notes payable 1,894,633
Partners' Capital (Deficit)
General partner $ (108,474)
Limited partners (12,400
units issued and outstanding) 613,683 505,209
$ 2,499,947
See Accompanying Notes to Consolidated Financial Statements
JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
1995 1994
Revenues:
Rental income $ 776,160 $ 2,329,618
Other income 96,970 108,098
Total revenues 873,130 2,437,716
Expenses:
Operating 330,929 775,729
General and administrative 119,473 72,245
Property management fees 44,847 120,141
Maintenance 105,472 271,800
Depreciation 118,241 444,959
Interest 204,312 661,191
Property taxes 67,592 234,827
Total expenses 990,866 2,580,892
Casualty gain -- 144,449
Gain on sale of property 855,585 --
Net income $ 737,849 $ 1,273
Net income allocated to
general partner (1%) $ 7,378 $ 13
Net income allocated to
limited partners (99%) 730,471 1,260
$ 737,849 $ 1,273
Net income per limited partnership unit $ 58.91 $ .10
See Accompanying Notes to Consolidated Financial Statements
JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Partners' capital (deficit) at
December 31, 1993 12,427 $ (95,294) $1,733,194 $1,637,900
Abandoned units for the year
ended December 31, 1994 (27) -- -- --
Net income for the year
ended December 31, 1994 -- 13 1,260 1,273
Partners' capital (deficit) at
December 31, 1994 12,400 (95,281) 1,734,454 1,639,173
Net income for the year
ended December 31, 1995 -- 7,378 730,471 737,849
Distributions -- (20,571) (1,851,242) (1,871,813)
Partners' capital (deficit)
at December 31, 1995 12,400 $ (108,474) $ 613,683 $ 505,209
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
1995 1994
Cash flows from operating activities:
Net income $ 737,849 $ 1,273
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation 118,241 444,959
Amortization of discounts and loan costs 31,161 88,115
Gain on sale of property (855,585) --
Casualty gain -- (144,449)
Change in accounts:
Restricted cash 61,398 (8,713)
Accounts receivable 4,688 (2,552)
Escrows for taxes 138,916 (95,264)
Other assets (4,884) --
Accounts payable (158,951) 33,019
Tenant security deposit liabilities (63,738) 11,053
Accrued taxes (175,982) 92,646
Other liabilities (46,136) (12,472)
Net cash (used in) provided by
operating activities (213,023) 407,615
Cash flows from investing activities:
Property improvements and replacements (42,413) (188,629)
Deposits to restricted escrows (48,698) (446,547)
Receipts from restricted escrows 462,765 198,676
Proceeds from sale of Willow Oaks 1,612,842 --
Insurance proceeds -- 244,607
Net cash provided by (used in)
investing activities 1,984,496 (191,893)
Cash flows from financing activities:
Payments on mortgage notes payable (57,051) (158,546)
Distributions (1,871,813) --
Net cash used in financing activities (1,928,864) (158,546)
Net (decrease) increase in cash (157,391) 57,176
Cash at beginning of year 743,507 686,331
Cash at end of year $ 586,116 $ 743,507
Supplemental disclosure of cash
flow information:
Cash paid during the period for interest $ 190,793 $ 573,075
See Accompanying Notes to Consolidated Financial Statements
JACQUES-MILLER INCOME FUND, L.P. II
CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)
Supplemental Disclosure of Non-Cash Activity
Property Improvements and Replacements
Accounts payable was adjusted $126,597 at December 31, 1994, for non-cash
amounts in connection with property improvements and replacements. Notes
receivable was adjusted $267,618 and $262,093 at December 31, 1995 and 1994,
respectively, for non-cash amounts in connection with accrued interest on the
notes receivable. These amounts were fully reserved.
