UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] 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
Commission File Number 0-18512
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 (Partnership I.R.S.
Organization) Employer Identification No.)
Delaware 86-0588507
(Corporation State of (Corporation I.R.S.
Incorporation) Employer Identification No.)
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
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
Limited Partnership Depositary Units
(Title of Class)
Indicate by check mark whether the Co-Registrants (1) have 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
Co-Registrants were required to file such reports) and (2) have been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Co-Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the Co-Registrants: Not applicable.
The Limited Partnership Depository Units (the "Units") are not currently
traded in any market. Therefore, there is no market price or average bid and
asked price for the Units within the 60 days prior to the date of this filing.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
ITEM 1. BUSINESS.
Participating Income Properties II, L.P., a Delaware limited
partnership (the "Partnership"), was organized on August 12, 1987 under the
Delaware Revised Uniform Limited Partnership Act. The Partnership was organized
primarily to purchase new and existing "Flying J Travel Plaza" facilities,
including land, buildings and equipment, to be leased on a net basis to
franchisees of Flying J Franchise Inc. and to Flying J Inc. The managing general
partner of the Partnership is Franchise Finance Corporation of America II, a
Delaware corporation (the "Managing General Partner"). Morton H. Fleischer and
Paul Bagley are the individual general partners of the Partnership. (The
Managing General Partner, Morton H. Fleischer and Paul Bagley are sometimes
referred to collectively herein as the "General Partners.")
Morton H. Fleischer is the sole stockholder of FFCA Investor Services
Corporation 88-C, a Delaware corporation, which was incorporated on August 11,
1987, to serve as the initial limited partner of the Partnership and the owner
of record of the limited partnership interests in the Partnership, the rights
and benefits of which are assigned by FFCA Investor Services Corporation 88-C to
investors in the Partnership. FFCA Investor Services Corporation 88-C conducts
no other business activity. The Partnership and FFCA Investor Services
Corporation 88-C are referred to collectively as the "Co-Registrants."
On December 12, 1988, the Co-Registrants commenced a public offering of
$100,000,000 of limited partnership depository units (the "Units") in the
Partnership pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended. The Co-Registrants sold a total of 82,834
Units to investors at $1,000 per Unit for a total of $82,834,000. Purchasers of
the Units (the "Holders") acquired the following number of Units from FFCA
Investor Services Corporation 88-C on each of the following dates: 24,735 Units
on May 11, 1989; 16,700 Units on July 13, 1989; 24,806 Units on October 19,
1989; and 16,593 Units on December 11, 1989. Subsequent to that date, no Holder
has made any additional capital contribution. The Holders share in the benefits
of ownership of the Partnership's assets, including its real and personal
property investments, according to the number of Units held in substantially the
same manner as limited partners in the Partnership.
After deducting organizational and offering expenses, including sales
commissions, the net proceeds of the offering of the Units, $71,956,541, were
fully invested by the Partnership in thirteen travel plazas located in eleven
states. "Flying J Travel Plaza" facilities offer a full-service operation,
generally including fuel facilities, a restaurant, convenience store and other
amenities for use by the trucking industry and traveling public in general. One
of the properties was acquired in 1988, five were acquired during 1989, five
were acquired during 1990, and two were acquired during 1991. As of December 31,
1998 all thirteen travel plazas were leased to CFJ Properties, a general
partnership formed pursuant to a joint venture between Flying J Inc., through
its subsidiary Big West Oil Company ("Big West"), and Douglas Oil Company of
California, a subsidiary of Conoco Inc. ("Douglas Oil"). The Partnership is not
affiliated with CFJ Properties, Flying J Inc. or Flying J Franchise Inc.
("FJFI"), a subsidiary of Flying J Inc. and the franchisor of Flying J Travel
Plazas.
2
<PAGE>
The Partnership entered into purchase agreements with Flying J Inc. on
September 4, 1998 to sell substantially all of the Partnership's assets (those
assets comprising the travel plazas) for cash of $80,460,000. The limited
partners received a consent solicitation statement describing the proposed
transaction and an affirmative vote of investors holding a majority of the
partnership units was achieved on October 26, 1998. The sale transaction was
completed on March 22, 1999 and the Partnership recognized a gain of
approximately $34.3 million on the sale. The net cash proceeds from this sale
are being held in U.S. government securities pending distribution to investors.
The sale of the travel plazas represents the disposition of substantially all of
the Partnership's assets and the Partnership has no further liability in
connection with any of the travel plazas. The Managing General Partner has begun
the process of winding down the affairs of the Partnership that includes
liquidation and distribution of assets to the investors in accordance with the
Partnership agreement. The liquidation of the Partnership is expected to be
completed in June 1999.
As part of the sale of the travel plazas, approximately $515,000
(representing less than one percent of the aggregate sales price) may, at the
Managing General Partner's discretion, be deposited in a trust (the "Trust
Fund") with a bank. The Trust Fund, including interest income, would be
available to satisfy claims made directly or indirectly with respect to the
liquidation, dissolution and winding up of the affairs of the Partnership during
a period of up to 36 months following the liquidation date. At the end of this
period, final decisions will be made in settlement of all disputed claims, if
any, and the remaining balance of the Trust Fund will be disbursed to the
investors.
Real estate owned by the Partnership at December 31, 1998 was leased
for a term of 20 years. Equipment was leased for a term of eight years. Lessees
paid the Partnership annual rental payments (in monthly installments) equal to
10% of the Partnership's total investment in properties. As additional rent
under the terms of the lease, the Partnership was entitled to receive a portion
of the operating revenues of the lessees equal to (a) 3.5% of annual gross
receipts derived from the travel plaza facility, excluding fuel sales; (b) 3/10
of $.01 per gallon of fuel sold; and (c) 3.5% of all amounts received by the
lessee for any lease year pursuant to any sublease by the lessee of any part of
its leased premises. All leases were terminated on March 22, 1999 upon sale of
the related travel plazas.
The Managing General Partner, the Partnership and Flying J Inc. entered
into an operating agreement (the "Operating Agreement"). Pursuant to the terms
of the Operating Agreement, in the event a lessee defaults in payment of any
minimum rent or other monetary sum when due and payable under the lease and
fails to cure such default within five days after receipt of notice of such
default from the Partnership, Flying J Inc. has agreed to operate such lessee's
leased travel plaza for the maximum potential lease term as a full-service
travel plaza and to provide adequate working capital for the operations of such
property. A defaulting lessee and any personal guarantor of such defaulting
lessee will remain liable under the lease and guaranty, respectively, to the
extent permitted by law. The Operating Agreement was terminated upon sale of the
related travel plazas.
During 1998, CFJ Properties contributed 100% of the Company's total
rental and participating rental revenue for the year. Flying J Inc., through its
subsidiary Big West, entered into a joint venture with Douglas Oil to form CFJ
Properties in February 1991. Flying J Inc. (and subsidiaries) is a fully
integrated oil and gas company and is engaged in the production, refining,
3
<PAGE>
transportation, wholesaling and retail marketing of petroleum products and other
services through its travel plazas and gasoline stations. Flying J Inc. operates
all of CFJ Properties' travel plazas and related facilities, which included 78
interstate travel plaza properties as of January 31, 1998. At December 31, 1998,
the Partnership owned thirteen of these properties. Flying J Inc. assigned its
leasehold interests in the travel plazas owned by the Partnership to CFJ
Properties and was released by the Partnership with respect to its obligation
under those leases.
The Partnership's leases with CFJ Properties were with full recourse to
the assets of CFJ Properties, but without recourse to Big West or Douglas Oil. A
default on one lease constituted a default on all other leases to the same
lessee by the Partnership and two other partnerships sponsored by affiliates of
the Managing General Partner, all of whose travel plazas were leased to CFJ
Properties, Flying J Inc. or franchisees of FJFI.
