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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
-------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ------------------------
Commission file number
0-18504
PARTICIPATING INCOME PROPERTIES II, L.P.
and
FFCA INVESTOR SERVICES CORPORATION 88-C
- --------------------------------------------------------------------------------
(Exact Name of Co-Registrants as Specified in Their
Organizational Documents)
Delaware 86-0588505
- --------------------------------------------------------------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0588507
- --------------------------------------------------------------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (602) 585-4500
---------------------------
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 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>
PART 1 - FINANCIAL INFORMATION
Item l. Financial Statements.
------ --------------------
PARTICIPATING INCOME PROPERTIES II, L.P.
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
------
CASH AND CASH EQUIVALENTS $ 3,974,080 $ 3,984,265
RECEIVABLES FROM LESSEES 187,300 197,300
PROPERTY SUBJECT TO OPERATING LEASES, at cost
Land 11,709,570 11,709,570
Buildings 54,004,577 54,004,577
Equipment 3,832,921 3,832,921
------------ ------------
69,547,068 69,547,068
Less - Accumulated depreciation 21,428,178 20,814,945
------------ ------------
48,118,890 48,732,123
------------ ------------
Total assets $ 52,280,270 $ 52,913,688
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 2,112,679 $ 2,132,357
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 71,500 72,006
DEFERRED INCOME 525,696 594,251
------------ ------------
Total liabilities 2,709,875 2,798,614
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partners (222,874) (217,427)
Limited partners 49,793,269 50,332,501
------------ ------------
Total partners' capital 49,570,395 50,115,074
------------ ------------
Total liabilities and partners' capital $ 52,280,270 $ 52,913,688
============ ============
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Rental $1,865,905 $1,865,905
Participating rentals 565,225 531,517
Interest and other 45,211 55,697
Gain on sale of equipment -- 2,138
---------- ----------
2,476,341 2,455,257
---------- ----------
EXPENSES:
General partner and affiliate fees 211,036 209,102
Depreciation 613,233 766,397
Operating 62,945 61,212
---------- ----------
887,214 1,036,711
---------- ----------
NET INCOME $1,589,127 $1,418,546
========== ==========
NET INCOME ALLOCATED TO:
General partners $ 15,891 $ 14,185
Limited partners 1,573,236 1,404,361
---------- ----------
$1,589,127 $1,418,546
========== ==========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(based on 82,834 units held by limited partners) $ 18.99 $ 16.95
========== ==========
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General ---------------------------
Partners Number Total
Amount of Units Amount Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1997 $ (217,427) 82,834 $ 50,332,501 $ 50,115,074
Net income 15,891 -- 1,573,236 1,589,127
Distribution to partners (21,338) -- (2,112,468) (2,133,806)
------------ ------------ ------------ ------------
BALANCE, March 31, 1998 $ (222,874) 82,834 $ 49,793,269 $ 49,570,395
============ ============ ============ ============
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,589,127 $ 1,418,546
Adjustments to net income:
Depreciation 613,233 766,397
Gain on sale of equipment -- (2,138)
Change in assets and liabilities:
Decrease (increase) in receivables from lessees 10,000 (1,218)
Increase in payable to general partner -- 7,005
Increase (decrease) in accounts payable
and accrued liabilities (506) 8,314
Decrease in deferred income (68,555) (68,554)
----------- -----------
Net cash provided by operating activities 2,143,299 2,128,352
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property -- 42,751
----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Partner distributions declared (2,133,806) (2,114,251)
Increase (decrease) in distribution payable
to limited partners (19,678) 18,116
----------- -----------
Net cash used in financing activities (2,153,484) (2,096,135)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (10,185) 74,968
CASH AND CASH EQUIVALENTS, beginning of period 3,984,265 3,790,885
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 3,974,080 $ 3,865,853
=========== ===========
</TABLE>
<PAGE>
PART I.- FINANCIAL INFORMATION
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------ Financial Condition and Results of Operations
---------------------------------------------
As of March 31, 1998, Participating Income Properties II, L.P., a Delaware
limited partnership, (the Registrant), had received $82,834,000 in gross
proceeds from its offering of Units. Net funds available for investment,
after payment of sales commissions, organizational costs and acquisition
costs, amounted to $71,956,541. The offering of Units is the Registrant's
sole source of capital, and since the final closing of limited partnership
units was held on December 11, 1989, the Registrant will not receive
additional funds from the offering. The Registrant was fully invested in
thirteen travel plaza properties by June 1991 and does not anticipate any
further capital expenditures.
