ITEM 1. BUSINESS
GENERAL DESCRIPTION OF PARTNERSHIP
Swift Energy Income Partners 1986-A, Ltd., a Texas limited partnership (the "Partnership" or the "Registrant"), is a partnership formed under a public serial limited partnership offering denominated Swift Energy Income Partners II (Registration Statement No. 33-1875 on Form S-1, originally declared effective January 14, 1986, and amended effective October 8, 1986 [the "Registration Statement"]). The Partnership was formed effective May 13, 1986 under a Limited Partnership Agreement dated May 6, 1986. The initial 689 limited partners made capital contributions of $3,775,536.
The Partnership is principally engaged in the business of acquiring, developing and, when appropriate, disposing of working interests in proven oil and gas properties within the continental United States. The Partnership does not engage in exploratory drilling. Each working interest held by the Partnership entitles the Partnership to receive, in kind or in value, a share of the production of oil and gas from the producing property, and obligates the Partnership to participate in the operation of the property and to bear its proportionate share of all operating costs associated therewith. The Partnership typically holds less than the entire working interest in its producing properties.
At December 31, 1995, the Partnership had expended or committed to expend 100% of the limited partners' net commitments (I.E., limited partners' commitments available to the Partnership for property acquisitions after payment of organization fees and expenses) in the acquisition and development of producing properties, which properties are described under Item 2, "Properties," below. The Partnership's revenues and profits are derived almost entirely from the sale of oil and gas produced from its properties and from the sale of acquired oil and gas properties, when the sale of such properties is economically preferable to continued operation.
The Partnership's business and affairs are conducted by its Managing General Partner, Swift Energy Company, a Texas corporation ("Swift"). The Partnership's Special General Partner, VJM Corporation, a California corporation ("VJM"), consults with and advises Swift as to certain financial matters. Swift is the designated operator of many of the properties in which the Partnership owns interests. The remaining properties are operated by industry operators designated by the owners of a majority of the working interest in each property.
The general manner in which the Partnership acquires producing properties and otherwise conducts its business is described in detail in the Registration Statement under "Proposed Activities," which is incorporated herein by reference.
COMPETITION, MARKETS AND REGULATIONS
COMPETITION
The oil and gas industry is highly competitive in all its phases. The Partnership encounters strong competition from many other oil and gas producers, many of which possess substantial financial resources, in acquiring economically desirable Producing Properties.
MARKETS
The amounts of and price obtainable for oil and gas production from Partnership Properties will be affected by market factors beyond the control of the Partnership. Such factors include the extent of domestic production, the level of imports of foreign oil and gas, the general level of market demand on a regional, national and worldwide basis, domestic and foreign economic conditions that determine levels of industrial production, political events in foreign oil-producing regions, and variations in governmental regulations and tax laws and the imposition of new governmental requirements upon the oil and gas industry. There can be no assurance that oil and gas prices will not decrease in the future, thereby decreasing net Revenues from Partnership Properties.
From time to time, there may exist a surplus of natural gas or oil supplies, the effect of which may be to reduce the amount of hydrocarbons that the Partnerships may produce and sell while such oversupply exists. In recent years, initial steps have been taken to provide additional gas transportation lines from Canada to the United States. If additional Canadian gas is brought to the United States market, it could create downward pressure on United States gas prices.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
REGULATIONS
ENVIRONMENTAL REGULATION
The federal government and various state and local governments have adopted laws and regulations regarding the control of contamination of the environment. These laws and regulations may require the acquisition of a permit by Operators before drilling commences, prohibit drilling activities on certain lands lying within wilderness areas or where pollution arises and impose substantial liabilities for pollution resulting from operations, particularly operations near or in onshore and offshore waters or on submerged lands. These laws and regulations may also increase the costs of routine drilling and operation of wells. Because these laws and regulations change frequently, the costs to the Partnership of compliance with existing and future environmental regulations cannot be predicted. However, the Managing Partner does not believe that the Partnership is affected in a significantly different manner by these regulations than are its competitors in the oil and gas industry.
FEDERAL REGULATION OF NATURAL GAS
The transportation and sale of natural gas in interstate commerce is heavily regulated by agencies of the federal government. The following discussion is intended only as a summary of the principal statutes, regulations and orders that may affect the production and sale of natural gas from Partnership Properties. This summary should not be relied upon as a complete review of applicable natural gas regulatory provisions.
PRICE CONTROLS - Prior to January 1, 1993, the sale of natural gas production was subject to regulation under the Natural Gas Act and the Natural Gas Policy Act of 1978 ("NGPA"). Under the Natural Gas Wellhead Decontrol Act of 1989, however, all price regulation under the NGPA and Natural Gas Act rate, certificate and abandonment requirements were phased out effective as of January 1, 1993.
FERC ORDERS
Several major regulatory changes have been implemented by the Federal Energy Regulatory Commission ("FERC") from 1985 to the present that affect the economics of natural gas production, transportation and sales. In addition, the FERC continues to promulgate revisions to various aspects of the rules and regulations affecting those segments of the natural gas industry that remain subject to the FERC's jurisdiction. In April 1992, the FERC issued Order No. 636 pertaining to pipeline restructuring. This rule requires interstate pipelines to unbundle transportation and sales services by separately stating the price of each service and by providing customers only the particular service desired, without regard to the source for purchase of the gas. The rule also requires pipelines to (i) provide nondiscriminatory "no-notice" service allowing firm commitment shippers to receive delivery of gas on demand up to certain limits without penalties, (ii) establish a basis for release and reallocation of firm upstream pipeline capacity, and (iii) provide non-discriminatory access to capacity by firm transportation shippers on a downstream pipeline. The rule requires interstate pipelines to use a straight fixed variable rate design. The rule imposes these same requirements upon storage facilities.
FERC Order No. 500 affects the transportation and marketability of natural gas. Traditionally, natural gas had been sold by producers to pipeline companies, which then resold the gas to end-users. FERC Order No. 500 altered this market structure by requiring interstate pipelines that transport gas for others to provide transportation service to producers, distributors and all other shippers of natural gas on a nondiscriminatory, "first-come, first-served" basis (open access transportation"), so that producers and other shippers can sell natural gas directly to end-users. FERC Order No. 500 contains additional provisions intended to promote greater competition in natural gas markets.
It is not anticipated that the marketability of and price obtainable for natural gas production from Partnership Properties will be significantly affected by FERC Order No. 500. Gas produced from Partnership Properties normally will be sold to intermediaries who have entered into transportation arrangements with pipeline companies. These intermediaries will accumulate gas purchased from a number of producers and sell the gas to end-users through open access pipeline transportation.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
STATE REGULATIONS
Production of any oil and gas from Partnership Properties will be affected to some degree by state regulations. Many states in which the Partnership will operate have statutory provisions regulating the production and sale of oil and gas, including provisions regarding deliverability. Such statutes, and the regulations promulgated in connection therewith, are generally intended to prevent waste of oil and gas and to protect correlative rights to produce oil and gas between owners of a common reservoir. Certain state regulatory authorities also regulate the amount of oil and gas produced by assigning allowable rates of production to each well or proration unit.
FEDERAL LEASES
Some of the Partnership's properties are located on federal oil and gas leases administered by various federal agencies, including the Bureau of Land Management. Various regulations and orders affect the terms of leases, exploration and development plans, methods of operation and related matters.
EMPLOYEES
The Partnership has no employees. Swift, however, has a staff of geologists, geophysicists, petroleum engineers, landmen, and accounting personnel who administer the operations of Swift and the Partnership. As of December 31, 1995, Swift had 176 employees. Swift's administrative and overhead expenses attributable to the Partnership's operations are borne by the Partnership.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
ITEM 2.

ITEM 2. PROPERTIES
As of December 31, 1995, the Partnership has acquired interests in producing oil and gas properties which are generally described below.
