FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-19243
UNITED INVESTORS INCOME PROPERTIES II
(Exact name of small business issuer as specified in its charter)
Missouri 43-1542903
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) UNITED INVESTORS INCOME PROPERTIES II
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 912,547
Restricted-tenant security deposits 4,776
Accounts receivable 60,718
Escrows for taxes 2,982
Other assets 45,144
Investment properties:
Land $1,026,222
Buildings and related personal
property 6,099,327
7,125,549
Less accumulated depreciation (658,147) 6,467,402
$7,493,569
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 9,176
Tenant security deposits 10,856
Accrued taxes 33,409
Other liabilities 57,883
Minority interest 632,366
Partners' Capital (Deficit)
General partner $ (306)
Limited partners (32,601 units
issued and outstanding) 6,750,185 6,749,879
$7,493,569
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
1
<PAGE>
b) UNITED INVESTORS INCOME PROPERTIES II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $248,539 $220,143 $493,235 $459,080
Other income 17,134 9,291 33,644 26,767
Total revenues 265,673 229,434 526,879 485,847
Expenses:
Operating 41,153 30,432 72,988 58,351
General and administrative 14,641 16,983 29,615 27,784
Property management fees 7,882 16,705 24,046 32,477
Maintenance 17,158 17,396 33,594 32,640
Depreciation 46,224 46,045 92,417 91,685
Amortization 819 680 1,638 1,258
Property taxes 16,329 9,394 33,272 18,787
Tenant reimbursements (28,891) (18,220) (48,918) (48,667)
Total expenses 115,315 119,415 238,652 214,315
Minority interest in net
income of joint ventures (28,954) (20,708) (56,560) (58,697)
Net income $121,404 $ 89,311 $231,667 $212,835
Net income allocated to
general partner (1%) $ 1,214 $ 893 $ 2,317 $ 2,128
Net income allocated to
limited partners (99%) 120,190 88,418 229,350 210,707
$121,404 $ 89,311 $231,667 $212,835
Net income per limited
partnership unit $ 3.69 $ 2.71 $ 7.04 $ 6.46
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
c) UNITED INVESTORS INCOME PROPERTIES II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 32,601 $ 100 $8,150,250 $8,150,350
Partners' capital at
December 31, 1994 32,601 $ 63 $6,786,717 $6,786,780
Partners' distributions -- (2,686) (265,882) (268,568)
Net income for the six months
ended June 30, 1995 -- 2,317 229,350 231,667
Partners' capital (deficit)
at June 30, 1995 32,601 $ (306) $6,750,185 $6,749,879
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
d) UNITED INVESTORS INCOME PROPERTIES II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $231,667 $ 212,835
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest in net income of
joint ventures 56,560 58,697
Depreciation 92,417 91,685
Amortization of lease commissions 1,638 1,258
Change in accounts:
Accounts receivable (5,358) 26,952
Escrows for taxes -- 6,843
Other assets 3,231 (13,653)
Accounts payable 3,646 (1,334)
Accrued taxes 14,394 895
Other liabilities 42,617 (21,832)
Net cash provided by operating
activities 440,812 362,346
Cash flows from investing activities:
Property improvements and replacements (33,645) (8,078)
Net cash used in
investing activities (33,645) (8,078)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from financing activities:
Distributions to minority interests $ (57,085) $ (75,603)
Partners' distributions (268,568) (228,307)
Net cash used in financing
activities (325,653) (303,910)
Net increase in cash 81,514 50,358
Cash at beginning of period 831,033 752,868
Cash at end of period $ 912,547 $ 803,226
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
e) UNITED INVESTORS INCOME PROPERTIES II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended
June 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ended December 31, 1995. For further
information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-KSB for the
fiscal year ended December 31, 1994.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Basis of Accounting
The financial statements include the Partnership's operating
divisions, Keebler Distribution Center, Chesapeake, Virginia, and
Keebler Distribution Center, Columbia, South Carolina. In addition, the
Partnership owns a 65% interest in Corinth Square Associates ("Corinth")
and a 55% interest in Covington Pike Associates ("Covington"). The
Partnership consolidates its interest in the joint ventures (whereby all
accounts of the joint ventures are included in the Partnership's
financial statements with intercompany accounts being eliminated). The
minority partners' share of the joint ventures' net assets are reflected
as minority interest in the balance sheet of the Partnership. Earnings
and losses attributable to the minority partners' ownership of the joint
ventures are reflected as a reduction or addition to income in the
statement of operations.
