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<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 March 31, 2000
--------------
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
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Winthrop Residential Associates II, A Limited Partnership
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
Maryland 04-2742158
---------------------------------------------------- ------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
---------------------------------------------------- ------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
-----------------------------------------
</TABLE>
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_____
---
================================================================================
1 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
(In Thousands, Except Unit Data) 2000 1999
--------------------- ---------------------
Assets
<S> <C> <C>
Cash and cash equivalents $ 1,463 $ 1,472
Escrow deposits 137 253
Other assets 225 185
Real estate, net of accumulated depreciation of
$4,992 in 2000 and $4,919 in 1999 3,143 3,194
--------------- ---------------
Total Assets $ 4,968 $ 5,104
=============== ===============
Liabilities and Partners' Capital
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 201 $ 328
Distribution payable 26 26
Loan payable - affiliate 501 501
Mortgage notes payable 3,487 3,499
--------------- ---------------
Total Liabilities 4,215 4,354
--------------- ---------------
Minority interest 30 30
--------------- ---------------
Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per unit; 25,010 units
authorized, issued and outstanding 1,736 1,733
General Partners' deficit (1,013) (1,013)
--------------- ---------------
Total Partners' Capital 723 720
--------------- ---------------
Total Liabilities and Partners' Capital $ 4,968 $ 5,104
=============== ===============
</TABLE>
See notes to consolidated financial statements.
2 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, March 31,
2000 1999
--------------------- ---------------------
<S> <C> <C>
Income:
Rental income $ 325 $ 308
Income from Local Limited Partnership cash distributions 40 33
Interest income 14 12
Other income 11 12
----------- -----------
Total income 390 365
----------- -----------
Expenses:
General and administrative 21 25
Operating 150 129
Depreciation 73 72
Interest 74 71
Management fees 43 40
----------- -----------
Total expenses 361 337
----------- -----------
Net income before minority interest 29 28
Minority interest - -
----------- -----------
Net income $ 29 $ 28
=========== ===========
Net income allocated to General Partners $ 1 $ 1
=========== ===========
Net income allocated to Limited Partners $ 28 $ 27
=========== ===========
Net income per Unit of Limited Partnership interest $ 1.12 $ 1.08
=========== ===========
Distributions per Unit of Limited Partnership Interest $ 1.00 $ 1.00
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Consolidated Statement of Changes in Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited Limited General Total
Partnership Partners' Partners' Partners'
Interest Capital Deficit Capital
------------------ ------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 25,010 $ 1,733 $ (1,013) $ 720
Net income 28 1 29
Distributions (25) (1) (26)
------------- ------------- ------------ --------------
Balance - March 31, 2000 25,010 $ 1,736 $ (1,013) $ 723
============= ============= ============ ==============
</TABLE>
See notes to consolidated financial statements
4 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, March 31,
(In Thousands) 2000 1999
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 29 $ 28
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation 73 72
Amortization 2 2
Changes in assets and liabilities:
Decrease in escrow deposits 46 22
Increase in other assets (42) (74)
Decrease in accounts payable, accrued
expenses and other liabilities (127) (7)
------------- -------------
Net cash (used in) provided by operating activities (19) 43
------------- -------------
Cash Flows From Investing Activities:
Change in replacement reserves 70 (13)
Property improvements (22) (37)
------------- -------------
Net cash provided by (used in) investing activities 48 (50)
------------- -------------
Cash Flows From Financing Activities:
Mortgage principal payments (12) (11)
Distributions to partners (26) (26)
------------- -------------
Cash used in financing activities (38) (37)
------------- -------------
Net decrease in cash and cash equivalents (9) (44)
Cash and cash equivalents, beginning of period 1,472 1,304
------------- -------------
Cash and cash equivalents, end of period $ 1,463 $ 1,260
============= =============
Supplemental Disclosure of Cash Flow Information
Interest paid in cash $ 73 $ 69
============= =============
Supplemental Disclosure of Non-Cash Financing Activities
Accrued Distributions to Partners $ 26 $ 26
============= =============
</TABLE>
See notes to consolidated financial statements.
5 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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-KSB for the year ended December 31, 1999.
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. The balance sheet at December 31, 1999 was
derived from audited financial statements at such date.
The results of operations for the three months ended March 31, 2000 and
1999, are not necessarily indicative of the results to be expected for
the full year.
2. Consolidation
The consolidated financial statements of the Partnership include the
accounts of the Partnership and two subsidiaries, Southwest Parkway,
Ltd. ("Southwest Parkway") and Brookside, Ltd. ("Brookside"), which are
Local Limited Partnerships previously accounted for under the equity
method of accounting. All significant intercompany transactions and
balances have been eliminated.
