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 March 31, 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)
March 31, 1996
Assets
Cash and cash equivalents $ 495
Accounts receivable 5
Escrows for taxes 21
Prepaid and other assets 8
Investment properties:
Land $ 650
Buildings and related personal property 1,536
2,186
Less accumulated depreciation (427) 1,759
$2,288
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 1
Accrued taxes 12
Other liabilities 31
Partners' Capital (Deficit)
General partner $ (37)
Corporate limited partners - on behalf
of the Unitholders - (67,814 Units
issued and outstanding) 2,281 2,244
$2,288
See Accompanying Notes to Consolidated Financial Statements
b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 99 $ 87
Other income 9 9
Total revenues 108 96
Expenses:
Operating 19 23
General and administrative 9 15
Maintenance 4 4
Depreciation 20 20
Property taxes 12 12
Total expenses 64 74
Net income $ 44 $ 22
Net income allocated to general partner (1%) $ 1 $ --
Net income allocated to Unitholders (99%) 43 22
$ 44 $ 22
Net income per Unit of Depositary Receipt: $ .63 $ .32
See Accompanying Notes to Consolidated Financial Statements
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 three months
ended March 31, 1996 -- 1 43 44
Partners' capital (deficit) at
March 31, 1996 67,814 $ (37) $2,281 $2,244
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net income $ 44 $ 22
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 20 20
Change in accounts:
Accounts receivable 1 (4)
Escrows for taxes (12) (8)
Prepaid and other assets 5 (5)
Accounts payable (4) (3)
Accrued taxes 12 12
Other liabilities 5 22
Net cash provided by
operating activities
71 56
Cash flows from investing activities:
Property improvements and replacements -- (1)
Purchase of securities available for sale -- (80)
Proceeds from sale of securities available
for sale -- 109
Net cash provided by
investing activities -- 28
Cash flows from financing activities: -- --
Net increase in cash and cash equivalents 71 84
Cash and cash equivalents at beginning of period 424 152
Cash and cash equivalents at end of period $ 495 $ 236
See Accompanying Notes to Consolidated Financial Statements
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 month period ended March 31, 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 annual report on Form
10-KSB for the fiscal year ended December 31, 1995, for Johnstown/Consolidated
Income Partners/2 (the "Partnership").
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 the property management fees noted below based upon
collected gross rental revenues for property management services in each of the
three months ended March 31, 1996 and 1995. Fees paid to Insignia and
affiliates for the three months ended March 31, 1996 and 1995 are presented
below. These expenses are included in operating expenses.
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees $6 $6
Note B - Transactions with Affiliated Parties (continued)
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 received
reimbursements as reflected in the following table:
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Reimbursement for services of affiliates $4 $9
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 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 $495,000 at March 31, 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 three months ended March 31, 1996 and 1995:
Average Occupancy
1996 1995
Florida #6 Mini-Warehouse 91% 94%
Lauderhill, Florida
The decrease in occupancy is due to increased competition from similar
facilities in the area.
The Partnership realized net income of $44,000 for the three months ended March
31, 1996, compared to net income of $22,000 for the three months ended March 31,
1995. The increase in net income is due to an increase in rental income
resulting from an overall increase in rental rates at the Partnership's sole
investment property as well as a decrease in operating and general and
administrative expenses. Operating expenses decreased due to reduced personnel
costs. General and administrative expenses decreased due to reduced expense
reimbursements related primarily to the efforts of the Dallas partnership
administration staff during the management transition period in 1995.
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 March 31, 1996, the Partnership held cash and cash equivalents of
approximately $495,000 compared to approximately $236,000 at March 31, 1995.
Net cash provided by operations increased primarily due to increased net income,
as discussed above. No cash was provided by or used in either investing or
financing activities in the three months ended March 31, 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. Currently, disposition is not considered imminent.
Additionally, other investing parties are involved who must be consulted before
such a transaction can be consummated. The General Partner intends to solicit
the Unitholders of the Partnership 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 December 31, 1996, 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. During the first three months
of 1996 or 1995, no cash distributions were declared or paid.
PART II - OTHER INFORMATION
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.
Vice President/CAO
Date: May 3, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Johnstown/Consolidated Income Partners/2 1996 First Quarter 10-QSB and is
qualified in its entirety by reference to usch 10-QSB filing.
</LEGEND>
<CIK> 0000812431
<NAME> JOHNSTOWN/CONSOLIDATED INCOME PARTNERS/2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 495
<SECURITIES> 5
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 2,186
<PP&E> 427
<DEPRECIATION> 2,288
<TOTAL-ASSETS> 0<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,244
<OTHER-SE> 2,288
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 108
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 64
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet.
</FN>
</TABLE>
