<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
Annual Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the year ended December 31, 1996 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 of organization) (I.R.S. Employer I.D. No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 330-8600
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B 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-KSB or any amendment to
this Form 10-KSB. [ ]
Cover Page continued on Next Page
<PAGE>
Cover Page 2 of 2
Registrant's revenues for its most recent fiscal year were $2,092,797.
No market for the Limited Partnership Units exists and therefore, a market value
for such Units cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE
Part of the
Form 10-KSB
I The Prospectus of the Registrant dated January 29,
1982, as supplemented on March 5, 1982, June 21, 1982
and August 27, 1982
Transitional Small Business Disclosure Format: Yes ___ No X
2
<PAGE>
Item 7 is hereby amended and restated as follows:
Item 7. Financial Statements
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
INDEX
Page
Independent Auditors' Reports.................................. F-2
Financial Statements:
Balance Sheets as of December 31, 1996 and 1995................ F-4
Statements of Income for the Years Ended
December 31, 1996 and 1995................................ F-5
Statements of Partners' Capital for the Years Ended
December 31, 1996 and 1995................................ F-6
Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995................................ F-7
Notes to Financial Statements.................................. F-8
F-1
<PAGE>
Independent Auditors' Report
To the Partners
Winthrop Residential Associates II, a Limited Partnership
Boston, Massachusetts
We have audited the accompanying balance sheet of Winthrop Residential
Associates II, a Limited Partnership (a Maryland limited partnership) as of
December 31, 1996 and the related statements of income, partners' capital and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit. We did
not audit the financial statements of the Local Limited Partnerships, the
investments in which are reflected in the accompanying financial statements
using the equity method of accounting and were written down to zero (see Note
1). Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts
included for those Local Limited Partnerships, is based solely on the reports
of other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Winthrop Residential Associates II, a
Limited Partnership as of December 31, 1996, and the results of its operations
and its cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ Imowitz Koenig & Co., LLP
New York, New York
March 24, 1997
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP:
We have audited the accompanying balance sheets of WINTHROP RESIDENTIAL
ASSOCIATES II, A Limited Partnership (a Maryland limited partnership) as of
December 31, 1995 and the related statements of operations, changes in
partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of certain Local Limited
Partnerships, the investments in which are reflected in the accompanying
financial statements using the equity method of accounting and were written
down to zero. Those statements were audited by other auditors whose reports
have been furnished to us, and our opinion, insofar as it relates to the
amounts included for those Local Limited Partnerships, is based solely on the
reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of WINTHROP RESIDENTIAL ASSOCIATES II, A
LIMITED PARTNERSHIP as of December 31, 1995 and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 20, 1996
F-3
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
BALANCE SHEETS
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1996 1995
------------------ -------------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 2,732 $ 2,078
Escrow Deposit 370 -
Other 5 8
----------------- -----------------
Total Assets $ 3,107 $ 2,086
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses $ 70 $ -
Distribution payable 53 105
----------------- -----------------
Total Liabilities 123 105
----------------- -----------------
Partners' Capital:
Limited Partners -
Units of Limited Partnership
Interest, $1,000 stated value
per unit; 25,010 units authorized,
issued and outstanding 3,898 2,970
General Partners (deficit) (914) (989)
----------------- -----------------
Total Partners' Capital 2,984 1,981
----------------- -----------------
Total Liabilities and Partners'
Capital $ 3,107 $ 2,086
================= =================
</TABLE>
See notes to financial statements.
F-4
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1996 1995
---------------- ------------------
<S> <C> <C>
Income:
Income from Local Limited Partnership
cash distributions $ 1,969 $ 701
Interest 124 100
Other - 39
----------------- -----------------
Total Income 2,093 840
----------------- -----------------
Expenses:
General and Administrative 99 50
Management fees 123 77
----------------- -----------------
Total Expenses 222 127
----------------- -----------------
Net income $ 1,871 $ 713
================= =================
Net income allocated to General
Partners $ 93 $ 36
================= =================
Net income allocated to Limited
Partners $ 1,778 $ 677
================= =================
Net Income per Unit of Limited
Partnership Interest $ 71.09 $ 27.07
================= =================
Distributions per Unit of Limited
Partnership Interest $ 33.99 $ 12.00
================= =================
</TABLE>
See notes to financial statements.