6 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Item 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and
regulatory matters, etc.) detailed in the disclosure contained
in this Form 10-QSB and the other filings with the Securities
and Exchange Commission made by the Partnership from time to
time. The discussion of the Partnership's liquidity, capital
resources and results of operations, including forward-looking
statements pertaining to such matters, does not take into
account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially
from those projected in the forward-looking statements as a
result of a number of factors, including those identified
herein.
This Item should be read in conjunction with the consolidated
financial statements and other items contained elsewhere in the
report.
Liquidity and Capital Resources
As of March 31, 2000, the Partnership retained an equity
interest in six Local Limited Partnerships owning eight
apartment properties. The Partnership also owns a 97% limited
partnership interest in Southwest Parkway Ltd. ("Southwest
Parkway") and a 99% limited partnership interest in Brookside,
Ltd. ("Brookside") (collectively referred to as the
"Subsidiaries"). Affiliates of the general partners of the
Partnership are the general partners of the Subsidiaries. The
Partnership's primary sources of income are distributions from
the Local Limited Partnerships and rental income from the
Subsidiaries. The Partnership requires cash to pay the operating
expenses of the Subsidiaries, management fees, general and
administrative expenses or to make capital contributions, or
loans, 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.
To date, all cash requirements have been satisfied by interest
income earned on short-term investments, rental income from the
Subsidiaries 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. 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.
The level of liquidity based on cash and cash equivalents
experienced a $9,000 decrease at March 31, 2000, as compared to
December 31, 1999. The Partnership's $48,000 of net cash
provided by investing activities was more than offset by $38,000
of cash used in financing activities and $19,000 of net cash
used in operating activities. Net cash provided by investing
activities includes a $70,000 change in replacement reserves
which was partially offset by $22,000 of property improvements.
Cash used in financing activities included $26,000 of
distributions to partners and $12,000 of mortgage principal
payments.
7 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Item 2. Management's Discussion and Analysis or Plan of Operation
(Continued)
Liquidity and Capital Resources (Continued)
The Partnership is not obligated to provide any additional funds
to the Local Limited Partnerships to fund operating deficits.
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 would share in these
consequences in proportion to its ownership interest in the
Local Limited Partnership.
For the three months ended March 31, 2000, the Partnership
accrued distributions aggregating $25,000 ($1.00 per unit) to
its limited partners and $1,000 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 and its Subsidiaries.
Southwest Parkway currently has a housing assistance contract
with the Federal Housing Administration which accounts for
approximately 29% of rental revenue. This contract expires on
June 30, 2001.
Results of Operations
Net income increased by $1,000 for the three months ended March
31, 2000 as compared to the comparable period in 1999 due to an
increase in income of $25,000, which was significantly offset by
an increase in expenses of $24,000.
Income increased for the three months ended March 31, 2000, as
compared to the comparable period in 1999, primarily due to an
increase in rental income of $17,000 generated from the
Partnership's Southwest Parkway and Brookside properties and an
increase in income from Local Limited Partnership cash
distributions of $7,000. During the three months ended March 31,
2000, the Partnership received $40,000 of cash distributions
from the Local Limited Partnership which owns the Crofton
Village Apartments. Expenses increased primarily due to an
increase in operating expenses of $21,000 primarily at the
Partnership's Southwest Parkway property.
8 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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 period ended
March 31, 2000.
9 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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.
WINTHROP RESIDENTIAL ASSOCIATES II,
A LIMITED PARTNERSHIP
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
----------------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas C. Staples
----------------------------------
Thomas C. Staples
Chief Financial Officer
Dated: May 11, 2000
10 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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
<PAGE>
Exhibit 99
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three
months ended March 31, 2000:
Net Income $ 29,000
Add: Depreciation 73,000
Amortization 2,000
Less: Cash to reserves (78,000)
-----------
Cash Available for Distribution $ 26,000
===========
Distributions allocated to General Partners $ 1,000
===========
Distributions allocated to Limited Partners $ 25,000
===========
2. Fees and other compensation paid or accrued by the Partnership
to the general partners, or their affiliates, during the three
months ended March 31, 2000:
<TABLE>
<CAPTION>
Entity Receiving Form of
Compensation Compensation Amount
------------------------------ -------------------------------------------------- ----------------
<S> <C> <C>
General Partners Interest in Cash Available for Distribution $ 1,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for Distribution 5
</TABLE>
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>
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
<CASH> 1,463,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,135,000
<DEPRECIATION> (4,992,000)
<TOTAL-ASSETS> 4,968,000
<CURRENT-LIABILITIES> 0
<BONDS> 3,487,000
0
0
<COMMON> 0
<OTHER-SE> 723,000
<TOTAL-LIABILITY-AND-EQUITY> 4,968,000
<SALES> 0
<TOTAL-REVENUES> 376,000
<CGS> 0
<TOTAL-COSTS> 266,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,000
<INCOME-PRETAX> 29,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,000
<EPS-BASIC> 1.12
<EPS-DILUTED> 1.12
</TABLE>
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