For the fiscal year ended January 31, 1998, CFJ Properties reported net
income of $16 million on revenues of $1.3 billion. Revenues rose 7% from $1.2
billion in the prior year. The higher revenues resulted from the opening of six
new units and increases in fuel prices. Net income increased from $1.8 million
in the prior year due to higher gross profit margins.
During the fiscal year ended January 31, 1998, CFJ Properties reported
$41.7 million in net cash provided by operating activities. This cash, along
with the cash provided by financing activities, was used to make capital
expenditures. As of January 31, 1998, CFJ Properties reported cash balances of
approximately $3.8 million, with liquidity supported by net cash provided by
operating activities and a $150 million revolving line of credit with a bank. As
of January 31, 1998, CFJ Properties reported partners' capital of $155.5 million
and total assets of $463.7 million.
CFJ Properties leases travel plazas and equipment under non-cancelable
operating leases, which generally expire at various dates over the next 9 to 15
years. Payments under these leases were $17.5 million in fiscal 1998 and $17.3
million in fiscal 1997, including percentage lease payments.
The thirteen travel plaza properties leased by CFJ Properties from the
Partnership generated a combined fuel and non-fuel gross profit (including other
income) of approximately $35.9 million during the fiscal year ended January 31,
1998 as compared to $31.9 million in fiscal year 1997. This increase was due to
higher volumes of fuel sales and higher fuel prices during fiscal year 1998 as
compared to fiscal year 1997. Total travel plaza unit-level income for these
thirteen properties (before depreciation and allocated corporate overhead)
totaled approximately $758,000 in 1998 with four of the thirteen properties
reporting positive unit-level income. The remaining nine properties reported
losses primarily due to higher expenses. The combined result of the travel plaza
unit-level net income before depreciation and allocated corporate overhead was
up from the unit-level net loss of $1.6 million in the prior year due largely to
an increase in fuel and non fuel sales volumes and an increase in fuel prices.
Volumes and margins were reduced in 1997 due to CFJ's curtailment of its
relationship with a third party billing company in June 1996. For CFJ
Properties' fiscal year ended January 31, 1998, the average unit-level base and
participating rents approximated 13.5% of the original cost of these properties.
4
<PAGE>
None of the thirteen travel plaza properties operated by CFJ Properties
represented over 10% of the Partnership's total assets at December 31, 1998.
As of December 31, 1998, the Partnership had invested in real estate
located in eleven states in the western, central and southeastern portions of
the United States, and no real estate investments are located outside of the
United States. A presentation of revenues or assets by geographic region is not
applicable and would not be material to an understanding of the Partnership's
business taken as a whole.
The Partnership does not believe that any aspect of its business is
significantly seasonal in nature. No portion of the Partnership's business is
subject to renegotiation of profits or termination of contracts or subcontracts
at the election of the United States Government. The Partnership does not
manufacture any products and therefore does not require any raw materials in
order to conduct its business.
The Partnership is managed by the Managing General Partner and
therefore has no employees of its own. FFCA Investor Services Corporation 88-C
has no employees because it does not conduct any business operations.
The Partnership has completed its assessment of its Year 2000
preparedness and has determined that any potential consequences of Year 2000
issues will not have a material effect on the partnership's business, results of
operation or financial condition. On March 22, 1999, the Partnership sold
substantially all of its assets to a third party. The sale of substantially all
of its assets will lead to the prompt liquidation of the partnership and the
distribution of net assets to the limited partners. The Managing General Partner
anticipates that the partnership liquidation will be accomplished during 1999
and, accordingly, does not expect the Partnership to be in existence when the
year 2000 arrives.
The statements contained in this Annual Report on Form 10-K, regarding
the planned dissolution and liquidation of the Partnership, are forward-looking
statements and involve risks and uncertainties that could cause actual results
to differ materially from the results, financial or otherwise, or other
expectations described in the forward-looking statements. Although the Managing
General Partner believes that the estimated timing and amounts of the
liquidating distributions are reasonable, the actual costs of the liquidation
and dissolution of the Partnership may vary from the estimates and that
variation could be material. In addition, the actual timing of the liquidating
distribution could vary from the estimate; therefore, forward-looking statements
should not be relied upon as a prediction of actual future results or
occurrences.
ITEM 2. PROPERTIES.
As of December 31, 1998, the Partnership had thirteen travel plaza
properties located in 11 states. The properties were acquired by the Partnership
during 1988, 1989, 1990 and 1991 with the net proceeds received by the
Partnership from the public offering of the Units.
On September 4, 1998, the Partnership entered into purchase agreements
with Flying J Inc. to sell substantially all of the Partnership's assets (those
assets comprising the travel plazas) for cash of $80,460,000. The limited
partners received a consent solicitation statement describing the proposed
transaction and an affirmative vote of investors holding a majority of the
5
<PAGE>
partnership units was achieved in October 1998. The sale transaction was
completed on March 22, 1999. The sale of the travel plazas represents the
disposition of substantially all of the Partnership's assets and the Partnership
has no further liability in connection with any of the travel plazas.
The travel plazas, divided into sections which serve both the
commercial and non-commercial traveler, generally offer a multi-use, full
service operation including fuel facilities for the storage and sale of
automotive and diesel fuels, a 24-hour restaurant, a convenience store, restroom
facilities with private showers, and other amenities designed to meet the needs
of the trucking industry and the traveling public in general. As of December 31,
1998, no one property is a principal property of the Partnership because each
property represented less than 10% of the Partnership's total assets. The
following is a description of each of the properties owned by the Partnership at
December 31, 1998.
PECOS, TEXAS. The Pecos travel plaza was acquired as a new full-service
travel plaza, built on a parcel consisting of approximately 14.11 acres located
at the interchange of Interstate 20 and US 285.
DILLON, SOUTH CAROLINA. The Dillon travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 20.64
acres, located at the interchange of Interstate 95 and State Route 38. Within an
85-mile radius of the property are the markets of Columbia and Florence, South
Carolina and Lumberton and Fayetteville, North Carolina.
GRAHAM, NORTH CAROLINA. The Graham travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 20
acres, located at the interchange of Interstate 40/85 and State Route 1928.
KNOXVILLE, TENNESSEE. The Knoxville travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 14.05
acres, located parallel to Interstate 40.
KINGMAN, ARIZONA. The Kingman travel plaza was built on the site of an
existing Husky truck stop that was razed and replaced with a new full-service
travel plaza. The site consists of approximately 7.45 acres located 1/8 of a
mile north of the Interstate 40/US 90 interchange.
JACKSON, GEORGIA. The Jackson travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 42.2
acres of which 27 acres are developed, located at the interchange of Interstate
75 and Star Route 36.
6
<PAGE>
TEXARKANA, ARKANSAS. The Texarkana travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 28
acres, located at Exit 7 of Interstate 30. In 1993, the Texarkana travel plaza
sustained substantial damage due to a fire. The property was insured and the
lessee of the travel plaza used the insurance proceeds to rebuild the travel
plaza. During 1994, the Partnership made an additional investment of $595,000 in
the Texarkana travel plaza to enlarge the property to conform to the new Flying
J travel plaza prototype. The lessee of the travel plaza continued to make
monthly base rental payments during the reconstruction of the travel plaza. The
travel plaza reopened in March 1994.
RESACA, GEORGIA. The Resaca travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 39.65
acres, situated at the southeast corner of Resaca Road and Interstate 75.
WALTON, KENTUCKY. The Walton travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 19.63
acres, situated at the southwest corner of Stephenson Mill Road and Kentucky
Highway 14 and 16 just west of the Interstate 75 exit ramp with 1,200 feet of
primary frontage.
SAN ANTONIO, TEXAS. The San Antonio travel plaza was acquired as a new
full-service travel plaza, built on a parcel consisting of approximately 19.94
acres, located at the northwest corner of Foster Road and Interstate 10.
ROCK SPRINGS, WYOMING. The Rock Springs travel plaza was acquired as a
new full-service travel plaza, built on a parcel consisting of approximately
9.57 acres, situated at the northwest corner of Elk Street and Stagecoach Drive
at the Elk Street exit off Interstate 80.