PRINCIPAL OIL AND GAS PRODUCING PROPERTIES
The most valuable fields in the Partnership, based upon year-end engineering estimates of discounted future net revenues using constant pricing and costs, are described below.
1. The Valentine Field is in La Fourche Parish, Louisiana (JPM and Valentine acquisition). One well produces from the SC-3-A formation, accounting for 52% of the value.
2. The East Bridges Field is in Shelby County, Texas (Jones O'Brien, acquisition). Swift operates two wells which produce from the Mooringsport and James Lime formations. These wells account for 26% of the value.
The remaining value in the Partnership is attributable to numerous properties none of which equals or exceeds 15 percent of the total Partnership value.
TITLE TO PROPERTIES
Title to substantially all significant producing properties of the Partnership has been examined. The properties are subject to royalty, overriding royalty and other interests customary in the industry. The Managing General Partner does not believe any of these burdens materially detract from the value of the properties or will materially detract from the value of the properties or materially interfere with their use in the operation of the business of the Partnership.
PRODUCTION AND SALES PRICE
The following table summarizes the sales volumes of the Partnership's net oil and gas production expressed in equivalent barrels of oil. Equivalent barrels are obtained by converting gas to oil on the basis of their relative energy content; one barrel equals 6,000 cubic feet of gas.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
NET PROVED OIL AND GAS RESERVES
Presented below are the estimates of the Partnership's proved reserves as of December 31, 1995, 1994 and 1993. All of the Partnership's proved reserves are located in the United States.
Revisions of previous quantity estimates are related to upward or downward variations based on current engineering information for production rates, volumetrics and reservoir pressure. Additionally, changes in quantity estimates are the result of the increase or decrease in crude oil and natural gas prices at each year end which have the effect of adding or reducing proved reserves on marginal properties due to economic limitations.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
The following table summarizes by acquisition the Registrant's reserves and gross and net interests in producing oil and gas wells as of December 31, 1995:
There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting the future rates of production, timing and plan of development. Oil and gas reserve engineering must be recognized as a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact way, and estimates of other engineers might differ from those above, audited by H. J. Gruy and Associates, Inc., an independent petroleum consulting firm. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate, and, as a general rule, reserve estimates based upon volumetric analysis are inherently less reliable than those based on lengthy production history. Accordingly, reserve estimates are often different from the quantities of oil and gas that are ultimately recovered.
In estimating the oil and natural gas reserves, the Registrant, in accordance with criteria prescribed by the Securities and Exchange Commission, has used prices received as of December 31, 1995 without escalation, except in those instances where fixed and determinable gas price escalations are covered by contracts, limited to the price the Partnership reasonably expects to receive. The Registrant does not believe that any favorable or adverse event causing a significant change in the estimated quantity of proved reserves has occurred between December 31, 1995 and the date of this report.
Future prices received for the sale of the Partnership's products may be higher or lower than the prices used in the evaluation described above; the operating costs relating to such production may also increase or decrease from existing levels. The estimates presented above are in accordance with rules adopted by the Securities and Exchange Commission.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Partnership is not aware of any material pending legal proceedings to which it is a party or of which any of its property is the subject.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of limited partners during the fourth quarter of the fiscal year covered by this report.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
PART II
ITEM 5.

ITEM 5. MARKET PRICE OF AND DISTRIBUTIONS ON THE REGISTRANT'S UNITS AND RELATED LIMITED PARTNER MATTERS
MARKET INFORMATION
Units in the Partnership were initially sold at a price of $1,000 per Unit. Units are not traded on any exchange and there is no established public trading market for the Units. Swift is aware of negotiated transfers of Units between unrelated parties; however, these transfers have been limited and sporadic. Due to the nature of these transactions, Swift has no verifiable information regarding prices at which Units have been transferred.
HOLDERS
As of December 31, 1995, there were 689 Limited Partners holding Units in the Partnership.
DISTRIBUTIONS
The Partnership generally makes distributions to Limited Partners on a quarterly basis, subject to the restrictions set forth in the Limited Partnership Agreement. In the fiscal years ending December 31, 1994 and 1995, the Partnership distributed a total of $47,200 and $7,600, respectively, to holders of its Units. Cash distributions constitute net proceeds from sale of oil and gas production after payment of lease operating expenses and other partnership expenses. Some or all of such amounts or any proceeds from the sale of partnership properties could be deemed to constitute a return of investors' capital.
Oil and gas investments involve a high risk of loss, and no assurance can be given that any particular level of distributions to holders of Units can be achieved or maintained. Although it is anticipated that quarterly distributions will continue to be made through 1996, the Partnership's ability to make distributions could be diminished by any event adversely affecting the oil and gas properties in which the Partnership owns interests or the amount of revenues received by the Partnership therefrom.
The Partnership's Limited Partnership Agreement contains various provisions which might serve to delay, defer or prevent a change in control of the Partnership, such as the requirement of a vote of Limited Partners in order to sell all or substantially all of the Partnership's properties or the requirement of consent by the Managing General Partner to transfers of limited partnership interests.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data, prepared in accordance with generally accepted accounting principles as of December 31, 1994, 1993, 1992, 1991 and 1990, should be read in conjunction with the financial statements included in Item 8.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has expended all of the partners' net commitments available for property acquisitions ("net commitments") and development by acquiring producing oil and gas properties. The partnership invests primarily in proved producing properties with nominal levels of future costs of development for proven but undeveloped reserves. Significant purchases of additional reserves or extensive drilling activity are not anticipated. Oil and gas reserves are depleting assets and therefore often experience significant production declines each year from the date of acquisition through the end of the life of the property. The primary source of liquidity to the Partnership comes almost entirely from the income generated from the sale of oil and gas produced from ownership interests in oil and gas properties. This source of liquidity and the related results of operations will decline in future periods as the oil and gas produced from these properties also declines.
The MGP anticipates that the Partnership will have adequate liquidity from income from continuing operations to satisfy any future capital expenditure requirements. Funds generated from bank borrowings and proceeds from the sale of oil and gas properties will be used to supplement this effort if deemed necessary.
RESULTS OF OPERATIONS
Oil and gas sales decreased 26 percent in 1994 vs. 1993. Production volumes decreased 24 percent due to a 14 percent gas production decrease and a 60 percent oil production decline. Since the partnership's reserves are 82 percent gas, the decrease in gas production, due to an accelerated production decline on the Gautreaux #1 well, which was recompleted in 1993, and production curtailments due to declining prices, had a major impact on partnership performance. The Partnership experienced a decline in oil prices of 12 percent or $1.93/BBL, which further contributed to the decreased revenues. The average sales price per equivalent BBL decreased 3 percent in 1994.
Oil and gas sales increased 98 percent in 1993 vs. 1992. Production volumes increased 83 percent due to an 83 percent gas production increase and an 80 percent oil production increase. The successful recompletion of the Gautreaux #1 well in the third quarter of 1993 greatly increased 1993 production volumes. An increase of 9 percent in the average sales price per equivalent Bbl further increased revenues. 1993 gas prices increased 22 percent or $.38/MCF compared to 1992.
Production cost per equivalent Bbl decreased 45 percent in 1994 compared to 1993 and total production costs decreased 58 percent in 1994. Production cost per equivalent Bbl decreased 56 percent in 1993 compared to 1992 and total production costs decreased 20 percent in 1993.
Associated depreciation expense decreased 21 percent in 1994 when compared to 1993 and increased 202 percent in 1993 when compared to 1992.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
The Partnership recorded an additional provision in depreciation, depletion and amortization in 1994 and 1993 when the present value, discounted at ten percent, of estimated future net revenues from oil and gas properties, using the guidelines of the Securities and Exchange Commission, was below the fair market value paid for oil and gas properties resulting in a full cost ceiling impairment.