F-5
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1996 AND 1995
(In Thousands, Except Unit Data)
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
---------- ---------- ---------- ----------
Balance - January 1, 1995 25,010 $ (1,009) $ 2,593 $ 1,584
Net Income 36 677 713
Distributions (16) (300) (316)
---------- ---------- ---------- ----------
Balance - December 31, 1995 25,010 (989) 2,970 1,981
Net Income 93 1,778 1,871
Distributions (18) (850) (868)
---------- ---------- ---------- ----------
Balance - December 31, 1996 25,010 $ (914) $ 3,898 $ 2,984
========== ========== ========== ==========
See notes to financial statements.
F-6
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1996 1995
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,871 $ 713
Changes in assets and liabilities:
Increase (decrease) in accrued expenses 70 (3)
Decrease in other assets 3 66
------------ ----------------
Net cash provided by operating activities 1,944 776
------------ ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Escrow deposit (370) -
------------ ----------------
Cash used in investing activities (370) -
------------ ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (920) (263)
------------ ----------------
Cash used in financing activities (920) (263)
------------ ----------------
Net increase in cash 654 513
Cash and Cash Equivalents, Beginning of Year 2,078 1,565
------------ ----------------
Cash and Cash Equivalents, End of Year $ 2,732 $ 2,078
============ ================
Supplemental Disclosure of Non-Cash
Financing Information - Accrued
Distributions to Partners $ 53 $ 105
---------------------------------
============ ================
</TABLE>
See notes to financial statements.
F-7
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Winthrop Residential Associates II, A Limited Partnership (the
"Partnership") was organized on October 21, 1981 under the Uniform
Limited Partnership Act of the State of Maryland to invest in limited
partnerships (the "Local Limited Partnerships") which develop, manage,
operate and otherwise deal in government assisted apartment complexes and
which do not significantly restrict distributions to owners or the rate
of return on investments in such properties. The Partnership has
investments in nine Local Limited Partnerships owning eleven apartment
complexes located in various locations throughout the United States.
The Partnership was capitalized with $25,000,000 of contributions
representing 25,000 investor limited partnership units. The offering
closed on November 17, 1982. The general partners and the initial limited
partner (10 units) contributed $12,000.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents. The carrying amount of cash and cash equivalents
approximates its fair value due to its short term nature.
Uses of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Investments in Local Limited Partnerships
The Partnership accounts for its investment in each Local Limited
Partnership using the equity method. Under the equity method of
accounting, the investment cost is subsequently adjusted by the
Partnership's share of the Local Limited Partnership's results of
operations and by distributions received. Costs relating to the
acquisition and selection of the investment in the Local Limited
Partnerships are capitalized to the investment account and amortized over
the life of the investment. Costs in excess of the Partnership's initial
basis in the net assets of the Local Limited Partnership are amortized
over the estimated useful lives of the underlying assets. Equity in the
loss of Local Limited Partnerships and amortization of investment costs
and costs in excess of initial basis is not recognized to the extent that
the investment balance would become negative since the Partnership is not
obligated to advance funds to the Local Limited Partnerships.
F-8
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income Per Limited Partnership Unit
The net income per limited partnership unit is computed by dividing net
income allocated to the limited partners by the 25,010 units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Concentration of Credit Risk
Principally all of the Partnership's cash and cash equivalents consist of
a mutual fund that invests in U.S. treasury bills and repurchase
agreements with original maturity dates of three months or less.
2. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS
In accordance with the partnership agreement, profits and losses not
arising from a sale or refinancing and cash available for distribution
shall be allocated 5% to the general partners and 95% to the limited
partners. Distributions of proceeds arising from a sale or refinancing
are allocated first to the limited partners to the extent of their
Adjusted Capital Contribution (as defined) and then in accordance with
the partnership agreement.
