<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000 Commission File Number 0-17810
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2961376
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
Former name, former address and former fiscal year if changed since last report:
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 twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No ___
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2000
PART I
FINANCIAL INFORMATION
2
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
(Unaudited) (Audited)
--------------- -----------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 442,754 $470,554
--------- --------
$442,754 $470,554
========= ========
Liabilities and Net assets in liquidation
Accounts payable $ 14,443 $ 38,922
Accrued expenses for liquidation 51,679 55,000
--------- --------
Total liabilities 66,122 93,922
--------- --------
Net assets in liquidation:
Limited partners ($582.04 per unit;
100,000 units authorized, 32,767
units issued and outstanding) 525,878 525,878
General partners (149,246) (149,246)
--------- ---------
Total partners' capital 376,632 376,632
--------- ---------
$ 442,754 $ 470,554
========= =========
</TABLE>
(See accompanying notes to unaudited financial statements)
3
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
Three Months Ended
March 31, 2000
(Unaudited)
-------------------
<S> <C>
Net assets in liquidation at
beginning of period $376,632
--------
Increase (decrease) during period:
Operating activities
Interest income 9,517
General and administrative (12,838)
--------
(3,321)
Liquidating activities
Change in provision for liquidation expenses 3,321
--------
3,321
--------
Net change in net assets in liquidation $ -
--------
Net assets in liquidation at end of period $376,632
========
</TABLE>
(See accompanying notes to unaudited financial statements)
4
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
(Unaudited)
------------------
<S> <C>
Investment Activity
Property rentals $126,439
Property operating expenses (30,500)
--------
Total real estate operations 95,939
Gain on sale of investment 599,655
--------
Total real estate activity 695,594
Interest on cash equivalents 30,865
--------
Total investment activity 726,459
--------
Portfolio Expenses
General and administrative 24,570
Management fee 25,991
--------
50,561
--------
Net income $675,898
========
Net income per limited partnership unit $ 20.42
========
Cash distributions per limited partnership unit $ 3.91
========
Number of limited partnership units outstanding
during the period 32,767
========
</TABLE>
(See accompanying notes to financial statements)
5
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(in liquidation for the three months ended March 31, 2000)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
2000 1999
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Net cash (used) provided by
operating activities $(27,800) $ 46,776
-------- ----------
Cash flows from investing activities:
Net proceeds from sale of property - 6,955,515
-------- ----------
Net cash provided by investing activities - 6,955,515
-------- ----------
Cash flows from financing activities:
Distributions to partners - (129,413)
-------- ----------
Net increase (decrease) in cash and
cash equivalents (27,800) 6,872,878
Cash and cash equivalents:
Beginning of period 470,554 518,094
-------- ----------
End of period $442,754 $7,390,972
======== ==========
</TABLE>
(See accompanying notes to unaudited financial statements)
6
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Partnership's financial
position as of March 31, 2000 and December 31, 1999 and the changes of net
assets in liquidation and the results of its operations for the three month
periods ended March 31, 2000 and 1999, respectively, and its cash flows for the
three month periods ended March 31, 2000 and 1999. These adjustments are of a
normal recurring nature.
See notes to financial statements included in the Partnership's 1999 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
Copley Realty Income Partners 2; A Limited Partnership (the "Partnership") is
a Massachusetts limited partnership organized for the purpose of investing
primarily in newly-constructed and existing income-producing real properties.
The Partnership commenced operations in October 1987 and acquired four real
estate investments prior to the end of 1987. The Partnership intended to
dispose of its investments within six to nine years of their acquisition, and
then liquidate; however, the managing general partner extended the holding
period, having determined it to be in the best interest of the limited partners.
The Partnership sold its last remaining investment in February 1999. On
December 31, 1999, the Partnership adopted a plan of liquidation and intends to
dissolve in 2000.
In connection with its adoption of a plan of liquidation on December 31,
1999, the Partnership also adopted the liquidation basis of accounting which,
among other things, requires that assets and liabilities be stated at their
estimated net realizable value and that estimated costs of liquidating the
Partnership be provided to the extent that they are reasonably determinable.