During 1995, Partnership revenues and costs will be shared between the limited and general partners in a 90:10 ratio, based on the annualized rate of cash distributions by the Partnership during a certain period prior to December 31, 1994. Based on current oil and gas prices, current levels of oil and gas production and expected cash distributions during 1995, the MGP anticipates that the Partnership sharing ratio will continue to be 90:10.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14(a) for index to financial statements.
ITEM 9.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As a limited partnership, the Registrant has no directors or executive officers. The business and affairs of the Registrant are managed by Swift as Managing General Partner. Set forth below is certain information as of March 15, 1995 regarding the directors and executive officers of Swift.
POSITION(S) WITH NAME AGE SWIFT AND OTHER COMPANIES ---- --- ------------------------- DIRECTORS --------- A. Earl Swift 61 President, Chief Executive Officer and Chairman of the Board
Virgil N. Swift 66 Executive Vice President - Business Development, Vice Chairman of the Board
G. Robert Evans 63 Director of Swift; Chairman of the Board, Material Sciences Corporation; Director, Consolidated Freightways, Inc., Fibreboard Corporation, Elco Industries, and Old Second Bancorp
Raymond O. Loen 70 Director of Swift; President, R. O. Loen Company
Henry C. Montgomery 59 Director of Swift; Chairman of the Board, Montgomery Financial Services Corporation; Director, Southwall Technology Corporation
Clyde W. Smith, Jr. 46 Director of Swift; President, Somerset Properties, Inc.
Harold J. Withrow 67 Director of Swift
EXECUTIVE OFFICERS ------------------
Terry E. Swift 39 Executive Vice President, Chief Operating Officer
John R. Alden 49 Senior Vice President - Finance, Chief Financial Officer and Secretary
Bruce H. Vincent 47 Senior Vice President - Funds Management
James M. Kitterman 50 Senior Vice President - Operations
Alton D. Heckaman, Jr. 37 Vice President - Finance and Controller
III-1
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
From time to time, Swift as Managing General Partner of the Partnership purchases Units in the Partnership from investors who offer the Units pursuant to their right of presentment, which purchases are made pursuant to terms set out in the Partnership's original Limited Partnership Agreement. Due to the frequency and large number of these transactions, Swift reports these transactions under Section 16 of the Securities Exchange Act of 1934 on an annual rather than a monthly basis. In some cases such annual reporting may constitute a late filing of the required Section 16 reports under the applicable Section 16 rules.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
As noted in Item 10, "Directors and Executive Officers of the Registrant," above, the Partnership has no executive officers. The executive officers of Swift and VJM are not compensated by the Partnership.
Certain fees and allowances contemplated by the Limited Partnership Agreement have been paid by the Partnership to Swift and VJM. See Note (4) in Notes To Financial Statements (Related-Party Transactions) for further discussion.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Swift Energy Company, the Managing General Partner, located at 16825 Northchase Drive, Suite 400, Houston, Texas 77060, owns 682 Limited Partnership Units, which is 18.05 percent of all outstanding Limited Partnership Units. All Limited Partnership Units owned by Swift were acquired from investors who offered the Limited Partnership Units pursuant to their right of presentment. As the Managing General Partner, Swift is not permitted generally, under the Limited Partnership Agreement, to vote its Limited Partnership Units. Swift also owns a general partnership interest of 9 percent of all partnership interests in the Partnership.
Swift and VJM are not aware of any arrangement, the operation of which may at a subsequent date result in a change in control of the Partnership.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As noted in Item 10, "Directors and Executive Officers of the Registrant," above, the Partnership has no executive officers or directors, and thus has not engaged in any transactions in which any such person had an interest. The Partnership is permitted to engage in certain transactions with Swift as Managing General Partner and VJM as Special General Partner, subject to extensive guidelines and restrictions described in the "Conflicts of Interest" section of the Amended Prospectus contained in the Registration Statement, which is incorporated herein by reference.
Summarized below are the principal transactions that have occurred between the Partnership and Swift, VJM and their affiliates.
1. The oil and gas properties acquired by the Partnership, as described in Item 2, "Properties" above, were typically acquired initially by Swift from the seller thereof and subsequently transferred to the Partnership. Such transfers were made by Swift at its Property Acquisition Costs (as defined in the Limited Partnership Agreement), less any amounts received from sale of production between the time of acquisition by Swift and the time of sale to the Partnership.
2. Swift acts as operator for many of the wells in which the Partnership has acquired interests and has received compensation for such activities in accordance with standard industry operating agreements.
3. The Partnership paid to Swift and VJM certain fees as contemplated by the Limited Partnership Agreement. See Note (4) in Notes To Financial Statements (Related-Party Transactions) for further discussion.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a(1) FINANCIAL STATEMENTS PAGE NO. -------------------- --------
Report of Independent Public Accountants IV-2
Balance Sheets as of December 31, 1994 and 1993 IV-3
Statements of Operations for the years ended December 31, 1994, 1993 and 1992 IV-4
Statements of Partners' Capital for the years ended December 31, 1994, 1993 and 1992 IV-5
Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992 IV-6
Notes to Financial Statements IV-7
a(2) FINANCIAL STATEMENT SCHEDULES -----------------------------
All schedules required by the SEC are either inapplicable or the required information is included in the Financial Statements, the Notes thereto, or in other information included elsewhere in this report.
a(3) EXHIBITS --------
3.1 Certificate of Limited Partnership of Swift Energy Income Partners 1986-A, Ltd. (including Limited Partnership Agreement of Swift Energy Income Partners 1986-A, Ltd. dated May 6, 1986), as filed May 13, 1986, with the Texas Secretary of State (excluding list of limited partners filed as part of Certificate). (Form 10-K for year ended December 31, 1988, Exhibit 3.1).
99.1 A copy of the following sections of the Prospectus dated January 14, 1986, contained in Pre-Effective Amendment No. 1 to Registration Statement No. 33-1875 on Form S-1 for Swift Energy Income Partners II as filed on January 14, 1986, which have been incorporated herein by reference: "Proposed Activities" (pp. 27-32) and "Conflicts of Interest" (pp. 44-48). (Form 10-K for year ended December 31, 1989, Exhibit 28.1).
b(1) REPORTS ON FORM 8-K -------------------
No reports on Form 8-K have been filed during the quarter ended December 31, 1994.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No annual report to security holders covering the Partnership's 1994 fiscal year, or proxy statement, form of proxy or other proxy soliciting material has been sent to Limited Partners of the Partnership.
IV-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Swift Energy Income Partners 1986-A, Ltd.:
We have audited the accompanying balance sheets of Swift Energy Income Partners 1986-A, Ltd., (a Texas limited partnership) as of December 31, 1994 and 1993, and the related statements of operations, partners' capital and cash flows for the years ended December 31, 1994, 1993 and 1992. These financial statements are the responsibility of the general partner's management. Our responsibility is to express an opinion on these financial statements 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 Swift Energy Income Partners 1986-A, Ltd., as of December 31, 1994 and 1993, and the results of its operations and its cash flows for the years ended December 31, 1994, 1993 and 1992, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP ------------------------- Arthur Andersen LLP
Houston, Texas February 17, 1995
IV-2
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. BALANCE SHEETS DECEMBER 31, 1994 AND 1993
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-3
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-4
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-5
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-6
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND TERMS OF PARTNERSHIP AGREEMENT -
Swift Energy Income Partners 1986-A, Ltd., a Texas limited partnership (the Partnership), was formed on May 13, 1986, for the purpose of purchasing and operating producing oil and gas properties within the continental United States. Swift Energy Company ("Swift"), a Texas corporation, and VJM Corporation ("VJM"), a California corporation, serve as Managing General Partner and Special General Partner of the Partnership, respectively. The general partners are required to contribute up to 1/99th of limited partner net contributions. The 689 limited partners made total capital contributions of $3,775,536.
Property acquisition costs and the management fee are borne 99 percent by the limited partners and one percent by the general partners. Organization and syndication costs were borne solely by the limited partners.