3. TRANSACTIONS WITH RELATED PARTIES
One Winthrop Properties, Inc. ("One Winthrop"), the Managing General
Partner and WP Management Co., Inc. ("WP Management"), the manager of
the Partnership's investments in the Local Limited Partnerships, are
wholly owned subsidiaries of First Winthrop Corporation, which in turn
is wholly owned by Winthrop Financial Associates, a limited partnership
("WFA").
WP Management is entitled to a fee for services rendered in managing the
Partnership's investments in the Local Limited Partnerships equal to 10%
of the Partnership's share of cash distributions from operations of the
Local Limited Partnerships, not to exceed one half 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. The minimum fee is
$100,000 per annum. For the years ended December 31, 1996 and 1995, WP
Management earned $123,000 and $77,000, respectively,
F-9
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
3. TRANSACTIONS WITH RELATED PARTIES (Continued)
for managing the Partnership's investments in the Local Limited
Partnerships. The 1996 fee includes a $23,000 adjustment for 1995.
An affiliate of WFA has a general partnership interest in one of the
Local Limited Partnerships which it acquired in 1986.
During the liquidation stage of the Partnership, the General Partners and
their affiliates are entitled to receive certain distributions,
subordinated to specified minimum returns to the Limited Partners as
described in the partnership agreement.
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
As of December 31, 1996 and 1995 the Partnership's equity interests in
nine Local Limited Partnerships is summarized as follows:
Local Limited Partnership Percentage Ownership
Whisper Lake, Ltd. 99
Sanford Landing Apartments, Ltd. 99
Honeywood Associates 95
Brookside, Ltd. 99
Westbury Springs, Ltd. 99
Southwest Parkway, Ltd. 99
Wedgewood Creek Limited Partnership 99
First Investment Limited Partnership IX 90
Crofton Village Limited Partnership 53
The Local Limited Partnership which owns Southwest Parkway Apartments
("Southwest Parkway"), in an effort to avoid foreclosure and retain
control of the property, filed for protection under Chapter 11 of the
United States Bankruptcy Code. Southwest Parkway negotiated an agreement
for a settlement with its lender that was approved by the Bankruptcy
Court as part of the confirmation of the plan of reorganization in
January 1997. The agreement, which was closed in January 1997, allowed
Southwest Parkway to purchase its debt for $4,100,000 and retain
ownership of the property. In conjunction with the purchase of the debt,
the Partnership invested approximately $1,770,000 in Southwest Parkway
in January 1997 as a capital contribution. As of December 31, 1996,
$370,000 was reflected as an escrow deposit in contemplation of the
above settlement. Southwest Parkway obtained a new first mortgage
in the amount of $2,200,000. The new mortgage bears interest of
8.75% per annum and matures on February 1, 2007.
F-10
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
The investment balance in Local Limited Partnerships is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31,
1995 Activity 1996
------------------- -------------------- -------------------
<S> <C> <C> <C>
Equity payments $ 20,727 $ $ 20,727
Additional investments made to and recognized
as operating deficit advances by the Local
Limited Partnerships 943 943
Capitalized costs 356 356
Cash distributions from Local Limited Partnerships (10,434) (1,969) (12,403)
Amortization of the capitalized costs and the costs
in excess of the Partnership's initial basis in the
net assets of the Local Limited Partnerships (1,099) (1,099)
Equity in loss of Local Limited Partnerships (12,406) (12,406)
Income from Local Limited Partnership cash
distribution 1,913 1,969 3,882
------------------- -------------------- -------------------
Investments per balance sheet 0 0 0
Difference in basis (including equity payments
paid to partners of two Local Limited
Partnerships totaling $2,188,000) (3,572) (3,572)
Additional investments paid to and recognized as
operating deficit advances by Local Limited
Partnerships (943) (943)
Capitalized costs (356) (356)
Amortization of the capitalized costs and the costs
in excess of the Partnership's initial basis in the
net assets of the Local Limited Partnerships 1,099 1,099
Equity in loss of Local Limited Partnerships not
recognizable under the equity method of
