JCM PARTNERS LLC - 10-K Annual Report


Securities registered pursuant to Section 12(g) of the Act: Common Membership Interest Units

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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No þ

State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant: Not applicable, since the registrant has no established trading market.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No þ⁽¹⁾

As of March 31, 2003, the registrant had 90,152,151 common membership units outstanding of which 6,901,303 units were owned by a wholly owned subsidiary of the Company.

Portions of the registrant’s Definitive Proxy Statement to be held in conjunction with registrant’s annual meeting of members to be held in June 2003 are incorporated by reference into Part III.

Certain information included in this Annual Report contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “intend,” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or similar expressions. Forward-looking statements, including those relating to our business strategy, capital expenditures, refinancing activities, occupancy levels, financial performance, and liquidity and capital resources, are subject to risks and uncertainties. Actual results or outcomes may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors. Those risks and factors include unanticipated adverse business developments affecting us or our properties, adverse changes in the real estate markets, increases in interest rates, increased competition, changes in general and local economies, and federal, state and local governmental regulations that affect us. Forward-looking statements speak only as of the date they are made, and we assume no duty to update them.

JCM Partners, LLC, a Delaware limited liability company (“JCM Partners”, “JCM” or the “Company”), was organized on May 15, 2000. We are the reorganized entity which emerged from the bankruptcy proceedings in the United States Bankruptcy Court for the Eastern District of California entitled In re IRM Corporation, et al. (the “IRM entities”), Case Number 98-32231-A-11. Pursuant to a plan of reorganization confirmed on June 5, 2000, all of the assets of the IRM entities were vested in our company. We commenced operations on June 30, 2000 pursuant to the confirmation order and the plan. Additional background information about the bankruptcy proceedings from which we emerged is set forth later in this Item 1 — Business, under “The IRM Bankruptcy Proceedings.”

We adopted “fresh start” accounting rules as of June 30, 2000 in accordance with AICPA Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” Accordingly, all of the assets and liabilities of JCM Partners were reflected at their reorganization value, which approximated fair value at the date of the reorganization, June 30, 2000. As a result, our financial results during the period from June 30, 2000 to December 31, 2000 serve as benchmark data for future comparisons, but generally are not comparable to prior periods.

Our principal executive offices are located at 2151 Salvio Street, Suite 325, Concord, California, 94520.

JCM Partners is a limited liability company with activities related to the ownership, development, acquisition, renovation, management, marketing and strategic disposition of multifamily apartment communities and commercial properties in California. Through our wholly-owned subsidiaries, we own 55 properties. Management’s strategy is to be a regional, highly efficient provider of quality apartment communities. We seek to be a market leader by operating a sufficiently sized portfolio of apartments within each of the markets in which we own properties in order to drive down operating costs through economies of scale and management efficiencies.

As of December 31, 2002, our real estate portfolio consisted of:


	•	46 apartment complexes with an aggregate of 5,341 units;
	•	two office/ retail properties with 36 tenants and approximately 172,200 square feet;
	•	six industrial properties with 25 tenants and approximately 145,000 square feet; and
	•	one 16.7-acre site held for future development or sale.

All of our real estate assets are located in Northern California, primarily in the Sacramento Metropolitan Area, the Central Valley communities of Tracy, Manteca, Modesto, Turlock and Stockton, and the San Francisco Bay Area.

We are subject to the risks inherent in the ownership of real property, such as fluctuating land values, interest rates, vacancy rates and rental values. Further, there could be difficulties in selling the properties as a result of general and local economic conditions, the condition of the properties, the demand for the properties and real property tax rates.

In addition, certain expenditures associated with real estate equity investments (principally, mortgage payments, real estate taxes, and maintenance costs) are not necessarily decreased by events adversely affecting our income from the properties. Thus, the cost of operating and holding the properties, or certain of them, may exceed the properties’ resale value and income producing ability, and we therefore may have to borrow funds in order to protect our investment or be required to dispose of the properties, or certain of them, at a loss. Our ability to meet our debt and other obligations, and thereafter to make distributions to our members in accordance with our limited liability company agreement, will depend on these and other factors.

Our limited liability company agreement provides that the purposes of JCM Partners are:


	(a)	to own, exchange, manage, sell or dispose of our properties and distribute the excess proceeds to the members in an orderly manner to attain appropriate investment potential and return to the members or reinvest such excess proceeds in any type of investment determined appropriate by the board of managers,
	(b)	to invest excess funds in any type of investment,
	(c)	to engage in any other activities relating to, and compatible with, the purposes set forth above, and
	(d)	to take such other actions, or do such other things, as are necessary or appropriate as determined by the board of managers to carry out the provisions of the limited liability company agreement.

We have focused our activities on those related to the ownership, development, acquisition, renovation, management, marketing and strategic disposition of multifamily apartment communities and commercial properties in California. We currently intend to continue this focus, but our Board of Managers could, without member approval, decide to engage in other activities. Similarly, our Board of Managers has broad discretion with respect to our investments and has the power to determine which types of investments are in the best interests of our Company and its members. Although we are not limited by our limited liability company agreement, we currently intend to continue our focus on investing in apartment communities and commercial properties in California. We currently hold these properties primarily for capital appreciation and income. Although we do not have a policy as to the amount or percentage of assets which will be invested in any specific property, it is our intent to maintain a diversified portfolio of properties.

Except as described below, we have not adopted any formal policies regarding the extent to which we will engage in specific activities such as issuing senior securities, borrowing money, making loans, investing in the securities of other issuers for the purpose of exercising control, underwriting securities of other issuers, engaging in the purchase and sale (or turnover) of investments, offering securities in exchange for property, repurchasing or otherwise reacquiring our units, or making annual or other reports to our members.

Under the terms of our limited liability company agreement, we have the discretion to repurchase or otherwise reacquire units from our members. In December 2001, our board of managers authorized us from time to time to repurchase units from our members, although we are not obligated to do so. In addition, under guidelines approved by our Board of Managers, we will provide information to members that will allow our members to contact each other in order to facilitate trading of Units among members. In 2002, through a wholly-owned subsidiary, we repurchased 6,632,657 common units for an aggregate price of $5,655,163. From January 1, 2003 through March 31, 2003, through a wholly-owned subsidiary, we repurchased an additional 268,646 common units for an aggregate price of $276,705. As of March 31, 2003, our wholly owned subsidiary owned 6,901,303 common units.

As of December 31, 2002, our apartment properties consisted of 46 apartment complexes located in the following counties: 21 in Sacramento County, five in Solano County, seven in Stanislaus County, eight in San Joaquin County and five in Contra Costa County. The majority of these properties are classified as “second tier,” meaning that they are considered to be typically well located, older properties in average to good condition. Additional information about these properties can be found under “Item 2 — Properties.”

Revenues from our apartment properties result primarily from rents. These rents are required to be paid on a monthly basis. Our business strategy includes seeking to increase the cash flow generated by our apartment properties through rent increases upon tenant turnover and lease expiration, while maintaining high occupancy rates and prudent management of our operating expenses. Our ability to increase rents is subject to market conditions and general economic conditions. Accordingly, there can be no assurance that we will be able to implement our operating strategy successfully. Therefore, we do not institute such increases based on a pre-determined range, nor are such increases based on increased services and/or renovations. We will generally make the increased cash flow available for our operating and capital expenses and cash distributions, but may

offer some increased services and/or renovations as determined by market conditions. The average occupancy rate of our apartment properties was 95.7% at December 31, 2002 and 94.6% at December 31, 2001.

In general, the tenants in our apartment properties enter into our standard form of lease, as modified, if necessary, to comply with local ordinances or custom. The term of these leases varies with market conditions, although six-month leases are most common. Generally, the leases provide that unless the parties agree in writing to a renewal, the tenancy will convert at the end of the lease term to a month-to-month tenancy, subject to the terms and conditions of the lease, unless either party gives the other at least 30 days’ prior notice of termination. All leases are terminable by us for nonpayment of rent, violation of property rules and regulations, or other defaults specified in the lease.

Approximately 60% of the tenants in our apartment properties leave each year, and rents are adjusted to reflect market conditions existing at the time any new rental relationship commences. As a result of the relatively short-term stay of the majority of our tenants, our apartment properties tend not to have long-term leases that lock in current market rates.

Our employees are responsible for marketing, maintenance and leasing activities at our apartment properties. These employees meet with prospective residents, show models, rent vacant units and strive to maintain contact with current tenants to monitor their level of satisfaction. From time to time, we have employed the services of, and paid customary fees to, apartment locator services and existing tenants for locating prospective tenants.

All of our apartment properties are located in developed areas that include other apartment properties serving comparable tenant populations. An increase in the number of competitive apartment properties in a particular area could have a material adverse effect on rents and our ability to maintain occupancy levels. In addition, we compete with providers of other forms of multifamily residential properties and single-family housing. Buying or renting single-family housing was the reason given by 25% of residents who moved out of our apartment properties during 2002.

Our commercial properties consist of nine sites in Northern California, including the Concord, California building housing our executive offices. Our commercial properties are located in the following counties: six in Napa County; and one each in San Francisco County, Contra Costa County and Solano County. Additional information regarding our commercial properties can be found in “Item 2 — Properties.”

Except for a vacant lot, revenues from our commercial properties are derived primarily from commercial tenants’ rents and common area maintenance charges. The rents are payable monthly.

As with our apartment properties, we seek to increase cash flow at our commercial properties through periodic rent increases for existing tenants according to the terms of their leases, through rent increases at tenant turnover and lease expiration, by maintaining high occupancy rates and through prudent management of our operating expenses. Our ability to increase rents is subject to market conditions and general economic conditions. Accordingly, there can be no assurance that we will be able to implement our operating strategy successfully. Therefore, we do not institute such increases based on a pre-determined range, nor based on increased services and/or renovations. We will generally make the increased cash flow available for our operating and capital expenses and cash distributions. The average occupancy rate of our commercial properties was 88.3% as of December 31, 2002 and 82.0% as of December 31, 2001.

We use a standard lease, modified at each property to the extent necessary to comply with local law or custom. The term of a lease varies with local market conditions, although multi-year leases with annual CPI rent increases are most common. Some of our leases include an option for the tenant to extend the term of the lease for an additional period. All leases are terminable by us for nonpayment of rent, violation of property rules and regulations, or other defaults specified in the lease.

In any given year, 20% to 30% of our existing commercial leases expire. Some tenants will exercise their option to extend the term of the lease, while others will sign a new lease and extend their tenancy for an additional

multi-year period. Rents are adjusted to reflect market conditions for spaces that are vacated or when leases are renewed. Rents are also adjusted to reflect any changes in rental rates associated with a lessee’s option to extend their lease.

Our employees are responsible for marketing, maintenance and leasing activities at the commercial properties. Prospective tenant leads are generated through our marketing program, which includes traditional advertising in newspapers, drive-by traffic and commercial real estate broker referrals. We strive to maintain contact with our existing commercial tenants to determine their level of satisfaction with property management and operations. We may employ the services of, and pay customary fees to, unaffiliated real estate brokers for leasing services and for locating prospective tenants.

All of our commercial properties are located in developed areas that include other commercial properties serving comparable tenant profiles. An increase in the number of competitive commercial properties in a particular area could have a material adverse effect on our ability to maintain current occupancy levels and on our ability to maintain or increase the rental rates applicable to the properties.

Each of our properties is covered by fire and property insurance provided by reputable companies and with commercially reasonable deductibles and limits, with such limits being equal to the replacement value of each property. Our management exercises its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. Insurance costs for the apartment industry increased significantly after the events of September 11, 2001. Our properties saw premium increases of 100% or more in 2002 over the prior year.

Where required by our lenders, flood insurance is obtained. However, we do not maintain earthquake insurance coverage due to the high premium cost. Accordingly, a loss resulting from earthquake damage could have a material and adverse effect on our financial condition and our operating results. Even if a loss is covered by our insurance, our insurance coverage may not be sufficient to pay the full current market value or replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.

The tax issues associated with the ownership of units of JCM Partners are extremely complex and are unique to each member’s own individual tax situation. The following summary of the tax laws may not be applicable to all of our members. Our members should consult their tax advisors concerning their individual tax situations with respect to the federal, state, local and foreign tax consequences arising from their ownership of JCM Partners units.

Definitions for many of the terms used throughout this section can be found at the end of the section.

JCM is treated as a partnership for tax purposes. Therefore, the Company is not subject to federal income tax. Instead, it files an annual information return with the Internal Revenue Service. Each member is required to report on the member’s personal tax return the member’s share of each item of Company income, gain, loss, deduction and credit, if any. During the first quarter of each year, the Company provides each member with a Form K-1 that reports that member’s pro rata share of Company income, gains and/or losses for the previous

The amount of any loss or deduction that a member may use in computing the member’s tax liability is limited to the member’s adjusted basis in the member’s units. In other words, a deduction cannot be taken if it would cause the member’s adjusted basis to become negative. Additionally, losses are limited to the amount “at risk” and the amount of income and loss from other passive activities.

The tax law restricts the ability of taxpayers to deduct losses derived from so-called “passive activities.” Passive activities generally include any activity involving a business in which the taxpayer does not actively participate — including membership in limited liability companies such as JCM. For almost all JCM members, their membership interest will be treated as a passive activity. Accordingly, JCM’s income and/or loss will likely constitute passive income and/or loss to its members.

Generally, losses from passive activities are deductible only to the extent the taxpayer has income or gains from other passive activities. Therefore, passive losses are not allowed to offset other income – such as salary, compensation for personal service, active business income, dividends, interest, royalties, annuities or gains from the sale of property held for investment. Passive losses that are not allowed in any tax year are suspended and carried forward indefinitely. Suspended losses may be used in future years to offset future passive income.

Upon the sale or transfer of a taxpayer’s entire interest in a passive activity, suspended losses with respect to that activity will be allowed as a deduction against:


	(i)	First, any remaining income or gain from that activity, including gain recognized on such disposition; then

	(ii)	On income or gain for the taxable year from other passive activities; and finally

	(iii)	Any other non-passive income or gain.

IRS regulations provide that similar investments, which are under common control and owned by a pass-through entity such as JCM, are generally treated as a single investment. Accordingly, suspended losses derived from an investment in JCM would not be available to members to offset non-passive income from other sources until the sale of all Company properties has occurred or until a member disposed of the member’s entire interest in JCM.