Initially, all continuing costs (including development costs, operating costs, general and administrative reimbursements and direct expenses) and revenues are allocated 85 percent to the limited partners and 15 percent to the general partners. After a certain period of partnership operations, but prior to partnership payout, as defined, one-third of these costs and revenues otherwise allocable to the general partners will be reallocated to the limited partners if the cash distribution rate (as defined in the Partnership Agreement) is less than 17.5 percent. Through December 31, 1987, the Partnership's continuing costs and revenues were allocated 85 percent to the limited partners and 15 percent to the general partners. Thereafter one-third of the general partners share was reallocated to the limited partners as the cash distribution rate fell below 17.5 percent. Payout had not occurred as of December 31, 1994.
(2) SIGNIFICANT ACCOUNTING POLICIES -
OIL AND GAS PROPERTIES -
For financial reporting purposes, the Partnership follows the "full-cost" method of accounting for oil and gas property costs. Under this method of accounting, all productive and nonproductive costs incurred in the acquisition and development of oil and gas reserves are capitalized. Such costs include lease acquisitions, geological and geophysical services, drilling, completion, equipment and certain general and administrative costs directly associated with acquisition and development activities. General and administrative costs related to production and general overhead are expensed as incurred. No general and administrative costs were capitalized during the years ended December 31, 1994, 1993 and 1992.
Future development, site restoration, dismantlement and abandonment costs, net of salvage values, are estimated on a property-by-property basis based on current economic conditions and are amortized to expense as the Partnership's capitalized oil and gas property costs are amortized.
The unamortized cost of oil and gas properties is limited to the "ceiling limitation", (calculated separately for the Partnership, limited partners, and general partners). The "ceiling limitation" is calculated on a quarterly basis and represents the estimated future net revenues from proved properties using current prices, discounted at ten percent, and the lower of cost or fair value of unproved properties. Proceeds from the sale or disposition of oil and gas properties are treated as a reduction of oil and gas property costs with no gains or losses being recognized except in significant transactions.
The Partnership computes the provision for depreciation, depletion and amortization of oil and gas properties on the units-of-production method. Under this method, the provision is calculated by multiplying the total unamortized cost of oil and gas properties, including future development, site restoration, dismantlement and abandonment costs, by an overall amortization rate that is determined by dividing the physical units of oil and gas produced during the period by the total estimated units of proved oil and gas reserves at the beginning of the period.
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. NOTES TO FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CASH FLOWS -
Highly liquid debt instruments with an initial maturity of three months or less are considered to be cash equivalents.
(3) OIL AND GAS CAPITALIZED COSTS -
The following table sets forth capital expenditures related to the Partnership's oil and gas operations:
All oil and gas property acquisitions are made by Swift on behalf of the Partnership. The costs of the properties include the purchase price plus any costs incurred by Swift in the evaluation and acquisition of properties.
During 1994, 1993 and 1992, the Partnership's unamortized oil and gas property costs exceeded the quarterly calculations of the "ceiling limitation" resulting in additional provisions for depreciation, depletion and amortization of $330,552, $66,595 and $177,464, respectively. In computing the Partnership's third quarter 1994 ceiling limitation, the Partnership utilized the product prices in effect at the date of the filing of the Partnership's report on Form 10-Q. Utilizing these subsequent prices, the write down recorded by the Partnership was $46,740 less than the amount that would have been recorded using product prices in effect at September 30, 1994.
In addition, the limited partners' share of unamortized oil and gas property costs exceeded their "ceiling limitation" in 1994, 1993 and 1992, resulting in valuation allowances of $297,277, $56,732 and $164,804, respectively. These amounts are included in the income (loss) attributable to the limited partners shown in the statements of partners' capital together with "combining adjustments" for the differences between the limited partners' valuation allowances and the Partnership's valuation allowances. The "combining adjustments" change quarterly as the Partnership's total depreciation, depletion and amortization provision is more or less than the combined depreciation, depletion and amortization provision attributable to general and limited partners.
(4) RELATED-PARTY TRANSACTIONS -
An affiliate of the Special General Partner, as Dealer Manager, received $94,388 for managing and overseeing the offering of limited partnership units.
A one-time management fee of $94,388 was paid to Swift in 1986 for services performed for the Partnership. In 1994, 1993 and 1992, Swift absorbed all the general and administrative overhead attributable to the Partnership.
IV-8
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(5) FEDERAL INCOME TAXES -
The Partnership is not a tax-paying entity. No provision is made in the accounts of the Partnership for federal or state income taxes, since such taxes are liabilities of the individual partners, and the amounts thereof depend upon their respective tax situations.
The tax returns and the amount of distributable Partnership income are subject to examination by the federal and state taxing authorities. If the Partnership's ordinary income for federal income tax purposes is ultimately changed by the taxing authorities, the tax liability of the limited partners could be changed accordingly. Ordinary income/(loss) reported on the Partnership's federal return of income for the years ended December 31, 1994, 1993 and 1992 was $146,220, $178,940, and $(34,685), respectively. The difference between ordinary income/(loss) for federal income tax purposes reported by the Partnership and net income or loss reported herein primarily results from the exclusion of depletion (as described below) from ordinary income reported in the Partnership's federal return of income.
For federal income tax purposes, depletion with respect to production of oil and gas is computed separately by the partners and not by the Partnership. Since the amount of depletion on the production of oil and gas is not computed at the Partnership level, depletion is not included in the Partnership's income for federal income tax purposes but is charged directly to the partners' capital accounts to the extent of the cost of the leasehold interests, and thus is treated as a separate item on the partners' Schedule K-1. Depletion for federal income tax purposes may vary from that computed for financial reporting purposes in cases where a ceiling adjustment is recorded, as such amount is not recognized for tax purposes.
(6) DEFERRED REVENUES -
Deferred Revenues represent a gas imbalance liability assumed as part of property acquisitions. The imbalance is accounted for on the entitlements method, whereby the Partnership records its share of revenue, based on its entitled amount. Any amounts over or under the entitled amount are recorded as an increase or decrease to deferred revenues.
(7) CONCENTRATIONS OF CREDIT RISK -
The Partnership extends credit to various companies in the oil and gas industry which results in a concentration of credit risk. This concentration of credit risk may be affected by changes in economic or other conditions and may accordingly impact the Partnership's overall credit risk. However, the Managing General Partner believes that the risk is mitigated by the size, reputation, and nature of the companies to which the Partnership extends credit. In addition, the Partnership generally does not require collateral or other security to support customer receivables.
IV-9
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. (Registrant)
By: SWIFT ENERGY COMPANY General Partner
Date: March 15, 1995 By: s/b A. Earl Swift ----------------------- -------------------------------- A. Earl Swift President
Date: March 15, 1995 By: s/b John R. Alden ----------------------- -------------------------------- John R. Alden Principal Financial Officer
Date: March 15, 1995 By: s/b Alton D. Heckaman, Jr. ----------------------- -------------------------------- Alton D. Heckaman, Jr. Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. (Registrant)
By: SWIFT ENERGY COMPANY General Partner
Date: March 15, 1995 By: s/b A. Earl Swift ----------------------- -------------------------------- A. Earl Swift Director and Principal Executive Officer
Date: March 15, 1995 By: s/b Virgil N. Swift ----------------------- -------------------------------- Virgil N. Swift Director and Executive Vice President - Business Development
IV-10
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
Date: March 15, 1995 By: s/b G. Robert Evans ----------------------- -------------------------------- G. Robert Evans Director
Date: March 15, 1995 By: s/b Raymond O. Loen ----------------------- -------------------------------- Raymond O. Loen Director
Date: March 15, 1995 By: s/b Henry C. Montgomery ----------------------- -------------------------------- Henry C. Montgomery Director
Date: March 15, 1995 By: s/b Clyde W. Smith, Jr. ----------------------- -------------------------------- Clyde W. Smith, Jr. Director
Date: March 15, 1995 By: s/b Harold J. Withrow ----------------------- -------------------------------- Harold J. Withrow Director
IV-11
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
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 33-1875-01
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0185864 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF ORGANIZATION) IDENTIFICATION NO.)