accounting (Note 2) (19,817) (1,331) (21,148)
Income from Local Limited Partnership cash
distribution (1,913) (1,969) (3,882)
------------------- -------------------- -------------------
Deficit per Local Limited Partnerships' combined
financial statements $ (25,502) $ (3,300) $ (28,802)
=================== ==================== ===================
</TABLE>
F-11
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
The combined balance sheets of the Local Limited Partnerships are as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------- -----------
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $ 4,616 $ 4,616
Buildings, net of accumulated
depreciation of $38,137,000
and $35,426,000 in 1996
and 1995, respectively 29,768 32,003
Cash and cash equivalents 1,042 1,115
Other assets, net of accumulated
amortization of $1,652,000 and
$1,581,000 in 1996 and
1995, respectively 4,466 3,876
------------- ----------
Total Assets $ 39,892 $ 41,610
============= ==========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Liabilities subject to compromise $ 8,003 $ -
Notes payable 2,488 2,950
Loans payable 473 973
Mortgage notes payable 57,442 59,893
Accounts payable and accrued expenses 2,650 4,339
------------- ----------
Total Liabilities 71,056 68,155
------------- ----------
Partners' Deficit:
Winthrop Residential Associates II (28,802) (25,502)
Other partners (2,362) (1,043)
------------- ----------
Total Deficit: (31,164) (26,545)
------------- ----------
Total Liabilities and Partners' Deficit $ 39,892 $ 41,610
============= ==========
</TABLE>
F-12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
The combined statements of operations of the Local Limited
Partnerships are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1996 1995
----------------- --------------
<S> <C> <C>
Income:
Rental income $ 13,323 $ 13,125
Other income 573 497
----------------- --------------
Total Income 13,896 13,622
----------------- --------------
Expenses:
Interest 4,659 4,990
Depreciation and amortization 2,782 2,749
Taxes and insurance 1,610 1,481
Management and administration fees 743 733
Repairs and maintenance 2,412 2,133
General and administrative 2,956 2,874
----------------- --------------
Total Expenses 15,162 14,960
----------------- --------------
Loss before extraordinary item (1,266) (1,338)
Extraordinary item:
Gain from extinguishment of debt - 863
----------------- --------------
Net loss $ (1,266) $ (475)
================= ==============
Net loss allocated to
Winthrop Residential Associates II $ (1,331) $ (643)
================= ==============
Net income allocated to
other partners $ 65 $ 168
================= ==============
</TABLE>
F-13
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
As of December 31, 1996, the Partnership has Limited Partnership equity
interests in nine Local Limited Partnerships that own eleven apartment
complexes. These Local Limited Partnerships have outstanding mortgages
totaling $64,288,000 (including $6,846,000 outstanding on Southwest
Parkway which is classified as liabilities subject to compromise), which
are secured by the Local Limited Partnerships' real property, security
interests, liens and endorsements common to first mortgage loans.
5. TAXABLE INCOME
The Partnership's taxable loss differs from the net income for financial
reporting purposes as follows (in thousands):
1996 1995
------------ ------------
Net income for financial reporting
purposes................................. $ 1,871 $ 713
Less: Equity in Local Limited Partnerships'
tax loss in excess of financial
statement loss (due primarily to the
depreciation differences caused
by ACRS and amount capitalized for
construction) ..................... (388) (620)
Equity in Local Limited Partnerships'
losses not recognizable under the
equity method of accounting for
financial reporting purposes....... (1,331) (643)
Income from Local Limited Partnership
cash distributions ................ (1,969) (701)
------------ ------------
Taxable loss ............................ $ (1,817) $ (1,251)
============ ============
F-14
<PAGE>
SIGNATURES
Pursuant to the requirements 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 this 2nd day
of April 1997.
WINTHROP RESIDENTIAL ASSOCIATES II,
A LIMITED PARTNERSHIP
By: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
By: /s/ Michael L. Ashner
---------------------
Michael Ashner
Chief Executive Officer