TROUTDALE, OREGON. The Troutdale travel plaza was acquired as a new,
full-service (with limited restaurant facilities) travel plaza, built on a
parcel consisting of approximately 7.45 acres, located at the southwest corner
of Northwest Frontage Road at Interstate 84 and Graham Road.
WINNEMUCCA, NEVADA. The Winnemucca travel plaza was acquired as a new,
full-service (with limited restaurant facilities) travel plaza, built on a
parcel consisting of approximately 8.29 acres, located on the northwest side of
West Winnemucca Boulevard at the interchange of Interstate 80 and West
Winnemucca Boulevard.
Independent of the Partnership, FFCA Investor Services Corporation 88-C
has no interest in any real or personal property.
7
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
Neither the Co-Registrants nor their properties are parties to, or
subject to, any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A proposal to sell substantially all of the Partnership's assets was
submitted to a vote of the security holders during the fourth quarter of fiscal
year 1998. A Consent Solicitation Statement dated September 11, 1998 relating to
the proposal was sent to the security holders. Voting was completed on October
26, 1998 without a meeting. The results of the voting are as follows: FOR,
46,619 votes; AGAINST, 4,679 votes, and ABSTAIN, 1,942 votes.
PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED SECURITY HOLDERS MATTERS.
MARKET INFORMATION. During 1998, there was no established public
trading market for the Units, and it is not anticipated that an established
public trading market for the Units will develop.
HOLDERS. As of March 4, 1999, there were 6,464 record holders of the Units.
DISTRIBUTIONS. For the two most recent fiscal years, the Partnership
made the following cash distributions to the Holders:
1998
Per Unit
Distribution Total
------------------- --------------------
Date of Number Cash from Cash from
Distribution of Units Operations Capital Operations Capital
- ------------ -------- ---------- ------- ---------- -------
March 31 82,834 $25.50 -- $2,112,267 --
June 30 82,834 26.41 -- 2,187,646 --
September 30 82,834 26.74 -- 2,214,981 --
December 31 82,834 25.89 -- 2,144,572 --
8
<PAGE>
1997
Per Unit
Distribution Total
------------------- --------------------
Date of Number Cash from Cash from
Distribution of Units Operations Capital Operations Capital
- ------------ -------- ---------- ------- ---------- -------
March 31 82,834 $25.27 -- $2,093,215 --
June 30 82,834 26.25 -- 2,174,393 --
September 30 82,834 26.15 -- 2,166,109 --
December 31 82,834 25.74 -- 2,132,147 --
Cash from operations, defined as disbursable cash in the agreement of
limited partnership that governs the Partnership, is distributed to the Holders.
Any variations in the amount of distributions from quarter to quarter are due to
fluctuations in net cash provided by operating activities. Reference is made to
Item 7 below for a discussion and analysis of such fluctuations. Cash proceeds
from the sale of property are distributed to the Holders as a return of capital.
The Adjusted Capital Contribution of a Holder is generally the Holder's initial
capital contribution reduced by the cash distributions to the Holders of
proceeds from the sale of Partnership properties and reduced by any other cash
distributions other than from operations. The Adjusted Capital Contribution per
Unit of the Holders, as defined in the agreement of limited partnership that
governs the Partnership, was $1,000 as of December 31, 1998. Any differences in
the amounts of distributions set forth in the above tables from the information
contained in Item 6 below are due to rounding the amount of distributions
payable per Unit down to the nearest whole cent and carrying any fractional
cents forward from one period to the next.
The Partnership expects to make cash distributions from operations to
the Holders through the date of the sale of the travel plazas on March 22, 1999.
The liquidation of the Partnership is expected to occur in June 1999. The
Managing General Partner estimates that the liquidating distribution will range
from approximately $982 to $1,011 per limited partnership unit. Although the
Managing General Partner believes that the range of the liquidating distribution
is reasonable, the actual costs of the liquidation and dissolution of the
Partnership may vary from the estimates and that variation could be material. As
part of the sale of the travel plazas, approximately $515,000 (representing less
than one percent of the aggregate sales price) may, at the Managing General
Partner's discretion, be deposited in a trust (the "Trust Fund") with a bank.
The Trust Fund, including interest income, would be available to satisfy claims
made directly or indirectly with respect to the liquidation, dissolution and
winding up of the affairs of the Partnership during a period of up to 36 months
following the liquidation date. At the end of this period, final decisions will
be made in settlement of all disputed claims, if any, and the remaining balance
of the Trust Fund will be disbursed to the Holders.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction
with the Financial Statements and the related Notes attached as an exhibit to
this Report.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $10,101,760 $10,034,660 $ 9,857,290 $ 9,985,844 $ 9,895,376
Net Income 6,666,969 5,974,380 5,831,607 6,002,622 5,926,437
Net Income Per Unit 79.68 71.40 69.70 71.74 70.83
Total Assets 50,660,281 52,913,688 55,827,780 58,932,231 61,749,194
Distributions of Cash from
Operations to Holders 8,659,886 8,565,908 8,460,157 8,537,458 8,258,384
Distributions of Cash from
Operations Per Unit 104.55 103.41 102.14 103.07 99.70
Return of Capital to
Holders -- -- -- -- --
Return of Capital Per Unit -- -- -- -- --
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership received $82,834,000 in gross proceeds from its public
offering of the Units. After deducting organizational and offering expenses,
including sales commissions, the Partnership invested the net offering proceeds
of $71,956,541 in thirteen travel plazas. The rental payments from lessees of
the properties have been the Partnership's primary source of income. As of
December 31, 1998, the Partnership had cash and marketable securities
aggregating $3,852,514, of which $2,144,572 was paid out to the Holders in
January 1999 as their fourth quarter distribution for fiscal year 1998.
The Partnership entered into purchase agreements with Flying J Inc. on
September 4, 1998 to sell substantially all of the Partnership's assets (those
assets comprising the travel plazas) for cash of $80,460,000. The limited
partners received a consent solicitation statement describing the proposed
transaction and an affirmative vote of investors holding a majority of the
partnership units was achieved on October 26, 1998. The sale transaction was
completed on March 22, 1999 at which time the Partnership recognized a gain of
approximately $34.3 million on the sale. The net cash proceeds from this sale
are being held in U.S. government securities pending distribution to investors.
The sale of the travel plazas represents the disposition of substantially all of
the Partnership's assets and the Partnership has no further liability in
connection with any of the travel plazas. The Managing General Partner has begun
the process of winding down the affairs of the Partnership that includes
liquidation and distribution of assets to the investors in accordance with the
Partnership agreement. The liquidation of the Partnership is expected to be
completed in June 1999.
10
<PAGE>
As part of the sale of the travel plazas, approximately $515,000
(representing less than one percent of the aggregate sales price) may, at the
Managing General Partner's discretion, be deposited in a trust (the "Trust
Fund") with a bank. The Trust Fund, including interest income, would be
available to satisfy claims made directly or indirectly with respect to the
liquidation, dissolution and winding up of the affairs of the Partnership during
a period of up to 36 months following the liquidation date. At the end of this
period, final decisions will be made in settlement of all disputed claims, if
any, and the remaining balance of the Trust Fund will be disbursed to the
investors.
FFCA Investor Services Corporation 88-C has no capital resources and
conducted no operations in 1998.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO
FISCAL YEAR ENDED DECEMBER 31, 1997
The Partnership's total revenues for the year ended December 31, 1998
increased to $10,101,760 from $10,034,660 in 1997. The overall increase in
revenues is due to an increase in participating rentals. Participating rental
revenues increased to $2,465,452 in 1998 from $2,352,826 in 1997 due to higher
travel plaza fuel and non-fuel sales volumes. Base rental revenue for 1998
includes the recognition of approximately $274,000 of income previously
deferred.