16825 NORTHCHASE DRIVE, SUITE 400 HOUSTON, TEXAS 77060 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713)874-2700 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No --- ---
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE ---- ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- September 30, 1995 and December 31, 1994 3
Statements of Operations
- Three month and nine month periods ended September 30, 1995 and 1994 4
Statements of Cash Flows
- Nine month periods ended September 30, 1995 and 1994 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION 9
SIGNATURES 10
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. BALANCE SHEETS
See accompanying notes to financial statements.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. STATEMENTS OF OPERATIONS (UNAUDITED)
SEE ACCOMPANYING NOTE TO FINANCIAL STATEMENTS.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. STATEMENTS OF CASH FLOWS (UNAUDITED)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) GENERAL INFORMATION -
The financial statements included herein have been prepared by the Partnership and are unaudited except for the balance sheet at December 31, 1994 which has been taken from the audited financial statements at that date. The financial statements reflect adjustments, all of which were of a normal recurring nature, which are, in the opinion of the managing general partner, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Partnership believes adequate disclosure is provided by the information presented. The financial statements should be read in conjunction with the audited financial statements and the note included in the latest Form 10-K.
(2) DEFERRED REVENUES -
Deferred Revenues represent a gas imbalance liability assumed as part of property acquisitions. The imbalance is accounted for on the entitlements method, whereby the Partnership records its share of revenue, based on its entitled amount. Any amounts over or under the entitled amount are recorded as an increase or decrease to deferred revenues.
(3) CONCENTRATION OF CREDIT RISK -
The Partnership extends credit to various companies in the oil and gas industry which results in a concentration of credit risk. This concentration of credit risk may be affected by changes in economic or other conditions and may accordingly impact the Partnership's overall credit risk. However, the Managing General Partner believes that the risk is mitigated by the size, reputation, and nature of the companies to which the Partnership extends credit. In addition, the partnership generally does not require collateral or other security to support customer receivables.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership was formed for the purpose of investing in producing oil and gas properties located within the continental United States. In order to accomplish this, the Partnership goes through two distinct yet overlapping phases with respect to its liquidity and results of operations. When the Partnership is formed, it commences its "acquisition" phase, with all funds placed in short-term investments until required for such property acquisitions. The interest earned on these pre-acquisition investments becomes the primary cash flow source for initial partner distributions. As the Partnership acquires producing properties, net cash from operations becomes available for distribution, along with the investment income. After partnership funds have been expended on producing oil and gas properties, the Partnership enters its "operations" phase. During this phase, oil and gas sales generate substantially all revenues, and distributions to partners reflect those revenues less all associated partnership expenses. The Partnership may also derive proceeds from the sale of acquired oil and gas properties, when the sale of such properties is economically appropriate or preferable to continued operation.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has completed the acquisition of producing oil and gas properties, expending all of the limited partners' net commitments available for property acquisitions.
The Partnership does not allow for additional assessments from the partners to fund capital requirements. However, funds in addition to the remaining unexpended net capital commitments of the partners are available from partnership revenues, borrowings or proceeds from the sale of partnership property. The Managing General Partner believes that the funds currently available to the Partnership will be adequate to meet any anticipated capital requirements.
RESULTS OF OPERATIONS
The following analysis explains changes in the revenue and expense categories for the quarter ended September 30, 1995 (current quarter) when compared to the quarter ended September 30, 1994 (corresponding quarter), and for the nine months ended September 30, 1995 (current period), when compared to the nine months ended September 30, 1994 (corresponding period).
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Oil and gas sales declined $17,914 or 40 percent in the current quarter of 1995 when compared to the corresponding quarter in 1994, primarily due to decreased gas production. Current quarter gas production declined 31 percent, when compared to third quarter 1994 production volumes. A decline in gas prices of 13 percent or $.24/MCF further contributed to decreased revenues.
Associated depreciation expense decreased 61 percent or $22,435.
The Partnership recorded an additional provision in depreciation, depletion and amortization in the third quarter of 1994 for $132,446 when the present value, discounted at ten percent, of estimated future net revenues from oil and gas properties based on the prices in effect at the filing date, using the guidelines of the Securities and Exchange Commission, was below the fair market value originally paid for oil and gas properties. The additional provision results from the Managing General Partner's determination that the fair market value paid for properties may or may not coincide with reserve valuations determined according to guidelines of the Securities and Exchange Commission. Using prices in effect at September 30, 1994, the Partnership would have recorded an additional provision at September 30, 1994 in the amount of $179,186.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Oil and gas sales decreased $143,083 or 62 percent in the first nine months of 1995 over the corresponding period in 1994. A decline of 51 percent in gas production was a contributing factor to the decreased revenues for the period. Also, current period gas prices decreased 37 percent or $.82/MCF compared to the corresponding period in 1994, further contributing to decreased income.
Associated depreciation expense decreased 67 percent or $105,900.
The Partnership recorded an additional provision in depreciation, depletion and amortization in the first nine months of 1995 and 1994 for $33,416 and $238,958, respectively, when the present value, discounted at ten percent, of estimated future net revenues from oil and gas properties, using the guidelines of the Securities and Exchange Commission, was below the fair market value originally paid for oil and gas properties. The additional provision results from the Managing General Partner's determination that the fair market value paid for properties may or may not coincide with reserve valuations determined according to guidelines of the Securities and Exchange Commission.
During 1995, partnership revenues and costs will be shared between the limited partners and general partners in a 90:10 ratio.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD. (Registrant)
By: SWIFT ENERGY COMPANY Managing General Partner
Date: November 13, 1995 By: /s/ John R. Alden ----------------- ------------------------------- John R. Alden Senior Vice President, Secretary and Principal Financial Officer
Date: November 13, 1995 By: /s/ Alton D. Heckaman, Jr. ----------------- ------------------------------- Alton D. Heckaman, Jr. Vice President, Controller and Principal Accounting Officer
H.J. GRUY AND ASSOCIATES, INC. - ----------------------------------------------------------------------------- 1200 SMITH STREET, SUITE 3040, HOUSTON, TEXAS 77002 - FAX (713) 739-6112 - (713)739-1000
February 17, 1995
Swift Energy Company 16825 Northchase Drive, Suite 400 Houston, Texas 77060
SWIFT ENERGY INCOME PARTNERS 1986-A LTD. 94-003-116
Gentlemen:
At your request, we have made an audit of the reserves and future net revenue as of December 31, 1994, prepared by Swift Energy Company ("Swift") for certain interests owned by the limited partners in Swift Energy Income Partners 1986-A Ltd. This audit has been conducted according to the standards pertaining to the estimating and auditing of oil and gas reserve information approved by the Board of Directors of the Society of Petroleum Engineers on October 30, 1979. We have reviewed these properties and where we disagreed with the Swift reserve estimates, Swift revised its estimates to be in agreement. The estimated net reserves, future net revenue and discounted future net revenue are summarized by reserve category as follows:
Swift Energy Company -2- February 17, 1995
The discounted future net revenue is not represented to be the fair market value of these reserves and the estimated reserves included in this report have not been adjusted for risk.
The estimated future net revenue shown is that revenue which will be realized from the sale of the estimated net reserves after deduction of royalties, ad valorem and production taxes, direct operating costs and required capital expenditures, when applicable. Surface and well equipment salvage values and well plugging and field abandonment costs have not been considered in the revenue projections. Future net revenue as stated in this report is before the deduction of federal income tax.
In the economic projections, prices, operating costs and development costs remain constant for the projected life of each lease.