On February 2, 1998, the Registrant entered into a letter of intent with
Flying J. Inc. to sell substantially all of the Registrant's assets for
cash of approximately $80 million. The sale is subject to certain
conditions specified in the letter of intent, including the negotiation
and execution of definitive sale and financing agreements with respect to
the assets of the Registrant and the approval, by vote, of a majority of
the limited partner interests. In accordance with the partnership
agreement, sale of substantially all of the assets will result in
dissolution of the partnership and liquidation of remaining Registrant
assets, net of liabilities. There can be no assurance as to the final
terms of the proposed transaction, that the conditions will be satisfied
or that the proposed transaction will be consummated. The limited partners
will receive a proxy statement containing a complete description of the
transaction when the sale and financing agreements are finalized.
The Registrant declared a cash distribution to the limited partners of
$2,112,468 for the quarter ended March 31, 1998 (the period). During the
period, all net proceeds not invested in real estate were invested in
Government Agency discount notes and bank repurchase agreements (which are
secured by United States Treasury and Government obligations).
During the period, the Registrant received base rental revenue pursuant to
its lease arrangements in the amount of $1,865,905, unchanged from the
comparable period of the prior year. Base rental revenue for the period
includes the recognition of approximately $69,000 of income previously
deferred. In addition, the Registrant received or accrued participating
rentals of $565,225 for the period representing an increase over
participating rentals of $531,517 for the comparable period in 1997. On
June 1, 1996, CFJ Properties (the Registrant's only lessee) curtailed its
relationship with a large third party billing company for the trucking
industry. The billing company requested changes to its contract that were
unacceptable to CFJ Properties' management due to the significant
long-term ramifications of the proposed change on CFJ Properties' future
business. This resulted in reduced volume and margins, which contributed
to low participating rental revenues in the quarter ended March 31, 1997
as compared to the quarter ended March 31, 1998. Total expenses decreased
by $149,497 during the period as compared to the prior period due to a
decrease in depreciation expense related to the sale of travel plaza
equipment in the last twelve months.
The decrease in total assets reflected in the Registrant's financial
statements filed with this report is mainly attributable to the
depreciation allowance, which is deducted for accounting purposes from the
cost of the assets on the Registrant's books.
In the opinion of management, the financial information included in this
report reflects all adjustments necessary for fair presentation. All such
adjustments are of a normal recurring nature.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 88-C
---------------------------------------
BALANCE SHEET - MARCH 31, 1998
------------------------------
ASSETS
Cash $100
Investment in Participating Income Properties II, L.P., at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent $100
----
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
Note: FFCA Investor Services Corporation 88-C (88-C) was organized on August 11,
1987 to act as the assignor limited partner in Participating Income Properties
II, L.P. (PIP-II).
The assignor limited partner is the owner of record of the limited
partnership units of PIP-II. All rights and powers of 88-C have been assigned to
the holders, who are the registered and beneficial owners of the units. Other
than to serve as assignor limited partner, 88-C has no other business purpose
and will not engage in any other activity or incur any debt.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
PARTICIPATING INCOME PROPERTIES II, L.P.
By FRANCHISE FINANCE CORPORATION OF AMERICA II
Corporate General Partner
Date: May 11, 1998 By /s/ John Barravecchia
-------------------------------------------------
John Barravecchia, Chief Financial Officer
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 88-C
Date: May 11, 1998 By /s/ John Barravecchia
-------------------------------------------------
John Barravecchia, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1998 AND THE STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 820806
<NAME> PARTICIPATING INCOME PROPERTIES II, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,974,080
<SECURITIES> 0
<RECEIVABLES> 187,300
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 69,547,068
<DEPRECIATION> 21,428,178
<TOTAL-ASSETS> 52,280,270
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 49,570,395
<TOTAL-LIABILITY-AND-EQUITY> 52,280,270
<SALES> 0
<TOTAL-REVENUES> 2,476,341
<CGS> 0
<TOTAL-COSTS> 887,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,589,127
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,589,127
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,589,127
<EPS-PRIMARY> 18.99
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
BALANCE SHEET.
</LEGEND>
<CIK> 820807
<NAME> FFCA INVESTOR SERVICES CORPORATION 88-C
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<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> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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