Total Partnership expenses in 1998 were $3,434,791, which decreased
from $4,060,280 in 1997. This decrease resulted from a reduction in depreciation
expense of $627,149, primarily related to the sale of equipment during 1997
through the lessee's exercise of purchase options. There were no equipment
purchase options exercised during 1998 due to the pending sale of the travel
plazas to Flying J Inc. Net income for 1998 amounted to $6,666,969 as compared
to $5,974,380 for 1997.
FISCAL YEAR ENDED DECEMBER 31, 1997 COMPARED TO
FISCAL YEAR ENDED DECEMBER 31, 1996
The Partnership's total revenues for the year ended December 31, 1997
increased to $10,034,660 from $9,857,290 in 1996. The overall increase in
revenues is due to an increase in participating rentals. Participating rental
revenues increased to $2,352,826 in 1997 from $2,237,456 in 1996 due to higher
travel plaza sales volumes. During 1997, the Partnership sold four equipment
packages for an aggregate gain of $29,488, with the remaining equipment leases
scheduled to expire at various dates through 1999. Base rental revenue for 1997
includes the recognition of approximately $274,000 of income previously
deferred.
Total Partnership expenses in 1997 were $4,060,280, representing an
increase from $4,025,683 in 1996. The increase, resulting from an increase in
operating expenses of $35,192, primarily related to higher legal fees in 1997.
Net income for 1997 amounted to $5,974,380 as compared to $5,831,607 for 1996.
11
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The financial instruments held by the Partnership at December 31, 1998
consist of cash equivalents (primarily investments in U.S. Treasury securities
or repurchase agreements that are collateralized by U.S. Treasury and government
obligations) and receivables from lessees. These financial instruments are
short- term in nature and do not subject the Partnership to a material exposure
to changes in interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Co-Registrants required by Regulation
S-X are attached to this Report. Reference is made to Item 14 below for an index
to the financial statements and financial statement schedules.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
The Partnership has no directors or executive officers. Franchise
Finance Corporation of America II ("FFCA II"), as the Managing General Partner,
has responsibility for all of the Partnership's operations. FFCA II was
organized in Delaware in October of 1988 for the purpose of sponsoring limited
partnerships such as the Partnership. The directors and executive officers of
FFCA II and FFCA Investor Services Corporation 88-C, and the year they were
elected or appointed to their respective offices, are as follows:
FFCA II
DIRECTORS
Name Position Held Since
---- -------------------
Paul Bagley 1988
Morton H. Fleischer, Chairman 1988
John R. Barravecchia 1993
Christopher H. Volk 1993
12
<PAGE>
OFFICERS
Associated With
Name Positions Held FFCA II Since
---- -------------- -------------
Morton H. Fleischer Chairman of the Board, President
and Chief Executive Officer 1988
John R. Barravecchia Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary 1989
Christopher H. Volk Executive Vice President, Chief Operating
Officer, Secretary and Assistant Treasurer 1989
Dennis L. Ruben Executive Vice President, General Counsel
and Assistant Secretary 1993
Stephen G. Schmitz Executive Vice President, Chief Investment
Officer and Assistant Secretary 1995
Catherine F. Long Senior Vice President-Finance, Principal
Accounting Officer, Assistant Secretary
and Assistant Treasurer 1990
FFCA INVESTOR SERVICES CORPORATION 88-C
DIRECTOR
Associated with the
Name Corporation Since
---- -----------------
Morton H. Fleischer 1987
OFFICERS
Associated with the
Name Positions Held Corporation Since
---- -------------- -----------------
Morton H. Fleischer Chairman of the Board 1987
John R. Barravecchia President, Secretary and Treasurer 1990
Vice President, Assistant Secretary
Christopher H. Volk and Assistant Treasurer 1994
All of the foregoing directors and officers have been elected to serve
a one year term and until their successors are elected and qualified. There are
no arrangements or understandings between or among any of the officers or
directors and any other person pursuant to which any officer or director was
selected as such. There are no family relationships among any directors and
officers.
13
<PAGE>
BUSINESS EXPERIENCE
The business experience during the past five years of each of the above
directors and executive officers is as follows:
PAUL BAGLEY, age 56, has served as a director of FFCA II since 1988.
Mr. Bagley is a founding partner of Stone Pine Capital LLC (1994), and is
chairman of FCM Fiduciary Management Co. LLC (1989 to date), the advisor to a
mezzanine and private equity fund. For more than twenty years prior to 1988, Mr.
Bagley was engaged in investment banking activities with Shearson Lehman Hutton
Inc. and its predecessor, E.F. Hutton & Company Inc., where he was responsible
for the creation and management of over $5 billion of direct investment
activities. Mr. Bagley has served on the boards of a number of public and
private companies. Currently he is on the boards of Fiduciary Capital,
Hollis-Eden Pharmaceuticals, Consolidated Capital of North America, LMC
Corporation.
MORTON H. FLEISCHER, age 62, has served as the Chairman of the Board of
FFCA Investor Services Corporation 88-C since 1987 and has served as President,
Chief Executive Officer and a Director of FFCA II since its formation in 1988.
Mr. Fleischer was appointed Chairman of the Board of FFCA II in February of 1994
and currently serves as President, Chief Executive Officer and Chairman of the
Board of Franchise Finance Corporation of America, a Delaware corporation
("FFCA"). He served as President, Chief Executive Officer and a Director of
Franchise Finance Corporation of America I ("FFCA I"), a predecessor of FFCA,
from 1980 to 1994. Mr. Fleischer is also an individual general partner of the
Partnership and is a general partner (or general partner of a general partner)
of the following public limited partnerships: Participating Income Properties
1986, L.P.; Participating Income Properties III Limited Partnership; and
Scottsdale Land Trust Limited Partnership.
JOHN R. BARRAVECCHIA, age 43, has served as President, Secretary and
Treasurer of FFCA Investor Services Corporation 88-C since 1990. He has served
as Senior Vice President and Chief Financial Officer of FFCA II since 1989, was
named Treasurer in December 1993 and was named Assistant Secretary in 1994. In
1995, Mr. Barravecchia was named Executive Vice President of FFCA II. Mr.
Barravecchia currently serves as Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary of FFCA and served in various
capacities for FFCA I from 1984 to 1994. He was appointed Vice President and
Chief Financial Officer of FFCA I in December 1986, and Senior Vice President in
October 1989. Mr. Barravecchia was elected as a Director of FFCA I in March 1993
and Treasurer in December 1993. Prior to joining FFCA I, Mr. Barravecchia was
associated with the international public accounting firm of Arthur Andersen LLP.
CHRISTOPHER H. VOLK, age 42, has served as Vice President, Assistant
Secretary and Assistant Treasurer of FFCA Investor Services Corporation 88-C
since 1994 and served as Vice President-Research of FFCA II from 1989 to 1993.
Mr. Volk was named Senior Vice President-Underwriting and Research and Secretary
of FFCA II in December 1993. In 1995, he was named Chief Operating Officer and
Executive Vice President of FFCA II. He currently serves as Executive Vice
President, Chief Operating Officer, Secretary and Assistant Treasurer of FFCA.
He joined FFCA I in 1986 and has served in various capacities in FFCA I's
14
<PAGE>
capital preservation and underwriting areas prior to being named Vice
President-Research in October 1989. In December 1993, he was appointed Secretary
and Senior Vice President-Underwriting and Research of FFCA I, and he was
elected as a Director of FFCA I in March 1993.
DENNIS L. RUBEN, age 46, served as Senior Vice President and General
Counsel of FFCA II from December 1994 and was named Executive Vice President,
General Counsel and Assistant Secretary of FFCA II in February 1997. He
currently serves in the same capacity for FFCA. In 1991, he joined FFCA I as
attorney and counsel. In December 1993, he was appointed Senior Vice President
and General Counsel of FFCA I. Prior to joining FFCA I, Mr. Ruben was associated
with the law firm of Kutak Rock from 1980 until March 1991. Mr. Ruben became a
partner of Kutak Rock in 1984.