For those wells with sufficient production history, reserve estimates and rate projections are based on the extrapolation of established performance trends. Reserves for other producing and nonproducing properties have been estimated from volumetric calculations and analogy with the performance of comparable wells. The reserves included in this study are estimates only and should not be construed as exact quantities. Future conditions may affect recovery of estimated reserves and revenue, and all categories of reserves may be subject to revision as more performance data become available. The proved reserves in this report conform to the applicable definitions promulgated by the Securities and Exchange Commission. Attachment 1, following this letter, sets forth all reserve definitions incorporated in this study.
Extent and character of ownership, oil and gas prices, production data, direct operating costs, capital expenditure estimates and other data provided by Swift have been accepted as represented. The production data available to us were through the month of October, 1994 except in those instances in which data were available through December. Interim production to December 31, 1994 has been estimated. No independent well tests, property inspections or audits of operating expenses were conducted by our staff in conjunction with this study. We did not verify or determine the extent, character, obligations, status or liabilities, if any, arising from any current or possible future environmental liabilities that might be applicable.
In order to audit the reserves, costs and future revenues shown in this report, we have relied in part on geological, engineering and economic data furnished by our client. Although we have made a best efforts attempt to acquire all pertinent data and analyze it carefully with methods accepted by the petroleum industry, there is no guarantee that the volumes of oil and gas or the revenues projected will be realized.
Production rates may be subject to regulation and contract provisions and may fluctuate according to market demand or other factors beyond the control of the operator. The reserve and revenue projections presented in this report may require revision as additional data become available.
Swift Energy Company -3- February 17, 1995
We are unrelated to Swift and we have no interest in the properties included in the information reviewed by us. In particular:
1. We do not own a financial interest in Swift or its oil and gas properties.
2. Our fee is not contingent on the outcome of our work or report.
3. We have not performed other services for or have any other relationship with Swift that would affect our independence.
If investments or business decisions are to be made in reliance on these estimates by anyone other than our client, such person with the approval of our client is invited to visit our office at his expense so that he can evaluate the assumptions made and the completeness and extent of the data available on which our estimates are based.
Any distribution or publication of this report or any part thereof must include this letter in its entirety.
Yours very truly,
H.J. GRUY AND ASSOCIATES, INC.
/s/ JAMES H. HARTSOCK ------------------------------------- James H. Hartsock, Ph/D., P.E. Executive Vice President
JHH:llb
Attachment
ATTACHMENT 1
ATTACHMENT 1 DEFINITIONS FOR OIL AND GAS RESERVES
PROVED OIL AND GAS RESERVES
Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquid which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.
Reservoirs are considered proved if economic producibility is supported by either actual production or conclusive formation test. The area of a reservoir considered proved includes (A) that portion delineated by drilling and defined by gas-oil and/or oil-water contacts, if any, and (B) the immediately adjoining portions not yet drilled, but which can be reasonable judged as economically productive on the basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower proved limit of the reservoir.
Reserves which can be produced economically through application of improved recovery techniques (such as fluid injection) are included in the "proved" classification when successful testing by a pilot project, or the operation of an installed program in the reservoir, provides support for the engineering analysis on which the project or program was based.
Estimates of proved reserves do not include the following: (A) Oil that may become available from known reservoirs but is classified separately as "indicated additional reserves"; (B) crude oil, natural gas, and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics, or economic factors; (C) crude oil, natural gas, and natural gas liquids, that may occur in undrilled prospects; and (D) crude oil, natural gas, and natural gas liquids, that may be recovered from oil shales, coal, gilsonite and other such sources.
PROVED DEVELOPED OIL AND GAS RESERVES
Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery should be included as "proved developed reserves" only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.
PROVED UNDEVELOPED RESERVES
Proved undeveloped oil and gas reserves that are expected to be recovered from new wells on undrilled, acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage shall be limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Under no circumstances should estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.


Item 1. Business
Brown-Flournoy Equity Income Fund Limited Partnership (the "Fund") is a Delaware limited partnership formed on June 25, 1986 to develop and operate four residential apartment communities in Georgia and South Carolina. The capital raised from the admission of investors enabled the Fund to acquire the property and improvements and complete the construction of the four apartment communities by the end of 1987. See Item 2, Properties, herein.
The General Partners of the Fund are Brown Equity Income Properties, Inc., a Maryland corporation (the "Administrative General Partner"), and John F. Flournoy (the "Development General Partner").
Reference is made to the Prospectus (the "Prospectus") of the Registrant, dated August 28, 1986, filed with the Securities and Exchange Commission pursuant to Rule 424 (b) under the Securities Act of 1933, as amended, in connection with the Registrant's Registration Statement on Form S-11 (file No. 33-6924). Supplements to the Prospectus ("Supplements") have been filed with the Securities and Exchange Commission upon completion of the minimum offering, dated October 29, 1986, and subsequent closings dated December 8, 1986, January 14, 1987, and February 16, 1987. Pursuant to the Registration Statement, a maximum of 27,000 units were registered under the Securities and Exchange Act of 1933, as amended. During 1986 and 1987, all 27,000 units were sold, and the Registrant's net proceeds available for investment aggregated $25,110,000 (gross proceeds of $27,000,000 less selling commissions and offering and promotion expenses paid of $1,797,300 and volume discounts of $92,700).
Funding for the acquisition of the land and improvements and construction of the apartment units was initially provided by capital raised by the Fund's $27,000,000 equity offering which commenced in the latter part of 1986 and was fully subscribed in February, 1987 with the admission of investors holding the final Class A Limited Partnership interests (the "Units"). Each of the four apartment communities was built within the terms of the fixed price construction contracts and all were completed ahead of the schedule required by the construction contracts.
The Fund secured first mortgage loans of $20.8 million on its properties on August 30, 1989. The loan proceeds were used to return approximately 60% of original equity to investors (approximately $16.2 million), repay certain deferred fees and establish reserves. The Fund took on the additional expense of monthly debt service payments resulting in a reduction of operating cash available for future distributions. Throughout 1995, the Fund's working capital not currently needed for improvements or other needs was invested, primarily in certificates of deposit or money market accounts.
The Fund's residential apartment communities face competition with similar properties in their locations. The competition is based on the properties proximity to area employers and commercial and retail facilities. In addition, consideration has been given to the comparability of quality, amenities, rental rates and unit sizes. The Fund's annual report discusses the current leasing at the properties and is incorporated by reference in Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K, herein.
Pursuant to the terms of a property management agreement with the Fund, each of the Properties is managed by Flournoy Properties, Inc., the property manager, and the agreement is now renewable on a year-to-year basis. The property manager receives a property management fee for each Property of 5% of gross monthly operating revenues of the Property. Under the terms of each of the property management agreements, the property manager is responsible for performing, or paying others to perform on its behalf, all leasing-related and other property management services for the properties. The management and administration of the Fund is performed by the General Partners or an affiliate thereof.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 2.

Item 2. Properties
The Fund owns the land and improvements as described below:
Name and Location of Property
Description of Property
Southland Station Warner Robins, Houston County, Georgia
A 160-unit garden apartment community consisting of twelve two-story buildings, a swimming pool, tennis courts and a clubhouse on approximately 15 acres of land.
Park Place Spartanburg County, South Carolina
A 184-unit garden apartment community consisting of thirteen two-story buildings, a swimming pool, tennis courts and a clubhouse on approximately 14.4 acres of land.
Hidden Lake - Phase Two Union City, Fulton County, Georgia
A 160-unit garden apartment community consisting of thirteen two-story buildings. The property shares two swimming pools, tennis courts, a sport court and a clubhouse with an existing 160-unit apartment complex adjacent to the site and is located on approximately 16.2 acres of land.
High Ridge Athens, Clarke County, Georgia
A 160-unit garden apartment community consisting of eleven two-and-three-story buildings, swimming pools, tennis courts and a clubhouse on approximately 18 acres of land.
For additional information on the properties, reference is made to the information set forth under "The Properties" at pages 36 through 47 of the Prospectus, which is incorporated herein by reference.