JACQUES-MILLER INCOME FUND, L.P. II
Notes to Consolidated Financial Statements
Note A - Organization and Significant Accounting Policies
Organization: Jacques-Miller Income Fund, L.P. II (the "Partnership ) is a
Delaware limited partnership organized in December 1985 to make long-term junior
mortgage loans, including wraparound mortgage loans and, to a lesser extent,
other mortgage loans including first mortgage loans primarily to affiliated
public and private real estate limited partnerships. The Partnership currently
holds seven notes receivable and operates one apartment property located in
Florida.
Principles of Consolidation: The financial statements include all the accounts
of the Partnership and its one 99.9% owned partnership. All significant
interpartnership balances have been eliminated.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocations to Partners: Net income (loss) of the Partnership and taxable
income (loss) are allocated 99% to the limited partners and 1% to the general
partner. Distributions of available cash, as defined by the partnership
agreement, are allocated among the limited partners and the general partner in
accordance with the agreement of limited partnership.
Deferred Revenue: Deferred revenue results from accrued but unpaid interest
receivable, realization of which is dependent upon appreciation of the property
which collateralizes the receivable. The net interest revenue is recognized
when collectibility is assured.
Restricted Escrows:
Reserve Account - These funds were established to cover necessary
repairs and replacements of existing improvements, debt service, out of pocket
expenses incurred for ordinary and necessary administrative tasks, and payment
of real property taxes and insurance premiums. The Partnership is required to
deposit net operating income (as defined in the mortgage note) from La Plaza to
the reserve account until it equals $1,000 per apartment unit or $144,000 in
total. The current balance is $111,611, which includes interest earned on these
funds.
Escrows for Taxes: These funds are held by the Partnership and are designated
for the payment of real estate taxes.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, as a result of the Tax Reform Act of 1986, the
modified accelerated cost recovery method is used for depreciation of (1) real
property over 27 1/2 years and (2) personal property additions over 7 years.
Note A - Organization and Significant Accounting Policies (Continued)
Present Value Discounts: Periodically, the Partnership incurs debt at below
market rates for similar debt. Present value discounts are recorded on the
basis of prevailing market rates and are amortized on an interest method over
the life of the related debt.
Loan Costs: Loan costs of $177,295 are included in other assets and are
amortized on a straight-line basis over the life of the loans. Current
accumulated amortization is $53,719.
Cash and Cash Equivalents: It is the Partnership's policy to classify all
highly liquid investments with an original maturity of three months or less as
cash equivalents. At certain times, the amount of cash deposited at a bank may
exceed the limit on insured deposits.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In
addition, the General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged to expense as incurred.
Restricted Cash - Tenant Security Deposits: The Partnership requires security
deposits from all lessees for the duration of the lease. Deposits are refunded
when the tenant vacates the apartment if there has been no damage.
Investment Properties: In March 1995, the FASB issued Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of ("Statement 121"), which requires impairment losses to be
recorded on long-lived assets used in operation when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Statement 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. The
Partnership will adopt Statement 121 in 1996; however, based on current
circumstances, the Partnership does not anticipate that Statement 121 will have
any significant impact on the Partnership's financial statements.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was $29,401 and $19,561 for
the years ended December 31, 1995 and 1994, respectively.
Fair Value: In 1995, the Partnership implemented Statement of Financial
Accounting Standards No. 107, "Disclosure about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
carrying amount of the Partnership's cash and cash equivalents approximates fair
value due to short-term maturities. The Partnership's notes receivable have a
carrying amount of zero at December 31, 1995, which management of the
Partnership believes also approximates the notes receivable fair value. The
Partnership estimates the fair value of its fixed rate mortgages by discounted
cash flow analysis, based on estimated borrowing rates currently available to
the Partnership. The carrying amounts of variable-rate mortgages approximate
fair value due to frequent re-pricing.
Reclassifications: Certain reclassifications have been made to the 1994
information to conform to the 1995 presentation.