The Company maintains a capital account for each member. This capital account is the beginning point in computing a member’s basis in the member’s JCM units. A member’s adjusted basis in JCM is equal to the amount originally invested in IRM, plus the cumulative effect of all capital account adjustments reported annually to the investor by both IRM and JCM on Form K-1. More specifically, a member’s adjusted basis is the amount originally invested increased by:


	•	The member’s pro-rata share of the Company’s non-recourse debt,
	•	The member’s pro-rata share of the Company’s taxable income, and
	•	Any additional contributions to the Company’s capital made by the member,


	•	The member’s proportionate share of Company losses, and
	•	The sum of all cash distributions made to the member.

Distributions in excess of a member’s adjusted basis generally will be treated as a gain from the sale of a member’s interest in the Company.

A Member may not deduct from the member’s income, losses in an amount exceeding the member’s adjusted basis. If, in any one tax year, a member’s share of Company losses exceeds the member’s adjusted basis at the end of that year, the excess losses must be carried forward and applied against gains in future years. These suspended losses cease being deductible whenever the member’s adjusted basis drops below zero.

Non-recourse debt is any Company liability in which a member has a pro rata interest, but no personal responsibility (e.g. mortgages on JCM properties). Any increase in non-recourse liabilities is treated as a cash contribution and increases a member’s basis. Any decrease in non-recourse liabilities is treated as a cash distribution and decreases a member’s basis. These rules apply even though a member does not actually contribute or receive actual cash. Distributions in excess of a member’s adjusted basis generally will be treated as a gain from the sale of a member’s interest in the Company.

The gain or loss on the sale of a member’s units is the difference between the sale amount and the member’s adjusted basis.

Generally, gain on the sale of units that have been held for more than 12 months will be taxed as a long-term capital gain. For non-corporate taxpayers, long-term capital gains are subject to a maximum rate of 20% (10% for individuals in the 10% or 15% tax brackets). A lower rate of 18% (8% for individuals in the 10% or 15% tax brackets) may be applicable if the individual has held the units for more than five years.

In the event of a loss, the amount of ordinary income against which an individual taxpayer may deduct a capital loss is the lower of $3,000 ($1,500 for a married taxpayer filing a separate return) or the amount of the loss.

There is a separate capital gains tax applied to “unrecaptured gain” as described in Section 1250 of the Internal Revenue Code. This class of gain includes real property that is subject to an allowance for depreciation. JCM has substantial unrecaptured Section 1250 gain on its books. Therefore, upon the sale of a property, a portion of each member’s gain may be subject to the 25% tax rate even though members may not actually receive any distribution upon the sale of the property. Additionally, the 25% tax rate on unrecaptured gain is triggered upon the sale, redemption, repurchase or gift of a member’s units. The tax is computed on the portion of the gain attributable to previously taken depreciation. For example, suppose a person bought a rental unit for $100,000, depreciated it over several years down to $60,000, and then sold it for $130,000. There would be a total gain of $70,000 with the following taxes applying:


	•	The difference ($40,000) between what was paid for the property ($100,000) and its depreciated value ($60,000) would be taxed at the 25% recapture rate.

	•	The difference ($30,000) between what was paid for the property ($100,000) and its sales price ($130,000) would be taxed at the 20% capital gain rate.

Consequences of Exercise of the “Put” Option in 2005 and Liquidation in 2007

JCM Partners’ LLC Agreement gives its members the right to require the Company to redeem some or all of their units on or before the Company’s seventh anniversary (June 30, 2007). The exercise of this right by a sufficient number of members may result in the liquidation of the entire Company. The redemption of units or the liquidation of the Company will most likely result in gain to the members. This gain will be computed in a manner similar to that described above.

As a result of the IRM bankruptcy proceedings, on June 30, 2000, persons who were equity investors in IRM (Equity Investors) and persons who were debt investors in IRM (Debt Investors) both became equity owners

of JCM. The fact that their JCM units originated from different types of IRM investments (i.e. equity and/or debt) will affect the determination of their future tax consequences.

Capital gains associated with the sale of JCM properties will be allocated back to the former Equity Investors to the extent those gains or losses were unrealized or “built in” at the time of the JCM’s formation. These built in gains are substantial. Therefore, if JCM sold a large number of properties or liquidated entirely, there would be substantial built in gains allocated back to the original IRM Equity Investors. Any gains since JCM’s formation that are attributed to the appreciation of real property will be divided among all JCM members in accordance with their ownership interests.

The built-in gain rules also cause the reduction of built-in gain over time through specific allocations of deductions. Section 704(c) of the Internal Revenue Code may require the allocation of depreciation associated with property contributed to a partnership, away from the contributing partner where the member’s capital account reflects an unrealized gain inherent in the contributed property. The Tax Matters Partner will select the method for making the allocations under Section 704(c) of the Tax Code.

Generally, no gain or loss is recognized for income tax purposes as a result of a gift of property. However, if a gift of JCM units is made at a time when a JCM member’s allocable share of non-recourse indebtedness exceeds the adjusted basis for the JCM units gifted, the gifting member will recognize a gain upon the transfer to the extent of such excess. Any such gain will generally be treated as capital gain. Gifts of JCM units may also be subject to a gift tax imposed pursuant to the rules generally applicable to all gifted property.

A gift of JCM units will not cause any suspended passive losses to become deductible. The recipient’s basis in the gifted JCM units is the same as the donor’s basis at the time of the gifting, plus any suspended passive losses allocable to the gifted units. It should be remembered, however, that the recipient’s basis, for purposes of determining loss on a later disposition, cannot exceed the fair market value of the units on the date of the gift. Consequently, if the sum of the donor’s basis in the units plus the suspended passive losses associated with those units exceeds the fair market value of the units, the deductibility of a portion of the suspended losses could be permanently lost.

In general, the basis for inherited property is increased or decreased (“stepped up” or “down”) from the decedent’s basis to the asset’s fair market value at the date of the decedent’s death. This adjustment to basis also applies to inherited JCM units. JCM has elected to reflect this adjustment in the tax basis of the property held by the Company. Any gain, loss or deduction associated with this step up or step down is specifically allocated to the member inheriting a deceased member’s JCM interest. To the extent the adjustment is allocated to depreciable property, the inheriting member is specifically allocated any related depreciation.

Current tax law provides for a Modified Accelerated Cost Recovery System (“MACRS”) of depreciation. Under this system, the cost of eligible residential real property, whether new or used, generally must be depreciated over a 27.5 year period using the straight-line method.

Furthermore, under MACRS, eligible personal property is divided into six classes (i.e. 3-year, 5-year, 7-year, 10-year, 15-year and 20-year). Any property, whether new or used, generally must be depreciated over specified periods using a prescribed accelerated method of depreciation or, if the taxpayer so elects, using the straight-line method over various periods. Property placed in service prior to 1987 was depreciated under an accelerated cost recovery system (“ACRS”), which provided for faster tax depreciation than under MACRS.

Generally, the real property owned by JCM is subject to a 27.5 year recovery period and is depreciated using the straight-line method. JCM’s personal property is generally depreciated over a seven-year period using the

Some expenses may not be deductible in the year they were paid. To the extent this occurs, the taxable income of the partnership may exceed its cash receipts for the year in which the expense is paid. As discussed above, the costs of acquiring properties must generally be recovered through depreciation deductions over a number of years. Prepaid interest and loan fees, and prepaid management fees are other examples of expenses that may not be deducted in the year they were paid.

Members are required to treat partnership items on their tax returns consistently with the treatment on JCM’s return, unless a member files a statement with the IRS identifying the inconsistency. Failure to satisfy this requirement could result in an adjustment to conform the treatment of the items by the member to its treatment on JCM’s return. In the event such adjustments are imposed, the member may also be subject to interest and penalties.

JCM’s income tax returns may be audited by the Internal Revenue Service. Such audits may result in the audit of the returns of its members. In an audit, various deductions claimed by members on their returns could be disallowed in whole or in part. Such an action would result in an increase in the taxable income or a decrease in the taxable loss of JCM, with no associated increase in distributions with which to pay any resulting increase in the members’ tax liabilities.

Audits of the Company by the Internal Revenue Service would be conduced at the JCM level in a single proceeding, rather than in separate proceedings with each of JCM’s members. Administrative adjustments to items challenged in an audit can be initiated by JCM’s Tax Matters Partner or by a member. Suits challenging the Service’s determinations may be brought by the Tax Matters Partner or by JCM’s Board of Managers. Only one such action may be litigated. All JCM members generally will be bound by the outcome of final partnership adjustments made by the Internal Revenue Service, as well as the outcome of any judicial review of such adjustments.

JCM has California source income. Therefore, members who are non-residents of California will be subject to tax in California with respect to their share of such income. California law requires JCM to collect taxes from JCM’s non-resident members and remit the taxes to the California taxing authorities. It is the responsibility of non-resident members to file a California tax return if they believe that JCM’s payments on their behalf to the State of California exceed their tax obligations to the state.

In the past, JCM has declared a voluntary distribution to non-resident members in an amount sufficient to pay this tax. JCM then has paid this amount to the California Franchise Tax Board and has sent JCM’s other members, a cash distribution in an equal and compensating amount per unit. There is no assurance that JCM will continue to declare these additional distributions in the future.

Qualified plans (e.g. pension plans, profit sharing plans and IRA’s) and other tax-exempt entities should consult their tax advisors with regard to the tax issues unique to such entities, including, but not limited to, issues relating to the classification of partnership interests as plan assets, unrelated business taxable income (UBTI) and required distributions.

Any person who is a fiduciary of an IRA, Keogh Plan, Qualified Plan or other tax-exempt entity with an investment in JCM should be aware that most JCM properties are debt-financed properties. This indebtedness

is considered acquisition indebtedness, creating UBTI. A trustee of a charitable remainder trust should be aware that if any portion of the income derived from its ownership of units is deemed to be UBTI, the trust will lose its exemption from income taxation.

JCM has not sought any rulings from the Internal Revenue Service regarding the tax issues discussed above. The Company relies on the opinions of its tax advisors. Their opinions are based upon representations and assumptions and are conditioned upon the existence of specified facts. The opinions are not binding on the IRS or the courts.

If JCM becomes classified as a “publicly traded partnership”, we would be taxed as a corporation and our net income could be treated as portfolio income rather than passive income. The application of “publicly traded partnership” rules to us will be based upon future facts. The IRS may determine that we should be treated as a “publicly-traded partnership” if our units are readily tradable on a secondary market.

If JCM is classified as a publicly traded partnership, but substantially all of its income is passive, it will avoid being treated as a corporation. However, in this situation, members may only deduct JCM losses against JCM income. Any unused losses are suspended and carried forward until they are either used against future JCM income or the member disposes of their entire interest in JCM.

The IRS may challenge our allocations of income, gain, loss and deductions. JCM’s Operating Agreement provides for the allocation of income, gain, loss and deductions among the members. The rules regarding partnership allocations are complex. It is possible that the IRS could successfully challenge the allocations in the Operating Agreement and reallocate items of income, gain, loss or deductions in a manner which reduces benefits or increases income allocable to JCM’s members.

The IRS may disallow our deduction of some or all fees and expenses. The IRS could seek to reallocate our basis in properties among land, improvements and personal property. Such reallocation could result in reduced tax losses or increased income without a corresponding increase in net cash flow to JCM’s members.

Members may be taxed on income which exceeds the cash distributions received by them. In any year in which we report income or gain in excess of expenses, members will be required to report their share of such net income on their personal tax returns even though they may have received total cash distributions which are less than the amount of net income they must report.

Members may be subject to alternative minimum tax which could reduce the tax benefits of their units. The effect of the alternative minimum tax upon members depends on their particular overall tax and financial situation. Members should consult with their tax advisor regarding the possible application of this tax.

An audit of member returns could result in adjustments to items on their returns that may or may not be related to JCM. There are special procedures pertaining to audits of partnership tax returns which may reduce the control members would otherwise have over proceedings concerning any proposed adjustment of their tax items by the IRS. If the IRS determines that a member has underpaid taxes, that member would be required

to pay the amount of the underpayment plus interest. Members may also be liable for penalties from the date the tax originally was due.

Future events may result in federal income tax treatment of JCM and its members that is materially and adversely different from the treatment described here. This discussion of the federal income tax aspects of an ownership interest in JCM is based on current law, including the Internal Revenue Code, the treasury regulations, administrative interpretations and court decisions. Changes could affect taxable years arising before and after such events. We cannot assure members that future legislation and administrative interpretations will not be applied retroactively.

Due to the history of the IRM entities that preceded the formation of JCM and the lack of specific tax law addressing the related issues, there continues to exist risks associated with the tax positions taken during the formation of JCM. Although these positions were believed to be reasonable, neither the taxing authorities nor the courts are bound by them. Therefore, there is a continuing risk that the taxing authorities and courts will not concur with these positions. All these risks were disclosed to the original investors in connection with the Plan of Reorganization that was approved by investors during IRM’s bankruptcy proceedings. JCM believes that any risks inherent in the positions taken during those proceedings apply only to those original investors and not to individuals who have subsequently become JCM members.

The amount you use to determine your profit or loss from a sale or exchange of property. To determine your adjusted basis for an asset, start with the original cost. Add your cost of improvements and assessments to the asset and subtract deductions you have taken, such as depreciation.

Profit on the sale of a capital asset. Capital gains receive more favorable tax treatment than ordinary gains. Depending on your tax bracket and on how long you held a capital asset, you may pay about one-third to one-half less tax on a capital gain than you would have paid on the same amount of ordinary income.

A deduction you are allowed for the wearing away over time of assets such as office equipment, vehicles, buildings and furniture. For assets that have an expected useful life of more than one year, you spread the cost of the asset over its estimated useful life rather than deducting the entire cost in the year you place the asset in service. For tax purposes, tax law specifies the depreciation term for specific types of assets.

The difference between your adjusted basis in an asset and the value you receive when you sell or otherwise dispose of the asset.

A type of debt for which a borrower is not personally liable. If you default on a non-recourse loan, the lender must recover the amount you owe by foreclosing on the property by which the loan is secured. At-risk rules limit the amount of loss you can take from activities with non-recourse financing.

An unincorporated business or investment organization having two or more owners. A partnership is not subject to tax, but passes income, losses and other tax items through to its partners.

An activity in which you do not materially participate. Real estate rentals and limited partnerships are examples of passive activities. Passive loss rules apply to losses from passive activities.

Income such as interest, dividends, royalties and gains or losses from investments.

A limited partnership, or LLC taxed as a partnership that has limited partnership or membership interests traded in an organized securities market or a substantial equivalent.

The section of the Internal Revenue Code that deals with depreciable real estate.

The partner responsible for representing the partnership in IRS audit proceedings.