Item 3.

Item 3. Legal Proceedings
The Fund is not subject to any material pending legal proceedings.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the security holders for a vote during the last quarter of the fiscal year covered by this report.
PART II
Item 5.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
An established public trading market for the Units does not exist and the Fund does not anticipate that a public market will develop. Transfer of Units by an investor and purchase of Units by the Fund may be accommodated under certain terms and conditions. Reference is made to "Transfer and Repurchase of Units" at pages 84 and 85 of the Prospectus and to the Amended and Restated Agreement of Limited Partnership, Article VII, "Admission of Additional and Substitute Limited Partners and Transferability of a Limited Partner's Interest" set forth at pages 23 through 25 of Exhibit B to the Prospectus, which are incorporated herein by reference.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters (continued)
As of December 31, 1995, there were 1,148 holders of Units of the registrant, owning an aggregate of 27,000 units. In 1995, the Fund made four quarterly distributions from operations totaling $551,020 and a special distribution from settlement proceeds received in 1994 of $275,511. In 1994, the Fund made four quarterly distributions from operations totaling $551,020, and a special distribution of financing proceeds to Class A Limited Partners of $800,000. In 1993, the Fund made four quarterly distributions from operations totaling $551,020. In 1992, the Fund made four quarterly distributions from operations of $385,818 and $165,202 from working capital reserves, aggregating $551,020. In 1991, the Fund made four quarterly distributions from operations of $298,989, and $252,031 from working capital reserves, aggregating $551,020.
Item 6.

Item 6. Selected Financial Data
Revenues and net earnings (loss) information furnished below is for the years ended December 31:
The above selected financial data should be read in conjunction with the financial statements and accompanying notes incorporated by reference in this report.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
At December 31, 1995, the Fund had a working capital position of unrestricted cash and cash equivalents of $1,317,137 and accounts payable and accrued expenses of $453,493. Restricted cash represents amounts retained from tenants for security deposits and totaled $130,542 at December 31, 1995. The working capital balance represents reserves for future contingencies that were established from mortgage loan proceeds and are deemed sufficient to meet the Fund's liquidity requirements even under very pessimistic operating scenarios. Reserves may be distributed as the General Partners deem appropriate.
Cash and cash equivalents decreased $290,394 during 1995. This decrease represents the net effect of $734,773 in cash provided by operating activities, $88,700 disbursed for capital expenditures, $16,000 in proceeds provided by a lawsuit settlement, $125,936 disbursed as principal payments on first mortgage debt and distributions to investors of $826,531.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Liquidity and Capital Resources (continued)
Distributions to investors during 1995 included $551,020 of cash provided by operating activities and a special distribution of $275,511, representing proceeds received from the settlement of a lawsuit regarding polybutelane piping utilized in the construction of one of the properties.
In February, 1996 the Fund made a cash distribution to its investors of $137,755. This distribution was derived from cash provided by operating activities during the fourth quarter of 1995.
The provisions of the mortgages for each of the Fund's four properties require repayment by September 30, 1996 of the outstanding principal balances totaling approximately $20 million. The Fund intends to repay these balances with proceeds from mortgage refinancings. Currently, there are no material commitments for capital expenditures or other uses of cash, other than ongoing debt service and the September 30, 1996 mortgage repayments.
Results of Operations
Rental income increased 4% and 5% during 1995 and 1994, respectively. These increases are primarily attributable to increased rental rates and reduced use of concessions. In addition, during 1994, the properties achieved a slightly higher overall occupancy level, as compared to the prior year.
Interest income increased during 1995, due to higher interest rates. Lower interest rates during 1994 resulted in a decrease in interest income for that year as compared to 1993.
During 1995, the Fund recognized $299,228 representing proceeds from the settlement of a lawsuit regarding polybutelane piping utilized in the construction of one of the properties.
Total expenses increased $215,523 in 1995, due primarily to higher maintenance and repairs costs. During 1995, the Fund completed its program, begun in 1994, of painting each of the properties. The Park Place and Southland Station properties were painted during the year for a total cost of approximately $110,000. Additional maintenance and repairs programs during 1995 included pool resurfacing and landscaping enhancements.
During 1994, the High Ridge and Hidden Lake properties were painted for a total cost of approximately $100,000, contributing to the increase in maintenance and repairs expenses for that year as compared to 1993.
Overall occupancy for the Fund's properties averaged 94% during 1995, a slight decrease from 1994's average of 95%. While rental rates were increased at all four properties during 1995, added competition from new construction tempered the acceptance of these increases by the market, as evidenced by the slightly lower occupancy levels. In spite of reduced overall occupancy levels, the Fund achieved a $193,282 increase in rental income, as compared to the prior year. Each property achieved some level of increase, with the High Ridge property contributing the largest year to year improvement.
The High Ridge property, located in Athens, Georgia, achieved an average occupancy during the year of 97%, 1% higher than 1994. However, rental income was 6% improved over the prior year, bolstered by rental rate increases which totaled $51 on average per unit by the end of the year. These results were achieved in spite of the addition to competition from a newly constructed property nearby.
Occupancy at the Hidden Lake property averaged 96% during 1995, a slight increase from 1994's average of 95%. Monthly rents were increased an average of $24 per unit during the year, contributing to a 3% increase in rental income as compared to 1994.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Results of Operations (continued)
In-migration to the Spartanburg, South Carolina area continued to provide a substantial source of new residents for multifamily communities in that market, including the Fund's Park Place property. These new residents are typically short term renters with plans to build or buy a new home. In the interim, they are relatively price insensitive, which has allowed management at Park Place to increase rental rates throughout the year by an average of $26. The short term nature of these residents' stay, however, causes large fluctuations in occupancy levels. While occupancy averaged 93% for the year, consistent with 1993, it ranged from as low as 87% in March to as high as 97% in October. Overall, the property achieved a 5% increase in rental income during the year.
The Southland Station property, located in Warner Robins, Georgia, achieved an average occupancy during 1995, of 92%, a substantial decrease from 1994's average of 97%. However, ongoing rental rate increases throughout the year resulted in an overall increase in rental income of 3%, as compared to 1994. Long term prospects for the property appear very strong, as the nearby Warner Robins Air Force Base was again excluded from the round of base closures announced in 1995. However, this news had some negative short term impact as some tenants who had been delaying a home purchase, decided to move ahead with their plans based on the promising long term outlook for the area. These moveouts contributed substantially to the drop in occupancy during the year.
Construction of new apartment communities has increased in many markets of the southeastern United States. This new competition has tempered rental rate increases and slowed previous trends of rental income gains. Each of the Fund's four properties experienced heightened competition during 1995 from new construction. In some cases, 1996 will present additional challenges from new construction. Management intends to meet these challenges in the upcoming year through their ongoing marketing programs and commitment to high tenant service. The properties have been very well maintained since construction, including the painting of all four in 1994 and 1995, and are well prepared to compete in their markets.
Item 8.

Item 8. Financial Statements and Supplementary Data
Index to Financial Statements and Financial Statement Schedule
Page(s) Herein Annual Report
Independent Auditors' Report 11 5 Balance Sheets 6 Statements of Operations 7 Statements of Partners' Capital (Deficit) 8 Statements of Cash Flows 9 Notes to Financial Statements 10-14 Financial Statement Schedule Schedule III - Real Estate and Accumulated Depreciation 12
All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Fund are Brown Equity Income Properties, Inc., the Administrative General Partner, and John F. Flournoy, the Development General Partner. The Fund's principal executive offices are located at 225 East Redwood Street, Baltimore, Maryland 21202, telephone (410) 727-4083. The General Partners have primary responsibility for overseeing the performance of those who contract with the Fund, as well as making decisions with respect to the financing, sale and liquidation of the Fund's assets. The General Partners are responsible for all reports to and communications with investors and others, all distributions and allocations to investors, the administration of the Fund's business and all filings with the Securities and Exchange Commission and other federal or state regulatory authorities. The Fund's Partnership Agreement provides for the removal of a General Partner and the election of successor additional general partners by investors holding a majority of the Units.