Note B - Abandoned Units
During the year ended December 31, 1994, the number of Partnership units
decreased by 27 units due to limited partners abandoning their units. There was
no change in the number of partnership units during 1995. In abandoning his or
her partnership units a limited partner relinquishes all right, title and
interest in the Partnership as of the date of abandonment.
Note C - Notes Receivable
Notes receivable consist of:
December 31,
1995
Notes receivable $ 1,599,397
Accrued interest receivable on
notes receivable 1,219,900
2,819,297
Provision for uncollectibles
(including $846,818 of deferred
interest revenue) (2,819,297)
$ --
The Partnership holds seven notes receivable at December 31, 1995, totaling
$1,599,397 with $1,219,900 of related accrued interest, all of which is fully
reserved. Six of the seven notes in the principal amount of $1,200,612 are due
from related partnerships. These six promissory notes bear interest at rates
ranging from 10.5% to 13.8%, and are secured by the related partnership's land
and buildings subordinated to the underlying mortgage of the respective
partnership.
Note C - Notes Receivable (Continued)
Notes receivable are scheduled to mature as follows:
Years Ending December 31,
1996 $ 271,150*
1997 1,265,913
1998 --
1999 --
2000 --
Thereafter 62,334
$1,599,397
*During 1994, two of the seven notes became due and as of December 31, 1994,
were in default. The total principal amount of these two notes is $201,150. At
December 31, 1995, these payments had not been received. During 1995, one of
the notes in the amount of $86,150 was extended until January 1, 1996; however,
the note was not repaid and has gone into default subsequent to December 31,
1995. No extension has been made on the other note. The General Partner is
currently negotiating to extend the maturity of both of these notes to January
1997.
Note D - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1995 Interest Rate Date Maturity
<S> <C> <C> <C> <C> <C>
La Plaza
1st mortgage $1,940,290 $16,375 7.60% 11/15/02 $1,502,719
2nd mortgage 64,166 406 7.60% 11/15/02 64,166
2,004,456
Less unamortized
present value
discounts (109,823)
Totals $1,894,633
</TABLE>
The estimated fair values of the Partnership's aggregate debt is $2,004,456.
The value represents a general approximation of possible value and is not
necessarily indicative of the amounts the Partnership may pay in actual market
transactions.
Note D - Mortgage Notes Payable (Continued)
The Partnership exercised interest rate buy-down options for La Plaza's mortgage
notes payable reducing the stated rate from 8.76% to 7.6%. The fee for the
interest rate reduction amounted to $148,870 and is being amortized as a loan
discount on the interest method over the life of the loans. The discount fee is
reflected as a reduction of the mortgage notes payable and increases the
effective rate of the debt to 8.76%.
The mortgage notes payable are non-recourse and are secured by pledge of the
apartment property and by pledge of revenues from the apartment property. The
notes require prepayment penalties if repaid prior to maturity and prohibit
resale of the property subject to existing indebtedness.
Scheduled principal payments of mortgage notes payable, subsequent to December
31, 1995, are as follows:
1996 $ 50,783
1997 54,780
1998 59,090
1999 63,741
2000 68,758
Thereafter 1,707,304
$2,004,456
Note E - Sale of Willow Oaks
On January 17, 1995, the Partnership sold Willow Oaks to an unaffiliated party.
The buyer assumed the mortgages, payable to Bank of America. The total
outstanding balance on the mortgage notes payable, including interest was
$5,438,551. The Partnership received net proceeds of $1,612,842 after payment of
closing costs. This disposition resulted in a gain of $855,585.
Revenues and expenses from Willow Oaks were $89,960 and $80,055, respectively,
in 1995 and $1,686,728 and $1,714,758, respectively, in 1994.
Note F - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in
the income tax returns of its partners.