Our commercial properties must comply with Title III of the Americans with Disabilities Act, commonly referred to as the ADA, to the extent that such properties are public accommodations or commercial facilities as defined by the ADA. Compliance with the ADA requirements could require removal of structural barriers to handicapped access in certain public areas of our commercial properties where such removal is readily achievable. The ADA does not, however, consider residential properties, such as our apartment properties, to be public accommodations or commercial facilities, except to the extent portions of such facilities, such as the leasing office, are open to the public. We believe that our properties comply with, or are exempt from, all present requirements under the ADA and applicable state laws. Noncompliance could result in imposition of fines or an award of damages to private litigants. If we are required to make material changes to our properties to comply with the ADA, our operating results could be materially and adversely affected.

Under various federal, state and local environmental laws, ordinances and regulations, a current or former owner of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at such property or may be held liable to governmental entities or to third parties for property or natural resource damage and for investigation, clean-up and other costs incurred by such parties in connection with the contamination. Such laws typically impose clean-up responsibility and liability without regard to whether the owner knew of or caused the presence of the contamination. The liability under such laws has been interpreted to be joint and several, unless the harm is capable of apportionment and there is a reasonable basis for allocation of responsibility. Recently, indoor air quality issues, including mold, have been

highlighted in the media and the industry is seeing mold claims from apartment residents rising. California state agencies are attempting to assess this issue.

Our leases generally provide that the tenant is responsible for compliance with applicable laws and regulations. However, this contractual arrangement does not eliminate our statutory liability or preclude claims against us by governmental authorities or persons who are not parties to such arrangement. The cost of an investigation and clean-up of site contamination can be substantial, and the fact that the property is or has been contaminated, even if remediated, may adversely affect the value of the property and the owner’s ability to sell or lease the property or to borrow using the property as collateral. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs that it incurs in connection with the contamination. Some state laws provide that such lien has priority over all other encumbrances on the property or that a lien can be imposed on any other property owned by the liable party. Finally, the owner of a site may be subject to common law claims by third parties based on damages and costs resulting from the environmental contamination emanating from the site. Other federal, state and local laws, regulations and ordinances govern the removal or encapsulation of asbestos-containing material when such material is either in poor condition or in the event of building remodeling, renovation or demolition. Still other federal, state and local laws, regulations and ordinances may require the removal or upgrade of underground storage tanks that are out of service or out of compliance. In addition, federal, state and local laws, regulations and ordinances may impose prohibitions, limitations and operational standards on, or require permits, licenses or approvals in connection with, the discharge of wastewater and other water pollutants, the emission of air pollutants, the operation of air or water pollution equipment, the generation, storage, transportation, disposal and management of materials classified as hazardous or nonhazardous waste, the use of electrical equipment containing polychlorinated biphenyls, the storage or release of toxic or hazardous chemicals and workplace health and safety. Noncompliance with environmental or health and safety requirements may also result in the need to cease or alter operations at a property which could affect the financial health of a tenant and its ability to make lease payments. Furthermore, if there is a violation of such a requirement in connection with the tenant’s operations, it is possible that we, as the owner of the property, could be held accountable by governmental authorities for such violation and could be required to correct the violation.

Such laws and regulations have not historically had a material effect on the operation of our properties. We are not aware of any environmental condition on any of our properties which would be likely to have a material adverse effect on our financial condition and results of operations. There may be, however, environmental problems that may have developed since our properties were acquired which remain latent or of which we are otherwise unaware.

The real estate industry in Northern California is generally fragmented and characterized by significant competition. Numerous developers, owners of apartment, industrial, office, and retail properties, and managers compete with us in seeking properties for acquisition, development or management and in attracting and retaining tenants. No one competitor owns a majority of the apartment units in any county in which our properties are located. Competition for tenants is principally on the basis of location, physical condition, amenities and rental rates. There are competitors in each area in which we operate that have greater capital resources than we do. There can be no assurance that the existence of such competition will not have a material adverse effect on our business, operations and cash flow.

As discussed above under “Background,” JCM Partners is the reorganized entity which emerged from the IRM entities bankruptcy proceedings. Pursuant to the plan of reorganization, the assets of the IRM entities were vested in JCM Partners on June 30, 2000. The real estate assets of JCM Partners are held through 55 wholly-owned subsidiaries, all but one of which is a single-asset limited liability company. The creditors of the IRM entities were divided into classes, as set forth in the plan of reorganization, with Classes 21 through 25 (representing certain investors in the equity and loan partnerships) receiving preferred or common membership interests in JCM Partners in satisfaction of their claims against the IRM entities. The plan of

reorganization stated that 100 units (either common or preferred, as applicable) would be issued to these creditors for every $10,000 of their allowed claims (i.e., one unit for every $100 of allowed claim). Creditors in other classes were treated as specified in the plan of reorganization, with many receiving immediate or deferred cash payment of all or part of their claims. None of the IRM entities received any payment or consideration for any claim against, or interest in, another IRM entity.

Under the terms of the plan of reorganization, each preferred membership unit had an initial redemption value equal to $40 (therefore representing a return of 40% of the holder’s claim), plus or minus that unit’s share of the profits or losses of JCM Partners. In September 2000, the board of managers of JCM Partners approved a split of units and an adjustment of each unit’s redemption value. Preferred unit holders would receive one unit, with a redemption value of $1.00, for every $2.50 of their allowed claim. For example, a preferred unit holder with an allowed claim of $100,000 would receive 40,000 preferred units, with a total redemption value of $40,000. This split simplified the correlation between the number of preferred units and the dollar amount of a complete redemption of the preferred units, while still achieving the result that each preferred unit holder would receive a 40% return of its claim amount upon redemption. As a result of the split, common unit holders received one unit for approximately every $1.53 of their allowed claim. The plan of reorganization and JCM Partners’ operating agreement provided for penalties in the event that JCM Partners did not redeem all of the preferred units by June 30, 2001. JCM Partners made a series of partial redemptions of preferred units, followed by a final and complete redemption of the preferred units on June 15, 2001. See “Item 7 — Management’s Discussion and Analysis of Financial Consideration and Results of Operations — Liquidity and Capital Resources” regarding the redemption obligations of JCM Partners for the common units.

As of December 31, 2002, we had 197 employees. We consider our relationships with our employees to be good.

Gayle M. Ing has been a manager and our President, Chief Executive Officer and Secretary since April 11, 2001. From April 11, 2001 until October 2, 2002, Ms. Ing was also our Chief Financial Officer. From March 15, 2001 until April 11, 2001, Ms. Ing served as a consultant to JCM Partners through Computer Management Corporation. Prior to that, from December 1996 until March 2001, Ms. Ing was a management consultant, also through Computer Management Corporation, and was a volunteer with a child services facility. Ms. Ing served as the Vice President and Business Manager for Electronic Banking at Bank of America from January 1994 to November 1996.

Michael W. Vanni has been a manager of JCM Partners and Chairman of our Board since June 2000. Since 1978, Mr. Vanni has been the President of Computer Management Corporation, a data processing consulting company.

Marvin J. Helder has been a manager of JCM Partners and Vice Chairman of our Board since June 2000. Mr. Helder has been the President of Helder Construction, a commercial and residential construction and property management company, for the past seven years.

Brian S. Rein has been our Chief Operating Officer and Director of Property Management since June 2000. Mr. Rein was the Chief Operating Officer of JCM Partners’ predecessor, IRM Corporation, from October 1998 through June 2000. For the ten years prior to his employment with IRM and JCM Partners, Mr. Rein has had similar operations and management responsibilities serving as Vice President of John Connolly IV & Company where he directed the management of multifamily and commercial properties for institutional clients.

Cornelius Stam has been a Director of Property Management since June 2000, and our Chief Financial Officer since October 2002. Mr. Stam was the Executive Director of Property Management of IRM Corporation from August 1998 through June 2000. From 1983 to August 1998, Mr. Stam was the Senior Vice President of Property Management for IRM Corporation.

Mr. Vanni and Ms. Ing are husband and wife. There are no other family relationships among executive officers, or managers, or persons chosen by us to be nominated as a manager or appointed as an executive officer of JCM Partners or any of its subsidiaries.

As of December 31, 2002, our real estate portfolio consisted of:


	•	46 apartment complexes with an aggregate of 5,341 units;
	•	two office/retail properties with 36 tenants and approximately 172,200 square feet;
	•	six industrial properties with 25 tenants and approximately 145,000 square feet; and
	•	one 16.7-acre site held for future development or sale.

The ordinary course of our business operations includes ongoing renovation projects to our properties, including but not limited to exterior painting, roofing, siding, fencing, balcony and deck replacement, landscape upgrades, asphalt repairs and resurfacing, swimming pool resurfacing, new signage and interior unit remodeling. Costs are incorporated in operating budgets and covered by cash flow from operations or may be financed as required lender repairs during refinancing of certain properties.

The table below sets forth general information relating to the properties owned by our subsidiaries at December 31, 2002. All of the properties are suitable for the purpose for which they are designed and are being used. None of our properties account for 10% or more of our assets or account for 10% or more of our gross revenues during the year ended December 31, 2002.

(B) Average monthly rent is calculated as the contract rent plus market rent for vacant apartment homes, divided by the number of apartment
homes.

None of our residential tenants occupy 10% or more of any individual property’s rentable square footage. None of our commercial tenants occupy 10% or more of the commercial property square footage.

The following table sets forth occupancy information for the past five years by sub-markets for the properties owned by our subsidiaries at December 31, 2002. Our subsidiaries have owned such properties since June 2000. Accordingly, information for the periods prior to such date is based on records we obtained from the IRM entities as part of the IRM bankruptcy proceedings.

The following table sets forth the average rent per square foot by sub-market for the past five years for the properties owned by our subsidiaries at December 31, 2002. Our subsidiaries have owned such properties since

June 2000. Accordingly, information for the periods prior to such date is based on records we obtained from the IRM entities as part of the IRM bankruptcy proceedings.


(A)	Average monthly rent per square foot is contract rent for occupied units plus market rent for vacant units divided by total rentable square feet.

Item 5. Market for Registrant’s Common Equity and Related Security Holder Matters

There is no public trading market for our common units and there can be no assurance that a market will ever develop for the units.

In 2001 and 2002, JCM made the distributions set forth below on a per unit basis. All of the distributions in 2001 were voluntary distributions. As indicated below, in 2002, some of the distributions were voluntary distributions declared by the Board of Managers and some were mandatory distributions required to be made under our LLC Agreement.


(A)	On December 12, 2001, the board of managers increased the voluntary monthly distributions to 1/12 of $0.055 per unit ($0.00458).


(B)	This distribution in April, in the aggregate amount of $739,651, were payments made to the California Franchise Tax Board or to our members to offset state income tax liabilities incurred by our members in 2001 due to their ownership of JCM Partners’ Units.

(C)	On June 26, 2002, the board of managers increased the voluntary distribution to members to 1/12 of $0.0775 per common unit ($0.00646).


(D)	Pursuant to an amendment to our LLC Agreement approved by our members on May 22, 2002, we are required under the terms of our LLC Agreement to pay a mandatory monthly distribution to our common unit holders in an amount equal to 1/12 of $0.0775 per unit ($0.00646). This mandatory monthly distribution replaced the voluntary distribution referred to in (C) above.


(E)	On December 10, 2002, the board of managers declared a voluntary monthly distribution, in addition to the mandatory monthly distribution, in the amount of 1/12 of $0.0025 per common unit.


(A)	This distribution, in the aggregate amount of $260,000, was paid to both common and preferred unit holders. As disclosed under “Item 1 — The IRM Bankruptcy Proceedings,” we completed the redemption of the preferred units in June 2001.


(B)	The distributions in April, in the aggregate amount of $33,401, was comprised of payments made to the California Franchise Tax Board. These payments were made from cash from operations and were intended to offset certain federal and/or state income tax liabilities incurred by our members in 2000 due to their ownership of JCM Partners’ units.

(C)	On June 18, 2001, the board of managers approved the institution of monthly distributions on or about August 25, 2001. On August 28, 2001, the board of managers delayed the commencement of the monthly distributions while we explored making a cash tender offer for some of our common units. We did not ultimately make a cash tender offer and, accordingly, on November 1, 2001, monthly distributions were sent to members of record as of October 1, 2001 in an amount equal to four regular monthly distributions that would have been distributed to holders of records as of the first day of July, August, September and October 2001. On November 9, 2001, the board of managers ratified the payment of these distributions. Each monthly distribution represented 1/12 of $0.05 per unit ($0.00417).


(D)	On December 12, 2001, the board of managers approved an increase in monthly distributions to 1/12 of $0.055 per unit ($0.00458).

Beginning in July 2002, we have been required under the terms of our LLC Agreement to make mandatory monthly distributions to the holders of common units in an amount equal to 1/12 of $0.0775 (seven and 3/4 cents) per common unit (the “Mandatory Monthly Distributions”). The Mandatory Monthly Distributions may be from cash from operations or cash from sales, or both. If we fail, for any reason, to pay any Mandatory Monthly Distribution(s) in a timely manner, we must begin liquidating our properties as quickly as commercially reasonable and must pay the common unit holders interest on any overdue Mandatory Monthly Distributions at the rate of ten percent per year. Once we no longer have any overdue Mandatory Monthly Distributions, we may cease liquidating our properties.

If the board of managers declares an additional voluntary distribution of cash from operations or from sales, then the members as of the record date are entitled to receive all such distributions which the board has declared, with each member entitled to receive a pro-rata portion of such available distributions.

Our limited liability company agreement provides that, except as set forth below, each holder of common units as of June 30, 2005 will have the right to require us to redeem all or, if so elected by the holder, a portion, of his or her units no later than June 30, 2007. The redemption price for each common unit will be calculated by dividing the value of our assets as of June 30, 2005 by the total number of common units outstanding, subject to adjustment as set forth in our limited liability company agreement. If a sufficient number of common unit holders exercise their right to have their units redeemed, the continued operation of JCM Partners beyond June 30, 2007 may not be reasonably feasible. Accordingly, our limited liability company agreement requires the board of managers to meet no later than June 30, 2006 to determine whether JCM Partners should continue operations beyond June 30, 2007. If the board of managers determines in its sole discretion that the company’s operations should not continue beyond June 30, 2007, then we must inform all owners of common units of this decision within 30 days after June 30, 2006 and the following will occur:


	•	the common unit holders’ rights to be redeemed as described above on June 30, 2007 will become null and void;

	•	all of JCM Partners’s properties will be sold as soon as practicable, but in no event later than June 30, 2007; and

	•	all owners of common units will receive the liquidation distributions to which they are entitled under our limited liability company agreement.

We did not sell any equity securities that were not registered under the Securities Act of 1933, as amended, during the year ended December 31, 2002.

