FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-16682
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
(Exact name of small business issuer as specified in its charter)
California 94-3032501
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
BALANCE SHEET
(Unaudited)
(in thousands, except for unit data)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash and cash equivalents $ 392
Securities available for sale 35
Prepaid and other assets 47
Investment properties:
Land $ 650
Buildings and personal property 1,536
2,186
Less accumulated depreciation (387) 1,799
$2,273
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable and accrued expenses $ 68
Partners' (Deficit) Capital
General partner $ (38)
Corporate limited partners - on behalf
of the Unitholders - (67,814 Units
(Note A) issued and outstanding) 2,243 2,205
$2,273
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 105 $ 106 $ 291 $ 306
Interest income 5 7 14 16
Dividend income -- 15 93 55
Total revenues 110 128 398 377
Expenses:
Property operations 41 38 123 105
Depreciation 20 20 60 60
Administrative 19 17 63 53
Total expenses 80 75 246 218
Income from operations 30 53 152 159
Other income (Note C) -- -- -- 295
Net income $ 30 $ 53 $ 152 $ 454
Net income allocated
to general partner (1%) $ -- $ 1 $ 1 $ 5
Net income allocated
to limited partners (99%) 30 52 151 449
$ 30 $ 53 $ 152 $ 454
Net income per weighted average
Unit of Depositary Receipt
(Note A): $ .44 $ .77 $2.23 $ 6.63
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
c) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Unitholders
Units of
Units of Depositary
Depositary General Receipts
Receipts Partners (Note A) Total
<S> <C> <C> <C> <C>
Original capital contributions 68,854 $ 1 $6,885 $6,886
Partners' (deficit) capital
at December 31, 1994 67,814 $ (37) $2,290 $2,253
Net income for the nine months
ended September 30, 1995 -- 1 151 152
Distributions (Note E) -- (2) (198) (200)
Partners' (deficit) capital at
September 30, 1995 67,814 $ (38) $2,243 $2,205
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
d) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 152 $ 454
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 60 60
Change in accounts:
Prepaids and other assets (28) (45)
Accounts payable and accrued
expenses 54 21
Net cash provided by
operating activities
238 490
Cash flows from investing activities:
Property improvements and replacements (1) --
Purchase of securities available for sale (453) (78)
Proceeds from sale of securities available
for sale 656 30
Net cash provided by (used in)
investing activities 202 (48)
Cash flows used in financing activities:
Distributions (200) (405)
Net increase in cash 240 37
Cash and cash equivalents at beginning of period 152 91
Cash and cash equivalents at end of period $ 392 $ 128
</TABLE>
,fn>
See Accompanying Notes to Financial Statements
e) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the annual report on Form 10-K for the fiscal year ended December 31, 1994, for
Johnstown/Consolidated Income Partners/2 ("the Partnership").
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Cash and Cash Equivalents
Cash and cash equivalents for purposes of reporting cash flows includes cash
on hand, demand deposits, money market funds, and U.S. Treasury Bills with
original maturities of three months or less.
Units of Depositary Receipts
Johnstown/Consolidated Depositary Corporation (the "Corporate Limited
Partner"), an affiliate of the former General Partner, serves as a depositary of
certain Units of Depositary Receipts ("Units"). The Units represent economic
rights attributable to the limited partnership interests in the Partnership and
entitle the holders thereof ("Unitholders") to certain economic benefits,
allocations and distributions of the Partnership.
Net Income Per Unit
Net income per Unit is computed by dividing net income allocated to the
Unitholders by the weighted average number of Units outstanding. Per Unit
information has been computed based on weighted average Units outstanding of
67,814 for the three and nine months ended September 30, 1995 and 1994,
respectively.
Note B - Related Party Transactions
The Partnership has paid the property management fees noted below, based upon
collected gross rental revenues ("Rental Revenues") for property management
services in each of the nine months ended September 30, 1995 and 1994,
respectively. For the nine months ended September 30, 1994, a portion of such
property management fees equal to 4% of Rental Revenues was paid to the property
management companies performing day-to-day property management services and a
portion equal to 1% of Rental Revenues, for a total of 5%, was paid to
Partnership Services, Inc. ("PSI") or its predecessor for advisory services
related to day-to-day property operations. In July 1993, Coventry Properties,
Inc. ("Coventry"), an affiliate of the General Partner, assumed day-to-day
property management responsibilities for the Partnership's property under the
same management fee arrangement as the unaffiliated management companies. In
late December 1994, an affiliate of Insignia Financial Group, Inc. ("Insignia")
assumed day-to-day property management responsibilities. Fees paid to Insignia
and affiliates for the nine months ended September 30, 1995, and fees paid to
PSI and Coventry for the nine months ended September 30, 1994, have been
reflected in the following table as compensation to related parties in the
applicable periods:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Charged to property operations expense:
Property management fees $18 $16
The Partnership Agreement also provides for reimbursement to the General
Partner and its affiliates for costs incurred in connection with the
administration of Partnership activities. The General Partner and its
affiliates, which includes Coventry for the nine months ended September 30,
1994, received reimbursements as reflected in the following table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Charged to administrative expense:
Reimbursement for services of affiliates $28 $30
Note B - Related Party Transactions (continued)
In July 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner, who
receives payment on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations is not significant.
Note C - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding.
These claims related to Southmark Corporation's activities while it exercised
control (directly or indirectly through its affiliates) over the Partnership.