Note F - Income Taxes (Continued)
The following is a reconciliation of reported net income and Federal taxable
income (loss):
1995 1994
Net income as reported $737,849 $ 1,273
Add (deduct):
Depreciation differences 16,935 44,631
Deferred revenue differences (14,396) (4,283)
Gain on disposal of property 68,293 (144,449)
Other 13,777 (16,898)
Federal taxable income (loss) $822,458 $(119,726)
Federal taxable income (loss)
per limited partnership unit $ 65.66 $ (9.56)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities:
Net assets as reported $ 505,209
Land and buildings 100,000
Accumulated depreciation (17,067)
Allowance for doubtful accounts 1,972,480
Other 18,587
Net assets - Federal tax basis $2,579,209
Note G - Transactions with Affiliated Parties
The Partnership has outstanding notes receivable with affiliated partnerships.
No income was recorded for the years ended December 31, 1995 or 1994, as no
payments were made to the Partnership. (See Note C for further information
concerning the note receivables.)
Note H - Investment Properties and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
<S> <C> <C> <C> <C>
La Plaza $2,004,456 $149,607 $1,773,363 $ 120,404
Altamonte Springs, FL
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1995
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
La Plaza $141,367 $1,902,007 $2,043,374 $424,285 1974 10/07/91 5-25
Altamonte Springs, FL
</TABLE>
Reconciliation of Investment Properties and Accumulated Depreciation:"
Years Ended December 31,
1995 1994
Real Estate
Balance at beginning of year $ 8,512,995 $ 8,317,163
Property improvements 42,413 315,226
Sale of apartment property (6,512,034) --
Disposals of property -- (119,394)
Balance at End of Year $ 2,043,374 $ 8,512,995
Accumulated Depreciation
Balance at beginning of year $ 1,201,094 $ 775,371
Additions charged to expense 118,241 444,959
Sale of apartment property (895,050) --
Disposals of property -- (19,236)
Balance at End of year $ 424,285 $ 1,201,094
Note H - Investment Properties and Accumulated Depreciation (Continued)
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1995 and 1994 were $2,143,374 and $8,487,782, respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1995 and 1994 were $441,353 and $1,178,175, respectively.
Note I - Casualty Gain
During the year ended December 31, 1994, Willow Oaks suffered roof damage due to
a storm which was covered by insurance. As a result, the Partnership recorded a
casualty gain of $144,449.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors and Executive Officers of the Partnership
The General Partner of the Registrant is:
Jacques-Miller, Inc., a Tennessee Corporation
Jacques-Miller, Inc., the Managing General Partner, was formed under the laws
of the State of Tennessee in 1972.
The principal executive officer and director of the Managing General Partner
is:
Name Age Position
C. David Griffin 49 President, Chief Operating Officer
and Director
Biographies
C. David Griffin. Mr. Griffin became President and Chief Operating Officer
of Jacques-Miller, Inc. in August 1987. He is an officer and director of
Jacques-Miller Property Management, Inc. and several other wholly owned
subsidiaries of Jacques-Miller, Inc., all of which render ancillary services to
the partnerships sponsored by the General Partner. From 1972 to 1981, Mr.
Griffin, a CPA, was a partner of Blankenship, Summar & Associates, an accounting
firm.
Balanced Holding Partners, L.P. Transaction
In December of 1989, Balanced Holdings Partners, L.P., a Delaware limited
partnership ("BHP"), purchased from Jacques-Miller, Inc. and certain of its
subsidiaries ("Jacques-Miller") certain real estate assets, which included,
among other things, the general partner's economic benefits and economic rights
in Jacques-Miller sponsored limited partnerships, including the Registrant.
Jacques-Miller remained as the general partner, but was indemnified by BHP to
the full extent of BHP's assets up to a maximum aggregate amount of $2,000,000
of which approximately all has been utilized.
As the general partner, Jacques-Miller itself remains liable for the recourse
obligations of the Registrant to the extent that the Registrant's cash flow and
assets become insufficient to meet Registrant's obligations, and could be
required to make payments on behalf of the Registrant in such events.