STEPHEN G. SCHMITZ, age 44, served as Senior Vice President-Corporate
Finance of FFCA II from January 1996 and was named Executive Vice President,
Chief Investment Officer and Assistant Secretary of FFCA II in February 1997. He
currently serves in the same capacity for FFCA. Mr. Schmitz served in various
positions as an officer of FFCA I from 1986 to June 1, 1994.
CATHERINE F. LONG, age 42, was named Senior Vice President-Finance of
FFCA in February 1997, was named Principal Accounting Officer in December 1993
and was named Assistant Secretary and Assistant Treasurer in 1994. She currently
serves in the same capacities for FFCA. In June 1990, she joined FFCA I as Vice
President-Finance. In December 1993, she was appointed Principal Accounting
Officer of FFCA I. Prior to joining FFCA I, Ms. Long was associated with the
international public accounting firm of Arthur Andersen LLP.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Co-Registrants during fiscal year 1998 and Forms 5 and
amendments thereto furnished to the Co-Registrants with respect to fiscal year
ended December 31, 1998 (the "Forms"), and any written representations by the
directors and executive officers of FFCA Investor Services Corporation 88-C and
the Managing General Partner, the Co-Registrants have not identified herein any
such person that failed to file on a timely basis the Forms required by Section
16(a) of the Securities Exchange Act of 1934 for fiscal year 1998.
ITEM 11. EXECUTIVE COMPENSATION.
The Partnership is required to pay an acquisition fee and a
subordinated real estate disposition fee to the Managing General Partner, and
the General Partners are entitled to receive a share of cash distributions, when
and as made to the Holders, a share of profits and losses and a subordinated
share of any sale proceeds. Reference is made to Note (1) and Note (5) of the
Notes to Financial Statements, which are filed with this Report, for a
description of the fees and distributions paid in 1998.
FFCA Investor Services Corporation 88-C serves as assignor and initial
limited partner without compensation from the Partnership. It is not entitled to
any share of the profits, losses or cash distributions of the Partnership. The
director and officers of FFCA Investor Services Corporation 88-C serve without
compensation from FFCA Investor Services Corporation 88-C or the Partnership.
15
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of March 4, 1999, no person or group was known by the Partnership to
own directly or beneficially more than 5% of the outstanding Units of the
Partnership.
None of the General Partners of the Partnership owned any Units as of
March 4, 1999. The directors and officers of the Managing General Partner,
individually and as a group, owned less than 1% of the Units as of March 4,
1999. The Managing General Partner is owned 51% by Morton H. Fleischer and 49%
by Paul Bagley.
FFCA Investor Services Corporation 88-C has an interest in the
Partnership as a limited partner and it serves as the owner of record of all of
the limited partnership interests assigned by it to the Holders. However, FFCA
Investor Services Corporation 88-C has no right to vote its interest on any
matter and it must vote the assigned interests as directed by the Holders. FFCA
Investor Services Corporation 88-C is a wholly owned subsidiary of the Managing
General Partner.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Since the beginning of the last fiscal year of both of the
Co-Registrants, there have been no significant transactions or business
relationships among the Co-Registrants, the General Partners or their affiliates
or their management, other than as described in Items 1, 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
1. FINANCIAL STATEMENTS. The following financial statements are
filed as part of this Report:
THE PARTNERSHIP
Report of independent public accountants
Balance Sheets as of December 31, 1998 and 1997
Statements of Income for the years ended
December 31, 1998, 1997 and 1996
Statements of Changes In Partners' Capital
for the years ended December 31, 1998, 1997
and 1996
Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
Notes to Financial Statements
16
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 88-C
Report of independent public accountants
Balance Sheet as of December 31, 1998
Notes to Balance Sheet
2. FINANCIAL STATEMENT SCHEDULES.
Schedule III-Schedule of Real Estate and Accumulated Depreciation
as of December 31, 1998
All other schedules are omitted since they are not required, are
inapplicable, or the required information is included in the
financial statements or notes thereto.
3. EXHIBITS.
The following is a complete list of exhibits filed as part of
this Form 10-K. For electronic filing purposes only, this report
contains Exhibit 27, the Financial Data Schedule. Exhibit numbers
correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
Pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, the following
document, filed with the Securities and Exchange
Commission as Exhibit 4 to the Co-Registrants' Form
10-K for the fiscal year ended 1989, Commission File
No. 0-18504, is incorporated herein by this reference.
Fifth Amended and Restated Certificate and
Agreement of Limited Partnership which governs the
Partnership, as filed with the Secretary of State
of Delaware on December 11, 1989.
Pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, the following
documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants'
Registration Statement on Form S-11, Registration No.
33-16849, are incorporated herein by this reference.
Form of Depository Agreement. 4(d)
The Certificate of Incorporation which governs FFCA 4(b)
4(d) Investor Services Corporation 88-C, as filed with
the Secretary of State of Delaware on August 11, 1987.
Bylaws of FFCA Investor Services Corporation 88-C. 4(c)
Operating Agreement, dated November 14, 1988, by and 10(c)
among Participating Income Properties II, L.P.,
Franchise Finance Corporation of America II, Flying J
Inc. and Flying J Franchise Inc.
17
<PAGE>
Pursuant to Rule 12b-32 under the Securities Exchange
Act of 1934, as amended, the following documents, filed with
the Securities and Exchange Commission as exhibits to the
Co-Registrant's Form 8-K dated March 22, 1999, Commission
File No. 0-18504, are incorporated herein by this reference.
March 22, 1999,
Form 8-K
Exhibit No.
-----------
Purchase Agreement dated as of September 4, 1998, between 10.01
Participating Income Properties II, L.P. and CFJ Plaza
Company II LLC, including the First Amendment thereto dated
as of March 22, 1999
Purchase Agreement dated as of September 4, 1998, between 10.02
Participating Income Properties II, L.P. and CFJ Plaza
Company I LLC, including the First Amendment thereto dated
as of March 22, 1999
Purchase Agreement dated as of September 4, 1998, between 10.03
Participating Income Properties II, L.P. and CFJ Plaza
Company III LLC, including the First Amendment thereto dated
as of March 22, 1999
Extension Agreement dated March 22, 1999 10.04
(b) REPORTS ON FORM 8-K.
The Co-Registrants did not file any reports on
Form 8-K during the fourth quarter of fiscal year
1998.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Partnership has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
PARTICIPATING INCOME PROPERTIES II, L.P.
By FRANCHISE FINANCE CORPORATION OF
AMERICA II, Managing General Partner
Date: April 8, 1999 By /s/ Morton H. Fleischer
--------------------------------------
Morton H. Fleischer, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Partnership and in the capacities and on the dates indicated.
SIGNATURES OF REQUIRED OFFICERS AND DIRECTORS OF FRANCHISE
FINANCE CORPORATION OF AMERICA II, MANAGING GENERAL PARTNER
OF PARTICIPATING INCOME PROPERTIES II, L.P.
Date: April 8, 1999 By
--------------------------------------
Paul Bagley, Director
Date: April 8, 1999 By /s/ Morton H. Fleischer
--------------------------------------
Morton H. Fleischer, President, Chief
Executive Officer and Director
Date: April 8, 1999 By /s/ John Barravecchia
--------------------------------------
John Barravecchia, Executive Vice
President, Chief Financial Officer,
Treasurer, Assistant Secretary and
Director
Date: April 8, 1999 By /s/ Christopher H. Volk
--------------------------------------
Christopher H. Volk, Executive Vice
President, Chief Operating Officer,
Secretary, Assistant Treasurer and
Director
Date: April 8, 1999 By /s/ Catherine F. Long
--------------------------------------
Catherine F. Long, Senior Vice President-
Finance, Principal Accounting Officer,
Assistant Secretary and Assistant
Treasurer
19
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Co-Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 88-C
Date: April 8, 1999 By /s/ Morton H. Fleischer
--------------------------------------
Morton H. Fleischer, Sole Director
Date: April 8, 1999 By /s/ John Barravecchia
--------------------------------------
John Barravecchia, President, Secretary,
Treasurer, Principal Financial Officer
and Principal Accounting Officer
20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Participating Income Properties II, L.P.:
We have audited the accompanying balance sheets of PARTICIPATING INCOME
PROPERTIES II, L.P. (a Delaware limited partnership) as of December 31, 1998 and
1997, and the related statements of income, changes in partners' capital and
cash flows for each of the three years in the period ended December 31, 1998.