We were organized as a Delaware limited liability company on May 15, 2000 and commenced operations as JCM Partners, LLC, the successor company to the IRM entities, on June 30, 2000.

The following table sets forth selected financial data for JCM Partners (a) for the years ended December 31, 2002 and 2001 and for the six month period ended December 31, 2000 and (b) as of December 31, 2002, 2001 and 2000.

(A)

Pursuant to an amendment to our LLC Agreement approved by our Members on May 22, 2002, we are required under the terms of our LLC Agreement to pay mandatory monthly distributions to our common unit holders in an amount equal to 1/12 of $0.0775 per unit. However, since this distribution is not required to be paid upon our dissolution, change of control, merger or consolidation, it is not reflected as a liability in the above table.

The following table sets forth selected financial data for the properties owned by the IRM entities for the period from January 1, 2000 to June 29, 2000 and for the years ended December 31, 1999 and 1998.

The foregoing combined statement of operations data presents operating results of the properties owned by the IRM entities for the period from January 1, 2000 to June 29, 2000 and the years ended December 31, 1999

and 1998. This data was prepared pursuant to SEC Regulation S-X, Rule 3-14, “Special instructions for real estate operations to be acquired.” Accordingly, the presentation excludes certain items not comparable to the future operations of the property, such as mortgage interest, leasehold rental, depreciation and corporate expenses.

We are not aware of any material factors relating to the properties transferred by the IRM entities to us that would cause the reported results of operations not to be necessarily indicative of future operating results.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements. See our statement that is set forth after the Table of Contents regarding Forward Looking Statements.

The following discussion should be read in conjunction with the Consolidated Financial Statements and notes set forth in Item 8 below.

We adopted “fresh start” accounting rules as of June 30, 2000. As a result, our financial results during the six months ended December 31, 2000 serve as benchmark data for future comparisons, but generally are not comparable to prior periods.

Because we commenced operations on June 30, 2000, there is no corresponding period in 2000 for comparison to the year ended December 31, 2001.

Total revenues increased 7% year-over-year for the year ended December 31, 2002. Occupancy in our apartment communities remained relatively stable, though we are seeing some softening in the sub-market areas closest to San Francisco where the slowdown in the technology sector has had a negative impact on rental prices. During the year, overall occupancy improved in our commercial properties, primarily at our light industrial buildings located in Napa, California.

The Company believes it has made extensive progress in our expanded apartment rehabilitation and deferred maintenance programs. We believe these efforts are essential to realizing the full income potential of our properties. In 2002, $4,434,000 was expensed for these rehabilitation and deferred maintenance items. This is an increase of $1,365,000 over 2001.

These increases in expenditures to improve our properties, coupled with substantial increases in insurance costs, resulted in a decrease to our net income for the year ended December 31, 2002 in comparison to the year ended 2001.

The accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (US GAAP). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change and the best estimates and judgments routinely require adjustment.

We believe the following critical accounting policies, in addition to those described in Note 2 to our financial statements (beginning on page F-4 of this filing), affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Our rental properties are carried at reorganization value plus improvements less accumulated depreciation. Depreciation is calculated using the straight-line method. The estimated useful lives for the properties range from 20 to 40 years for buildings and from 5 to 15 years for improvements.

Our apartment communities are generally leased under operating leases with terms of six months. Rental income is recognized according to the terms of the underlying leases, which approximates the revenue which would be recognized if recognized evenly over the lease term. Rental revenue on our commercial properties is recognized over the term of the related lease.

We capitalize those expenditures related to acquiring new assets, materially enhancing the value of an existing asset, or substantially extending the useful life of an existing asset. Expenditures necessary to maintain an existing property in ordinary operating condition are expensed as incurred.

The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the expected undiscounted cash flows expected to be generated by those assets are less than the related carrying amounts. If a rental property is determined to be impaired, the impairment would be measured based upon the excess of the asset’s carrying value over the fair value. The Company reports assets to be disposed of at the lower of carrying amount or fair value less cost to sell.

We use a supplemental performance measure, Funds from Operations (“FFO”), along with net income, to report operating results. FFO is calculated by making various adjustments to net income. Depreciation, amortization and loss on early extinguishment of debt are added back to net income, as they represent non-cash charges. In addition, gains on sale of real estate investments and extraordinary items are excluded from the FFO calculation.

FFO is not a measure of operating results or cash flows from operating activities as defined by generally accepted accounting principles. Further, FFO is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to cash flows as a measure of liquidity. We believe, however, that FFO provides relevant information about operations and is useful, along with net income, for an understanding of our operating results.

For the year ended December 31, 2002, FFO was $10,371,000 as compared to $9,832,000 for the year ended December 31, 2001, an increase of approximately 5% or $539,000. The increase was offset by a decrease in net income of $505,000 which was primarily due to substantial increases in insurance costs, a one time adjustment to real estate taxes in 2001, targeted increased expenditures in our apartment rehabilitation program and deferred maintenance projects and increased interest expense due to higher principal balances as a result of the refinancing of certain properties. These increased expenses were partially offset by lower utility costs, lower general and administrative expenses and an increase in rental revenue.

The table below sets forth the overall weighted average occupancy levels for our properties, by type of property, at December 31 for the last three years. The weighted average occupancy is calculated by multiplying the occupancy of each property by its square footage and dividing by the total square footage in the portfolio.

The overall weighted average occupancy level for our entire property portfolio as of December 31, 2002 was 94.3%, compared to 92.2% at December 31, 2001, and 94.6% at December 31, 2000.

Although we experienced a 32% drop in rental inquiries in 2002, occupancy at our apartment communities has remained relatively stable. We believe this stability has been a result of a successful cross marketing program, resident referral program and increased concessions. However, we continue to see soft demand in our markets closest to the San Francisco Bay Area due to the technology industry slowdown, resulting in lower occupancy rates than the rest of our portfolio.

Improved occupancy at our commercial properties has been attributable to the leasing of recent space primarily at our light industrial buildings located in Napa, California. As of March 1, 2003, occupancy is 79% primarily due to the vacating of three tenants in January 2003 from our San Francisco and Concord office buildings. Two of the tenants were on month to month tenancy. The third tenant, on lease through July 31, 2007, owes rent from February 1, 2003 and we are pursuing collection of the rent owed.

Market conditions for leased space in commercial buildings have weakened considerably in the San Francisco Bay Area. General economic decline and job loss in the technology industry have reduced demand for commercial buildings in most San Francisco Bay Area sub-markets. Vacancy rates have gone up and rents have stabilized and come down from the peaks reached in early 2000.

Our future occupancy rates will be subject to numerous factors, many of which are outside of our control. The year 2003 will be challenging on the leasing front. The overall slowdown of the California economy and other factors are impacting our sub-markets. Forecasts in trade journals and marketing reports indicate a relatively stable and flat year for rents with optimism for a pick up in the last quarter of 2003 to early 2004. A large unknown factor for our portfolio will be how California’s large budget deficit will impact local economies as funding cuts roll downward. Consumers are carefully considering how much they are willing to spend on housing, which is putting pressure on rents. In addition, low mortgage rates are enabling more renters to purchase homes. The number of rent inquiries is decreasing and qualified potential residents continue to be difficult to find. Our market surveys indicate vacancies have increased at our competitors and a number of competitors have decreased asking rents, as we have done at some selected properties. Many of our competitors give rent concessions and we give them as well at selected properties. Accordingly, there can be no assurance that our future occupancy or rental rates will not be significantly less than our occupancy and rental rates at December 2002.

Total rental revenue for the year ended December 31, 2002 was $53,056,000, up approximately 7% from $49,809,000 for the year ended December 31, 2001.

During the year ended December 31, 2002, our apartment communities generated $47,822,000 of rental revenue, up approximately 4% from $45,890,000 for the year ended December 31, 2001. The increase is primarily attributable to the increases in rental rates.

During the year ended December 31, 2002, our commercial properties generated $5,233,000 of rental revenue, up approximately 34% from $3,919,000 for the year ended December 31, 2001. The increase is attributable to the increases in rental rates, increases in occupancy rates and receipt of funds from a note secured by farm land which had been written off as uncollectable in 2001.

During the year ended December 31, 2002, rental rates for our apartment communities and commercial properties on a combined basis increased by 3.4%, reflecting our strategy of seeking to increase cash flow through rent increases. In 2001 and 2000, the increases were 9.6% and 11.8% on a full-year basis, respectively.

At December 31, 2002, the average monthly rental rate per square foot of our apartment communities was $1.03 compared to $0.99 at December 31, 2001 and $0.91 at December 31, 2000.

At December 31, 2002, the average monthly rental rate per square foot of our commercial properties was $1.27 compared to $1.21 at December 31, 2001 and $1.11 at December 31, 2000.

Our ability to continue to increase rental rates will materially depend on the changes in the real estate market and on general economic conditions in the areas in which we own properties. We expect that there will be rental rate increases at some, though not all, of our properties based on current sub-market conditions.

Total expenses. Our total expenses were $52,853,000 for the year ended December 31, 2002, an increase of 8% over 2001 when our total expenses were $49,078,000. This change was primarily due to increases in operating and maintenance costs, real estate taxes and insurance, and loss on early extinguishments of debt in the year ended December 31, 2002.

Interest expense. In the year ended December 31, 2002, interest expense was $13,674,000, or 3% higher than in the year ended December 31, 2001, when interest expense was $13,314,000. The increase was attributable to an increase in mortgages payable as a result of refinancing of certain mortgage loans during the year ended December 31, 2002, partially offset by the lower rates obtained on the new loans.

Operating and maintenance expenses. During the year ended December 31, 2002, operating and maintenance expenses were $16,613,000, an increase of approximately 13% over the year ended December 31, 2001

when operating and maintenance expenses were $14,646,000. The increase was primarily attributable to the increased expenditures for our ongoing apartment rehabilitation program, additional expenditures on deferred maintenance projects and increased advertising costs due to competitive leasing market conditions. During 2002, $1,757,000 was expended for dry-rot repairs and decking replacement, $460,000 for exterior painting, $346,000 for landscaping improvements and $97,000 for asphalt repairs and resealing. Approximately $1,493,000 of the expenses was used for lender required repairs related to the refinancing of certain mortgage loans.

Depreciation and amortization expenses. During the year ended December 31, 2002, depreciation and amortization expenses were $8,853,000, up 6% from the year ended December 31, 2001 when depreciation and amortization expenses were $8,363,000. This increase was primarily attributable to an increase in real estate investments due to capitalization of property improvements and capitalized loan fees from the refinance of mortgage loans.

General and administrative expenses. General and administrative expenses were $3,422,000 for the year ended December 31, 2002, compared to $4,452,000 in 2001, a 23% decrease. The decrease was primarily due to lower bad debt expense of $450,000 and lower legal and accounting fees associated with higher than normal fees for the first full year start up costs for the Company.

Real estate taxes and insurance expenses. In the year ended December 31, 2002, real estate taxes and insurance expenses were $5,200,000, an increase of approximately 43% over 2001 when real estate taxes and insurance expenses were $3,629,000. This increase is mainly attributable to the significant increase in insurance costs of approximately $1,098,000 due to general insurance industry conditions which were intensified by the events of September 11, 2001. Real estate property taxes increased as a result of changes in estimates of the effect of the new property tax assessments resulting from our reorganization in 2000. In anticipation of an increase in tax expense due to the possible reassessment for the tax year 2000-2001, we recorded additional estimated expense in 2000 and in the first quarter of 2001 to cover any increases. When the increased assessment did not occur, we recorded a downward adjustment in May 2001 of approximately $435,000 to reflect the actual tax expense incurred. Excluding the adjustments, real estate tax expense for the year ended December 31, 2001 was approximately $3,028,000 compared to $3,067,000 for the same period in 2002.

Utility expenses. Utility expenses were $3,870,000 for the year ended December 31, 2002, a decrease of approximately 5% from 2001, when utilities expense was $4,080,000. The decrease was primarily attributable to lower overall energy costs in California from the peak levels reached in 2001.

Loss on early extinguishment of debt. During the year ended December 31, 2002, we recorded a loss of $1,221,000 to reflect pre-payment premiums of $745,000 related to early prepayment of mortgages and the write-off of deferred loan costs of $476,000 related to retired debt in 2002 in connection with the refinancing of certain of our mortgages. This compares to 2001’s loss of $594,000 to reflect the write-off of deferred loan costs related to debt which was retired in 2001.

Net income. During the year ended December 31, 2002, net income was $563,000 compared to $1,068,000 for the prior year, a decrease of approximately 47%. This change was primarily due to substantial increases in insurance costs, the one-time adjustment to real estate taxes in 2001 described above, targeted increased expenditures in our apartment rehabilitation program and deferred maintenance projects including $1,493,000 of lender required repairs related to the refinancing of certain mortgages and increased interest expense due to higher principal balances as a result of the refinancing of certain properties. These increased expenses were partially offset by lower utility costs, lower general and administrative expenses and an increase in rental revenue.

We believe that the direct effects of inflation on our operations have been inconsequential.

We made the following cash distributions to our unit holders in the year ended 2002: $413,000 in each of January, February, March, April and May; $582,000 in each of June, July, August, September, October and November; and $600,000 in December. In addition, during April 2002 we paid to the California Franchise Tax Board $125,000 on behalf of our non-California unit holders who had been allocated income deemed taxable by the State of California and made a distribution of $614,000 to our members who were not required to make a California tax deposit. This special distribution in April 2002 and the payments to the California Franchise Tax Board was intended to offset certain state income tax liabilities incurred by our members in 2002 due to their ownership of JCM Partners’ common units. All of the distributions in 2002 were made from cash from operations.

We made the following cash distributions to our unit holders in the year ended 2001: $260,000 in February, $1,878,000 in November, and $413,000 in December. In addition, we paid to the California Franchise Tax Board $33,000 on behalf of some our unit holders during the year ended December 31, 2001. The distribution in February and the payments to the California Franchise Tax Board were made from our cash from operations and were intended to offset certain federal and/or state income tax liabilities incurred by our members in 2000 due to their ownership of JCM Partners’ units. The distributions in November and December were made from cash from operations.

Six Months Ended December 31, 2001 Compared to Six Months Ended December 31, 2000

Total rental revenue for the six months ended December 31, 2001 was $25,847,000, up approximately 10.5% from $23,398,000 for the six months ended December 31, 2000.

During the six months ended December 31, 2001, rental revenue generated by our apartment communities was $23,858,000, up approximately 11.1% from $21,478,000 for the six months ended December 31, 2000. The increase is primarily attributable to the increases in rental rates.