As the general partner, Jacques-Miller receives a residual interest in the
proceeds of the disposition of Registrant's assets, typically computed as a
percentage of net proceeds from the sale or refinancing of partnership assets
and subordinated to the recovery by the limited partners of their investments
plus a specified cumulative annual return. Jacques-Miller effectively sold all
of its residual interest to BHP in connection with this transaction.
Insignia Transaction
On December 31, 1991, an affiliate of Insignia Financial Group, Inc.
("Insignia") acquired substantially all of the assets of Jacques-Miller, Inc.
(the General partner Interest of the Registrant) including Jacques-Miller's
property management organization. However, the General Partner Interest of
Registrant was not acquired during this transaction. As a result of a separate
Advisory Agreement between the Registrant and IFGP Corporation (an affiliate of
Insignia) Insignia and its affiliates succeeded to those asset management and
property management duties previously performed by Jacques-Miller.
Item 10. Executive Compensation
The Registrant was not required to and did not pay remuneration to officers
and/or directors of the Managing General Partner during 1995 or 1994. See "Item
12. Certain Relationships and Related Transactions" below and Note G of the
Notes to the Financial Statements for a discussion of compensation and
reimbursements paid to the General Partner and certain affiliates.
Item 11. Security Ownership of Certain Beneficial Owners and Management
No person or group is known by the Registrant to own beneficially more
than 5% of the outstanding Interests of Registrant, as of December 31, 1995.
No officer or director of the General Partner of the Registrant owns, nor
do the officers or directors as a group own, any of the Registrant's Interests
as of December 31, 1995. No officer or director of the General Partner
possesses a right to acquire beneficial ownership of Interests of the
Registrant.
Item 12. Certain Relationships and Related Transactions
None.
Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 1995:
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JACQUES-MILLER INCOME FUND, L.P. II
By: Jacques-Miller, Inc.
Corporate General Partner
BY: /s/C. David Griffin
C. David Griffin
President and Chief Operating
Officer
Date: March 15, 1996
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/C. David Griffin President and Chief Operating March 15, 1996
C. David Griffin Officer (Principal Executive
Officer)
EXHIBIT INDEX
Exhibit
3 Partnership Agreement is incorporated by reference to Exhibit A of the
Prospectus contained in the Registrant's Registration Statement (2-
99745) as filed with the Commission pursuant to Rule 424(b) under the
Act.
4 Form of Certificate representing interests in the Registrant. [Exhibit
4 to Registration Statement on Form S-11 dated October 16, 1985,
Registration Number 2-99745 is incorporated herein by reference.]
10A Promissory Note dated July 20, 1990 in the amount of $476,000.00 payable
to the Registrant executed by Balanced Holding Partners, L.P. [Filed as
Exhibit 10A to Form 10K for the year ended December 30, 1990, and
incorporated herein by reference.]
10B Settlement Agreement dated July 25, 1991 between Jacques-Miller Income
Fund L.P. II and Balanced Holdings Partners, L.P., Jacques-Miller, Inc.,
and Jacques-Miller Mortgage, Inc. of Tennessee. [Filed as Exhibit 10B
to Form 10K for the year ended December 31, 1991, and incorporated
herein by reference.]
10C Advisory Agreement, dated December 30, 1991, between Jacques-Miller
Income Fund L.P. II and Insignia GP Corporation. [Filed as Exhibit 10C
to Form 10K for the year ended December 31, 1991, and incorporated
herein by reference.]
10D Contracts related to refinancing of debt:
(a) First Mortgage and Security Agreement dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(La Plaza), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing La Plaza
Apartments. *
(b) First Deed of Trust and Security Agreement dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(Willow Oaks), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing Willow Oaks
Apartments. *
(c) Second Mortgage and Security Agreement dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(La Plaza), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing La Plaza
Apartments.