These financial statements and the schedule referred to below are the
responsibility of the partnership's managing general partner. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Participating Income Properties
II, L.P. as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1998
in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of Real Estate and
Accumulated Depreciation is presented for purposes of complying with the
Securities and Exchange Commission's rule and is not a required part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
March 22, 1999.
21
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
BALANCE SHEETS - DECEMBER 31, 1998 AND 1997
1998 1997
------------ ------------
ASSETS
CASH AND CASH EQUIVALENTS $ 3,852,514 $ 3,984,265
RECEIVABLES FROM LESSEES 193,794 197,300
DEFERRED COSTS (Note 6) 236,461 --
PROPERTY SUBJECT TO OPERATING LEASES (Note 3) 46,377,512 48,732,123
------------ ------------
Total assets $ 50,660,281 $ 52,913,688
============ ============
LIABILITIES AND PARTNERS' CAPITAL
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 2,145,202 $ 2,132,357
PAYABLE TO GENERAL PARTNERS 133,462 --
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 26,903 72,006
DEFERRED INCOME (Note 2) 320,031 594,251
------------ ------------
Total liabilities 2,625,598 2,798,614
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partners (238,231) (217,427)
Limited partners 48,272,914 50,332,501
------------ ------------
Total partners' capital 48,034,683 50,115,074
------------ ------------
Total liabilities and partners' capital $ 50,660,281 $ 52,913,688
============ ============
The accompanying notes are an integral part of these balance sheets.
22
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
----------- ----------- -----------
REVENUES:
Rental $ 7,463,620 $ 7,463,620 $ 7,463,620
Participating rentals 2,465,452 2,352,826 2,237,456
Interest and other 172,688 188,726 156,214
Gain on sale of equipment -- 29,488 --
----------- ----------- -----------
10,101,760 10,034,660 9,857,290
----------- ----------- -----------
EXPENSES:
General partner and affiliate
fees (Note 5) 865,124 855,735 849,864
Depreciation 2,354,611 2,981,760 2,988,226
Operating 215,056 222,785 187,593
----------- ----------- -----------
3,434,791 4,060,280 4,025,683
----------- ----------- -----------
NET INCOME $ 6,666,969 $ 5,974,380 $ 5,831,607
=========== =========== ===========
NET INCOME ALLOCATED TO (Note 1):
General partners $ 66,670 $ 59,744 $ 58,316
Limited partners 6,600,299 5,914,636 5,773,291
----------- ----------- -----------
$ 6,666,969 $ 5,974,380 $ 5,831,607
=========== =========== ===========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (based on 82,834 units held by
limited partners) $ 79.68 $ 71.40 $ 69.70
=========== =========== ===========
The accompanying notes are an integral part of these statements.
23
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
General Limited
Partners Partners Total
------------ ------------ ------------
BALANCE, December 31, 1995 $(163,507) $55,670,639 $55,507,132
Net income 58,316 5,773,291 5,831,607
Distributions to partners (85,456) (8,460,157) (8,545,613)
--------- ----------- -----------
BALANCE, December 31, 1996 (190,647) 52,983,773 52,793,126
Net income 59,744 5,914,636 5,974,380
Distributions to partners (86,524) (8,565,908) (8,652,432)
--------- ----------- -----------
BALANCE, December 31, 1997 (217,427) 50,332,501 50,115,074
Net income 66,670 6,600,299 6,666,969
Distributions to partners (87,474) (8,659,886) (8,747,360)
--------- ----------- -----------
BALANCE, December 31, 1998 $(238,231) $48,272,914 $48,034,683
========= =========== ===========
The accompanying notes are an integral part of these statements.
24
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,666,969 $ 5,974,380 $ 5,831,607
Adjustments to net income:
Depreciation 2,354,611 2,981,760 2,988,226
Gain on sale of equipment -- (29,488) --
Change in assets and liabilities:
Decrease (increase) in receivables
from lessees 3,506 (24,300) 8,433
Increase in deferred costs (236,461) -- --
Increase (decrease) in payable to
general partners 133,462 (18,239) 18,239
Increase (decrease) in accounts
payable and accrued liabilities (45,103) (781) 10,091
Decrease in deferred income (274,220) (274,219) (392,589)
----------- ----------- -----------
Net cash provided by operating
activities 8,602,764 8,609,113 8,464,007
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment -- 179,500 79,750
----------- ----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Partner distributions declared
(Note 1) (8,747,360) (8,652,432) (8,545,613)
Increase (decrease) in distribution
payable to limited partners 12,845 57,199 (26,186)
----------- ----------- -----------
Net cash used in financing
activities (8,734,515) (8,595,233) (8,571,799)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (131,751) 193,380 (28,042)
CASH AND CASH EQUIVALENTS, beginning
of year 3,984,265 3,790,885 3,818,927
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end
of year $ 3,852,514 $ 3,984,265 $ 3,790,885
=========== =========== ===========
The accompanying notes are an integral part of these statements.
25
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
Notes to Financial Statements
December 31, 1998 and 1997
1) ORGANIZATION:
Participating Income Properties II, L.P. (the Partnership) was formed
on August 12, 1987 under the Delaware Revised Uniform Limited Partnership Act to
purchase new and existing "Flying J Travel Plaza" facilities, including land,
buildings and equipment to be leased on a net basis to certain franchisees of
Flying J Franchise Inc. and to Flying J Inc. As of December 31, 1998, all
thirteen travel plazas owned by the Partnership were leased to CFJ Properties
(CFJ), an affiliate of Flying J Inc. "Flying J Travel Plaza" facilities offer a
full-service operation, generally including fuel facilities, a restaurant,
convenience store and other amenities for use by the trucking industry and
traveling public in general. Franchise Finance Corporation of America II (FFCA
II), a Delaware corporation, is the managing general partner of the Partnership.
The Partnership will expire December 31, 2047, or sooner (see Note 6), in
accordance with the terms of the Partnership agreement.
Investors acquired units of assigned limited partnership interest (the
limited partnership units) in the Partnership from FFCA Investor Services
Corporation 88-C (the Initial Limited Partner), a Delaware corporation
wholly-owned by an affiliate of FFCA II. Holders of the units have all of the
economic benefits and substantially the same rights and powers of limited
partners; therefore, they are referred to herein as "limited partners."
The Partnership agreement provides for allocation of profits and losses
and cash distributions among its partners as follows:
Profits and Losses: Allocated 99% to the limited partners and 1% to the
general partners.
Cash Distributions: All cash from operations, as defined, after payment
of fees to the managing general partner is allocated 99% to the limited
partners and 1% to the general partners. Cash proceeds from the sale of
property are not considered cash from operations but, when distributed,
represent a partial return of the limited partners' initial $1,000 per
unit capital contribution. There have been no such distributions,
therefore, the limited partner Adjusted Capital Contribution, as
defined in the Partnership agreement, at December 31, 1998 is $1,000
per unit.
The following is a reconciliation of net income to cash distributions
from operations as defined in the Partnership agreement:
1998 1997 1996
---------- ---------- ----------
Net income $6,666,969 $5,974,380 $5,831,607
Adjustments to reconcile net income
to cash distributions declared:
Depreciation 2,354,611 2,981,760 2,988,226
Gain on sale of equipment -- (29,488) --
Rental enhancement accretion (274,220) (274,220) (274,220)
---------- ---------- ----------
Cash distributions declared from
operations $8,747,360 $8,652,432 $8,545,613
========== ========== ==========
26
<PAGE>
2) SIGNIFICANT ACCOUNTING POLICIES:
FINANCIAL STATEMENTS - The financial statements of the Partnership are
prepared on the accrual basis of accounting. The preparation of the financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the
reporting period. Although management believes its estimates are reasonable,
actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS - Investment securities that are highly
liquid and have maturities of three months or less at the date of purchase are
classified as cash equivalents. Cash equivalents include United States Treasury
securities of $2,970,427 and $3,704,718 at December 31, 1998 and 1997,
respectively, and bank repurchase agreements (which are collateralized by United
States Treasury and Government obligations) of $550,154 at December 31, 1998.