The Bankruptcy Court set the Partnership's and the other affiliated
partnerships' allowed claim at $11 million, in the aggregate. In March 1994,
the Partnership received 4,751 shares of Southmark Corporation Redeemable Series
A Preferred Stock and 34,747 shares of Southmark Corporation New Common Stock
with an aggregate market value on the date of receipt of $34,666 and $260,409
in cash representing the Partnership's share of the recovery, based on its pro
rata share of the claims filed.
Note D - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital for contingencies of not less than 3% of Net Invested Capital as defined
in the Partnership Agreement. In the event expenditures are made from these
reserves, operating revenue shall be allocated to such reserves to the extent
necessary to maintain the foregoing level. Reserves, including cash and cash
equivalents and securities available for sale totalling $427,000 at September
30, 1995, exceeded the Partnership's reserve requirement of $73,000.
Note E - Distributions
During September 1995, the General Partner declared and paid a distribution
of approximately $198,000 or $2.92 per Unit to the Unitholders along with the
corresponding $2,000 General Partner distribution, all of which represented
distributable cash flow from operations.
During September 1994, the General Partner declared and paid distributions of
approximately $405,000 or $5.97 per Unit to the Unitholders and accrued the
corresponding $4,000 General Partner distribution, all of which represented
distributable cash flow from operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment property consists of a two-thirds undivided
interest in a mini-warehouse storage facility. The following table sets forth
the average occupancy of the property for the nine months ended September 30,
1995 and 1994:
Average
Occupancy
1995 1994
Florida #6 Mini-Warehouse
Lauderhill, Florida 91% 99%
The decrease in occupancy is due to commercial clients reducing their
inventory levels which resulted in reduced usage of storage facilities in 1995
compared to 1994.
The Partnership realized income of $152,000 from operations for the nine
months ended September 30, 1995, and $30,000 for the three months ended
September 30, 1995, compared to income from operations of $159,000 for the nine
months ended September 30, 1994, and $53,000 for the three months ended
September 30, 1994.
Rental income decreased for the nine months ended September 30, 1995,
compared to the nine months ended September 30, 1994, due to the occupancy
decrease at the Partnership's sole investment property as noted above. Dividend
income increased due to dividends received on the Partnership's investment in
Southmark preferred stock for the nine months ended September 30, 1995.
Property operations expense increased for the nine months ended September 30,
1995, compared to the nine months ended September 30, 1994, due to increased
maintenance contracts, insurance and tax expense. Administrative expenses
increased for the nine months ended September 30, 1995, due to increased mailing
costs, professional fees and expense reimbursements related to the combined
efforts of the Dallas and Greenville partnership administration staffs during
the management transition period. The reimbursements for the Dallas office
amounted to approximately $13,000 for the nine months ended September 30, 1995.
The increased costs related to the transition efforts were incurred to
minimize any disruption in the year-end reporting function including the
financial reporting and K-1 preparation and distribution. The General Partner
expects recurring administrative expenses to be reduced now that the management
transition is completed.
Other income realized in the nine months ended September 30, 1994, related to
the receipt of the Partnership's pro rata share of the claims filed in
Southmark's Chapter 11 bankruptcy proceeding (See Note C in the Notes to
Financial Statements in Item 1).
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership from increases in expenses. As part of this plan,
the 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 General Partner will
be able to sustain such a plan.
At September 30, 1995, the Partnership held cash and cash equivalents of
$392,000 compared to $128,000 at September 30, 1994. Net cash provided by
operations decreased primarily due to the Partnership's receipt of approximately
$260,000 in cash related to the Southmark bankruptcy discussed above that did
not recur in 1995. The decrease in cash provided by operations was partially
offset by an increase in accounts payable and other accrued expenses. Net cash
provided by investing activities increased due to an increase in cash proceeds
received from liquidated securities available for sale. Net cash used in
financing activities decreased due to reduced Partner's distributions for the
nine months ended September 30, 1995, compared to the nine months ended
September 30, 1994.
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 meet other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. Future
cash distributions will depend on the levels of net cash generated from
operations, capital expenditure requirements, property sales and the
availability of cash reserves. As part of the Partnership's ongoing attempt to
maximize the return to the Unitholders, the Partnership is exploring the
possibility of selling the commercial property in which it has invested.
Currently, no such disposition is considered imminent. Additionally, other
investing parties are involved who must be considered before such a transaction
can be approved. For the nine months ended September 30, 1995, cash
distributions of $200,000 were declared and paid compared to cash distributions
of $405,000 for the nine months ended September 30, 1994.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is
not of a routine nature. The General Partner of the Partnership believes that
all such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 6. EXHIBITS 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.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
By: CONCAP EQUITIES, INC.
General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Johnstown
Conslidated Income Partners/2 1995 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000812431
<NAME> JOHNSTOWN CONSOLIDATED INCOME PARTNERS/2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 392
<SECURITIES> 35
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 2,186
<DEPRECIATION> 387
<TOTAL-ASSETS> 2,273
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,205
<TOTAL-LIABILITY-AND-EQUITY> 2,273
<SALES> 0
<TOTAL-REVENUES> 398
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 246
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<EPS-PRIMARY> 2.23
<EPS-DILUTED> 0
<FN>
<F1>
The Partnership has an unclassified balance sheet.
</FN>
</TABLE>