NOTE 2 - PROPERTY
- -----------------
On February 26, 1999, the La Mirada buildings were sold for a gross sale
price of $7,150,000. The partnership received net proceeds of $6,938,468 after
closing costs, and recognized a gain of $590,563 ($17.84 per limited partnership
unit) on the sale. On April 29, 1999 the Partnership made a capital
distribution of $6,519,322 ($198.96 per limited partnership unit) from the
proceeds of the sale.
7
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial Condition and
- ---------------------------------------------------------------
Results of Operations
- ---------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership completed its offering of units of limited partnership
interest in April 1988, and a total of 32,997 units were sold. The Partnership
received proceeds of $29,379,522, net of selling commissions and other offering
costs, which have been invested in real estate, used to pay related acquisition
costs or retained as working capital reserves.
On February 26, 1999, the Partnership sold the La Mirada buildings for
$7,150,000. The Partnership received net proceeds of $6,938,468, after closing
costs. On April 29, 1999, the Partnership made a capital distribution of
$6,519,322 ($198.96 per unit) from the proceeds.
In connection with two sales in May and December of 1997, and the sale in
February of 1999, capital of $13,701,415 ($417.96 per limited partnership unit)
has been returned to the limited partners, reducing the adjusted capital
contribution to $582.04 per unit.
At March 31, 2000, the Partnership had $442,754 in cash and cash
equivalents which is being retained primarily as a reserve in connection with
the liquidation of the Partnership. The Partnership intends to liquidate and
dissolve in 2000. Cash distributions related to the first quarter of 1999 were
made at an annualized rate of 1.75% on the adjusted capital contribution of $781
per unit. At the time of this distribution, the Partnership also made a special
distribution of $4.52 per limited partnership unit from operating reserves.
The Partnership maintained a fund for the purpose of repurchasing limited
partnership units. Two percent of cash flow, as defined, was designated for
this fund which had a balance of $78,985 at April 1, 1999. In accordance with
the terms of the Partnership Agreement, any amounts remaining in this fund after
April 1, 1999 were placed in Partnership reserves. Through April 1, 1999, the
Partnership had repurchased and retired 230 limited partnership units for an
aggregate cost of $177,945.
8
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
Results of Operations
- ---------------------
Operating Factors
As discussed above, the La Mirada buildings were sold on February 26,
1999. The Partnership received net proceeds of $6,938,468, after closing costs
and recognized a gain of $590,563 ($17.84 per limited partnership unit). The
buildings were 100% leased at the time of sale.
Investment Results
There are no real estate comparative operating results for the three month
periods ended March 31, 2000 and 1999, due to the sale of the Partnership's last
remaining property in February 1999, as discussed above.
Interest on cash equivalents decreased by $21,348, compared to the
comparable period in 1999 due to the sale of the Partnership's last remaining
property discussed above.
Cash flow from operations decreased by approximately $75,000 between the
respective three month periods. The decrease is primarily due to the sale of
the last remaining property discussed above.
Portfolio Expenses
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the managing general partner. General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
There was no management fee incurred during the first quarter of 2000 due
to the discontinuance of operating cash distributions as a result of the sale of
the Partnership's last remaining property in 1999, discussed above.
General and administrative expenses for the three months ended March 31,
2000 were $12,838 compared to $24,570 for the same period in 1999. The decrease
for the comparative periods is due to lower overall expenses as a result of the
sale of the Partnership's last remaining property in 1999, as discussed above.
9
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2000
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: No current reports on Form 8-K were filed
during the quarter ended March 31, 2000.
10
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COPLEY REALTY INCOME PARTNERS 2; A LIMITED
PARTNERSHIP
(Registrant)
May 2, 2000
/s/ Alison Husid Cutler
-------------------------------
Alison Husid Cutler
President, Chief Executive Officer and Director
of Managing General Partner,
Second Income Corp.
May 2, 2000
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Treasurer and Principal Financial and Accounting
Officer of Managing General Partner, Second
Income Corp.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 442,754
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 442,754
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 442,754
<CURRENT-LIABILITIES> 66,122
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 376,632
<TOTAL-LIABILITY-AND-EQUITY> 442,754
<SALES> 0
<TOTAL-REVENUES> 9,517
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