Short-term investments are recorded at cost plus accrued interest, which
approximates market value.
LEASES - The Partnership leases its property under long-term net leases
which are classified as operating leases. Rental revenue from operating leases
is recognized as it is earned.
DEFERRED INCOME - The Partnership required certain lessees to pay to
the Partnership, at the inception of the lease, an amount equal to 4% of the
property's cost (rental enhancements). This amount is deferred and accreted to
revenue on a straight-line basis over ten years. The cash from rental
enhancements and interest accrued thereon was used to supplement limited
partners' cash distributions during 1992 and prior years.
DEPRECIATION - Depreciation on buildings is provided using the
straight-line method based upon an estimated useful life of 24 years. Equipment
is depreciated over an estimated useful life of eight years, assuming a 10%
salvage value at the end of its useful life. The cost of properties includes
miscellaneous acquisition and closing costs.
3) PROPERTY SUBJECT TO OPERATING LEASES:
The following is an analysis of the Partnership's investment, at cost,
in property subject to operating leases by major class at December 31, 1998 and
1997:
1998 1997
----------- -----------
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 23,169,556 20,814,945
----------- -----------
$46,377,512 $48,732,123
=========== ===========
Lease agreements provide for monthly base rentals equal to a percentage
of the property's cost. As additional rent, the Partnership receives a portion
of the operating revenues of the lessee equal to a percentage of gross receipts
(participating rentals) from travel plaza facilities and fuel sales. The term of
the leases is eight years for equipment and 20 years for land and buildings.
During the year ended December 31, 1998, all thirteen travel plazas owned by the
Partnership were leased to CFJ. Scheduled minimum future rentals (excluding
participating rentals) under noncancellable operating leases as of December 31,
1998, are $7.2 million per year through the year 2009.
27
<PAGE>
All of the Partnership's property comprising the travel plazas is
subject to agreements entered into with Flying J Inc. on September 4, 1998 in
which Flying J Inc. agreed to buy the property (subject to certain conditions)
for cash totaling approximately $80 million (see Note 6). The Partnership was
the beneficiary of a letter of credit from CFJ in the amount of $952,483 (to be
used as security for CFJ's lease payments), that was released on the date of
sale.
4) INCOME TAXES:
The Partnership is not directly subject to income taxes; rather, each
partner is subject to income taxes on his distributable share of taxable income.
The Partnership tax returns and the amount of distributable partnership profits
or losses are subject to examination by Federal and state taxing authorities. If
examinations by taxing authorities result in changes to distributable
partnership profits or losses, the tax liabilities of the partners could be
changed accordingly.
The following is a reconciliation of net income for financial reporting
purposes to income reported for Federal income tax purposes for the years ended
December 31, 1998, 1997 and 1996:
1998 1997 1996
---------- ---------- ----------
Net income for financial
reporting purposes $6,666,969 $5,974,380 $5,831,607
Differences for tax purposes in:
Depreciation 859,171 1,466,095 1,382,631
Adjustment to deferred rental
revenue (274,220) (274,220) (274,220)
Deferred income -- -- (118,368)
Gain on sale -- 53,509 (35,758)
---------- ---------- ----------
Taxable income to partners $7,251,920 $7,219,764 $6,785,892
========== ========== ==========
For Federal income tax reporting purposes, taxable income to partners is
reported on the accrual basis of accounting and is classified as ordinary
income.
At December 31, 1998, the tax bases of the Partnership's assets and
liabilities exceed the amounts recorded for financial reporting purposes by
$8,603,657. This difference results primarily from differences in depreciation
methods and the treatment of deferred rental revenue for tax reporting and
financial reporting purposes.
5) TRANSACTIONS WITH RELATED PARTIES:
Under the terms of the Partnership agreement, FFCA II is entitled to
compensation for certain services performed in connection with managing the
affairs of the Partnership. Additionally, during 1996 and prior years, an
affiliate of FFCA II was entitled to a fee for investment banking and asset
management services (investment banking fee). During 1998, 1997 and 1996, fees
paid to FFCA II and the affiliate were as follows:
1998 1997 1996
-------- -------- --------
FFCA II - disbursable cash fee $865,124 $855,735 $845,593
Affiliate - investment banking fee -- -- 4,271
-------- -------- --------
$865,124 $855,735 $849,864
======== ======== ========
28
<PAGE>
FFCA II is entitled to a disbursable cash fee equal to 9% of all cash
received by the Partnership less Partnership operating expenses, only to the
extent the limited partners have received an annual return of 9% (calculated
quarterly) on their Adjusted Capital Contribution, as defined. The investment
banking fee payable to the affiliate was equal to .09% of disbursable cash as
described in the Partnership agreement and was limited in total by the
Partnership agreement. This limit was reached during 1996. FFCA II may also be
entitled to a subordinated real estate disposition fee and an incentive share of
sale proceeds, as defined in the Partnership agreement.
An affiliate of FFCA II incurs expenses on behalf of the Partnership
for maintenance of the books and records and for computer, investor and legal
services performed for the Partnership. These expenses are reimbursable in
accordance with the Partnership agreement and are less than the amount that the
Partnership would have paid to independent parties for comparable services. The
Partnership reimbursed the affiliate $65,828 in 1998, $34,897 in 1997 and
$28,364 in 1996 for such expenses.
6) SUBSEQUENT EVENT - SALE OF SUBSTANTIALLY ALL ASSETS:
The Partnership entered into purchase agreements with Flying J Inc. on
September 4, 1998 to sell substantially all of the Partnership's assets (those
assets comprising the travel plazas) for cash of $80,460,000. The limited
partners received a consent solicitation statement describing the proposed
transaction and an affirmative vote of investors holding a majority of the
partnership units was achieved on October 26, 1998. The sale transaction was
completed on March 22, 1999 and the Partnership recognized a gain of
approximately $34.3 million on the sale. The net cash proceeds from this sale
are being held in U.S. government securities pending distribution to investors.
The sale of the travel plazas represents the disposition of substantially all of
the Partnership's assets and the Partnership has no further liability in
connection with any of the travel plazas. FFCA II has begun the process of
winding down the affairs of the Partnership that includes liquidation and
distribution of assets to the investors in accordance with the Partnership
agreement. The liquidation of the Partnership is expected to be completed in
June 1999.
As part of the sale of the travel plazas, approximately $515,000
(representing less than one percent of the aggregate sales price) may, at FFCA
II's discretion, be deposited in a trust (the "Trust Fund") with a bank. The
Trust Fund, including interest income, would be available to satisfy claims made
directly or indirectly with respect to the liquidation, dissolution and winding
up of the affairs of the Partnership during a period of up to 36 months
following the liquidation date. At the end of this period, final decisions will
be made in settlement of all disputed claims, if any, and the remaining balance
of the Trust Fund will be disbursed to the limited partners.
29
<PAGE>
SCHEDULE III
Page 1 of 2
PARTICIPATING INCOME PROPERTIES II, L. P.
