<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-11063
Winthrop Residential Associates II, A Limited Partnership
(Exact name of small business issuer as specified in its charter)
Maryland 04-2742158
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, Massachusetts 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data) June 30, December 31,
1996 1995
-------- ------------
Assets
Cash and cash equivalents $1,980 $2,078
Other -- 8
------ ------
Total assets $1,980 $2,086
====== ======
Liabilities and Partners' Capital
Liabilities:
Accrued expenses $ 36 --
Distribution payable 105 105
------ ------
Total Liabilities 141 105
------ ------
Partners Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized, issued
and outstanding - 25,010 Units. 2,835 2,970
General Partners (Deficit) (996) (989)
------ ------
Total Partners' Capital 1,839 1,981
------ ------
Total Liabilities and Partners' Capital $1,980 $2,086
====== ======
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
<TABLE>
<CAPTION>
Statements of Operations (Unaudited)
(In Thousands)
For the Three Months Ended For the Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income:
Local limited partnership
cash distributions $ 41 $ 235 $ 138 $ 330
Interest income 24 24 46 45
------ ----- ----- ------
Total income 65 259 184 375
------ ----- ----- ------
Expenses:
General and administrative 26 31 43 41
Management fees 40 24 73 40
------ ----- ----- ------
Total expenses 66 55 116 81
------ ----- ----- ------
Net (loss) income $ (1) $ 204 $ 68 $ 294
====== ===== ===== ======
Net (loss) income per Unit of
Limited Partnership Interest $(0.04) $7.75 $2.60 $11.17
====== ===== ===== ======
Distributions per Unit of
Limited Partnership Interest $ 4.00 $3.00 $8.00 $ 5.00
====== ===== ===== ======
</TABLE>
See Notes to Financial Statements
3 of 12
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
Statement of Changes in Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------- --------- --------- -------
Balance - January 1, 1996 25,010 $(989) $2,970 $1,981
Distributions (10) (200) (210)
Net income 3 65 68
------ ----- ------ ------
Balance - June 30, 1996 25,010 $(996) $2,835 $1,839
====== ===== ====== ======
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
Statements of Cash Flows (Unaudited)
(In Thousands) For the Six Months Ended
June 30, 1996 June 30, 1995
------------- -------------
Cash Flows from Operating Activities:
Net income $ 68 $ 294
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Income from Local Limited Partnership
cash distributions (138) (330)
Changes in assets and liabilities:
Decrease in other assets 8 68
Increase (decrease) in accounts payable
and accrued expenses 36 (3)
------ ------
Net cash (used in) provided by operating
activities (26) 29
------ ------
Cash Flows From Investing Activities:
Cash distributions from Local Limited
Partnerships 138 330
------ ------
Cash provided by investing activities 138 330
------ ------
Cash Flows From Financing Activities:
Cash distributions (210) (106)
------ ------
Cash used for financing activities (210) (106)
------ ------
Net (decrease) increase in cash and cash
equivalents (98) 253
Cash and cash equivalents, beginning of period 2,078 1,566
------ ------
Cash and cash equivalents, end of period $1,980 $1,819
====== ======
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's annual report on Form 10-K for the
year ended December 31, 1995.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. Certain amounts have been reclassified to conform to the
June 30, 1996 presentation. The balance sheet at December 31, 1995 was
derived from audited financial statements at such date.
The results of operations for the three and six months ended June 30, 1996
and 1995 are not necessarily indicative of the results to be expected for the
full year.
2. Related Party Transactions
An affiliate of the Managing General Partner, is entitled to a fee for
services rendered in managing the Partnership's investments in the Local
Limited Partnerships equal to the greater of $100,000 or 10% of the
Partnership's share of cash distributions from the Local Limited
Partnerships, not to exceed 1/2 of 1% of the sum of (a) the amount of the
Partnership's aggregate total investment in all Local Limited Partnerships,
plus (b) the Partnership's allocable share of all liens and mortgages secured
by the projects of all Local Limited Partnerships. The fee is noncumulative
and commences at the closing of each Local Limited Partnership's permanent
loan. Management fees aggregated $73,000 during the six months ended June 30,
1996.
3. Subsequent Event
In August 1996, the Local Limited Partnership owning Southwest Parkway
Apartments, in an effort to avoid a foreclosure of the property, filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code. The carrying value on the books of the Partnership of this
investment is zero.