(d) Second Deed of Trust and Security Agreement dated October 28,
1992 between Jacques-Miller Income Fund II Special Asset
Partnership (Willow Oaks), L.P. and First Commonwealth Realty
Credit Corporation, a Virginia Corporation, securing Willow Oaks
Apartments. *
(e) First Assignment of Leases and Rents dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(La Plaza), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing La Plaza
Apartments. *
(f) First Assignment of Leases and Rents dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(Willow Oaks), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing Willow Oaks
Apartments. *
(g) Second Assignment of Leases and Rents dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(La Plaza), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing La Plaza
Apartments. *
(h) Second Assignment of Leases and Rents dated October 28, 1992
between Jacques-Miller Income Fund II Special Asset Partnership
(Willow Oaks), L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing Willow Oaks
Apartments. *
(i) First Mortgage Note dated October 28, 1992 between Jacques-Miller
Income Fund II Special Asset Partnership (La Plaza), L.P. and
First Commonwealth Realty Credit Corporation, relating to La
Plaza Apartments. *
(j) First Deed of Trust Note dated October 28, 1992 between Jacques-
Miller Income Fund II Special Asset Partnership (Willow Oaks),
L.P. and First Commonwealth Realty Credit Corporation, relating
to Willow Oaks Apartments. *
(k) Second Mortgage Note dated October 28, 1992 between Jacques-
Miller Income Fund II Special Asset Partnership (La Plaza), L.P.
and First Commonwealth Realty Credit Corporation, relating to La
Plaza Apartments. *
(l) Second Deed of Trust Note dated October 28, 1992 between Jacques-
Miller Income Fund II Special Asset Partnership (Willow Oaks),
L.P. and First Commonwealth Realty Credit Corporation, relating
to Willow Oaks Apartments. *
* Filed as Exhibits 10D (a) through (l), respectively, to Form
10KSB for the year ended December 31, 1992 and incorporated
herein by reference.
21 Subsidiaries of the Registrant
27 Financial Data Schedule
99A Agreement of Limited Partnership for Jacques-Miller Income Fund
II Special Asset Partnership (La Plaza), L.P. between Jacques-
Miller, Inc. and Jacques-Miller Income Fund II, L.P. entered into
August 21, 1991. [Filed as Exhibit 28A to Form 10KSB for the year
ended December 31, 1992, and incorporated herein by reference.]
99B Agreement of Limited Partnership for Jacques-Miller Income Fund II
Special Asset Partnership (Willow Oaks), L.P. between Jacques-Miller,
Inc. and Jacques-Miller Income Fund II, L.P. entered into December 16,
1991. [Filed as Exhibit 28B to Form 10KSB for the year ended December
31, 1992, and incorporated herein by reference.]
99C Agreement of Limited Partnership for Jacques-Miller Income Fund II
Special Asset Partnership (Brighton Way), L.P. between Jacques-Miller,
Inc. and Jacques-Miller Income Fund II, L.P. entered into December 16,
1991. [Filed as Exhibit 28C to Form 10KSB for the year ended December
31, 1992, and incorporated herein by reference.]
EXHIBIT 21
JACQUES-MILLER INCOME FUND, L.P. II
Subsidiary List
Name of Subsidiary State of Incorporation/Formation Date
Jacques-Miller Income Fund II
Special Asset Partnership
(La Plaza), L.P. Delaware 1991
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Jacques-Miller Income Fund, L.P. II 1995 Year-End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000774655
<NAME> JACQUES-MILLER INCOME FUND, L.P. II
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 586,116
<SECURITIES> 0
<RECEIVABLES> 5,329
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 2,043,374
<DEPRECIATION> 424,285
<TOTAL-ASSETS> 2,499,947
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,894,633
0
0
<COMMON> 0
<OTHER-SE> 505,209
<TOTAL-LIABILITY-AND-EQUITY> 2,499,947
<SALES> 0
<TOTAL-REVENUES> 873,130
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 990,866
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204,312
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 737,471
<EPS-PRIMARY> 58.91
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