During the six months ended December 31, 2001, rental revenue generated by our commercial properties was $1,989,000, up approximately 3.6% from $1,919,000 in the six months ended December 31, 2000. The increase is primarily attributable to the increases in rental rates, partially offset by the decrease in occupancy rates.

Total expenses. Our total expenses were $26,664,000 for the six months ended December 31, 2001, as compared to $23,414,000 for the six months ended December 31, 2000, an increase of approximately 13.9%. The increase was due to significant increases in operating and maintenance costs, general and administrative expense, and somewhat smaller increases in utilities, depreciation, and real estate taxes in the six months ended December 31, 2001.

Interest expense. In the six months ended December 31, 2001, interest expense was $6,819,000, down from $6,827,000 for the six months ended December 31, 2000, a decrease of approximately 0.1%. The decrease was attributable to a decline in interest rates on our variable interest rate loans and the lower fixed rate on the refinanced mortgage loans, partially offset by the increase in mortgages’ payable as a result of refinancing certain mortgage loans during the six months ended December 31, 2001.

Operating and maintenance expenses. During the six months ended December 31, 2001, operating and maintenance expenses were $8,834,000, up from $6,379,000 for the six months ended December 31, 2000, an increase of approximately 38.5%. The increase was primarily attributable to the increased expenditures for our ongoing apartment rehabilitation program, additional expenditures on deferred maintenance projects, additional hiring to fill vacant positions, increases in staff wages, increased costs for services provided by vendors and increased advertising costs due to competitive leasing market conditions.

Depreciation and amortization expenses. During the six months ended December 31, 2001, depreciation and amortization expenses were $4,252,000, as compared to $4,072,000 for the six months ended December 31, 2000, an increase of approximately 4.4%. This increase was primarily attributable to the increase in real estate investments due to capitalization of property improvements.

General and administrative expenses. General and administrative expenses were $2,515,000 for the six months ended December 31, 2001, up from $2,380,000 for the six months ended December 31, 2000, a 5.7% increase. The increase was primarily due to higher legal and outside service costs.

Real estate taxes and insurance expenses. In the six months ended December 31, 2001, real estate taxes and insurance expenses were $2,221,000, up from $1,914,000 for the six months ended December 31, 2000, an increase of approximately 16.0%. The increase was primarily due to higher insurance costs.

Utility expenses. Utility expenses were $2,022,000 for the six months ended December 31, 2001, as compared to $1,842,000 for the six months ended December 31, 2000, an increase of approximately 9.8%. The increase was primarily attributable to higher energy costs in California.

As of December 31, 2002, our short-term liquidity needs included normal operating requirements, ongoing capital improvements, monthly principal amortization of our debt, repurchase of common units and certain mandatory distributions required to be made to our common unit holders, as described at “Item 5 — Market for Registrant’s Common Equity and Related Security Holder Matters — Distributions Required by Our LLC Agreement.” We expect to meet these requirements through net cash provided by operations. However, if needed, we may refinance certain mortgage obligations. We do not expect that rent increases upon tenant turnover and lease expirations, subject to market and general economic conditions, will have a significant impact on our short-term liquidity.

In 2002, through a wholly-owned subsidiary, we repurchased 6,632,657 common units for an aggregate price of $5,655,000. From January 1, 2003 through March 31, 2003, through our wholly-owned subsidiary, we repurchased an additional 268,646 redeemable common units for an aggregate price of $277,000. As of March 31, 2003, our wholly-owned subsidiary owned 6,901,303 common units.

Our long-term liquidity requirements include scheduled debt maturities, significant capital improvements and certain mandatory distributions required to be made to our common unit holders, as described at “Item 5 — Market for Registrant’s Common Equity and Related Security Holder Matters – Distributions Required by Our LLC Agreement.” We anticipate that cash flows from operations, including the effects of any rent increases, will not be sufficient to meet some of these long-term requirements, such as remaining balances due at loan maturities, and that it may be necessary for us to refinance the mortgages on certain of our properties. There can be no assurance that we will be able to refinance on terms advantageous to JCM Partners, however, especially if interest rates rise in the future.

As described at “Item 5 — Market for Registrant’s Common Equity and Related Security Holder Matters — Redemption Rights,” our common unit holders will have the right to require us to redeem some or all of their common units in June 2007. In order to fund those redemptions, we will use cash from operations, loan refinancing proceeds, other capital sources and, if necessary, we may be required to liquidate some or all of our assets.

At December 31, 2002, we had unrestricted cash totaling $14,898,000, compared to $14,248,000 at December 31, 2001. This increase is primarily attributable to cash provided by operations of $10,866,000, offset by cash used in investing activities of $2,990,000 and cash used in financing activities of $7,227,000.

The terms of certain of our mortgages require impound accounts for the payment of insurance, property taxes, replacement reserves and lender holdbacks on proceeds from new mortgages for immediate repair improvements, in addition to the scheduled principal and interest payments on the debt. We classify these impound accounts as restricted cash on our balance sheet. Restricted cash for holdbacks, which total approximately $953,000 at December 31, 2002, will become unrestricted when repair improvements are completed. At December 31, 2002, our restricted cash totaled $2,331,000 compared to $2,722,000 at December 31, 2001.

Net cash provided by operating activities during the year ended December 31, 2002 was $10,866,000, which reflects net income of $563,000, non-cash depreciation charges of $8,853,000, a non-cash loss for early extinguishment of debt in the amount of $1,221,000 and the net effect of changes in operating assets and liabilities of $229,000.

Net cash used in investing activities consisted of improvements to real estate investments of $3,253,000 as part of our asset rehabilitation program, an increase of $1,244,000 over 2001, offset by proceeds from the disposal of assets of $263,000.

Net cash used in financing activities was $7,227,000. This consisted of proceeds received from the refinance of certain mortgage loans of $22,319,000 and the uses were as follows: repurchases of common units in the amount of $5,655,000, principal payments on mortgage notes of $1,968,000, early payoff of five mortgage notes totaling approximately $14,284,000, net deferred financing costs and prepayment penalties totaling approximately $802,000, distributions to common unit holders in the amount of $6,573,000 and change in other assets of $263,000.

We have made significant progress in our upgrade program, which is part of JCM’s strategic plan to improve the overall quality of our real estate portfolio. This program involves recurring expenditures, such as floor coverings, HVAC equipment, roofs, appliances, landscaping, siding and parking lots, and non-recurring expenditures, such as gating and access systems, the addition of washer-dryers, interior upgrades and fitness centers.

Our long-term debt consists of 48 real estate mortgages totaling $185,769,000 as of December 31, 2002. Each of the mortgages is individually secured by one of 47 properties with two mortgages secured by the same property. This debt generally requires monthly payments of principal and interest. As of December 31, 2002, the weighted average interest rate on our real estate mortgages was 6.57% compared to 7.48% at the same time last year.

At year end 2001, our long term debt consisted of 53 real estate mortgages totaling $179,702,000. During 2002, we completed the refinancing of 22 loans for a total of $83,628,000 of primarily fixed rate, partially amortizing mortgage loans payable with a weighted average interest rate of 5.96%. The balance of the mortgage loans retired was $61,308,000 with a weighted average interest rate of 7.63%. We received net proceeds, including funds held by the lender for required repairs, of $22,319,000 from the issuance of the new mortgage loans. The proceeds were used for: (1) payoff of 5 mortgage notes totaling $14,283,000 with a weighted average interest rate of 8.50%, (2) lender required repairs of $1,840,000, (3) net deferred financing costs of $57,000, (4) prepayment costs on mortgage payoffs of $745,000 and (5) the repurchase of common units.

Subsequent to December 31, 2002, we completed the refinancing of 3 loans for a total of $19,500,000 of 5.21% fixed rate, seven year, partially amortizing mortgage loans using some of the proceeds to pay off another loan. The balance of the mortgage loans retired was $14,612,000 with a weighted average interest rate of 8.41%. We received net proceeds from the issuance of the new mortgage loans including funds held by the lender for

required repairs of approximately $4,888,000. We anticipate using the proceeds for loan transactions costs, repurchase of common units and retirement of other loans.

We are subject to the normal risks associated with debt financing, including the risk our cash flow will be insufficient to meet required payments of principal and interest, the risk that indebtedness on our properties, or unsecured indebtedness, will not be able to be renewed, repaid or refinanced when due or that the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness. If we were unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the properties on disadvantageous terms, which might result in losses to us. Such losses could have a material adverse effect on us and our ability to make distributions to our Members and pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgage holder could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income to our Members without accompanying cash proceeds.

The following schedule reflects the changes in our members’ equity during 2002 for financial reporting purposes:

(1)

On May 22, 2002, the Members of the Company approved certain amendments to the Company’s Limited Liability Company Agreement. As a result, we were not required to distribute the balance of the mandatory distribution payable in 2002 and 2003. Instead, we are obligated to make monthly mandatory distributions to common unit holders of 1/12 of $0.0775 per unit. We began making these monthly mandatory distributions in July 2002. In connection with the approval of the amendments, we reclassified the liability for the mandatory distributions payable to redeemable common unit holders to members’ equity on May 22, 2002

Our primary market risk exposure results from changes in interest rates on our debt obligations. We are vulnerable to increases in the interest rates on our variable rate mortgage notes. We are also vulnerable to significant increases in interest rates to the extent we refinance our fixed rate mortgage notes or incur additional debt in the future.

The following table presents information about our debt obligations at December 31, 2002. The table presents principal cash flows and related weighted average interest rate by expected maturity dates.


(1)	Twenty-six loans with rates ranging from 5.68% to 7.75%.

(2)	Four loans with rates ranging from 8.28% to 8.69% that increase to between 8.78% to 9.48% at stated dates between February and June 2004; and seven loans with rates ranging from 4.95% to 7.38% that become variable between July 2004 and January 2008.

(3)	Twelve loans with rates from 3.34% to 10.50% at December 31, 2002.

We have audited the accompanying consolidated balance sheets of JCM Partners, LLC and its subsidiaries (the “Company”), as of December 31, 2002 and 2001, and the related consolidated statements of operations, members’ equity and cash flows for the years ended December 31, 2002 and December 31, 2001 and for the period from June 30, 2000 (Inception) to December 31, 2000. Our audits also include the consolidated financial statement schedule listed in the foregoing table of contents. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of JCM Partners, LLC and its subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for the years ended December 31, 2002 and December 31, 2001 and for the period from June 30, 2000 (Inception) to December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Also, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR
YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001,
AND FROM THE PERIOD JUNE 30, 2000 (INCEPTION) TO
DECEMBER 31, 2000


	JCM Partners, LLC (the “Company”), a Delaware limited liability company, was organized on May 15, 2000. The Company is the reorganized entity which emerged from the bankruptcy proceedings in the United States Bankruptcy Court for the Eastern District of California of IRM Corporation et al. (“the IRM entities”). Pursuant to a plan of reorganization confirmed on June 5, 2000 (the “Plan”), all assets of the IRM entities were vested in the Company. The Company commenced operations on June 30, 2000 pursuant to the confirmation order and the plan of reorganization.

	The Company owns, operates and manages forty-six apartment complexes and eight commercial income properties. The Company also owns one parcel of land which is available for development. All of the properties are located in northern California. The Company holds its real estate assets through 55 wholly-owned subsidiaries, each of which is a single-asset limited liability company.


	*Fresh Start Accounting* — In accounting for the effects of the reorganization, the Company implemented fresh start accounting in accordance with AICPA Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” Accordingly, all of the Company’s assets and liabilities were restated to reflect their reorganization value, which approximated fair value at the date of the reorganization, June 30, 2000.

	*Basis of Consolidation* — The financial statements include the accounts of the Company and its subsidiaries on a consolidated basis. All significant intercompany balances have been eliminated in consolidation.

	*Restricted Cash* consists of lender impound accounts (see Note 5).

	*Real Estate Investments* consist principally of rental properties which are carried at reorganization value plus improvements less accumulated depreciation, which is calculated using the straight-line method. The estimated useful lives for the properties range from 20 to 40 years for buildings and from 5 to 15 years for improvements.

	The estimated fair value of the properties as of the date of reorganization was determined based on appraisal reports prepared by independent M.A.I. (“Member of the Appraisal Institute”) appraisers. Determination of estimated fair values involves subjective judgment because the actual fair value of the real estate can be determined only by negotiation between the parties in a sales transaction.

	The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the expected undiscounted cash flows expected to be generated by those assets are less than the related carrying amounts. If a rental property is determined to be impaired, the impairment would be measured based upon the excess of the asset’s carrying value over the fair value. The Company reports assets to be disposed of at the lower of carrying amount or fair value less cost to sell. No impairment losses have been reflected in the accompanying statements of operations.

	Expenditures for ordinary maintenance and repairs are expensed as incurred. Significant renovations and improvements that enhance and/or extend the useful life of a property are capitalized and depreciated over its estimated useful life.


	*Deferred Costs* include financing costs which are amortized over the term of the related debt using the straight-line method and leasing commissions which are amortized over the term of the related leases using the straight-line method.

	*Other Assets* consist primarily of refundable deposits in connection with debt refinancings in process at year-end, other deposits and other receivables.

	*Rents Receivable* are carried net of any allowance for uncollectible amounts.

	*Rental Income Recognition* — Apartment communities are generally leased under operating leases with terms of six months. Rental income is recognized according to the terms of the underlying leases, which approximates the revenue which would be recognized if recognized evenly over the lease term. Rental revenue on commercial properties is recognized over the term of the related lease.

	*Use of Estimates* — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

	*Income Taxes* — Federal and state income taxes are the responsibility of the members. Accordingly, no provision for federal and state income taxes is included in the Company’s financial statements.

	*Segment Reporting* — The Company has two reportable operating segments: residential real estate and commercial real estate. Residential real estate includes the Company’s 46 apartment communities. Commercial real estate includes the Company’s eight commercial properties and land held for development (See Note 10).

	*New Accounting Standards* — In June 2001, the Financial Accounting Standards Board approved for issuance Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that all business combinations initiated after June 30, 2001 be accounted for under the purchase method of accounting and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. SFAS No. 142 addresses the initial recognition and measurement of intangible assets acquired outside of a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 provides that intangible assets with finite useful lives will be amortized and that goodwill and intangible assets with indefinite lives will not be amortized, but will be required to be tested at least annually for impairment. The Company adopted SFAS No. 142 effective January 1, 2002. The adoption of SFAS Nos. 141 and 142 did not have any impact to the Company’s financial statements.