6 of 12
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation
This Item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
Liquidity and Capital Resources
As of June 30, 1996, the Partnership retained an equity interest in nine
Local Limited Partnerships owning 11 apartment properties. The
Partnership's primary source of income is distributions from the Local
Limited Partnerships. The Partnership requires cash to pay management
fees, general and administrative expenses or to make capital
contributions to any of the Local Limited Partnerships which the
Managing General Partner deems to be in the Partnership's best interest
to preserve its ownership interest. In August 1996, the Local Limited
Partnership which owns Southwest Parkway Apartments, in an effort to
avoid foreclosure and retain control of the property, filed for
protection under Chapter 11 of the United States Bankruptcy Code (see
Item 1, Note 3). If Southwest Parkway Apartments is lost through
foreclosure, Registrant expects that $5.5 million (approximately $210
per limited partnership unit) will be recaptured as income for income
tax purposes.
To date, all cash requirements have been satisfied by interest income
earned on short-term investments and cash distributed to the Partnership
by the Local Limited Partnerships. If the Partnership funds any
operating deficits, it will use monies from its operating reserves. As
of June 30, 1996, the Partnership had cash of approximately $1,980,000
as compared to $2,078,000 at December 31, 1995. The Managing General
Partner's current policy is to maintain a reserve balance sufficient to
provide the Partnership the flexibility to preserve its economic
interest in the Local Limited Partnerships. Therefore, a lack of cash
distributed by the Local Limited Partnerships to the Partnership in the
future should not deplete the reserves, though it may restrict the
Partnership from making distributions.
The level of liquidity based on cash and cash equivalents experienced a
$98,000 decrease at June 30, 1996, as compared to December 31, 1995. The
Partnership's $138,000 of cash distributions from Local Limited
Partnerships was more than offset by $210,000 of cash distributions to
partners and $26,000 used in operating activities.
The Partnership is not obligated to provide any additional funds to the
Local Limited Partnerships to fund operating deficits and does not
anticipate doing so in 1996. Beyond 1996, the Partnership will determine
on a case by case basis whether to fund any operating deficits. If a
Local Limited Partnership sustains continuing operating deficits and has
no other sources of funding, it is likely that it will eventually
default on its mortgage obligations and risk a foreclosure on its
property by the lender. If a foreclosure were to occur, the Local
Limited Partnership would lose its investment in the property and would
incur a tax liability due to the recapture of tax benefits taken in
prior years. The Partnership, as an owner of the Local Limited
Partnership, would share these consequences in proportion to its
ownership interest in the Local Limited Partnership.
7 of 12
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
During the six months ended June 30, 1996, the Partnership distributed
$200,000 ($8.00 per Unit) to its limited partners and $10,000 to the
general partners. The ability of the Partnership to continue to make
distributions to its partners is dependent upon the financial
performance of the Local Limited Partnerships.
Results of Operations
Net income decreased by $226,000 and $205,000 for the six and three
months ended June 30, 1996, respectively, as compared to 1995, primarily
due to a decrease in cash distributions received from Local Limited
Partnerships. In 1996, Local Limited Partnerships owning Honeywood and
Crofton Village Apartments made cash distributions to the Partnership of
$41,000 and $97,000, respectively. Expenses increased by $35,000 for the
six months ended June 30, 1996, as compared to 1995 due to an increase
in management fees. Management fees increased due to the timing of the
accrual for the 1995 period.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
PART - II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to Section 9.4 of the
Partnership Agreement.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the three months ended June 30,
1996.
9 of 12
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
BY: /s/ Edward V. Williams
Edward V. Williams
Chief Financial Officer
Dated: August 13, 1996
10 of 12
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
JUNE 30, 1996
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule --
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
JUNE 30, 1996
Supplementary Information Required Pursuant to Section 9.4 of
the Partnership Agreement
1. Statement of Cash Available for Distribution for the three months ended
June 30, 1996:
Net Loss $ (1,000)
Add:Cash from reserves 106,000
--------
Cash Available for Distribution $105,000
========
Distributions allocated to General Partners $ 5,000
========
Distributions allocated to Limited Partners $100,000
========
2. Fees and other compensation paid or accrued by the Partnership to the General
Partners, or their affiliates, during the three months ended June 30, 1996:
Entity Receiving Form of
Compensation Compensation Amount
---------------- -------------------------- ------
W.P. Management
Co., Inc. Property Management Fees $40,000
General Partners Interest in Cash Available
for Distribution $ 5,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available
for Distribution $ 20
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Residential Associates II, A Limited Partnership and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,980,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,980,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,839,000
<TOTAL-LIABILITY-AND-EQUITY> 1,980,000
<SALES> 0
<TOTAL-REVENUES> 138,000
<CGS> 0
<TOTAL-COSTS> 73,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 68,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 68,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,000
<EPS-PRIMARY> 2.60
<EPS-DILUTED> 2.60
</TABLE>