The directors and executive officers of the Fund are as follows:
The Development General Partner
John F. Flournoy, age 55, the Development General Partner, is the majority shareholder and Chief Executive Officer of Flournoy Development Company, a Georgia corporation that he organized in 1967 for the purpose of engaging in real estate development. Flournoy Construction Company, the general contractor for the Properties, is a wholly-owned subsidiary of Flournoy Development Company. Mr. Flournoy is also the majority shareholder of Flournoy Properties, Inc., the property manager of the properties.
Mr. Flournoy is a graduate of the University of North Carolina Business School. In his various capacities as a principal of Flournoy Development Company and Flournoy Construction Company, he participates actively in all aspects of real estate development and construction.
The Administrative General Partner
Brown Equity Income Properties, Inc., the Administrative General Partner, is a Maryland corporation and is wholly owned by Alex. Brown Realty, Inc. The Administrative General Partner is responsible for administering the business of the Fund including providing clerical services, investor communications services and reports, and for making all reports and filings to regulatory authorities. The Administrative General Partner is reimbursed for such services to the Fund on a cost basis.
The following individuals are the directors and principal officers of Brown Equity Income Properties, Inc.:
John M. Prugh, age 47, has been a Director and President of the General Partner since 1986 and of Alex. Brown Realty, Inc. and Armata Financial Corp. since 1984. Mr. Prugh graduated from Gettysburg College in 1970, and was designated a Certified Property Manager by the Institute of Real Estate Management in 1979. He has worked in property management for H. G. Smithy Co., in Washington, D.C., and Dreyfuss Bros., Inc. in Bethesda, Maryland. Since 1977, Mr. Prugh has been involved in managing, administering, developing and selling real estate investment projects sponsored by Alex. Brown Realty, Inc. and its subsidiaries.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 10. Directors and Executive Officers of the Registrant (continued)
The Administrative General Partner (continued)
Peter E. Bancroft, age 43, has been a Director and Vice President of the General Partner since 1986 and a Senior Vice President of Alex. Brown Realty, Inc. and Armata Financial Corp. since 1983. Mr. Bancroft graduated from Amherst College in 1974, attended the University of Edinburgh, and received a J.D. degree from the University of Virginia School of Law in 1979. Prior to joining Alex. Brown Realty, Inc. in 1983, Mr. Bancroft held legal positions with Venable, Baetjer and Howard and T. Rowe Price Associates, Inc.
Terry F. Hall, age 49, has been the Secretary of the General Partner and a Vice President and Secretary of, and Legal Counsel for Alex. Brown Realty, Inc. since 1989. Mr. Hall graduated from the University of Nebraska- Lincoln in 1968, and received a J.D. degree from the University of Pennsylvania Law School in 1973. Prior to joining Alex. Brown Realty, Inc. in 1986, Mr. Hall was a Partner at the law firm of Venable, Baetjer and Howard from 1981 to 1986 and an associate at the same firm from 1973 to 1981.
Timothy M. Gisriel, age 39, has been the Treasurer of the General Partner and of Alex. Brown Realty, Inc. and Armata Financial Corp. since 1990. He was the Controller of Alex. Brown Realty, Inc. and Armata Financial Corp. from 1984 through 1990. Mr. Gisriel graduated from Loyola College in 1978 and received his Masters of Business Administration degree from the Robert G. Merrick School of Business, University of Baltimore. Prior to joining Alex. Brown Realty, Inc. in 1984, Mr. Gisriel was an audit supervisor in the Baltimore office of Coopers & Lybrand. He is a Maryland Certified Public Accountant.
There is no family relationship among the Development General Partner or the officers and directors of the Administrative General Partner.
Item 11.

Item 11. Executive Compensation
The Development General Partner and the officers and directors of the Administrative General Partner received no compensation from the Partnership.
The General Partners are entitled to receive a share of cash distributions and a share of profits and losses as described in the Limited Partnership Agreement, Article IV, "Allocation Distributions and Applicable Rules" at pages 12 through 17 of Exhibit B to the Prospectus herein incorporated by reference.
For a discussion of compensation and fees to which the General Partners are entitled, see Item 13, Certain Relationships and Related Transactions, herein.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
No person is known to the Fund to own beneficially more than 5% of the outstanding interests of the Fund.
The General Partners each have a 1% interest in the Fund as General Partners, but hold no Class A Limited Partnership interest.
Item 13.

Item 13. Certain Relationships and Related Transactions
The General Partners and their affiliates have engaged in and are permitted to engage in transactions with the Fund as described in "Compensation and Fees to the General Partners and Affiliates" and under the caption "Transactions Between the Fund and General Partners and Affiliates" set forth in "Conflicts of Interest" at pages 13 through 17 of the Prospectus, herein incorporated by reference.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Item 13. Certain Relationships and Related Transactions (continued)
For a summary of fees paid to the General Partners and their affiliates for the three years ended December 31, 1995, see Note 5, "Related Party Transactions", in Item 8, Financial Statements and Supplementary Data, herein.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements: See Index to Financial Statements and Financial Statement Schedule in Item 8 on Page 7.
2. Financial Statement Schedule: See Index to Financial Statements and Financial Statement Schedule in Item 8 on Page 7.
3. Exhibits: (3, 4) Limited Partnership Agreement on pages 1 through 32 of Exhibit B to the Fund's Registration Statement on Form S-11 (File No. 33-6924) included herein by reference.
(13) Annual Report for 1995.
(b) Reports on Form 8-K: None.
INDEPENDENT AUDITORS' REPORT
The Partners Brown-Flournoy Equity Income Fund Limited Partnership:
Under date of January 16, 1996, we reported on the balance sheets of Brown-Flournoy Equity Income Fund Limited Partnership as of December 31, 1995 and 1994, and the related statements of operations, partners' capital (deficit) and cash flows for each of the years in the three-year period ended December 31, 1995, as contained in the 1995 Annual Report. These financial statements and our report thereon are incorporated by reference in the Annual Report on Form 10-K for 1995. In connection with our audits of the aforementioned financial statements, we also have audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Fund's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Baltimore, Maryland January 16, 1996
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995
(2) AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $23,825,965 AT DECEMBER 31, 1995.
(3) SEE NOTE 5 OF NOTES TO THE FINANCIAL STATEMENTS FOR INFORMATION CONCERNING TRANSACTIONS WITH AFFILIATES.
(4) SEE NOTE 6 OF NOTES TO THE FINANCIAL STATEMENTS FOR INFORMATION REGARDING MORTGAGE LOAN AGREEMENTS, COLLATERALIZED BY THE LAND, BUILDING AND IMPROVEMENTS.
(5) DEDUCTION IS DUE TO IMPAIRMENT TO ASSETS RESULTING FROM DEFECTIVE MATERIALS AND SUBSEQUENT REIMBURSEMENT OF SETTLEMENT PROCEEDS.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
DATE: 3/22/96 BY: /s/ John F. Flournoy John F. Flournoy Development General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following in the capacities and on the dates indicated.
DATE: 3/25/96 BY: /s/ John M. Prugh John M. Prugh President and Director Brown Equity Income Properties, Inc. Administrative General Partner
DATE: 3/25/96 BY: /s/ P. E. Bancroft Peter E. Bancroft Vice President and Director Brown Equity Income Properties, Inc. Administrative General Partner
DATE: 3/25/96 BY: /s/ Terry F. Hall Terry F. Hall Secretary Brown Equity Income Properties, Inc. Administrative General Partner
DATE: 3/25/96 BY: /s/ Timothy M. Gisriel Timothy M. Gisriel Treasurer Brown Equity Income Properties, Inc. Administrative General Partner