	In August 2001, the Financial Accounting Standards Board approved for issuance (SFAS) No. 144, Accounting For The Impairment Or Disposal Of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, Accounting For The Impairment Of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of and the accounting and reporting provisions of Accounting Principles Board (“APB”) Opinion No. 30, Reporting The Results Of Operations – Reporting The Effects Of Disposal Of A Segment Of A Business, And Extraordinary, Unusual and Infrequently Occurring Events And Transactions. SFAS No. 144 unifies the accounting treatment for various types of long-lived assets to be disposed of, and resolves implementation issues related to SFAS No. 121. The Company adopted SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144 did not have any effect on the Company’s financial position, results of operations, or cash flows, as the Company had no long-lived assets that were considered impaired or that were disposed of for the year ended December 31, 2002.

	In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which addresses accounting for restructuring and similar costs. SFAS No. 146 supersedes previous accounting guidance, principally Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including


	Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. Under Issue 94-3, a liability for an exit cost was recognized at the date of a company’s commitment to an exit plan. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS No. 146 may affect the timing of recognizing future restructuring costs as well as the amounts recognized. The Company will adopt the provisions of SFAS No. 146 for any restructuring activities initiated after December 31, 2002.

	In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation assumed under that guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The liability recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company had no such guarantee arrangements for the year ended December 31, 2002


	The amount of redeemable common units as of December 31, 2001 has been reclassified in the Company’s condensed financial statements as a component of members’ equity because redeemable common is the only outstanding class of equity as of December 31, 2002 and December 31, 2001. Such amount had been classified outside of members’ equity in the Company’s previously issued December 31, 2001 financial statements.

	In addition, the Company reclassified to operating expenses the loss on early extinguishments of debt in the accompanying 2001 consolidated statements of operations as a result of the Company’s adoption of Statements of Financial Accounting Standards (SFAS) No. 145, Rescission of Financial Accounting Standards Board (FASB) Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. Such amount was classified as an extraordinary loss in the Company’s previously issued 2001 financial statements.

	Other reclassifications were made to the 2001 consolidated financial statements to conform to the 2002 presentation.


	Real estate investments are comprised of the following at December 31, 2002 and 2001:


	Minimum future rental revenues to be received on noncancellable tenant operating leases for more than 1 year in effect at December 31, 2002 are as follows:

The Company’s mortgages payable generally require monthly interest and principal payments. The obligations include twenty six fixed rate loans and twenty two variable rate loans which are secured by deeds of trust on the Company’s real estate investments. The Company is required by the terms of certain of the mortgage loans to maintain lender impound accounts for insurance, property taxes, reserves for property improvements and a bond account which are recorded as restricted cash. A summary of the Company’s mortgages payable outstanding is as follows:


	Aggregate maturities of mortgage loans payable subsequent to December 31, 2002 are as follows:


	During the year ended December 31, 2002, the Company completed the refinancing of twenty two loans. The balance of the mortgage loans retired was $61,308,000, and the Company received net proceeds, including funds held by the lender for required repairs, from the issuance of the new mortgage loans of approximately $22,319,000. The Company also paid off five mortgage loans totaling $14,283,000. In


	connection with the early retirement of the old mortgage loans, the Company recorded a loss on early extinguishments of debt of $1,221,000 in its statement of operations for the year ended December 31, 2002. The loss resulted in primarily from the write-off of debt issuance costs associated with the retired mortgage loans of $476,000 and prepayment penalties of $745,000.

	During the year ended December 31, 2001, the Company completed the refinancing of twelve mortgage loans. The balance of the mortgage loans retired was $45,901,000, and the Company received net proceeds, including funds held by the lender for required repairs, from the issuance of the new mortgage loans of approximately $18,297,000. In connection with the early retirement of the old mortgage loans, the Company recorded an extraordinary loss of $595,000 in its statement of operations for the year ended December 31, 2001. The loss resulted in primarily from the write-off of debt issuance costs associated with the retired mortgage loans.

	Subsequent to December 31, 2002, the Company completed the refinancing of three mortgage loans using some of the proceeds to pay off another loan. The balance of the mortgage loans retired was $14,612,000 with interest rates of 8.28% to 8.48%, and the Company received net proceeds, including funds held by the lender for required repairs, from the issuance of the new mortgage loans of approximately $4,888,000. All three of the new mortgage loans have fixed interest rates of 5.21% and will mature in 2010.


	In 2002, through a wholly-owned subsidiary, the Company repurchased 6,632,657 redeemable common units for an aggregate price of $5,655,000

	During January and February 2003, the Company repurchased 268,646 redeemable common units for an aggregate of $277,000.


	If the Company’s Board of Managers declares a distribution of cash from operations, then the members as of the record date are entitled to receive all such distributions which the Board has declared, with each member entitled to receive a pro-rata portion of such available distributions. During the year ended December 31, 2002, the Company made distributions of $6,573,000 to redeemable common unit holders. In addition, during April 2002 the Company paid to the California Franchise Tax Board $125,000 on behalf of our non-California unit holders who had been allocated income deemed taxable by the State of California and made a distribution of $614,000 to members who were not required to make a California tax deposit. The special distribution in April 2002 and the payments to the California Franchise Tax Board were made from cash from operations and were intended to offset certain state income tax liabilities incurred by the Company’s members in 2002 due to their ownership of JCM Partners’ common units. All of the other distributions in 2002 were also made from cash from operations.

	On January 17, 2001, the Board of Managers approved a distribution of cash from operations in the aggregate amount of up to $300,000 payable to common and preferred unit holders recorded as of December 31, 2000. This distribution, in the amount of $260,000, was paid on February 28, 2001. In addition, the Company paid $33,000 to the California Franchise Tax Board on behalf of its unit holders.

Prior to an amendment approved by the members of the Company on May 22, 2002 as described below, the Company was required by the agreement to make a pro-rata distribution to common unit holders in an amount not less than $20,000,000 on or before June 30, 2003. If the Company failed, for any reason, to distribute cash to common unit holders as provided above, the Company would have had to liquidate properties as quickly as was commercially reasonable so that the Company would have had sufficient liquidity to make the distributions to common unit holders. Notwithstanding the foregoing, no distribu-


	tion could be made to any common unit holder pursuant to this paragraph until all preferred units were redeemed and completely liquidated.

	At December 31, 2001, the Company’s balance sheet includes a liability for “Mandatory Distribution Payable to Redeemable Common Unit Holders” in the amount of $17,450,000. This balance represents the $20,000,000 mandatory distribution minus $2,550,000 distributed to common unit holders in 2001. This distribution consisted of $259,000 made prior to the redemption of the outstanding preferred units on June 15, 2001 and $2,291,000 subsequent to the redemption of the preferred units. On May 22, 2002, the Members of the Company approved certain amendments to the Company’s Limited Liability Company Agreement. As a result, the Company was not required to distribute the balance of the $20,000,000 mandatory distribution due on or before June 30, 2003. Instead, the Company is required to make monthly distributions to redeemable common unit holders of 1/12 of $0.0775 per unit, or a total of $0.0775 per unit each year, beginning in July 2002 (the “Mandatory Monthly Distributions”). In connection with the approval of the amendments, the Company reclassified the liability for the mandatory distributions payable to redeemable common unit holders in its balance sheet to members’ equity on May 22, 2002. The Mandatory Monthly Distributions may be from cash from operations or cash from sales, or both. If the Company fails, for any reason, to pay any Mandatory Monthly Distribution(s) in a timely manner, the Company must begin liquidating its properties as quickly as commercially reasonable and shall pay the common unit holders interest on any overdue Mandatory Monthly Distributions at the rate of ten percent per year. The Company may cease liquidating its properties once it no longer has any overdue Mandatory Monthly Distributions. The Company made Mandatory Monthly Distributions of $582,000 in each of July, August, September, October, November and December 2002.

Each common unit holder owning common units as of June 30, 2005 will have the right to require the Company to redeem some or all of such member’s common units on June 30, 2007. The redemption price for each common unit will be calculated by dividing the fair market value of the Company’s net assets as of June 30, 2005 by the total number of common units outstanding, subject to adjustment as set forth in the Company’s operating agreement. If a sufficient number of common unit holders exercise their right to have their units redeemed, the continued operation of the Company beyond June 30, 2007 may not be reasonably feasible. Accordingly, the Company’s operating agreement requires the board of managers to meet no later than June 30, 2006 to determine whether the Company should continue operations beyond June 30, 2007. If the board of managers determines in its sole discretion that the Company’s operations should not continue beyond June 30, 2007, then the Company must inform all owners of common units of this decision within 30 days after June 30, 2006 and the following will occur:


	•	the common unit holders’ right to be redeemed as described above on June 30, 2007 will become null and void;

	•	all of the Company’s properties will be sold as soon as practicable, but in no event later than June 30, 2007; and

	•	all owners of common units will receive the liquidation distributions to which they are entitled under the Company’s operating agreement.

In the normal course of business, the Company enters into transactions with related parties on substantially the same terms as comparable transactions with unaffiliated persons. During the years ending December 31, 2002 and December 31, 2001 and for the period from June 30, 2000 to December 31, 2000, the Company paid approximately $122,000, $36,000 and $188,000 respectively, for landscaping and repair services to a company that is owned by a relative of the chief operating officer of JCM Partners, LLC.


	The Company entered into a management services agreement, dated as of July 1, 2000, with JCIV, LLC, a California limited liability company of which the Company’s then CEO/ President is the sole member. Pursuant to the terms of the management services agreement, the Company agreed to retain JCIV, LLC through April 30, 2001 for a fee of $42,000 per month. On March 15, 2001, the Company entered into a Transition Services Agreement and Amendment to Management Services Agreement with JCIV, LLC. Pursuant to this agreement, the termination date of the management services agreement was accelerated from April 30, 2001 to March 15, 2001 and the Company agreed to engage the former CEO/ President as an independent consultant to provide transition management services for the period of March 19, 2001 through March 30, 2001 with compensation totaling $62,000.

	On March 8, 2001, the Company retained Computer Management Corporation (“CMC”) to provide management services to the Company. The Company’s Chairman of the Board and his wife, who is the CEO/ President of the Company, own CMC. Pursuant to the terms of the agreement, the Company agreed to retain CMC through April 30, 2002 for a fee of $25,000 per month. During the period from March 8, 2001 to December 31, 2001, the Company paid $225,000 for such services to CMC. On March 21, 2002, the Board approved renewal of the agreement with CMC on the same terms as the prior agreement, except that the new agreement with CMC terminates on April 30, 2004, and the amount of insurance required was conformed to the Company’s existing managers’ and officers’ liability insurance. During 2002, the Company paid $300,000 for such services to CMC.


	The Company believes that the carrying amounts of its mortgages payable approximate their fair value as of December 31, 2002 and 2001 because interest rates and yields for these instruments are consistent with rates currently available to the Company.

The Company defines each of its real estate investments as an individual operating segment. Based on the criteria for aggregation of segments with similar economic characteristics, the Company has two reportable segments: apartment communities and commercial properties. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Property


	administration and corporate overhead expenses, along with interest, other income, capital expenditures, and assets have been allocated on a relative revenue basis to each segment. Segment data is as follows:


	Results of operations data for the quarters ended March 31, June 30, September 30, and December 31 2002 and 2001 are as follows:

[Continued from above table, first column(s) repeated]



		Gross Amount at Which
		Carried at Close of Period

		Land and		Buildings		Total
		Land		and		Carrying		Accumulated
		Improvements		Improvements		Value		Depreciation

Apartments:
	Sacramento Region
	Antelope Woods	$	900,886	$	4,805,598	$	5,706,484	$	364,149
	Rose Glen		777,260		1,516,228		2,293,488		197,948
	Carmichael Gardens		590,408		3,331,549		3,715,078		326,755
	Country Glen		481,041		3,425,363		3,906,404		231,603
	Fair Oaks Meadows		1,267,530		3,816,944		5,084,474		248,649
	Foxworth		676,550		2,868,324		3,544,874		185,798
	Glenbrook		1,784,510		7,450,716		9,235,226		938,081
	Hidden Creek		506,463		3,836,063		4,342,526		392,947
	La Riviera		1,619,968		7,506,258		9,126,226		946,151
	La Riviera Commons		1,706,184		4,925,369		6,631,553		499,201
	Lincoln Place		1,486,140		7,994,433		9,480,573		1,005,857
	Meadow Gardens I		1,137,394		4,537,750		5,675,144		460,159
	Meadow Gardens II		762,696		2,504,025		3,266,721		256,332
	Morningside Creek		891,588		3,086,930		3,978,518		230,198
	North Country Vista		1,862,010		6,141,449		8,003,459		404,725
	Orangewood East		494,856		3,336,417		3,831,273		409,747
	Orangewood West		582,084		4,204,253		4,786,337		515,325
	Riverside Commons		520,380		2,534,057		3,054,437		320,282
	Sterling Pointe I		969,617		4,111,200		5,080,817		515,845
	Sterling Pointe II		983,496		4,270,309		5,253,805		549,310
	Sunrise Commons		1,906,170		6,944,182		8,850,352		593,112
	Stockton Region
	Inglewood Oaks		477,086		1,824,281		2,301,367		236,841
	La Espana		91,616		472,183		563,799		60,303
	Mariners Cove		633,360		3,354,473		3,987,833		295,816
	Oakwood		3,829,617		7,855,517		11,685,134		1,044,841
	Modesto/ Turlock Region
	Greenbriar		924,792		2,592,100		3,516,892		339,937
	Meadow Lakes		1,357,884		6,358,887		7,716,771		486,228
	Northwood Place		677,588		1,804,943		2,482,531		126,729
	Park Lakewood		930,248		4,068,754		4,999,002		332,316
	Villa Verde North		1,200,600		2,998,712		4,199,312		382,390
	Walnut Woods		963,236		4,237,064		5,200,300		289,238
	Northlake Gardens		501,144		1,215,062		1,716,206		125,984
	Tracy/ Manteca Region
	Driftwood		940,032		4,560,071		5,500,103		473,516
	Fairway Estates		1,234,440		5,245,779		6,480,219		671,773
	Granville		918,000		4,142,987		5,060,987		531,190
	Laurel Glen		1,574,000		6,436,615		8,010,615		509,329

[Continued from above table, first column(s) repeated]



		Gross Amount at Which
		Carried at Close of Period

		Land and				TOTAL
		Land		Buildings and		Carrying		Accumulated
		Improvements		Improvements		Value		Depreciation

Apartments:
	Fairfield/ Vacaville Region
	Creekside Gardens	$	1,550,920	$	10,230,255	$	11,781,175	$	1,055,994
	Parkwood		950,880		4,746,059		5,696,939		309,608
	Peach Tree Villa		336,755		2,094,973		2,431,728		153,578
	Peachwood		584,082		2,801,869		3,385,951		181,298
	Village Green		1,562,190		11,820,633		13,382,823		904,652
	Concord/ Antioch Region
	Crestview Pines		1,443,189		3,030,686		4,473,875		312,820
	Diablo View		1,276,560		4,153,447		5,430,007		301,693
	Meadowlark		463,130		1,044,607		1,507,737		88,895
	Oakview		720,360		1,610,817		2,331,177		138,982
	Villa Diablo		380,800		766,956		1,147,756		54,988

		$	47,429,740	$	192,615,146	$	240,044,886	$	19,001,111

Commercial:
Bay Area Region
860 Kaiser Road			331,450		1,557,919		1,889,369		124,885
900 Business Park			831,875		2,122,308		2,954,183		130,327
908 Enterprise Way			215,574		1,021,024		1,236,598		74,856
910 Enterprise Way			314,060		1,735,940		2,050,000		123,995
988 Enterprise Way			205,995		724,005		930,000		60,335
938 Kaiser Road			286,485		778,515		1,065,000		64,877
Salvio Pacheco Square			2,107,840		9,129,584		11,237,424		762,326
Wilson Building			2,365,830		2,484,170		4,850,000		155,260
Starlight Estates			2,000,000		—		2,000,000		—

		$	8,659,109	$	19,553,465	$	28,212,573	$	1,496,861

Total real estate owned		$	56,088,849	$	212,168,611	$	268,257,459	$	20,497,972


(A)	Approximation of fair value as of June 30, 2000 as disclosed in footnote 2 of Notes to Consolidated Financial Statements


(A)	Approximation of fair value as of June 30, 2000 as disclosed in footnote 2 of Notes to Consolidated Financial Statements

The information required by this item with respect to the managers and compliance with Section 16(a) of the Securities Exchange Act is incorporated by reference from the information provided under the headings Proposal 1 — “Election of Managers” and Section 16(a) Beneficial Ownership Reporting Compliance,” respectively, contained in our Proxy Statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for our Annual Meeting of Members to be held June 2003 (the “Proxy Statement”). The information required by this item with respect to our executive officers is contained in Item 1 of Part I of this Form 10-K under the heading “Executive Officers of the Registrant.”