Note C - Repurchase of Units
The partnership agreement for the Partnership contains a provision
which states that the General Partner shall purchase up to 10% of the
limited partnership Units outstanding at the fifth anniversary date of
the last Additional Closing Date. Any Limited Partner desiring to sell
all or any of his Units to the General Partner must submit a written
request to the General Partner beginning 30 days prior to the fifth
anniversary date.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of two distribution
centers, a mini-storage facility and an office building. The following
table sets forth the average occupancy of the properties for the six
months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
1995 1994
<S> <C> <C>
Keebler Distribution Center
Chesapeake, Virginia 100% 100%
Keebler Distribution Center
Columbia, South Carolina 100% 100%
Corinth Square Professional Building
Prairie Village, Kansas 84% 84%
U-Stor Covington Pike Mini-warehouse
Memphis, Tennessee 99% 99%
</TABLE>
Occupancy has remained stable at the Partnership's properties. The
General Partner, however, was recently notified by the Keebler Company
that it intends to vacate the Columbia, South Carolina facility in 1996
and the Chesapeake, Virginia facility in 1997. The Keebler company has
indicated its intentions to honor its financial obligations (the Company
is obligated to continue to pay rent on the vacated space through the
years 2001 (Columbia) and 2002 (Chesapeake), but the ultimate impact of
this uncertainty on the Partnership cannot be determined at this time.
The Partnership's net income for the six months ended June 30, 1995,
was $231,667, of which $121,404 was income for the second quarter. The
corresponding net income for 1994 was $212,835 and $89,311,
respectively. The increase in net income for the six month period ended
June 30, 1995, is due to an increase in total revenues. The increase in
rental revenue is primarily attributed to reduced bad debt expense in
1995 at Corinth. The increase in total revenues was also attributed to
an increase in interest income resulting from investments in short-term
certificates of deposit for the six months ended June 30, 1995.
Management fees for the Keebler Distribution Centers also decreased in
1995. Management fees were reduced to make operating cash available for
use in re-leasing the Keebler Distribution Centers. Partially
offsetting the increase in revenues are increases in operating expenses
and property tax expenses. Operating expenses increased due to higher
administrative and insurance expenses at Corinth Square. Property tax
expense increased as a result of low estimates being recorded in the
first six months of 1994.
7
<PAGE>
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expenses. As part of this plan, the General Partner
attempts to protect the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, due to changing market conditions, which can
result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General
Partner will be able to sustain such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $912,547
versus $831,033 at December 31, 1994. Net cash provided by operating
activities increased primarily as a result of increased prepaid rent
collections. Net cash used in investing activities increased due to
higher levels of property improvements in 1995. Net cash used in
financing activities increased as a result of increased partners'
distributions partially offset by a decrease in distributions to
minority interests in the joint ventures.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the level of
capital expenditures required at the property to adequately maintain the
physical assets and other operating needs of the Partnership. Such
assets are currently thought to be sufficient for any near-term needs of
the Partnership. Cash distributions of $470,674 were made during 1994
and cash distributions of $268,568 were made during the first six months
of 1995.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter June 30, 1995.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNITED INVESTORS INCOME PROPERTIES II
(A Missouri Limited Partnership)
By: United Investors Real Estate, Inc.,
a Delaware corporation, its General
Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: August 11, 1995
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
United Investors Income Properties II 1995 Second Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 912,547
<SECURITIES> 0
<RECEIVABLES> 60,718
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 981,023
<PP&E> 7,125,549
<DEPRECIATION> 658,147
<TOTAL-ASSETS> 7,493,569
<CURRENT-LIABILITIES> 111,324
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 6,749,879
<TOTAL-LIABILITY-AND-EQUITY> 7,493,569
<SALES> 0
<TOTAL-REVENUES> 526,879
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 238,652
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,667
<EPS-PRIMARY> 7.04
<EPS-DILUTED> 0
<PAGE>
</TABLE>