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1998
Initial Cost to Partnership and
Gross Amount At December 31, 1998
---------------------------------------------------
Travel Plaza Location Land Buildings Equipment Total
- --------------------- ---- --------- --------- -----
Kingman, Arizona $ 843,681 $ 3,731,319 $ -- $ 4,575,000
Texarkana, Arkansas 63,243 4,866,904 765,921 5,696,068
Jackson, Georgia 284,661 5,523,339 492,000 6,300,000
Resaca, Georgia 1,145,422 4,555,578 600,000 6,301,000
Walton, Kentucky 1,216,623 4,529,377 454,000 6,200,000
Winnemucca, Nevada 1,489,004 3,098,996 287,000 4,875,000
Graham, North Carolina 1,153,847 5,566,153 -- 6,720,000
Troutdale, Oregon 738,474 3,647,526 267,000 4,653,000
Dillon, South Carolina 1,052,840 5,625,160 -- 6,678,000
Knoxville, Tennessee 1,058,958 4,241,042 -- 5,300,000
Pecos, Texas 170,990 1,999,010 -- 2,170,000
San Antonio, Texas 1,566,238 3,612,762 600,000 5,779,000
Rock Springs, Wyoming 925,589 3,007,411 367,000 4,300,000
----------- ----------- ----------- -----------
TOTAL $11,709,570 $54,004,577 $ 3,832,921 $69,547,068
=========== =========== =========== ===========
Accumulated Depreciation
--------------------------------------
Date
Travel Plaza Location Buildings Equipment Total Acquired
- --------------------- --------- --------- ----- --------
Kingman, Arizona $ 1,451,068 $ -- $ 1,451,068 Sep. 1989
Texarkana, Arkansas 1,352,780 670,181 2,022,961 Jan. 1990
Jackson, Georgia 2,109,609 442,800 2,552,409 Nov. 1989
Resaca, Georgia 1,708,342 540,040 2,248,382 Jan. 1990
Walton, Kentucky 1,651,335 408,600 2,059,935 Apr. 1990
Winnemucca, Nevada 979,197 244,847 1,224,044 Jun. 1991
Graham, North Carolina 2,222,596 -- 2,222,596 Jun. 1989
Troutdale, Oregon 1,190,512 235,294 1,425,806 Mar. 1991
Dillon, South Carolina 2,265,690 -- 2,265,690 Feb. 1989
Knoxville, Tennessee 1,664,020 -- 1,664,020 Aug. 1989
Pecos, Texas 805,157 -- 805,157 Nov. 1988
San Antonio, Texas 1,292,064 540,000 1,832,064 Jun. 1990
Rock Springs, Wyoming 1,065,124 330,300 1,395,424 Jul. 1990
----------- ---------- -----------
TOTAL $19,757,494 $3,412,062 $23,169,556
=========== ========== ===========
30
<PAGE>
SCHEDULE III
Page 2 of 2
PARTICIPATING INCOME PROPERTIES II, L.P.
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1998
NOTES:
(1) There are no encumbrances on the properties. The properties are subject
to a purchase agreement whereby Flying J Inc. has agreed, subject to
certain conditions, to purchase the properties for an aggregate cash
price of approximately $80 million.
(2) Cost for Federal income tax purposes is the same as cost for financial
reporting purposes.
(3) All buildings and equipment are depreciated over estimated useful lives
of 24 and eight years, respectively. Substantially all of the buildings
and equipment were purchased as new properties.
(4) Transactions in real estate, equipment and accumulated depreciation
during 1998, 1997 and 1996 are summarized as follows:
Accumulated
Cost Depreciation
------------ ------------
Balance, December 31, 1995 $ 71,621,068 $ 16,689,197
Cost of equipment sold (638,000) (558,250)
Depreciation expense -- 2,988,226
------------ ------------
Balance, December 31, 1996 70,983,068 19,119,173
Cost of equipment sold (1,436,000) (1,285,988)
Depreciation expense -- 2,981,760
------------ ------------
Balance, December 31, 1997 69,547,068 20,814,945
Depreciation expense -- 2,354,611
------------ ------------
Balance, December 31, 1998 $ 69,547,068 $ 23,169,556
============ ============
31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To FFCA Investor Services Corporation 88-C:
We have audited the accompanying balance sheet of FFCA INVESTOR SERVICES
CORPORATION 88-C (a Delaware corporation) as of December 31, 1998. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of FFCA Investor Services Corporation
88-C as of December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
March 22, 1999.
32
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 88-C
BALANCE SHEET - DECEMBER 31, 1998
ASSETS
Cash $100
Investment in Participating Income Properties II, L.P., at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent (Note 2) $100
----
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
The accompanying notes are an integral part of this balance sheet.
33
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 88-C
NOTES TO BALANCE SHEET
DECEMBER 3l, l998
(l) Operations:
FFCA Investor Services Corporation 88-C (a Delaware corporation) (88-C)
was organized on August 11, l987 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.
(2) Related Parties:
Morton H. Fleischer is the sole stockholder of 88-C. Mr. Fleischer is
also a general partner of PIP-II.
34
<PAGE>
PARTICIPATING INCOME PROPERTIES II, L.P.
AND
FFCA INVESTOR SERVICES CORPORATION 88-C
EXHIBIT INDEX
The following is a complete list of exhibits filed as part of this Form 10-K.
For electronic filing purposes only, this report contains Exhibit 27, the
Financial Data Schedule. Exhibit numbers correspond to the numbers in the
Exhibit Table of Item 601 of Regulation S-K.
Exhibit
-------
Pursuant to Rule 12b-32 under the Securities Exchange
Act of 1934, as amended, the following document, filed with
the Securities and Exchange Commission as Exhibit 4 to the
Co-Registrants' Form 10-K for the fiscal year ended 1989,
Commission File No. 0-18504, is incorporated herein by this
reference.
Fifth Amended and Restated Certificate of Limited
Partnership which governs the Partnership, as filed
with the Secretary of State of Delaware on December 11,
1989.
Pursuant to Rule 12b-32 under the Securities Exchange
Act of 1934, as amended, the following documents, filed with
the Securities and Exchange Commission as exhibits to the
Co-Registrants' Registration Statement on Form S-11,
Registration No. 33-16849, are incorporated herein by this
reference.
Pre-Effective Amendment
No. 3 Exhibit No.
-----------------
Form of Depository Agreement. 4(d)
The Certificate of Incorporation which governs FFCA 4(b)
Investor Services Corporation 88-C, as filed with
the Secretary of State of Delaware on August 11,
1987.
Bylaws of FFCA Investor Services Corporation 88-C. 4(c)
Operating Agreement, dated as of 10(c) November 14, 10(c)
1988, by and among Participating Income Properties
II, L.P., Franchise Finance Corporation of America II,
Flying J Inc. and Flying J Franchise Inc.
Pursuant to Rule 12b-32 under the Securities Exchange
Act of 1934, as amended, the following documents, filed with
the Securities and Exchange Commission as exhibits to the
Co-Registrant's Form 8-K dated March 22, 1999, Commission
File No. 0-18504, are incorporated herein by this reference.
March 22, 1999,
Form 8-K
Exhibit No.
-----------
Purchase Agreement dated as of September 4, 1998, between 10.01
Participating Income Properties II, L.P. and CFJ Plaza
Company II LLC, including the First Amendment thereto dated
as of March 22, 1999
Purchase Agreement dated as of September 4, 1998, between 10.02
Participating Income Properties II, L.P. and CFJ Plaza
Company I LLC, including the First Amendment thereto dated
as of March 22, 1999
Purchase Agreement dated as of September 4, 1998, between 10.03
Participating Income Properties II, L.P. and CFJ Plaza
Company III LLC, including the First Amendment thereto dated
as of March 22, 1999
Extension Agreement dated March 22, 1999 10.04
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 31, 1998 AND THE STATEMENT OF INCOME FOR THE YEAR ENDED
DECEMBER 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> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,852,514
<SECURITIES> 0
<RECEIVABLES> 193,794
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 69,547,068
<DEPRECIATION> 23,169,556
<TOTAL-ASSETS> 50,660,281
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 48,034,683
<TOTAL-LIABILITY-AND-EQUITY> 50,660,281
<SALES> 0
<TOTAL-REVENUES> 10,101,760
<CGS> 0
<TOTAL-COSTS> 3,434,791
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,666,969
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,666,969
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,666,969
<EPS-PRIMARY> 79.68
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 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> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-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>