The information required by this item is incorporated by reference from the information provided under the heading “Executive Compensation” of the Proxy Statement.

The information required by this item is incorporated herein by reference from the information provided under the heading “Unit Ownership of Certain Beneficial Owners and Management and Related Membership Matters” of the Proxy Statement.

The information required by this item is incorporated herein by reference from the information provided under the heading “Transactions Involving Management” of the Company’s Proxy Statement.

Within 90 days of the date of this annual report, under the supervision and with the participation of Gayle M. Ing, the Chief Executive Officer, and Cornelius Stam, the Chief Financial Officer, management carried out an evaluation of the effectiveness of the design and operation of disclosure controls and procedures pursuant to Rule 13a-14 of the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in periodic filings with the Securities and Exchange Commission.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation by the Chief Executive Officer and Chief Financial Officer of the Company, including any corrective actions with regard to significant deficiencies and material weaknesses.


		Report of Independent Certified Public Accountants

		Consolidated Balance Sheets — December 31, 2001 and December 31, 2002

		Consolidated Statements of Operations – for the period from June 30, 2000 (Inception) to December 31, 2000, and for the Years Ended December 31, 2001 and December 31, 2002

		Consolidated Statements of Changes in Members’ Equity — for the period from June 30, 2000 (Inception) to December 31, 2000, and for the Years Ended December 31, 2001 and December 31, 2002

		Consolidated Statements of Cash Flows – for the period from June 30, 2000 (Inception) to December 31, 2000, and for the Years Ended December 31, 2001 and December 31, 2002

		Notes to Consolidated Financial Statements

All other schedules are omitted because they are not applicable or because the required information is shown in the Consolidated Financial Statements or the Notes thereto.


*	Indicates management contract or compensation plan or arrangement.

(1)	Incorporated by reference to the exhibit with the same exhibit number attached to our Registration Statement on Form 10 (File No. 000-32653) filed on October 3, 2001 with the Securities and Exchange Commission.

(2)	Incorporated by reference to the exhibit with the same exhibit number attached to our Current Report on Form 8-K filed on November 16, 2001 with the Securities and Exchange Commission.

(3)	Incorporated by reference to Exhibit 3 to our Quarterly Report on Form 10-Q filed on November 19, 2001 with the Securities and Exchange Commission.

(4)	Incorporated by reference to the exhibit with the same exhibit number attached to our Quarterly Report on Form 10-Q, filed on May 15, 2002 with the Securities and Exchange Commission.

(5)	Incorporated by reference to the exhibit with the same exhibit number attached to our Quarterly Report on Form 10-Q, filed on August 14, 2002 with the Securities and Exchange Commission.

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, on March 31, 2003.

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.

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	(a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	(c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):


	(a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


	(a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	(c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	(a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


*	Indicates management contract or compensation plan or arrangement.

(1)	Incorporated by reference to the exhibit with the same exhibit number attached to our Registration Statement on Form 10 (File No. 000-32653) filed on October 3, 2001 with the Securities and Exchange Commission.

(2)	Incorporated by reference to the exhibit with the same exhibit number attached to our Current Report on Form 8-K filed on November 16, 2001 with the Securities and Exchange Commission.

(3)	Incorporated by reference to Exhibit 3 to our Quarterly Report on Form 10-Q filed on November 19, 2001 with the Securities and Exchange Commission.

(4)	Incorporated by reference to the exhibit with the same exhibit number attached to our Quarterly Report on Form 10-Q, filed on May 15, 2002 with the Securities and Exchange Commission.

(5)	Incorporated by reference to the exhibit with the same exhibit number attached to our Quarterly Report on Form 10-Q, filed on August 14, 2002 with the Securities and Exchange Commission.


(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2002
OR
o		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 000-32653


Delaware		94-3364323
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2151 Salvio Street, Suite 325, Concord, CA		94520
(Address of Principal Executive Offices)		(Zip Code)


PART I
Item 1.	Business	1
Item 2.	Properties	14
Item 3.	Legal Proceedings	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
PART II
Item 5.	Market for Registrant’s Common Equity and Related Security Holder Matters	16
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 8.	Financial Statements and Supplementary Data	30
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
PART III
Item 10.	Managers and Executive Officers of the Registrant	31
Item 11.	Executive Compensation	31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Membership Matters	31
Item 13.	Certain Relationships and Related Transactions	31
Item 14.	Controls and Procedures	31
PART IV
Item 15.	Exhibits, Consolidated Financial Statements, Schedules and Reports on Form 8-K	32
Signature Page		34
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14 Under the Securities Exchange Act of 1934, as Amended (the “Exchange Act”)		35


														Average
														Monthly
														Rental Rates
					Percentage of									for the Year
			Number of		Total Real									Ended		Average
	Number of		Apartment		Estate Net			Net Book				Physical		December 31,		Unit Size
Properties	Properties		Homes		Book Value			Value		Encumbrances		Occupancy(A)		2002(B)		(Square Feet)

Residential Apartments by Geographic Markets
Sacramento, CA		21		2,785		42.9	%	$	105,462,477	$	88,904,230		95.9%	$	720		734
Stockton, CA		4		483		6.9	%		16,900,330		15,956,676		95.4%		719		813
Modesto/Turlock, CA		7		752		11.1	%		27,748.191		18,290,279		95.3%		724		780
Tracy/Manteca, CA		4		454		9.3	%		22,866,116		18,485,623		93.2%		847		721
Fairfield/Vacaville, CA		5		634		13.7	%		34,073,485		19,636,578		97.8%		929		753
Concord/Antioch, CA		5		233		5.6	%		13,993,174		12,601,913		93.1%		961		684

Total Residential Apartments		46		5,341		89.5	%	$	221,043,775	$	173,875,299		95.7%	$	767		747

Commercial Properties(C)		9		N/A		10.5	%		26,715,713		11,893,326		88.3%		N/A		N/A

Total All Properties		55		5,341		100.0	%	$	247,759,487	$	185,768,625		94.3%	$	767		747


Properties	2002		2001		2000		1999		1998

Residential Apartments:
Sacramento		95.9%		95.6%		96.2%		94.3%		95.2%
Stockton		95.4%		96.1%		97.9%		94.8%		95.7%
Modesto/ Turlock		95.3%		94.9%		96.8%		94.7%		95.5%
Tracy/ Manteca		93.2%		93.0%		94.7%		96.0%		95.2%
Fairfield/ Vacaville		97.8%		92.0%		95.3%		94.6%		95.7%
Concord/ Antioch		93.1%		88.8%		95.3%		94.4%		97.0%

Total Residential Apartments		95.7%		94.6%		96.2%		94.6%		95.3%
Commercial Properties		88.3%		82.0%		88.1%		94.1%		92.2%

Total All Properties		94.3%		92.2%		94.6%		94.5%		94.7%


⁽¹⁾	The Company did not file a Form 10-Q for the period ending June 30, 2001. However, the Company’s Form 10, filed with the Securities and Exchange Commission on October 3, 2001 contains certain financial information for the six-month period ended June 30, 2001.


Name	Age		Offices

Gayle M. Ing		53	Manager, Chief Executive Officer, President and Secretary
Michael Vanni		63	Manager and Chairman of the Board
Marvin J. Helder		53	Manager and Vice Chairman of the Board
Brian S. Rein		45	Chief Operating Officer and Director, Property Management
Cornelius Stam		55	Chief Financial Officer and Director, Property Management


	Year Ended		Year Ended		Six Months Ended
	December 31, 2002		December 31, 2001		December 31, 2000

Rental revenue	$	53,055,531	$	49,809,459	$	23,397,831
Net income	$	562,920	$	1,068,103	$	167,795
Net income per unit	$	0.01	$	0.01	$	0.00
Distributions to unit holders	$	6,572,892	$	2,584,870	$	0


(B)	Excludes common units owned by our wholly-owned subsidiary.


			Period from
			January 1,		Year Ended		Year Ended
			2000 to		December 31,		December 31,
			June 29, 2000		1999		1998

Rental revenue			$	21,221,841	$	40,038,261	$	36,467,497
Direct operating expenses:
	Operating and maintenance			7,041,143		11,019,924		8,159,394
	Real estate taxes and insurance			1,712,210		2,916,950		3,031,597
	Utilities			1,822,209		3,279,110		3,109,478

		Total direct operating expenses		10,575,562		17,215,984		14,300,469

Rental revenue in excess of direct operating expenses			$	10,646,279	$	22,822,277	$	22,167,028



		Year ended December 31,

		2002		2001

Net income(loss)		$	562,920	$	1,068,103
(Deduct)/Add
(Gain)/Loss On Disposal of Assets:			3,697		(5,183	)
Add loss on early extinguishment of debt:			1,220,875		594,543
Add depreciation and amortization:
	Real property		8,495,180		8,112,579
	Capitalized leasing expenses		88,516		62,168

Funds from operations		$	10,371,188	$	9,832,210

Funds from operations per unit		$	0.12	$	0.10

Weighted average units			85,861,010		94,951,736



	Occupancy at December 31,

Property Type	2002		2001		2000

Apartment Communities		95.7%		94.6%		96.2%
Commercial Properties		88.3%		82.0%		88.1%


Balance, January 1, 2002	$	71,353,403
Reclassification of Mandatory Distribution Payable(1) to Member’s Equity		14,176,248
Repurchase of Redeemable Common Units		(5,655,143	)
Distributions(1)		(3,299,369	)
Net Income		562,920

Balance, December 31, 2002	$	77,138,059


			2003			2004			2005			2006			2007			Thereafter

Mortgage loans with fixed rates maturing through March 2012(1)			$	1,244,259		$	1,328,772		$	1,419,049		$	1,515,757		$	2,965,664		$	95,738,602
		Average interest rate		6.67	%		6.67	%		6.67	%		6.67	%		6.67	%		6.67	%
Mortgage loans with fixed rates that become variable between February 2004 and January 2008, maturing through 2033.(2)			$	684,879		$	732,022		$	782,574		$	837,487		$	21,652,220		$	34,208,652
		Average interest rate		6.97	%		6.97	%		6.97	%		6.97	%		6.97	%		6.97	%
Mortgage loans with variable rates maturing through 2031(3)			$	445,433		$	456,420		$	468,791		$	481,140		$	8,394,620		$	12,412,287
	Average interest rate(3)			6.67	%		6.67	%		6.67	%		6.67	%		6.67	%		6.67	%


		Page
INDEPENDENT AUDITORS’ REPORT			F-1
FINANCIAL STATEMENTS:
	Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001		F-2
	Consolidated Statements of Operations for the Years Ended December 31, 2002 and December 31, 2001 and for the Period from June 30, 2000 (Inception) to December 31, 2000		F-3
	Consolidated Statements of Changes in Members’ Equity for the Years Ended December 31, 2002 and December 31, 2001 and for the Period from June 30, 2000 (Inception) to December 31, 2000		F-4
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2002 and December 31, 2001 and for the period from June 30, 2000 (Inception) to December 31, 2000		F-5
	Notes to Consolidated Financial Statements		F-6
FINANCIAL STATEMENT SCHEDULES:
	Schedule III — Real Estate and Accumulated Depreciation		F-14


Properties	2002		2001		2000		1999		1998

Residential Apartments:
Sacramento	$	0.98	$	0.94	$	0.85	$	0.77	$	0.73
Stockton		0.88		0.84		0.76		0.68		0.67
Modesto/ Turlock		0.93		0.90		0.80		0.71		0.66
Tracy/ Manteca		1.17		1.19		1.12		0.99		0.93
Fairfield/ Vacaville		1.24		1.20		1.11		0.97		0.90
Concord/ Antioch		1.40		1.47		1.36		1.14		1.09

Total Residential Apartments		1.03		0.99		0.91		0.81		0.76
Commercial		1.27		1.21		1.11		1.00		0.94

Total All Properties		1.04		1.01		0.92		0.82		0.78


							Period from
							June 30, 2000
			Year Ended		Year Ended		(Inception) to
			December 31,		December 31,		December 31,
			2002		2001		2000

REVENUES:
	Rental		$	53,055,531	$	49,809,459	$	23,397,831
	Interest			360,624		336,983		183,686

		Total revenues		53,416,155		50,146,442		23,581,517

OPERATING EXPENSES:
	Interest expense			13,674,175		13,314,059		6,827,294
	Operating and maintenance			16,613,108		14,645,903		6,378,529
	Depreciation and amortization			8,852,620		8,362,834		4,072,488
	General and administrative			3,421,847		4,452,028		2,379,563
	Real estate taxes and insurance			5,200,308		3,628,893		1,914,166
	Utilities			3,870,303		4,080,079		1,841,681
	Loss on early extinguishment of debt			1,220,874		594,543		—

