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, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
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 (864) 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 unit data)
September 30, 1996
Assets
Cash and cash equivalents $ 606
Accounts receivable 4
Escrows for taxes 45
Other assets 5
Investment properties:
Land $ 650
Buildings and related personal property 1,537
2,187
Less accumulated depreciation (466) 1,721
$2,381
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 1
Accrued taxes 36
Other liabilities 38
Partners' Capital (Deficit)
General partner $ (37)
Corporate limited partners - on behalf
of the Unitholders - (67,814 Units
issued and outstanding) 2,343 2,306
$2,381
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,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 102 $ 99 $ 303 $ 275
Other income 10 11 28 123
Total revenues 112 110 331 398
Expenses:
Operating 24 25 66 71
General and administrative 11 19 51 63
Maintenance 6 5 13 17
Depreciation 19 20 59 60
Property taxes 12 11 36 35
Total expenses 72 80 225 246
Net income $ 40 $ 30 $ 106 $ 152
Net income allocated
to general partner (1%) $ -- $ -- $ 1 $ 1
Net income allocated
to limited partners (99%) 40 30 105 151
$ 40 $ 30 $ 106 $ 152
Net income per Unit of
Depositary Receipts $ .59 $ .44 $1.55 $ 2.23
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
c) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Unitholders
Units of
Units of Depositary
Depositary General Receipts
Receipts Partner (Note A) Total
<S> <C> <C> <C> <C>
Original capital contributions 68,854 $ 1 $6,885 $6,886
Partners' capital (deficit)
at December 31, 1995 67,814 $ (38) $2,238 $2,200
Net income for the nine months
ended September 30, 1996 -- 1 105 106
Partners' capital (deficit) at
September 30, 1996 67,814 $ (37) $2,343 $2,306
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net income $ 106 $ 152
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 59 60
Change in accounts:
Accounts receivable 2 --
Escrows for taxes (36) (28)
Other assets 8 1
Accounts payable (4) --
Accrued taxes 36 35
Other liabilities 12 18
Net cash provided by
operating activities 183 238
Cash flows from investing activities:
Property improvements and replacements (1) (1)
Purchase of investments -- (453)
Proceeds from sale of investments -- 656
Net cash (used in) provided by
investing activities (1) 202
Cash flows used in financing activities:
Distributions to partners -- (200)
Net increase in cash and cash equivalents 182 240
Cash and cash equivalents at beginning of period 424 152
Cash and cash equivalents at end of period $ 606 $ 392
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Johnstown/Consolidated Income
Partners/2 (the "Partnership" or "Registrant") 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 ConCap Equities, Inc. (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine months ended
September 30, 1996, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1996. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-KSB for the fiscal year ended December
31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Units of Depositary Receipts
Johnstown/Consolidated Depositary Corporation/2 (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.
Note B - Transactions with Affiliated Parties
The Partnership has paid property management fees based upon collected gross
rental revenues for property management services in each of the nine months
ended September 30, 1996 and 1995. Property management fees of approximately
$19,000 and $18,000 were paid to affiliates of the General Partner for the nine
months ended September 30, 1996 and 1995, respectively. These fees are included
in operating expenses.
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. Reimbursements for services of affiliates of
approximately $20,000 and $28,000 were paid to the General Partner and its
affiliates for the nine months ended September 30, 1996 and 1995, respectively.
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 - COMMITMENT
The Partnership is required by the Partnership Agreement to maintain working
capital reserves 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. Cash and cash equivalents of
approximately $606,000 at September 30, 1996, exceeded the Partnership's reserve
requirement of approximately $73,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment property consists of a two-thirds interest in a
mini-warehouse. The following table sets forth the average occupancy of the
property for the nine months ended September 30, 1996 and 1995:
Average Occupancy
1996 1995
Florida #6 Mini-Warehouse 92% 91%
Lauderhill, Florida
The Partnership realized net income of approximately $40,000 and $106,000 for
the three and nine months ended September 30, 1996, compared to net income of
$30,000 and $152,000 for the three and nine months ended September 30, 1995.
The decrease in net income is due primarily to a decrease in other income
mitigated by an increase in rental revenue.
Rental income increased for the three and nine months ended September 30, 1996,
compared to the corresponding periods of 1995 as a result of an increase in
rental rates at the Partnership's investment property. Other income decreased
due to the non-recurring nature of the dividends received on the Partnership's
investment in Southmark Preferred Stock during the second quarter of 1995.
Operating expenses decreased due to reduced personnel costs. General and
administrative expenses decreased primarily due to reduced general partner
reimbursements. Maintenance expense decreased due to reduced yard and grounds
contract fees.
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 (see Part II "Item 4").
At September 30, 1996, the Partnership held cash and cash equivalents of
approximately $606,000 compared to approximately $392,000 at September 30, 1995.
Net cash provided by operations decreased primarily due to the partnership
receiving no dividend income from the Southmark stock. Net cash provided by
investing activities decreased due to the absence of proceeds from the sale of
investments in 1996. The decrease in investing activities was due to the
Partnership investing in shorter term cash equivalents during 1996 rather than
longer term securities. Net cash used in financing activities decreased due to
the absence of Partner distributions for the nine months ended September 30,
1996.
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. Future cash
distributions will depend on the levels of net cash generated from operations,
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 (see Part II "Item 4"). No cash distributions were
declared or paid during the nine months ended September 30, 1996, compared to
cash distributions of approximately $200,000 which were declared and paid during
the nine months ended September 30, 1995.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 20, 1996, the General Partner distributed a consent
solicitation to the Limited Partners to modify the Partnership Agreement
for a certain proposal (the "Proposal") as described in the proxy
statement. The Registrant filed a definitive Schedule 14A Information
Statement with the Securities and Exchange Commission concurrent with the
distribution of the consent solicitation.
The General Partner formulated the Proposal to amend the Partnership
Agreement to authorize the General Partner to sell all or substantially
all of the Partnership's assets to unaffiliated entities pursuant to a
binding agreement to be entered into on or before June 30, 1997, at a
price of not less than $2,000,000. A consequence of the closing of such
a sale would likely be the dissolution and termination of the
Partnership.
The amendment will be approved when, and if, properly completed,
unrevoked consents with respect to such sale are signed by holders of
record on the record date (September 19, 1996) of at least a majority of
the Units then outstanding and such consents are delivered to the
Partnership, provided the requisite consents are so delivered by the
expiration date (November 22, 1996). The General Partner has an option
to extend the expiration date for a period of up to an additional sixty
days.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
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.
Vice President/CAO
Date: October 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Johnstown
Consolidated Income Partners/2 1996 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000812431
<NAME> JOHNSTOWN CONSOLIDATED INCOME PARTNERS/2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 606
<SECURITIES> 0
<RECEIVABLES> 4
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 2,187
<DEPRECIATION> 466
<TOTAL-ASSETS> 2,381
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,306
<TOTAL-LIABILITY-AND-EQUITY> 2,381
<SALES> 0
<TOTAL-REVENUES> 331
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 225
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106
<EPS-PRIMARY> 1.55<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