		Total expenses		52,853,235		49,078,339		23,413,722

NET INCOME			$	562,920	$	1,068,103	$	167,795

EARNINGS PER UNIT — Basic and diluted			$	0.01	$	0.01	$	0.00

WEIGHTED AVERAGE UNITS
	Basic and diluted			85,861,010		94,951,736		104,960,231



		Preferred Units						Redeemable Common Units
														Retained
		Units			Amount			Units			Amount			Earnings			Total

ISSUANCE OF UNITS ON JUNE 30, 2000 (INCEPTION)			15,067,539		$	15,067,539			90,152,151		$	90,152,151					$	105,219,690
	Redemption of preferred units		(3,000,000	)		(3,000,000	)											(3,000,000	)
	Net income													$	167,795			167,795

BALANCE, DECEMBER 31, 2000			12,067,539			12,067,539			90,152,151			90,152,151			167,795			102,387,485

	Redemption of preferred units		(12,067,539	)		(12,067,539	)											(12,067,539	)
	Distribution														(293,472	)		(293,472	)
	Reclassification of redeemable common units to mandatory distribution payable											(19,741,174	)					(19,741,174	)
Net income															1,068,103			1,068,103

BALANCE, DECEMBER 31, 2001			—		$	—			90,152,151		$	70,410,977		$	942,426		$	71,353,403

	Reclassification of mandatory distribution payable to redeemable common units											14,176,248						14,176,248
	Distributions											(3,299,369	)					(3,299,369	)
	Repurchase of redeemable common units								(6,632,657	)		(5,655,143	)					(5,655,143	)
	Net income														562,920			562,920

BALANCE, DECEMBER 31, 2002			—		$	—			83,519,494		$	75,632,713		$	1,505,346		$	77,138,059


2003	$	3,570,047
2004		2,942,801
2005		2,163,313
2006		1,367,674
2007		695,605
Thereafter		328,710

Total	$	11,068,150


2003	$	2,374,571
2004		2,517,213
2005		2,670,413
2006		2,834,383
2007		33,012,504
Thereafter		142,359,541

Total	$	185,768,625


		Apartment			Commercial
		Communities			Properties			Total

From June 30, 2000 (Inception) to December 31, 2000:
	Rental revenue	$	21,478,479		$	1,919,352		$	23,397,831
	Interest revenue		168,618			15,068			183,686
	Interest expense		6,163,730			663,564			6,827,294
	Depreciation and amortization		3,713,762			358,726			4,072,488
	Net operating income		9,766,125			1,117,766			10,883,891
	Net income (loss)		57,251			110,544			167,795
	Capital expenditures		1,012,111			44,173			1,056,284

As of December 31, 2000 —
	Total assets	$	241,343,791		$	29,810,794		$	271,154,585

For the Year Ended December 31, 2001:
	Rental revenue	$	45,890,439		$	3,919,020		$	49,809,459
	Interest revenue		310,469			26,514			336,983
	Interest expense		12,071,406			1,242,653			13,314,059
	Depreciation and amortization		7,689,304			673,530			8,362,834
	Net operating income		21,361,724			1,640,835			23,002,558
	Net income (loss)		1,316,939			(248,834	)		1,068,105
	Extraordinary item		594,543						594,543
Capital expenditures			2,005,987			148,544			2,154,532

As of December 31, 2001 —
	Total assets	$	245,348,478		$	29,096,373		$	274,444,850

For the Year Ended December 31, 2002:
	Rental revenue	$	47,822,230		$	5,233,301		$	53,055,531
	Interest revenue		325,321			35,303			360,624
	Interest expense		12,548,564			1,125,611			13,674,175
	Depreciation and amortization		8,117,158			735,462			8,852,620
	Net operating income		21,445,906			3,225,308			24,671,214
	Net income (loss)		(738,937	)		1,301,857			562,920
	Extraordinary item		1,193,799			27,075			1,220,874
Capital expenditures			3,078,419			269,048			3,347,467

As of December 31, 2002 —
	Total assets	$	242,507,198		$	26,936,145		$	269,443,343


2002	Q1		Q2		Q3			Q4

Rental revenue	$	12,769,657	$	13,280,525	$	13,182,396		$	13,822,953
Net income (loss)	$	342,089	$	232,402	$	(66,395	)	$	54,824
Net income (loss) per unit	$	0.01	$	0.00	$	(0.00	)	$	0.00

2001

Rental revenue	$	12,000,788	$	12,505,592	$	12,614,827		$	12,688,252
Net income (loss)	$	779,478	$	1,163,275	$	22,165		$	(896,815	)
Net income (loss) per unit	$	0.01	$	0.01	$	0.00		$	(0.01	)


										Cost of
				Initial Costs(A)						Improvements
										Capitalized
				Land and		Buildings		Total Initial		Subsequent
				Land		and		Acquisition		to
		Encumbrances		Improvements		Improvements		Cost(A)		Acquisition

Apartments:
	Sacramento Region
	Antelope Woods	$	4,613,321	$	900,886	$	4,719,114	$	5,620,000	$	86,484
	Rose Glen		1,444,872		777,260		1,422,740		2,200,000		93,488
	Carmichael Gardens		2,880,196		590,408		3,049,592		3,640,000		281,957
	Country Glen		3,152,500		481,041		3,388,959		3,870,000		36,404
	Fair Oaks Meadows		4,225,000		1,267,530		3,742,470		5,010,000		74,474
	Foxworth		—		676,550		2,823,450		3,500,000		44,874
	Glenbrook		7,995,000		1,784,510		7,315,490		9,100,000		135,226
	Hidden Creek		3,518,372		506,463		3,703,537		4,210,000		132,526
	La Riviera		8,384,125		1,619,968		7,340,032		8,960,000		166,226
	La Riviera Commons		5,868,336		1,706,184		4,773,816		6,480,000		151,553
	Lincoln Place		8,040,560		1,486,140		7,813,860		9,300,000		180,573
	Meadow Gardens I		4,267,651		1,137,394		4,432,606		5,570,000		105,144
	Meadow Gardens II		2,818,465		762,696		2,447,304		3,210,000		56,721
	Morningside Creek		3,317,274		891,588		2,998,412		3,890,000		88,518
	North Country Vista		5,289,805		1,862,010		5,787,990		7,650,000		353,459
	Orangewood East		2,721,345		494,856		2,985,144		3,480,000		351,273
	Orangewood West		3,288,353		582,084		3,787,916		4,370,000		416,337
	Riverside Commons		1,980,814		520,380		2,429,620		2,950,000		104,437
	Sterling Pointe I		3,623,657		969,617		3,900,383		4,870,000		210,817
	Sterling Pointe II		4,064,584		983,496		4,176,504		5,160,000		93,805
	Sunrise Commons		7,410,000		1,906,170		6,793,830		8,700,000		150,352
	Stockton Region
	Inglewood Oaks		1,459,539		477,086		1,782,914		2,260,000		41,367
	La Espana		355,468		91,616		468,384		560,000		3,799
	Mariners Cove		3,483,868		633,360		3,266,640		3,900,000		87,833
	Oakwood		10,657,800		3,829,617		7,660,383		11,490,000		195,134
	Modesto/ Turlock Region
	Greenbriar		2,757,366		924,792		2,485,208		3,410,000		106,892
	Meadow Lakes		5,251,801 ?a?		1,357,884		6,262,116		7,620,000		96,771
	Northwood Place		2,216,580		677,588		1,762,412		2,440,000		42,531
	Park Lakewood		4,237,267		930,248		3,909,752		4,840,000		159,002
	Villa Verde North		3,827,265		1,200,600		2,939,400		4,140,000		59,312
	Walnut Woods		—		963,236		4,176,764		5,140,000		60,300
	Northlake Gardens		—		501,144		1,178,856		1,680,000		36,206
	Tracy/ Manteca Region
	Driftwood		—		940,032		4,499,968		5,440,000		60,103
	Fairway Estates		5,869,184		1,234,440		5,115,560		6,350,000		130,219
	Granville		4,802,778		918,000		4,082,000		5,000,000		60,987
	Laurel Glen		7,813,661		1,574,000		6,296,000		7,870,000		140,615


						Depreciable
						Life of
		Date of		Date		Building
		Construction		Acquired		Component

Apartments:
	Sacramento Region
	Antelope Woods		1986		07/01/2000		35
	Rose Glen		1973		07/01/2000		20
	Carmichael Gardens		1977		07/01/2000		25
	Country Glen		1991		07/01/2000		40
	Fair Oaks Meadows		1987		07/01/2000		40
	Foxworth		1986		07/01/2000		40
	Glenbrook		1972		07/01/2000		20
	Hidden Creek		1978		07/01/2000		25
	La Riviera		1971		07/01/2000		20
	La Riviera Commons		1976		07/01/2000		25
	Lincoln Place		1973		07/01/2000		20
	Meadow Gardens I		1975		07/01/2000		25
	Meadow Gardens II		1975		07/01/2000		25
	Morningside Creek		1990		07/01/2000		40
	North Country Vista		1986		07/01/2000		40
	Orangewood East		1974		07/01/2000		20
	Orangewood West		1974		07/01/2000		20
	Riverside Commons		1968		07/01/2000		20
	Sterling Pointe I		1972		07/01/2000		20
	Sterling Pointe II		1972		07/01/2000		20
	Sunrise Commons		1984		07/01/2000		30
	Stockton Region
	Inglewood Oaks		1970		07/01/2000		20
	La Espana		1966		07/01/2000		20
	Mariners Cove		1984		07/01/2000		30
	Oakwood		1971		07/01/2000		20
	Modesto/ Turlock Region
	Greenbriar		1971		07/01/2000		20
	Meadow Lakes		1985		07/01/2000		35
	Northwood Place		1988		07/01/2000		40
	Park Lakewood		1985		07/01/2000		35
	Villa Verde North		1971		07/01/2000		20
	Walnut Woods		1987		07/01/2000		40
	Northlake Gardens		1977		07/01/2000		25
	Tracy/ Manteca Region
	Driftwood		1974		07/01/2000		25
	Fairway Estates		1973		07/01/2000		20
	Granville		1972		07/01/2000		20
	Laurel Glen		1985		07/01/2000		35


			Year Ended
ASSET RECONCILIATION			December 31, 2002

Balance at beginning of period			$	265,295,999
	Additions during period:
		Acquisitions through foreclosure		—
		Other acquisitions		—
		Improvements		3,252,776
		Purchase of assets		—
	Deductions during period:			—
		Cost of real estate sold		(291,316	)
		Other		—

Balance at close of period			$	268,257,459


			Year Ended
DEPRECIATION RECONCILIATION			December 31, 2002

Balance at beginning of period			$	12,027,147
	Additions during period:
		Acquisitions through foreclosure		—
		Other acquisitions		—
		Depreciation		8,470,825
		Purchase of assets		—
	Deductions during period:			—
		Cost of real estate sold		—
		Other		—

Balance at close of period			$	20,497,972


Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


Item 10.	Managers and Executive Officers of the Registrant


Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Membership Matters


Item 13.	Certain Relationships and Related Transactions


Item 15.	Exhibits, Consolidated Financial Statements, Schedules and Reports on Form 8-K


Exhibit
No.				Description

	2.1 ⁽¹⁾		—	Order Confirming Second Amended Plan of Reorganization
	2.2 ⁽¹⁾		—	Amended Joint Plan of Reorganization (May 9, 2000)
	3.1 ⁽¹⁾		—	JCM Partners, LLC Certificate of Formation
	3.2 ⁽¹⁾		—	JCM Partners, LLC Limited Liability Company Agreement dated as of June 30, 2000, and as amended on September 13, 2000
	3.3 ⁽³⁾		—	Restated Bylaws of JCM Partners, LLC
	3.4 ⁽⁵⁾		—	Second Amendment to Limited Liability Company Agreement of JCM Partners, LLC, dated as of May 22, 2002
	3.5 ⁽⁵⁾		—	Restated Limited Liability Company Agreement of JCM Partners, LLC, dated as of August 1, 2002
	3.6 ⁽⁵⁾		—	Amendment (as of June 26, 2002) to Restated Bylaws of JCM Partners, LLC
	3.7 ⁽⁵⁾		—	Second Restated Bylaws of JCM Partners, LLC (as of June 26, 2002).
	4.1 ⁽²⁾		—	Restrictions on Transfer of Membership Units
	10.1 ⁽¹⁾	*	—	Management Services Agreement dated July 1, 2000 between JCM Partners, LLC and JCIV, LLC
	10.2 ⁽¹⁾	*	—	Transition Services Agreement and Amendment to Management Services Agreement dated March 15, 2001 among JCIV, LLC, John Connolly IV and JCM Partners, LLC
	10.3 ⁽¹⁾	*	—	Management Services Agreement dated April 11, 2001 between JCM Partners, LLC and Computer Management Corporation
	10.4 ⁽¹⁾	*	—	Form of Indemnification Agreement between JCM Partners, LLC and JCM Partners, LLC’s Managers and Executive Officers



Name	Title	Date


/s/ GAYLE M. ING Gayle M. Ing	President, Chief Executive Officer, Secretary and Manager (Principal Executive Officer)	March 31, 2003

/s/ CORNELIUS STAM Cornelius Stam	Chief Financial Officer (Principal Financial Officer)	March 31, 2003

/s/ DENNIS RIMAC Dennis Rimac	Corporate Controller (Principal Accounting Officer)	March 31, 2003

/s/ MICHAEL VANNI Michael Vanni	Manager; Chairman of the Board	March 31, 2003

/s/ HENRY CONVERSANO Henry Conversano	Manager	March 31, 2003

/s/ ARTHUR G. DEN DULK Arthur G. den Dulk	Manager	March 31, 2003

/s/ FRANK DEPPE Frank Deppe	Manager	March 31, 2003

/s/ HENRY DOORN, JR. Henry Doorn, Jr.	Manager	March 31, 2003

/s/ MARVIN J. HELDER Marvin J. Helder	Manager; Vice Chairman of the Board	March 31, 2003

/s/ KENNETH J. HORJUS Kenneth J. Horjus	Manager	March 31, 2003

/s/ LOIS B. MOL Lois B. Mol	Manager	March 31, 2003
/s/ NEAL NIEUWENHUIS Neal Nieuwenhuis	Manager	March 31, 2003


	/S/ GAYLE M. ING

	Gayle M. Ing
	Chief Executive Officer and President